Industrial Court of New South Wales CITATION: Liang v Xie [2010] NSWIRComm 185 PARTIES: Wei Wen Liang (also known as Raymond Liang) (Applicant) Virginia Yue Yun Xie (also known as Yue Yun Xiao) trading as "Ocean City Chinese Restaurant" (Respondent) FILE NUMBER(S): IRC 1382 of 2009 CORAM: Marks J CATCHWORDS: APPLICATION FOR RECOVERY OF MONEY – applicant sponsored by respondent for permanent resident purposes – contract of employment – Restaurant Employees (State) Award – marked differences between evidence of applicant and respondent – inadequate record keeping – employment summarily terminated – applicable grade classification under the Award – findings made as to hours of work – proceedings stood over to allow for calculations to occur based on findings – costs and interest reserved LEGISLATION CITED: Industrial Relations Act 1996 – s 364, s 365, s 366, s 370 HEARING DATES: 28 and 29 June, 15 October 2010 DATE OF JUDGMENT: 15 December 2010 Mr R Moore of counsel (Applicant) Solicitor: Austin Haworth & Lexon Legal (Sydney) LEGAL REPRESENTATIVES: Mr P Stockley of counsel (Respondent) Solicitor: Kennedy & Cooke Lawyers JUDGMENT: INDUSTRIAL COURT OF NEW SOUTH WALES CORAM: MARKS J Wednesday 15 December 2010 Matter No IRC of 1382 of 2009 WEI WEN LIANG (ALSO KNOWN AS RAYMOND LIANG) v VIRGINIA YUE YUN XIE (ALSO KNOWN AS YUE YUN XIAO) TRADING AS "OCEAN CITY CHINESE RESTAURANT" Application for recovery of money under s 365 of the Industrial Relations Act 1996 JUDGMENT [2010] NSWIRComm 185 1 In these proceedings the applicant Wei Wen Liang seeks the recovery of certain monies from the respondent, Virginia Yue Yun Xie under ss 365 and 366 of the Industrial Relations Act 1996 ("the Act"). The applicant alleges that he was employed by the respondent to work in a business which she conducted in Merimbula known as the Ocean City Chinese restaurant in which he was employed to perform work involving the preparation and cooking of food. The applicant claims an underpayment of monies under an applicable industrial instrument, namely the Restaurant Employees (State) Award ("the Award") as well as an underpayment of certain monies under the terms of a contract of employment with the respondent. The statutory basis for the claim 2 The provisions of ss 364, 365, 366 and 370 of the Act are as follows: 364 Definitions (1) In this Part: amount payable under an industrial instrument, includes: (a) remuneration payable to an employee for work done where the industrial instrument fixes the rate or amount of the remuneration, or (b) commission or other amount payable to a person in the circumstances specified in the industrial instrument (other than remuneration for work done), or (c) an amount for which an employee is required under the industrial instrument to be re-imbursed or compensated for an expense incurred or loss sustained by the employee. industrial court means: (a) the Commission in Court Session, or (b) in the case of proceedings under section 380 (Small claims during other Commission proceedings)—the Commission, whether or not in Court Session, or (c) the Local Court constituted specially for the purposes of this Part by an Industrial Magistrate sitting alone. (2) In this Part, a reference to an industrial instrument and to an amount payable under the industrial instrument includes a reference to: (a) a permit under section 125 and the amount that may be paid to the employee in accordance with the permit, and (b) section 13 of the Annual Holidays Act 1944, section 12 of the Long Service Leave Act 1955 and section 12 of the Long Service Leave (Metalliferous Mining Industry) Act 1963 and an amount payable to the employee under any such provision. 365 Order for recovery of remuneration and other amounts payable under industrial instrument An industrial court may, on application, order an employer to pay any amount payable under an industrial instrument that remains unpaid to the person to whom it is payable. 366 Order for recovery of over-award payments under contract of employment (1) An industrial court may, on application, order an employer to pay any amount payable to a person under a contract relating to the employment of the person that remains unpaid. (2) This section applies only if there is an industrial instrument that fixes the minimum rate or amount of remuneration for the work done under the contract. … 370 Making of order (1) An industrial court may, on an application for an order under this Part, make such order as it considers just in the circumstances. (2) An order may be made despite any smaller payment or any express or implied agreement to the contrary. Note . An order under this section may also be made in connection with proceedings for a contravention of an industrial instrument (see section 358) or, in the case of a small claim, in connection with other proceedings before the Commission (see section 380). The applicant's claim 3 In his application filed in the Court, the applicant alleged that he was employed by the respondent to perform work as a cook/chef from 23 June 2004 to 23 September 2008. He alleged that he should have been paid at a rate pursuant to the Award applicable to a Grade 4 employee. It was alleged that he was required to work each Tuesday to Sunday each week working a split shift between the hours of 10.45am to 3.30pm and 5.15pm to 10pm, although "at times the applicant was required to perform work after 10pm." 4 The application alleged that because of the hours worked on the days each week, the applicant was entitled to be paid for some of the period at overtime rates, together with a broken shift allowance and the applicant was entitled to other penalty rates when working ordinary time on Saturdays and Sundays. The application alleged that the applicant was paid $154,396 during the period of employment and that he was underpaid pursuant to the provisions of the award by $105,299.14 and was entitled to a further $12,054 in allowances. In addition, there was a claim for payment of monies in lieu of notice, annual leave and annual leave loading totalling a further $14,000 approximately. 5 The claim brought under s 366 of the Act asserted that the applicant was employed under a contract of employment on an annual salary of $42,000 to work 40 hours a week and was to be paid overtime rates for work in excess of 40 hours per week. It was said that approximately $18,000 was owing for overtime payments not made and this sum was claimed in addition to the amount of the underpayment under the award. The issues in the proceedings 6 The legal representatives of the parties helpfully reached agreement about a number of factual matters but, unfortunately, they were within a small compass. There was agreement that the applicant was employed by the respondent from 23 June 2004 to 23 September 2008 and during this time he worked as a full-time employee in the respondent's restaurant. His work was covered by the Award. 7 It was agreed that the restaurant was generally closed every Monday and that it traded every Tuesday to Sunday inclusive for both lunch and dinner. 8 The parties identified the following matters about which agreement could not be reached: 1) Whether the applicant performed work classified as a Grade 4 employee or a Grade 3 employee under the Award; 2) the hours of work each day from which a calculation of ordinary and overtime hours could be derived; 3) whether time and wages books maintained by the respondent were accurate; 4) whether the applicant was entitled to be paid a split shift allowance under the Award; 5) whether the applicant's employment was terminated by the respondent or whether he abandoned or otherwise terminated his employment; 6) whether the respondent was paid holiday pay; 7) whether the applicant was entitled to payment of any additional monies under the Award or under his contract of employment. The factual matrix 9 Both the applicant and the respondent filed affidavit evidence in the proceedings and both supplemented this evidence orally including evidence under cross-examination. Their evidence was given with the aid of interpreters. In addition, certain documents were tendered into evidence, which I will refer to later in these reasons for judgment. 10 The respondent commenced operating the restaurant in Merimbula in about June 1998. In 2001 she commenced a process to sponsor the applicant, who is her sister's husband and thus her brother-in-law, to immigrate with his wife and children to Australia. She used a 457 Visa process. After overcoming a number of difficulties, which it is not necessary to set out, the applicant arrived in Australia in June 2004. The 457 Visa was based upon a guaranteed offer of employment to the applicant. There had been a series of contracts of employment prepared by immigration lawyers retained by the respondent. The one that applied at the time that the applicant was granted his visa and commenced employment with the respondent simply provided that the respondent would be employed "on full time basis starting from 1 February 2004." It set out five terms of employment namely: 1. Annual remuneration package: A$37,000.00 2. Weekly work load: 40 hours 3. Annual holidays except weekends: As per Australian Commonwealth and NSW Government regulations. 4. Additional workload on top of the normal workload receives 1.5 times the normal pay. 5. Medical cover provided for family unit. 11 It was provided that the employment would remain effective "for four years" and in case of termination one month's notice would be required from either side. 12 The respondent said that the applicant could not speak any English when he arrived. 13 In 2006 the applicant applied for permanent residence status for himself, his wife and daughter and the respondent assisted him to do so. He remained employed, however, pursuant to the provisions of the 457 Visa, which required employment for a minimum of four years. 14 As will be seen, the evidence of the applicant and the respondent differed markedly on almost every matter of detail. At all relevant times there were three people who regularly worked in the restaurant. They were the respondent, the applicant and the applicant's partner, Simonn Xia, who was the chef. Occasionally, during busy times casuals were engaged to wash up and carry out other duties in the kitchen. The restaurant business was seasonal in that it was busier during the summer period and especially during school holidays and public holidays and less busy in winter. This had some impact on the opening hours of the restaurant or, more accurately, the closing hours, depending on the level of trading. 15 Both the applicant and Mr Xia lived with the respondent so they all travelled into the restaurant together each day. The evidence differed as to when this occurred and as to whether the applicant was required to start work immediately he arrived at the restaurant. The respondent said that sometimes she arrived earlier than necessary to take delivery of supplies or to discuss matters with suppliers and the like. The evidence of the applicant and respondent differed markedly also as to closing times. Obviously, there would be different closing times depending upon the number of patrons, including the take away business, the night of the week and the time of the year. 16 There is in evidence the original of a time and wages book. It purports to set out the hours of work of the applicant on a weekly basis for almost all of the period of his employment, commencing 8 August 2004 and finishing 21 September 2008. The hours upon which the applicant is said in this record to have commenced and finished work on each day do not differ. Some of the pages are signed by the applicant but most are not. The respondent said in evidence that she asked the applicant to sign the wages book each week but that he did not do so saying that he could trust her. The applicant said that he was asked on occasions to sign a wages book that was otherwise blank, the respondent saying to him that he could trust her. 17 My perusal of the document gives me cause to conclude that many of the entries were written at the same time. The same ballpoint pen appears to have been used, the writing is uniform and there is nothing to indicate or give the impression that each entry was written on a different date. Whether and to what extent the document which is in evidence attempts to be a reconstruction I do not know. Certainly, I am not prepared, on the evidence, to assume that the time and wages book reflects accurately the hours of work of the applicant each day. 18 It was the applicant's evidence that in the middle of the day he would sit with the respondent and Mr Xia and eat lunch for a short period. He would then attend to some other work. There would then be a break until the evening work started at about 5pm when he had to cook the oil in preparation for deep-frying. 19 There was also some dispute between the parties as to exactly how much money the respondent paid to the applicant. All monies were paid in cash. 20 Fortunately, the applicant filed income tax returns for all the relevant years during which he worked for the respondent. It seems to me that it is preferable to proceed on the basis that what was paid to the applicant by the respondent was the amount that he disclosed in his return to the Australia Taxation Office. 21 Before dealing with each of the discrete issues, I should observe that the contract of employment between the applicant and the respondent was entered into as part of a family arrangement to facilitate the immigration of the applicant and his family to Australia, sponsored by the respondent. The arrangements made were reflective of this family situation; it was not an arm's length transaction in the ordinary sense. The applicant and his family lived with the respondent and for some time also with her partner in the respondent's home. The respondent facilitated the employment of the applicant in a small business which she had established. 22 On the basis of the evidence given in the proceedings, it is obvious that there was not a great deal of sophistication in terms of the keeping of records, and in particular wages records dealing with the applicant's employment. This should be seen, in the overall environment in which the applicant's employment took place, against the background of the conduct of what was obviously a small business enterprise. I make these observations not to condone any failure on the part of the respondent to keep accurate and contemporaneous time-and-wages records, but to explain the circumstances in which this arose. 23 Obviously, the evidence given in the proceedings was of a most general kind only covering some years of trading operations. No one could expect any recall of the precise or even approximate starting times and finishing times each day over this long period. Nor would it be possible to recall trading patterns over such a period to make allowance for the obvious seasonal factors that apply to the conduct of a business of this kind in Merimbula. 24 In the course of submissions, I canvassed with counsel the adoption of a generalised approach, including the adoption of a three-month period to cover peak trading circumstances. Sensibly, neither counsel contended for any other approach to be adopted. I have applied this approach in reaching the findings that I have made concerning the discrete issues. The hours of work 25 In his affidavit evidence, the applicant said that he travelled with the respondent and her "boyfriend" to work at the restaurant. He said that during the period the restaurant was open for lunch they would arrive at about 10.30am and begin preparation, working through until about 3.30pm. They would resume at about 5.30pm and work through until at least 10pm and at times later, up to 11.30pm. 26 In a complaint document that the applicant lodged with the Australian Government Workplace ombudsman, he set out his hours of work as 10.45am to 3.30pm each day and 5.15pm to 10pm Tuesday to Friday and 5.15pm to 10.30pm on Saturday and Sunday. These hours differ from those that are contained within his principal affidavit. 27 In her affidavit, the respondent said that the applicant usually came to work with her at about 11.30am from Tuesday to Saturday and about 12noon on a Sunday and that he worked through until 2pm. He would then usually leave the restaurant until he started work again at 5.30pm. In the evenings, he worked from 5.30pm until about 9.30pm except on Friday when he worked until about 10pm and Saturdays until about 10.30pm. 28 In cross-examination, the respondent was tested as to whether an 11.30am start was feasible given that the restaurant was to open at 12. She said that the lunch menu was "short", although she conceded that the same menu was offered for both lunch and dinner. 29 The respondent did say, however, that in general terms the restaurant was not busy at lunchtimes and sometimes there were only one or two customers. 30 In endeavouring to reconcile the competing evidence as to the times at which the applicant attended for work, I take into account that at lunchtime, on the evidence, some preparation of food was undertaken during the previous evening. Furthermore, on the evidence there were three people working in the kitchen, namely the applicant, the chef Mr Xia and the respondent herself. 31 In considering the evidence, I take into account also that it was the respondent who drove the applicant to work. It is probable in these circumstances that she was more conscious of the time than the applicant, although I do not regard this as a highly persuasive factor. 32 Based on the totality of the evidence and my understanding of the respective positions of the parties, tested to some extent in cross-examination, I find that in general terms the applicant started work at 11.30am on Tuesdays to Saturdays and worked until 2pm. Thereafter, and on all other days the applicant commenced work at 5.15pm and finished at 9.30pm on Tuesday, Wednesday and Thursday, 10pm on Friday and 10.30pm on Saturday for a period of nine months excluding the peak summer holiday period. During that peak period, the applicant worked on Saturdays to 11pm. On Sundays, the restaurant was not open for lunch. I find, on the evidence, that generally the applicant commenced work at 11.30am on Sundays and worked to 9.30pm during the nine months of the year and 10.30pm during the three month peak summer period. There is no evidence about any lunch break taken on Sundays. 33 The respondent had submitted that overall the applicant did not work consistently forty hours a week because there was not enough work for him to do to occupy that number of hours each week, especially given the variable nature of the restaurant business because of seasonal factors. My general impression of the evidence is that the applicant did perform work during the times that he attended work. In any event, the respondent, perhaps driven by altruistic motives, agreed to provide forty hours a week of employment as a condition for the grant of the visa to the applicant. I reject this submission. Split/broken shift 34 It follows from the findings which I have made that the applicant must be taken to have worked a broken shift and should be paid accordingly pursuant to clause 5.11 of the Award. The grade classification under the Award 35 The applicant claimed to be engaged at a Grade 4 level. The respondent said that he was employed at a Grade 3 level. Grade 4 under the Award refers to employees primarily engaged in undertaking "general cooking duties, including a la carte cookery, baking, pastry cooking or butchery." The remaining Award provisions indicate a degree of speciality and sophistication in the work performed. 36 On the other hand a Grade 3 employee is defined as "preparing and cooking a limited range of basic food items such as breakfast, grills and snacks." 37 In his affidavit, the applicant said that the work which he undertook in the kitchen included the making of spring rolls and dim sum and dumplings and "other work preparatory to stir frying such as cutting of vegetables and marinating of meats, and cooking food on the stove and deep frying." He also assisted in the cleaning up of the kitchen as required and the handling and storage of food. Having regard to this description of the work, and having regard also to the fact that there was at all times present Mr Xia, who was described as a chef, I am of the opinion that the work performed by the applicant fell within the classification of a Grade 3 employee under the Award classification structure. Holiday pay 38 The applicant asserted that he did not take any holidays. The respondent did not deny this but said that she made payments to him from time to time in cash of amounts by way of holiday pay. These totalled the sum of $6,987.20. The applicant said that he did receive additional monies from time to time but was unable to say how much and how frequently. In all the circumstances, I accept the evidence given by the respondent that the applicant was paid holiday pay in the amount of $6,987.20 during the period of his employment commencing on 2 October 2005 and finishing on 6 July 2008. The amounts paid are as set out in exhibit 4, a summary prepared by the respondent which was tendered into evidence in the proceedings. Public holidays 39 The respondent also prepared in the same schedule, exhibit 4, a notation of monies paid by her in cash to the applicant to cover certain public holidays. I find that these monies were paid to the applicant as asserted by the respondent. Termination of the employment 40 Once again, the evidence of the parties as to the circumstances surrounding the termination of the applicant's employment differed. The respondent said that she had an argument with her sister on about 19 September 2008 about the use by her of her piano. Her sister complained that it was too loud. On 23 September 2008, she found that the piano had been damaged and suspected her sister of having done this. In the course of an argument with her sister, at which the applicant was present, she said that she asked her sister and the applicant to leave the house. The applicant did not come to work that day and commenced looking for accommodation. He did not return to work and, it is alleged, he required the payment of certain monies to cover the cost of moving before he would return to work. He has not worked for the respondent since. The applicant denied that he had witnessed any argument about the piano and did not know about any allegation of damage to the piano until he read it in the respondent's affidavit, filed for the purpose of the proceedings. He said that the respondent told him that he was fired and that she wanted him out of the house. 41 My impression of the evidence is that it is more likely than not that the applicant's employment with the respondent was terminated by her as a result of the altercation with the applicant's wife, her sister. I accept that the applicant's employment was terminated summarily as alleged by him and that he is therefore entitled to notice, calculated in accordance with the contract of employment or the Award, whichever results in the higher payment. Unauthorised deductions from payments made 42 During the course of submissions on 15 October 2010, the applicant raised by way of an issue an assertion that, of the monies which the respondent had said she had paid to him, approximately $35,000 had been deducted for the payment of monies by way of superannuation, to the applicant's Medicare fees and, perhaps also, reimbursement for airfares paid. The applicant gave some evidence about this and was not subject to cross-examination. However, counsel for the respondent said that he did not cross-examine on this evidence because it was not an issue in the proceedings. I agree with the respondent's submission that this matter was not an issue in the proceedings before me either by way of inclusion within the application filed in the court or identified as such at the commencement of the proceedings. 43 The applicant did not press this matter further other than to seek some assurance that it would not be the subject of any estoppel by reason of any finding that I have made. I should state that the findings that I have made, as set out in these reasons for judgment, are those that I have felt are necessary in order to determine the issues raised between the parties. Whether and to what extent the applicant wishes to pursue this matter will be a matter entirely for him and those advising him. The further conduct of the proceedings 44 The hearing of these proceedings occurred initially on 28 and 29 June 2010. After hearing submissions on the second day, I gave the parties an indicative impression of findings that I would be inclined to make on the basis of the evidence that was adduced in the proceedings. I did this for two reasons. The first was that depending upon the findings made, it would then be necessary for the parties to undertake detailed and exhaustive calculations concerning any monies that might become payable pursuant to the application of the provisions of the Award and the contract of employment so as to calculate in turn whether and to what extent any monies were owing by the respondent to the applicant. The second reason for taking this course of action was to induce the parties, even at that late stage, to reach some agreed settlement bearing in mind that the applicant and the respondent are related in marriage and that ultimately there was an underlying dispute between two sisters. Any personal reconciliation would be easier to achieve upon settlement of the proceedings by agreement rather than any result enforced by a court. 45 Unfortunately, the proceedings did not settle and further submissions were made by the parties on 15 October 2010. At the conclusion of the proceedings that day, I again expressed the hope that the parties would be able to reach some sensible agreement about any amount ultimately found to be owing by the respondent to the applicant. Unfortunately, no agreement was possible and on 24 November 2010, the Court was asked to prepare reasons for judgment. 46 The findings that I have made, which are consistent with those indicated to the parties on 29 June 2010 and again on 15 October 2010, will now necessitate the legal practitioners revisiting the calculations which have previously been made and reaching some consensus between them as to the ultimate amount that might be payable by the respondent to the applicant, if any. The proceedings are stood over to allow this to occur. The parties are directed to bring in short minutes of order within one month of this date to reflect the impact upon the claim of the findings that I have made. I grant liberty to apply in the event that any difficulty arises in this regard. 47 The parties requested that any claim made by the applicant for interest and that the costs of the proceedings be reserved and I shall do so. 48 The proceedings are stood over accordingly. _____________________________________________________________________ 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.