Industrial Relations Commission of New South Wales in Court Session CITATION : Robert Roberts v Stewart Hicks Real Estate [2000] NSWIRComm 138 APPLICANT: PARTIES : Robert Roberts RESPONDENT: Stewart Hicks Real Estate FILE NUMBER: IRC 231 of 1999 CORAM: Boland J CATCHWORDS : Recovery of wages - applicant working in real estate business - whether contract of employment existed - illusory promise - mutuality of obligation - control test - held that having regard to whole of relationship applicant not an employee Annual Holidays Act 1944 (NSW) LEGISLATION CITED : Industrial Relations Act 1996 (NSW) Property Stock and Business Agent Act 1941 (NSW) Pay-roll Tax Assessment Act 1941 (Cth) Connelly v Wells (1993) 55 IR 73, Diocese of Bathurst (1999) 89 IR 47 Dalgety Farmers Ltd t/as Grazcos v Bruce (1995) 12 NSWCCR36 Dietrich v Dare (1980) 54 ALJR 388 Federal Commissioner of Taxation v Barrett (1973) 129 CLR 400 Knowles v The Anglican Church Property Trust CASES CITED : Montreal v Montreal Locomotive Works [1947] 1 DLR 161 Narich Pty Ltd v Commissioner of Pay Roll Tax [1983] 2 NSWLR 597 Placer Development Limited v Commonwealth of Australia (1969) 121 CLR 353 Queensland Stations Pty Ltd v Federal Commissioner of Taxation (1945) 70 CLR 539 Stevens v Brodribb Sawmilling Company Pty Limited (1985) 160 CLR 16 Zuijs v Wirth Bros. Pty Ltd (1955) 93 CLR 571 HEARING DATES: 07/06/2000; 07/07/2000 DATE OF JUDGMENT: 08/11/2000 Applicant: Mr J Capsanis, Solicitor LEGAL REPRESENTATIVES: Respondent: Mr A Gotting of Counsel JUDGMENT: - 1 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: BOLAND J DATE: 11 August 2000 Matter No 231 of 1999 ROBERT ROBERTS V STEWART HICKS REAL ESTATE Application for recovery of money under s 365 of the Industrial Relations Act 1996 JUDGMENT 1 This is an application by Robert Roberts ("the applicant") for recovery of money under s 365 of the Industrial Relations Act 1996 ("the Act"). The claim was made against Stewart Hicks Real Estate Pty Limited ("the respondent"), a real estate business in Maitland, New South Wales in respect of what Mr Roberts alleged was a period of employment with the respondent from 6 April 1994 to 15 April 1996. 2 The applicant claimed that the respondent was liable to pay him the sum of $68,955.42 plus interest and costs. The particulars of the claim were as follows: "1. It is claimed the amount became due under the Real Estate Industry (State) Award 1992 as varied, and the Annual Holidays Act, 1944, as amended. 2. Applicant was employed in capacity of Real Estate salesman and paid commissions only, and not minimum salary as prescribed by the Award for a salesman not holding a licence in Real Estate. Additionally, he was not paid locomotion and telephone allowance as prescribed. Also not paid holiday pay as prescribed by the said Award and Act. Details of how the amount is calculated appears in the annexure hereto." Background and Evidence 3 The applicant's evidence consisted of two affidavits that, subject to a number of changes made on the objection of the respondent, were read into evidence. The applicant was cross examined on his affidavit. There was additional oral evidence from Ms Nina West, who was employed by the respondent from March 1994 to March 1999 in various roles including receptionist, secretary and property management. 4 The respondent's evidence consisted of an affidavit by Stewart Hicks and Sonia Toussaint, Directors of the respondent. Subject to a number of changes made on objection by the applicant, these were read into evidence and the deponents were cross examined on their evidence. Additional documentary evidence was tendered including the applicant's tax returns for 1994, 1995 and 1996 together with his diaries for the years 1994, 1995 and 1996. 5 The evidence was that in early 1994, having moved residence from Singleton to Maitland, the applicant contacted Stewart Hicks with a view to gaining employment as a real estate salesperson with the respondent. The applicant made several approaches to Mr Hicks about employment. Eventually Mr Hicks agreed to help the applicant "understand the workings of a real estate agency" and allowed the applicant into the office and allowed him to gain real estate experience with the respondent. Mr Hicks, in his evidence, denied that he took on the applicant as an employee. He said that he informed the applicant that "I'm not in a position to hire anyone at the moment because of the state of the market." Mr Hicks said that he considered the applicant to be a friend, that he felt sorry for him and felt that given the applicant had purchased a home in Maitland using the respondent that he, Mr Hicks, had some obligation to the applicant. 6 The applicant said that there was a conversation between he and Mr Hicks where Mr Hicks said "I have considered the matter and decided to put you on, the industry is very tight and I am going to put you on under the same conditions as I was employed when I started out." The applicant alleged that Mr Hicks then said "The system works like this, I will be paying you commission only when the sales come through and that is the way the industry works." The applicant deposed that "As a result of what Stewart Hicks said to me, I believe that this was how the industry worked, never having been employed in real estate before." Mr Hicks denied he said these words. 7 The applicant said that the following day he reported to the respondent's office and commenced work; that he came in every day and was given an office key and that he fell into a salesperson's routine and duties. 8 The other significant elements of the applicant's evidence, which essentially go to establishing that he was in fact an employee, may be summarised as follows: · He reported to work each week day and worked on many weekends; · He was provided with a desk, had the use of a phone and access to files; · He used his own car in the business and was provided with "petrol money" although this money was deducted from commission earned; · He would show properties to people; · He was paid commission on sales; · He obtained registration under the provisions of the Property, Stock and Business Agent Act, 1941. The relevant certificate issued by the Real Estate Services Council cites that the applicant was employed by the respondent; · Stewart Hicks signed a letter in December 1994 to the effect that the applicant was employed by the respondent "on a continuous and full time basis". The letter was requested by the applicant for the purpose of re-enrolling his children at pre-school; · In October 1994 the respondent issued the applicant with a business card; · The applicant commenced and completed studies for qualification as a licensed real estate salesperson with the concurrence of the respondent. While it was the case that the course was full time the applicant attended for work on each day albeit for a reduced number of hours on some days. 9 The applicant deposed that in April 1996 he resigned from his employment with the respondent. 10 The respondent denied that the applicant was an employee. The respondent's evidence in this respect may be summarised as follows: · Stewart Hicks did not engage the applicant as an employee. Mr Hicks deposed that the applicant's "presence was treated something like work experience"; · Stewart Hicks was aware that it is necessary for the employer of a real estate salesperson to pay a wage but deposed that "at no stage did I intend to provide Mr Roberts with a wage. My simple aim was to assist Mr Roberts in understanding the workings of a real estate agency."; · The respondent paid commission on sales at the rate of 40 per cent of commission earned because, as Mr Hicks described it, he "did have some sympathies for his difficulties and felt that this was the least I could do to assist him"; · The respondent paid for diesel fuel in the applicant's car because Stewart Hicks did not want him to be out of pocket; · the applicant spent a good deal of time during business hours attending to his personal and other business affairs including: campaigning for election to the Maitland Council in September 1995; visiting the Maitland library on a regular basis to read newspapers; attending a full time TAFE course commencing in February 1995 through to the end of 1995 necessitating him being absent for a substantial part of the day on Tuesdays, Wednesdays and Thursdays; attending classes at the local school to read to pupils once or twice per week; picking up his children from school; mowing his lawn; paving his driveway; erecting a fence at his home; performing domestic duties; attending the local car wash on a regular basis. Stewart Hicks states that had the applicant been employed by the respondent he would not have been prepared to tolerate the absences and disruption to the business and "would have sacked him."; · At no stage did the applicant ask to be paid wages; · At no stage was the applicant covered by the respondent's workers' compensation policy; · the applicant did not claim and was not paid annual leave despite absences of up to two weeks on holiday; · the applicant conducted a hire car business on weekends; · In signing the letter to the pre-school Mr Hicks states "I simply wanted to help him to ensure that his children remained at the Child Care Centre."; · The applicant arranged for the making of the business cards himself and paid for the cards himself; · The applicant applied for registration with the Real Estate Services Council himself and paid his own application fee and annual registration fees; · The applicant regarded himself as an independent contractor and not an employee for taxation purposes and his taxation returns for 1994, 1995 and 1996 are evidence of this. Applicant's Case 11 Mr J P Capsanis, solicitor, appeared for the applicant. His submission's may be summarised as follows: 1. there was a continuous relationship between the applicant and the respondent of a commercial nature from April 1994 to April 1996. It was a contractual relationship where in return for certain productivity there was a certain reward; 2. the applicant performed the work of a real estate salesperson with the permission and participation of the respondent; 3. the respondent represented to the public and the community at large that the applicant was a member of the team of the respondent; 4. it is an incongruous proposition that Stewart Hicks did not or could not exercise direction and control over the applicant in his functions as a real estate salesperson; 5. the Real Estate Industry (State) Award, the award that regulates the employment of real estate salespersons, does not regulate hours of work. The award allows for flexibility in the way hours of work are structured. The fact that the applicant could come and go is quite consistent with the terms of the award; 6. the documentation evidences an employer/employee relationship. This documentation includes the certificates of registration, the letter to the pre-school, correspondence signed by the applicant in his role as a real estate salesperson; 7. the applicant was supplied with a desk and a telephone; 8. the relationship was not based on 'work experience'; 9. the fact that tax returns do not reflect the applicant's status as an employee is more to do with the applicant's accountant who simply adopted a pro forma approach to completing the forms based on some desire to maintain consistency with past returns; 10. the use of the expression 'consultant' on business cards and the like does not deny the applicant was an employee; 11. the relationship between the applicant and respondent was one of employer and employee. Respondent's Case 12 Mr A Gotting of counsel, appeared for the respondent. The case for the respondent may be summarised as follows: 1. the primary submission is that the application should be dismissed because the applicant failed to establish that at the relevant times he was an employee; 2. the alternative submission is that if it is held that the applicant was an employee, the compensation claimed by him is higher than what he is entitled to, not only because he did not work on a full time basis but also because he did not fulfil the requirements for payment of certain award allowances which he claims should be paid to him; 3. There was no contractual relationship between the applicant and the respondent because there was no mutuality of obligation: Placer Development Limited v Commonwealth of Australia (1969) 121 CLR 353; Dietrich v Dare (1980) 54 ALJR 388. The applicant was not obliged to work; the applicant could come and go when it suited him and he did so; 4. If the court holds there was a contractual relationship between the applicant and the respondent, it was not an employment relationship: the respondent was aware that an employee was to be paid a wage and the respondent at no stage intended to provide the applicant with a wage; the applicant could not afford to employ the applicant; the respondent's intention was to merely expose the applicant to the real estate industry and to provide him with work experience; the applicant did not regard himself as an employee for income tax purposes; 5. The applicant became aware , through his TAFE course, that there was an award covering real estate salespersons and such persons were entitled to a wage. The applicant, upon learning this, did not approach the respondent claiming entitlement to a wage. This indicates that the applicant did not regard himself as an employee; 6. There is an absence of any evidence concerning control by the respondent over the applicant: Stevens v Brodribb Sawmilling Company Pty Limited (1985) 160 CLR 16. The applicant was free to do as he pleased. There is no evidence about directions given by the respondent to the applicant; 7. the applicant was not given paid annual leave; 8. the applicant was not covered by the respondent's workers' compensation insurance policy; 9. the existence of documents referring to the applicant's status as an employee do not reflect the reality of the relationship between the parties and in particular the absence of control; 10. in relation to the alternative submission, the respondent argues that: employment during 1995 was on a part time basis; the applicant did not work the 105 weeks claimed in his Application; the amount of annual leave pay is disputed; there is no evidence to support the claim for a locomotion allowance to be paid under the award; there is no evidence to support a claim for the payment of a telephone allowance under the award . Consequently, the amount claimed in the Application cannot be justified. Consideration 13 The fundamental issue in this case is whether the applicant, Mr Roberts, was an employee of the respondent during the period 6 April 1994 to 15 April 1996. That is, whether there was a contract of service subsisting over this period. The respondent submitted that the applicant had not discharged the necessary onus of proving that the applicant was an employee for the relevant period. 14 An appropriate starting point is to consider whether there was an intention by the parties to create a legal relationship. It seems to me there was such an intention. Mr Capsanis described it as "a relationship of a commercial nature ………because in return for services rendered and in return for productivity in terms of sales of property, either it was listing or selling, the applicant received a defined formulated reward and that was 40% of the office commission." If the respondent had not paid the commission as agreed - and it was not disputed that such commission was payable - the applicant could, in my opinion, have sought to legally enforce the arrangement. 15 Nevertheless, Mr Gotting submitted that there was no contract between the applicant and the respondent so there could have been no contract of employment. Mr Gotting relied on Placer Development Limited v Commonwealth of Australia. That case was concerned about an illusory promise. In Placer Development the Commonwealth agreed with Placer that if customs duty was paid upon the importation into Australia of certain goods, and was not remitted, the Commonwealth would pay Placer a subsidy upon the goods "of an amount or at a rate determined by the Commonwealth from time to time ...". A majority of the High Court held that the Commonwealth was not obliged to determine an amount or rate of subsidy, to pay a subsidy of such amount or rate as would recoup the customs duty paid, or to pay a subsidy. Kitto J said the Commonwealth's promise was, in substance, a promise to pay such subsidy if any as may be decided upon by the Commonwealth. It therefore did not create any contractual obligation. The principle was, he said (at 356): "…..that wherever words which by themselves constitute a promise are accompanied by words showing that the promisor is to have a discretion or option as to whether he will carry out that which purports to be the promise, the result is that there is no contract on which an action can be brought at all." 16 At 359-360 Taylor and Owen JJ said: "But a promise to pay an unspecified amount of money is not enforceable where it expressly appears that the amount to be paid is to rest in the discretion of the promisor and the deficiency is not remedied by a subsequent provision that the promisor will, in his discretion, fix the amount of the payment. Promises of this character are treated by Pollock ... not as vague and uncertain promises - for their meaning is only too clear - but as illusory promises .... " 17 It seems to me that Placer Developments does not apply here. It was not a question of Stewart Hicks as a director of the respondent saying to the applicant "I will employ you (or, I will give you work experience) and I will pay you but payment will be at my discretion." 18 The evidence was that Stewart Hicks said to the applicant that he could not afford to pay him a wage but that he would provide him with commission on sales that the applicant generated. The payment to the applicant was 40 per cent of the commission earned as a result of the sale. There was consideration and it was not illusory. 19 Mr Gotting also relied on Dietrich v Dare for the proposition that there was no mutuality of obligation. This involved a case where Mr Dietrich, who was unemployed, entered into a trial arrangement with Mr Dare to paint Mr Dare's house. Mr Dietrich was to receive $2.00 per hour during the trial period. During the course of the trial period Mr Dietrich fell of a ladder and fractured his right shoulder and hip. The High Court held that Dietrich was not an independent contractor and was not an employee. Gibbs, Mason and Wilson JJ with whom Aitkin J agreed, found that the arrangement lacked the element of mutuality of obligation that is essential to the formation of a contract of service. At 390 the majority said: "Nor are we persuaded that the arrangement gave rise to a contract of service. It seems to us that the arrangement lacked the element of mutuality of obligation that is essential to the formation of such a contract. A contract of service is of its nature a bilateral contract. It may be conceded that merely to say that the parties had agreed upon a trial does not necessarily rule out its formation. The answer in that respect will depend upon the detail of the arrangement. In particular, the answer will be affected, among other things, by the discovery in the arrangement of the assumption by the "Worker" of an obligation to perform some work, it being the purpose of the trial to determine whether the work is performed in a satisfactory manner. "We have indicated that from the point of view of the appellant, the arrangement did not place him under any legal obligation to do anything. Likewise, the respondent did not receive any assurance of benefit to which the payment of money could be related. The work which the appellant was able to do during the trial might have proved beneficial to him because it enhanced the value of his property, but, on the other hand, it might have proved unhelpful, requiring the expenditure of further moneys to overcome the effect of incompetent workmanship. The trial arrangement provided him with no assurance whatever." 20 What, if any, were the mutual obligations of the applicant and the respondent? At the very least, the respondent's obligations were to help the applicant to "understand the workings of a real estate agency", to give him "some real estate experience" and to pay him a commission on sales that the applicant generated. The applicant's obligations are somewhat more elusive. On one view there was no obligation on the applicant to do any work for the respondent other than observe the workings of the real estate agency. He was just there to learn. On the other view, however, at the time a legal relationship was formed the respondent not only agreed to provide the applicant with experience in work normally done by a real estate salesperson, such as listings and selling, but the respondent also agreed that upon any sale by the applicant a commission would be paid. If the applicant had simply observed in order to learn, rather than performed the work of a salesperson, it perhaps could have been said that there was no mutuality of obligation. But that was not the case. The applicant performed work which was of benefit to the respondent and was rewarded for that work by the payment of a commission. 21 The next issue to be determined is whether the legal relationship between the applicant and the respondent was an employment relationship. 22 An employee is defined in section 5 of the Act in these terms: "Definition of employee (1) General definition In this Act, "employee" means a person employed in any industry, whether on salary or wages or piece-work rates. (2) A person is not prevented from being an employee only because: (a) the person is working under a contract for labour only, or substantially for labour only, or (b) the person works part-time or on a casual basis, or (c) the person is the lessee of any tools or other implements of production, or (d) the person is an outworker, or (e) the person is paid wholly or partly by commission (such as a person working in the capacity of salesperson, commercial traveller or insurance agent). (3) Deemed employees The persons described in Schedule 1 are taken to be employees for the purposes of this Act Any person described in that Schedule as the employer of such an employee is taken to be the employer. (4) Exclusion A person employed or engaged by his or her spouse or parent is not an employee for the purposes of this Act." 23 In Knowles v The Anglican Church Property Trust, Diocese of Bathurst (1999) 89 IR 47 at 88 Wright J, President said that: "Although the term "employee" is defined in the Act, by section 5, in terms wider than the general law notion of employee, there is no basis in that wider definition to consider that the term "employee" is being used in any wider sense that the general law notion, in circumstances other than those which are specifically stated in the Act as extending beyond the general law notions.". 24 In Connelly v Wells (1993) 55 IR 73 Gleeson CJ as he then was said at 74: "Where the relationship between two persons is founded in contract, the character of the relationship depends upon the meaning and effect of the contract. In the absence of a suggestion that a contract was varied after it was originally made, its meaning and effect must be determined as at the time it was entered into. If the contract is in writing, then the Court which is considering the nature of the relationship between the parties is directed to an examination of the terms of the written agreement in the light of the circumstances surrounding its making ( Narich Pty Ltd v. Commissioner of Pay Roll Tax [1983] 2 N.S.W.L.R. 597 at 601). In some cases, of which the present is an example, the contract may have been entered into without writing, and in circumstances of considerable informality. This may mean that it is more difficult to reach a conclusion as to when the contract was entered into, and as to the terms of the agreement which the parties made. The conduct of the parties may need to be examined for the purpose of reaching a conclusion as to their common intention as to the terms and conditions on which they were contracting with one another. However, the basic principles remain the same." 25 There was considerable informality surrounding the contract entered into between the applicant and the respondent. It was not in writing. It is permissible therefore, to have regard to the conduct of the parties "for the purpose of reaching a conclusion as to their common intention as to the terms and conditions on which they were contracting with one another." 26 In doing so, I have necessarily had regard to the decision of the High Court in Stevens v Brodribb Sawmilling Company Pty Limited. In this case the Court was obliged to consider the legal criteria for determining the relationship between employer and employee and employer and independent contractor. 27 Mason J in Stevens observed that whilst the existence of control was significant it was not the sole criterion by which to gauge the nature of an employment relationship but merely as one of a number of indicia to be considered in determining that question (at 24). His Honour added (at pp.28-29): "The traditional formulation, though attended with some complications in its application to a diverse range of factual circumstances ( Federal Commissioner of Taxation v. Barrett (1973) 129 C.L.R. at p.400), nevertheless has had a long history of judicial acceptance. True it is that criticisms have been made of it. It is said that a test which places emphasis on control is more suited to the social conditions of earlier times in which a person engaging another to perform work could and did exercise closer and more direct supervision that is possible today. And it is said that in modern post-industrial society, technological developments have meant that a person so engaged often exercises a degree of skill and expertise inconsistent with the retention of effective control by the person who engages him. All this may be readily acknowledged, but the common law has been sufficiently flexible to adapt to changing social conditions by shifting the emphasis in the control test from the actual exercise of control to the right to exercise it, "so far as there is scope for it", even if it be "only in incidental or collateral matters": Zuijs v. Wirth Bros. Pty. Ltd. (1955) 93 C.L.R., at p.571. Furthermore, control is not now regarded as the only relevant factor. Rather it is the totality of the relationship between the parties which must be considered. 28 To a similar effect, Wilson and Dawson JJ. (at pp.36-37) said : "In many, if not most, cases it is still appropriate to apply the control test in the first instance because it remains the surest guide to whether a person is contracting independently or serving as an employee. That is not now a sufficient or even an appropriate test in its traditional form in all cases because in modern conditions a person may exercise personal skills so as to prevent control over the manner of doing his work and yet nevertheless be a servant: Montreal v. Montreal Locomotive Works [1947] 1 D.L.R. 161, at p.169. This has led to the observation that it is the right to control rather than its actual exercise which is the important thing ( Zuijs v. Wirth Bros. Pty. Ltd. (1955) 93 C.L.R. 561, at p.571) but in some circumstances it may even be a mistake to treat as decisive a reservation of control over the manner in which work is performed for another. That was made clear in Queensland Stations Pty. Ltd. v. Federal Commissioner of Taxation (1945) 70 C.L.R. 539, at p.552, a case involving a droving contract in which Dixon J. observed that the reservation of a right to direct or superintend the performance of the task cannot transform into a contract of service what in essence is an independent contract. The other indicia of the nature of the relationship have been variously stated and have been added to from time to time. Those suggesting a contract of service rather than a contract for services include the right to have a particular person do the work, the right to suspend or dismiss the person engaged, the right to the exclusive services of the person engaged and the right to dictate the place of work, hours of work and the like. Those which indicate a contract for services include work involving a profession, trade or distinct calling on the part of the person engaged, the provision by him of his own place of work or of his own equipment, the creation by him of goodwill or saleable assets in the course of his work, the payment by him from his remuneration of business expenses of any significant proportion and the payment to him of remuneration without deduction for income tax. None of these leads to any necessary inference, however, and the actual terms and terminology of the contract will always be of considerable importance. Having said that, we should point out that any attempt to list the relevant matters, however incompletely, may mislead because they can be no more than a guide to the existence of the relationship of master and servant. The ultimate question will always be whether a person is acting as the servant of another or on his own behalf and the answer to that question may be indicated in ways which are not always the same and which do not always have the same significance." 29 There are indications both for and against the applicant being an employee of the respondent. The indications that tend to suggest the applicant was not an employee are as follows: 1. The respondent was not looking to employ a salesperson at the time; the real estate market was depressed; 2. At no time did the respondent regard the applicant as an employee; 3. The applicant was not paid a wage; 4. The respondent was aware of the necessity to pay wages to a salesperson who was an employee; 5. The respondent did not apply the terms of the Real Estate Industry (State) Award to the applicant; 6. The applicant did not receive annual holiday pay and was not covered for workers compensation under the respondent's policy; 7. The respondent did not make superannuation contributions on behalf of the applicant; 8. The applicant became aware, through his TAFE course, that there was an award covering real estate salespersons and such persons were entitled to a wage. The applicant, upon learning this, did not approach the respondent claiming entitlement to a wage and at no time during the relationship between the applicant and the respondent did the applicant claim to the respondent that he was an employee; 9. No tax was deducted from payments made to the applicant and no group certificates for taxation purposes were issued to the applicant by the respondent; 10. The applicant did not regard himself as an employee for taxation purposes; 11. The applicant carried on another business, albeit on weekends; 12. The applicant operated under very flexible working hours arrangements, attending to his own affairs as the need arose. The respondent did not seek to exercise any direction or control over the applicant in this respect; 13. The applicant arranged for the making of the business cards himself and paid for the cards himself; 14. The applicant applied for registration with the Real Estate Services Council himself and paid his own application fee and annual registration fees; 15. There is no evidence of any direct control, in the day to day sense, being exercised by the respondent over the applicant in the performance of work; 16. Within a year of commencing with the respondent the applicant began a full time TAFE course for the purpose of acquiring qualifications necessary to obtain a licence. There was no objection by the respondent to the applicant undertaking the course, despite the brief period that the applicant had been with the respondent and despite the amount of time off needed to attend the course. Ms Nina West, to whom I referred earlier was also undertaking the course but on a part time basis. 30 The indications that suggest the applicant was an employee include: 1. He reported to work each week day and worked on many weekends; 2. He was provided with a desk, had the use of a phone and access to files: 3. He used his own car in the business and was provided with "petrol money" although this money was deducted from commission earned; 4. the applicant performed work normally associated with the work of a real estate salesperson; 5. the applicant was paid a commission on sales that he generated; 6. He obtained registration under the provisions of the Property, Stock and Business Agent Act, 1941. The relevant certificate issued by the Real Estate Services Council cites that the applicant was employed by the respondent; 7. Stewart Hicks signed a letter in December 1994 to the effect that the applicant was employed by the respondent "on a continuous and full time basis"; 8. The applicant commenced and completed studies for qualification as a licensed real estate salesperson with the concurrence of the respondent. While it was the case that the course was full time the applicant attended for work on each day albeit for a reduced number of hours on some days; 9. the applicant was seen to be an integral part of the respondent's operation. 31 These heavily competing indicia make it difficult to determine, without reservation, whether or not the applicant could be held to be an employee of the respondent during the period April 1994 to April 1996. 32 In Federal Commissioner of Taxation v Barrett, a case to which I was not referred, Stephen J was called upon to decide whether real estate salesmen paid on a commission only basis were employees for the purposes of the Pay-roll Tax Assessment Act 1941 (Cth). His Honour held that they were employees. At 406-407 his Honour said: "There do, however, appear to me to be a number of circumstances which point to the conclusion that these salesmen are employees. They are not engaged for a limited time or to perform one specific task but as more or less permanent representatives of the firm, thus they participate as beneficiaries, albeit in respect of small sums only, in the firm's non-contributory superannuation scheme, the relative permanency of their employment being thereby recognised; turnover of land salesmen was described as "very, very small". They may not, by statute, act as land salesmen for any other agents nor act in any way in connexion with land dealings on their own account so long as they represent the respondents; they accurately enough describe themselves as representatives of the respondents. Their basis of remuneration, by commission, is attained only because of their proved experience and proficiency as land salesmen; until they "become sufficiently experienced and competent to go on full commission" they are unquestionably employees, paid by a salary plus some commission; their progression to a pure commission basis is regarded as promotion, yet they do not thereby cease to be an integral part of the firm's organisation, in fact quite the contrary; any experienced salesmen new to the firm are only permitted to become pure commission salesmen if they are of "proven ability". Salesmen are expected to report on their whereabouts each working day, are required to pay over to the respondents all moneys received by them from purchasers and, apart from their sales activities in the field, those salesmen concerned with vacant land sales are expected to attend at the respondents' office for about one day a week in accordance with a roster, there to answer telephone enquiries and the like concerning land sales; this roster system is quite a flexible one and attendance pursuant to it advantages salesmen since enquiries relating to land sales initiated on their roster day are normally handled by them thereafter, thus providing a potential source of commission income. However their rostered attendance is also, under the respondents' system of organisation, essential to its proper functioning and by their presence and the functions they there perform they render valuable services to the respondents. Most of those salesmen concerned with vacant land sales must not only attend, on their rostered day, at the firm's head office but have other calls made on their time; for instance, when the firm is engaged in selling off a new subdivisional area these salesmen must so arrange matters between themselves as to ensure that a representative is always present at the site of the subdivision at times when enquiries from visiting prospective purchasers are anticipated and when sales of a particular subdivision happen to lag somewhat the salesmen will be directed to devote more attention to it. All salesmen are required to abide by the code of ethics of the Institute of which the employers are members and by the rules of the Multiple Listing Bureau and these obligations are insisted upon. For every sale effected by a salesman he is required to complete and submit a questionnaire to the respondents, the purpose of which is to provide them with a quite detailed knowledge of the circumstances of the sale which has been negotiated and of the facts leading up to its conclusion, so that they may ensure that salesmen are acting as they would wish them to; for instance, the respondents insist that salesmen should always visit the land with an intending buyer before a sale is concluded. Control of newspaper advertising and the supervision of the form of contracts which the salesmen induce buyers to execute is undertaken by the respondents. 33 Stephen J goes on to say at 407-408: "There emerges from the evidence a picture of a staff of land salesmen who enjoy a settled and permanent relationship with the respondents, although it is subject always to termination by either party, and who work exclusively for the respondents in their chosen vocation of land salesmen, receiving their commission remuneration from the respondents and conforming to the respondents' requirements concerning ethical conduct, compliance with the law and observance of approved procedures in the negotiation of sales. They are otherwise free from supervision in their primary task of effecting land sales, a task calling for highly individual qualities and a willingness to work at odd hours when the community at large is not at work. This lack of supervision is in large measure accounted for by the nature of their work and their careful selection and resultant skill and responsibility, coupled with the fact that payment by commission itself provides adequate incentive so as to safeguard the interests of the respondents. Even without reference to their rostered duties and the other tasks to which they may from time to time be directed by the respondents I would conclude from the foregoing that, whichever of the acknowledged tests of an employer-employee relationship may be applied, the conclusion must be that such a relationship does exist in the present case." 34 There are strong parallels between what Stephen J described as the work of land salesmen in Barrett and that of the applicant, yet distinctions can be made. The applicant, for example, was not receiving superannuation contributions. The lack of supervision of the applicant was not due to the level of his skill and responsibility but rather because Mr Hicks did not feel he had the authority as he did not regard the applicant as an employee. There is no suggestion from the evidence that the applicant was rostered to perform work on any given day. There did not seem to be any requirement that the applicant had to report on his whereabouts each working day. I do not consider that it could be said there was a "settled and permanent relationship" between the applicant and the respondent. The land salesmen in Barrett were paid on commission only because they had proven themselves to be proficient and competent salespersons. The move to pure commission was regarded as a promotion. In the case of the applicant he was paid on a "commission only" basis because the respondent did not regard him as an employee and because Mr Hicks "did have some sympathies for his difficulties and felt that this was the least I could do to assist him". 35 Despite these distinctions, the relationship between the applicant and the respondent had the appearance of an employer-employee relationship. 36 The question of the applicant's status as an employee is therefore, very finely balanced but I have come to the conclusion that the applicant was not an employee. This conclusion is not without its reservations because I would not want to be seen to be condoning a situation where an employer could allow a person to perform work for the benefit of that employer, claim that the relationship was not one of employer-employee because the employer could not afford to pay wages, set up a false regime that suggested there was no control being exercised by the employer and thereby avoid all of the obligations an employer has to an employee. Of course, each case will have to be treated according to its own peculiar facts and that is what I have sought to do here. In doing so, I have had regard to the whole of the relationship between the applicant and the respondent. In this respect in Dalgety Farmers Ltd. t/as Grazcos v. Bruce (1995) 12 N.S.W.C.C.R. 36, Kirby A.-C.J. said (at pp.47-48) : "In determining whether a contract of service has been entered, and if so with whom, it is necessary to look to the circumstances of the engagement and to ascertain who it was that offered employment, and whether the worker accepted that offer. To determine whether what then ensued was indeed employment (in the sense of a contract of service) it is necessary to look to the whole of the relationship.". 37 I have set out the competing indicia for and against an employment relationship above. The factors, however, that tip the balance in favour of the respondent's position are as follows: 1. It is very clear at the time the respondent agreed to show the applicant "the workings of a real estate agency" that the respondent did not need a real estate salesperson. The market was depressed. After persistent approaches from the applicant Mr Hicks, who struck me as a genuine, honest person, decided he should help out the applicant and agreed to allow the applicant into the office and allowed him to gain real estate experience with the respondent. He was doing the applicant a favour because he felt obligated. Mr Hicks, I think was influenced by what he saw as a need on the part of the applicant to be seen to be in employment because of his political ambitions. Mr Hicks made it clear to the applicant that the respondent could not afford to pay the applicant a wage. Mr Hicks knew that an employee was entitled to a wage. Indeed, he had in his employment at the time a part time employee, Ms Nina West. It was not Mr Hicks intention to engage the applicant as an employee. 2. The applicant is a man with a strong outgoing personality. He immediately took up his new role, acquired a key to the office a desk and a phone. He stated in his evidence that he regarded himself as an employee from the outset. His explanation as to why he did not receive a wage was that he thought payment by commission only was "how the industry worked, never having been in real estate before." I find this explanation difficult to accept. The amount of commission paid to the applicant for the tax year ended 30 June 1995 was $22,728 and for year ended 30 June 1996 it was $6,465. The applicant was a man of some experience. He had been an employee, a manager and a member of the New South Wales Parliament. How he could assume that a sum of $6,465 per annum could constitute a proper income from full time employment, despite the fact it was paid in the form of commission, or why he would not query an entitlement to holiday pay which is a universal and well known right of employees, seems implausible. There is also the fact that, by his own admission, in 1995 the applicant became aware, during his TAFE course, of a right to wages for real estate salespersons under an award but never took the matter up with the respondent. Why he did not is another matter that concerns me. One explanation is that the applicant did not in fact regard himself as an employee. If he did regard himself as an employee, as he said was the case from the outset, no proper explanation was given by him as to why he chose to keep silent about a right to wages once he became aware of this right. 3. I must say, I do find it a strange set of circumstances where a mature person with the applicant's background and experience claims that he believed he was an employee of an employer at the time the relationship was formed (but that he accepted that he was not entitled to wages), that he subsequently discovered that a person doing the work he was doing was entitled to wages but he kept silent about this. Then, after terminating the relationship some four months later, he sues for recovery of wages. The applicant was driven by some motive that is not apparent to me or he did not regard himself as an employee. 4. The applicant chose not to describe himself as an employee for taxation purposes during the 1995 and 1996 tax years. He described himself as a consultant and claimed the relevant taxation deductions in respect of the use of a motor vehicle and telephone calls. The applicant's answer to this was that his accountant simply adopted a pro forma approach to completing the forms based on some desire to maintain consistency with past returns and overlooked the applicant's new status of employee. The applicant agreed that he signed the relevant declarations on the income tax returns including that the information contained therein was true and correct. He cannot rely on alleged mistakes of this nature by the accountant. 5. the applicant was not paid wages or annual holiday pay; there were no superannuation contributions made on his behalf; the applicant was not covered by the respondent's workers' compensation insurance policy; there was no tax deducted from commission payments. 6. The applicant, although he attended for work on a regular and consistent basis, operated under very flexible working hours arrangements, attending to his own affairs as the need arose. The respondent did not seek to exercise any direction or control over the applicant in this respect. The respondent could not point to any occasion where the respondent sought to exercise the authority one would normally expect an employer to exercise. No objection was taken to the absences by the applicant from the respondent's office when the applicant was attending to his own affairs; no objection was taken when the applicant embarked on a full time TAFE course in real estate less that twelve months after the applicant started with the respondent. Mr Hicks said he did not object because he did not regard the applicant as an employee. Clearly, the applicant would have needed to comply with the policies and practices of the respondent's business in carrying out his role but that is not inconsistent with an agent's role for example, or a person on work experience. I have noted the flexible hours of work provisions in the Real Estate Industry (State) Award and Mr Capsanis' reliance on these. Nevertheless, the extent to which the applicant had freedom to attend to his own affairs and the complete lack of objection to him doing so during business hours would indicate greater freedom than even the Award countenances. It is indicative of an absence of control necessary in an employer-employee relationship. 7. The applicant was referred to as an employee in two documents, namely a letter signed by Mr Hicks to the child care centre and a certificate of registration under the provisions of the Property, Stock and Business Agent Act, 1941. The relevant certificate issued by the Real Estate Services Council cited that the applicant was employed by the respondent. The references to employment are not determinative of an employer-employee relationship between the employer and employee. For example, the child care letter was signed by Mr Hicks at the applicant's request, more in the nature of a favour to the applicant than a statement of fact, so that the child care centre would continue to admit the applicant's children. 38 Having regard to the whole of the relationship between the applicant and the respondent I find that the applicant has not discharged his onus of proving that he was an employee of the respondent for the relevant period. His application for recovery of wages, therefore fails. Orders 39 I make the following orders in this matter: 1. That the application is refused. 2. That the applicant shall pay the costs of the respondent as agreed or assessed. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.