Denny Realty Pty Ltd trading as Mackay Business Brokers v Hodge [2004] ICQ 41 (2004) 176 QGIG 468

468 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 2 July, 2003 ########################################################################################################################## # INDUSTRIAL COURT OF QUEENSLAND Industrial Relations Act 1999 – s. 341(1) – appeal against decision of industrial commission Denny Realty Pty Ltd trading as Mackay Business Brokers AND Peter Herbert Hodge (No. C30 of 2004) PRESIDENT HALL 25 June 2004 DECISION This is an appeal against a decision of the Queensland Industrial Relations Commission released on 7 April 2004 and now reported at 175 QGIG 1287. By that decision the Commission ordered Denny Realty Pty Ltd to pay $9,575 to Peter Herbert Hodge by way of unpaid “wages” in the expanded sense of the noun at Schedule 5 of the Industrial Relations Act 1999 (the Act). Both at first instance and on the appeal, the parties were at idem as to many of the facts. It was common ground that Mr Hodge (the respondent) commenced employment as a real estate salesperson/business broker on 22 January 1996. His employer was a partnership trading as Mackay Business Brokers. The partners were Denny Realty Pty Ltd (the appellant) and Paycliff Pty Ltd. The Commission found that the engagement was within the scope of the Property Sales Award Queensland – State (the Award) in the form which it took over the material period, viz 23 September 2000 to 28 February 2001. That conclusion, which was disputed by the appellant at first instance, has not been challenged on the appeal. The Award, of course, makes provision for employer and employee to opt out of the Award by the device of executing an “individual employee flexibility agreement” under Part C of the Award and registering the agreement with the Property Salesmen’s Association Queensland, Union of Employees. Notwithstanding the point taken about the applicability of the Award by the appellant at first instance, it was and is common ground that in fact, Mr Hodge and the partnership did execute and register such an “individual employee flexibility agreement”. The agreement was renewed from time to time as required by the Award. On 23 September 2000 Paycliff Pty Ltd resigned from the partnership. It is common ground that Denny Realty Pty Ltd continued to trade as Mackay Business Brokers, that Mr Hodge continued to work as a Real Estate Salesperson/Business Broker within the business trading as Mackay Business Brokers and that his employer was (intruth) Denny Realty Pty Ltd. The Commission found that Mr Hodges’ engagement by Denny Realty Pty Ltd as and from 23 September 2000 was a new engagement. That is the finding which is the focus of the appeal. It was a finding which acquired significance because the Commission also held that: (a) the Property Sales Award Queensland – State applied to the engagement; (b) Mr Hodge and Denny Realty Pty Ltd had not executed and registered a new “individual employee flexibility agreement”; and (c) the original “individual employee flexibility agreement” had not been transferred as required by Part C of the Award. The consequence was found to be that the wages payable to Mr Hodge after 23 September 2000 were to be assessed under the Award. In fact, Denny Realty Pty Ltd had paid Mr Hodge in accordance with the “individual employee flexibility agreement” previously referred to. The amount of “wages” ordered to be paid by the Commission was the discrepancy between the Award amount and the agreement amount. The Commission gave no reason for the conclusion that, after the resignation of Paycliff Pty Ltd, Denny Realty Pty Ltd and Mr Hodge had entered into a new engagement. Examination of the transcript and, in particular, the exchanges between the Bench and the Advocate for Denny Realty Pty Ltd in the course of closing submissions, makes manifest that the Commission was of the view that resignation of a partner terminates the engagement of all employees of the partnership. On that hypothesis, the conclusion that Mr Hodge, who in fact continued to work for reward for Mackay Business Brokers, had entered into a new contract of employment with the company trading as Mackay Business Brokers, viz Denny Realty Pty Ltd, was unimpeachable. However, with respect to the Commission, the proposition that the resignation of a partner discharges all employees of the partnership, seems to me not to be supported by authority. It is certainly true that some, “older” text cite Brace v Calder [1895] 2 QB 253 as authority for that proposition, but Brace v Calder, ibid, has become distinguished in the less flattering sense of the adjective. Tunstall v Condon [1980] ICR 786 is a case in which the Employment Appeal Tribunal had to consider two submissions. One of those submissions was that termination of employment followed by operation of law from the dissolution of a partnership. At 790 to 791 Talbot J, delivering the unanimous decision of the Tribunal, observed: -- 1 of 3 -- 2 July, 2003 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 469 9/7/04 “We will deal with the first submission. It is based upon an old authority though one that is still cited in the textbooks, Bruce v Calder [1895] 2 Q. B. 253. In that case, there was a partnership consisting of four members and the plaintiff was employed in their business by a written agreement for a period. Before the expiry of the period of his employment, two partners retired and the business was transferred to and carried on by the other two. The continuing partners were willing to employ the plaintiff (the manager) on the same terms as before, but he declined to serve them. He then brought an action for wrongful dismissal. It was held by the majority, Lopes L. J. and Rigby L. J., that the dissolution of the partnership operated as a wrongful dismissal of the plaintiff. Lord Esher M. R. dissented, but it would seem from a reading of his judgement that his dissent was that the dismissal was wrongful. It would seem that the unanimous decision of the Court of Appeal in that case was that the dissolution did terminate the plaintiff’s employment. Thus, it is argued here, the dissolution terminated Mr Condon’s employment and, indeed, Mr Biddle’s employment. It is clear, in our view, that this is a decision that we should follow, but it is also clear that it is not every case of dissolution of partnership that necessarily terminates the employment of the servants of that partnership. We have been referred to the opinions expressed in Grunfeld, The Law of Redundancy, 1 st ed. (1971). His book dealt with dissolution of partnership, and the passage at p.50 reads: ‘A partnership is dissolved if a partner dies or retires. But, contracts of employment of the partnership’s employees do not automatically end with the technical dissolution of the partnership. Essentially, it is a question of the scope and meaning of the particular contract of employment.’ He then goes on to deal with the case, the report of which we have not seen but which is set out in the text of the professor’s work, Phillips v Alhambra Palace Co. [1901] 1 Q.B. 59, which was an instance where the partnership dissolution did not terminate the employment. In that case Kennedy J. had said, at p. 64–and again we take this from Professor Grunfeld’s work–“…no absolute rule can be laid down which shall be applicable to all cases”–namely, whether there shall be termination or not. We would adopt as being correct the principles expressed by Professor Grunfeld, and it is our view that we have to look to the contracts in this case and the circumstances of the dissolution in order to determine whether the dissolution of this partnership terminated Mr Condon’s contract and that of Mr Biddle. It is our view that their contracts were terminated by the dissolution. One of the relevant factors that has influenced us is that this was a complete split up of a solicitors’ partnership. It is not a case merely of one partner leaving or dying; that decision would have to be argued in the light of the particular circumstances of the case. But in this case the break-up of the partnership involved one part of the partnership business, which was being carried on at Epsom, going to four of the partners, and that other part of the partnership business which was carried on in London going to Mr Tunstall the other partner. There was therefore a complete break and alteration and, in our view, that must mean that there was a termination of the service contracts of Mr Condon and Mr Biddle.”. On the proposition that a major split will suffice, the decision in Tunstall v Condon, op.cit., was followed in Barnes v Leavesley [2001] ICR 38 at 42 to 43. But here there was no major split. The business activity engaged in under the trading name Mackay Business Brokers was carried on as before. It was a case of “business as usual”. Counsel for the Respondent rightly identifies that the alter-ego of Paycliff Pty Ltd, negotiated a restraint of trade clause excluding Denny Realty Pty Ltd from the market in hotels/motels for six months from the date of dissolution of the partnership, but there is no material on which to find that the passing change was a major split rather than a hiatus. With respect to Professor Grunfeld, op.cit., the decision in Phillips v Alhambra Palace Co [1901] 1 Q.B. 59 went beyond determining that “—no absolute rule can be laid down which shall be applicable to all cases”. The full passage is: “It is clear that no absolute rule can be laid down which shall be applicable to all cases. The case of the Tasker v Shepherd (1) has certainly gone as far as any case. But even there the judges did not go upon the ground that the case fell within the principle of those cases in which the contract has been held to be put an end to by reason of the personal skill of the parties being involved. They only said that it might be so. They expressed no opinion upon it. The real ground of the decision was that the contract had reference to the existing partnership business only. So I can conceive that a contract such as we have to deal with in the present case might be made under circumstances under which it would be unjust to compel the plaintiffs to perform for the surviving partners, and under which it would be equally unjust to compel the surviving partners to employ them. But here, if the plaintiffs are provided with the agreed stage on which to perform, and are only required to perform at the agreed time and under the agreed conditions, it surely cannot matter to them who the particular persons are by whom they are to be paid. The case does not fall within the decision of Tasker v Shepherd. (1).”. [Tasker v Shepherd is reported at 6 H&N 575] To understand the reference to “agreed stage” and “perform” it is perhaps necessary to know that the partners operated a music-hall and that the plaintiffs were a troupe of music hall performers Macken, O’Grady, Sappideen and Warburton, Law of Employment, 5th edition, contrast the decision in Phillips v Alhambra Palace Co Ltd, with the decision in Harvey and Sons v The Tivoli, Manchesten Ltd (1907) 23 TLR 592. At 242 the learned authors observe: “Contrast this with a case where a troupe of ‘speciality entertainers’ consisted of three brothers one of whom died, but was replaced. The employing theatre company was held not liable to be sued on the original contract (which it had purported to cancel, unnecessarily it seems). The judgments do not refer to the personal nature of the services to be rendered, but the case is consistent with the earlier authorities and can be explained on the basis that the death of one partner frustrated the contract which depended on the continued existence of the lives of those who initially contracted to perform these specialised, personal services.”. Here, before and after the dissolution, the business in which the Respondent was employed was carried out from the same premises with the same equipment. The business traded under the banner and behind the reputation of Mackay Business Brokers. No attempt was made to show that Mr Doughty, the alter-ego of Paycliff Pty Ltd had such a reputation or such deep pockets as to make engagement otherwise than by the partnership different in nature or less secure. (And the assumption that one may go behind the corporate veil is untested.) I quite accept that one must always have regard to the terms of the contract of employment. But where, as here, the terms of the engagement (and, in particular, the terms of the renewals of the engagement) suggest that the respondent’s employment was in the business carried on as Mackay Business Brokers, rather than employment by the two corporations who happened to be the partners at the time of the agreement – and that seems to be the critical issue, compare Briggs v Oates [1991] 1 A11 ER 407 at 415 per Scott J. I am unable to discern an intention that resignation of one of the two partners was to automatically terminate the respondent’s employment. The Commissions finding that the respondent was unaware that the appellant was his employer after the resignation is compatible only with the view that the respondent’s focus was the business, not the proprietor. In my view the evidence does not support a conclusion that the dissolution of the partnership terminated the respondent’s existing contractual arrangement with Denny Realty Pty Ltd. Prior to the resignation of Paycliff Pty Ltd the respondent might have enforced any claim for wages against either of the partners. Almost certainly he would have sued the partners together lest by securing judgment against a partner who proven to be impecunious, he lost his right to bring a further action against the remaining partner, compare Kendall v Hamilton [1879] 4 App.Cas. 504 to 514 to 516 per Earl Cairns, L.C. But he was entitled to proceed against one partner only. After the resignation of Paycliff Pty Ltd he lost the right to proceed against Paycliff Pty Ltd (otherwise than for wages earned before the resignation). But he retained the right to proceed against Denny Realty Pty Ltd and it was the very same right which he held prior to the resignation, viz a right to proceed on the “individual employee flexibility agreement”. -- 2 of 3 -- 470 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 2 July, 2003 Counsel for the respondent submits that the appellant is bound by the conduct of its case at first instance and may not, on an appeal, raise an issue conceded at first instance. The proposition of law is sound, compare Coulton v Holcombe (1986) 162 CLR 1 at 7 to 8 per Gibbs C J, Wilson, Brennan and Dawson J J and Water Board v Moustakas (1988) 180 CLR 491 at 496 to 497 per Mason C J, Wilson, Brennan and Dawson J J. However, in my view the appellant did not concede that the resignation, of Paycliff Pty Ltd had brought the respondent’s existing employment to an end and that his subsequent employment by Denny Realty Pty Ltd was a fresh engagement. The position taken up by the appellant’s lay advocate and the thrust of the evidence led for the appellant was that after the resignation the business had a new owner but that the business ran on as usual. Only in closing submissions, in response to a series of leading questions from the Bench and faced with an assertion that the original engagement had been terminated by operation of law, was such a concession made by the appellant’s advocate. And it was always the appellant’s submission that the “individual employee flexibility agreement” continued to apply to the respondent’s employment. It was the respondent who had initiated proceedings in the Commission under s. 278 of the Act. It was the respondent who advanced the proposition that the resignation of Paycliff Pty Ltd terminated his “individual employee flexibility agreement” leaving him at liberty to enforce the Award against his new employer, viz Denny Realty Pty Ltd. It was for the respondent to make out his case. That he failed to do. The Industrial Relations Act 1999 is not the Workers’ Compensation and Rehabilitation Act 2003. There is power to allow an appeal and remit the matter to the Commission to be heard and determined according to law s. 341(3)(d). It might well be that if that course was adopted the respondent would have additional evidence to lead upon the issue whether the resignation split the business or additional evidence to lead about the importance of the personality of Mr Doughty. However, it would be an odd system which allowed lay folk who have chosen to act for themselves to treat a subsequent appeal as an advice on evidence and relitigate the matter. The proper course is to rely on ss 341(3)(b) and 348(1) of the Act and to determine the matter on the record. I allow the appeal. I set aside the decision and order of the Commission in matter W140 of 2003. In lieu thereof I order that the application initiating W140 of 2003 be dismissed. There can be no order as to costs. Dated 24 June 2004. D.R. HALL, President. Appearances: Mr K. Watson directly instructed for the Appellant. Mr R. E. Reed instructed by P. K. Lawyers for the Respondent. -- 3 of 3 --