Industrial Court of New South Wales CITATION: Georkas v Stephen Streeting & anor [2007] NSWIRComm 160 APPLICANT: Constantinos Andreas (Dinos) Georkas PARTIES: RESPONDENTS: Stephen Streeting Charger Pty Ltd FILE NUMBER(S): IRC 1582 and IRC 3209 of 2006 CORAM: Marks J CATCHWORDS: Unfair contract s106 proceedings - s365 application for recovery of money by courier driver - claim to entitlement to payment pursuant to Contract Determination abandoned - application for recovery of money dismissed - dispute as to number of hours worked - whether remuneration under the contract was unfair - objective approach with regard to all aspects of the contract and competing interests of the parties - level and quantum of remuneration did not render the contracts unfair - contract was terminated by respondent - Held: contract made no provision for termination - contract should be varied to include that it is a contract of indefinite duration and is terminable by reasonable notice - reasonable period of notice fixed at four months Civil Procedure Act 2005 LEGISLATION CITED: Industrial Relations Act 1996 ss105, 106 and 365 Transport Industry - Courier and Taxi Truck Contract Determination CASES CITED: Brown v Rezitis (1970) 127 CLR 157 HEARING DATES: 5th June and 6th June 2007 DATE OF JUDGMENT: 3 July 2007 APPLICANT: Mr J Heath of counsel Solicitor: Mr C Serow LEGAL REPRESENTATIVES: Rice More Gibson RESPONDENTS: Mr S Streeting (in person) JUDGMENT: INDUSTRIAL COURT OF NEW SOUTH WALES CORAM: Marks J Tuesday 3rd July 2007 Matter No's IRC 1582 of 2006 and IRC 3209 of 2006 Georkas v Streeting and anor Application under ss 106 and 365 of the Industrial Relations Act 1996 JUDGMENT [2007] NSWIRComm 160 1 The respondents in these proceedings, Stephen Streeting and Charger Pty Ltd, held sequential contracts with Australia Post for the delivery of mail and parcels in the Armidale area. The first respondent, Mr Streeting, is the sole director and shareholder of the second respondent, Charger Pty Ltd ("Charger"). Both Mr Streeting and Charger engaged the applicant, Constantinos Andreas Georkas, on a sequential basis to deliver mail and parcels pursuant to those contracts in the Armidale area. 2 The applicant has commenced two sets of proceedings against the respondents. The first is brought under s 106 of the Industrial Relations Act 1996 ("the Act") and seeks findings that the contracts with the respondents pursuant to which he delivered mail and parcels were unfair. The second set of proceedings is brought under s 365 of the Act seeking an order that the respondents pay him $48,273.67, being underpayment of monies calculated as being payable under the Transport Industry - Courier and Taxi Truck Contract Determination, a Determination of the Industrial Relations Commission of New South Wales. 3 During the course of the proceedings, the applicant abandoned any claim to entitlement to payment pursuant to the Courier and Taxi Truck Contract Determination. Accordingly, it follows that the application for recovery of money should be dismissed. 4 It is only necessary to deal with the summons brought under s 106. Relevantly, ss 105 and 106 of the Act are in the following terms: s 105 Definitions In this Part: "contract" means any contract or arrangement, or any related condition or collateral arrangement, but does not include an industrial instrument. "unfair contract" means a contract: (a) that is unfair, harsh or unconscionable, or (b) that is against the public interest, or (c) that provides a total remuneration that is less than a person performing the work would receive as an employee performing the work, or (d) that is designed to, or does, avoid the provisions of an industrial instrument. s 106 Power of Commission to declare contracts void or varied (1) The Commission may make an order declaring wholly or partly void, or varying, any contract whereby a person performs work in any industry if the Commission finds that the contract is an unfair contract. (2) The Commission may find that it was an unfair contract at the time it was entered into or that it subsequently became an unfair contract because of any conduct of the parties, any variation of the contract or any other reason. (2A) A contract that is a related condition or collateral arrangement may be declared void or varied even though it does not relate to the performance by a person of work in an industry, so long as: (a) the contract to which it is related or collateral is a contract whereby the person performs work in an industry, and (b) the performance of work is a significant purpose of the contractual arrangements made by the person. (3) A contract may be declared wholly or partly void, or varied, either from the commencement of the contract or from some other time. (4) In considering whether a contract is unfair because it is against the public interest, the matters to which the Commission is to have regard must include the effect that the contract, or a series of such contracts, has had, or may have, on any system of apprenticeship and other methods of providing a sufficient and trained labour force. (5) In making an order under this section, the Commission may make such order as to the payment of money in connection with any contract declared wholly or partly void, or varied, as the Commission considers just in the circumstances of the case. (6) In making an order under this section, the Commission must take into account whether or not the applicant (or person on behalf of whom the application is made) took any action to mitigate loss. 5 The proceedings were substantially conducted on the basis of affidavit evidence of the applicant and Mr Streeting both of whom also gave oral evidence and were the subject of cross-examination. In addition, a large bundle of documentary material became evidence. The respondents were initially represented by a solicitor but from a relatively early stage in the proceedings, Mr Streeting has represented his own interests and that of Charger. 6 In about August 2002, the applicant commenced delivery of mail and parcels for the respondent, Mr Streeting. Whilst there was controversy about whether or not there was any written agreement, there is no evidence, or sufficient evidence, that there was any such written agreement. The applicant was required to work certain hours, commencing by attending at the Australia Post delivery centre where parcels and mail were sorted and given to him for delivery on set runs within the Armidale area, principally in the Armidale CBD and in a "suburban" area. The applicant was required to supply his own vehicle and was responsible for all running costs. Initially, he was paid at the rate of $2,200 per month inclusive of GST and submitted invoices at the end of each month. 7 The applicant was told by Mr Streeting that he, Mr Streeting, had the Australia Post contract until the end of June 2005 and that he could expect to be working on the contract until at least that time, or later if the contract was renewed. As it transpires, the contract was renewed with effect 1 July 2005 but, owing to Australia Post requirements, the contract was required to be made with a corporation. It was for that purpose that Mr Streeting incorporated the second respondent. Charger was successful in obtaining the Australia Post contract for a number of mail service runs in the Armidale area commencing 1 July 2005 for a period of five years. At the time that it was negotiated, the applicant was told by Mr Streeting that there was no reason why he should not anticipate continuing to carry out mail and parcel delivery until 2010. 8 During the course of the contractual arrangements, the monthly payments made to the applicant were increased from time to time to accommodate increases in the price of petrol and other running costs of the vehicle. 9 During the first half of 2005, there were discussions between the applicant and Mr Streeting about what monthly rate would be paid to the applicant after 1 July 2005. Negotiations ensued culminating in the applicant agreeing to work for $3,400 per month exclusive of GST. At the time that this agreement was reached, the applicant said that he told Mr Streeting that he had no choice other than to take the contract because he was paying off a mortgage on his house. 10 There was controversy between the parties as to whether or not the applicant signed a contract with Charger. The applicant insisted that he did, but that Mr Streeting did not give him a copy. Mr Streeting denied that any such contract was signed. 11 In the absence of any evidence concerning a written contract, and because of the state of the evidence, I am not satisfied that there has been established that any written contract was entered into. In any event, it is not suggested by the applicant that any of the terms of that written contract had any bearing on the outcome of these proceedings, other than to explain in an historical sense what later transpired between the parties. 12 There were further adjustments made to the monies paid to the applicant to accommodate increases in petrol costs and the like. From November 2005, the applicant was paid $3,500 per month, exclusive of GST, making a total of $3,850 per month. 13 There was much evidence given in the proceedings about a number of "incidents" which were said to impact upon the relationship between the applicant and Mr Streeting. Other than incidents that led to the termination of the applicant's contract, I do not regard any of them as being relevant to the determination of these proceedings. 14 In early February 2006, the applicant said that he had had discussions with Mr Streeting about taking some time off work that month. There was also a discussion about whether the applicant would be paid whilst on holidays. Because the applicant was concerned about the precise conditions of work that applied to him and because he felt that Mr Streeting had not been sufficiently forthcoming about the terms of his contract, the applicant approached an Australia Post employee seeking to initiate a chain of enquiry about the terms and conditions of his contract. The fact that he had done so came to the attention of Mr Streeting. 15 There was, on the evidence, an angry exchange between the applicant and Mr Streeting on the morning of 9 February 2006, which was conducted on the telephone. Later that morning the conversation continued when the applicant returned to the post office having completed his delivery run. 16 Later that day, after the applicant returned to the post office from his afternoon rounds, he found a letter from Mr Streeting, which had been left for him. That letter, dated that day, commenced by expressing "complete amazement with your actions regarding your rights as a sub-contractor regarding holidays and the subsequent comments regarding that you wouldn't trust me." The letter then went on to state that the applicant had resigned from his position. 17 In fact, the applicant returned to work on the following day, 10 February 2006, believing that he had not resigned and assuming that Mr Streeting would calm down. Mr Streeting conceded that the applicant had never used the word "resigned" during the course of any discussion with him. 18 The applicant asserted in evidence that he had never resigned, in the sense that he had terminated his contract, which, at that stage, was with Charger. Mr Streeting initially asserted that the applicant had resigned by indicating that he, Mr Streeting, could "stick his job." However, under cross-examination, Mr Streeting conceded that the applicant had not resigned and that the letter of 9 February 2006 had been written because he was angry about what had occurred and about the applicant's attitude to his contract and to Mr Streeting. 19 In all the circumstances, I conclude on the basis of the evidence that the applicant's contract with Charger was terminated by Charger. It was common ground that no notice was given. It was also common ground that Charger had failed to make payment to the applicant of the then last current month's invoice of $3,850, inclusive of GST. It is clear, as conceded by Mr Streeting, that these monies are owed to the applicant. 20 Part of the claim, and a substantial part of the claim in terms of quantum, made by the applicant was based initially on underpayment of monies by reference to those that would have been earned under the provisions of the Transport Industry - Courier and Taxi Truck Contract Determination. On the commencement of the second day of the proceedings, the applicant withdrew any allegation that any underpayment should be calculated by reference to the provisions of that Contract Determination in that they specifically applied to the applicant. However, it was submitted that the Court could have recourse to the provisions of that Contract Determination in a general sense as representing a standard of remuneration that ought properly and in fairness have been paid to the applicant. 21 As it transpired, analysis of what was in fact paid to the applicant, after the evidence was given by both the applicant and Mr Streeting, seemed to focus attention on the number of hours that the applicant said that were involved in the performance of his work. The hours of work as initially asserted by the applicant averaged about 34 per week. However, these hours seemed to have been calculated from the time when the applicant left his home each day to travel initially to the Australia Post depot until the time that he arrived home after completing the final run of work that day. Furthermore, no allowance appears to have been made for meal breaks and the like. If the applicant were an employee at law, he would not be entitled, in general terms, to be paid for the time taken travelling to and from work and would not be paid for a luncheon break. As a matter of fairness and in reflecting what ought, in fairness, be paid to the applicant as a contract driver, it is arguable that he should be paid only for such time as he was engaged in undertaking work in attending at the Australia Post depot, taking possession of parcels and letters and delivering them and collecting parcels from Australia Post customers and returning them to the depot. The evidence was to the effect that the applicant undertook two runs, one in the morning and one in the afternoon, but there was a significant period in the middle of the day when he performed no work. Furthermore, except for the months of October to December, the applicant did not work on Tuesday afternoons and in fact finished his work on most Tuesdays at about 11am. 22 Maps which were admitted into evidence indicated that the distance travelled by the applicant in carrying out his pick up and delivery work was not great, being within an area which was said to be about 20% of the total Armidale town area, together with a further area involving a round trip of 6.7kms and which took 15 to 20 minutes. 23 The applicant complained about other aspects of the work hours. For example, he complained that he worked on Sundays during the lead up to the Christmas period, but conceded that, firstly, he did so on a voluntary basis and, secondly, he was paid additional money for working on Sundays. 24 I conclude that the applicant has exaggerated his claim and that on the evidence there can be no certainty that the hours worked by the applicant are as many as he claimed. Indeed, Mr Streeting asserted that the applicant worked 28 hours per week only. 25 In determining whether the applicant's remuneration under the contract with the respondents was unfair for the purpose of s 106 of the Act, it is necessary to make a value judgment. Such a value judgment needs to be undertaken in an objective sense having regards to all of the circumstances of the contract and having regard, also, to the competing interests of the applicant and the respondents. 26 A determination as to whether something is fair or unfair cannot be undertaken in a vacuum. That is, there must be a reference point by which determinations of fairness and unfairness may be made. There may not be one only figurative line in the sand that marks the boundary of what is fair or unfair. Often, there will be a range of conduct or circumstances that may be characterised as fair or unfair. That is, in a figurative sense there may be two lines in the sand between which remuneration might be said to be fair or, for the purpose of these proceedings, not unfair. 27 I have reached the conclusion that the state of the evidence, which I have attempted to summarise succinctly, is such that I am unable to conclude that the contracts between the applicant and the respondents in terms of the level and quantum of remuneration and the circumstances in which it was paid rendered the contracts unfair. Even if I were to have regard to some industrial instrument that might, in general terms, set a rate of remuneration that is appropriate, there remains the difficulty in applying that rate to the uncertainty and lack of precision in determining the hours worked by the applicant. Indeed, Mr Streeting asserted that the relevant rate that applied to the applicant at the time of the termination of the contract was a rate of $17 per hour calculated over a period of 28 hours per week together with an amount each month of about $600 to cover running and standing costs of the applicant's vehicle. This amount, as properly conceded by counsel for the applicant, equated with an amount provided for by an industrial instrument with general application in the transport industry. That amount is exclusive of GST. 28 There was evidence that in the course of a tender process, Mr Streeting had suggested to Australia Post that an appropriate hourly rate was $22. However, given that this was a tender document it is not necessarily reflective, in my opinion, of such an amount being necessarily a fair amount for the purpose of assessing whether the applicant's contract was unfair in this regard. Notice 29 The applicant claimed that his contracts with the respondents did not make provision for termination. This would seem to be the case. Mr Streeting gave evidence that he always regarded the applicant's contract as having been made on a month-to-month basis, although he conceded that he never discussed this with the applicant. The applicant was of the understanding that his contract would persist until 2010 when Charger's contract with Australia Post came to an end. 30 It may be that as a matter of law a court might imply that there was in existence a contract between the applicant and, relevantly, Charger of indefinite duration terminable by reasonable notice. I am not prepared to so hold given the different appreciation by each of the applicant and Mr Streeting as to what were the precise terms of the contract in terms of its duration and termination. These circumstances render the contract unfair. As a matter of fairness, I would vary it by inserting provisions to the effect that the contract was one of indefinite duration terminable by reasonable notice. 31 It is then necessary to determine what notice should have been given by Charger to the applicant in all the circumstances. It is clear, as I have previously concluded, that the contract was summarily brought to an end. In my opinion, the circumstances in which Mr Streeting purported to do so on behalf of Charger did not warrant summary termination of the contract. 32 It is then necessary to determine what notice should have been given in all the circumstances of the contract so as to afford reasonable notice to the applicant. In considering this matter, I take into account that, although the applicant supplied his own vehicle, it was a vehicle that he owned prior to commencing his relationship with Mr Streeting in August 2002 and was not a vehicle that was acquired or modified so as to accommodate the specific purpose of delivering parcels and mail. However, I take into account that the applicant was under the impression, as conceded by Mr Streeting, that he could have anticipated continuing to perform work under the contract until 2010. 33 The applicant had been in a relationship with Mr Streeting and Charger for about four years. As the contract was one of indefinite duration, but having regard to the applicant's expectation of work to 2010, I would fix a reasonable period of notice of four months. In calculating the quantum of monetary entitlement appropriate to four months' notice, I feel constrained to make allowance for the fact that the applicant would not have been required to use his vehicle for work purposes during that period and that there would have been a resultant saving in running costs. In my opinion, there is insufficient evidence to allow a precise quantification of running costs. I would propose to allow of the sum of $600 per month set aside for vehicle costs, one third of that amount to cover the cost of petrol and the like. Accordingly, on a prima facie basis, the applicant would be entitled to payment for four months, less the sum of $800. However, the final amount should not be quantified until the parties have an opportunity of determining whether or not GST is payable with respect to monies so awarded by way of compensation. 34 Mr Streeting was, as I have said, the sole director and shareholder of the second respondent, Charger. It is clear from the factual narrative, which I have previously set out, that Mr Streeting was the sole controlling mind of Charger, and that it was he who conducted all negotiations and discussions with the applicant on behalf of Charger. Furthermore, as the sole shareholder he stood to gain from any advantage derived by Charger from the unfairness, which I have found to exist for the purpose of s 106 of the Act. Although the amended summons is not specific in this regard, it is capable of being read as seeking an order that any monies payable by Charger to the applicant should be paid by Mr Streeting, applying the well known principles in Brown v Rezitis (1970) 127 CLR 157. I accept the submission, particularly as evidence given in the course of the proceedings was to the effect that Mr Streeting has caused Charger to surrender its mail service contracts with Australia Post and to give fresh contracts to his brother, because he was concerned about the potential outcome of these proceedings. 35 This leaves for consideration the question of costs and interest. 36 The applicant has succeeded overall in obtaining orders including a monetary order in his favour. However, a significant part of the proceedings and a significant part of the evidence was taken up in connection with the underpayment issue in which the applicant has been unsuccessful. The quantum of the monetary compensation awarded to the applicant is significantly lower than that which was claimed by him by reference to the underpayment. For these reasons, I am of the opinion that the applicant should not be entitled to all of his costs and I propose to award him 80% of his costs only. 37 The applicant claimed interest in the amended summons and there is no reason why he should not be entitled to payment of interest on the amount of the monetary compensation payable to him. Orders 38 Pursuant to the finding of unfairness of the contract between the applicant and Charger Pty Ltd, I make the following orders: 1) The contract is varied from 1 July 2005 so as to provide that it is a contract of indefinite duration terminable upon reasonable notice. 2) The respondents are jointly and severally liable to pay the applicant the agreed outstanding payment of $3,850, inclusive of GST, together with a further payment representing four months of monies that would have been paid to the applicant by Charger Pty Ltd less $800. 3) The parties are to confer on whether it is appropriate that the additional four months' payment referred to in order (2) above is to be quantified inclusive or exclusive of GST. 4) The respondents are jointly and severally liable to pay 80% of the costs of the applicant in the amount assessed under the Legal Profession Act in default of agreement. 5) The respondents are jointly and severally liable to pay the applicant interest on the monies payable under order (2) above from 9 February 2006 to the date of this judgment calculated pursuant to s 100 of the Civil Procedure Act 2005. 6) Liberty to apply with respect to final orders of monetary compensation. 7) The summons in Matter No IRC 3209 of 2006 is dismissed. 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