Righetti v Stockdale & Leggo Pty Ltd [1996] IRCA 334

DECISION NO: 334/96 CATCHWORDS INDUSTRIAL LAW - complaint of UNLAWFUL TERMINATION - whether applicant precluded from bringing application because he received or was entitled to receive relevant wages exceeding the monetary limit provided for by the Act - WAGES - "relevant wages" - whether wage-related benefits or entitlements were "relevant wages" Industrial Relations Act 1988, ss 170EA, 170CD Ardino v Count Financial Services Pty Ltd (1994) 1 IRCR 221 PETER LLOYD RIGHETTI v STOCKDALE & LEGGO PTY LTD VI 2246 of 1995 Before: PARKINSON JR Place: MELBOURNE Date: 19 JULY 1996

IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 2246 of 1995 B E T W E E N: Peter Lloyd RIGHETTI Applicant A N D STOCKDALE & LEGGO PTY LTD Respondent MINUTES OF ORDERS 19 July 1996 PARKINSON JR THE COURT ORDERS THAT: 1. The application is dismissed. NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules

IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 2246 of 1995 B E T W E E N: Peter Lloyd RIGHETTI Applicant A N D STOCKDALE & LEGGO PTY LTD Respondent REASONS FOR DECISION 19 July 1996 PARKINSON JR In this matter an application pursuant to s170EA of the Industrial Relations Act 1988 was filed on 29 March 1995. This is a decision in relation to a preliminary argument which I determined was appropriate to be heard prior to the substantive proceedings. The preliminary argument was heard on 23 and 24 April 1996. Written submissions were filed by the applicant on 6 May 1996 and by the respondent 13 May 1996. The applicant filed submissions in reply on 23 May 1996 and the respondent was granted leave to file further submissions, which it did on 28 May 1996. The respondent submits that the applicant is by operation of s170CD of the Industrial Relations Act 1988 precluded from bringing proceedings pursuant to s170EA. The respondent contends that the applicant received or was entitled to receive relevant wages in an amount exceeding the monetary limit provided for by s170CD. It contends that the applicant received relevant wages in the sum of $60,230. 96 in the relevant period 15 March 1994 to 14 March, 1995, exceeding the relevant wages by $230.96. It was further contended that the applicant received or was entitled to receive as a result of the salary package agreed, amounts of money or payments on his behalf which were to be characterised as relevant wages for the purpose of the Act. These amounts, payments or entitlements which the respondent said ought be accounted for as relevant wages were: · bonus and commission payments · car lease payments · motorpass credit card payments on behalf of both the applicant and his spouse · cash payments described as telephone allowances · cash payments in respect of reimbursement for personal tax liability incurred on private use of motor vehicle. All of the above matters might be described as salary or wage-related benefits or entitlements. The issue in this proceeding is whether they fall within the description of "relevant wage" as that term in used in s170CD. The respondent also referred to the amounts of commission received by the applicant in the relevant period. The respondent relied upon these commission and bonus amounts as constituting relevant wages. As to commission, I am satisfied that the receipt of these amounts, being contingent upon various and uncertain events, does not fall within the usual meaning of the word "wages", or within the term "relevant wages" as provided for in s170CD. I am also satisfied that the payments of expenses actually incurred, which also vary from time to time, including the applicant's motorpass charge card account and direct payment of telephone accounts are not matters which fall within the description of relevant wages. These payments can truly be described as reimbursements of actual expenses incurred in the course of the employment. They are not amounts of money available to the applicant to use for any purpose he might choose, but are payments directed by the respondent to the suppliers of goods or services. As to the payments made by the respondent on account of Mrs Righetti's motorpass card, whether made on behalf of the applicant or Mrs Righetti, the evidence does not contradict the assertion in the applicant's affidavit that such payments were made to compensate Mrs Righetti for her business contributions. Further, there is no evidence to suggest that such payments were available to the applicant's direction or control as to expenditure. I now turn to examine each other salary or wage-related payment or benefit. The wages received The applicant contends that his salary entitlement pursuant to the employment contract was $60,000.00. He contends that he was not entitled to receive the additional amount of $230.96 in respect of the relevant period, being the 12 months from 15 March 1994 to 14 March 1995. In the submissions filed on 23 May 1996 behalf of the applicant the argument was expressed in the following manner: In the case of the regular fortnightly payments there is no dispute those payments, by whomever paid, were wages and that the applicant received a total of $60,239.96 [sic] in those payments during the relevant period. The applicant says he did not receive that amount "in respect of the relevant period". Further the applicant says that only part of the amount was received from the employer, the respondent, and that the respondent cannot count as "relevant wages" amounts received from persons other than the employer notwithstanding those amounts might have been wages. Clearly the amounts paid by Stockdale & Leggo (Qld) Pty Ltd were not amounts paid by the employer-respondent. It is appropriate to set out the circumstances of the employment and the history of the arrangements between the parties. The applicant was employed by the respondent at its real estate agency as a licensed real estate agent and valuer. He was also a director of the respondent. The applicant was employed by the respondent from 1 January 1984 to the date of the termination of the employment on 15 March 1995. At commencement of employment various terms and conditions of employment were agreed between the parties. These included salary and commission entitlements, motor vehicle and other cash and non-cash benefits. Over the period of the employment there were numerous variations to the terms of the employment, including increases in salary and alterations as to the description and manner in which various payments were made and benefits provided to the applicant. Few of these alterations were reduced to writing. The applicant as at the date of termination had received an amount in salary of $60,230.96. He also received other cash payments including those set out above. The definition of "relevant wages" in subs.(4) reads: "relevant wages", in relation to an employee, means the total amount of the wages that the employee received, or was entitled to receive, from the employer in respect of: (a) if paragraph (1)(a) applies to the employee - the period of 12 months referred to in that paragraph; or (b) if paragraph (1)(b) applies to the employee - the lesser period referred to in that paragraph; but, in relation to an employee whose contract of employment prescribes normal hours for the performance of work (whether by prescribing the number of hours in which, or the times at which, work is normally to be performed in a particular period), does not include any wages, additional to normal wages, in respect of additional hours of work performed or in respect of work performed at other times. In this case s170CD(1)(a) applies; the applicant being continuously employed by the employer throughout the period of 12 months immediately before the termination day. So the question is whether the total amount of the wages that he received, or was entitled to receive from the respondent, in respect of that period of 12 months exceeded $60,000.00, that amount being the applicable amount. The applicant contends that the amount of $230.96 is not part of the relevant wage for the purpose of s170CD. Counsel for the applicant submitted this was so because the amount was not an amount which the applicant was entitled to receive, but rather was received as a consequence of the payroll division methods used by the respondent. The applicant contended that the salary to which the 1992 contract entitled him was $60,000.00. Thus it was submitted that as the applicant was not entitled to receive the amount of money, the fact of its receipt does not preclude the application. It is also submitted that the amount in excess of $60,000.00 was not received in respect of the relevant period. That is, in respect of the period 15 March 1994 to 14 March 1995. In this regard the applicant referred to the decision of Chief Justice Wilcox in Ardino v Count Financial Services Pty Ltd (1994) 1 IRCR 221. In particular, reference was made to the following extract at page 227: I accept that the wages earned prior to 23 June 1993 should be disregarded. They were not wages that Mr Ardino received, or was entitled to receive, "in respect of" the relevant 12 month period. It does not matter that they were received within it. However, I do not think the wages attributable to the period 1 June - 23 June 1994 should be ignored. These were wages that Mr Ardino "was entitled to receive" in respect of part of the 12 month period. It does not matter that they were not received within it. Nor does it matter if, as appears to be the case, the wages did not become due and payable until the end of the month; a date outside the relevant period. The definition does not speak of wages that the employee becomes entitled to receive within the 12 month period, but rather wages "in respect of" that period. If wages are attributable to days within the 12 month period, they are to be counted. It does not matter when the employee became entitled to receive the wages or when (if ever) payment was made. In Ardino there were various amounts which were paid in advance or identified as being paid in respect of periods outside of the relevant period. That is the context in which the observations as to the operation of the words "entitled to receive in respect of the relevant period" were made Applying the same approach to the words "received in respect of the relevant period", the outcome is the same. The applicant in his affidavit correctly states that the original description by the respondent of the relevant period of 12 months included a day which ought not to have been included. That day was 15 March 1995. The adjustment of the dates which occurred as a consequence resulted in the same amount of salary being paid in the period 15 March 1994 to 14 March 1995. Accepting the applicant's approach to the period to be considered, which was clearly correct, there is however no evidence in these proceedings to establish that the amount received in the period of 15 March 1994 to 14 March 1995 included any amount payable in respect of a period outside those dates. The amounts paid were attributed to that period of the employment. That this is so is established by reference to the wages records of the respondent. The applicant received the salary amount in excess of $60,000.00. The amount received was an amount attributable to the relevant period and paid in respect of the relevant period. Whilst it may not have been an amount to which the applicant was entitled to receive pursuant to the terms of the variation in 1992, nevertheless the provision is not confined to consideration of those amounts to which a contractual entitlement may be established. This is clear by the use of the words "received" in addition to the words "entitled to receive". The evidence is that regular payments of the same amount were received by the applicant on a fortnightly basis over at least the period relevant for the purposes of s170CD. The examples of calculations provided by the applicant do not do anything to alter the fact that the amount of $60,230.96 was received by the applicant as salary in the relevant period and in respect of the relevant period. I do not accept that the amount of $230.96 was attributable to an additional day's pay outside of the relevant period. Further, I have considered the question of mistake. I am not satisfied that the amount of money in excess of $60,000.00 was an amount either paid or received by mistake, nor, although this was not submitted, paid by design to invoke the operation of s170CD. Although I need not decide the question, it may be that an entitlement to restitution in some circumstances may affect the question of whether the monies were in fact "received". However, in this case, the receipt of the actual amounts was in the knowledge of both parties. The method of payment of a fortnightly amount, which when added together amounted to an amount in excess of $60,000.00, was a matter in fact in the knowledge of both parties. In this sense there was a mutuality and an accord about the provision and receipt of the payments, the result of which does not enable a proper characterisation of the payments made as being by mistake. I am satisfied that the applicant received in respect of the relevant period, 15 March 1994 to 14 March 1995, an amount of relevant wages in excess of $60,000.00. For that reason the application is dismissed. I turn now to consider the other amounts. The cash payments for telephone allowance The applicant was originally entitled as an employee to have his home telephone bills paid. Subsequently, arrangements were made for the implementation of an allowance system paid fortnightly in the sum of $45.00 in relation to the applicant's home telephone, and $60.00 in relation to his mobile telephone. As a result of a decision taken by the respondent, all directors were entitled to have their home telephone and mobile telephone expenses paid directly by the respondent. Whilst this entitlement did not arise out the contract of employment or the course of the employment, nevertheless it affected the true nature of the expenses which the applicant in fact incurred for telephones. No alterations were made to the arrangements for the fortnightly payments to the applicant of the amounts of $60.00 and $45.00 as a consequence of respondent's decision to make direct payment of telephone accounts. I am not satisfied that the amounts of $60.00 and $45.00 per fortnight were payments in the nature of allowances, paid for the purpose of reimbursing or compensating an employee for an expense incurred. This is because of the dual role the applicant occupied at the respondent. The fact that no expense in fact arose in respect of telephone accounts leads me to the conclusion that the amounts of $60.00 and $45.00 paid fortnightly were not allowances or reimbursements for expenses incurred by the applicant, but are properly characterised as payments of an amount in the nature of wages. The applicant contends that the arrangement as to these payments contemplated that the applicant would at the end of a relevant period repay or reimburse any amount paid which exceeded expenses actually incurred. However, the payments nominated as being "allowances", and thus tax-free, continued well beyond the implementation of the direct payment of the applicant's telephone accounts by the respondent. No reimbursement or adjustment occurred, nor was one sought. I am satisfied that the applicant well understood the nature of the alterations made, as the characterisation of various payments as "allowances" had implications for both him and the respondent in a taxation sense. This arrangement had been one which has suited all parties to the arrangement. These payments were regular, scheduled payments, not conditional or contingent upon the happening of any event, unlike the case with a commission or bonus. I am satisfied that the applicant received an additional amount of earnings which is properly to be described as relevant wages for the purposes of s170CD, and that is the amount of cash received and described as "telephone allowance" in the fortnightly wages records of the respondent. That is the sum of $1,921.50. Other payments Where, as was the case with the reimbursement of motor vehicle expenses, a taxation liability could be reduced, the respondent altered the arrangement from providing a fully-maintained motor vehicle, to reimbursing its employees for vehicle lease repayments. The leaseholds were to be in the name of the individual employee. When it became apparent to some employees of the respondent that this change had resulted in a tax obligation in relation to that part of the motor vehicle use which was assessed as private usage, the respondent made a payment of $51.66 per fortnight to compensate for that taxation obligation or the loss of a taxation advantage by the applicant. These payments are not in compensation for any payment made by the applicant or expense incurred. Rather they are direct cash payments by the respondent to the applicant, which he is free to apply to any purpose. Once again these were also scheduled and regular payments, not dependant upon any contingent event or circumstance. Payments made through Stockdale and Leggo (Qld) Pty. Ltd In the course of 1994 arrangements were made for the salary or wages of all of the employees of the respondent to be paid through an associated company, Stockdale and Leggo (Qld) Pty. Ltd. The employees of the respondent were notified of this arrangement for payment of salaries by memorandum dated 30 June 1994 (exhibit A3). The evidence in these proceedings identifies that the arrangements between the applicant and the respondent and the respondent and other employees as to various payments were apparently ad hoc and altered from time to time in a bid to maximise the best interests of the respondent from the standpoint of taxation liability. The applicant was a participant in this process. His role as a director of the respondent cannot be ignored when attempting to ascertain the reality of the arrangements between the parties in an employment context. When it became apparent that payment of wages could more tax effectively be made through an associated company, Stockdale and Leggo (Qld) Pty. Ltd., this is the arrangement which was instituted. No alterations were made to the status of employees. No alteration or reduction in the amount of the payments received or entitled to be received occurred as a result.(see exhibit A3). No changes as to the actual personnel responsible for administering wage or salary entitlements occurred, and the accountability of the applicant as an employee did not in respect of any part of his work alter. Consequently, I am satisfied that the arrangement was of reality one where the Queensland company stood as agent for respondent in respect of the payment of the applicant's and other employee's salary. I am satisfied that that part of the salary of the applicant which was paid through Stockdale and Leggo (Qld) Pty. Ltd was paid by it on behalf of the respondent and not by it as an employer of the applicant. The former acted as agent for the latter in respect of the latter's obligation to make payments to the applicant. I am satisfied that the salary received by the applicant in the relevant period of $60,230.96 was relevant wages paid to the applicant by the respondent (employer). The applicant makes no assertion in his evidence to the contrary. The evidence clearly establishes the reality of the arrangements between the parties, no matter how the arrangements may have been described or constructed for taxation purposes. For the reasons set out herein I have decided that the applicant's relevant wage exceeded the amount provided for in s170CD of the Act and for that reason the application is beyond the jurisdiction of the Court. The application is dismissed. I certify that this and the preceding ten (10) pages are a true copy of the reason for decision of Judicial Registrar Parkinson. Associate: Dated: 19 July 1996 APPEARANCES Counsel appearing for the applicant: Mr C Wallis Solicitors for the applicant: Septimus Jones & Lee Counsel appearing for the respondent: Mr T Ginnane Solicitors for the respondent: Maddock Lonie & Chisholm Written submission complete: 28 May 1996