C2007/2960, Transcript of Proceedings [2007] AIRCTrans 436 (4 September 2007)

TRANSCRIPT OF PROCEEDINGS

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Workplace Relations Act 1996 17309-1

SENIOR DEPUTY PRESIDENT WATSON
DEPUTY PRESIDENT HAMILTON
COMMISSIONER SIMMONDS

C2007/2960

s.120 - Appeal to Full Bench
Appeal by Hi Security Fencing Systems Pty Ltd
(C2007/2960)

MELBOURNE

10.10AM, THURSDAY, 23 AUGUST 2007

Reserved for Decision

PN1

MS F O'BRIAN: I seek leave to appear on behalf of the appellant, with
MR T DONAGHEY.

PN2

MR C DOWLING: I seek leave to appear on behalf of Mr Forsyth, the respondent to the appeal.

PN3

SENIOR DEPUTY PRESIDENT WATSON: There is no issue about leave. Leave is granted in each case.

EXHIBIT #A1 APPELLANT'S WRITTEN SUBMISSIONS
EXHIBIT #R1 RESPONDENT'S WRITTEN SUBMISSIONS

PN4

SENIOR DEPUTY PRESIDENT WATSON: In accordance with the notes of listing, the purpose of the hearing this morning is for brief oral submissions in support of those submissions. You can be assured that members of the Bench have had opportunity to, and have, read and considered the written submissions.

PN5

Ms O'Brian.

PN6

MS O'BRIAN: Your Honour, I have prepared a submission in reply.

PN7

SENIOR DEPUTY PRESIDENT WATSON: Yes.

PN8

MS O'BRIAN: I won't go directly to it. I've got an oral submission I propose to make.

PN9

SENIOR DEPUTY PRESIDENT WATSON: Yes.

PN10

MS O'BRIAN: But I have a set of cases you may not have access to, I suspect, you've delivered. It's only the pertinent cases as for the purposes of the argument.

PN11

SENIOR DEPUTY PRESIDENT WATSON: Very well.

PN12

MS O'BRIAN: There's a set for each of your Honours. I'm sorry, I should have sent that off this morning. It was ready last night and I apologise for not doing that.

PN13

SENIOR DEPUTY PRESIDENT WATSON: That is fine. Thank you. I will mark, so we can later find the appellant's submissions in reply.

EXHIBIT #A2 APPELLANT'S SUBMISSIONS IN REPLY

PN14

SENIOR DEPUTY PRESIDENT WATSON: Yes.

PN15

MS O'BRIAN: Your Honours, the issue in this matter is materiality and I want to say - - -

PN16

SENIOR DEPUTY PRESIDENT WATSON: I'm sorry, just before you go on. I've got seven pages here.

PN17

MS O'BRIAN: Have you got the right one, or is it the wrong one? No, you have got the wrong one. I apologise, you have got a copy.

PN18

SENIOR DEPUTY PRESIDENT WATSON: There then seems to be some - - -

PN19

MS O'BRIAN: Yes, it's very much a draft, that one.

PN20

SENIOR DEPUTY PRESIDENT WATSON: Very well.

PN21

MS O'BRIAN: I'm sorry, your Honour, I'm not quite sure how that happened.

PN22

SENIOR DEPUTY PRESIDENT WATSON: Good. Thank you for that.

PN23

MS O'BRIAN: Okay.

PN24

SENIOR DEPUTY PRESIDENT WATSON: Yes. Sorry, go ahead, Ms O'Brian.

PN25

MS O'BRIAN: Your Honour, the issue here is materiality and I want to say I've got six points to make about that. The first is this; was the question of whether this person, that is Mr Forsyth, was an employee; was that a material question? Undoubtedly it was the ultimate fact which had to be discerned, had to be decided. Why was that material? Because his Honour couldn't proceed until he had found that fundamental question.

PN26

The second point is; was the intention to form an employment relationship material, which I say was the immediate fact that had to be determined? Undoubtedly. Because why? Because that is a factor, one of the crucial factors that goes up to make the employment relationship and the findings in the decision state pretty plainly about other factors that are normally considered in determining whether an employment relationship has been formed. So the only question his Honour directed himself to, quite correctly - I'm not saying it's wrong - was the intention to form such a relationship. So that was a material matter he had to decide. He was aware of that because it was a crucial factor in the ultimate question; that is, was Mr Forsyth an employee?

PN27

The third point is; was the evidence of Mr Papadopoulos as to the intention to form that relationship material? Of course it was. There were three parties at the negotiations. There were three parties forming the intention and that is the vice of the problem here. There has been no finding about Mr Papadopoulos's evidence about the intentions to form an employment relationship. On that third point I've got five minor points I want to make about the evidence.

PN28

The first is the one I've already made; there were three persons on the negotiations, not two. But reading these reasons for decision you would never know that. Mr Papadopoulos is not even referred to. No reference is made to his evidence. No reference is even made to the suggestion that his evidence is unacceptable, irrelevant, or whatever. It is simply as though he never existed.

PN29

The second is his evidence contradicts Mr Forsyth specifically on the question of did he say he did not want to be a director? I don't recall that, and those matters of evidence are set out in my original submission and I put them in a box so they were completely accessible for you. What I did was show you then, in comparison with Mr Hancock's evidence, and then I show you how they compare with Mr Forsyth's evidence. It is the only thing that Mr Forsyth - I beg your pardon, Mr Papadopoulos contradicts Mr Forsyth on.

PN30

SENIOR DEPUTY PRESIDENT WATSON: What do you say as to the respondent's submissions on the evidence that the proposition by Forsyth that he did not wish to be a director was made in the first meeting with Hancock - - -

PN31

MS O'BRIAN: I will come to that your Honour. I certainly would propose to deal with that.

PN32

SENIOR DEPUTY PRESIDENT WATSON: - - - at which Papadopoulos wasn't in attendance?

PN33

MS O'BRIAN: The third point - and I will come to that, your Honour, and I agree that is a relevant matter.

PN34

SENIOR DEPUTY PRESIDENT WATSON: Yes.

PN35

MS O'BRIAN: The third point under these five points on the evidence; the evidence of Mr Papadopoulos specifically supports Mr Hancock. He says, "He said to us, you'll be directors".

PN36

SENIOR DEPUTY PRESIDENT WATSON: That is not in contention, is it? Forsyth's evidence is the same effect.

PN37

MS O'BRIAN: But it's critical. It's not in contention but it's absolutely critical in my respectful submission.

PN38

SENIOR DEPUTY PRESIDENT WATSON: Yes.

PN39

MS O'BRIAN: I will tell you why in a moment, your Honour. This evidence of Mr Forsyth heard for the first time in cross-examination at 501, in cross-examination, not in examination-in-chief, not in his witness statement but in cross-examination; and in his examination-in-chief he goes to some length to amend his witness statement and put it all in order. The first time it's heard in cross-examination that Mr Papadopoulos wasn't present when he said the words. Now this is despite Mr Hancock and Mr Papadopoulos not having had put to them in their evidence, and remember they appeared first, that the conversation took place in Mr Forsyth's absence.

PN40

That, in my respectful submission, merely heightens the fundamental problem here. The fundamental problem is the failure to analyse the crucial evidence about what transpired at the meetings to form the so-called relationship. It simply highlights the problem. There were issues of credit with Forsyth; there were issues in relation to Mr Papadopoulos's evidence which directly contradicted Mr Forsyth on the allegation he made, and which supported Mr Hancock; but they were simply ignored. That point, your Honour, about the credit issue of Mr Forsyth is relevant to the next point, and it's number 4.

PN41

If you accept Mr Papadopoulos's evidence, let us just accept that for the moment, that Forsyth did not say when he was present, in answer to Mr Hancock, "You will be directors", "Oh, no, no. I don't want to be a director". If that was never said, as Mr Papadopoulos says, that corroborates Mr Hancock's version of events. That is the first thing. But most importantly the then matters on which Mr Hancock's evidence is said to be unreliable and inconsistent by his Honour simply falls away because then that documentary evidence becomes what it truly is, which is just slack documentation. Because remember his Honour says in paragraph 14, on question of whose version he should accept about the intention to form the employment relationship, he says:

PN42

I accept Forsyth's because I cannot accept Hancock's.

PN43

He says:

PN44

Hancock is inconsistent and unreliable on other matters.

PN45

So his credit is in issue, so:

PN46

I accept Forsyth.

PN47

This relates to a legal point and I will come to it in a minute. But that is crucial in two respects, and this is my sixth point and it's the legal point. Mr McHugh J says in Soulemezis, "unequivocally, when you are looking at a question of jurisdictional fact you cannot rely solely on credit to determine it". He says that at page 281 I think; it's in the reply. As my learned friend says there's lots of generalised comments from Mr Mahoney J and Mr McHugh J about you don't have to do everything et cetera, et cetera, and you shouldn't go through judgment with fine toothcombs. That is correct.

PN48

Both of them give examples of how you are to approach questions of fact and Mr McHugh J says, "unequivocally if you rely merely" - I beg your pardon, "you cannot rely merely on credit to determine a fact in issue when there are other matters that could go to the probability or improbability of that fact occurring". That is the specific vice in the failure to analyse in the reasons the factual matters going up to the intention to form the employment relationship and ultimately determining the question of whether an employee existed.

PN49

I will just take you to McHugh; it's at 281. It is set out in the submission but I think it is absolutely critical. Mr Mahoney J says on this same issue, where you have got a factual dispute in a court where error of law is the question of appeal; so we have that here, this is a dispute about jurisdictional fact, and they make that point specifically and say this is how these things are to be dealt with. Mr Mahoney J says words to the effect, something along the lines of it may be required but it probably is:

PN50

It may be necessary, at least it will be expected when a court has power to alter rights of parties and if particular jurisdictional facts are in issue.

PN51

It may be necessary, at least it will be expected that findings on those facts are made. This is the problem here. There's been no finding on a crucial part, and that is the other material part of the evidence on intention to form a relationship. Mahoney says that. If you go to McHugh he is very specific. He says, in the middle at paragraph B - he has prefaced that immediately before at 279:

PN52

More elaborate reasons are required where legislation gives a right of appeal.

PN53

SENIOR DEPUTY PRESIDENT WATSON: I’m sorry, where - - -

PN54

MS O'BRIAN: It's the bottom of 280, your Honour.

PN55

SENIOR DEPUTY PRESIDENT WATSON: It's the bottom of 280. Yes.

PN56

MS O'BRIAN:

PN57

More elaborate reasons are required where legislation gives a right of appeal against a decision than when no appeal lies. In the first class of case -

PN58

that is, where a right of appeal lies:

PN59

- unless the basis of the decision is properly articulated the losing party may effectively be deprived of his right of appeal.

PN60

Now that is the Kumunian principle. That is Mr Finn J in Kumuni and there's no argument about that.

PN61

In a case where a right of appeal is given only in respect of a person at law different considerations apply from those where there is a full appeal.

PN62

That is us, clearly:

PN63

An ultimate finding of fact which is not subject to appeal and which is in no way dependant upon the application of a legal standard can be treated less elaborately than an issue involving a question of law or mixed fact and law.

PN64

I don't think I need to argue that but perhaps it's arguable. I don’t think it's necessary to argue that for the moment. I'm prepared to accept this as just a fact.

PN65

If no right of appeal is given against findings of fact a failure to state a basis of even a crucial finding of fact if it involves no legal standard will only constitute an error of law if the failure can be characterised as a breach of the principle that justice must be seen to be done. If -

PN66

and he gives the specific example that is in issue in this case:

PN67

If for example the only issue before the court is whether the plaintiff sustained injury by falling over or simply finding that he fell or sustained injury -

PN68

I beg your pardon:

PN69

- a finding that he simply fell or sustained injury would be enough if the decision turned simply on the plaintiff's credibility. But if in addition to the issue of credibility other matters were relied on as going to the probability or improbability of the plaintiff's case, such a simple finding, that is the finding on credibility, would not be enough.

PN70

His Honour says:

PN71

I find Mr Hancock inconsistent and unreliable.

PN72

That is at paragraph 14:

PN73

I am inclined therefore -

PN74

Inconsistent and unreliable; he says he has no credit, this witness.

PN75

I am inclined therefore to accept the evidence of Mr Forsyth.

PN76

Well, in my respectful submission, that is exactly what he cannot do. He must, given that there was a probability of Mr Papadopoulos's evidence going to the essential question of the intention, this material question of the intention to form the relationship, he had to analyse that evidence; and he has failed to do so. My client has been deprived of the opportunity to determine the real situation, the real view of his Honour in relation to this matter and it is an error of law.

PN77

It's an error of law for two reasons. It's an error of law on the basis that he has failed to give adequate reasons and, in my respectful submission as is set out in the submission in reply, it is also an error of law because he has failed to take into account a relevant consideration on the Youssef test. I don't know if you want me to go to that, and I will come back to that, but that in short is what we say.

PN78

Your Honour, on the issue of the failure to take into account a relevant consideration, that may or shall, I should say, require the leave of a tribunal to amend the notice of appeal. My learned friend may have views about that but if you read the submission I think it's unequivocally plain that the High Court takes the view that a failure to deliver adequate reasons is merely a species of a failure to consider a relevant consideration. In my respectful submission that would ultimately not in any way prejudice the respondent but it may be merely - in my submission, that is a matter of completeness in relation to the notice of appeal and that is why I seek to do it; and I do make that application.

PN79

SENIOR DEPUTY PRESIDENT WATSON: I'm sorry, the application is?

PN80

MS O'BRIAN: Is to amend the notice of appeal to the effect that there is an error of law on the failure of his Honour to take into account a relevant consideration, namely the evidence of Mr Papadopoulos which is itself proof and/or corroboration of Mr Hancock's evidence on the issue of the intention to form an employment relationship.

PN81

Your Honour, the submission also refers to remitter and it's our respectful submission, put shortly, that the matter should be remitted not to his Honour, Senior Deputy President Lacy. That submission is put on the basis not for actual bias but merely for apparent bias and it's submitted that the strong findings of adverse credit to Mr Hancock means that the matter should be remitted to a different member.

PN82

Finally, your Honour, we say this is ultimately no different from Cruickshank at all. This is an intermediate finding of fact crucial to the outcome and in my respectful submission that falls squarely within the Cruickshank principle. So unless there's anything else. I beg your pardon, your Honour.

PN83

DEPUTY PRESIDENT HAMILTON: Before you sit down, can I perhaps take you to paragraph 22 of exhibit R1 if you have it handy.

PN84

MS O'BRIAN: Yes.

PN85

DEPUTY PRESIDENT HAMILTON: There's no rush. Take your time.

PN86

MS O'BRIAN: Thank you, your Honour. Yes.

PN87

DEPUTY PRESIDENT HAMILTON: Right. That is an attempt, if I could put it that way, to deal with this issue of the importance of Mr Papadopoulos's - - -

PN88

MS O'BRIAN: I'm sorry, your Honour, I can't hear you. I'm a bit hard of hearing.

PN89

DEPUTY PRESIDENT HAMILTON: No, no ,I will start again, no problems. That is an attempt to deal with this issue of the importance or otherwise of Mr Papadopoulos's evidence.

PN90

MS O'BRIAN: That is right.

PN91

DEPUTY PRESIDENT HAMILTON: It's essentially indicated that it may not be crucial perhaps, is how I put it. What do you think about paragraph 22?

PN92

MS O'BRIAN: Well, I think it is crucial.

PN93

DEPUTY PRESIDENT HAMILTON: Right.

PN94

MS O'BRIAN: Critically, that is why the evidence required analysis, because this wasn't a case of Mr Papadopoulos having an opportunity to answer that, it wasn't a case of Mr Hancock having an opportunity to answer that. That comes out for the first time in cross-examination of Mr Forsyth, so there's credit issues for Mr Forsyth, where his Honour found no credit issues in relation to Mr Forsyth. The only credit issues he found were in relation to Mr Hancock on questions other than this issue. He didn't say, "Oh, you're lying in this -" he formed a view about credit in relation to the company documentation and he then used that question to determine that Mr Hancock had no credit in relation to the intention to form the employment relationship.

PN95

In my respectful submission that's not enough. I doubt whether he can do that, in any event, but given that he did, it's simply not enough. Given that Forsyth's evidence must have been in issue, given the way that that critical aspect which Mr Justice - I beg your pardon, his Honour Senior Deputy President Lacy doesn't refer to at all, when the conversation took place. He just says the outcome of the negotiations was X, which is rather inconsistent with the evidence.

PN96

The only other point I should raise, which my learned friend refers to, is the so-called recollection of Mr Hancock - of Mr Papadopoulos. He is asked at PN119 two questions. That question comes immediately after he has been asked:

PN97

Do you recall the conversation where Mr Forsyth says, 'I don't want to be a director'?

PN98

He says:

PN99

No, I don't recall such a conversation.

PN100

He is asked it again and he says, "No". Then he is asked a question:

PN101

What is your recollection of the conversation as to whether he asked and you told him you didn't want to be a director, and what else was said?

PN102

No, I'd better take you to it - so he's asked:

PN103

Do you recall the conversation about the fact that you didn't want to be a director?---No.

PN104

He is then asked again, "No.". Then at PN119 he is asked two questions:

PN105

Do you recall whether or not in the meetings with Hancock that Forsyth said 'I don't want to be a director. I want to be on wages' or any words of that nature?

PN106

He says:

PN107

My recollection is we talked about the wages.

PN108

That's absolutely consistent with his earlier evidence, that there was no conversation by Mr Forsyth that he didn't want to be a director; and furthermore he is answering the part of the question he had not already been asked; that is, "Do you recall the conversation about the directorship?". He is answering the part of the question, "I want to be on wages or any words to that effect". He says, "Yes". My learned friend says that's his recollection therefore that's all there was. Well, that's not all there was. There was two previous questions that have to be taken into account in looking at that answer.

PN109

I don't think there's anything else.

PN110

DEPUTY PRESIDENT HAMILTON: Thank you.

PN111

SENIOR DEPUTY PRESIDENT WATSON: Very well.

PN112

Mr Dowling.

PN113

MR DOWLING: Thank you, your Honour. Your Honour, I'm told by my instructor the folder of cases upon which we rely and those cases have been referred to in exhibit R1 have already been provided.

PN114

SENIOR DEPUTY PRESIDENT WATSON: Thank you.

PN115

MR DOWLING: Thank you. I don't expect to take you to those apart from I think, one of the authorities contained in that folder. Can I start though by taking you to the decision of Senior Deputy President Lacy, which I understand is in the appeal book. Tab 1, I'm instructed, your Honour.

PN116

If I can take you very quickly through the decision. Relevantly paragraphs 3 to 5, and I won't take you to them, where his Honour sets out what the questions were that he was required to answer. There are two paragraphs that I do want to take you to. Paragraph 7, the fourth line, the sentence beginning:

PN117

In both cases there was a serious conflict in the evidence of Mr Hancock and Mr Forsyth on the contentious issues of fact.

PN118

In some respects that is the respondent's significant proposition in this appeal, that his Honour properly identifies that the contentious issues of fact, underlining contentious, are between Mr Hancock and Mr Forsyth. So in the preceding paragraph he sets out there are three witnesses here; there's Mr Hancock, there's Mr Papadopoulos and there's Mr Forsyth. The contentious issues of fact are between Mr Hancock and Mr Forsyth and he proceeds to deal with it that way. While I've got you there, a significant paragraph is paragraph 8 because in that paragraph - and this responds to something my learned friend has said - the Senior Deputy President says:

PN119

Putting aside the question of directorship, there are relevant indicia that indicate Mr Forsyth was an employee.

PN120

The relevant indicia that he goes on to identify, in our submission, are uncontroversial. They were either unchallenged or were agreed and they are that he was supervised by a leading hand, that he was subject to the direction of that person, the supervisor; that he had no capacity to delegate his work; that he was paid a flat hourly rate of work; and that there was taxation deductions from that hourly rate. They, we say, are proper indicia of the employment relationship and right up front he identifies, "Despite what you say about the directorship, I have found unchallenged indicia of the employment relationship".

PN121

That leads directly to what seems to be the essence of what is put against us. My learned friend in her reply submission at paragraph 7, if I could take the Bench to that paragraph, that was exhibit A2. In paragraph 7 the appellant there states:

PN122

SDP Lacy does not rely on other matters going to the probability or improbability of the appellant's case. He relies wholly on credit.

PN123

That, we say, is a complete misunderstanding of what it is his Honour did and made out, not in the least by paragraph 8; because what his Honour looked at, in determining whether there was an employment relationship, amongst other matters, were the ASIC documentation which are referred to in the respondent's submissions. That ASIC documentation identifies Mr Forsyth as appointed as a director on 17 January and terminating as a director on 17 January, and in our submission there's a wholly inadequate explanation for that from Mr Hancock.

PN124

He looks at and considers the absence of any other documentation and notes in his decision there is no written resolution of the company at any point that sets out the making of Mr Forsyth a director of the company. So he has found the ASIC documentation supports his conclusion, the lack of any other documentation supports his conclusion, the payslips that were an exhibit to the statement of Mr Forsyth sets out his hourly rate; and additionally, those matters that the respondent sets out at paragraph 16 and 17 of its written submissions - I'm sorry to take you from one document to the other but that's R1 at paragraph 16.

PN125

At paragraph 16 you will see there is the paragraph that sets out the agreed or consistent evidence. It sets out the commencement of the relationship; the hourly rate; the fact that all the work he performed he was paid at that hourly rate; tax was deducted; he did not receive any dividends or returns; was not provided with any documentation appointing him as director; did not sign any; the ASIC documents I've already referred to; no evidence of any written company resolution; again, I've already referred to it.

PN126

17 goes on to talk about the unchallenged evidence; never attended board meetings; never held himself out to be a director; received superannuation; reported to his leading hand; couldn't delegate; and at 17(f) the evidence of Mr Forsyth that Mr Hancock told him, "The way we get around the union and the EBAs was by making everyone a director" or words to that effect. That was completely unchallenged. That evidence stood unchallenged. So the vice of what is put by the appellant; it said the SDP decided this on credit alone. It's simply not the case and his reasons make it clear there was significant documentary material and a lack of documentary material, together with unchallenged evidence that formed the basis of his decision. That's the vice with paragraph 7 of the reply.

PN127

Can I take you to now the last of the exhibits, A1, which is the one I haven't referred to. My learned friend referred to the table in which she there set out the evidence of Mr Papadopoulos and why that was material.

PN128

SENIOR DEPUTY PRESIDENT WATSON: Sorry, which paragraph?

PN129

MR DOWLING: Paragraph 18 of A1.

PN130

SENIOR DEPUTY PRESIDENT WATSON: A1, yes?

PN131

MR DOWLING: That's the table of the evidence. Now if I could just briefly say something in response to each of the pieces of evidence that are set out there. As I understand it the table repeats largely the evidence of Mr Papadopoulos when comparing it to Mr Hancock and then when comparing it to Mr Forsyth, so I only propose to deal with it once.

PN132

In relation to the column that deals with Mr Papadopoulos's evidence, the first item, number 1:

PN133

It was clear to me I was not starting as an employee.

PN134

Our brief response to that is well, that's not determinative of anything much. Mr Papadopoulos's own opinion of his own situation. That, we say, is not a critical piece of evidence.

PN135

In relation to paragraph 2 or what is identified there as the second point:

PN136

Bob stated Gary and I would be directors. Well, in the interview we're told we were going to be directors of the company, not as employees.

PN137

There's two things we say in response to that. The first the Deputy President has already identified; we say in relation to the comment of Mr Forsyth that he did not want to be a director, it was raised in the first conversation to which Mr Papadopoulos was not a party. There is no doubt in Mr Forsyth's statement, he makes very clear that he said to Mr Hancock, "I do not want to be a director". That allegation is put squarely at paragraph 7 of his statement, before the Senior Deputy President. It can't be said now against us, well, he never really understood that allegation". Mr Hancock never really understood that allegation. He clearly puts in his statement that he said to Mr Hancock, "I do not want to be a director". We say that was in a conversation at which Mr Papadopoulos was not present.

PN138

We also say, in response to point 2, that paragraph PN119 is telling. My friend has taken you to it and I will briefly take you back to it and perhaps the easiest way to do that is it is extracted at paragraph 28 in R1 of the submissions of the respondent. Before taking you to it I'll deal with what my learned friend says about the context. We don't dispute that preceding that there are questions of Mr Papadopoulos about whether he can recollect Mr Forsyth saying, "I did not want to be a director" and he says, "I don't recollect it". In the proper language of witnesses we say he is doing nothing other than saying he can't recollect, he is not ruling out the possibility. The questions are put in that context. He does not rule it out; that's the best that can be said about the fact that he doesn't recollect it.

PN139

He then goes on to say, and PN119 is fully set out in paragraph 28:

PN140

Can I explain what my recollection of that was? When we were going to the interview, which was the second interview, I wasn't present for the first -

PN141

He confirms what we say:

PN142

- the advertisement for the job was being subcontractors and we didn't want to be subcontractors. We want to be on weekly income and as far as I'm concerned that's what it was, that we want to be on wages which means we want to be on weekly income. That's my recollection of it.

PN143

Now, pretty unambiguous in our submission, he is saying he reached an agreement with Mr Hancock to be on wages, completely at odds, we say, with the notion that he is a director and has not entered into an employment relationship. So that is why we say, in relation to Mr Papadopoulos's evidence, it is either not material or certainly not helpful.

PN144

I took you to that point when I was dealing with - and again I apologise for chopping and changing a bit between the documents - when I was taking you through the Papadopoulos evidence as it is set out at paragraph 18 of A1. If I could just quickly continue on down that process. The third point is:

PN145

Gary was present at this conversation.

PN146

He is now dealing with the second and third conversation. Again, I just refer back to 119, the finding in relation to 119 and the finding in relation - I withdraw that. My apologies, not the finding, the evidence in relation to the first conversation. In relation to paragraph 4 Mr Papadopoulos sets out what they discussed at A and B. We say A and B are not controversial. 4C is relied upon as significant:

PN147

Gary and myself receiving a share of the profits for this work.

PN148

Our response to that is to say well that simply never happened. The unchallenged agreed evidence of the parties is that there never was a share of the profits and that puts that evidence in a significant light. Five is:

PN149

I do not recall him saying he did not want to be a director.

PN150

I've dealt with that. Six is a part quotation of 119. We say 119 has to be read as a full paragraph and when it is read as a full paragraph it is unambiguous.

PN151

If I can take the Bench now back to R1 and I think I can do this very quickly, but I just want to deal with the relevant authorities on adequate reasons. They are set out starting at page 2 under that heading D Relevant Authority on Adequate Reasons. Soulemezis is extracted there and the authorities which relied upon it. There's an extract from the Australian Education Union. Can I add to that paragraph, the paragraph that is set out there, the reference to it is at paragraph 152. My apologies, I did not include the reference to the paragraph.

PN152

Likewise, at paragraph 12 there's an extract from Fletcher v Lyons McFarlane; the relevant paragraph is at paragraph 101. I warned the Bench that I would take you to one authority and that's the one that I want to take you to. So that is Fletcher v Lyons and that appears behind tab G in the authorities which have been provided to you. I really do this for completeness, lest it be said the quote is not full. You will see there the quote from Fletcher v Lyons says:

PN153

In any case in which reasons are required the necessary content will depend on the circumstances of the particular matter.

PN154

We say that's a pretty uncontroversial proposition. You don't expect it to be disagreed with but the Court of Appeal does go on and it's the following paragraph - still the same numbered paragraph, my apologies - on the following page that I want to take the Bench to. That's where it say:

PN155

First a Judge should refer to the relevant evidence. There is no need to refer to the relevant evidence in detail especially in circumstances where it's clear that the evidence has been considered. However, where certain evidence is important or critical to the proper determination of the matter and is not referred to by the trial Judge, an appellant Court may infer the trial Judge over that the evidence failed to give consideration to it -

PN156

et cetera, et cetera. Secondly and thirdly I won't take you to. As I say - my apologies, there is one further part:

PN157

- fail to give consideration to it… where conflicting evidence of a significant nature is given, the existence of both sets of evidence should be referred to.

PN158

Again, this underscores the respondent's position and that is it has to be critical to the proper determination, it has to be of a significant nature. For the reasons that I've already taken the Bench to, we say the evidence of Mr Papadopoulos was neither of those things and that is set out in the following part and that is under the heading The Evidence Below in the submissions. In paragraph 16 and 17, which I've already identified, is the agreed and consistent evidence and paragraphs 21 through to 29 of the respondent's submissions are those submissions that deal directly with the proposition that there was either limited conflict or limited utility in the evidence of Mr Papadopoulos. In those circumstances it's not critical or significant in the way which their Honours in the Court of Appeal described it in Fletcher v Lyons. That is the proposition.

PN159

The submission next deals with the real conflict and this leads to something my learned friend has said. The real conflict is the relationship as agreed between Mr Hancock and Mr Forsyth. Now my learned friend in her submissions said there were three people at the meeting, there were three parties forming the intention. That's just not so. That doesn't sit with contract law, we say. There were two parties forming the intention; they were Mr Forsyth and Mr Hancock. Mr Papadopoulos might form a relationship or does form a relationship, whatever it may be, with the employer himself.

PN160

But the crucial question is the relationship formed between Mr Forsyth and Mr Hancock. That is the consideration that the Senior Deputy President was looking at that is the real conflict that the Senior Deputy President was looking at. What was that relationship and what were the relevant indicia, taking into account the other evidence? So we say my learned friend is not right to say this is a tripartite deal. This clearly isn't such a thing. You have got to look at the relationship formed between Mr Forsyth and Mr Hancock.

PN161

The other thing that is said in relation to Soulemezis, dealing with my learned friend's reply, is that - and I dealt with this already and will only deal with it briefly - if the question of jurisdictional fact turns on a credit issue alone, that it's not enough to reason it in the way in which he has done. Well, as I said earlier, clearly this does not turn on credit alone. There is significant documentary and lack of documentary evidence and other agreed evidence that deals with it.

PN162

The other thing that needs to be said about that, it's not completely clear to me how my learned friend puts it. It's said in the original submissions that the appellant is properly entitled to appeal provided there is an error. It's also said that that error may be classified as an error of fact or an error of law. That is their submissions in A1 and that they say is supported by authority and they rely on Edwards v Giudice for that proposition. We say that's a relatively uncontroversial proposition. So what you are presented with is, is the ability to appeal on a question of fact or a question of law? Now that doesn't sit with the classification that my learned friend had put on this appeal as not giving a right to appeal against an error of fact.

PN163

If I can deal lastly with the question of the disposition of the appeal. The submissions on leave really overlap with what I have already put and that is to say there's no sufficient doubt. But secondly to say there's no substantial injustice and this is perhaps a gloss on what is already put, and that is because the best that can be established from the appeal as it is presently put is that Mr Papadopoulos's evidence would have made out a directorship. For the reasons I've already alluded to, in paragraph 8 his Honour finds despite the question of directorship there are significant agreed and uncontroverted evidence that is uncontroverted evidence demonstrating an employment relationship.

PN164

The reason we say that is relevant to leave is even if Mr Papadopoulos's evidence was able to establish that Mr Forsyth was a director, it could not have established that he was an employee because of the other evidence that was before Senior Deputy President Lacy. We say that's a proper reason for refusing leave, because an outcome of the sort that's contended for is not going to change the result. You might find that he is a director or should have concluded that he is a director, but you can't find on the evidence that it wasn't an employment relationship. That, we say, goes to the refusing of leave.

PN165

The submissions there set out that the appeal should be dismissed for reasons I've already identified. There are two last matters. I say last matters but I suspect they probably won't be, but I'll do my best. But the question of the remittal of the matter: what seems to be put against us is there's some bias on the part of Senior Deputy President Lacy and that's a reason not to send it back to him. Can I make very clear what our submission on this is; the ground that we were here to face today was a lack of adequate reasons. Now the authority referred to therein, we say, stands for the proposition that if that is the only error the proper course is to send it back. There's a logical and good reason for that and that is it's not suggested there's any error other than not fully setting out what your reasoning was.

PN166

In those circumstances the proper course is to send it back and say okay, if the Bench is content there was some shortcoming in the reasoning, send it back and say, "Fill in the gap in your reasoning". The authority stands to that proposition, that that is the proper course if it is the only reason. Again that is logical because if there are other errors perhaps it's proper to send it elsewhere. But if that is the only error there is no reason not to send it back and say, "Okay, fill in the gap". We say that's a logical course to adopt.

PN167

In relation to the final and further alternative, as the respondent puts it in its submissions, if the Full Bench is against us on leave, against us on the finding that there was no error and against us on the question of remitting it, we say it is able - again, an uncontroversial proposition - to determine the matter itself. In the circumstances of the evidence set out at paragraph 16 and 17 and all of the evidence that is now before you in the nature of the re-hearing, the proper course is for the Full Bench to dismiss it. Excuse me one moment.

PN168

DEPUTY PRESIDENT HAMILTON: You don't go so far as to say that Mr Papadopoulos's evidence is of no assistance at all, do you? You simply say that it's peripheral or incidental or something of that sort; is that right?

PN169

MR DOWLING: Yes, it's not necessary, in our submission, for us to answer the question of whether Mr Papadopoulos's evidence was relevant or irrelevant. The critical question is whether it was necessary for his Honour to refer to it in his determination and where it was - it had to be critical or significant with respect to the finding. So that's a different question to saying was any of it relevant? We say we don't have to answer that question. We just have to look at was it critical in his finding? In our submission we say it wasn't critical and therefore wasn't necessary for him to refer to it in his reasoning process.

PN170

SENIOR DEPUTY PRESIDENT WATSON: Mr Dowling, while you are interrupted, the appeal was brought on the single ground that Senior Deputy President Lacy erred in failing to adequate reasons, as he failed to give any reasons for rejecting or accepting Papadopoulos's evidence as corroborative and/or proof if Forsyth was a director. Ms O'Brian has sought leave to amend the appeal grounds to add an additional ground, as I understood it, that SDP Lacy erred in law in failing to take into account a relevant consideration the evidence of Papadopoulos, which was proof and/or corroborative of evidence of Hancock as to the intention to form an employment relationship. What is your position in respect to that application?

PN171

MR DOWLING: Yes, I was coming to that matter, your Honour.

PN172

SENIOR DEPUTY PRESIDENT WATSON: Yes.

PN173

MR DOWLING: I think the way it's put is it's really a part of the same argument. We don't accept that proposition. There's a bit of a leap in that proposition because what is said is there's inadequate reasoning. The first time around the ground of appeal we were here to face, there's inadequate reasoning and the appellant says, well the inadequate reasoning shows that we don't know what he reasoned and therefore that's - although these words are not used - a denial of natural justice. What is put in this way is slightly different. It's really said that he failed to take account of Mr Papadopoulos's evidence. So they don’t go in the same - they're not hand in hand, those propositions. So it would be facing a very different appeal, we say, to meet a proposition that he didn't consider it - I will withdraw that. That there's an error in not taking account of it all is something very different to not reasoning it.

PN174

I think in the circumstances, though, I think we would have to concede such an argument would likely be met with the same response and that is this is the uncontroverted evidence, this is the unchallenged evidence. He answered the critical question, he took into account all the things he was properly supposed to take into account therefore there was no error. So whilst I'm not instructed to consent to the amendment, we do make the concession that it would likely be met with a similar argument. We do say - we take issue with the proposition that it's really the ..... argument. We say it's not, but we would say we would likely meet it with a similar argument. So whilst we are not instructed to consent, I do make that concession.

PN175

SENIOR DEPUTY PRESIDENT WATSON: Very well. Yes, well I can indicate now that the Bench will allow the application to amend the grounds. I wonder, Ms O'Brian, if the amended ground could be provided in writing.

PN176

MS O'BRIAN: Yes, I beg your pardon, your Honour, I should have done that.

PN177

SENIOR DEPUTY PRESIDENT WATSON: Yes, very well. Yes, Mr Dowling.

PN178

MR DOWLING: That was all from me, your Honour, unless there are any questions. They are the submissions of the respondent.

PN179

SENIOR DEPUTY PRESIDENT WATSON: Very well. Thank you.

PN180

MR DOWLING: Thank you.

PN181

SENIOR DEPUTY PRESIDENT WATSON: Ms O'Brian.

PN182

MS O'BRIAN: Your Honour, just a couple of things. My learned friend is quite correct; Mr Papadopoulos was not a party to the formation of the relationship between Mr Forsyth and Mr Hancock for the company. However he was a witness to at least two of the conversations that are to the formation of that contract.

PN183

SENIOR DEPUTY PRESIDENT WATSON: Mr Hancock's evidence was
that - - -

PN184

MS O'BRIAN: Sorry, I can't hear you.

PN185

SENIOR DEPUTY PRESIDENT WATSON: Mr Hancock's evidence was that Papadopoulos attended one of those meetings?

PN186

MS O'BRIAN: No, two meetings.

PN187

SENIOR DEPUTY PRESIDENT WATSON: Just one moment, please.

PN188

MS O'BRIAN: I don't think Mr Hancock gave any evidence about how many meetings Mr Papadopoulos attended but if it was anything - it is hard to find where that is but it is there somewhere. Because there's no evidence, until Papadopoulos gets into the witness box, about how many meetings there were and then he says there were two.

PN189

SENIOR DEPUTY PRESIDENT WATSON: Just bear with me one moment. I'm thinking of the statement of Mr Hancock at paragraph 11 where he refers to three meetings - - -

PN190

MS O'BRIAN: I beg your pardon?

PN191

SENIOR DEPUTY PRESIDENT WATSON: - - - and indicates Papadopoulos did not attend the first two interviews but attended the third.

PN192

MS O'BRIAN: You might be right. I think his Honour finds that there were three meetings and Mr Papadopoulos - - -

PN193

SENIOR DEPUTY PRESIDENT WATSON: I don't think there's any issue that there were three meetings.

PN194

MS O'BRIAN: Yes. No, there's no issue about that. Mr Papadopoulos gave evidence there were two. I mean, it really just reinforces my point about why his Honour really had to address Papadopoulos's evidence, isn't it? He makes a finding, arguably on the Papadopoulos evidence but it doesn't say so. That's all he had to do; all he had to do was, you know, say that. That is what Mahoney says; he says all he has to say is, "I took into account the evidence of Mr Papadopoulos".

PN195

SENIOR DEPUTY PRESIDENT WATSON: His evidence, I think, was one at one point and two at another point.

PN196

MS O'BRIAN: I think my learned friend wants to run away from the credit finding that Senior Deputy President Lacy made about Mr Hancock:

PN197

In my view Mr Hancock's evidence about the appointment of Mr Forsyth as a director of the company is inconsistent and unreliable. I am inclined
therefore -

PN198

It doesn't matter what the content of the evidence was, he makes a clear unequivocal credit finding that he then applies to the separate fundamental question; what was the intention of the parties?

PN199

SENIOR DEPUTY PRESIDENT WATSON: That would not have been encompassed within the evidence about the appointment of Forsyth as a director?

PN200

MS O'BRIAN: Well, it does not matter. That's what his Honour does. I mean, his Honour makes that the issue and he shouldn't have. He should have said, "I'm looking at all of these issues and deciding. In addition to the intention to form the relationship I'm just taking all those into account". He didn't do that. He said, "On the question of the intention to form an employment relationship, I'm saying that is a credit question and on credit I do not accept Mr Hancock for these other reasons".

PN201

If you take that away and say Mr Papadopoulos's evidence was that the directorship relationship was formed, then the documentation about the ASIC and all that stuff - and if you look at it you can see it's all over the place. It could hardly be described as a matter of some sort of fraud on the public. It's mere slack documentation, nothing more. So if you accept Papadopoulos that the arrangements were that they were to be directors, they were made directors. The process and the time and the rest of it might have been all up the whatever, and it was, but they were made directors according to that documentation. Just as Forsyth says they were intended to be. There is no running away from that.

PN202

So if you take out the credit issue about Hancock all you have got left is Papadopoulos's evidence and that's why it had to be dealt with and that's the point that McHugh makes in Soulemezis. You can't rely on credit for fundamental questions and this was a fundamental question.

PN203

SENIOR DEPUTY PRESIDENT WATSON: Can I ask you, in exhibit R1 of the respondent's submission, page 6, 17(f), Hancock told Forsyth, "The way we get around the union and EBAs was by making everyone a director" or words to that effect. Mr Dowling's submission was that was uncontested evidence. What is your position with respect to that?

PN204

MS O'BRIAN: The words that my learned friend used in inverted commas are not correct but there was some evidence about such words to that effect. I don't think it was quite "we get around the union" but there was something along the lines of "we avoid the EBA" or something along those lines.

PN205

MR DOWLING: It's a quote from the statement.

PN206

MS O'BRIAN: Is it a quote from the statement?

PN207

SENIOR DEPUTY PRESIDENT WATSON: It comes from Forsyth's statement.

PN208

MR DOWLING: It's quoted from his statement, your Honour.

PN209

COMMISSIONER SIMMONDS: Yes, it's a quote from the statement.

PN210

MR DOWLING: Yes.

PN211

COMMISSIONER SIMMONDS: It's a quote from the statement.

PN212

MS O'BRIAN: Well, that might be right.

PN213

SENIOR DEPUTY PRESIDENT WATSON: Was that ever contested, that evidence?

PN214

MS O'BRIAN: I think Mr Hancock - no, it wasn't contested and I think the important thing here is not to let that get in the way of the legal issues and that's the danger here. Frankly, with gross respect, there's a suggestion that that got in the way of his Honour's reasoning in this matter.

PN215

SENIOR DEPUTY PRESIDENT WATSON: Yes.

PN216

MS O'BRIAN: You have got to put aside the blinkers, concentrate on the law. Did he give adequate reasons on a crucial issue? No. Did he rely on a credit issue to resolve a crucial matter? Yes. Is that correct at law? No. The matter must go back, in my respectful submission, for those reasons.

PN217

COMMISSIONER SIMMONDS: Ms O'Brian, I think I'm confused about something and I would like you to try and remove the confusion. I think you were saying that Papadopoulos attended two meetings prior to the commencement of the work, along with the respondent; is that right?

PN218

MS O'BRIAN: Yes.

PN219

COMMISSIONER SIMMONDS: Where is the evidence of that?

PN220

MS O'BRIAN: Yes, he gives that at - here it is, paragraph 2 of Mr Papadopoulos's statement, your Honour, which is exhibit - paragraph 2 says:

PN221

From about the date of the first meeting I had with Bob Hancock, I think about October 2006, I said I would start with the company at the same time as Gary Forsyth.

PN222

Then at five begins the discussion about the conversation everybody agrees was had, that is:

PN223

After we came back about 3 weeks after Gary left the previous workplace in mid-November I joined the company as a director. It was clear to me I was not starting as an employee. Bob stated we, meaning Gary and myself -

PN224

The implication being that they were both present.

PN225

COMMISSIONER SIMMONDS: That does not show that the respondent was present at that meeting.

PN226

MS O'BRIAN: That the respondent was not present at the second meeting?

PN227

COMMISSIONER SIMMONDS: At that meeting.

PN228

MS O'BRIAN: The meeting in para 6.

PN229

COMMISSIONER SIMMONDS: Sorry?

PN230

MS O'BRIAN: At the meeting in para 6, your Honour.

PN231

COMMISSIONER SIMMONDS: There's no meeting at para 6.

PN232

MS O'BRIAN: Well, if you go on- - -

PN233

COMMISSIONER SIMMONDS: "I joined the company as a director".

PN234

MS O'BRIAN: Yes.

PN235

COMMISSIONER SIMMONDS: So he had already joined.

PN236

MS O'BRIAN: No, that is not correct, your Honour, and we need to get this understood. I agree the evidence is not very good. I agree this evidence is confusing but if you read it carefully:

PN237

After we came back about three weeks after Gary left the previous workplace in November 2006 I joined the company as a director. It was clear to me -

PN238

COMMISSIONER SIMMONDS: But the evidence is that the respondent was already working at that point.

PN239

MS O'BRIAN: No.

PN240

COMMISSIONER SIMMONDS: Well, let's - - -

PN241

MS O'BRIAN: You have to read all of the evidence, "I joined the company- - -

PN242

COMMISSIONER SIMMONDS: I have, that is why I'm having the difficulty.

PN243

MS O'BRIAN: Well, that's why I'm trying to take you out of the difficulty:

PN244

I joined the company as a director. It was clear to me I was not starting as an employee. Bob stated that we, meaning Gary and myself, would be directors. We discussed the type of work we would do. This was mainly work on Bunnings sites et cetera. Gary and myself doing work all over Australia and Gary and myself receiving a share of the profits.

PN245

If you look at PN19.

PN246

DEPUTY PRESIDENT HAMILTON: 119?

PN247

COMMISSIONER SIMMONDS: No, 19.

PN248

DEPUTY PRESIDENT HAMILTON: 19.

PN249

MS O'BRIAN: "When we were going to the interview which was the second interview".

PN250

COMMISSIONER SIMMONDS: Sorry, PN19 of the transcript or?

PN251

MS O'BRIAN: I beg your pardon, PN19 - 119. I’m sorry, 119.

PN252

SENIOR DEPUTY PRESIDENT WATSON: Yes.

PN253

MS O'BRIAN:

PN254

Can I explain what my recollection was? When we were going to the interview which was the second interview.

PN255

Yes, you have to draw some inferences.

PN256

COMMISSIONER SIMMONDS: Yes, but he says, "I wasn't present for the first".

PN257

MS O'BRIAN: Because there were three and that is a finding his Honour makes and it's uncontested. We don’t contest that argument. If you look at the whole of the evidence they both say there were three interviews and Mr Papadopoulos says - and if you look at PN135, which confirms this, in re-examination by Mr Donaghey of Papadopoulos:

PN258

You also gave evidence you attended a third interview as you described it with Mr Hancock, is that right?---Second and third, I believe. Yes.

PN259

Then he goes on:

PN260

Second and third. At either the second and third interviews did Mr Forsyth say he was reluctant to become a director to you?---No, not at the interview.

PN261

Your Honour, I concede that it's difficult to follow but I think that his Honour got that correct.

PN262

COMMISSIONER SIMMONDS: But see if we go to paragraph 70, PN70, that suggests to me that the respondent was already working there when - it more than suggests, it makes it plain that the respondent was working there when Mr Papadopoulos commenced.

PN263

MS O'BRIAN: Yes, that is right.

PN264

COMMISSIONER SIMMONDS: Well I thought you - - -

PN265

MS O'BRIAN: Yes, that's right.

PN266

COMMISSIONER SIMMONDS: I thought you disagreed with me when I said that before.

PN267

MS O'BRIAN: No, no, I didn't disagree with you. Mr Forsyth started the work prior to Mr Papadopoulos but the conversations occurred prior to him starting work. I agree it's hard to find it but you have to read all of the evidence and his Honour got that right; that Papadopoulos comes over after Forsyth has begun. Yes, I mean until - both in the witness statements and in the examination-in-chief there is a lack of precision as to when these things occurred. I conceded that; there's no doubt about that. That is why you have to read all of the evidence to get out of it the correct findings I think his Honour made. I think he made those - the findings he actually made were correct. There's no argument about those.

PN268

The problem here is not that he didn't make - that he made incorrect findings. The problem here is he failed to address a fundamental matter.

PN269

COMMISSIONER SIMMONDS: Yes, thanks.

PN270

MS O'BRIAN: Critically, and I think this needs to be understood here, one of the factors going to make up the ultimate finding is the intention to form a relationship. That has not been dealt with and that is an intermedetiary(sic) fact that goes to the ultimate fact that has to be found. Until that intermedetiary fact is found, no finding of the ultimate fact can be made, because you could - my learned friend keeps saying it will all come to the same conclusion. It may not. In my respectful submission there's no reason at all why it should. There would need to be a great deal more evidence about the relationship and what was intended, to form the view that it was going to be an employee.

PN271

The mere fact you had the tax taken out, the mere fact you've been supervised, that does not necessarily mean you are an employee. But crucially all of the matters have to be taken into account and until there's a finding about the crucial matter no finding can be made.

PN272

On remitter, we do not say of course for one moment that Mr Lacy J would himself be biased in fact. We merely say an objective observer would form the view, given his very strong findings on credit, that he couldn't bring an impartial assessment ultimately of the matter.

PN273

SENIOR DEPUTY PRESIDENT WATSON: Very well. Thank you all for your submissions. We will reserve our decision on the appeal.

<ADJOURNED ACCORDINGLY [11.22AM]

LIST OF WITNESSES, EXHIBITS AND MFIs

EXHIBIT #A1 APPELLANT'S WRITTEN SUBMISSIONS PN3
EXHIBIT #R1 RESPONDENT'S WRITTEN SUBMISSIONS PN3
EXHIBIT #A2 APPELLANT'S SUBMISSIONS IN REPLY PN13