Industrial Relations Commission of New South Wales in Court Session CITATION : Basile v Zizikas [2003] NSWIRComm 398 APPLICANT: Giuseppe Basile PARTIES : RESPONDENT: Harry Zizikas FILE NUMBER: IRC 1176 of 2003 CORAM: Schmidt J CATCHWORDS : Unfair contract - no appearance by respondent - exparte hearing - partnership - recycling yard business - claim not brought out of time - section 108B of the Industrial Relations Act - no payments made by respondent - exploitation of labour - contract varied - respondent ordered to pay a sum for work performed and effecting restitution - usual order as to costs LEGISLATION CITED : Industrial Relations Act 1996 Bowker & Anor v Software Engineers Australia (NSW) Pty Limited & Ors [2003] NSWIRComm 213 CASES CITED : Davies & Anor v General Transport Development Pty Ltd (1967) AR 371 Kennedy v Contract Transport Solutions Pty Ltd [2003] NSWIRComm 158 Stevenson v Barham (1976) 136 CLR 190 HEARING DATES: 11/14/2003 DATE OF JUDGMENT: 11/18/2003 APPLICANT: Mr MA Ashhurst of counsel SOLICITORS: LEGAL REPRESENTATIVES: Packer & Austin RESPONDENT: No appearance JUDGMENT: - 1 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: Schmidt J DATE: 18 November 2003 Matter Number IRC 1176 of 2003 GIUSEPPE BASILE v HARRY ZIZIKAS Application under section 106 of the Industrial Relations Act 1996 JUDGMENT 1 This application was brought in March 2003. It concerns the terms of a partnership between the parties which came to an end in March 1998. There was an appearance for the respondent by a solicitor when the matter first came before the Registrar. There has also been communication received by the Court from the respondent himself. However, no notice of appearance has been filed and the respondent has not complied with either the Court's Rules, or the directions made by the Registrar, as to the filing of material in the proceedings. No response to the summons has been filed and there was no appearance for the respondent when the matter was listed for conciliation. A certificate under s109 of the Industrial Relations Act 1996 ('the Act') was issued and the respondent notified of the hearing. There was no communication from the respondent and no appearance for the respondent at the hearing. The hearing proceeded ex parte. 2 The relief claimed in the summons was: (1) An order varying the partnership agreement between the Applicant and the Respondent so as to provide the relief sought in paragraph (2) below. (2) An order that the Respondent pay to the Applicant: (i) $341,613.49; plus (ii) Interest on that amount in accordance with the Rules. (3) An order that the Respondent pay the Applicant's costs. (4) Such further or other orders as this Honourable court deems fit. 3 Affidavit evidence was given by the applicant; Victoria Basile, the applicant's wife and Peter Suciu, self-employed transport driver. Oral evidence was called from David Austin, the applicant's solicitor, to explain how the money orders sought were calculated. Leave was also given for a document to be filed after the hearing, setting out those calculations in writing. 4 The evidence showed that the applicant entered into a partnership with the respondent in 1996. The business involved the operation of a recycling yard owned by the respondent. The applicant provided various assets, including equipment and cash and then worked in the business until the parties fell out with each other and the relationship came to an end, in 1998. 5 The terms of the parties' arrangement were never reduced to writing, although in a handwritten document prepared by the respondent, the value of certain assets of the business was agreed by the parties. The applicant worked long hours, seven days per week in the business. He was excluded from involvement in the financial affairs of the business and received no income from the business, throughout his entire involvement with it. His wife supported the applicant with her earnings, throughout this period and he also derived some income from a share which he had in another, unrelated business. 6 Despite promising to pay the applicant money which he acknowledged was owed to the applicant when the relationship concluded, the respondent has paid the applicant nothing. The respondent retained all of the assets put into the business by the applicant and all of the income which the business generated. He also continued to operate the business after the applicant's departure. 7 The applicant's money claim had two aspects. Firstly, a sum of $166,545 was claimed for the assets and money which the applicant had provided the respondent for his share of the business. Secondly, a money sum for payment for the work performed by the applicant. Documentary evidence as well as evidence from the witnesses supported the asserted value of various assets and the payment of various sums to the respondent. 8 The applicant's evidence was that the parties had discussed what the applicant should earn in the business. The respondent's view was that he was 'worth a minimum of $70,000'. The calculation of the sum claimed in the summons had regard to the C10 classification in the Metal and Engineering Industry (New South Wales) Interim Award, the 10% allowance for a leading hand, reflective of the supervisory and other work performed by the applicant and the hours worked by the applicant in the business. Various figures were derived from this calculation depending upon how penalty payments provided by the Award were treated. Consideration 9 While the parties' arrangement came to an end in 1998 and these proceedings were not commenced within 12 months of that date, I am satisfied that the claim was not brought out of time, having regard to the proper construction of s108B of the Act. (See Kennedy v Contract Transport Solutions Pty Ltd [2003] NSWIRComm 158 and Bowker & Anor v Software Engineers Australia (NSW) Pty Limited & Ors [2003] NSWIRComm 213.) 10 The High Court has cautioned this Court that in exercising the jurisdiction granted by s106 of the Act, it should not interfere with 'bargains freely made by a person who was under no constraint or inequality'. (See Stevenson v Barham (1976) 136 CLR 190 at 192.) Stephen J, however, went on to refer in that passage, to those 'whose labour was not being oppressively exploited.' The evidence led in this case evidenced such exploitation. 11 The authorities have also long shown, that the section's 'massive power' should not be used to permit the section to become a 'refuge for those who are merely disgruntled with a bargain entered into on even terms'. (See Davies & Anor v General Transport Development Pty Ltd (1967) AR 371 at 375.) That case also shows however, that even those who have been foolish or negligent, may be entitled to relief under the section, if they have been the subject of fraud, deceit or other unconscionable dealing. 12 Here, there can be no doubt that the evidence demonstrated the requisite unfairness of the contract and the respondent's conduct towards the applicant. The applicant met the respondent's terms in relation to the business venture they entered together; he provided various assets and money to the respondent and worked hard in the business, but yet was excluded from any proper involvement in its direction and control and received no benefit at all from either his work, or the income which was generated by the business. When, unsurprisingly in these circumstances, the relationship came to an end, the respondent promised to pay the applicant money he acknowledged was owed to the applicant. How much would have been paid, had the promise been honoured, cannot be known. The respondent was not specific, has not made any payment at all to the applicant, has retained all the assets and money provided by the applicant and continued to operate the business. He has not appeared to defend the proceedings. 13 The result was that no payments of any kind were made to the applicant, during the course of the contract, or after its termination. The respondent retained the assets which the applicant had provided and continued operating the business without the applicant. In those circumstances, there can be no doubt that the onus falling on the applicant has been met and relief must follow. 14 Money orders in relation to the assets provided to the business and payment for the work performed, must follow. The applicant worked in the business for some two years. The respondent thought he should be paid a minimum of $70,000. Having regard to this evidence and that as to the nature and extent of the work performed; the provisions of the award to which reference was made and the calculations which resulted, I am satisfied that the money sum for the work which results from the calculations made by Mr Austin, reflects a fair adjustment of the position between the parties. I have, however concluded that not all of the provisions of the Award can properly be applied to the applicant. This Award contains provisions designed to protect employees who are required to work overtime, which does not permit for a 10 hour break, before ordinary work is resumed the next day. Mr Austin's calculations showed what would result, both if that provision were applied and if not. I have concluded that justice could not require the applicant simply to be treated as if he were an employee to whom the Award applied. It was, after all, plainly a matter for him as a partner in the business, to fix his working hours. The resulting calculation arrives at a figure of $148,650.90, reflective of the work performed by the applicant over the period in question, but not applying the 10 hour break penalty. 15 In coming to this conclusion, I have had regard to the fact that the applicant was not an employee, but had decided to involve himself in a business venture. The evidence suggested that the business was a viable one, with much work to do, generating income and involving the engagement of up to 12 staff. The award, on the other hand, provides for minimum rates of pay when employees are engaged. The classification selected for the calculation is at the tradesman and leading hand levels appropriately in my view, given the evidence as to the work performed by the applicant. In accepting that approach, I have paid regard to the evidence of the discussions as between the parties, as to the minimum which the applicant should have earned from the business. I have also taken account of the fact that the effect of these orders will also be one of restitution, as to the assets and money put into the business by the applicant. I am satisfied that together, this reflects an appropriate and fair adjustment of the parties' respective positions. Orders 16 For all of these reasons, I make the following orders: 1. I vary the contract between the parties to require the respondent to pay the applicant the sum of $315,195.93 on termination of the contract. 2. I order the respondent to pay the applicant the sum of: (a) $315,195.93, plus (b) interest on that sum, calculated at Supreme Court rates, from 9 March 1998 to the date of judgment. 17 The usual order as to costs is that the respondent bear the applicant's costs, as agreed or assessed. If no application is made within a period of 14 days of this judgment, for the matter to be relisted, so that costs orders on some other basis may be considered, an order against the respondent as to costs in the usual terms, will take effect, without further order. ------------------------ DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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