FEDERAL COURT OF AUSTRALIA

Nield v Mathieson [2014] FCAFC 74

THE COURT ORDERS THAT:

1.    The appeal be dismissed.

2.    The appellants file and serve their written submissions relating to costs on or before 27 June 2014.

3.    The respondent file and serve any answering submissions on or before 4 July 2014.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    The trial judge, without exaggeration, described this as “an extraordinary case”. Ms Beth Mathieson worked in the appellants’ mixed business in Swan Hill for some five years despite receiving very little remuneration and a few other benefits.

2    The appellants (Mrs Marjorie Nield and her husband Keith) conducted the business. Mrs Nield gave evidence on behalf of the appellants at trial. Mr Nield did not because he was suffering from ill health at the time.

3    The circumstances in which these events came to pass were, as the trial judge found, “essentially uncontroversial.” The following account is drawn from his Honour’s reasons.

4    The appellant was born in 1951. For the next thirty years she lived at a place called Tyntynder, about seven kilometres from Swan Hill. In the course of the 1970’s, Ms Mathieson came to know Mrs Nield and there was some social interaction between them. They lived near to one another.

5    In 1981 Ms Mathieson moved to Maryborough. She lived there for some twenty years. In 2006 she moved to Swan Hill.

6    In January 2006, Mr and Mrs Nield took over a mixed business which operated as a milk bar and take away food outlet. This was the first time that Mrs Nield had run a small business.

7    As the result of an intervention of a mutual friend, Ms Mathieson commenced work in the business from about mid-May 2006. From then until mid-August she worked for about seven to eight hours a day as a casual employee. Timesheets were kept and wages were paid to her.

8    In August 2006 Ms Mathieson separated from her then husband. When Mr and Mrs Nield became aware of this it was arranged that Ms Mathieson would move into a bedroom in the premises in which the business was located.

9    Ms Mathieson took up residence in about the middle of August 2006. Thereafter she continued to work but was not paid wages. She was provided with free board and lodging and, until December 2006, she was paid $25 per day by Mrs Nield. She was told by Mrs Nield that she could take a packet of cigarettes a day from the store. This she did.

10    The $25 per day payment ceased in December 2006. The catalyst for this change was that Ms Mathieson told Mrs Nield that she was receiving Centrelink benefits. This was not, in fact, the case. As his Honour found, she had received benefits between June and July 2006. She received no further benefits until April 2007, when she commenced to receive a widow’s allowance. She continued to receive this allowance until February 2011.

11    Despite the cessation of payment, Ms Mathieson continued to work in the business until February 2011. During this period she was paid no wages. She worked long hours. The store was open for seven days a week and on public holidays. Ms Mathieson played a role in the administration of the business. She managed it, from time to time, in the absence of the appellants on leave and she was made a signatory to the business’ bank account.

12    Ms Mathieson also, on occasions, took leave.

13    In April 2007, Ms Mathieson gave $20,000 to Mr and Mrs Nield. The circumstances in which this payment was made and the purpose served by it were matters of dispute.

14    In about April 2007, Mr and Mrs Nield bought a residential property in Jager Street, Swan Hill. It was purchased for $155,000. It was in some disrepair and Ms Mathieson’s sister and brother-in-law spent time tidying the property up. Before the property was purchased Ms Mathieson accompanied Mrs Nield on an inspection.

15    In March or April 2009, Ms Mathieson moved into the Jager Street property as a tenant. She paid the appellants $200 per week rental. She continued to make these payments until about February 2011. She lived at the property until June 2011 when she was evicted because of the arrears of rent.

16    During the period of her residence in the property, Ms Mathieson caused a split system air conditioner valued at $3,000 to be installed and spent about $1,000 on repairs to the verandah.

17    Towards the end of 2010 or in early 2011, a dispute of some kind arose between Ms Mathieson and Mr and Mrs Nield. On 7 February 2011, Mr and Mrs Nield attended at the Swan Hill office of Centrelink. There they spoke to Mr Dennis Barnett who was, at the time, Ms Mathieson’s partner. He was employed by Centrelink. They advised him that Ms Mathieson was receiving benefits from Centrelink despite working at the store. The Nields told Mr Barnett that they had decided not to give the Jager Street property to Ms Mathieson any more. Mrs Mathieson was very upset at this news. She ceased work two days later and moved out of the Jager property on 25 June 2011. The trial judge found Mr Barnett to be a “palpably honest witness” and expressly accepted his account of the meeting with the Nields on 7 February 2011.

THE PROCEEDING IN THE FEDERAL CIRCUIT COURT

18    Following the termination of her employment and her eviction from the Jager Street property, Ms Mathieson commenced a proceeding in the Federal Circuit Court (“the FCC”) against the appellants. Ms Mathieson sought payment for the hours which she had worked in the business on three bases: as an entitlement under the relevant award, by reason of what she contended was the appellants’ misleading and deceptive conduct or, in the event she were found not to have been an employee, a claim in restitution on the basis of unjust enrichment.

19    Ms Mathieson also made a claim in contract for the return of the $20,000 which she had paid to the appellants under the mistaken view that it was a part contribution which would enable her to secure a one third interest in the business.

20    The appellants resisted Ms Mathieson’s claims. At the forefront of their case was the contention that they had never entered into an employment relationship with her. They said that she had been a volunteer. The trial judge rejected this contention holding that Ms Mathieson “was always an employee entitled to the award conditions that she claim[ed].” His Honour intimated that, had he taken the view that Ms Mathieson was not an employee, he would have upheld her cause of action for a quantum meruit. He rejected the misleading and deceptive conduct claim. He upheld Ms Mathieson’s claim for repayment of the $20,000 plus interest.

21    The appellants brought a counter-claim against Ms Mathieson for arrears of rental between February and June 2011. The trial judge upheld this claim but set off the monies spent by Ms Mathieson on the purchase of the air conditioner and the repairs to the verandah.

22    Having published his reasons, the primary judge directed that the parties confer and file draft orders giving effect to his reasons. This required the parties to give consideration to the relevant award, Ms Mathieson’s proper classification under that award and the monetary value of wages due to her under the relevant instruments during her employment by the appellants. In accordance with this direction the parties brought in draft orders. We were told that Ms Mathieson’s legal advisors prepared the orders and provided them to the appellants’ solicitors. Although the appellants did not object to the draft orders being filed, they made it clear that they were not to be taken to be assenting to the making of the orders in the terms proposed. Having considered the draft orders, his Honour ordered that:

“1.    The respondents to pay to the applicant the sum of $388,688.62, in respect of underpayments, inclusive of superannuation and annual leave entitlements plus interest in the sum of $61,965.98.

2.    The respondents to pay to the applicant the sum of $20,000.00 in respect of contractual claim plus interest of $3,188.46.

3.    The applicant to pay to the respondents the sum of $13,485.71 in respect of the counterclaim, plus interest in the sum of $1,844.30.”

23    The calculation of the principal sum in Order 1 was based on Ms Mathieson falling within the classification of Fast Food Employee Level 2 of the Fast Food Industry Award 2010 and its predecessor during the relevant period.

24    The principal sum referred to in Order 2 was the amount paid by Ms Mathieson to the appellants in April 2007.

25    The principal amount referred to in Order 3 was intended to cover the arrears of rental less the set off.

THE APPEAL

26    The appellants appealed on 13 grounds. It will not be necessary to deal with them all.

27    Ms Mathieson filed a notice of contention seeking to uphold the trial judge’s orders on both of the alternative bases which had been relied on at trial: the quantum meruit and the misleading and deceptive conduct causes of action.

WAS MS MATHIESON AN EMPLOYEE? (grounds 5 and 6)

28    The central plank of the appellants’ case on appeal was that the primary judge had erred in finding that Ms Mathieson had, at all relevant times, been their employee.

29    They accepted that she was an employee from the time of her original engagement as a casual employee in the business in May 2006 until mid-August 2006 when she commenced to live in the business premises.

30    The appellants also accepted that, as an employee, Ms Mathieson was entitled to the benefits of the applicable award and that she could not, by contractual arrangement or otherwise, forego her award entitlements. These concessions were properly made: see Byrne v Australian Airlines Limited (1995) 185 CLR 410 at 421. Section 323 of the Fair Work Act 2009 (Cth) operated to prevent the appellants, as employers, paying wages other than in money.

31    The appellants’ case, as developed in oral argument, was that, in mid-August 2006, the then existing contract of employment was repudiated by Ms Mathieson and that they had accepted that repudiation. This argument was mentioned in passing during final submissions at trial, but no more than that. The appellants relied on Mrs Nield’s evidence at trial that, in mid-August 2006, Ms Mathieson had approached her and said words to the effect “You cannot afford to pay me full-time. I will ask my sister Judy for any money.” Ms Mathieson had offered to work for her board and keep. At trial Ms Mathieson had strongly denied having made the statement that Mr and Mrs Nield could not afford to keep her on full-time but agreed that she had said that, if need be, she would ask her sister for money.

32    The primary judge found that the appellants had agreed to allow Ms Mathieson to live rent free at the premises “in exchange for work”. He considered that “[n]o other explanation makes sense.” It had also been arranged that Ms Mathieson would be paid $25 per day and, shortly afterwards, the appellants agreed that Ms Mathieson could take a packet of cigarettes a day from the store for her personal use.

33    The primary judge dealt shortly with the question: “Was there an employment relationship?” He said that:

“151.    The kernel of the respondents’ case was that there never was an employment relationship. There was never any intention to create legal relations. The applicant worked as a volunteer.

152.    This position was what gave rise to the very extensive cross-examination of the applicant in relation to her receipt of statutory benefits. Put shortly, what was being put was that the applicant on statutory benefits, simply had no need to, and therefore was not required to, do any work for the respondents.

153.    I roundly reject this assertion. As I have already indicated there was plainly a discussion of some sort about the applicant getting a reward, whether by part ownership of the business or by the Jager Street property, from time to time.

154.    While it is true that the parties never discussed pay and conditions of employment in terms, it is equally clear that it was never agreed between the parties that the applicant would receive no reward for her work.”

34    The appellants sought to challenge this analysis on a number of bases. The first was that the trial judge had oversimplified the argument which had been advanced by them when he said that they had argued that, because Ms Mathieson was receiving statutory benefits, she had no need to work for the appellants and was not required to do so. What had been put was that, in order to receive statutory benefits, Ms Mathieson had made a declaration to Centrelink that she was not employed. This was one of a number of objective facts which, when considered together, supported the conclusion that Ms Mathieson had not been employed by them. The additional facts which had been relied on were that:

    After the breakdown of the relationship in February 2011, Ms Mathieson had obtained alternative employment and had advised Centrelink that she no longer wished to receive a widow’s allowance;

    The parties had never discussed pay and conditions of employment;

    The “negative finding” made by the primary judge “that it was never agreed between the parties that [Ms Mathieson] would receive no reward for her work”;

    The appellants had imposed no requirement on Ms Mathieson that she perform work for them;

    There was no written contract of employment or verbal agreement entered into between the parties; and

    The provision, by the appellants, of free accommodation, food, drinks and cigarettes which was said to be “indicative of a familial rather than an employment relationship.”

35    These considerations, it was contended, should have led the trial judge to conclude that there was no intention to create a legal relationship between the parties and that, as a result, no contract of employment existed at relevant times.

36    The appellants confront many difficulties in seeking to make good this proposition. Foremost amongst them is the fact that they accept, correctly, that a contract of service was entered into when Ms Mathieson commenced working for them in May 2006. This contract existed notwithstanding the absence of discussions about terms such as pay and conditions and the fact that no written contract of employment or any verbal agreement about such matters had been entered into. Between May and August 2006, Ms Mathieson worked in the business as a casual employee for seven to eight hours per day and was paid the wages and other entitlements prescribed by the relevant award. The making and implementation of these arrangements support the view that the mutual intention of the parties was that a contract of service should be entered into. Although the terms of that contract were not formalised, it may readily be inferred that they included the award provisions relating to matters such as Ms Mathieson’s hours of work, her remuneration and the nature of her duties. The implication of such terms was necessary for the reasonable and effective operation of the contract: cf Byrne at 422, 442. The drawing of the inference is supported by an examination of what Ms Mathieson actually did in and for the business during this period.

37    The arrangements between the parties changed when, in August 2006, Ms Mathieson accepted the appellants’ offer to come and reside in the business premises. From then, until December 2006, a number of things changed. Ms Mathieson was no longer paid in accordance with the award. She was paid $25 per day and provided with a packet of cigarettes each day. She received free board and lodging. Her hours increased to 12 per day on week days and she continued to work long hours at the weekends. The trial judge did not accept Mrs Nield’s explanation for these changes which was that Ms Mathieson had foregone her award entitlements in return for small daily cash payments and free board and lodging because she (Ms Mathieson) did not think that the appellants were in a financial position to pay her the remuneration required by the award. Rather, his Honour was persuaded that the appellants had held out some vague prospect of Ms Mathieson’s work being rewarded with an interest in the business. He did not accept that Ms Mathieson had agreed to work for no reward or that she was under no obligation to work in the business at all. In doing so he rejected the factual basis upon which the appellants’ repudiation argument is founded. In any event, the alleged acknowledgement, by Ms Mathieson, that the appellants would have difficulty paying for her services on a full-time basis related only to one of the terms of the contract and was not an intimation by Ms Mathieson that she was not prepared to abide by those terms by which she was bound. No act of hers precipitated a termination of the contract.

38    The only other material change in the arrangements between the parties which occurred between August 2006 and February 2011 was that, in December 2006, the appellants ceased to pay Ms Mathieson $25 per day. This occurred, according to the appellants, because they had been advised by Ms Mathieson that she was then receiving a widow’s allowance. As already noted, Ms Mathieson was not receiving any social welfare benefits at that time. In other respects the contract continued to operate in accordance with its terms. This change was not, ultimately, relied on as evidence of a repudiation.

39    Both at trial and on appeal the appellants sought to place considerable weight on the fact that, during the course of her employment, Ms Mathieson had been in receipt of a widow’s allowance. Ms Mathieson applied for this allowance in March 2007. Payment commenced early in the following month and continued until February 2011. When completing the application form Ms Mathieson answered “no” to the question “Have you worked 20 hours or more in a week in the last 12 months?” She also advised that she was receiving free board and lodgings. At trial Ms Mathieson explained her negative answer to the hours of work question on the basis that, although she had been working, she was not being paid.

40    It is difficult to see what bearing Ms Mathieson’s receipt of the widow’s allowance could have on the existence or otherwise of an employment contract between her and the appellants. She was not in receipt of social welfare benefits at the time she commenced employment in March 2006. Nor was she in receipt of such benefits in August 2006 when, the appellants contend, the contract was repudiated. Nor can Ms Mathieson’s receipt of benefits have any bearing on the intention of the parties to remain in a legal relationship after August 2006 given that the relevant intention must be judged at the time the contract was entered into or terminated.

41    In any event, the appellants did not become aware of the details of Ms Mathieson’s dealings with Centrelink (including the contents of her application form) until the documents were produced by Centrelink after this proceeding had been commenced in 2012. Nor was there evidence to suggest that either of the appellants were aware of the statutory criteria for eligibility for a widow’s allowance.

42    The trial judge was required to make an objective assessment, based on all of the surrounding circumstances, in order to determine whether the parties had the intention to enter into and maintain a contractual relationship between May 2006 and February 2011. As Gaudron, McHugh, Hayne and Callinan JJ said in Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 at 105-6:

“Although the word ‘intention’ is used in this context, it is used in the same sense as it is used in other contractual contexts. It describes what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened. It is not a search for the uncommunicated subjective motives or intentions of the parties.”

43    We consider that it was open, on the evidence which we have outlined, for the trial judge to decide that a contract of employment was entered into between the appellants and Ms Mathieson in March 2006 and continued in operation uninterrupted until February 2011. It further follows, as the appellants conceded in argument, that the applicable industrial instruments applied to Ms Mathieson’s employment throughout the relevant period.

44    We say nothing about the lawfulness of the dealings between Ms Mathieson and Centrelink. It is a matter for Centrelink to determine whether or not recovery should be effected and, if so, how. We do not consider that Ms Mathieson’s claim for and receipt of widow’s allowance can have implications for the existence of a contract of employment after May 2006.

THE PROPER CLASSIFICATION (GROUND 13)

45    At trial Ms Mathieson contended that she was entitled to be remunerated, initially, under the National Fast Food Retail Award 2000 (“the 2000 Award”) and, after 1 January 2010, under the National Fast Food Industry Award 2010 (“the 2010 Award”).

46    Ms Mathieson submitted that, under the 2000 Award, she was a “Retail Food Employee Grade 2” worker and that, under the 2010 Award, the relevant classification was “Fast Food Employee Level 2”.

47    The 2000 Award provided for three gradings of employee. Clauses 3.5 to 3.7 relevantly provided that:

“3.5    Retail Food Employee Grade 1 means an employee … engaged in any one or more than one of the receipt of orders for or the preparation (including cooking), sale, serving or delivery of food and beverages but does not include a tradesperson employed as such.

3.6    Retail Food Employee Grade 2 means an employee … who has the major responsibility on a day to day basis for supervising Retail Food Employee Grade 1 and/or for training new employees or an employee required to exercise trade skills.

3.7    Retail Food Employee Grade 3 means an employee … appointed by the employer to be in charge of a shop, food outlet, delivery outlet, commissary, call centre.”

48    In Schedule B of the 2010 Award three levels were identified. Items B.1 to B.3 provided that:

“B.1 Fast Food Employee Level 1

B.1.1 An employee engaged in the preparation, the receipt of orders, cooking, sale, serving or delivery of meals, snacks and/or beverages which are sold to the public primarily to take away or in food courts in shopping centres.

B.1.2 A Fast Food Employee Level 1 will undertake duties as directed within the limits of their competence, skills and training including incidental cleaning and cleaning of toilets.

B.2 Fast Food Employee Level 2

An employee who has the major responsibility on a day to day basis for supervising Fast Food employees Level 1 and/or training new employees or an employee required to exercise trade skills.

B.3 Fast Food Employee Level 3

An employee appointed by the employer to be in charge of a shop, food outlet, or delivery outlet.”

49    The first order made by the primary judge was that the appellants pay Ms Mathieson $388,688.62 plus interest in respect of unpaid wages, superannuation contributions and annual leave entitlements. This calculation was based on acceptance of Ms Mathieson’s contention that the work she did for the appellants attracted the Grade 2 and then Level 2 classifications in the awards. The appellants, on the other hand, asserted that the appropriate classification was Grade 1 and Level 1.

50    Ms Mathieson gave unchallenged evidence that, prior to commencing work in the appellant’s business, she had had experience in a variety of retail and manufacturing jobs. She had also worked in various hotel kitchens, bars and cafes. In 2008, Ms Mathieson had received a Certificate II Hospitality (Operations) for workplace hygiene procedures. She had also undertaken training for food supervisors. In about February 2007, Mrs Nield sent Ms Mathieson to a training course so that Ms Mathieson could operate a new espresso coffee machine which had been purchased for the store.

51    After August 2006 Ms Mathieson had undertaken various administrative and managerial duties at the store. In early 2007 she had become a signatory to a bank account operated by the business. This meant that she was able to operate the account in the absence of the appellants who were about to be absent on holiday. When the appellants were taking holidays on this and other occasions they asked Ms Mathieson to manage the business. This she did. Ms Mathieson also had some responsibility for ordering stock, receiving deliveries, paying for the stock and working on taxation statements on a fortnightly basis. Ms Mathieson also said that, during unspecified periods, she had responsibility for the training and supervision of other employees.

52    In our view the appellants have failed to establish that the trial judge erred in determining that Ms Mathieson’s work placed her within the Grade 2 and Level 2 classifications. If Ms Mathieson had done no more than provide customer service in the store she would have fallen into the Level 1 category. (She may not have fallen within Grade 1 because, having regard to her qualifications, she may have been regarded as “a tradesperson employed as such.”) Her duties were, however, more extensive than those contemplated for a Grade 1 or for a Level 1 employee.

53    At times she would have qualified as a Grade 3/Level 3 employee because she ran the business in the absence of the appellants when they were on leave. The precise times during which they took leave between 2006 and 2011 were not disclosed in the evidence.

54    Some of Ms Mathieson’s other duties, such as the supervision and training of junior employees, were performed from time to time but the evidence did not allow the primary judge to determine how often and for how long she performed these duties. On the other hand duties such as ordering and receiving goods and paying suppliers’ invoices was an ongoing and regular incident of her employment. It may also be inferred that her qualifications and experience were brought to bear for the benefit of the business on a regular basis.

55    In these circumstances, in our opinion, it was open to the primary judge to conclude that the classification which best reflected Ms Mathieson’s responsibilities in the business, during most of her period of employment, was Grade 2/Level 2.

CREDIT, DEMEANOUR AND NATURAL JUSTICE (GROUNDS 1, 2, 3, 4, 9 and 10)

56    The appellants contended that the primary judge had erred by placing “too much weight” and “inordinate reliance” on the demeanour of witnesses. The relevant witnesses were not identified in the notice of appeal. Nor were they identified in the appellants’ written submissions.

57    In their written submissions, the appellants founded their complaint on certain passages appearing in the trial judge’s reasons at [111] to [120]. In paragraphs [111]-[113] his Honour made favourable findings in relation to the evidence of Mr Neil Mesley who was a customer of the business and Mr Barnett. His Honour then continued:

“114.    I turn now to the two primary witnesses. Neither were by any means entirely convincing.

115.    It must be said, however, that [Ms Mathieson’s] evidence was given in part with some measure of conviction. She was, in my view, to an extent unresponsive and evasive when being questioned about the extent of her revelations to Centrelink. Nonetheless, her evidence as to her work for the respondents, her description of the work that she did and the hours that she worked, was given with conviction.

116.    I note that [Ms Mathieson] is a person who, on any view of the matter, is given to dishonest conduct. She is plainly a serial fraudster on the Centrelink authorities. Her convictions in 2004 (exhibit R11) speak for themselves. Likewise, it is not possible to accept her assertion that she thought there was nothing untoward about the receipt of her statutory benefits during her period of employment.

117.    These reservations, however, are much lesser than those that I entertain, regrettably, in respect of Ms Nield.

118.    I accept that Mr Nield is in ill health and I draw no adverse Jones v Dunkell [sic] conclusion from his non-attendance at court. Nonetheless I have not had the benefit of hearing what he had to say, and while he may well have been unable to give evidence at court, it is difficult to see why he did not file an affidavit at the very least.

119.    To return to Ms Nield, it is, of course, always regrettable to have to make findings about a witness that may be off-putting or distressing to them. Nonetheless, Ms Nield was a spectacularly bad witness.

120.    She was frequently unresponsive, having a tendency, on occasion, to answer questions with questions of her own. Her demeanour and conduct in the witness box, and indeed, when she was sitting in the body of the court more generally, was such as to cause me the gravest doubts as to her capacity correctly to recall the truth. Her responses were often uttered in a sarcastic manner and her contempt for [Ms Mathieson], in which I regret to say a measure of spite was unpleasantly evident, could not be concealed.”

58    It was common ground that the primary judge was in error when he said (at [118]) that Mr Nield had not filed an affidavit. He had but it was not read. Nothing turns on this minor misstatement but it will be necessary to refer to it again in dealing with another ground.

59    The parties were agreed as to the principles which inform the approach which is to be taken on appeal to findings by a primary judge which are based on the demeanour and credit of witnesses. They were those propounded by Gleeson CJ, Gummow and Kirby JJ in Fox v Percy (2003) 214 CLR 118 at 128.

60    In oral submissions the appellants directed particular attention to the primary judge’s adverse findings relating to Mrs Nield’s credibility based on his observations of her demeanour and conduct in the witness box and when she was sitting in the body of the Court. This adverse assessment had led, it was submitted, to his Honour’s finding, at [153] (see above at [33]) that discussions of some kind had taken place between the appellants and Ms Mathieson about the possibility of her contribution to the business being recognised by an offer of part ownership of the business or the Jager Street property, despite Mrs Nield’s denial that any such conversation had taken place.

61    This adverse finding was also challenged on the basis that the trial judge had erred in accepting and acting on Ms Mathieson’s evidence given his reservations about her credibility.

62    The appellants also contended that they had been denied natural justice because the trial judge had not alerted counsel to the observations he had made of Mrs Nield when she was in the body of the Court and which had contributed to his adverse credit findings.

63    It is first to be observed that the discussion to which his Honour referred at [153] was not found to have taken place at a particular time during Ms Mathieson’s employment. This was no doubt because such evidence as had been given by Ms Mathieson about such discussions was pitched at a very general level and was not time specific. His observations are based on findings which he had earlier made (at [128]) where he said that:

“In my view it is inherently more probable than otherwise, leaving aside my view of the demeanour of the two primary protagonists, that there must have been at least some informal discussion of the applicant being, as it were, taken into the partnership in some way. It simply does not make sense that [Ms Mathieson] would have worked the very long hours that she did without some sort of idea that she would herself benefit from it to a degree greater than merely keeping her head above water.” (Emphasis added).

64    As can be seen, the primary judge’s rejection of Mrs Nield’s denial that there had ever been any discussion (however vague) between the appellants and Ms Mathieson about the possibility of Ms Mathieson being rewarded for her work with an interest in the business was based on what might be described as a “common sense” approach to the dynamics of the relationship between the parties. His Honour expressly disavowed any reliance on the demeanour of Mrs Nield and Ms Mathieson in making his finding.

65    No other material finding, made by his Honour, was alleged by the appellants to have been influenced by his adverse assessment of Mrs Nield’s credibility. It cannot, therefore, be found that the adverse credit findings and the manner in which they were reached gave rise to any appealable error.

THE RETURN OF THE $20,000 (GROUND 11)

66    The trial judge’s second order required the appellants to pay Ms Mathieson the sum of $20,000 plus interest. The challenge to this order was abandoned during the hearing of the appeal.

67    There was no dispute that the money had been paid by Ms Mathieson to Mrs Nield. Mrs Nield said at trial that the money had been given to her so that Ms Mathieson would not have to declare it to Centrelink. His Honour rejected this claim. Mrs Nield advanced no basis upon which she was entitled to retain the money once Ms Mathieson had sought to have it repaid.

68    The failure of Mr Nield to give evidence about this issue was raised in Ground 11.

69    Given the abandonment of the challenge to the trial judge’s second order it is not necessary for us to pursue this issue further. We do, however, note that his Honour expressly decided to draw no adverse inference from what he mistakenly said was the failure of Mr Nield to file an affidavit: see at [118] (above at [57]).

INCONSISTENT FINDINGS AND STANDARD OF PROOF (GROUNDS 7 AND 8)

70    These two grounds were argued together by the appellants because they were both said to relate to what were claimed to be inconsistent findings made by the trial judge. This inconsistency was said to be evident from the rejection of a claim, attributed to Ms Mathieson, that she had been offered a proprietary interest in the Jager Street property and the acceptance of her claim to be an employee. As we understood the argument, the appellant’s contention was that this inconsistency would not have arisen, had the trial judge applied the provisions of s 140 of the Evidence Act 1995 (Cth) (“the Evidence Act”), when assessing the evidence whether a contract of employment existed.

71    These grounds were only faintly pressed on appeal. We do not consider that the trial judge made the inconsistent findings which the appellants attributed to him. Even had he done so, however, he would not have erred simply because he accepted part of Ms Mathieson’s evidence and rejected another part of it.

72    The provisions of s 140 of the Evidence Act were not relied on in argument by either side at trial. It may safely be assumed that the experienced trial judge was well aware of the statutory requirements and would have given effect to them when making his factual findings.

THE OFFSET ON THE COUNTER CLAIM (GROUND 12)

73    This ground relates to the third order made by the trial judge. This order required Ms Mathieson to pay the value of outstanding rent which she owed to the appellants for her occupancy of the Jager Street property between February and June 2011.

74    We were told that there is an ongoing issue between the parties as to the calculation of the principal amount referred to in the order. The ground of appeal does not, however, relate to this issue. The appellants (as cross-claimants) complain that the primary judge erred by offsetting $3,000 for the air conditioner and $1,000 for repairs to the verandah, both amounts which had been paid by Ms Mathieson, from the amount awarded on the counter-claim.

75    There was no dispute at trial that Ms Mathieson had made the payments and that the instalment of the air conditioner and the repairs to the verandah had constituted improvements to the property. The appellants failed to identify any legal error arising from the setting off of the value of these improvements.

THE RESPONDENT’S NOTICE OF CONTENTION – THE QUANTUM MERUIT CLAIM

76    Although it is not strictly necessary for us to do so we would record that, had we been minded to accept the appellants’ argument that the trial judge was wrong to find that a contract of employment existed, we would, subject to two reservations, have been disposed to uphold Ms Mathieson’s contention that she was entitled to obtain an order in the same terms as Order 1 on the ground that the appellants had been unjustly enriched by the work which Mathieson had performed but in respect of which she had not been paid. We would have valued that contribution to the appellants’ business by reference to Ms Mathieson’s award entitlements and her statutory entitlements to superannuation contributions and leave. The first reservation is that some discount might have been necessary to take account of the cash payments to Ms Mathieson between August and December 2006, the provision of cigarettes and the value to her of free board and lodgings. Our second reservation is that it would have been necessary for us to have been satisfied, on the evidence, that the appellants had requested Ms Mathieson to perform the work which provided them with the benefit for which they had not paid: see Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635 at 664-7. This issue was only lightly touched on in written submissions following trial and was not explored at all on appeal. In these circumstances it is not desirable that we express any concluded views about these issues.

DISPOSITION

77    The appeal must be dismissed with costs.

Associate:

Dated:    17 June 2014