C2007/2622, Transcript of Proceedings [2007] AIRCTrans 225 (2 May 2007)

TRANSCRIPT OF PROCEEDINGS

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Workplace Relations Act 1996 16783-1

SENIOR DEPUTY PRESIDENT LACY
SENIOR DEPUTY PRESIDENT O’CALLAGHAN
COMMISSIONER SIMMONDS

C2007/2622

s.120 - Appeal to Full Bench
Appeal by Kitchen Design Systems Pty Ltd
(C2007/2622)

MELBOURNE

10.02AM, TUESDAY, 17 APRIL 2007

Reserved for Decision

PN1

MR M EASTON: I seek leave of the Commission to appear on behalf of the appellants.

PN2

MR T DONAGHEY: I seek leave to appear on behalf of Ms Moran who is the respondent to the appeal.

PN3

SENIOR DEPUTY PRESIDENT LACY: Thank you. Leave is granted in both cases. Yes, Mr Easton.

PN4

MR EASTON: I have filed a somewhat detailed notice of appeal and I understand arrangements were made yesterday for some authorities to be available to the members of the bench.

PN5

SENIOR DEPUTY PRESIDENT LACY: Sorry, I didn't catch that.

PN6

MR EASTON: Some arrangements were made yesterday to make the industrial reports and another authority available to the members of the bench and I can see some of those reports there in front of you. Your Honour, I anticipate that they're available for the members.

PN7

SENIOR DEPUTY PRESIDENT LACY: Yes. Thank you.

PN8

MR EASTON: If I may, unless there is another protocol that your Honour adopts, simply talk to the notice of the appeal.

PN9

SENIOR DEPUTY PRESIDENT LACY: Sorry, in the notice of appeal, what about it?

PN10

MR EASTON: In terms of the procedure for today, unless your Honour has a different approach, I would simply talk to the notice of appeal.

PN11

SENIOR DEPUTY PRESIDENT LACY: Yes. You make your submissions in accordance with the notice of appeal.

PN12

MR EASTON: Thank you. Now, there are two appellants to the notice and the first ought not be contentious because it was the party below as the respondent, but the second appellant is in our submission an aggrieved person for the purposes of section 120(3)(g) in that Commissioner Smith's ultimate finding was that that entity was the employer of Ms Moran. In one sense, Kitchen Design Systems could be happy with the result because it's out of the proceedings, but it has a significant effect on how Kitchen Design Systems and the Enstrom Group arrange their affairs.

PN13

SENIOR DEPUTY PRESIDENT LACY: So you do take issue with the Commissioner's finding about who the employer was?

PN14

MR EASTON: Yes, yes.

PN15

SENIOR DEPUTY PRESIDENT LACY: Sorry, I say who the employer was. That is probably not as neutral as it should be, but who the relevant party to the agreement was from your point of view.

PN16

MR EASTON: Yes. Well, the proceedings below, there were two jurisdictional objections raised by the respondent and the identity of the employer is significant to both of those objections, the first being that there was no contract of employment at all, the second being that if Kitchen Design Systems was the employer, then it didn't have 100 employees and that brought rise to evidence and submissions about the connection between the Enstrom Group and KDS, if I can abbreviate it to KDS, evidence and contentions about the connection between a group of companies that are related for the purpose of the Corporations Act, the Enstrom Group and this other company, KDS, which we say was not.

PN17

SENIOR DEPUTY PRESIDENT LACY: And the Commissioner found, though, that whatever the nature of the contract, the contracting party from the respondent's side was Freedom Kitchens.

PN18

MR EASTON: Yes.

PN19

SENIOR DEPUTY PRESIDENT LACY: And you take issue with that finding?

PN20

MR EASTON: Yes, we do. Unless there's any other point in relation to the standing of the second appellant, I think the authority in Fox v Kangan Batman is pretty clear that the second appellant is an affected party.

PN21

SENIOR DEPUTY PRESIDENT LACY: Perhaps we should ask Mr Donaghey if he takes issue with that.

PN22

MR DONAGHEY: Your Honours and Commissioner, I don't. In fact, before the appeal commenced this morning, I handed to my friend a short outline of submissions and paragraph 1(a), the person aggrieved status of Freedom Kitchens is conceded by the respondent. If the Commission pleases.

PN23

SENIOR DEPUTY PRESIDENT LACY: Thank you, Mr Donaghey.

PN24

MR EASTON: I haven't read my friend's submissions yet.

PN25

SENIOR DEPUTY PRESIDENT LACY: Perhaps you should have done that, Mr Easton.

PN26

MR EASTON: At point 3 of the notice of appeal, the appellants say squarely that the Commissioner erred in finding that Ms Moran was an employee of Freedom Kitchens Direct for the purposes of the Act. Now, the appeal principles applicable to these proceedings in our submission are not the principles of House v The King as to an error of discretion. It's a matter of finding a jurisdictional fact and I don't imagine that that point is contentious either with my friend.

PN27

I am not sure if he has formally concurred with that, but I don't think the principles were contentious in that regard and so whilst much of the notice of appeal is couched on terms similar to an appeal on a discretion, a discretionary matter, we say it's clearly a matter where the Full Bench needs to be concerned with the correctness of Commissioner Smith's decision in its entirety. By way of a broad overview of the proceedings, there were two corporate entities between the entity that Commissioner Smith found was the employer, Freedom Kitchens Direct, and the worker, Ms Moran. There were two corporate entities in between, being KDS and also Check Lec Pty Ltd.

PN28

Now, Ms Moran had worked for the group previously by way of a contract or arrangement and there were some discussions about her working in Melbourne and building the business of Freedom Kitchens Direct and there were two conversations relevantly, one with Mr McEwan where Ms Moran says she was offered employment and given the choice between a sales or a designer position which she took to mean the difference between engagement as employee or as a contractor and then a second conversation with Ms Hasler where the Commissioner has found Ms Hasler has said you've got the job and the Commissioner has taken that to be the formation of the employment contract, where, in fact, Ms Moran indicates that there wasn't specifically any statement to the effect of you've got the job and in any event, those two conversations were found to be the formation of the contract of employment and after that point, though, Ms Moran provided information in order to establish a relationship between Check Lec and KDS whereby Check Lec invoiced KDS for consultancy services and Check Lec was an existing entity incorporated in 1978 as a corporate trustee of a family trust.

PN29

Ms Moran's husband, Mr Cant, is the director and shareholder of Check Lec and Ms Moran is one of the beneficiaries of the family trust and, in fact, in the financial year just finishing as Ms Moran's employment started, financial year 2004, Check Lec had made a distribution to Ms Moran of $50,000 by way of a distribution to a family trust, so Check Lec has been in existence for some time and that was the vehicle elected by Ms Moran by which she invoiced KDS for the work.

PN30

SENIOR DEPUTY PRESIDENT LACY: That was after the engagement, wasn't it?

PN31

MR EASTON: After the conversations that Commissioner Smith found to be the engagement, yes.

PN32

SENIOR DEPUTY PRESIDENT LACY: Yes.

PN33

MR EASTON: But before any work was performed. No, I am sorry, that needs to be clarified. There were two conversations which Commissioner Smith found to be the commencement of the employment and then before any work commenced, Commissioner Smith found that there was a further conversation between Ms Hasler and Ms Moran when Ms Hasler said you need to provide us with an invoice and then after that, it set about a train of process where Ms Moran provided a whole lot of information about Check Lec and then Check Lec started sending invoices to KDS and KDS paid them.

PN34

Now, the matter of the invoices, rendering an invoice, was before any work had commenced and in my submission that's significant and I will expand upon that later, but once the arrangement was in place, Check Lec used the money in its own discretion. It paid Ms Moran $5000 per annum, despite collecting approximately $78,000 a year plus GST. It paid Ms Moran $34,000 in superannuation, bought a motor vehicle and a laptop, claimed full deduction for those, they were used by Ms Moran and made a distribution to the beneficiaries of the family trust, including Ms Moran and including Mr Cant and Mr Cant's children.

PN35

Ms Moran in the case maintained that she thought she was an employee through this time, an employee of somebody in the Enstrom Group, despite the evidence that in her role she engaged contractors and engaged employees and understood and used the system for the engagement of each. When she was asked about providing an invoice, said to Ms Hasler I don't have anything like that still set up, I will ask Kevin, which in my submission is indication that she understood what she was being asked to do and that is enter a contracting arrangement, regardless of the earlier first two conversations in May.

PN36

When she's asked to provide an invoice, in my submission she understands exactly what that means and then she completes the forms which she acknowledges are the forms that are used to engage contractors. She by her own hand writes out invoices and sends them to KDS adding $150 a week GST. She didn't receive any group certificates or ask for any group certificates over the time. She read, she checked and signed her tax returns which show salary and wages of $5000.

PN37

The employer identified is only identified by an ABN number, not by a name and the ABN number in the tax return is Check Lec's ABN, not KDSs or anybody else's and ultimately, despite all of those matters, Commissioner Smith accepted that Ms Moran didn't think - sorry, Ms Moran continued to think she was an employee of somebody in the kitchen group. Now, as I have mentioned, there were two central jurisdictional objections in the proceedings and Commissioner Smith determined one question which then made the second one irrelevant.

PN38

The fundamental finding was that the Commissioner found that there was a contract between Ms Moran and Freedom Kitchens Direct and he found that on the face of his decision at paragraph 35 on the basis of the conversations that occurred in May 2004, he found that at paragraph 38 the invoicing arrangement was a mere contrivance and didn't alter the contract that had been formed and then considered the practical reality of the situation, paragraph 46 and concluded that on evidence, it pointed to Ms Moran being an employee and based on the evidence that the conversations in May were about Ms Moran developing the business of Freedom Kitchens Direct than the employment relationship was with Freedom Kitchens Direct.

PN39

Now, if I may in a bit more detail and by reference to the evidence unpack the relationships and the parties to the proceedings. Firstly, Ms Moran describes herself as an experienced businesswoman and she annexed her curriculum vitae to her affidavit which your Honours and Mr Commissioner will find at tab 17 in the appeal book and it outlines, starting at appeal book page 543, it outlines an extensive history of working in sales and contract intensive - environments where contracts and the negotiating of contracts is significant.

PN40

It goes backwards on the curriculum vitae. The first experience she identifies is Moran's Property Services. Now, if members of the Full Bench keep a finger at page 544 and turn to page 112 in the appeal book, I ask Ms Moran some questions about Moran's Property Services and page 112 is at tab 8 and starting at paragraph 1078 I ask Ms Moran:

PN41

You gave a description of what project that Moran's Property Services was hoping to do. I confess I should have written down what you said, what the project was. I just ask you again to indicate what Moran's Property Services' business was?

PN42

Answer:

PN43

Sure. I've actually got a brochure here about it, if that's any help.

PN44

Question:

PN45

No, it's okay. I'm happy with your description.

PN46

Answer:

PN47

Sure. Basically, what it was, it was services to starting with initial concierge services with supplying multi-storey apartment developments and it was providing a concierge service plus associated services, everything from dry cleaning, laundry, cleaning, car washing, collecting groceries that had been delivered, deposited in people's fridges, that sort of thing. It was something that was being targeted to developers such as Lend Lease.

PN48

Question:

PN49

I see. You wrote a 600-page business plan?

PN50

Answer:

PN51

Yes, that's correct.

PN52

Question:

PN53

And the company manuals?

PN54

Answer:

PN55

Yes.

PN56

Question:

PN57

You later on sold to Lend Lease, you later on sold the concept to Lend Lease for incorporation in their up-market apartment developments, is that right?

PN58

Answer:

PN59

It wasn't really sold in the end. We had to let go of the agreement. They basically offered us the contract to provide all the services. We had to let go of it.

PN60

Question:

PN61

But you prepared a 600-page manual in relation to that?

PN62

Answer:

PN63

Yes, myself and two colleagues.

PN64

That's the task that Ms Moran describes she was doing immediately prior to her employment in Primelife and then before that, going back to page 544, before that she was a contractor through a sole trader arrangement under the name Salmor to kitchen companies connected to the Enstrom Group and, of course, was familiar with the arrangements of contracting there and then before then, her previous three roles related to selling of real estate and contracts and the like and she, as I say, describes herself as an experienced businesswoman and was able at parts of the transcript to explain the nature of Check Lec and its business and some financial dealings that Check Lec had had in relation to the sale of part of its business to another party as well.

PN65

SENIOR DEPUTY PRESIDENT LACY: Didn't seem to know a lot about what was going on with Check Lec, though, did she?

PN66

MR EASTON: Well, on her evidence she didn't, but in my submission that evidence just does not bear credibility in the light of the totality of the arrangements. It just cannot be so that she simply sent the invoices and then did nothing else except sign a tax return. For a woman with that business experience, it defies logic that she took no interest at all in the nature of the contractual relationship. For example, she claims that she was surprised to be told by her solicitor that on the paperwork she is regarded as an employee of Check Lec.

PN67

That would suggest, if it were true, that since May 2004 this businesswoman hasn't even thought who employs her. It's a situation vastly different, for example, to Mr Damevski's situation where he's a cleaner and is proposed to become a contract cleaner. She can't claim in my submission that kind of innocence, given her experience and given her involvement in the processes which I will come to in some degree.

PN68

On the appellant's side, there's a group of companies, the Enstrom Group, which relevantly comprises of four companies and those companies are listed at tab 14, paragraph 5 of Mr Vyagurunatha's affidavit and I think they're mentioned in numerous other places, but there are four kitchen companies within the Enstrom Group, Sydney Kitchen Group Pty Ltd, Wholesale Joinery Pty Ltd, Freedom Kitchens Direct Pty Ltd and Kitchen Group Pty Ltd.

PN69

We I think early in the piece conceded that those four entities are all related entities and between them there is at least 100 employees within that group and so the second jurisdictional point came to be whether KDS was related to any of those entities in the group. Now, significantly I might add at this point - I am sorry, no, I will come back to that, then there's a separate entity, Kitchen Design Services. It has different shareholders and directors to the rest of the companies in the Enstrom Group. It engages contractors.

PN70

SENIOR DEPUTY PRESIDENT LACY: But there's a familial relationship, isn't there, between the directors of KDS and the directors of these other businesses?

PN71

MR EASTON: Yes, there is, which doesn't satisfy the test in the Corporations Act.

PN72

SENIOR DEPUTY PRESIDENT LACY: No, I understand that.

PN73

MR EASTON: And by oral agreement and there was no evidence of written agreements, by oral agreement KDS supplied a number of services to companies in the Enstrom Group. It provided contractors and also provided software, IT, catalogues and other services and the reference to that is Mr McEwan's evidence at AB54, paragraph 410 of the transcript. It charges a margin over the rates that it pays the contractors. It has one employee, Ms Riddock, who is also the director and shareholder. It paid her a salary of $70,000 in the relevant financial year and Mr McEwan's evidence is that in total, the companies in the Enstrom Group paid KDS approximately $2m a year for its services.

PN74

He wasn't sure plus or minus whether it was including GST or not, but around about that figure, so it's a significant transaction and significant arrangement that's in place. KDS engages contractors, pays them weekly or fortnightly as the arrangements are and then sends a monthly invoice to each of the four companies in the Enstrom Group or any of the four companies in the Enstrom Group that the contractors had provided services to and then it's paid by the Enstrom Group for those contracts and pages 316, 17 and 18 in the appeal book are tax invoices from Kitchen Design Systems to companies in the Enstrom Group in relation to services and my friend cross-examined Mr Vyagurunatha, the financial controller of the Enstrom Group, about those invoices and particularly how it could show an invoice that has a total amount and then an amount applied to it and the explanation, lest there be any doubt about that, is that this was an invoice printed later out of the accounting system and so it shows that at some stage after the invoice was generated and between the time it was printed that the money had been paid.

PN75

There was a suggestion in cross-examination that the invoice when issued already showed a zero balance and that doesn't bear out in the evidence itself. The evidence is that moneys were paid from the Enstrom Group to KDS in fulfilment of those invoices and it's not alleged significantly, it's not alleged by the present respondent that any of those arrangements were a sham. That's not alleged at all.

PN76

SENIOR DEPUTY PRESIDENT LACY: At least he found it was a contrivance, didn't he?

PN77

MR EASTON: Well, the Commissioner found it was a contrivance, but Ms Moran's counsel didn't submit that any of these arrangements were a sham except for a particular submission that he made at appeal book 189 where he's making a submission about sham arrangements, the question of an arrangement being a sham was relevant in the proceedings to the link between KDS and Enstrom and comes from a paragraph in Commissioner Smith's decision in Triangle Cables about arrangements and related companies and at paragraph 1846 my friend says:

PN78

When somebody does something in order to create an entity, then the veil may be pierced. What that entity is created for is in its nature or effect a sham. We put the sham point, sir, very much narrower than that. The payments and the transactions that ...(reads)... where he says that there is no control asserted over that company and yet he does both the transaction from both sides, from the KDS side and the Enstrom Group side.

PN79

Now, the first point I make about that submission is that it's not a submission that the whole arrangement between KDS and the Enstrom Group was a sham.

PN80

COMMISSIONER SIMMONDS: Do you say that the Commissioner can only come to a conclusion based on the submissions of the parties?

PN81

MR EASTON: No, I am not saying that at all, Commissioner.

PN82

COMMISSIONER SIMMONDS: Whether or not it's been mentioned that it's a sham or a contrivance by Mr Donaghey seems to be the thrust of your submission.

PN83

MR EASTON: Well, I make the point that the parties proceeded below without challenge of the bona fides of the arrangements and in the evidence below, there was no challenge as to the bona fides of the arrangements. There was a challenge as to the independence of - - -

PN84

COMMISSIONER SIMMONDS: As between the parties, there was no challenge. Are you saying the Commissioner didn't raise the possibility of a contrivance?

PN85

MR EASTON: That's right.

PN86

COMMISSIONER SIMMONDS: And that he ought to have before he came to the conclusion that it was?

PN87

MR EASTON: Indeed, indeed.

PN88

COMMISSIONER SIMMONDS: I understand that part of it.

PN89

MR EASTON: Yes. I don't say that the Commissioner is limited to the submissions of the parties in terms of how he decides the matter, but it's a matter of natural justice that that be the case.

PN90

COMMISSIONER SIMMONDS: Does that go to the jurisdiction issue?

PN91

MR EASTON: It does because his finding as to the contrivance is central to the finding of what happens to the employment contract that he found between Moran and Freedom Kitchens Direct. That is, Commissioner Smith found that there was a contract based on the conversations in May 2004, then he found that the invoicing arrangements were all a mere contrivance and didn't change that relationship and so in my submission, whatever the arrangement might have been in May 2004, it didn't result in there being an employment contract standing even by the time Ms Moran started work, but certainly by the time the alleged dismissal occurred.

PN92

COMMISSIONER SIMMONDS: I am not sure I understand the connection that you're trying to make.

PN93

MR EASTON: Our submission is that the Commissioner was wrong in finding that the conversations in May were a formation of the contract.

PN94

COMMISSIONER SIMMONDS: Yes, I understand that part of it.

PN95

MR EASTON: But we say that even if he was correct about that, that it was the formation of a contract, the subsequent conduct and arrangements between the parties wholly replaced any contract that was formed at that time.

PN96

COMMISSIONER SIMMONDS: I understand that that's your submission, but he came to the view that it was a contrivance that you say he didn't put to you and therefore you didn't get the benefit of natural justice in presenting your case. Now, one might go along with that as an argument and ask so what in the context of the jurisdictional point that you're seeking to make, that you ought to have been given that opportunity and that may be the result, that you be given that opportunity, but not that the jurisdictional point is made.

PN97

MR EASTON: I think I understand your question, Mr Commissioner, that if there's an error of natural justice, that it's not fundamental to the finding of a jurisdictional fact.

PN98

COMMISSIONER SIMMONDS: Well, it may not be.

PN99

MR EASTON: Or may not be and that one avenue to fix that would be to return the matter to Commissioner Smith to allow submissions about contrivance. The first I guess answer to that - - -

PN100

COMMISSIONER SIMMONDS: Or, alternatively, we deal with that issue of whether or not you being on notice, that there is an argument about contrivance, that we deal with that issue as part of the appeal, if we're convinced by your case so far.

PN101

MR EASTON: Let me answer it a couple of ways, if I can, and I am sorry if my answer is a little bit long. The first is that, yes, as the Full Bench on the question of a jurisdictional fact you can simply ignore Commissioner Smith's findings about contrivance or make your own findings about that contrivance and certainly from Commissioner Smith's decision - - -

PN102

COMMISSIONER SIMMONDS: And, indeed, hear your arguments as to why it's not.

PN103

MR EASTON: Yes, yes, I think that's only fair, that that allegation has been made - sorry, not an allegation, that finding has been made by the Commissioner because the issue is raised. However, the second point goes really to how the case was conducted before Commissioner Smith and that is that it was never challenged that the arrangements between KDS and the Enstrom Group were anything other than bona fide arrangements. It was only challenged to the point of there not being a sufficient connection between the two.

PN104

SENIOR DEPUTY PRESIDENT LACY: It was challenged in cross-examination of Mr McEwan, wasn't it? I seem to recall some evidence or cross-examination of Mr McEwan where it was put to him very directly that there was a relationship or a close relationship between KDS and the Enstrom Group.

PN105

MR EASTON: Yes, that's right. It was put to him at length that there was a closeness in the relationship and you could have engaged these people yourself and the like.

PN106

SENIOR DEPUTY PRESIDENT LACY: That's right.

PN107

MR EASTON: But that's a different question. It goes to the - the way it was run by my friend was that that goes to the issue of the connection between the Enstrom Group and KDS. The whole issue of a transaction being a sham for the purposes of Sharrmant's case could never be found on the case that was put by either party. There's a bona fide legal purpose for the transactions and the proceedings below were put on that basis.

PN108

SENIOR DEPUTY PRESIDENT LACY: Just taking up the Commissioner's point, you get your opportunity now to rectify the natural justice point by arguing the point now.

PN109

MR EASTON: Yes, and to some degree what I am indicating to you is that the case below and whilst my friend hasn't had an opportunity to depart from his case below, in my submission he is or Ms Moran is caught by her evidence below as well, nobody is suggesting that any of the arrangements between any of the parties are a sham.

PN110

COMMISSIONER SIMMONDS: Except the Commissioner.

PN111

MR EASTON: Well, he doesn't either.

PN112

COMMISSIONER SIMMONDS: Well, a contrivance. You enter the word sham as though it were the same as a contrivance, but you're happy now to agree that that's not the case? Contrivance is something different from a sham or not?

PN113

MR EASTON: Contrivance is something different to a sham.

PN114

COMMISSIONER SIMMONDS: Okay, so let's leave sham out of it, because he never accused it of being a sham.

PN115

MR EASTON: Yes. Well, if he found it to be a contrivance, in my submission that finding is from a Full Bench point of view unsatisfactory.

PN116

SENIOR DEPUTY PRESIDENT LACY: That's in the same context as it was found to be a contrivance in Donatacci's case which you relied on.

PN117

MR EASTON: Yes, that it doesn't take the matter any further and, in fact, it puts the matter squarely at odds with Fox v Kangan Batman because in Fox v Kangan Batman, the primary consideration is whether there were contractual relations at all and Damevski v Giudice applies - doesn't demur from that - - -

PN118

SENIOR DEPUTY PRESIDENT LACY: Giudice J.

PN119

MR EASTON: Yes, I'm sorry, doesn't demur from that, but expounds upon or gives principles about how one is to consider whether there's a contract between the parties, so in that situation, if it's a contrivance which is not a sham because there was extensive submissions about shams, but only in relation to the connection between Enstrom and KDS, if it's a contrivance, but not a sham, then the contractual relations that were in place ought be found applying Fox v Kangan Batman to find that if there was an employment relationship at all, it was between Ms Moran and Check Lec. It couldn't be any other.

PN120

Applying common law principles of contract, there was no consideration, for example, from Freedom Kitchens Direct to Ms Moran and that's most clearly demonstrated by looking at what Check Lec does with the money. Check Lec doesn't pay the money on to Ms Moran. It takes the money and does with it what it pleases.

PN121

COMMISSIONER SIMMONDS: On the Commissioner's analysis, the contract comes about because of an offer and acceptance and the consideration is the potential payment. Subsequently, they enter into a contrivance for whatever reason that produces the result that you're now describing and you would say that that is the entering of a new contract, whereas the Commissioner says, no, it's not an entering of a new contract, it's a contrivance that the parties entered into to disguise the real relationship that existed between the appellant and the respondent. That's as I understand his argument.

PN122

SENIOR DEPUTY PRESIDENT LACY: That's as I understand it, too.

PN123

MR EASTON: Which equates contrivance with a sham.

PN124

COMMISSIONER SIMMONDS: Well, it may.

PN125

MR EASTON: In my submission, the Commission after hearing extensive submissions about shams and the principles to be applied consciously falls short of finding a sham arrangement and the logical step from there is that the arrangements and the contracts that he was presented with and they're all implied contracts or oral contracts, those contracts that he's presented with could only result in a finding that Ms Moran was an employee of Check Lec and how that affects his first finding is that at best, again applying Fox v Kangan Batman, at best the discussions in May 2004 were an agreement to contract, at best, because no work was performed.

PN126

COMMISSIONER SIMMONDS: That's the usual situation with an employment contract.

PN127

MR EASTON: Yes.

PN128

COMMISSIONER SIMMONDS: It's arrived at before any work is performed, so there's nothing new about that.

PN129

MR EASTON: Yes, but whatever arrangement - - -

PN130

COMMISSIONER SIMMONDS: It's not an agreement to contract. It is the contract.

PN131

MR EASTON: Well, whatever arrangement was put in place didn't actually occur. There's no conduct that would prove a contract of employment. There's no valuable consideration.

PN132

COMMISSIONER SIMMONDS: Well, but for the contrivance. There's all of the evidence that he talks about in terms of practical reality. There's the card, there's the behaviour. Well, conduct is what he talks about and he talks about - I think the phrase was practical reality and I hear your argument about the law of it on one side, but then the law of it is a bit wider than that, isn't it?

PN133

MR EASTON: Well, the law of contract and subsequent variation of contracts in my submission makes it pretty clear that when you look at whether a subsequent arrangement wholly replaced an earlier arrangement, really in the common law context it's subsequent contracts and earlier contracts, then you look at authorities like Alphapharm and Tallerman which say that the central factor is the intention of the parties, whether it's an express intention or an implied intention and whether that intention is to wholly replace the earlier arrangement.

PN134

Now, in this situation, it couldn't be anything but an intention that the arrangements through Check Lec and KDS wholly replaced any employment contract that was in place and I say that in the context of Ms Moran's giving evidence of her knowledge of the industry and that contractors and designers are engaged as contractors, salespeople by her understanding are generally not, they're engaged as employees. There's a discussion and the evidence doesn't get high enough about her discussion with Mr McEwan, Mr McEwan to constitute an offer of employment, but there's a discussion there and then a second discussion where Ms Moran concedes that there was no mention of employment specifically. She just understood that it was a discussion about employment and then after that, Ms Moran sets about a course where she provides the information that contractors provide.

PN135

SENIOR DEPUTY PRESIDENT LACY: At the direction of the putative employer.

PN136

MR EASTON: Well, she is asked to provide an invoice and perhaps I will take you to the significant evidence of what she understands that request to mean and that is - at appeal book 104 - I am sorry, no, I think it's helpful to start at page 100 and then there's quite a section through to the end of page 102 which I respectfully suggest is worth reading in its entirety and I'm sure your Honours and Mr Commissioner don't need me to read two and a half pages of transcript out aloud.

PN137

SENIOR DEPUTY PRESIDENT LACY: No.

PN138

MR EASTON: It might be helpful to pause and allow the members to read that passage from paragraph 991 through to 1016 and then at paragraph 1027 at the top of page 104 I ask:

PN139

Just Salmor, were you a sole trader?

PN140

Answer:

PN141

Yes, that was the only time in my life that I've worked as a contractor.

PN142

Question:

PN143

I see. With an ABN, by 2000 you had an ABN, anyway, for Salmor?

PN144

Answer:

PN145

It was a trading name, yes, and then when GST came in, I would have had an ABN.

PN146

Question:

PN147

Yes, okay, so when you were asked to accelerate your payment because you hadn't been paid for the two weeks or so that you had worked, when you were asked in order to accelerate your payment to complete the contractor details, why didn't you just activate your ABN and use the sole trader, you in a sole trader capacity?

PN148

Answer:

PN149

I didn't have Salmor any more at that stage. I only had Salmor up until the year 2000 when I stopped designing, so I no longer kept that going and that was one thing I did say to Sue on the day that she rang me. I said I haven't got anything like that still set up, but I'll have a talk to Kevin and I did. Kevin is my husband and it was his family trust, so that was the easiest tool to grab to get it running.

PN150

Now, applying the objective test of a party's intention to form a contractual relation based on their conduct viewed objectively, when Ms Moran says at that point I haven't got anything like that still set up, but I'll talk to Kevin, in my submission those words are crucial. By that, it evidences and by the rest of her answer there, it evidences that she is understanding when asked to provide an invoice to engage in a contractual relationship. It could only be that.

PN151

She can explain why Salmor didn't work, but the answer she gives Ms Hasler is that I don't have anything like that set up and then the next thing that occurs in terms of the evidence is that she provides the documentation at appeal book 282 which is all the information relating to Check Lec and it's the same information that Ms Moran requests of other designer contractors when she engaged them. Now, that could only be in my submission found to be an intention to form a contractual relationship between KDS and Check Lec that wholly replaces any employment contract that might have been in place.

PN152

It couldn't do anything else and when you look at then what Check Lec does with the money, you couldn't find that Check Lec or its officers had any intention that its involvement in the arrangement was only as an agent for Ms Moran for her pay, because it only paid her $5000 a year in salary and wages. It used the money most beneficially for Check Lec and there's a particular note from Check Lec's accountant that came unsolicited with the answer to a summons to produce and that's at page 326 in the appeal book.

PN153

It's a letter from Mr Bragg who describes himself at the foot of 327 as financial director, St Kilda Road Communications and that's the trading name, former trading name of Check Lec as I understand it and it's the business that continued operating that Check Lec sold two-thirds of and operates in partnership. That is, I asked Ms Moran some questions about Check Lec and some hand-written financial records for Check Lec and in my submission she confirmed that Check Lec sold two-thirds of its interest in the St Kilda Road Communications business and became a one-third partner in that business and receives distributions from that partnership which can be found in its tax returns.

PN154

That's how St Kilda Road Communications comes into the picture and point three of Mr Bragg's list of documentation has journal entries showing and then the fourth one down, wages to Sally, balance showing as distribution to minimise WorkCover and superannuation obligations. That's one aspect of what Check Lec did with the money that it received from KDS. It then paid Ms Moran $34,000 in superannuation which is a significant improvement tax-wise.

PN155

SENIOR DEPUTY PRESIDENT LACY: Didn't pay it to her, paid it to her benefit with the superannuation fund.

PN156

MR EASTON: Paid it to her benefit, but if Ms Moran had paid $34,000 herself to superannuation, 25 per cent of everything over $5000 would not be tax deductible so there's an advantage there for her plus that money is not as Mr Bragg says subject to WorkCover premiums and the like and so Check Lec uses that money as it will. Now, Ms Moran's evidence about that is that she just never took any interest in those things which in my submission, in the light of her work history, is extraordinary, but if she did and you accept that she just took no interest in that amount and what Check Lec did with the money, well, that would evidence a separation from Ms Moran and KDS or anyone in the Enstrom Group.

PN157

That is, she has in effect abandoned her interest in the remuneration. She's left it over for Check Lec to do with it as it will. She makes comments that she trusts her husband and trusts her accountant and the like, but it's not and couldn't be suggested that Check Lec collected the money and then paid it on to Ms Moran as an agent and you can also note how Check Lec accounts for the money in its accounts.

PN158

SENIOR DEPUTY PRESIDENT LACY: She was previously an employee of Primelife, was it?

PN159

MR EASTON: Yes, she was an employee.

PN160

SENIOR DEPUTY PRESIDENT LACY: Was there any evidence about how she arranged her financial affairs in relation to the payments or the remuneration she received from them?

PN161

MR EASTON: No. I asked her some questions about what her annual salary was with Primelife. The group certificate for the financial year 2004 had Ms Moran earning $50,000 between July 03 and May 04 and I made the point that in total, her salary at Primelife or her remuneration was worth about 55,000 and she was being offered 78,000 plus GST in effect to be engaged to work in whatever capacity it was and I put to Ms Moran that the money was so significantly more, that she was prepared to do whatever arrangement was asked of her in that sense and if the Full Bench accepts that proposition, then it could only conclude that she with knowledge of the consequences accepted that contractual arrangement, but in any event, no, there wasn't evidence about Primelife and any unusual arrangement there in terms of employment, if I could describe it that way. She did indicate that she managed her own tax affairs in relation to Salmor which was the sole trader entity before Primelife.

PN162

SENIOR DEPUTY PRESIDENT LACY: But the way in which she arranged her financial affairs in relation to the remuneration she received from her work really doesn't demonstrate, does it, what the nature of the relationship is between her and the contractor that she's working with?

PN163

MR EASTON: Well, she says that she thought she was an employee of somebody in the Kitchen Group and she says she read her tax return before signing it and then when I took her to some of the details of the tax return, didn't say salary and wages $5000, that's wrong. She said that doesn't look correct.

PN164

SENIOR DEPUTY PRESIDENT O'CALLAGHAN: She did say at a later stage that she relied upon the expertise that developed that particular tax return, rather than questioning it in any way.

PN165

MR EASTON: Yes. Well, that would amount to, as I said earlier, in effect an abandonment of her interest in the amount, but in the context of the whole situation, looked at objectively, you could only conclude that when she signs her tax return, it's consistent with her understanding of the relationships between the parties. Colloquially, it would have rang alarm bells, as would the fact that nobody ever gave her a group certificate, as would the fact after she is signing up a whole range of employees on employment contracts, nobody gave her an employment contract.

PN166

All of those factors in my submission are consistent with an objective intention to wholly replace any employment arrangement either by overt conduct or by passive compliance and she can't claim the ignorance of Mr Damevski in that respect and then in terms of how the case was run below, again kind of coming back to the contrivance issue, Ms Moran didn't depart from any of the prima facie relationships that were formed and, frankly, I can't imagine that she will because if it's found that there's no jurisdiction in the Commission here, one would probably expect Check Lec to sue on the contract with KDS.

PN167

Now, my friend, of course, can denounce that contract and he'll have some different submissions about that, but in the evidence below and the case below, nobody departed from those contracts. The question became whether there was an employment contract with KDS because Ms Moran said I was an employee of KDS and my friend specifically put to Mr McEwan in evidence when you spoke to Ms Moran in May 2004, you made an offer to her by the authority of KDS or words to that effect.

PN168

Mr McEwan denied it, but that was the case that was put and nobody has departed from those arrangements and that is significant in terms of how the matter could be dealt with by the Full Bench in my submission because if the Full Bench was of a mind to return the matter to Commissioner Smith to hear argument about the contrivance point, well, that may re-open the whole evidentiary case which is at odds with the case that was put below.

PN169

SENIOR DEPUTY PRESIDENT LACY: Apart from the natural justice point, do you suggest that there is some aspect of his reasoning where he erred in the contrivance, in finding there was contrivance?

PN170

MR EASTON: Yes. In terms of putting a House v King approach, even though the mark is not as high as that for the appellant. He considered evidence in my submission which was not - well, he made some errors in terms of his findings of fact and then he considered matters that ought not to have been considered, such as the arrangements between - such as Ms Riddock's involvement in the process. Now, there was a Jones v Dunkel inference submitted by my friend and the Commissioner in effect has made that inference from Ms Riddock's non-attendance to give evidence.

PN171

SENIOR DEPUTY PRESIDENT LACY: Well, who did give evidence on behalf of KDS?

PN172

MR EASTON: There were three witnesses, Mr McEwan, Mr Vyagurunatha - - -

PN173

SENIOR DEPUTY PRESIDENT LACY: Mr McEwan said he had no relationship with KDS.

PN174

MR EASTON: Yes.

PN175

SENIOR DEPUTY PRESIDENT LACY: Who else?

PN176

MR EASTON: Mr Vyagurunatha.

PN177

SENIOR DEPUTY PRESIDENT LACY: And he prepares their financial accounts. He's not an employee of KDS, is he?

PN178

MR EASTON: No. That's right, and Ms Hasler who was for some of the relevant period a contractor to KDS and then for another part not. She engaged contractors on behalf of KDS. That evidence is not contested. She gave evidence of her daily contact with Ms Riddock and her daily contact with Ms Moran and somehow, Commissioner Smith places a reliance on a disconnection between Ms Riddock and Ms Moran to be founding of or dispelling of the suggestion that there was a subcontracting arrangement with KDS.

PN179

SENIOR DEPUTY PRESIDENT O'CALLAGHAN: In paragraph 43 of the Commissioner's decision, he refers to the absence of evidence from Ms Riddock, but he does so in the context of this question of the extent to which Ms Moran was an employee of Freedom Kitchens and as such an employee of the Enstrom Group. My reading of the Commissioner's decision in that regard indicates that he concludes that the absence of evidence from Ms Riddock goes to the question of how Ms Moran could or could not be an employee of KDS and are you saying that the Commissioner was in error in taking into account the absence of evidence from Ms Riddock in that respect?

PN180

MR EASTON: Yes.

PN181

SENIOR DEPUTY PRESIDENT O'CALLAGHAN: You'll need to spell that one out for me, because I've missed that point.

PN182

MR EASTON: Well, the evidence, if the evidence of Ms Hasler and Mr McEwan and Ms Moran are accepted, then Ms Riddock's involvement is by way of day to day contact with Ms Hasler and occasion contact with Ms Moran. Now, that doesn't take in my submission the Commission anywhere because the evidence at the time of the engagement of Ms Moran via Check Lec was that Ms Hasler was also a contractor to KDS.

PN183

SENIOR DEPUTY PRESIDENT LACY: Ms Moran said she effectively didn't know who her employer was in that context. It was KDS that was asserting that it was the employer or was the contractor, the contacting party.

PN184

MR EASTON: Yes.

PN185

SENIOR DEPUTY PRESIDENT LACY: Well, wasn't it up to KDS in those circumstances or didn't it carry the onus of proof?

PN186

MR EASTON: No, because KDS wasn't asserting anything. KDS was - it's a difficult form to answer because Ms Moran was alleging employment with Freedom Kitchens and KDS was saying that she's not an employee of anybody, but in effect the form says the closest one that could be an employer is KDS.

PN187

SENIOR DEPUTY PRESIDENT LACY: Who was asserting that? Freedom Kitchens or KDS?

PN188

MR EASTON: Well, Mr Farrell was instructed by both companies. Mr Farrell completes the employer's reply that says at appeal book 16 - - -

PN189

COMMISSIONER SIMMONDS: Was that 16?

PN190

MR EASTON: 16, in answer to question 14:

PN191

Ms Moran was a consultant whose services were supplied by Check Lec Pty Ltd, ABN -

PN192

and it's recited there -

PN193

and as their representative, she was informed -

PN194

sorry, no, that's not the answer I was looking for. The answer I was looking for is in question 4:

PN195

Has the applicant given the employer's correct name?

PN196

The answer is no and then:

PN197

The correct name is Kitchen Design Systems.

PN198

But then that answer is qualified by - there is a qualification and it's just not jumping out at me, I'm afraid. It's qualified in two respects. The answer to question 14 on page 16, the last sentence:

PN199

Ms Moran was not an employee, she was not paid wages. Check Lec Pty Ltd invoiced Kitchen Design for consultancy services.

PN200

I am sorry, that's two sentences and also page 18 of the appeal book, a jurisdictional objection, dated the same day, dated and signed the same day:

PN201

The respondent moves for the dismissal of the application on the following grounds. Ms Moran was not an employee of Kitchen Design Systems Pty Ltd. She was a consultant whose services were provided by Check Lec Pty Ltd.

PN202

SENIOR DEPUTY PRESIDENT LACY: Ms Moran had to prove who the employer was and her contention was that that was Freedom Kitchens and not KDS. She didn't have to prove that KDS was not the employer.

PN203

MR EASTON: Well, the contention when she filed her application was that Freedom Kitchens was, but then she files her evidence, evidencing and describing her relationship with KDS and she does so quite particularly and her counsel as I alluded to you earlier put squarely to Mr McEwan that Mr McEwan was acting on behalf of KDS when he allegedly offered the employment contract, but Ms Moran described in a number of places and I confess I had it highlighted in the proceedings below, but I haven't got it highlighted in my appeal book, in a number of places in exhibit - in her affidavit that starts at page 527, she describes her time at KDS.

PN204

SENIOR DEPUTY PRESIDENT LACY: But it's pretty difficult to come to the conclusion that there was some relationship between Ms Moran or Check Lec and KDS because Mr McEwan in his evidence said he had no control over KDS. He controlled all of the other companies. It was Mr McEwan who first approached Ms Moran and offered her some - or asked her to provide services, to put it in neutral terms. It was Ms Hasler who ultimately had a discussion with her about providing those services and it doesn't appear that there was any contact between KDS and Ms Moran or anyone that was seeing Ms Moran, so how could there be any relationship between Ms Moran and KDS?

PN205

MR EASTON: I am happy with that conclusion because that's exactly our case. There isn't any contract between Ms Moran and any of those companies.

PN206

SENIOR DEPUTY PRESIDENT LACY: I am not putting it that high. I am just saying as far as logic goes, if Ms Moran had no communication or contact with KDS, there could not be a relationship between her and KDS. Do you agree with that?

PN207

MR EASTON: Yes, that's right, that's right. However, her contact with Ms Hasler - if we had to prove anything about a contract with KDS, then her contact with Ms Hasler makes that connection to KDS.

PN208

SENIOR DEPUTY PRESIDENT LACY: Ms Hasler was not working with KDS at that time.

PN209

MR EASTON: Ms Hasler was a contractor to KDS at that time.

PN210

SENIOR DEPUTY PRESIDENT LACY: At the time that Ms Moran was brought on board?

PN211

MR EASTON: Yes.

PN212

SENIOR DEPUTY PRESIDENT LACY: I see. Who was the other person that asked Ms Moran or told Ms Moran she would have to provide some invoices? There was Ms Hasler and another person as well. Who was that, or provided the documentation?

PN213

MR EASTON: There was a reference to - I can't remember her last name, but Karen somebody in the accounts department.

PN214

SENIOR DEPUTY PRESIDENT O'CALLAGHAN: Karen Herbert, I think.

PN215

SENIOR DEPUTY PRESIDENT LACY: Who did she work for?

PN216

MR EASTON: She was an employee of one of the companies in the Enstrom Group that worked in the admin area and I asked Ms Moran some questions about her in terms of Ms Moran's understanding of the division of work in the admin area, where Ms Herbert dealt with contractors and another lady dealt with the employees in terms of payroll type problems and when Ms Moran had a problem, she went to Ms Herbert and I put that to her to be further consistent conduct of an understanding that she was a contractor.

PN217

SENIOR DEPUTY PRESIDENT O'CALLAGHAN: Was there any evidence as to specifically which group Ms Herbert worked for?

PN218

MR EASTON: On my way to finding that, I will indicate that at appeal book 282, the fax that was sent by Ms Moran to set up the Check Lec arrangement was to Ms Herbert.

PN219

SENIOR DEPUTY PRESIDENT O'CALLAGHAN: But that doesn't identify for whom Ms Herbert worked or was contracted to.

PN220

MR EASTON: No, it doesn't, and as I say, I was on my way to finding that for you because I suspect that Mr Vyagurunatha was asked about that in cross-examination and that cross-examination starts at appeal book 79. For some reason, my laptop hasn't started up so I could do a word search of the transcript to find that and it's not jumping out at me.

PN221

SENIOR DEPUTY PRESIDENT O'CALLAGHAN: You could come back to us on it later.

PN222

MR EASTON: Yes, I could certainly do that.

PN223

SENIOR DEPUTY PRESIDENT O'CALLAGHAN: I will rely on your memory to do that.

PN224

MR EASTON: Well, my wife certainly doesn't any more, but I will endeavour to come back to you. I am sure there was cross-examination about what Mr Vyagurunatha's subordinates did and who they were employed by, so I will find that reference.

PN225

SENIOR DEPUTY PRESIDENT LACY: The facts of this matter seem to have some similarity to the facts of the matter before Ryan J in the Textile and Footwear case, the Bellhop case.

PN226

MR EASTON: I must confess I - - -

PN227

SENIOR DEPUTY PRESIDENT LACY: Well, there was a case in which there were a number of companies with the one director and there had been a number of changes in the way in which the companies actually determined who the employees were employed by and at the end of the day, his Honour said that it didn't really matter identifying who the employer was, given that the one person controlled all of the companies and whichever was the company that the applicant said it was was the company that he relied on.

PN228

MR EASTON: Well, in terms of who Ms Herbert might be employed by, I would suggest that that analysis was apposite in that she was an employee of one of the companies in the Enstrom Group, but in looking at KDS, it's an entirely different situation. KDS isn't controlled or owned or any of the kind by Mr McEwan or anyone else that has an interest in the Enstrom Group companies.

PN229

SENIOR DEPUTY PRESIDENT O'CALLAGHAN: But if I took you from there back to that paragraph 43 in Commissioner Smith's decision, is it the case that what you're putting to us is that the Commissioner was confronted with a dispute over the corporate entity with whom Ms Moran had contracted and that in the absence of any evidence from Ms Riddock, he was not entitled to assume that the KDS Group had failed to establish that it was in effect the contracting party? Forgive me if I've asked the question in a complicated way. What you appear to be saying is that the Commissioner was in error in drawing a Jones v Dunkel inference from the absence of evidence from Ms Riddock and, furthermore, that that was the case because there was no obligation on KDS to establish that it was or wasn't the contracting party.

PN230

MR EASTON: Well, there's two reasons why the Jones v Dunkel inference ought not have been implied. The first is that nothing arose that Ms Riddock ought to have needed to answer, in the same way that a director of a large company isn't required to give evidence in proceedings about its company or her company just by the fact that they're a director. It comes down to then, well, are there matters that can be inferred against Ms Riddock that can be more readily inferred by her absence to give evidence. Now, no such matters arise.

PN231

COMMISSIONER SIMMONDS: Well, aren't there a series of matters in 43?

PN232

MR EASTON: Well, they're issues - - -

PN233

COMMISSIONER SIMMONDS: The title and day to day duties being consistent with being an employee of a company within Enstrom Group, that's one, subject to the total direction of Ms Hasler who was an employee of Sydney Kitchen Group, appeared to work across the Enstrom Group, that's two. She had little or no contact with the owner of KDS, Ms Riddock, that's three and
Ms Riddock never exercised any interest or involvement in the duties of Ms Moran, that's four. There are four findings, direct findings and then he says that in view of Ms Riddock's complete absence of the proceedings -

PN234

I infer that her evidence would not have assisted the respondent in its case.

PN235

In other words, there's nothing countering that coming forward and the absence of Riddock wouldn't have assisted.

PN236

MR EASTON: Well, the four - I should have written the numbers down as you've adverted to in the four. Two of the four don't arise against Ms Riddock.

PN237

COMMISSIONER SIMMONDS: Yes, I agree with that. There's one that she doesn't exercise any interest and there was little or no contact.

PN238

MR EASTON: Yes. Well, they're not disputed. Ms Hasler would agree with that. I didn't put anything to the contrary to Ms Moran.

PN239

COMMISSIONER SIMMONDS: So those findings aren't disputed?

PN240

MR EASTON: The two findings in relation to Ms Riddock didn't have an interest in the day to day conduct of Ms Moran and the last one - - -

PN241

COMMISSIONER SIMMONDS: I thought you were disputing them. They went to the extent that you were saying that in some way Hasler was the personification of Riddock.

PN242

MR EASTON: Yes, that's right.

PN243

COMMISSIONER SIMMONDS: Well, that is disputed, isn't it?

PN244

MR EASTON: No, I shouldn't say that. Hasler is not the personification of Riddock. Hasler is the personification of KDS.

PN245

COMMISSIONER SIMMONDS: Well, Riddock is KDS. I think the evidence is that Riddock is KDS. She's the sole director and sole employee.

PN246

MR EASTON: That doesn't follow.

PN247

SENIOR DEPUTY PRESIDENT LACY: Why not?

PN248

MR EASTON: Just because somebody is the director and a shareholder of a company - - -

PN249

COMMISSIONER SIMMONDS: And sole employee.

PN250

MR EASTON: Yes, and the company engages between 40 and 60 contractors at any one time.

PN251

SENIOR DEPUTY PRESIDENT LACY: And what evidence is there that there was an agency relationship between KDS and Ms Hasler, apart that they had a contract? There was no disclosure of agency, was there?

PN252

MR EASTON: There was no evidence of a contract between Ms Hasler and KDS. Ms Hasler says she by a partnership with her husband contracted to KDS. There was no as I recall contest of that arrangement as to its bona fides.

PN253

COMMISSIONER SIMMONDS: That was prior to - - -

PN254

MR EASTON: No, that was at the time that Ms Moran was engaged.

PN255

COMMISSIONER SIMMONDS: Yes, at the time she was engaged, but not while she was - I thought I understood you to say earlier that at the point of the discussion between Hasler and Moran about employment, should I say engagement, at that point Hasler was a contractor to KDS.

PN256

MR EASTON: Yes.

PN257

COMMISSIONER SIMMONDS: But subsequent to Moran commencing work away from Primelife, subsequent to her, Hasler was an employee of Enstrom, one of the Enstrom companies.

PN258

MR EASTON: Yes, April 2005 or thereabouts.

PN259

COMMISSIONER SIMMONDS: Had no contractual relationship with KDS.

PN260

MR EASTON: Yes.

PN261

COMMISSIONER SIMMONDS: So at the time - - -

PN262

MR EASTON: Personally had no contractual relationship with KDS, that's right.

PN263

COMMISSIONER SIMMONDS: So at the time that she was you say doing something on behalf of KDS vis a vis Moran, she had no contractual relationship with KDS.

PN264

MR EASTON: No, no, in the May 2004 discussions - - -

PN265

COMMISSIONER SIMMONDS: No, I am not talking about May 2004. I use the word personification, you took a problem with that and that's fair enough, I understand that, but then his Honour raised the question of agency and we ran into the problem there. Now, we're talking about the period after Moran commences working for someone other than Primelife. In that period, Hasler is not a contractor to or employee of KDS.

PN266

MR EASTON: For the whole of that period, she's not.

PN267

COMMISSIONER SIMMONDS: But what do you say the relationship between Hasler and KDS is when you say that somehow she was doing something vis a vis Moran on behalf of Riddock?

PN268

MR EASTON: That she was authorised to offer contracts with KDS. I am sorry, that doesn't quite answer your question. If I could come back to it another way.

PN269

COMMISSIONER SIMMONDS: It's talking about a different thing altogether.

PN270

MR EASTON: Yes, I am sorry. The relationship in May 2004 all the way through I think to April 2005, so there's some nine months of overlap, was that Ms Hasler was in a partnership with her husband that contracted to KDS and by the terms of that arrangement and there's no evidence as to whether that contract between the partnership and KDS was in writing and it certainly wasn't called for in terms of the document wasn't called for. I am not suggesting anything of inappropriateness. She as a partner in that partnership offered contracts on behalf of KDS and that is necessarily inferred from her conduct. The evidence is that all of the arrangements, all of these relevant arrangements between KDS and companies in the Enstrom Group are all oral agreements. There's no formal - - -

PN271

COMMISSIONER SIMMONDS: So that takes us through to May 2005.

PN272

MR EASTON: Yes.

PN273

COMMISSIONER SIMMONDS: Do you say there was any relationship between Riddock and Moran via Hasler after May 2005?

PN274

MR EASTON: Yes, because Hasler continued to - well, between Riddock and Moran and Hasler, the evidence is that Hasler spoke to each on a day to day basis and the finding of fact that Commissioner Smith makes is that Riddock doesn't take an interest in the day to day affairs of Ms Moran and if it were a House v King type appeal, that finding is open to it, but that finding doesn't carry anything, carry any weight in consideration of whether there's a contract between KDS
and - - -

PN275

COMMISSIONER SIMMONDS: I understand that. I was simply dealing with the proposition in 43 or the series of propositions in 43 and we went through them in the context of the Jones v Dunkel and it may not have been necessary for him to - in terms of the first two, she's got nothing, Riddock has got nothing to bring to the findings.

PN276

MR EASTON: Yes.

PN277

COMMISSIONER SIMMONDS: And in regard to the latter two, there's probably no need for him to come to the Jones v Dunkel inference, anyhow, because you concede them, I think.

PN278

SENIOR DEPUTY PRESIDENT LACY: You conceded those two points, yes.

PN279

MR EASTON: Well, the two propositions that are there, that's right, he's found those and on House v King principles, they were open to him to find.

PN280

COMMISSIONER SIMMONDS: And the Jones v Dunkel to the extent that he relies on Jones v Dunkel, it was probably otiose, because it could only be an inference in regard to those two points, I think.

PN281

MR EASTON: Well, if his reference to Jones v Dunkel is only to - is read to be only to the final two findings against Riddock, well, it's either otiose or harmless.

PN282

COMMISSIONER SIMMONDS: And the other two findings seem to me to be beyond argument as well.

PN283

MR EASTON: Which? The first two?

PN284

COMMISSIONER SIMMONDS: That she was - - -

PN285

SENIOR DEPUTY PRESIDENT LACY: Subject to total direction by Ms Hasler.

PN286

COMMISSIONER SIMMONDS: She had a title that was consistent with being an employee and she's subject to the total direction of Ms Hasler.

PN287

MR EASTON: We don't concede that point, that she's entitled to - sorry, that she was at the total direction of Ms Hasler. She came to us with management experience and experience in the kitchen industry and exercised skills and management functions.

PN288

COMMISSIONER SIMMONDS: But wasn't there a duty statement that showed that that was the case?

PN289

MR EASTON: Well, the duty statement is contested as to whether it precisely applied to her. Ms Hasler says that document was not - - -

PN290

SENIOR DEPUTY PRESIDENT LACY: Some other person's position.

PN291

MR EASTON: It was some other person's, but was similar to Ms Moran's.

PN292

COMMISSIONER SIMMONDS: That document, sorry, I must have missed that. There was an email attaching a document and the email makes it clear that the attached document did apply to her, but you say that the attached document wasn't the document that was attached to the original email?

PN293

MR EASTON: That's right. Ms Hasler says the document - well, actually, no. Ms Hasler is asked about it at AB66, starting at 568 and the appeal book reference to the document that my friend has taken her to is at 574 which was an email that starts, to save the members of the bench looking it up, it starts:

PN294

As previously advised, new designers are to have one appointment each per day.

PN295

COMMISSIONER SIMMONDS: That's not the one to which I was referring. There's an email that comes with the job description - sorry, it struck me it came with the job description and I can't find it now. It's at page 556.

PN296

MR EASTON: Yes, SM7.

PN297

COMMISSIONER SIMMONDS: Appeal book page 556.

PN298

MR EASTON: Yes, that was annexure SM7. I am trying to back track through the transcript as to where she was asked about SM7.

PN299

COMMISSIONER SIMMONDS: I just thought it spoke for itself.

PN300

MR EASTON: It's a range of functions, yes.

PN301

COMMISSIONER SIMMONDS: No, but who is the group retail sales manager?

PN302

MR EASTON: Sorry?

PN303

COMMISSIONER SIMMONDS: Who is the group retail sales manager? I took it that that was Ms Hasler, but I might be wrong.

PN304

MR EASTON: Well, in effect, in that context nobody, because when you look at page 556 it says:

PN305

Please find attached job description for you and also area managers.

PN306

And my recollection is that Ms Moran says she was supervising the area managers.

PN307

SENIOR DEPUTY PRESIDENT LACY: She's asked about - Ms Hasler was asked about the document I think at paragraph number 694, AB75.

PN308

MR EASTON: Yes, she says that it didn't apply to her. I think she concedes that it was very similar.

PN309

SENIOR DEPUTY PRESIDENT LACY: It was prepared for a person by the name of Lyn Smith, she said.

PN310

COMMISSIONER SIMMONDS: Well, that answers the question I asked, that is that email is not referring to that document.

PN311

MR EASTON: Yes. Well, wherever the document came from, it was either the attachment to the email and it's not the right document or it wasn't the attachment to the email, but either way, Ms Hasler says it wasn't the document that related to Ms Moran.

PN312

COMMISSIONER SIMMONDS: Yes, I understand that, but then on its face it
is -

PN313

job description for you and also area managers.

PN314

MR EASTON: Well, yes, except that - - -

PN315

COMMISSIONER SIMMONDS: Let's just get it straight. Do we know who the group retail sales manager is, if it's anyone?

PN316

MR EASTON: I don't think I can assist there, just because if it was discussed in evidence, I don't recall it.

PN317

COMMISSIONER SIMMONDS: But, anyhow, you say that it wasn't open to the Commissioner below at paragraph 43 to come to the conclusion that Moran was subject to the day to day - - -

PN318

MR EASTON: Well, he should never have got to that point.

PN319

COMMISSIONER SIMMONDS: Sorry, not day to day, subject to the total direction of Ms Hasler.

PN320

MR EASTON: Well, yes. He should never have got to that point because the proceedings should have stopped or the - - -

PN321

COMMISSIONER SIMMONDS: I understand you say that. The proceedings didn't stop and if we're against you on that earlier part, what is your position about that?

PN322

MR EASTON: In terms of her function and duties?

PN323

COMMISSIONER SIMMONDS: That she was subject to the total direction of Ms Hasler.

PN324

MR EASTON: It's not conceded and I don't recall whether that was ever put to Ms Hasler, that Ms Hasler has the day to day control.

PN325

COMMISSIONER SIMMONDS: It's not day to day, it's total direction of.

PN326

MR EASTON: Yes, okay. I don't think that was put to Ms Hasler, but I could well be corrected by that.

PN327

SENIOR DEPUTY PRESIDENT LACY: I think it was put to Mr McEwan, wasn't it?

PN328

MR EASTON: It was certainly put to Mr McEwan that, well, you control Ms Hasler and Ms Hasler controls Ms Moran, so therefore you control Ms Moran and Mr McEwan didn't accept that proposition and in my submission properly so, but the Commissioner in my submission has erred in equating KDS with Riddock and to the extent that his Jones v Dunkel inference goes beyond the final two points of paragraph 43 that we're talking about, he's erred.

PN329

SENIOR DEPUTY PRESIDENT LACY: I don't understand why you say he has erred in equating KDS with Ms Riddock, when Ms Riddock is the sole director and sole employee of KDS.

PN330

MR EASTON: Yes, and there's evidence - - -

PN331

SENIOR DEPUTY PRESIDENT LACY: I know about the corporate veil and all of that, but, I mean, it just seems ridiculous to say that they can't be equated when that is the situation, when that is the fact.

PN332

MR EASTON: But there's evidence of Ms Riddock's activities in the organisation, there's evidence of KDS engaging 60 contractors, up to 60 contractors I think was the highest figure that Mr Vyagurunatha talks about. There's evidence of KDS engaging in software development and the like and software training and things with designers.

PN333

SENIOR DEPUTY PRESIDENT LACY: But let's take your point about contractors. I mean, even if any of the contractors were directing Ms Moran or having any control over Ms Moran, that would not necessarily equate to KDS unless you could establish an agency between KDS and the contractor. The contractor would be operating in their own right as an independent contractor.

PN334

MR EASTON: Well, it's not been put that Ms Hasler acted beyond her authority in that sense. It wasn't put to Ms Hasler, well, even though you're a contractor of KDS, you couldn't offer anything to Ms Moran or Check Lec.

PN335

SENIOR DEPUTY PRESIDENT LACY: There doesn't have to be, does there? It's a question of law whether or not there is an agency established between Ms Hasler and KDS.

PN336

MR EASTON: But the agency is comfortably implied in the situation in the context of the whole factual matter in the same way that it can be comfortably implied that when Ms Moran engaged contractors on behalf of KDS, she did so with authority, the same as Ms Hasler. Mr McEwan says he doesn't have that authority, Ms Hasler did, so after he had spoken to Ms Moran, he put her on to Ms Hasler, but there's no suggestion that Ms Hasler when discussing matters with Ms Moran in 2004, in May 2004 or any time afterwards, even after her contractual arrangements changed in April or May 2005, there's no suggestion at all that she acted beyond any authority she had and the authority she had can be readily implied from the conduct of the parties and what was permitted to occur. It couldn't be anything else and it was never alleged to be a sham.

PN337

The Commissioner erred in his reasoning as to why Freedom Kitchens Direct was the employer. He appears to base that on the fact that when Ms Moran spoke to Mr McEwan and Ms Hasler, they were talking about the development of the Freedom Kitchens Direct business in Victoria. That seems to be the touch point that the Commissioner makes as to who is a contracting party there and that's at paragraph 35:

PN338

In this case, there was no written contract. The arrangement pursuant to which Ms Moran performed work following her resignation from Primelife was wholly oral, namely the conversations between Mr McEwan and Ms Hasler on the one hand and Ms Moran on the other.

PN339

Now, that finding is in error in light of the contractual arrangements that we say replaced it, which is a whole other issue that we've discussed in part, but then he says:

PN340

On the evidence before me, I am satisfied that a contract was formed when Ms Moran was informed that she "had the job." I am satisfied that the parties to that contract were Ms Moran and Freedom Kitchens. In particular, I am satisfied that both Mr McEwan and Ms Hasler conveyed through the things they said during the discussion that led to Ms Moran being told that she "had the job," that they were representing Freedom Kitchens and that Ms Moran would be working in the business conducted by that company. This is consistent with and corroborated by the business cards subsequently provided to Ms Moran.

PN341

Now, the basis of that conclusion seems to be because when the parties met, they were talking about Freedom Kitchens Direct and growing that business in Victoria. Now, that finding is erroneous in the light of the rest of the facts of the matter and it's akin to someone applying for work at IBM to go and service a bank for an IT contract and if they get someone who's got experience relevant to the particular bank that they're going to and they hire them, that it's consistent with an intention that the contract would be between the worker and the bank.

PN342

It doesn't help the findings of fact at all, the fact that what they were talking about was the growth of the Freedom Kitchens Direct business in this context, the context being some people are employed by companies in the Enstrom Group and some were engaged on a contracting basis, so already in Ms Moran's mind is the existence of other contracting arrangements which wouldn't automatically therefore lead to a contract with Freedom Kitchens Direct, but also, just because they were talking about that particular, for want of a better term, shop front doesn't make it a binding contract with Freedom Kitchens Direct. It's a leap of logic that the Commission wasn't entitled to make in that sense. Now, that has enormous significance to the 100 plus employees question, the finding that it witness Freedom Kitchens Direct, not any other entity and that - - -

PN343

SENIOR DEPUTY PRESIDENT LACY: It only has implications if we could be satisfied that KDS was the actual employer, because all of the other companies are part of the group.

PN344

MR EASTON: Yes. Well, you might find that there's a company within the group that employed her, but you would have to leap over the evidence that the contractual arrangements were with KDS.

PN345

SENIOR DEPUTY PRESIDENT LACY: Well, you call them contractual arrangements. The arrangements - - -

PN346

COMMISSIONER SIMMONDS: The arrangements subsequent to - I mean, where it seems to me that the point of difference is, do you say that what happened on 12 May didn't happen as the Commissioner has found or do you say it was subsequently - if it was that way, it was subsequently altered by the conduct of the parties?

PN347

MR EASTON: Yes and yes. That's right. It didn't happen to form a contract, a binding contract at that time. A contract of employment that had a separate existence - - -

PN348

SENIOR DEPUTY PRESIDENT LACY: Are you saying that it was an offer to treat?

PN349

MR EASTON: It was an offer to contract. In Fox v Kangan Batman they apply the same rationale and there's a similar decision of the New South Wales Supreme Court in a matter involving Graham Murray who was a football coach in England and I've forgotten the surname of the liquidator of the North Sydney Leagues Club, but the case was where in the February of one year, Mr Murray signed a contract to coach for the next year and then the contract said we'll enter into a written contract of employment for it. Before that written contract of employment was executed, the club went into liquidation and Hayden J found that if there was any contract at all, it was only an agreement to contract, it wasn't an employment contract of itself and that's where the relevance would stop.

PN350

COMMISSIONER SIMMONDS: So why do you say that's the case here?

PN351

MR EASTON: We're saying that there was no contract of employment formed on 12 May at all. If it was - that's our primary submission. There's no evidence to say that there's a contract of employment formed between Freedom Kitchens Direct and Ms Moran on 12 May.

PN352

COMMISSIONER SIMMONDS: When was she informed that she "had the job?" I am looking at paragraph 55.

PN353

MR EASTON: Thereabouts on those dates.

PN354

COMMISSIONER SIMMONDS: That is more than an offer.

PN355

MR EASTON: Okay, it wasn't said to her "you have the job," according to Ms Moran. She doesn't share that account of the meeting with Ms Hasler.

PN356

COMMISSIONER SIMMONDS: Where does he get that from? There's no evidence to support that proposition, is there?

PN357

MR EASTON: I was going to say maybe Mr McEwan said it, but I don't think he did, because he simply referred her on to Ms Hasler and Ms Moran says of that conversation - - -

PN358

COMMISSIONER SIMMONDS: Well, what he says at paragraph 30:

PN359

The key conversations with Ms Hasler were said to be -

PN360

and it's the fourth dot point:

PN361

the discussion on or about 12 May where it was the evidence of Ms Moran that Ms Hasler said that she "had the job."

PN362

MR EASTON: Yes. Well, I can't recall whether Ms Hasler said that she said that, that Ms Moran specifically said she didn't. Ms Moran said that Ms Hasler specifically didn't say that and the reference - - -

PN363

SENIOR DEPUTY PRESIDENT LACY: That finding of the Commissioner in paragraph 30, the last dot point, the discussion on or about 12 May where it was the evidence of Ms Moran that Ms Hasler said that she had the job. You say that that was never the evidence of Ms Moran?

PN364

MR EASTON: Well, Ms Moran in cross-examination said the opposite to that.

PN365

SENIOR DEPUTY PRESIDENT O'CALLAGHAN: Is it not the case that the debate here is over the description of whether there was a job offer or the offer was that to have been a contractual arrangement, because the questions that you put to Ms Hasler or that were put to Ms Hasler at paragraph 584, page 67 of the appeal book, seem to go to the proposition that Ms Moran was told that in some sense she was employed. Ms Hasler seems to disagree with that and talk about her being offered a role that was a contractually based role.

PN366

MR EASTON: Yes, that was my friend's cross-examination of Ms Hasler.

PN367

SENIOR DEPUTY PRESIDENT O'CALLAGHAN: Is that where the confusion in relation to this particular issue arises and, if so, how does that go to the suggestion that Commissioner Smith's decision at paragraph 35 and, indeed, paragraph 30 is in error?

PN368

MR EASTON: Well, that sequence that you're referring to is where it's put to - where Ms Hasler's evidence about the conversations is tested by my friend and Ms Hasler's evidence says that the conversations were made on the basis or on the assumption of it being a contractor arrangement and my friend challenges that in that sequence of Ms Hasler's evidence. The passage that I have now found and was thinking of earlier in relation to Ms Moran's evidence was at appeal book 114.

PN369

SENIOR DEPUTY PRESIDENT LACY: Yes, over to 115.

PN370

MR EASTON: Over to 115, starting at 1104.

PN371

SENIOR DEPUTY PRESIDENT LACY: Well, it's there that she says in cross-examination that Ms Hasler said that I had the job:

PN372

She then said that I had the job.

PN373

This is on the top of AB115.

PN374

MR EASTON: Well, that would have to be read as a whole, that paragraph, because she specifically says at the start of the answer:

PN375

She didn't actually say I had the job then.

PN376

And my question relates to the whole conversation, not just the end of it.

PN377

SENIOR DEPUTY PRESIDENT LACY: But she used those words. She says Ms Hasler said - she says she spoke - - -

PN378

MR EASTON: The first sentence of her answer says:

PN379

She didn't actually say I had the job then, no.

PN380

COMMISSIONER SIMMONDS: But read the whole paragraph. It talks about:

PN381

It was after I had completed the analysis that she then said that I had the job.

PN382

MR EASTON: Well, she - - -

PN383

COMMISSIONER SIMMONDS: Well, the words - - -

PN384

MR EASTON: No, it continues, it continues then, 1108:

PN385

Can I take it that you agree with my question that there was never a specific discussion about you working as an employee?

PN386

Answer:

PN387

No, I wouldn't agree with that. I mean, all the terms we were using, all the understanding was that I was coming on board or potentially coming on board as an employee.

PN388

Question:

PN389

You see, your evidence, if I understand your answer, your evidence is the unspoken understanding when you discussed these functions and the amount of remuneration and things, the unspoken understanding was that you were to be an employee.

PN390

Answer:

PN391

No, I didn't see it as being that way.

PN392

But you don't say that there was any specific statement by Ms Hasler that says you can come and work as an employee, do you? You don't say that she ever said that?

PN393

Answer:

PN394

I can't honestly say that I remember the word employee being used.

PN395

And the answer continues about:

PN396

We were talking about her working.

PN397

COMMISSIONER SIMMONDS: So you say that the Commissioner is in error in forming a conclusion from paragraph 1105, that whole discussion there that she was told she had the job.

PN398

MR EASTON: It's against Ms Hasler's specific evidence, that's my submission that the words - - -

PN399

COMMISSIONER SIMMONDS: I understand that and he obviously said he prefers Ms Moran's evidence to Ms Hasler's. I thought you were saying earlier that Ms Moran had specifically said that she was never told she had the job.

PN400

MR EASTON: No, I guess I am being over cautious about the words in that sense and I heard your question perhaps wrongly. The evidence from Ms Moran is the words you have the job were not specifically said. They're the words that are quoted by Commissioner Smith. There's a discussion there - - -

PN401

COMMISSIONER SIMMONDS: So he made an error in concluding that she had said - Moran said that she had the job, that Hasler said, sorry?

PN402

MR EASTON: Yes, at the conclusion of the discussion with Ms Hasler, events take their course where Ms Moran - - -

PN403

COMMISSIONER SIMMONDS: Yes, I understand that and you'll recall when I was questioning you, the introduction of my question was that we've got two steps and I understood you to be saying that at no time was there agreement at that 11 May or 12 May that there was an offer and acceptance and all the other considerations and considerations of fact because there was talk about salary and so on.

PN404

MR EASTON: Perhaps I can put it colloquially to address what I think you're asking. After that meeting, there was an agreement for her to come on board. If that's the essence of your question, then I think the evidence bears that out, because after that meeting she resigns her employment at Primelife and then other things happen, so I'm not suggesting at that point that she resigned her employment at Primelife - - -

PN405

SENIOR DEPUTY PRESIDENT LACY: Without having a contractual relationship.

PN406

MR EASTON: Well, without having received an offer.

PN407

SENIOR DEPUTY PRESIDENT LACY: Well, it would have to be more than an offer, wouldn't it? I mean, surely you wouldn't give up a salaried job on the basis of a promise of a contract.

PN408

MR EASTON: Well, that's what people do every day and that's what Hayden J would say Mr Murray did.

PN409

SENIOR DEPUTY PRESIDENT LACY: No, Mr Murray was in a different situation, wasn't he?

PN410

MR EASTON: Well, all he had by his first written agreement was an agreement to agree.

PN411

SENIOR DEPUTY PRESIDENT LACY: Yes, but we're not talking about written agreements here.

PN412

COMMISSIONER SIMMONDS: We're not talking about a written agreement. We're talking about what normally happens out there as a matter of practical reality in the formation of employment contracts all the time and it seems to me that what you're saying is until the person actually starts work, there's no employment contract. I just don't think that that's the law. You've got offer and acceptance, you've got consideration and consideration of 78,000-plus. It doesn't actually have to be paid, it's there and you've got acceptance which is at least implicit - sorry, at least can be inferred from the fact that Ms Moran resigns her previous employment.

PN413

MR EASTON: Yes. In my submission, there isn't by the evidence of the discussions in the May 04, there isn't sufficient basis for Commissioner Smith to find that there was a contract by which Freedom Kitchens Direct is bound.

PN414

COMMISSIONER SIMMONDS: I understand that's - - -

PN415

MR EASTON: That's a sub-point of what you're saying. In general terms, what happens in the community, I think I accept your characterisation. People are offered jobs, there's a time before they start and then ordinarily they're going to start their employment, do work and receive wages for it.

PN416

COMMISSIONER SIMMONDS: So which bit is missing as far as you're concerned in respect of - I mean, his finding at - we were talking about it before, but at 35, I can understand that there may be a dispute as to whether it's Freedom Kitchens, to use that word or KDS, I understand that dispute and it's certainly your argument that if there was a contractual arrangement arrived at on that date and you deny that there was, it must have been with KDS, it couldn't have been with Kitchen Design. Am I understanding you so far?

PN417

MR EASTON: I think that is - - -

PN418

COMMISSIONER SIMMONDS: Now, you would also say that there was no contract formed on that day with KDS. Is that your position?

PN419

MR EASTON: At that point, there's only an offer to contract per Fox v Kangan Batman.

PN420

COMMISSIONER SIMMONDS: So when was that offer accepted?

PN421

MR EASTON: Well, there and then. No, no, sorry. No, I am sorry, I've used the wrong terminology. At that point there was an agreement to contract. I am sorry to confuse the answer there, in the same way that - - -

PN422

COMMISSIONER SIMMONDS: So which bit of - you see, he talks about the key conversations, we've got a meeting at Moore Park shopping centre where the evidence of Moran is that Hasler asked if a salary of 78,000 plus bonuses and working and so on was okay, Moran agreed, that's okay, and understands that there's no - they're discussions prior to the reaching of a contract. There was a discussion on 11 May where she required her to do an online personality test and that was apparently done and then there was a discussion on 12 May where she said that she had the job. Now, he seems to have accepted all of that evidence.

PN423

MR EASTON: Yes.

PN424

COMMISSIONER SIMMONDS: And then we have Mrs Moran resigning her prior employment.

PN425

MR EASTON: Yes.

PN426

SENIOR DEPUTY PRESIDENT LACY: On the same day, on 12 May.

PN427

COMMISSIONER SIMMONDS: On the same day.

PN428

MR EASTON: Yes.

PN429

COMMISSIONER SIMMONDS: The inference being that she accepted the offer.

PN430

MR EASTON: Yes.

PN431

COMMISSIONER SIMMONDS: Now, why is that an agreement to contract rather than a contract?

PN432

MR EASTON: Because it never resulted in an employment contract actually commencing because the elements of - no, because the elements of the contract of employment, common law principles, aren't present, what's missing, for consideration.

PN433

COMMISSIONER SIMMONDS: Yes, consideration - - -

PN434

MR EASTON: No, no. Actual consideration.

PN435

COMMISSIONER SIMMONDS: It doesn't have to be actual consideration. The promise of consideration is sufficient, consideration, on my understanding of contract law.

PN436

MR EASTON: Well, that would make the - to make the agreement to agree, or the contract to agree.

PN437

COMMISSIONER SIMMONDS: The promise of consideration is sufficient consideration.

PN438

MR EASTON: At the commencement of the contract but if no consideration is actually made in accordance with the contract - - -

PN439

SENIOR DEPUTY PRESIDENT LACY: Why couldn't Ms Moran, if, for example, after 12 May someone in the interim - ADS said, well, look, we've decided we're not going to take you on, why couldn't Ms Moran sue on that agreement?

PN440

MR EASTON: If she, like Mr Murray, was to sue she could only recover for the agreement to contract at that point and relevantly which is a matter that hasn't especially come up in this jurisdiction.

PN441

COMMISSIONER SIMMONDS: What more could be done to make it matter? What more was necessary?

PN442

MR EASTON: That it actually be performed.

PN443

COMMISSIONER SIMMONDS: So, that's where we're at odds, because I think you agreed with me before an employment contract had come into existence before a person actually commenced work.

PN444

MR EASTON: Yes. Perhaps - - -

PN445

COMMISSIONER SIMMONDS: Now you're saying that - I don't want to get into an argument about it.

PN446

MR EASTON: Perhaps I ought to explain how I suspect I'm mis-communicating with you. The question of jurisdiction is whether there's a contract of employment with Freedom Kitchens Direct and whether that contract was terminated in July '06 or whatever it was that Mrs Moran was allegedly dismissed. Whether there was a contract that had some independent - a contract of employment that at that point that had some independent enforceability, it wasn't a contract of employment such as to bring her within the jurisdiction of the Commission in June or July '06.

PN447

COMMISSIONER SIMMONDS: I understand those arguments. I understood you to be saying that at - and I hesitate to take it any further - - -

PN448

MR EASTON: Perhaps - - -

PN449

COMMISSIONER SIMMONDS: As at 12 May there was no contract.

PN450

MR EASTON: Well, perhaps if I could add one more sentence there? If on 13 May Ms Hasler said, we don't want you any more, in my submission there's no dismissal that would have founded the jurisdiction of the Commission.

PN451

COMMISSIONER SIMMONDS: For a variety of reasons, not the least of which is the qualifying period hadn't been met.

PN452

MR EASTON: Forgetting all those exceptions.

PN453

SENIOR DEPUTY PRESIDENT LACY: There's no reason why Ms Moran or Mrs Moran couldn't have sued on contract at common law if that had have been the case, on 13 May Ms Hasler said to her, we've decided we don't want you.

PN454

MR EASTON: Quite possibly, that's right, but he wouldn't have founded the jurisdiction even at that point.

PN455

SENIOR DEPUTY PRESIDENT LACY: No.

PN456

MR EASTON: Which, and I suspect I haven't been clear about this, is a slightly different point to the whole variation of the contract point to the subsequent - - -

PN457

COMMISSIONER SIMMONDS: I understand all those bits.

PN458

MR EASTON: Right.

PN459

COMMISSIONER SIMMONDS: So, if I can summarise where we've got to. You disagree that there was a contract found on 12 May and we can have
that - and I understand your argument there, but you say even if there was such a contract there, it was either replaced or varied by subsequent conduct and it was never with Freedom Kitchens, it was always with KDS.

PN460

MR EASTON: Yes, it could not by any analysis of the evidence be a binding contract with Freedom Kitchens, that's one sub point, the identity of who the Commission found there was an employment contract with. There couldn't have at that point been sufficient clarity or particularity as to the parties to have bound Freedom Kitchens by that contract. Now, for a hypothetical situation, if the next month when Ms Moran started she got a letter of appointment from Freedom Kitchens Direct, then one could infer that the agreement reached back in the May was a contract with Freedom Kitchens Direct by the subsequent conduct and that might fix the ambiguity of the contract formed at the time. But the facts and the circumstances of the subsequent conduct of the parties puts paid to any kind of finding that it was Freedom Kitchens Direct.

PN461

So there's that aspect of it. The next aspect is that the subsequent arrangement between the parties which, as I say, no one has alleged was a sham, didn't simply vary the contract and leave it alive. It wholly replaced it. It could only be seen to have done that because of the conduct of the parties, particularly Ms Moran, in how she engaged the intermediary of Check Lec. The Commissioner erred in suggesting that the absence of involvement for Mr Kant would be probative on the question of whether Check Lec was a contractual party at any point. I might be speaking too much shorthand at that point, but Commissioner Smith found it persuasive in some form that there was no evidence of Mr Kant's involvement in the contractual arrangements that were set up between KDS and Check Lec.

PN462

COMMISSIONER SIMMONDS: That's 36(4) I think.

PN463

MR EASTON: Yes. Now, that is erroneous because the evidence which I invited the members to read earlier of Ms Moran indicating, well, I don't have anything set up, I'll talk to my husband, and then Ms Moran's subsequent conduct of handwriting the invoices on behalf of Check Lec, and then Check Lec receiving the payments for the invoices that Mrs Moran issued could only be consistent with Ms Moran having the authority to engage in that contract on behalf of Check Lec.

PN464

Mrs Moran provides the information of Check Lec's details. It would be somewhat extraordinary if the woman who professes to have no interest at all and no knowledge in Check Lec's affairs was able to assemble the documents that she annexes to her facsimile without the assistance and consent of Mr Kant or the accountant or the like would be extraordinary. So the only conclusion to infer in that regard is that when Ms Moran engaged in all of that conduct, she did so with the authority of Check Lec.

PN465

Now, the way in which Check Lec then treated the payments and engaged in its tax affairs is, in my submission, something far more compelling than simply a worker who professes to be a sole trader issuing an invoice and claiming the payment. There are far more, for want of a better term, professional and complicated arrangements that Check Lec is a part of that are established because of this relationship with KDS, ie. Check Lec, as a result of receiving this contractual income, did what it did with it because of the arrangement with KDS and because its understanding that it was free to do it, and that's something vastly different to your average worker who may ordinarily be an employee, but who gives the putative employer an invoice.

PN466

It's a far more considered arrangement when you look at Check Lec's affairs, and there's no evidence, as I say, of any disavowing of those arrangements by Ms Moran at any point. Now, there's no valuable considering passing between Ms Moran and any employer, putative employer in my submission. The only consideration that could be seen to be consideration in respect of an employment contract is the $5000 and the other benefits that Check Lec paid to Mrs Moran, ie. the $5000 plus $34,000 in super.

PN467

And that processing that Check Lec did with the money interrupted the connection - lest there be any doubt about it - interrupted the connection between Moran and KDS or any other company there. It took the money because it was entitled to take the money and do what it wanted with it. When asked about being an employee of Check Lec Ms Moran's evidence was not to disavow that employment relationship. It was simply one of surprise. That, in my submission, is significant because again it is in contrast with cases such as Damevski's where Mr Damevski never regarded himself as being engaged by MLC and the like. It's a different situation.

PN468

Now, as I say, there was considerable debate about shams in the context of the connection between KDS and the Enstrom Group and in light of that the Commission's finding of the contrivance is unhelpful to the determination of the matter because it led the Commissioner to a departure from Fox v Kangan Batman that he wasn't entitled to take. That is, that if Commissioner Smith's logic was applied to the facts of Fox v Kangan Batman, one would suspect that the result would be the opposite of what the Full Bench determined in that case.

PN469

The factual circumstances surrounding the negotiations of relationships is not distinguishable from this case and ultimately, whilst there might be relationships between Ms Moran and the companies in the Enstrom Group, there's not an employment contract between any of them. One difficulty that if the Full Bench was to find that there was an employment contract that founded the jurisdiction of the Commission, one difficulty that would arise is the question of valuable consideration, vis-à-vis, any compensation that might be available to Ms Moran should she ultimately prove that the dismissal with whichever employer it was, was unfair.

PN470

That is, let's say the appellants lose this appeal and then run a case on merits, we may well be back before a Full Bench to argue about the compensation available assuming reinstatement's impracticable. On one view of it the only salary or wages that Ms Moran received was that from Check Lec and if the Commission was to award compensation, the Commission would have to, in my submission, delve into all of the contractual relations between Freedom Kitchen Direct via the others, because you can't create any new contractual arrangements. If there's an employment contract still alive, the terms of that employment contract only require Freedom Kitchens Direct to pay money to KDS and then the Commission is stuck trying to enforce KDS to pay Check Lec and then the Commission will be stuck trying to enforce Check Lec to pay Ms Moran in light of - -

PN471

SENIOR DEPUTY PRESIDENT LACY: The Commission wouldn't be trying to enforce any of it because enforcement doesn't carry.

PN472

MR EASTON: Well, to look at it another way, it would create a remedy that wouldn't be immediately available to Ms Moran. The only remedy that - - -

PN473

SENIOR DEPUTY PRESIDENT LACY: I understand your point, yes.

PN474

MR EASTON: And I don't think that's been explored in matters such as Damevski in terms of what consideration could be available and how it might be applied. I'm not sure that members of the Full Bench would be interested in a detailed analysis of Damevski versus Fox v Kangan Batman and the like. I think the principles are relatively clear, though from a public interest point of view in terms of particularly granting leave to the appeal, it is a matter of general importance how the principles of Fox v Kangan Batman can be reconciled to some degree with Damevski insofar as how situations like Ms Moran's are resolved in terms of identifying the parties to the contract.

PN475

Now, prima facie, if there's a contract in place then that's the cornerstone of the jurisdiction and my submission is that Damevski simply puts a more practical flavour or says that the Commission is to take more practical consideration of the entire arrangements when first deciding whether there's a contract of employment to found the jurisdiction.

PN476

Now, that, in my submission, assists the appellant's case because when you look at the entire arrangements in place and the conduct over the period one can only conclude that there's a contracting arrangement that replaced the contract of employment and was intended to do so by the parties. I think the questions from members of the Bench I think have encompassed the rest of my planned submission and the points of the notice of appeal and unless there are any particular matters that your Honours and Mr Commissioner would like me to speak to, I'll take my seat.

PN477

SENIOR DEPUTY PRESIDENT LACY: No, thanks, Mr Easton. Mr Donaghey, I think we'll take the luncheon adjournment now. How long do you think you might take in your submissions?

PN478

MR DONAGHEY: I think I'll be in the order of 25 minutes or so.

PN479

SENIOR DEPUTY PRESIDENT LACY: We will come back at 1.45, thank you.

PN480

MR DONAGHEY: If your Honour pleases.

<LUNCHEON ADJOURNMENT [12.24PM]
<RESUMED [1.47PM]

PN481

MR EASTON: Your Honour, there was one matter I was asked to come back to you about which proves your Honour's questions are more important than my wife's. In relation to Ms Herbert, with appeal book 88, Mr Vyagurunatha was asked about some invoices, I think it was, and his evidence to the effect was that Ms Herbert was the person who prepared the invoice. In paragraph 861:

PN482

And is she employed by Sydney Kitchens Group, isn't she?

PN483

Answer:

PN484

That's correct.

PN485

So Ms Herbert is an employee of Sydney Kitchens Group - I don't think there's a precise descriptor of that, it's part of the Enstrom Group.

PN486

SENIOR DEPUTY PRESIDENT O'CALLAGHAN: Yes. So in effect the negotiation that gave rise to the invoice that Ms Moran sent was finalised with an employee of the Sydney Kitchen Group or the Enstrom Group?

PN487

MR EASTON: I don't think there's any evidence of Ms Moran negotiating with Ms Herbert. I think the evidence is that she sent those details to Ms Herbert.

PN488

SENIOR DEPUTY PRESIDENT LACY: That's the person named Karen, is it?

PN489

MR EASTON: Karen, yes.

PN490

SENIOR DEPUTY PRESIDENT O'CALLAGHAN: Ms Herbert obviously sent her something too because the email or the facsimile at page 282 thanks Ms Herbert for providing or forwarding a list of requirements so I guess I could rephrase that and invite you to comment. The invoicing arrangements were finalised between the applicant and Ms Herbert who was an employee of the Enstrom Group?

PN491

MR EASTON: Yes, and the evidence is that there was an arrangement between the Enstrom Group and KDS where the Enstrom Group did KDS' bookkeeping function and that's a factor, a useful quote that I took your Honour to of how that evidence pans out that Mr Vyagurunatha's subordinates didn't play that particular function.

PN492

SENIOR DEPUTY PRESIDENT O'CALLAGHAN: Thank you. You've done well. You can report as such to your wife.

PN493

MR EASTON: Thank you.

PN494

MR DONAGHEY: Your Honours and Commissioner, I have some folders of material to hand up, each is marked with the name of the member of the Bench for ease of reference. I'll wait till you have those folders in front of you, your Honours and Commissioner. At the front of each folder is a short note entitled Outline of Submissions, and that's the document - nothing turns on the titles to the documents, your Honours and Commissioner, just merely to make sure I have three.

PN495

In any event the note is the note I intend to speak to and the documents behind are the cases, mostly prepared by reference to the Notice of Appeal upon which I intend to rely. The matters which were discussed between my learned friend and the Full Bench this morning also deserve a mention later on, but if it's convenient to the Full Bench, I propose to take you to the note first and then go back over the matters arising from this morning.

PN496

The first point is we've reached already, sirs, and that's the concession referred to in 1(a) of the note. Because it's legal rights are affected, I don't think it could be put otherwise than to say that the second appellant is the person aggrieved. Leave to appeal falls is the next major issue in my submission for this appeal and
that - I'll leave you to read the points under paragraph (2). The exercise to be conducted by the Full Bench is an examination of whether appellable error exists within the meaning of 685(2) of the legislation and it's Ms Moran's submission that no such appellable error exists and leave to appeal should be denied, or declined.

PN497

I will examine briefly the leave points put in the Notice of Appeal and first of all it's significant to note that there are two categories of them. There seem to be public interest grounds of appeal in paragraph 12(c) of the notice, if you have that in front of you. The public interest grounds of appeal are put by the respondent to the appeal as a simple exaggeration. The facts of this case are so narrow, the facts found by the Commissioner are not such that give rise to wider implications in the nature of the public interest matter.

PN498

In other words the two contracts found, the early May 2004 contract and its subsequent variation by the payment term are identifiably unique to these circumstances. It means many of the outsourcing or Kangan Batman style cases involving Odco(?) engagement would not apply as a matter of course to any decision the Full Bench were to make. It would be far more likely that that decision would be confined to the facts of the matter even if the Full Bench were to quash and remit or consider for itself.

PN499

The other matters it's submitted that exist in paragraph 12(a) and 12(b) are not reasons, or not instances of reasons for leave to appeal. It's submitted that those questions of the Commissioner following a Full Bench decision and otherwise follow more as a matter of course and cannot be characterised as something enlivening the 120(1) leave to appeal discretion. For those and for the reasons in relation to the merits of appeal itself, it's said that no leave ought to be granted, and I guess that we're in the situation, your Honours and Commissioner, of the merits of the appeal have to inform the rest of what I'm about to say about leave in any event, and so that brings us to the merits, and that's in this third part of the note that I've handed up with that folder.

PN500

It's my submission that there are really two points flowing from the Notice of Appeal which are the main substance of the appeal, despite the factual grounds that appear throughout the Notice of Appeal itself. Those two issues are the identity of the employer and the formation of the contract. Now, those issues separated by me for convenience might in fact be one, of course, because the formation begs the question, with whom, and that's the identity point.

PN501

But to take them in that order, in the order of formation first, really takes the Full Bench to the question of the facts found by the Commissioner, and this is where the question of the facts found and the influence or their impact upon the jurisdiction comes most readily to the fore. What's been put forward by my learned friend is not within the meaning of cases like Jones v Hyde or Abalos, which is referred to in the note that I've handed up, are ground for distinguishing or setting aside or interfering with the facts found at first instance, given the first instance advantage of a single member of this Commission and in fact of all judicial or quasi judicial members when they hear try-able matters.

PN502

Behind tab 12 of the folder is the High Court case of Abalos and the respondent relies upon the conclusions flowing from Jones v Hyde that appear on page 179 of that CLR, so at 171 CLR 179. Those conclusions which are in turns the requirement that the first instance member failed to use or palpably misused that first instance advantage, apply to this case. It's not put with any precision what the misuse of that advantage was and in those terms, sirs, it's submitted that really what the appellant is seeking is that different facts be found or that the facts found be substituted for facts more preferable to the appellants rather than complaining that there was some misuse of that basis or that no reasonable single member of the Commission could have found as Commissioner Smith found in this case.

PN503

And your Honours and Commissioner would be aware that there are many instances of Jones v Hyde or Abalos being applied in the Commission and one recent example is Fernleigh v Tennis Defence Systems. In the respondent's submission Kangan Batman ought to be distinguished from this case. It's not the respondent's submission that it is incorrect, but rather that applying it to this case, as my learned friend does, is simply comparing apples with oranges.

PN504

On the one hand Ms Fox had a relationship with the TAFE and on the other hand she had a contract with AAWS, the labour hire provider. In this case an amorphous group of companies with one representative made an offer to Ms Moran and at the time of making that offer the evidence, to the extent that it's in agreement, seems to be that no entity was named. So rather than the Full Bench, as in Kangan Batman, looking closely and saying, is there an employment contract at all with Kangan Batman, and there wasn't, we have a situation where the identity is obscure, is ambiguous or uncertain, as my learned friend's put in his notice, and so that the task of the Commission is substantially different.

PN505

It's not merely a case of picking the best employer based on contract principles, but rather, figuring out who the author or/employer was at the relevant time, if that can be discerned. In essence, your Honours and Commissioner, the Commissioner at first instance had three options. He could have found there was no second invoice term at all, no discussion to the effect that Ms Moran describes that requiring that third party payment term, or the Commissioner could have accepted my learned friend's case which was to the effect that that term replaced wholly that first 12 May discussion, or he could have found some combination of those two options.

PN506

Revisiting those facts, without identifying what the perversion was, if I can use that term, or what the misuse of the advantage was, leads us nowhere in particular. At this point, sirs, I take the Full Bench to Sammartino which, although my copy has a bit of an awkward photocopy, is at tab 2 of the folder that I handed up. Now, I hesitated in providing this case to the Full Bench because it's the kind of case I expect that members of a Full Bench read on regular occasions, but looking at paragraph 9 on page 54, which is the third page of that photocopy, I consider that paragraph 9 is instructive enough to be worth bringing directly to your Honours' and Commissioner's attention.

PN507

My learned friend has said that the facts to be found are those jurisdictional facts. In my submissions Sammartino casts the net slightly wider. Not at large, not by any means, but instead, Sammartino says, "In dealing with the appeal," this is from para 9:

PN508

The Commission is under a duty to consider all of the proven facts and those facts that have been admitted and any inferences to be drawn from those facts to arrive at its conclusion.

PN509

Then it goes on:

PN510

It is also under a duty to determine the content of any point of law upon which its decision might depend.

PN511

And there I find myself in heated agreement with my learned friend.

PN512

The question of identity of employer is significant for both of the jurisdictional motions that were brought. But it's not to say that the Commissioner was under some duty to pick a competing option and only go with that. Rather, he had to construe all of the facts that were proven before him and that is what the respondent says he did in relation to identifying who was the employer of Ms Moran. Ms Moran's case was not that it had to be KDS or no one. Rather, the question of employer was still alive at the date of the jurisdictional motion.

PN513

True it is - - -

PN514

SENIOR DEPUTY PRESIDENT LACY: Assuming an employment contract - - -

PN515

MR DONAGHEY: Yes, I'm assuming that in the submission I'm making, sir.

PN516

SENIOR DEPUTY PRESIDENT LACY: Yes.

PN517

MR DONAGHEY: Assuming there was an employment contract, that issue fell for determination under the paragraph I've just referred you to in Sammartino, and as a matter of practicality because without it one could not reasonably have determined the 100 employees or fewer exclusion. But also on the papers Ms Moran filed an R18 form. She indicated that her employer was Freedom Kitchens, or the entity that goes by that name, and then the respondent responded in the way that my learned friend has taken the Full Bench to and thereafter nothing happened.

PN518

It seemed that the parties presented their cases in the way that best suited them, but the question of the identity of the employer still remained to be determined and it wasn't as was put, I think, fairly faintly, that the respondent had decided simply that it was KDS or no one. I think that cannot be taken from the materials and from the written materials particularly as a conclusion that ought to bind the respondent upon this appeal.

PN519

It will be a different situation if Ms Moran had been asked to, or through her solicitor, perhaps had been asked to say, well, which of these entities are you suing? That didn't happen. The question of the formal elements of an offer and acceptance has reached some significance in the discussions this morning and I think it's probably convenient to refer to it now.

PN520

In the folder is the well familiar extract from Macken on The Laws of Employment, page 67 appears at tab 5, and those six elements are to be found in most contract law case books, as indeed in that one, as setting out the formal requirements of an employment contract. In the notice of appeal and in submissions today my learned friend has referred to consideration and intention to create legal relations as being elements, either not present, or which prevent the Full Bench from making a decision that there was a valid contract of employment.

PN521

The question of what is consideration arises most clearly at this juncture. In my submission consideration is moving from the promisee to the promisor, of course, the promise being promise of employment, would be the promise to serve. The question about consideration is, to whom was that service to be directed. The promise from the promise - then that would be the executive consideration within the meaning of Automatic Fire Sprinklers v Watson.

PN522

Turning then to the employer's side, what would amount to the promise of employment, strikes the same difficulty in the promisor's employer's position because it was at least ambiguous, if not entirely uncertain at the time that it was made. Turning then to intention to create legal relations, it seems from what is said in the notice and perhaps I ought not - I don't need to go into this terribly much further, but it seems that an actual intention or a formation in the mind is what my learned friend is putting is required to form a contract. In my submission an intention to create legal relations can be inferred from all the circumstances, simply being that she went to work and she got paid.

PN523

By way therefore of contention, that is to say, another way of looking at the Commissioner's decision which might support the Commissioner's decision apart from the way that the Commissioner decided himself, I'd like to take you to tab 7 and tab 8, not both at the same time, of course, of the folder that I have handed up. The two cases there found are Empirnall Holdings 1988, 14 NSW LR at 523, and Receiver Nominees, a Victorian case, 1998, 2 VR 70. The two cases stand for the same proposition, or rather the same part of the submission that I am putting to the Full Bench today.

PN524

Simply that absent these formal elements, the six elements that are required for the formal creation of an enforceable contract, one can look at the conduct of the parties to reach that conclusion. In Empirnall Holdings, the question was, whether in a building contract, proffering terms, which were never signed, but which were acted upon, could create the effect of making a contract under those terms, under the written document, and the answer from the Full Court of the Court of Appeal of New South Wales was, yes.

PN525

Just to flesh out that point a bit more, I've included Risada Nominees because the Court of Appeal in Victoria found the contrary conclusion when considering that the conduct of the party there, Risada, did not match up to the proposition that a contract had been formed. In that case the Senior Counsel was contending for a proposition that the second contract had replaced the first and the Full Court said no. Whilst - - -

PN526

SENIOR DEPUTY PRESIDENT LACY: I think Marshall J applied in Empirnall Holdings in finding a case against me at one time.

PN527

MR DONAGHEY: I think Marshall J has done the same thing to me only recently, but not with that case. I wasn't aware that Empirnall Holdings comes up terribly much in contract law or employment law, but it does follow, doesn't it, because many of the contracts that are made between parties make those terms or lack the formality that you might find and until I read Empirnall I would have been prepared to say that building contracts were more formal, but it appears not from that case.

PN528

The way that we get to that conclusion, sirs, is that even Risada Nominees has the opposite outcome for which Ms Moran contends, it was a case necessarily limited to the facts and that brings me to my submission about facts earlier. Really the facts of this case condition the finding of jurisdiction and therefore one is quite closely allied with the other. It is the respondent's submission that the conclusion of the Commissioner at first instance, in relation to the contract, is supported by the fact that there being no written contract and him being in the unenviable position of having to identify in order to carry the case onwards and to bring to conclusion the jurisdictional objection who that employer was.

PN529

Under the heading, Merits, in the note that I've handed up to your Honours I already referred to the mattes under (4), the delay, the factual grounds of appeal. I don't think I need to take that any further. Kangan Batman too, in (4)(b) I've distinguished and (4)(c), the submission that the identity of the employer was still an issue subject, of course, to the finding of the formation of the contract I think has been dealt with also.

PN530

Paragraph (d) takes me to Damevski and the question of the identity of the payee and of the contracting party.

PN531

SENIOR DEPUTY PRESIDENT O'CALLAGHAN: Just before you leave (4)(c), am I understanding that you say that the Commissioner had a duty to resolve the question of identity of the employer. To what extent do you say that Ms Moran, as the applicant, had a duty to establish the identity of the employer? And in that respect I refer to the comments made in Kangan Batman where, in concluding in that matter, the Full Bench indicated that the applicant ought to go first in those proceedings because it was the applicant that had the obligation to produce evidence establishing that they were in fact employed by the respondent and that the respondent had a capacity to call no evidence and simply invite the Commission to reach a conclusion on the extent to which the applicant had established the relevant employer.

PN532

MR DONAGHEY: I fear what I'm about to say, Senior Deputy President, is something that I should be better armed with authority for, but I think that Kangan Batman was a case prior to the enactment of 170CEA, as it then was, on about 30 August 2001. Not that I use that as a basis to distinguish it. Put simply, I regard it as something in the order of following from the nature of its consequences that an applicant in an application, such as Ms Moran, would have to establish jurisdiction on merits and that's the kind of hearing that I understand Kangan Batman was appealed from.

PN533

That is, it was an appeal from the merits hearing and the jurisdiction was taken up at that merits hearing in the way that was not as easily possible prior to 170CEA became a part of the legislation. But what we're talking about is an appeal from jurisdictional motions and my submission is in those circumstances the mover, the party seeking the application, has the burden of establishing or un-establishing jurisdiction. Ms Moran's burden, such as it was, would have come later and would have required her to say on a merits application, look, I'm establishing it under 643(1), I am someone terminated from a contract of employment by an employer and that's something that she would have had to argue and prove or risk failing at the merits hearing.

PN534

Does that answer your question?

PN535

SENIOR DEPUTY PRESIDENT O'CALLAGHAN: Yes, thank you.

PN536

MR DONAGHEY: Moving on to Damevski, as I did a moment ago, there is no authority, your Honours and Commissioner, that I'm aware of that it requires the identity of the payee to be identical to that person who is the employee under a contract of employment. It is said that Damevski is authority for the opposite proposition. I've read that in cases most recently in the Commission, and I apologise that I'm unable to take you to that proposition within Damevski, but if it's convenient to the Full Bench I would certainly do so as soon as I am able after this hearing.

PN537

The proposition therefore by Ms Moran in relation to the payment was that there was, as my friend calls it, and as he picks up from the decision, a contrivance. But as it was put by Ms Moran in the hearing, quite simply, a separate or third party payment term, that there was a contract of employment established initially and then that contract was either modified or added to, but not replaced, by the requirement that Ms Moran render invoices and be paid in that way.

PN538

When one is considering an ambiguous contract of employment, often the payer is one indication of who that might be, but in this instance the payer, it's submitted by the respondent, is not co-extensive or is not identical with that party.

PN539

SENIOR DEPUTY PRESIDENT LACY: Just before you move on from that, there was a part of the evidence that Mr Easton took us to this morning where he was cross-examining Ms Moran and was asking about the provision of the documentation for the third party payment, if you like, and Ms Moran, in her answer, said that she no longer had that facility available, or words to that effect, but that she would speak to her husband about it, doing it that way. How are we to characterise that evidence? It does appear, on the face of it at least, that Ms Moran had a fair understanding there of the nature of those sorts of arrangements.

PN540

MR DONAGHEY: I think that the full expression or the full nature of that payment term would have to explored in order to characterise it, sir, and the way to most quickly do that would probably start with Ms Moran's witness statement. Lest there be any misunderstanding about what my learned friend said about the attachment to that witness statement, SM9, and its successor, SM10, all of which were tendered in evidence, there were two periods of witness statements - excuse me, SM9 is the KDS invoice. SM10 is the only document I wish to refer you to now.

PN541

SENIOR DEPUTY PRESIDENT O'CALLAGHAN: Can you give us a page number?

PN542

MR DONAGHEY: Excuse me, sir, 567 of the appeal book.

PN543

SENIOR DEPUTY PRESIDENT O'CALLAGHAN: Thank you.

PN544

MR DONAGHEY: Ms Moran's evidence in her witness statement was to the effect that she did have an understanding - excuse me, in her evidence, oral evidence, that she did have an understanding because she had been a contractor before on one occasion, but it was also to the effect that she was given a choice in the April discussion with Mr McEwan about whether to take several options and she chose, to characterise it roughly, the option of their coming on staff, and that conclusion was accepted by the Commissioner.

PN545

Digging deeper into these tax invoices it appears from this document that the first six months of invoices were not sat down and written out as my learned friend submitted in the sense that this was not a case of Ms Moran sitting herself down and writing an invoice very week as the payments were weekly. Rather, she provided one invoice and it was photocopied repeatedly to provide her with the accompanying paperwork. In my submission, sir, that speaks more closely to an additional term and much more closely to the contrivance, to which I'll come in due course, than it does to Ms Moran's understanding of this being the heart and soul of her contract.

PN546

SENIOR DEPUTY PRESIDENT LACY: When you say they were photocopied, by whom, by Ms Moran or - - -

PN547

MR DONAGHEY: I don't think this statement refers to that. If you just bear with me a moment. Paragraph 51 of the statement at 535, appeal book, doesn't say in either way. Paragraph 52 on that page refers to the previous invoices containing the words salary and Ms Moran using liquid paper after being asked to change that to consultancy fees. Now, that is evidence, according to my recollection, sirs, that was not challenged during the hearing below.

PN548

Putting all that together, sir, and this is unfortunately a long winded way of getting back to your question, Senior Deputy President Lacy, this is - all of that together, it cannot be denied that Ms Moran had an understanding of some level of the distinction between contractor and employee. But she also had an understanding that she was being asked to add this term to her employment contract, so the respondent would say, by making these changes, not to replace the previous responsibilities she had with new responsibilities, in fact, not to vary the contract that she'd agreed to on about 12 May in any way. But rather, as SM10 would appear, to bring the papers in line with the appearance or the façade that was erected in order to give an impression of a contractor rather than its substance.

PN549

SENIOR DEPUTY PRESIDENT LACY: Yes.

PN550

MR DONAGHEY: I think something similar can be said about the documents to which my learned friend took the Full Bench which were the initial engagement documents and were proffered by - first were a communication from Ms Herbert to the applicant, or the respondent on this appeal, and then some provision of documents back to Ms Herbert. The documents there clearly said KDS, and clearly said, Designer, on them. Ms Moran's evidence on that in her witness statement was quite simply, look, these were proffered to me because they didn't have anything else at the time.

PN551

I don't think terribly much ought to be made on the question of identity about someone else's documents used by the applicant under those circumstances. I think it also useful at this juncture to turn to paragraph number 1027 and following, on page 104 of the appeal book. Those were paragraphs, your Honours and Commissioner, that you were taken to by my learned friend in relation to the setting up of this arrangement and the discussion with Ms Hasler.

PN552

I recall perhaps it was you, Commissioner Simmonds, who asked a question about whether there was some other party who had the invoice discussion with Ms Moran. My recollection is this, the entirety of her oral evidence about the setting it up, it wasn't referred to in-chief and is only elsewhere referred to in her written statement. But if you look at the answer given and the reaction of Ms Moran to being asked to set something up, it appears on the case most favourable to Ms Moran, that she's really setting up a payment term. She's not setting up a whole other entity at all.

PN553

Was she speaking to her husband, Mr Kevin Kant, about setting something up. She's setting up the payment term and she's wanting to get that running, bearing in mind, of course, the context of this discussion is also at the time when she's proposing to get paid by some entity in the Enstrom Group, so she says on her evidence, and of course she's already resigned her employment with Primelife.

PN554

SENIOR DEPUTY PRESIDENT LACY: Are you aware of any other authority that deals with the question of salary being paid to a family trust for the benefit of a person who is an employee?

PN555

MR DONAGHEY: No, I'm not, sir, and either it's very obscure or doesn't exist, because I have done some examination of unreported cases. That, in my submission, shouldn't discourage the Full Bench from finding that there was an employment relationship for the reasons I've already stated in relation to the 12 May discussion. Paragraph 5 of the written note at the start of the - sorry, sir.

PN556

SENIOR DEPUTY PRESIDENT LACY: I did think that there was a case that actually did deal with that issue at one time or discussed.

PN557

MR DONAGHEY: I was interested to hear your comments, sir, about, is it a Ryan J decision?

PN558

SENIOR DEPUTY PRESIDENT LACY: Yes, and the TCFUA.

PN559

MR DONAGHEY: The TCFUA.

PN560

SENIOR DEPUTY PRESIDENT LACY: TCFUA v Bellhop.

PN561

MR DONAGHEY: I'm not familiar with that case and perhaps it's something that would repay examination, but unfortunately I can't make a submission on it at this time.

PN562

SENIOR DEPUTY PRESIDENT LACY: No.

PN563

MR DONAGHEY: The final point about the written note in the folders, your Honours and Commissioner, is what the respondent on the appeal says is the kernel or the central point of the case. It is about what is able to be proved and provable on ambiguous evidence when there has been someone acting upon that ambiguous offer. That is to say, once accepted, the Full Bench has to decide whether it is even possible for a contract of employment to exist, and in my submission it is because the elements of it are in place, and the Full Bench ought to resist the temptation to revisit the factual findings absent some indication of mis-application of the advantage to which I've referred already.

PN564

This, of course, takes me to the point about identity which I'll flesh out more fully in just a moment, which of course is the respondent's submission that the Commissioner did not err in identifying Freedom Kitchens as the employer from 12 May or from the time of conclusion of contract onwards. The Commissioner's task was, without a doubt, to assess and form a view on the formation of the contract and it is, in my submission, appeal style nitpicking to say that there are less than complete consideration of the formation of contract questions.

PN565

It is true enough that the Commissioner did not sit down with those six part tests or something equivalent from other text books and go through them, but in the way that the decision is structured, it is clear that he turned his mind to that formation question and reached a conclusion based on, to use the Sammartino terms, all of the evidence and the inferences. Now, subject to any questions at this point, I will turn then to some of the matters arising from this morning and comment on those fairly briefly judging by the time.

PN566

SENIOR DEPUTY PRESIDENT LACY: We won't hold you to the time you said you would take, Mr Donaghey.

PN567

MR DONAGHEY: Absent a whole lot of questions from your Honour I doubt whether I'm going to need terribly much longer. I might just say in relation to those two authorities I took you to, Risada and Empirnall Holdings, there is a summary at tab 6 of the folder which refers to them. It's an extract from the Seddon & Ellinghaus text book, Cheshire & Fifoot on the Law of Contract. The footnote at the bottom of the page referring to Empirnall is present, but your Honours and Commissioner might find the discussion useful also, which occurs in the top part of that page.

PN568

Your Honours and Commissioner were urged to find that there was a contract between Check Lec and Ms Moran based upon the conduct of the financial of Ms Moran's affairs. The response to that put by the respondent is, I guess, in three parts. First of all, once the payment term had been placed over or placed in addition to the contract of employment, it really was a matter for Check Lec to do with those moneys whatever it saw fit. It is really not to the point of formation of contract to then say, well, this reflects on the true nature of the contract, when that contract was formed some time previously, in fact, quite a while previously in May 2004.

PN569

It's not as if there are facts in this case, sirs, that indicate an election. Ms Moran was put to an election. She didn't have to choose whether she was employed by X or Y, of course, that being one of the issues in this case. In response to the reflection upon Mr Damevski as being innocent and Ms Moran being not, at its highest Ms Moran can be said to have gone along with the ruse, that's the effect of the third party payment term.

PN570

Whether that affects the formation of a contract of employment or not, I must submit that it doesn't seem to me to do so. At its highest, as pointed out by the Commissioner, it can have taxation office consequences only. Something was made of the state of Ms Moran's - - -

PN571

SENIOR DEPUTY PRESIDENT LACY: Perhaps it could have consequences for all parties.

PN572

MR DONAGHEY: I think that almost certainly follows from the possibility of an Australian Taxation Office audit. Sir, something was made of the state of Ms Moran's belief as to her - both the status she held as an employee or not employee, and also in relation to the identity of her employer, be it a putative employer or otherwise. Kangan Batman, it is true, does make something of the state of Ms Fox's belief as to who was her employer. But the basis of matters fully distinguishing that earlier applies to this case as well. It wasn't as if it could have easily have been the TAFE and AAWS. That nebulous offer and acceptance was not present in that case. And indeed, immediately following that paragraph about the question of the identity of the employer, there is a qualification apposite to this case.

PN573

Just bear with me for a moment. I find that my tab - I expect it to be on the right paragraph, was on something a little bit different. I might paraphrase it instead of searching through the judgment right now. The Full Bench in Kangan Batman reflected on other cases where a person's view about their identity of their employer might be significant and one of those was Team Ranch. In the Team Ranch case referred to in Kangan Batman, individuals' belief as to whether he was engaged or employed or otherwise was said to be significant.

PN574

In Kangan Batman the Full Bench says it may be significant and puts it no higher than that. In my submission, the facts are sufficiently different that Ms Moran's belief that she was employed or engaged by KDS must be seen in light of what else she has put in her evidence and there are passages in her cross-examination by my learned friend where she says, quite frankly, "I don't know who I was employed by." One of those paragraphs is at 102 of the appeal book, paragraph number 1007, and then later on she says, "KDS." It is clear that that was an issue at the time and it wasn't certain. It certainly wasn't fixed in her mind.

PN575

To the extent that the test applied by the Commissioner was inconsistent with Kangan Batman, it was also consistent with the Commissioner's conclusions about a contrivance in the nature of a payment term. The Commission didn't find that the contract itself was a contrivance or somehow affected by falsehood, and there are two factors which follow from that. First of all, what is a contrivance? A contrivance seems to be, in my submission, something in the nature, but stopping short of a falsehood.

PN576

In my submission that is so because the Commissioner formed the view that there was an employment contract and, quite simply, that payment term did not fit well with that employment contract and seemed at odds with it, and yet both were pursued simultaneously by the applicant that was and the employer respondent. Turning then to my friend's submission about contrivance, it's not clear, and it was put only faintly, how a notice for perhaps a warning of a possible finding that the payment term was a contrivance would have been dealt with by the appellants in this case.

PN577

In my submission any question of the natural justice or otherwise requires a consideration of what would or could have been done. It seems to me unlikely that further evidence would have been able to be led about the formation of any contract, it would have been merely an assertion that there was less of a contrivance because there were commercial reasons behind it or something of that nature.

PN578

In any case the question of what use or what difference that notice might have made is integral to the question of finding that there was an error in making that finding of fact of contrivance. In my submission the nature of the evidence coming out, the first contract, offering sequence occurring on about 12 May, and then the subsequent side deal or contrivance, howsoever called, is only a very short leap away from the Commissioner's eventual finding of contrivance.

PN579

It contains within it an impression, which impression does not underpin the main agreement or arrangement entered into, perhaps put neutrally. The real complaint of the appellant in this case, and I'm echoing the case behind tab 13, Boral Formwork, the real complaint of the appellant seems to me to be that the Commissioner did not fall into error so much as refuse or decline to accept the version of events proffered to him. Bottom of paragraph 21 is where you'll find that reference.

PN580

I regard it as trite law, sirs, that the requirement of natural justice is flexible, that there's no rigorous or formulaic requirement that could be imposed upon the Commissioner in deciding whether to make the conclusion that it was a contrivance. Indeed, that would speak against the Sammartino conclusions of fact which I've taken the Full Bench to already. But cases such as Kioa v West deal with what process must a repository of power engage in in particular fact situations.

PN581

In this fact situation it is submitted that for the Commissioner to make the finding of fact of contrivance was not a denial of natural justice, simply because it followed on naturally from the facts that the Commissioner found, to the end effect, if no error is detected in the finding of those facts, then no natural justice requirement can be detected and further, even if there were an error in the nature of a denial of natural justice, which is not admitted by the respondent in this appeal, then the effect of it is not to deny the appellants anything.

PN582

My learned friend made the submission that the intention of the payment term by invoice was to wholly replace the previous arrangement or agreement, neutrally put, made on 12 May between Ms Hasler and Ms Moran. It's the respondent's submission that that agreement for the third party payment term was correctly characterised by the Commissioner, but because it could not, without more, have replaced the previous arrangement, it did not contain an express term saying, and the previous deal is off.

PN583

I'm not familiar with my learned friend's Alpha Farm. I don't know that case. The case referred to and relied upon by the respondent below was the case of Sara Lee, which is a Full Federal Court decision, and that decision is to the effect of the submission I'm making. It was put in relation to paragraphs 991 to 1016, and I don't think it's necessary for your Honours and Commissioner to turn to that, that Ms Moran's understanding of who was engaged or employed by KDS and the fact that they were contractors and designers should somehow have affected her knowledge of her own engagement or arrangement.

PN584

In my submission, that stands in stark contrast to Ms Moran's evidence and should not be countenanced because Ms Moran on her own evidence was, and accepted by the Commissioner, was given the option of those two courses, either taking it down the staff road or going back as a contractor as she had been with the Enstrom Group previously.

PN585

SENIOR DEPUTY PRESIDENT LACY: What do you say about Ms Hasler acting on behalf of KDS when she was negotiating with Mrs Moran for the formation of an arrangement?

PN586

MR DONAGHEY: That point is difficult for the respondent and finds its form in the decision of the Commissioner on the conclusion that Ms Hasler seemed to work across multiple companies in the Enstrom Group. The question has to be, in determining who was the offer-or of that employment contract, who did Ms Hasler represent or who is it possible that Ms Hasler represent? My learned friend seems to say that because there was evidence of her being in a partnership arrangement and acting for KDS, that was the only conclusion available to the Commissioner at the time. That is not the respondent's submission in this case.

PN587

It seems to be my learned friend's submission that the Commissioner had no alternative but to accept Ms Hasler's version of events that she was acting for KDS, that whenever she stood in relation to that offer, that was where KDS was. The difficulty with that of course is that the Commissioner didn't accept Ms Hasler's evidence, and in fact preferred Ms Moran's.

PN588

SENIOR DEPUTY PRESIDENT LACY: Preferred Ms Moran's, yes.

PN589

MR DONAGHEY: Yes. Excuse me, sir, that's the correct characterisation of it, that she preferred Ms Moran's. It would therefore, sir, be unusual in the extreme for him then to, in such an ambiguous environment, when there were so many companies and the relationships between them were so opaque, say, well, no, that part of your evidence I accept. True it is though that the respondent could not contradict that she was acting for KDS, but in effect, because of the inter-relation of those companies and the impression and finding, and it's submitted, correct impression that Ms Hasler worked across companies, it was not necessary for us to contradict.

PN590

If the respondent had been - excuse me, I'm mixing my terms - if the employer had been so at large, so at distaste to make the point about who was the employer, then it bore the burden in respect of proving, given that the employer question was at large, which or which others it could have produced Ms Riddock in that regard and would have been a much more powerful position in an evidentiary sense if it had done so, and that quasi Jones v Dunkel submission is in fact not even in that paragraph that Commissioner Simmonds referred to.

PN591

That question about authority wasn't touched upon in that paragraph and so it merely gives a different flavour to the kind of conclusion about authority which can be given. But I think that's the only answer that's possible on the evidence from below, is that it is a characterisation of Ms Sue Hasler's work. If you just bear with me for a moment, your Honours and Commissioner.

PN592

The evidence and submissions about a sham are to be quite simply distinguished from the conclusion of contrivance for the following reason. The sham was in relation to control of KDS, so went the submission below, and of course that was something that under Sammartino the Commissioner was able to reach for on the question of proof of facts, but not necessary for him to consider the submission given that that sham point, or that question about control of KDS, really went more than 100 employers or fewer, objection, which did not fall to be decided based on who the employer was eventually found to be.

PN593

So in a sense equating sham with contrivance is to mix and match two conclusions, one of which was not necessary to be considered by the Commissioner in any event.

PN594

SENIOR DEPUTY PRESIDENT LACY: And a different concept on your submission.

PN595

MR DONAGHEY: Wildly different concepts.

PN596

SENIOR DEPUTY PRESIDENT LACY: Yes.

PN597

MR DONAGHEY: I don't think that extract from my submission in relation to ..... could have been put that way in relation to contrivance. The question of the evidence of Ms Moran saying that she was informed by Ms Hasler that she got the job is conclusive in my submission as concluding a contract of employment. There's only two real dimensions in terms of consideration. That is, money to be paid and work to be performed and once those things are certain, it is difficult to conclude that a contract remains open or remains what I think Goldberg J has called in several cases, an agreement to agree.

PN598

I'd seek to distinguish the agreement to agree from the subsequent 12 May discussion simply on the basis that if Ms Moran had resigned her employment with Primelife in April, when she first got the call from Mr McEwan, that would certainly not be at a time when her contract was concluded. No discussion about duties, no discussion about wage. Of course, a different situation arises later when both of those things have been both discussed and, more importantly, agreed to by the parties necessary to form the contract.

PN599

Picking up something your Honour said, Senior Deputy President Lacy, could Ms Moran have sued after 12 May 2004. The answer from the respondent is yes, leaving aside questions of jurisdiction in the Commission, she could have sued for an employment contract breach and I referred in the latter part of the submissions below to a recent case in the Full Federal Court called Walker v City Group where I think that very thing happened. A stockbroker was engaged, left his previous employment, didn't actually make it to City Group to commence work, but was still awarded substantial damages based on the written terms that he had signed with the City Group.

PN600

On balance I think my friend wants a strict construction of offer and acceptance on 12 May but a rather looser one in relation to Ms Moran and Check Lec. The existence of an inferred contract is no object to the law. That is to say, this Commission has to find as a jurisdictional fact whether a common law contract existed and there is relatively little to point to that in relation to Ms Moran and Check Lec. She is an employee on the papers only, absent offer, absent acceptance, absent all the indicia necessary to establish that.

PN601

What she does do is agree to the contrivance and, for good or for bad, goes along with that in the way that I've described by creating two sets of invoices, one, first referring to salary and later referring to consultancy fees, and in my submission that particular finding of the Commissioner ought not to be disturbed without more. Subject to any questions, your Honours and Commissioner, those are the submissions for the respondent.

PN602

SENIOR DEPUTY PRESIDENT LACY: Mr Donaghey, the application was made against KDS.

PN603

MR DONAGHEY: No, sir. It was made originally against Freedom Kitchens Direct.

PN604

SENIOR DEPUTY PRESIDENT LACY: Sorry, yes.

PN605

MR DONAGHEY: And I think it's in the appeal book, at page 9.

PN606

SENIOR DEPUTY PRESIDENT LACY: Yes, it is too, thank you. Thank you, Mr Donaghey. Do you wish to have a brief response, Mr Easton?

PN607

MR EASTON: I do, thank you, your Honour, and I'll keep it as brief as I can. My friend encourages the Full Bench to resist the temptation to - I can't remember the word he came up with - but resist the temptation to change Commissioner Smith's findings and relied on Sammartino and others in that respect. I think that the case law is well and truly clear now that the Full Bench on the question of jurisdictional fact has the obligation to find that the jurisdictional facts exist and is not going to be bound by the findings of the Commissioner below, but must
make its own decision in that regard and Damevski is an example of that
at page 75 of the industrial reports where the Federal Court gives instruction/direction/suggestion as to what matters ought be determined by the Full Bench, ie. the whole of the circumstances of the matter of facts.

PN608

My friend makes the submission that the case, that Ms Moran doesn't have to present a case that it's KDS or no one. I think I can agree with his submission in that respect. However, one can't move past the fact that the case and the evidence on oath that Ms Moran provided to the Commission was that she was an employee of KDS. Now, she may of course be mistaken about that, but the point I make is that in all of the circumstances of the uncertainty et cetera of the formation of the contracts and the like, at the end of it, Ms Moran swears on oath that she understood she was an employee of KDS.

PN609

SENIOR DEPUTY PRESIDENT LACY: But that's an issue, I think, that's discussed by Ryan J in the TCFUA case and I think his Honour there said, notwithstanding what the people's understanding or belief was about who was their employer, you've got to look at the whole of the circumstances or all of the circumstances and work it out for yourself.

PN610

MR EASTON: Yes. I think the case law is pretty clear on that as well, regardless of what people might think their position, it's still going to be a matter of fact whether they're an employee or not. However, the question is all about the intention of the parties in entering into the arrangements and the contracts that they did and when you look at their conduct immediately after things were done, for example, once the materials were sent to establish Check Lec as a contractor there, how Check Lec dealt with the money et cetera is all consistent with an intention examined in the whole context of the matter, an intention that Ms Moran was not to be constrained by the limitations on what she can do with her money by way of being an employee.

PN611

Now, I have probably poorly worded that, but my friend makes a submission which I might deal with at this point, that if money is passed over by the terms of the contract, which is the varied contract that my friend suggested was in place, it's up to Check Lec to do what it wants with the money. Now, if your Honours and Mr Commissioner accept that proposition, it would make an extraordinary amendment to what, in tax law, has been regarded for years, that if person A is an employee, they can't agree that instead of paying me, you can pay my wife or my child or my husband or anybody else, when there's a privity of contract in the employment contract, payment to somebody else is not going to be payment in satisfaction of that employment contract. It's salary and wages - - -

PN612

SENIOR DEPUTY PRESIDENT LACY: But an employee can direct where the payments will be made in salary sacrifice. There's ample examples of that.

PN613

MR EASTON: But in salary sacrifice arrangements, there's a fringe benefits tax consequence for those things, or it's, for example, a health fund deduction, that's going to be out of an employee's net pay.

PN614

SENIOR DEPUTY PRESIDENT LACY: That's the normal process, but that doesn't mean - the fact that those elements were not present doesn't mean that the parties weren't doing the same sort of thing.

PN615

MR EASTON: Well, it would be - - -

PN616

SENIOR DEPUTY PRESIDENT LACY: It might mean there's a problem with the taxation department.

PN617

MR EASTON: Yes. Well, it would be an extraordinary consequent if my friend's submission is that the arrangement that was made was that the money could be paid to Check Lec as agent for Ms Moran and then Check Lec is entitled to do whatever it likes with the money.

PN618

SENIOR DEPUTY PRESIDENT LACY: At her direction, obviously.

PN619

MR EASTON: Well, there's no evidence of doing it at her direction, and that would - I mean, there's a whole logical inconsistency, an internal inconsistency with that very argument. How can Check Lec be her agent and yet have all of the discretion that it retained with what to do with the money. That's extraordinary. I mean, there's no basis to imply an agency arrangement there and impose on Check Lec an obligation of agency when clearly they never assume that role.

PN620

In terms of the issue of natural justice and the issue of a contrivance, that may have changed significantly the evidence below. I would certainly have asked Ms Moran a whole range of questions if she was to depart from the paperwork and depart from her declarations to the tax office in relation to her salary and wages from Check Lec, I would have had a number of questions for her, and for example, a Jones v Dunkel inference would have likely have arisen at that time by Ms Moran's failure to call Mr Kant.

PN621

The flow of the evidence below seemed to be, well, Kevin took care of all of those things, and Kevin decided that Check Lec would pay me 34,000 in super, and Check Lec decided all of these things. If Ms Moran was to suggest that was a contrivance, then I would have had a whole range of questions for her and it could have vastly changed the character of the case. Now, at appeal book 174 through to somewhere beyond 177, I take Commissioner Smith through the principles in Sharman's case about chance and they're very - in my submission, a very strong onus and - - -

PN622

SENIOR DEPUTY PRESIDENT LACY: It's very difficult to establish, on the basis of the principles in Sharman it's very difficult to establish.

PN623

MR EASTON: Yes, and in my submission nobody has suggested that sham, but to find this contrivance actually doesn't resolve the matter and even if you accept that there was a contrivance, then the Full Bench will need to address itself as Commissioner Smith should have addressed himself to, well, what happens in terms of these relationships? If they're a contrivance, then he hasn't made a finding that they're not binding on anybody. So how does the employment relationship between Ms Moran and Check Lec, which Ms Moran doesn't disavow, how does that affect the contract?

PN624

Commissioner Smith in a blanket way says, well, that's all a contrivance and the original contract stands. In my submission it's not a sham, it's not a contrivance, and even if it was a contrivance, on the case law and Fox v Kangan Batman, there's no contract of employment.

PN625

COMMISSIONER SIMMONDS: In Fox v Kangan Batman there was no contract at all other than the contract between AWS and Fox and AWS and Kangan. Where's the contract here between Check Lec and KDS?

PN626

MR EASTON: That's the contract established by Ms Moran.

PN627

COMMISSIONER SIMMONDS: When was the offer and acceptance?

PN628

MR EASTON: Well, by Ms Moran's conduct in - - -

PN629

COMMISSIONER SIMMONDS: It takes two to tango. Who is the - - -

PN630

MR EASTON: Yes, yes.

PN631

COMMISSIONER SIMMONDS: What was it that Check Lec was contracting KDS to do?

PN632

MR EASTON: Provide the services of Ms Moran.

PN633

COMMISSIONER SIMMONDS: In respect of?

PN634

MR EASTON: In respect of whatever she was called upon - - -

PN635

COMMISSIONER SIMMONDS: And you say the evidence of that arises from the conduct of Ms Moran. It's a bit of a circular argument.

PN636

MR EASTON: Well, all of the findings are really being based on the conduct of the parties. Commissioner Smith finds that the conduct of the parties by the way he's characterised the control mechanisms of the organisations by that conduct - - -

PN637

COMMISSIONER SIMMONDS: Don't you fall into that trap that Mr Donaghey made for you that the demand that you have of the original contract is greater than the demand you had for the contract between Check Lec and KDS?

PN638

MR EASTON: No, because it's a - and I perhaps didn't spend as much time on it as I should have in my submission - the discussions in May clearly were the beginning of the relationship, to put it in the neutral terms, between Ms Moran and the other players in the matter. There was an agreement reached there which, as I think I said this morning, if a letter of employment had flowed from it, one would look retrospectively at the conversations in May and say, well, the work that they were talking about in May was the work with the company that the employment contract came through from, or if there were discussions in May and then with no issue as to the facts, the contracting arrangement was established with KDS and Check Lec and there was no contest about it, then you would say the conversations in May were clearly the precursor or the arrangements for the contracts with Check Lec and KDS.

PN639

However there's a step in between.

PN640

COMMISSIONER SIMMONDS: That's far too complex for me. I don't understand what you're saying. Are you saying that whatever occurred in May, that has nothing to do with the reaching of the contract. It was simply a discussion and subsequently a contract occurred when Check Lec billed KDS for Ms Moran's services? Is that what you're saying?

PN641

MR EASTON: Well, that was the case that we presented below.

PN642

COMMISSIONER SIMMONDS: Well, what are you saying now?

PN643

MR EASTON: And we still say that. By the discussions that occurred there was not complete certainty of all the terms of a contract that was formed.

PN644

SENIOR DEPUTY PRESIDENT LACY: Speaking for myself, Mr Easton, I find it very difficult to escape the conclusion that on 12 May there was a contract between Mrs Moran and whoever it was that Mr McEwan and Ms Hasler were representing. I think where you go after that is another issue, but just on the facts as they appear in the material before me at this stage, I find it very difficult to escape that conclusion.

PN645

MR EASTON: Yes, and I don't think I've been clear enough about this point and I must apologise. The conclusion in the agreement reached on 12 May was not so certain that without any more one could find a contract with Freedom Kitchens Direct. One would have to be informed by what happens next, and that conclusions is inescapable in my submission because Mrs Moran never knew on her evidence who she was contracting with at that point. So that turn, for example, falls to be determined by the subsequent conduct of the parties.

PN646

Now at that point in time there's an agreement for her to - to use a very loose term - come on board. There's an argument about whether or not that's an employment or a contracting arrangement, but nonetheless she's invited to come on board at that point and I don't move away from that, but there's not sufficient precision in those arrangements without more for the Commissioner to reach the conclusion that he did, and the without more has got to be the conduct that happens next, and thereafter.

PN647

So my two examples of what would have happened if the conduct was this next, well, one would have then looked back at the discussions on 12 May and said, well, yes, that's what they're talking about, or if had resulted in a contracting arrangement, one would have looked back at 12 May and said, yes, that's what they were talking about and the agreement was reached as at 12 May.

PN648

What happened in my submission is that after 12 May there wasn't a contract of employment that finds the jurisdiction. As I said, if she made an application the next day in the Commission, my submission is there wouldn't have been jurisdiction. Now, in one sense - - -

PN649

COMMISSIONER SIMMONDS: Sorry, I heard you say that before. I should have asked you then. Why, apart from the technicalities of absence of confine period and so on?

PN650

MR EASTON: Because there would have been no dismissal by sending away.

PN651

COMMISSIONER SIMMONDS: Well, there'd been no termination.

PN652

MR EASTON: Yes.

PN653

COMMISSIONER SIMMONDS: But I thought you were saying there was no contract of the sort that could lead to jurisdiction in this Commission?

PN654

MR EASTON: Yes, that's right.

PN655

COMMISSIONER SIMMONDS: Well, a termination of a contract that would lead to jurisdiction in this Commission?

PN656

MR EASTON: I'm sorry, yes, you're right. I put - - -

PN657

COMMISSIONER SIMMONDS: Absent termination, there was no jurisdiction in this Commission.

PN658

MR EASTON: Yes, and there couldn't have been a dismissal because the employment hadn't started for the person to be sent away from.

PN659

COMMISSIONER SIMMONDS: Why couldn't there have been a dismissal, a la City Group?

PN660

MR EASTON: Well, a case that my friend refers to - - -

PN661

SENIOR DEPUTY PRESIDENT LACY: You seem to be resuscitating that dichotomy of the contract and the employment.

PN662

MR EASTON: Well, the case in City Group, and I don't have it with me, my reading of that decision is that the court did not find that Mr Walker became an employee. The court found that the damages that were applicable to him were the damages of a lost employment contract and made findings about the quantum of the contract and that sits, in my submission, and I must say, I've not looked deeply into the City Group case, but that was my reading of it, that sits consistently with the Murray decision that I adverted to where in that case it was actually in the context of corporations and a priority in a liquidation.

PN663

SENIOR DEPUTY PRESIDENT LACY: What you're saying is, there was no termination of employment and there could be no termination of employment because even though a contract of employment may have been commenced, there was no employment.

PN664

MR EASTON: Yes.

PN665

SENIOR DEPUTY PRESIDENT LACY: Very well, I understand that.

PN666

MR EASTON: Yes, and I'm sorry that I've led you to confusion about that. Even if you're against me on all of that, the variation that occurred and the conduct of the parties and the intention of the parties that can only be found in relation to the intention of what the effect of the subsequent arrangements could only be that it replaced the employment contract. Now, my friend mentioned Alpha Pharm and I think I've actually misquoted Alpha Pharm. I found a reference to it in one of the cases that's on my list, the FSU v Commonwealth Bank, and it's at volume 146 of the Industrial Reports at page 78, his Honour, Merkel J quotes a portion of Alpha Pharm. The full reference is Toll (FGCT) Pty Ltd v Alpha Pharm Pty Ltd, and I've already given the spelling to the monitor[2004] HCA 52; , 2004, 219, CLR 165, and the quotation there from Merkel J goes to a matter that I don't think is contentious with anybody here in terms of determining the intention of a party by an objective assessment of the conduct rather than consideration of their subjective view.

PN667

I fear I've muddled my concepts there because I raised Alpha Pharm in the context of the intentions of parties in making a subsequent contract, whether or not that intention was to wholly replace the earlier contract. Tallerman is the leading case, 1956 CLR, I can't remember the full citation, but Tallerman leaves that possibility open. The references I made earlier to Fox v Kangan Batman about the agreement to contract is at paragraph 74 of the Full Bench's decision there. I don't need to read that in full, but that's the finding they made under what I submit is the facts that can't be distinguished from these.

PN668

In my submission it's not open for the Full Bench to find that the arrangements and the invoicing and the like is a contrivance or a sham because it's not the evidence of any of the parties here. It would be somewhat extraordinary if that were to become the finding of the Full Bench here, if against the submissions of both parties those arrangements don't have a legal effect. There's an argument about what the legal effect is, but in my submission it's not open to the Commission here to find that those arrangements are a contrivance and whilst my friend urges you to resist the temptation to dislodge Commissioner Smith's decision, in my submission that amounts to, in effect, a House v The King approach that is advocating and it's clearly not that approach that the Full Bench is called upon to make.

PN669

Unless there's any other matter I'll close.

PN670

SENIOR DEPUTY PRESIDENT LACY: We thank counsel for their very helpful submissions. We'll reserve our decision and publish our reasons in due course. The Commission is now adjourned.

<ADJOURNED INDEFINITELY [3.15PM]