FEDERAL COURT OF AUSTRALIA

Fair Work Ombudsman v Chambers [2026] FCA 1452

ORDERS

THE COURT ORDERS THAT:

1.    The amended originating application filed on 10 April 2024 is dismissed.

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

REASONS FOR JUDGMENT

MEAGHER J

INTRODUCTION

1    This is an application concerning “sham contracting” and underpayment of employees under the Fair Work Act 2009 (Cth). Various contraventions of ss 45 and 357(1) of the Act are alleged. The application is with respect to the dealings of ProClean HQ Pty Ltd ACN 164 849 870 (in liquidation) and the first and second respondents, Mr Timothy Chambers and Mr Craig Simpson, who at all material times were directors of ProClean. The applicant, the Fair Work Ombudsman, is a statutory appointee of the Commonwealth pursuant to s 687(1) of the Act and a Fair Work Inspector pursuant to s 701 of the Act. She has standing pursuant to s 539(2), items 2 and 11A of the Act. She seeks declaratory relief, orders awarding compensation and the payment of pecuniary penalties against the first and second respondents, who the Ombudsman alleges are accessorily liable for ProClean’s contraventions on the basis that each was involved within the meaning of s 550(2) of the Act and pursuant to s 550(1) of the Act is taken to have contravened ss 45 and 357(1) of the Act. The alleged total outstanding entitlements are in the amount of $124,202.60.

2    For reasons which will become clear below, some time after the hearing, at the Court’s request, additional written submissions were provided addressing cases which had considered the approach to identifying the engaging entity following the High Court’s decisions in WorkPac Pty Ltd v Rossato [2021] HCA 23; 271 CLR 456, Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1; 275 CLR 165 and ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2; 275 CLR 254. The Ombudsman and the second respondent were represented, while the first respondent appeared in person. The Court heard evidence from five cleaners, who are referred to as the “Workers”. Where cleaners other than the Workers are referred to, they are simply referred to as the “cleaners”. The Court also heard evidence from a Fair Work Inspector (FWI) and each of the respondents.

3    For the reasons below, the application is dismissed.

BACKGROUND FACTS

Uncontentious facts

4    The following facts were uncontroversial as between the parties.

5    Between 15 February 2018 and 14 April 2019 inclusive (Work Period), train cleaning occurred at the Auburn Maintenance Centre, located at 154 Manchester Road, Auburn NSW 2144 (AMC), and the adjoining Auburn Stabling Yard (ASY). Sydney Trains had contracted with Downer to provide maintenance, cleaning and security services. Downer EDI Ltd, the majority shareholder of Spotless Facility Services Pty Ltd, subcontracted the cleaning and security services to Spotless (referred to as the “Downer-Spotless Contract”). Spotless, in turn, contracted with iGuard Australia Pty Ltd to provide cleaning and security services (though the scope of this agreement is discussed below at [213] – [220]).

6    At all material times, Mr Chambers and Mr Simpson were directors and secretaries of ProClean. Mr Shannon was the director of iGuard.

7    On 1 February 2018, a meeting (1 February 2018 Meeting) was attended by at least Mr Chambers and Mr Lamsal at Granville Memorial Park.

8    On 15 February 2018, a meeting (15 February 2018 Meeting) was attended by Mr Chambers and Mr Simpson, and a number of the cleaners, including Mr Lamsal, Mr Gnanasothy and Mr Sembakutti.

9    Spotless uniforms, or high-visibility vests, were worn on-site at the AMC.

10    The prior cleaning arrangements at the AMC were terminated around January or February 2018, but there was no evidence otherwise as to the manner of the cleaners’ engagement and it was unclear which entity engaged them under the prior arrangements. The previous contractor was identified as “Auscey Pty Ltd”, which was sometimes referred to as “ANT”.

11    The trains at the AMC were regularly audited by Sydney Trains for cleanliness, and successful audits were sometimes celebrated with pizza.

12    At some point after the 15 February 2018 Meeting not before 26 February 2018, each of Mr Lamsal, Mr Gnanasothy and Mr Sembakutti were sent, from iguardpayroll1@gmail.com (iGuard Payroll Email Address), a written agreement (Written Agreement) in the following form (errors in original):

CONTRACTOR AGREEMENT / Statement

This contract Agreement is entered into on        DATE

Contractor: Name:                     ABN:

Address:

Phone:                            Email:

The above named contractor/s agrees to provide the following described labour, materials and construction in accordance with plans and specifications as may be referred to herein by reference, upon the following described property / event:__TRAINS____

LEGAL AND COMMON:

The Company, ProClean HQ Pty Ltd, (the company) acting for iGuard and Spotless agrees to pay to the contractor for the satisfactory performance of the contractor’s work in accordance with the following terms and conditions

DESCRIPTION OF WORK:

Contractor to provide Labour either by way of themselves or staff or sub contracted, materials and equipment to be furnished.

SCHEDULE OF PAYMENTS:

Contractor must invoice the Company agreed sum at the completion of work period completed.

TIME AND Scheduling WORK:

Contractor shall commence work as per companies / site requirements. Working days are defined as Monday through Sunday inclusive, holidays included unless notified by the contractor. Scheduling of work, as provided for in this Contract, is based on acceptable industry standards. The above contractor is responsible for all labour provided to complete the works.

TERMINATION:

This is an ongoing contract provided specifications of duties are completed. This contract can be terminated by the contractor by providing 14 days notice to the company. The company can terminate the contract at any time. The contractor may not approach any of the company’s clients for a period of at least 18 months from the termination of this contract.

If the contractor terminators this agreement prior to 6 months the company will withhold any expenses from training courses or certificates it has paid for in advanced.

CONFIDENTIALITY:

Contractor acknowledges and agrees that all financial and accounting records, lists of property owned by the Company, including amounts paid therefore, client and customer lists, and other Company data and information related to its business (hereinafter collectively “Confidential Information”) are valuable assets of the Company. Contractor shall not, during the term of this Agreement or after the termination of this Agreement, disclose any Confidential Information to any person or use any Confidential Information for the benefit of Contractor or any other person, except with the prior written consent of the Company.

INDEPENDENT SUBCONTRACTOR STATUS:

Contractor acknowledges that he/she is an independent contractor and is not an agent, partner, joint venture nor employee of Company. Contractor shall have no authority to bind or otherwise obligate Company in any manner nor shall Contractor represent to anyone that it has a right to do so. Contractor further agrees that in the event that the Company suffers any loss or damage as a result of a violation of this provision Contractor shall indemnify and hold harmless the Company from any such loss or damage. The contractor can pay other contractors to provide the service required. The contractor is responsible for their own public liability insurance, workers compensation insurance, tax and payroll tax associated to the contract.

SAFETY: Contractor Responsibility for Safety.

Contractor shall, at its own expense, be solely responsible for protecting its employees, subcontractors, material suppliers and all other persons from risk of death, injury or bodily harm arising from or in any way related to the work or the site which it is been performed (the “Work Site”) and ensuring full compliance with all government safety and OHS rules and regulations.

Safety Laws and Indemnity Agreement.

Contractor shall fully comply with all laws, orders, citations, rules, regulations, standards and statutes concerning occupational health and safety, accident prevention, safety equipment and practices, including but to limited to federal and OSHA regulations. Contractor shall immediately pay all fines or penalties assessed upon Contractor or Owner relating to the work.

SOLE AGREEMENT: This Agreement, including all terms and conditions hereof, is expressly agreed to and constitutes the entire Agreement as of this date. No other Agreement or understandings, verbal or written, expressed or implied, are a part of this Agreement unless specified herein.

IN WITNESS HEREOF the parties have accepted this Agreement the day and year first above written.

Contractor Name:                 Signature:

(Original emphasis.)

13    Also provided with the Written Agreement was an invoice template which contained a blank table for the entry of hours worked, as well as the following:

INVOICE #                            DATE:

                                Contractor ID #:

NAME:

ABN

BSB:

ACC:

Contractor ID #:

TO: ProClean HQ (care of iGuard)

14    In around April 2019, Spotless directly contracted with the Workers at the AMC.

The Ombudsman’s investigation

15    The evidence regarding the Ombudsman’s investigation is contained in the First Jambekar Affidavit. Mr Jambekar deposes that the investigation commenced on or about 14 May 2019, following receipt of a letter from Downer dated 18 April 2019, in which Downer outlined that it and Spotless held concerns about possible underpayment of rates for work undertaken at the AMC. That letter made reference to advice provided by Downer to the FWO on 11 April 2019, although details thereof were not deposed to.

16    According to Mr Jambekar, a “team” of FWIs was assigned to the investigation, including Ms Higgins, Ms Willoughby and Mr Jambekar. Ms Higgins and Ms Willoughby had since left the Ombudsman, and Mr Jambekar only took over primary carriage of the investigation from 31 March 2023. The FWIs undertook interviews with the Workers. Mr Jambekar deposed generally to having received information and documents relating to the Workers’ engagement as part of these interviews, as well as information and documents collected under notices to produce records and documents issued to “various entities”, including those “involved in the contractual arrangements at the AMC”. It was unclear which entities had been the subject of notices to produce records and documents; however, Mr Jambekar deposed to notices to produce records and documents having been issued to Spotless, iGuard, ProClean and the Australian and New Zealand Banking Group Ltd. He also included Downer in the “relevant entities referred to throughout” the First Jambekar Affidavit, but it was not clear that Downer had been the subject of a notice to produce records and documents.

17    As to Spotless, Mr Jambekar deposed inter alia that its solicitors had responded to the Notice to Produce, but that response was neither annexed nor otherwise set out, though two letters from Corrs Chambers Westgarth dated 29 July and 5 August 2019 on behalf of Spotless to the Ombudsman in response to a Notice to Produce Records or Documents (Corrs Letters) were put to Mr Jambekar in cross-examination. The Corrs Letters enclosed documents but relevantly did not produce any documents responsive to the category identified as “[a]ll records or documents (including spreadsheets, emails and notes of meeting or telephone discussions)” between Spotless and Downer during the period 1 January 2017 to 26 June 2019 in relation to a range of subjects. Mr Jambekar could not give evidence as to what steps Ms Willoughby might have taken to ascertain if there were documents available under that category, and gave evidence that he had never been required to inquire as to whether there were such documents.

18    On or about 21 August 2020, Ms Higgins issued a compliance notice to ProClean under s 716(2) of the Act, addressed to Mr Chambers, requiring ProClean to rectify the underpayments. Phone calls between Ms Higgins and Mr Chambers between 21 and 31 August 2020 regarding the outcome of the investigation and the compliance notice are deposed to, and file notes thereof are annexed. The compliance notice was withdrawn on or about 16 November 2021.

19    Mr Jambekar deposed to the respondents having been invited to participate in voluntary recorded interviews on 13 December 2019. Ms Higgins also invited the respondents to do so on 17 November 2021. The respondents declined these requests, but on or about 3 February 2022 Mr Simpson provided a voluntary written statement that was responsive to a list of questions provided by Ms Higgins.

20    Apart from what is set out above, very little emerges from the Ombudsman’s evidence as to the course of the investigation which ultimately led to this proceeding.

The parties’ respective positions

21    The Ombudsman framed the first “critical question[]” as whether ProClean engaged the Workers. Her broad case is that ProClean was the Workers’ true employing entity, and that the nature of the engagement was one of employment, contending that ProClean engaged the Workers under a contract that was “partly written, partly oral and partly varied by conduct”. To the extent that the contract was written, it was contained in the Written Agreement, which was plainly not an entire agreement and did not comprehensively commit the relationship to writing. To the extent that it was oral, it comprised discussions with the Workers regarding payment based on a time basis. To the extent that the Written Agreement was varied by conduct, this related to requirements surrounding the work which were not specified in the Written Agreement, as well as to other requirements for completing the work which were accepted by the Workers in continuing to work for ProClean. The Ombudsman says that the conduct following the Written Agreement is relevant in determining whether the Workers were employees or independent contractors. The Ombudsman accepted in oral submissions that if ProClean were found not to have engaged the Workers, the Ombudsman’s case could not succeed. It did not appear to be disputed between the parties that the Workers had been underpaid during the Work Period.

22    Mr Chambers’ case is that at all times he was an employee of Spotless, and gave directions at the direction of “Spotless Management”. The Workers, in turn, were Spotless employees, and identified themselves as such by their uniform, name badge and “Downer login”.

23    Mr Simpson’s primary case is that the Ombudsman has not discharged the burden of proving that the Workers were employees of ProClean. He says that the terms of the Written Agreement show that ProClean was acting as agent for iGuard and Spotless, and says that the principles relating to agency are relevant. Further, he says that iGuard was aware that ProClean was acting on its behalf, and ratified the Written Agreements entered into by ProClean on its behalf. Additionally, he says that Spotless was aware at all material times that Mr Lamsal was representing himself as Spotless. He also says that the circumstances point to Spotless exercising significant control over the performance and time of the work, the uniforms to be worn, and site access, and accordingly on the “totality of the relationship”, Spotless was the employing entity.

LEGAL PRINCIPLES

The High Court’s decisions in Rossato, Personnel Contracting and Jamsek

24    The cases of Rossato, Personnel Contracting and Jamsek are the leading High Court authorities on the approach to be followed when characterising the nature of the relationship between the parties (i.e., whether it is casual or full-time, and whether it is one of employment or of an independent contractor). For reasons that will become clear, I consider that they are relevant to the anterior question of which entity engaged the relevant individual.

25    In Rossato, a majority of the High Court at [55] – [67] held that, where the contract is wholly written, and in the absence of any allegation that the contractual agreements between the parties were shams, the character of the employment relationship was to be determined only by reference to the legal rights and obligations comprehensively set out in the contractual agreements. There, the issue was whether the relationship of employment was one of casual, or full-time, employment: at [9]. In Personnel Contracting, the plurality saw no reason in principle why the approach in Rossato should not be applied where the issue was whether the relationship was one of employment: at [62]. At [59], Kiefel CJ, Keane and Edelman JJ stated as follows:

Where the parties have comprehensively committed the terms of their relationship to a written contract the validity of which is not in dispute, the characterisation of their relationship as one of employment or otherwise proceeds by reference to the rights and obligations of the parties under that contract. Where no party seeks to challenge the efficacy of the contract as the charter of the parties’ rights and duties, on the basis that it is either a sham or otherwise ineffective under the general law or statute, there is no occasion to seek to determine the character of the parties’ relationship by a wide-ranging review of the entire history of the parties’ dealings. Such a review is neither necessary nor appropriate because the task of the court is to enforce the parties’ rights and obligations, not to form a view as to what a fair adjustment of the parties’ rights might require.

(Footnotes omitted.)

26    The requirement to determine the legal character of the relationship by the rights and obligations established in the written contract did not mean that the label chosen by the parties to describe their relationship was determinative of, or relevant to, the characterisation: at [63] – [66]. See also Fair Work Ombudsman v Avert Logistics Pty Ltd [2022] FCA 841; 317 IR 473 at [3] – [4].

27    In Personnel Contracting, Gordon J expressed her view in the following terms at [162]:

… Where the parties have entered a wholly written employment contract, as in this case, the totality of the relationship which must be considered is the totality of the legal rights and obligations provided for in the contract, construed according to the established principles of contractual interpretation. In such a case, the central question neither permits nor requires consideration of subsequent conduct and is not assisted by seeing the question as involving a binary choice between employment and own business. …

28    Though in dissent in the result in Personnel Contracting, Steward J agreed with Gordon J’s expression of the test for determining whether a person was an employee: at [203].

29    In Jamsek, Kiefel CJ, Keane and Edelman JJ affirmed the approach set out in Personnel Contracting that where the relevant contract was wholly written and there was no suggestion that it was a sham or had been “otherwise displaced by conduct of the parties”, nor was there an application to set it aside, the “character of the relationship between the parties in this case was to be determined by reference to the rights and duties created by the written agreement which comprehensively regulated that relationship”: at [8]. Gordon and Steward JJ at [95] adopted the principles that Gordon J had set out in Personnel Contracting when “deciding whether the totality of a relationship between two parties is one of employer and employee”.

30    In the result, the “totality of circumstances” that must be considered is the totality of contractual rights and obligations, to be ascertained according to ordinary principles of contractual interpretation: Personnel Contracting at [59] – [61], [88], [172] – [173]. Consideration of how the parties discharged their obligations, or “subsequent conduct”, is generally neither permitted nor required on this approach (Personnel Contracting at [18], [57], [59], [162], [176], [187]) but may be relied on in relation to, inter alia, questions of formation, to contractual terms where the contract is not wholly in writing (Personnel Contracting at [177]), or to prove a variation to the terms of the original contract: see Personnel Contracting at [42].

What is the relevant inquiry for determining the identity of the employing entity?

31    The Ombudsman’s position was that determining the true employing entity requires considering the “substance and totality of the relationship” between ProClean and the Workers, including post-contractual conduct. That required applying the common law “multi-factor” test. The Ombudsman relied on the remarks in Resilient Investment Group Pty Ltd v Barnet and Hodgkinson as liquidators of Spitfire Corporation Limited (in liq) [2023] NSWCA 118; 111 NSWLR 446 at [165], [173] – [185] and Nino v Kuksal (No 4) [2023] FedCFamC2G 1051 at [286]. She said that the Court must consider “the reality of purported contractual arrangements”, to ensure that consideration was appropriately given in circumstances where documentation was created for parallel purposes without reflecting the reality of the relationship. She referred in particular to Director of the Fair Work Building Industry Inspectorate v McCullough [2016] FCA 1291 at [38] and Gothard (as recs and mgrs of each of AFG PTY LTD) (ACN 051 982 560) (in liq) v Davey [2010] FCA 1163; 80 ACSR 56 at [60] for the factors to consider when applying this approach.

32    Importantly, she said that the above approach had not been displaced by Rossato, Personnel Contracting or Jamsek, and that this was confirmed in both Resilient and Nino. In Resilient, Gleeson JA at [162] (with whom White and Brereton JJA agreed on this point) considered, in obiter, referring to Rossato at [62] – [63], Personnel Contracting at [59] and [174], and Jamsek at [8], that were it necessary to decide the issue,

… there [was] a real distinction between [Rossato, Personnel Contracting and Jamsek] and the “true employer” cases. The former are concerned with ascertaining the “character” or “characterisation” of the parties’ relationship and dealt with whether an employee was engaged on a casual or permanent basis, or whether a worker was an employee or an independent contractor. By contrast, the “true employer” cases are concerned with ascertaining the identity of the party by whom a putative employee is engaged.

(Original emphasis, footnotes omitted.)

33    The authors of I Neil, D Chin, and C Parkin, The Modern Contract of Employment (3rd edition, Thomson Reuters (Professional) Australia Limited, 2023) state that this “suggestion … is likely to be controversial”: at [2.020]. That text expresses the view, at [2.019], that “[w]here a worker who is an employee has more than one possible employer, and the question is which one employs the worker”, the correct approach to ascertaining the employing entity’s identity is that set out in Rossato, Personnel Contracting and Jamsek.

34    In Nino, Judge Forbes stated that Resilient confirmed that the “identity question” required considering the “substance and totality of the relationship”, and in this regard, post-contractual conduct could be considered: at [285] – [286].

35    Mr Chambers did not address, in his submissions in chief, the approach to be adopted in identifying the engaging entity. Mr Simpson focused primarily on the principles of agency, but seemed to contend that, similarly to the Ombudsman, the “totality of the relationship” must be considered.

36    As noted, the parties were invited to file submissions on identified cases post-dating the final hearing which considered the issue of identifying the engaging entity after the decisions in Rossato, Personnel Contracting and Jamsek. Those cases were Agrigrain Pty Ltd v Rindfleish [2024] NSWCA 295; 335 IR 400; In the matter of Mosaic Brands Ltd (admins apptd) (recs and mgrs apptd) [2025] NSWSC 959; Shepard (Administrator), in the matter of Transtar Linehaul Pty Ltd (Administrators Appointed) [2025] FCA 1663; Tazleem v Certain Underwriters at Lloyds Listed in Annexure “A” [2026] NSWSC 124; OZ ESDM PTY LTD v Fair Work Ombudsman [2026] FedCFamC2G 378; Moon Recruitment Pty Ltd v Execom Software Pty Ltd (t/a Execom Personnel) [2025] WADC 18 (Moon Recruitment (District Court)) and Moon Recruitment Pty Ltd v Horne [2026] WASCA 80 (Moon Recruitment (Court of Appeal)).

37    On the one hand, the following cases suggested that the Court should continue to follow the “multifactorial approach” to assess the “totality of the relationship” between the parties, when identifying the employing entity: Mosaic Brands at [24] – [32]; Shepard at [13] – [16]; OZ ESDM at [93] – [106].

38    On the other hand, there are cases which apply, or appear to apply, the “contractual approach” taken in Rossato, Personnel Contracting and Jamsek to the identification of the employing entity: Global Risk Alliance at [407] – [414]; Agrigrain at [31] – [40]; Moon Recruitment (District Court) at [202] – [204], [283] – [285]; Moon Recruitment (Court of Appeal) at [43] – [45], [48].

39    The approach of Elkaim AJ in Tazleem seemed to approve of Kirk JA’s approach set out in [31] – [34] of Agrigrain: at [78]. However, his Honour also appeared to approach the issue by reference to the totality of the relationship, without explicitly indicating whether he was following an objective contractual inquiry: at [80] – [98].

40    The Ombudsman’s submission was that the legal test for identifying the true engaging entity remained unchanged, and was as she had already submitted: namely, that the relevant inquiry was distinct from that set out in Rossato, Personnel Contracting and Jamsek, and was as set out in Resilient at [162].

41    Mr Simpson’s submission similarly was that the Court should apply the “multifactorial” approach when assessing the “totality of the relationship”, citing Resilient at [173] – [185]. However, that submission appeared to proceed on the basis of the approach in Agrigrain which sought to harmonise the apparent tension between Resilient and Rossato, Personnel Contracting and Jamsek, by taking into account various “post-contractual” factors under the banner of an objective contractual approach. Mr Simpson focused on the indicia relevant to assessing the employing entity, in particular on the control exercised by Spotless, and iGuard’s engagement of ProClean to manage the cleaning services and pay the cleaners’ invoices.

42    Mr Chambers’ submissions were that Agrigrain stood for the proposition that the Court should, in the absence of a “clear written employment contract”, consider post-contractual conduct to identify which entity a reasonable person would understand to be the engaging entity. In this regard, he emphasised that factors evincing the relevant entity’s control, financial burden and “independent business substance”, rather than the entity that issued payments or was named in a subcontracting document, were the factors to be considered.

43    Contrary to the Ombudsman’s and Mr Simpson’s submissions, on the basis of the reasoning in Rossato, Personnel Contracting and Jamsek, and Agrigrain and Moon, I consider that the correct approach is not to consider the “totality of the relationship” broadly; rather, the correct approach is an objective contractual one.

44    First, the foundational premise in the majority’s reasoning in Rossato is that the character of a legal relationship can only be determined by reference to the legal rights and obligations constituting that relationship. After noting that no contention was advanced that the relevant contractual documents were shams, the majority considered that they should be regarded as “true, reliable and realistic statements of the rights and obligations to which the parties agreed to bind themselves”: at [55]. At [56] – [57], the majority stated:

In Commonwealth Bank of Australia v Barker [[2014] HCA 32; 253 CLR 169 at [1]], French CJ, Bell and Keane JJ said:

“The employment relationship, in Australia, operates within a legal framework defined by statute and by common law principles, informing the construction and content of the contract of employment.”

A court can determine the character of a legal relationship between the parties only by reference to the legal rights and obligations which constitute that relationship. The search for the existence or otherwise of a “firm advance commitment” must be for enforceable terms, and not unenforceable expectations or understandings that might be said to reflect the manner in which the parties performed their agreement. To the extent that [the primary judge] expressed support for the notion that the characterisation exercise should have regard to the entirety of the employment relationship, his Honour erred.

(Emphasis added, footnotes omitted.)

45    The minor premise, which the majority draws from the quoted statement in Barker, is that employment relationships operate within a legal framework defined by statute and common law principles which inform the construction and content of the employment contract. It therefore follows that the characterisation of employment as casual or otherwise proceeds solely from examining the terms of the contract: at [62]. The reasoning in this passage of Rossato is taken up again by the plurality in Personnel Contracting at [44] where, albeit speaking in relation to a wholly written contract, their Honours state as follows:

Not only is there no reason why, subject to statutory provisions or awards, established legal rights and obligations in a contract that is entirely in writing should not exclusively determine the relationship between the parties but there is every reason why they should. The “only kinds of rights with which courts of justice are concerned are legal rights”. The employment relationship with which the common law is concerned must be a legal relationship. It is not a social or psychological concept like friendship. There is nothing artificial about limiting the consideration of legal relationships to legal concepts such as rights and duties. By contrast, there is nothing of concern to the law that would require treating the relationship between the parties as affected by circumstances, facts, or occurrences that otherwise have no bearing upon legal rights.

(Bolded emphasis added, footnotes omitted.)

46    It would appear anomalous if, having accepted, and being bound by, the central premise which the majority accepted, that the character of a legal relationship can only be determined by legal rights and obligations constituting that relationship, one purported to determine the issue of whether a legal relationship existed between two parties by reference to factors or indicia other than those which establish contractual rights and obligations. In this regard, I consider that the majority’s warning in Rossato at [63] against descending “into the obscurantism that would accompany acceptance of an invitation to enforce ‘something more than an expectation’ but less than a contractual obligation” applies equally to identifying the engaging entity (see also Personnel Contracting at [59] – [60]). That the plurality in Personnel Contracting at [62] saw no reason not to extend the application of these principles to the issue of characterisation in that case provides additional force to these observations applying in this case.

47    In this regard, the remarks of Gordon J at [188] – [190] of Personnel Contracting are apposite:

The multifactorial approach was applied not merely without any central principle to guide it but also by reference to a roaming inquiry beyond the contract. It allowed consideration of what had happened after the entry into the contract to characterise the nature of “the status or relationship of parties”. That is not appropriate. Such an inquiry slips away from – slips over – the critical consideration that the relationship between the parties is the relationship established by contract. Conduct may be looked at to establish the formation, variation or discharge by agreement and the remaking of a contract. But evidence that is relevant to inquiries of those kinds is limited by the purpose of the inquiry. The evidence of what was done is relevant only if and to the extent that it shows or tends to show that a contract was made between the parties or a contract previously made between the parties was varied or discharged.

Following [Rossato], the multifactorial approach applied in previous authorities must be put to one side when characterising a relationship as one of employment under a contract. The approach in [Rossato] seeks to avoid the difficulties just identified with the multifactorial approach and, in particular, seeks to avoid “employee” and “employer” becoming legal terms of meaningless reference. It focuses the task of characterisation by reference to established doctrine, rather than inviting an assessment of the relationship between two parties which is “amorphous” and “inevitably productive of inconsistency”. The need for judgment is unavoidable, but this approach promotes certainty by providing identified and well established limits: admissible evidence to identify the formation and the terms of the contract and the established principles of contractual interpretation.

… As explained, when an oral contract or a partly oral, partly written contract is in issue, recourse to conduct may be necessary to identify the point at which the contract was formed and the contractual terms that were agreed. In relation to the latter, “[s]ome terms may be inferred from the evidence of a course of dealing between the parties”, “[s]ome terms may be implied by established custom or usage”, and “[o]ther terms may satisfy the criterion of being so obvious that they go without saying”. But in each of these cases, the question is whether the particular term “is necessary for the reasonable or effective operation of the contract in the circumstances of the case”. In this way, even where the contract has not been reduced to a complete written form, the admissible evidence is limited to identifying those matters – formation and terms – objectively and for those limited purposes. …

(Emphasis added, footnotes omitted.)

48    See also the remarks in Personnel Contracting at [183] in relation to oral or partly oral contracts.

49    Second, the application of the above approach to the identification of the employing entity has been confirmed in Agrigrain and Moon Recruitment.

50    In Agrigrain, the Court considered, inter alia, the issue of who, of the appellant and its wholly owned subsidiary, was the respondent’s employer at the time he suffered an injury at a grain handling facility. This issue was relevant to the respondent’s claim that the appellant had breached a duty of care in failing to maintain the facility and on-site safety resulting in the respondent’s injury: at [2], [6]. There was no written contract of employment: at [8]. Despite the fact that the identity of the employer was relevant for the purposes of the Workers Compensation Act 1987 (NSW) and the Workplace Injury Management and Workers Compensation Act 1998 (NSW), Kirk JA (with whom Ward P and Stern JA agreed entirely) accepted that the issue depended on the common law understanding of employment: at [25] – [28].

51    While Kirk JA accepted the appellant’s submission that the principles set out in Rossato, Personnel Contracting and Jamsek were not directly applicable to the issue of the identity of the respondent’s employer, his Honour reconciled the approach as follows: at [31].

52    His Honour accepted that the issue was one of contract law: at [31]. There was no dispute that there must have been a contract to which the respondent was a party, that either the appellant or its subsidiary intended to create legal relations, that there was consideration, nor was there a dispute as to the terms, save for identity: at [32].

53    Kirk JA characterised the issue of the identity of the employer as one “of formation going to the terms of the contract”: at [32]. His Honour at [34] defined the contractual question as “what a reasonable person in the position of the parties would understand as to the terms and effect of the contract”, relying on Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; 219 CLR 165 at [40]; Realestate.com.au Pty Ltd v Hardingham [2022] HCA 39; 277 CLR 115 at [15], [47], [115]; Shaw v Bindaree Beef Pty Ltd [2007] NSWCA 125 at [61] – [62]. Applied to this context, his Honour considered at [34] that:

… Where there are two potential employers, in a case such as this one, the “parties” here can be taken to include both of them such that the question is what a reasonable person in the position of all potentially relevant parties would understand as to which entity was party to the employment contract as employer. For a written contract, assessment of what a reasonable person would understand “requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction”: Toll at [40]. For contracts not exclusively in writing, post-contractual material may also be relevant in determining what were the terms of the contract: eg Lawrence v Ciantar [2020] NSWCA 89 at [114], and authority there cited; Personnel Contracting at [177] and [190].

(Emphasis added.)

54    His Honour at [35] then referred to the remarks of Gleeson JA at [162] and [165] of Resilient, considering first that those comments were obiter, and second that contrary to the suggestion at [2.020] of The Modern Contract of Employment, referenced above at [33], there was no need for controversy, if the remarks in Resilient were “understood to be addressing the issue of identifying the relevant party to the contract as a matter of contract law”. Thus, regard could be had to the surrounding circumstances “as a matter of contract law”, and in circumstances of a contract “not wholly written”, to “post-contract evidence”. His Honour accepted that the issue of the character of the relationship as one of employment or independent contracting was different from that of the identity of the parties to a contract “which it is accepted establishes a relationship of employment”: at [36]. As to the conduct that might be relevant in this context in ascertaining the identity of the employer, his Honour said:

… That being said, insofar as post-contract conduct is relevant to the true employer issue it is necessary to identify what sort of conduct might throw light on which entity was the true employer. Notions from the characterisation context may assist in that regard. For example, the nature and degree of control exercised may be relevant to determining whether a person is an employee or contractor. Analogously, identifying who exercises control may be relevant to identifying the true employer. Insofar as account is taken in the true employer context of factors identified in the characterisation context, they should be factors which are still relevant in that context in light of the recent trio of High Court decisions.

(Emphasis added, references omitted.)

55    His Honour at [37] referred to the remarks of the plurality at [61] of Personnel Contracting that the “totality of the relationship” could still be considered when characterising the relationship between the parties “on the understanding that ‘for a matter to bear upon the ultimate characterisation of a relationship, it must be concerned with the rights and duties established by the parties’ contract, and not simply an aspect of how the parties’ relationship has come to play out in practice’”. By analogy, his Honour stated the following in relation to assessing who was the employing entity at [37] – [39]:

… A similar point applies here. There is some danger in using language such as having to assess the “totality of the relationship between the parties”, as though that were the legal test, without keeping a steady eye on the fact that the issue in the “true employer” cases is one of contract law, and that any assistance from the characterisation cases is analogical and must also take account of the law on that topic as it now stands.

If there was at the relevant time an extant written employment contract, which is not alleged to be a sham, or invalid for some other reason, or to have been overtaken by a subsequent contract, or to have in fact been made for an undisclosed principal, or such like, then the answer to the true employer will readily be found in the document.

If the contract was not wholly written then it is permissible to refer to post-contractual conduct. Care should be taken to avoid a “roaming inquiry beyond the contract” except to the extent permitted by contract law principles (quoting Personnel Contracting at [188] per Gordon J). In this context, as in the context considered in [Rossato], “it is the function of the courts to enforce legal obligations, not to act as an industrial arbiter” ([Rossato] at [62]). …

(Emphasis added.)

56    His Honour at [39] referred positively to the remarks of Gordon J at [178] of Personnel Contracting, where her Honour considered that, in the context of a “dynamic relationship”, it may be necessary to consider “the whole relationship and not only … what was said and done when the relationship was first formed”; however, in doing so, the “inquiry remains an objective inquiry the purpose of which is to ascertain the terms the parties can be taken to have agreed”, and is not directed to conduct not adduced to “establish the formation of the contract or the terms on which the parties contracted”. Finally, his Honour at [40] expressed the inquiry as follows:

The ultimate question in cases such as this is the contractual one of what a reasonable person in the position of all the potentially relevant parties would understand as to which entity was party to the employment contract as employer, taking account of the permissible evidence. …

57    In applying these principles, Kirk JA rejected the appellant’s reliance on evidence of subjective intention, and confined the inquiry as to post-contractual conduct to matters such as control, direction, and the entity making payments, which pointed towards the identity of the party to the employment contract: at [49], [51]. Further, his Honour considered the relevant circumstances indicating which entity was the employing entity from the point of view of a reasonable person in the position of the parties: at [74] – [75].

58    In Moon Recruitment (Court of Appeal), the Court of Appeal dismissed the appeal from Moon Recruitment (District Court). The first-instance decision of Sweeney DCJ concerned a finding by an arbitrator of the Workers’ Compensation Arbitration Service that the appellant, Moon Recruitment Pty Ltd, and not the first respondent at first instance, Execom Software Pty Ltd, had employed the second respondent at first instance, Mr Horne, for the purposes of the Workers’ Compensation and Injury Management Act 1981 (WA): Moon Recruitment (District Court) at [1], [8].

59    Mr Horne was injured at the workplace of Echo Marine, on his first day of work: at [3]. Moon Recruitment had a written labour-hire arrangement with Echo Marine to supply workers to it on a labour-hire basis. Under that arrangement, Moon Recruitment was required to arrange for workers’ compensation insurance to cover any work-related injury: at [4]. Ms Moon, of Moon Recruitment, interviewed Mr Horne, considered him suitable, and sent him to Echo Marine for a welding test. She told him that he “had secured the job subject to a drug and alcohol screen, which she had organised for him”, and provided him with a uniform: at [5]. By prior arrangement between Execom and Moon Recruitment, Execom sent Mr Horne a written offer letter “concerning that same job, by which he would agree to provide his services to Execom’s ‘client’ and Execom would agree to pay him, as well as to take out workers’ compensation insurance which covered him”. However, Echo Marine was not Execom’s client and had no contractual relationship with it. Execom did arrange for Mr Horne to be covered with a workers’ compensation policy with its insurer: at [6].

60    The arbitrator found that Execom, also a labour-hire organisation, and Moon Recruitment, had an agreement whereby Execom would provide payroll services for Moon Recruitment’s employees for labour-hire, as Moon Recruitment lacked the cash flow to manage this. Execom would pay the employee, described as a “contractor”, and take out workers’ compensation insurance, on the basis that it would invoice Moon Recruitment for these sums plus a service fee, and Moon Recruitment would in turn “invoice its own client an amount including the wages and its own fee for providing the labour to its client, and would then pay Execom”: at [44].

61    The central issue was whether the arbitrator had taken into account irrelevant matters in considering, essentially, the broad dealings and totality of the relationship between the parties: at [83] –[84], [90]. Moon Recruitment contended that in determining whether a contract existed between Mr Horne and Execom, the arbitrator was to examine “the words and conduct of Mr Horne and Execom between themselves”, and not to consider the words and conduct of another party extraneous to that transaction, where that third party was not a participant in the communications between the two: at [82]. Moon Recruitment advocated for an “objective consideration of the contract” between Execom and Mr Horne, to “determine what a reasonable bystander would have understood by it”: at [83]. Execom submitted that Personnel Contracting was distinguishable on the basis that it did not concern the identity of the employer, and also on the basis that at the time of Mr Horne’s injury, the parties had not committed their relationship to a comprehensive written contract: at [90], [122]. Execom endorsed the arbitrator’s approach in considering the overall context in which Mr Horne was hired, the arrangements between Moon Recruitment and Echo Marine, the arrangements between Moon Recruitment and Execom, and the dealings between Ms Moon and Mr Horne: at [90].

62    The arbitrator had found that Moon Recruitment was Mr Horne’s employer, which decision was upheld by Sweeney DCJ: at [8] – [9]. At [152]ff, her Honour referred to “a line of authority referred to as the ‘true employer’ cases”, in which the identity of the employer had been determined by reference to the “reality of purported contractual arrangements” by reference to various indicia comprising the “totality of the circumstances surrounding the relationship of the various parties”, beyond the contractual terms as found according to an “objective inquiry”. Her Honour also referred to the remarks in Resilient and Agrigrain, referred to above, and considered that though the ratio decidendi in Agrigrain was not binding on her, it was “persuasive authority as to how this court should approach a ‘true employer’ issue”: at [202]. Her Honour, at [203] – [205], held that:

In particular, where the issue is the identity of the employer and, as here, there are two (or more) contenders, the court is not restricted to a consideration of the terms of any written contract there may be in existence, or to the dealings between the two parties named in the contract alone, or to the facts known to both parties as the lowest common denominator, but may consider the background information known to all of the parties where that is necessary to throw light on the purpose and meaning of any contract entered into.

Phrases like ‘the totality of the relationship’ are not the contractual test itself, and are not to replace the ultimate question of the formation of any contract of employment and the identity of the employer. Where the parties have chosen to commit their relationship to a comprehensive written contract, that may well supply the answer to the question, but where there is ambiguity, suggestions of a sham or, if not a sham, an arrangement which does not reflect the intention of the parties in their performance of the contract (whether because the contract was varied, or replaced, or abandoned), where issues of estoppel or agency are present, or other issues which justify a broader approach to identify the employer, then the court is justified in looking to facts outside the confines of the four corners of any contract. The court in [Personnel Contracting] did not confine the consideration of the court to the four corners of the contract, and allowed for a broader enquiry where appropriate.

Applying the principles in [Personnel Contracting], which allowed for consideration of the factual matrix in which a contract was entered into to assist in determining its object and purpose, and a broader enquiry where there were issues of variation or abandonment of the contract, or estoppel or agency was raised, or sham was raised, or other factors justifying that broader enquiry, there were factors raised in this appeal which positively required a broader enquiry to be made. Further, this case was distinguishable on the basis of the issue to be determined by the court: namely, which of two putative employers was the employer, given that it was not in issue that one of the parties was.

(Emphasis added.)

63    At [281], her Honour considered that the arbitrator had correctly distinguished Personnel Contracting on the basis that that case did not involve an application of the statutory scheme under consideration in Moon Recruitment (District Court) and involved an executed contract. Her Honour further distinguished Personnel Contracting on the basis that in Moon Recruitment (District Court) it was accepted that an employment contract had been entered into; the issue was simply of the relevant employing entity, and therefore one of contract formation: at [283]. Her Honour considered, at [283] – [285]:

… The decision in Agrigrain v Rindfleish puts persuasive authority behind the legitimacy of recognising the distinction to be drawn between those cases calling for a characterisation of a relationship based on a comprehensive written contract and a case in which a choice is to be made between two putative employers. But in any event, the majority judgments in [Personnel Contracting] allowed that differing circumstances would determine the approach to be taken, and the principles in that case were expressly directed to respecting the parties’ decision to commit to a comprehensive written contract.

The contractual question remains what a reasonable person in the position of the relevant parties would have understood as to the identity of the employer and the terms and effect of any contract. This was also not a binary choice between whether Mr Horne had entered into some sort of contract with Execom or not. It was possible for Mr Horne to have entered into a contract with Execom whereby it was to be the entity which paid him, without that determining the contest between putative employers. The arbitrator found that the Execom offer was not accepted by conduct and on foot at the time Mr Horne was injured but, in any event, the question was as to which of the two entities was his employer.

In those circumstances, both in determining whether an inference should be drawn that the Execom offer had been accepted by conduct and in determining, in any event, which of the two entities had employed Mr Horne, it was permissible to consider the surrounding circumstances known to the parties – all relevant parties, not just Execom and Mr Horne, but Moon Recruitment too – and the objective purpose and object of the arrangement reached.

(Emphasis added.)

64    In applying the quoted cases, her Honour took an objective approach viewed from the position of a reasonable person in possession of all the background facts, in finding that Moon Recruitment was Mr Horne’s employer: see at [334], [339], [352], [357], [361] – [362].

65    The Court of Appeal approached the analysis differently from Sweeney DCJ: Moon Recruitment (Court of Appeal) at [63] – [64], [68]. The Court quoted at [43] – [45], with approval, the remarks of Kirk JA in Agrigrain in [32] – [34] and [40]. At [44], the Court stated:

… as Kirk JA observed at [40]:

The ultimate question in cases such as this is the contractual one of what a reasonable person in the position of all the potentially relevant parties would understand as to which entity was party to the employment contract as employer, taking account of the permissible evidence.

66    Then, at [48], the Court considered that:

The critical issue arises on the facts set out above. Applying an objective theory of contract, the correct inference to draw from those facts, about the identity of the relevant contracting parties in the arrangements between Moon Recruitment, Execom and Horne depends upon the inference which a reasonable person in the position of the parties would have drawn. That also is a question of fact.

(Emphasis added.)

67    In applying the above approach, the Court at [49] listed the matters that were objectively known to the relevant parties at material times, and concluded that based on an objective theory of contract, namely assessing the arrangements from the view of a reasonable person in Mr Horne’s position, the relevant contractual arrangement was for Mr Horne to provide his services to Moon Recruitment, so that Moon Recruitment could provide those services to Echo Marine under a labour-hire agreement: at [56]. The choice, which was open to the Court, between either finding that Execom was contracting with Mr Horne as Moon Recruitment’s agent, or with him in its own capacity directly with Mr Horne, whose services Moon Recruitment could hire out to Echo Marine, was resolved by having regard to Mr Horne’s written contractual arrangements with Execom, and Execom’s written contractual arrangements with Moon Recruitment: at [57]. The fact that Mr Horne did not sign a written contract with Execom until after he commenced employment did not mean that it was not part of the circumstances from which the Court’s objective analysis proceeded: at [60].

68    I consider that the proper approach to determining the true employing entity where there is more than one possible engaging entity is the objective approach set out in Agrigrain and Moon Recruitment (Court of Appeal). While I accept that neither case is strictly binding on me, Agrigrain is, in particular, persuasive, as it explains how the approaches in Rossato, Personnel Contracting and Jamsek to determining the character of the relationship might be reconciled with what might be thought to be an inconsistent approach to determining the identity of the employer set out by Gleeson JA in Resilient. In addition to providing a principled approach consistent with the High Court’s approach in the characterisation question, Kirk JA’s approach also provides support for not following the “multifactorial” approach followed in cases in reliance on Resilient, save to the extent that such factors, insofar as they arise under any contract, are relevant to a finding of the true engaging entity.

69    In any event, I consider that the reasoning expressed in Agrigrain and Moon Recruitment is persuasive for the reason that it accords with the central and emphatic premises contained in the prevailing views in Rossato, Personnel Contracting and Jamsek. I am not persuaded by the Ombudsman’s submission that, because Agrigrain involved related companies in a parent-subsidiary relationship, it is distinguishable because no such corporate relationship exists here.

Construction of employment contracts

70    Employment contracts are construed in the same way as every other contract: see The Modern Contract of Employment at [5.017] – [5.018]; Irving M, The Contract of Employment (2nd ed, LexisNexis Butterworths, 2020) at [7.6]; Personnel Contracting at [60]. “The legal rights and obligations of the parties [to a contract] turn upon what their words and conduct would be reasonably understood to convey, not upon actual beliefs or intentions”: Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; 218 CLR 471 at [34]. All questions as to the existence, content and construction of a contract focus on “the objective framework of facts within which the contract came into existence, and to the parties’ presumed intention in this setting”, to the exclusion of “the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract”: Codelfa Construction Pty Ltd v State Rail Authority (NSW) [1982] HCA 24; 149 CLR 337 at 352.

71    Where the contract is partly written and partly oral, ascertaining the terms of the contract is a matter of fact, and surrounding circumstances may be used as an aid to determining what the terms of the contract are: Masterton Homes Pty Ltd v Palm Assets Pty Ltd [2009] NSWCA 234; 261 ALR 382 at [90]. The Court is required to “determine objectively what each party by their words or conduct would have led a reasonable person in the position of the other party to believe, taking into consideration the language used … , the circumstances the … contract addressed and the commercial purpose or objects it secured”. The common intention of the parties to the contract is “what a reasonable person would understand by the language in which the parties have expressed their agreement”: Cellarit Pty Ltd v Cawarra Holdings Pty Ltd [2018] NSWCA 213 at [189].

72    In BH Australia Constructions Pty Ltd v Kapeller [2019] NSWSC 1086; 100 NSWLR 367, Leeming JA at [68] quoted with approval the following passage from Campbell JA’s judgment in Lym International Pty Ltd v Marcolongo [2011] NSWCA 303; 15 BPR 29,465 at [143]:

… the task in ascertaining what are the terms of a contract that is not wholly in writing is quite different — the task is finding as a fact what the parties have agreed. A range of post-contractual conduct could be relevant to ascertaining what the parties have agreed. For example, their conduct in carrying out the contract could itself be objective evidence of what they had agreed, an admission of one of the parties could assist in ascertaining what they have agreed, and business records created to record or report on the contract rather than carry it out could also assist in that task.

73    Leeming JA went on to state, at [69]:

It is clear that in the case of a contract which is partly written and partly oral, regard may be had to the whole of the circumstances. The parol evidence rule applies only to contracts which are wholly in writing: see Masterton Homes Pty Ltd v Palm Assets Pty Ltd (2009) 261 ALR 382; [2009] NSWCA 234 at [90(3)]. The non-written components of a contract which is not wholly in writing give rise to questions of primary fact, which are capable of being proven in the usual way, including by conduct after the event which bears upon those matters. In particular, an admission after the event may be powerful evidence supportive of a particular aspect of a contract. Indeed, Stephenson LJ said for the Court of Appeal in Mears v Safecar Security Ltd [1983] QB 54 at 77 that:

Common sense suggests that [the parties’] subsequent conduct is the best evidence of what they had agreed orally but not reduced to writing, though it is not evidence of what any written terms mean … .

74    The parties did not advance submissions or refer the Court to authorities directly related to the principles (if any) applicable to entire agreement clauses found in employment contracts. In any event, the authorities appear to treat these no differently to entire agreement clauses found in other contracts: see, e.g., The Contract of Employment at [7.16]; Network Ten Pty Ltd v Rowe [2005] NSWSC 1356; 149 IR 262 at [6] – [7], [34] – [36]; Keays v JP Morgan Administrative Services Australia Ltd [2012] FCAFC 100; 224 IR 406 at [61] – [73]; Rema Tip Top Asia Pacific Pty Ltd v Grüterich [2019] NSWSC 1594 at [2] – [8], [225] – [230], [290], [294] – [295], [315]; Secure Logic Pty Ltd v Noble (No 2) [2021] NSWSC 675; 306 IR 241 at [1] – [2], [649] – [673].

75    As to the effect of an entire agreement clause found in a contract, there appear to be two streams of authority. On the one hand, there is authority suggesting that entire agreement clauses are effective according to their terms, and the issue of their effect becomes one of construction: see Seddon NC and Bigwood RA, Cheshire and Fifoot: Law of Contract (12th ed, LexisNexis Butterworths, 2023) at [10.7]; Coast Corp Pacific Pty Ltd v Stockland Development Pty Ltd [2018] QSC 305 at [120]; Ha Tinh Pty Ltd v Chin Yin Pty Ltd [2022] QSC 282; 12 QR 609 at [47]; Aurora Australasia Pty Ltd v Hunt Prosperity Pty Ltd trading as trustee of the Aurora Australasia Investment Fund Unit Trust [2024] NSWSC 1054 at [119] (not relevantly disturbed on appeal in Aurora Australasia Pty Ltd v Hunt Prosperity Pty Ltd [2025] NSWCA 15); Peden E and Carter JW, “Entire Agreement – and Similar – Clauses” (2006) 22 Journal of Contract Law 1 at 5 – 6, 14 – 15, and Jackman IM, “Some judicial fallacies concerning entire agreement clauses” (2015) 89 Australian Law Journal 791 at 792, each relying largely on Inntrepreneur Pub Co (GL) v East Crown Ltd [2000] 2 Lloyd’s Rep 611 at 614; Heydon JD, Heydon on Contract (Thomson Reuters (Professional) Australia Limited, 2019) at [9.110] – [9.120]; Spigelman JJ, “Contractual interpretation: A comparative perspective” (2011) 85 Australian Law Journal 412 at 424; Elridge J, “‘Entire agreement’ clauses: how effective?” (2019) 33(4) Commercial Law Quarterly 3 at 6.

76    The authors of Cheshire and Fifoot refer, inter alia, to the following authorities which stand for the proposition at [10.7] that “evidence of extrinsic terms has generally (but not always) been excluded in cases of documents containing an entire agreement or merger clause”: see Hope v RCA Photophone of Australia Pty Ltd [1937] HCA 90; 59 CLR 348 at 357 – 360, 362 – 363, 365 – 368; Johnson Matthey Ltd v AC Rochester Overseas Corp (1990) 23 NSWLR 190 at 196; C G Mal Pty Ltd v Sanyo Office Machines Pty Ltd [2001] NSWSC 445 at [52] – [54]; Alstom Ltd v Yokogawa Australia Pty Ltd and Anor (No 7) [2012] SASC 49 at [112] – [114].

77    On the other hand, there is significant authority to the effect that entire agreement clauses are merely an evidentiary indication that the contract is wholly in writing. Several commentators take the view that where a formal contract contains an entire agreement clause, this strengthens the argument that the written contract embodies the entire agreement, but it is still open to the parties to prove that the real intention was that the agreement was partly oral and partly written: see Christensen S and Duncan WD, The Construction and Performance of Commercial Contracts (3rd ed, The Federation Press, 2023) at [6.2], [6.3.1]; The Contract of Employment at [7.16]; McLauchlan D, “The Entire Agreement Clause: Conclusive or a Question of Weight” (2012) 128 Law Quarterly Review 521 at 523, 529 – 531, 533. On the view expressed in Construction and Performance, whether the contract is intended to be wholly in writing depends on the “intention of the parties as expressed in the contract and extrinsic circumstances”: at [6.2], citing Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; 117 FCR 424 at [289] and State Rail Authority (NSW) v Heath Outdoor Pty Ltd (1986) 7 NSWLR 170 at 191 – 193.

78    On this view, a party may challenge the allegation that the written document represents the entire agreement, and adduce oral evidence to prove a contractual term that has not been reduced to writing: Construction and Performance at [6.3.1], citing, inter alia, Masterton Homes at [90] and Mainieri v Cirillo [2014] VSCA 227; 47 VR 127 at [13]; see McLauchlan D, “The Entire Agreement Clause: Conclusive or a Question of Weight” (2012) 128 Law Quarterly Review 521 at 529 – 531, 533; Mitchell C, “Entire Agreement Clauses: Contracting out of Contextualism” (2006) 22 Journal of Contract Law 222 at 231.

Variation of terms by conduct

79    During the course of dealings between the parties, the terms of a contract may be varied by way of an implied agreement, and where a party wishes to rely upon such a term as incorporated into the contract, that party is not required to demonstrate that the other party had “actual knowledge” of the implied term: Benge v Bluescope Steel (AIS) Pty Ltd (No 2) [2020] FCCA 515 at [64], quoting Moratic Pty Ltd v Gordon [2007] NSWSC 5; 13 BPR 24,713 at [21]. The parties must evidence a “mutual intention to vary the existing contractual terms, and consideration”: Benge at [64], quoting Moratic Pty Ltd at [21]. Consideration can be found in the abandonment of existing rights, the conferment of new benefits by each party to the other, or the incurring of liability to an increased detriment: Cellarit at [232]. Acceptance of an offer to vary a contract may be inferred from conduct: Commonwealth v Crothall Hospital Services (Aust) Ltd (1981) 36 ALR 567 at 576 – 577; Abbott v Women’s & Children’s Hospital Inc [2003] SASC 145; 86 SASR 1 at [34].

Contracts that are shams

80    A sham refers to steps which take “the form of a legally effective transaction but which the parties intend should not have the apparent, or any, legal consequences”: Equuscorp at [46]. In Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 18 FCR 449 (which the High Court referred to in Equuscorp at [46]) Lockhart J at 454 stated as follows:

… A “sham” is therefore, for the purposes of Australian law, something that is intended to be mistaken for something else or that is not really what it purports to be. It is a spurious imitation, a counterfeit, a disguise or a false front. It is not genuine or true, but something made in imitation of something else or made to appear to be something which it is not. It is something which is false or deceptive. …

81    For something to be found to be a sham, it must be shown that there was a subjective intention to create a false appearance in the written document, including to deceive or conceal the true transaction from third parties and the Court, and that this subjective intention was commonly held by all the parties to the contract: Sharrment at 454; Lewis v Condon [2013] NSWCA 204; 85 NSWLR 99 at [58] – [63]; Coshott v Prentice [2014] FCAFC 88; 221 FCR 450 at [64]. There is “a strong and natural presumption against holding a provision or a document a sham”: Lewis at [63]. Because a finding of sham requires a finding of intentional deception as to the effect of a document, the Court takes a cautious approach to finding that a document or transaction is a sham: Lewis at [63]; Raftland Pty Ltd v Federal Commissioner of Taxation [2008] HCA 21; 238 CLR 516 at [36]. An inference of sham should not be drawn where another inference is at least equally open: Sharrment at 461.

82    In the context of employment contracts, there is a suggestion that the conventional doctrine of a sham will “be of little utility in exposing a disguised employment”: Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd [2015] FCAFC 37; 228 FCR 346 at [145] (not relevantly disturbed on appeal in Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd [2015] HCA 45; 256 CLR 137). In other cases, courts have employed the language of a “pretence”, or a document being “brought into existence ‘as a mere piece of machinery’ for serving some purpose other than that of constituting the whole of the arrangement”: see Raftland at [34], [47]; Millar v Federal Commissioner of Taxation [2016] FCAFC 94; 243 FCR 302 at [45], [84] – [85].

THE EVIDENCE

The witnesses

83    At trial, the Ombudsman relied upon the following evidence:

(1)    Affidavits of Mr Sandesh Lamsal affirmed on 16 August 2023 and 9 September 2024 (Second Lamsal Affidavit).

(2)    Affidavit of Mr Chandu Tharaka Sembakutti affirmed on 16 August 2023.

(3)    Affidavit of Mr Nilon Shahilan Gnanasothy sworn on 17 August 2023.

(4)    Affidavit of Mr Sunil Poudel affirmed on 18 August 2023.

(5)    Affidavit of Mr Shishir Khanal filed on 18 August 2023.

(6)    Affidavits of Mr Amey Abhay Jambekar, a Fair Work Inspector, affirmed on 18 August 2023 (First Jambekar Affidavit) and 4 June 2024 (Second Jambekar Affidavit).

84    In this judgment, Mr Lamsal, Mr Sembakutti, Mr Gnanasothy, Mr Poudel and Mr Khanal are referred to together as “the Workers”.

85    Mr Chambers relied upon his affidavits affirmed on 10 October 2023 and 22 May 2024.

86    Mr Simpson relied upon his affidavits affirmed on 11 October 2023 and 22 May 2024.

Dramatis personae of other relevant persons

87    Many other individuals were involved in the subject matter of the proceeding and are mentioned in the evidence of others or in the relevant correspondence. At least some of the gaps in the evidence in this matter, of which there were many and in respect of which the Ombudsman entreated me to make inferences, might have been able to be filled by evidence from them. Unfortunately, no such evidence was forthcoming. Nonetheless, to understand as well as possible the roles they played and the scant evidence that was before the Court, they are identified below in a consolidated fashion, as follows:

(1)    The following persons, in addition to Mr Jambekar, employed by the Ombudsman:

(a)    Ms Laura Willoughby, a Fair Work Inspector.

(b)    Ms Kerryanne Higgins, a Fair Work Inspector.

(c)    Mr Steven Ronson, Executive Director, Proactive Compliance.

(2)    Downer, with which the following persons were associated:

(a)    Mr Ross Stafford, Presentation Delivery Manager – NSW Passenger Fleets Rail at Downer.

(b)    Ms Deborah Croft, Contracts Manager, Sydney Trains Accounts at Downer.

(c)    Mr Stephen Schofield, Group Head of Human Resources and Industrial Relations at Downer.

(3)    Spotless, with which the following persons were associated:

(a)    Mr David Tait, who had various roles, including being the State Manager for New South Wales, Queensland and Northern Territory of TechGuard Security and Soft Services – Business & Industry. Mr Tait’s email signature also generally contained the Spotless logo and the words “SPOTLESS We’ll take care of it”. His email account was in the name of “David Tait – Spotless”, and this appeared in the emails that he sent.

(b)    Mr Paul Shumack, General Manager – FM & Projects at Spotless.

(c)    Ms Michelle Dixon, Executive General Manager – Hospitality & FM at Spotless.

(d)    Mr David Blogg, whose email signature identified him as the Operations Manager of Alliance Catering, but whose email address displayed as “David Blogg – Spotless”.

(e)    Mr Paul Leung, the Legal Counsel at Spotless.

(f)    Ms Judith Blinkhorn, an employee of Spotless.

(g)    Mr John Katsik, Cleaning Operations Manager at Spotless/TechGuard Security/Soft Services.

(4)    iGuard Australia Pty Ltd, with which the following persons were associated:

(a)    Mr Luther Shannon, who was a director of iGuard.

(b)    Mr Harry Greenwood, who was involved in iGuard’s accounts.

(5)    The following other persons associated with the AMC:

(a)    Mr Bikram Pokharel, a site manager at the AMC.

(b)    Mr Ansari, who sought work at the AMC.

Preliminary observations regarding the witnesses

88    I did not find any of the witnesses to be wholly reliable or believable other than Mr Jambekar, whose role was extremely confined as set out below.

89    Mr Chambers presented as an opportunistic and energetic witness, whose intention at the AMC was simply to perform the task required. My impression of him was that he was naïve in that he did not take into account the legal niceties involved in the work performed at the AMC, he simply enthusiastically pursued the potential opportunities and money which might flow from this work. Some of his evidence was implausible and internally inconsistent. For example, while it might be accepted that he could not remember details of the individual payments made to the cleaners, his evidence that he could not remember whether he, or Mr Simpson at his direction, made payments, was implausible. He was also prepared to tailor his evidence to show himself in a better light, and in some of his evidence conflated himself and ProClean in a way which, in the absence of any other evidence, might have supported the Ombudsman’s case. However, at times Mr Chambers also impressed me as frank because of his indignation. He displayed an understanding that responsibility was being shifted onto him when it was unjust that this should occur. He was prepared to give evidence against his own interests with respect to Mr Simpson, which demonstrated a level of candour. Overall, his version of events made more sense than that advanced by the Ombudsman, particularly in the context of the incomplete evidence which she adduced, as explained below.

90    Mr Simpson struck me as a largely passive actor in the circumstances giving rise to this proceeding. I formed the impression that he wanted to feel purposeful, as circumstances had rendered him unable to participate fully in work. He felt ineffectual. Not all of his evidence was plausible or logical and I consider that his level of knowledge and involvement was greater than his evidence suggested. For example, his evidence that he could not recall the purpose of certain visits he made to the AMC on 10 April 2018 and 14 March 2019 was implausible. Further, his evidence that he had no active role in the payroll or invoicing process, and that his involvement was totally dependent on Mr Chambers, was not persuasive. That said, he was clearly not a significant actor in relation to the matters in issue and overall, his version of events was largely consistent with that of Mr Chambers.

91    Mr Jambekar, while strictly truthful, presented as a guarded witness. His role was to introduce the Ombudsman’s documents. He failed to explain why so few obvious witnesses (e.g., from the Ombudsman, Downer or Spotless) were called. He provided very little background information or context regarding the investigation, and similarly gave little explanation as to what the investigation entailed, or what steps were taken. When taken to numerous documents which referred to, directly or indirectly, the involvement of Downer and Spotless at the AMC, he frankly conceded that there were other people who were not, to his knowledge, questioned, but who might have been able to provide relevant information in this proceeding. The gaps in Mr Jambekar’s evidence, and this concession, reflected poorly on the Ombudsman’s case. It appeared that, to some extent, Mr Jambekar had been isolated so that the investigation was conducted in silos, and he did not know about certain aspects of it.

92    In that circumstance, it was surprising that the Ombudsman emphasised the “inherent inconsistency and opaqueness” about Mr Chambers’ position regarding the Workers’ engagement, and urged that that was symptomatic of the “sham arrangements that were put in place” when the same could be said to arise from the Ombudsman’s decision not to call witnesses regarding, or at the very least her failure to address, Spotless and Downer’s involvement at the AMC, or the role played by iGuard. Related to this point, it was often difficult to discern, based on the evidence of the correspondence that had proceeded from Spotless, by which entity the relevant Spotless personnel were engaged. The entities with which Spotless personnel appeared to be connected include “TechGuard Security”, “Soft Services”, and “Alliance Catering”.

93    The Ombudsman’s submission in oral opening regarding the Workers’ evidence was, “There will be confusion about who was working for who. The Workers themselves are confused and we don’t resile from that”. She acknowledged that the “facts in this case will at times be murky”, and that the only thing on which I could reliably base a decision was the documents upon which the Ombudsman relied. The Ombudsman repeatedly indicated that I should rely on the documents when I was required to determine, among competing accounts, what was the true nature of the arrangement. She reiterated that I would “hear evidence about the confusion of the Workers” as to the engaging entity, but that ultimately this was not determinative, in light of the “multifactorial” test to be applied, and that it was the documentary evidence upon which I should rely. However, in written closing submissions, while the Ombudsman urged that the Court could place weight on the documents, she also emphasised that I should rely on “the various uncontested (and therefore uncontroverted and reliable) evidence of the Workers”.

94    Contrary to the Ombudsman’s submission I found none of the Workers to be reliable witnesses. They were internally inconsistent within their own evidence and contradicted one another. Particular inconsistencies will be explored below, especially in relation to the evidence surrounding the Workers’ receipt of the Written Agreement.

95    I found Mr Lamsal a particularly unimpressive witness. I formed the impression that he was attempting to “play both sides” by seeking to negotiate for payment, initially with either Spotless or Mr Chambers, and once the Ombudsman became involved, just with Mr Chambers. This impression emerges from the sworn evidence of both Mr Lamsal and Mr Chambers, which suggested that Mr Lamsal was intermittently providing Mr Chambers with updates about the Ombudsman’s investigations into the work at the AMC, and was open to resolving the alleged underpayments without the Ombudsman’s involvement. Messages annexed to the First Chambers Affidavit suggested that, in response to the Ombudsman “contacting more people”, Mr Lamsal had instructed them about how to respond. Further messages suggested that Mr Lamsal, at the request of Mr Chambers, had confirmed whether the cleaners had always worked on ABNs. In relation to Mr Chambers’ message that “[S]potless [was] trying to say that you guys were not[,] they told us”, Mr Lamsal stated, “Spotless is paying too much fins [sic] on audit so may be trying to make some money out of your guys”.

96    Further related to that issue, Mr Lamsal’s evidence under cross-examination appeared to be to the effect that he was open to resolving the alleged underpayments with Mr Chambers without the Ombudsman’s involvement, whereby Mr Chambers would seek that Spotless pay back the cleaners. However, Mr Lamsal left the matter with the Ombudsman since it was already being investigated. Significantly, on 1 November 2020, Mr Lamsal sent Mr Chambers the following:

Hi Tim,

I had a chat with boys and they are happy to do some negotiation, like boys will pay back 10% - 15 %, and don’t want to take things to court if that help both boys and you, what do you say ??

97    This seemed to be a reference to some kind of settlement which Mr Lamsal and other cleaners were expecting to receive.

98    Mr Chambers alluded to Mr Lamsal offering an arrangement which would have occurred if Spotless were not to pay the cleaners. Such an arrangement would have involved Mr Chambers paying them instead. Under this arrangement Mr Chambers “would have to pay and he and other applicants would do a deal with me and give me [back] money”. By “applicants”, Mr Chambers referred to the Workers. This was an attempt by Mr Lamsal, as Mr Lamsal himself accepted, to “make the arrangements outside” without a court proceeding, on behalf of the other cleaners (i.e., the “boys”). By “boys”, he also explained under cross-examination that “[b]oys means the … only the five boys we were picked by the Ombudsman”. Under cross-examination Mr Lamsal said that he had asked the other cleaners if they were happy with Mr Chambers’ proposal, and in so doing he positioned the arrangement as one proposed by Mr Chambers. However, as Mr Lamsal subsequently conceded, he had not deposed to the arrangement being Mr Chambers’ idea and nor did the WhatsApp messages referring to the arrangement suggest that it had emanated from Mr Chambers. That also indicates to me that Mr Lamsal appeared to be the ringleader of the cleaners’ attempts to make money out of the events of this proceeding after the fact, and partly explains why the evidence, discussed below, appeared to have been in some instances contrived to retrofit to the Ombudsman’s case.

99    Mr Lamsal’s evidence also disclosed that he was willing to tailor his evidence according to the outcome he favoured. For example, he deposed in the Second Lamsal Affidavit that he found out that he was not working for Spotless when he received the Written Agreement and template invoice. However, in cross-examination he conceded that he did not in fact read the Written Agreement upon receipt, but simply signed it. Further, he said under cross-examination that he still did not know which entity engaged him.

100    Additionally, in light of the contradictions which will be explored below, I do not accept the Ombudsman’s contention in written closing submissions that Mr Lamsal’s evidence was broadly uncontested under cross-examination and, when challenged, his evidence “stood up to the cross-examination”.

101    Mr Sembakutti was also an unreliable witness. His affidavit and oral evidence revealed inconsistencies in his purported encounters with Mr Simpson and his understanding of for which entity he was working. As with the other Workers, I formed the impression that his evidence had been shaped in order to fit the Ombudsman’s case against the respondents.

102    As with Mr Sembakutti, Mr Gnanasothy’s sworn evidence was inconsistent with that ultimately given under cross-examination in relation to, in particular, the attendees at the 15 February 2018 Meeting and the entity for which he was working. He made concessions in cross-examination that contradicted his sworn evidence regarding, for example, who purchased pizzas for the celebration of good audit results at the AMC.

103    As will be discussed, Mr Poudel’s credibility as a witness was impeached by him having signed a declaration as to the identity of his employer despite claiming to have understood that to have been a different entity to that declared as his employer. As with the other Workers, significant portions of his sworn evidence were undermined by contradictory concessions made in cross-examination.

104    Mr Khanal gave evidence which suffered from the least internal inconsistencies. Nonetheless, his sworn and oral evidence bespoke a confusion surrounding the corporate structures and relationships between Spotless, iGuard and ProClean.

105    The Ombudsman’s closing submission that the evidence of Mr Gnanasothy, Mr Sembakutti, Mr Poudel and Mr Khanal was consistent as between the Workers’ evidence, and that their evidence was “essentially unchallenged” in cross-examination, is not accepted. By contrast, the Ombudsman urged that Mr Chambers’ evidence was “so inherently unreliable that it should not be accepted unless it is corroborated by documents”. It is surprising that the Ombudsman should urge that I only accept the respondents’ evidence if corroborated by documentary evidence, in circumstances where the Workers’ evidence was at least as contradictory, unreliable and liable to change under cross-examination as that of the respondents, indeed more so.

General observations on the evidence

106    Much of the evidence in this proceeding, be that documentary, affidavit and cross-examination, was incomplete, inconsistent, and patchy. There were very significant gaps in the evidence – much was left unsaid or to inference. I am not confident that I have a full understanding of the parties’ relationships. It is therefore difficult to understand what weight to give the various pieces of evidence. In the circumstances, therefore, the Court was tasked with doing the best it could on the evidence available. Evidence in relation to one issue necessarily feeds into the evidence relevant to other issues, which in these circumstances renders it more difficult to make findings in respect of discrete issues. It has also necessitated repetition of some of the evidence. Conclusions of fact could only be drawn with great difficulty based on the scant documentary evidence and having regard to which of the witnesses provided a more compelling account of the events that are the subject of this proceeding.

107    Obvious witnesses were not called by the Ombudsman. In particular, the dramatis personae suggests that there were several people from Downer and Spotless who could have shed light on the arrangements at the AMC. Further, it is somewhat surprising that the Workers, being only five of the cleaners at the AMC (and who in Mr Lamsal’s words were “picked by the Ombudsman”), gave the bulk of the evidence supporting the Ombudsman’s case. In this regard, seeming gaps in the Ombudsman’s investigation were not adequately explained. Mr Jambekar’s concessions, summarised above, demonstrate this. Further, other FWIs who were referred to in the evidence and who, presumably, could have shed light on the course of the investigations were not called as witnesses.

108    At different stages of the Work Period, different entities were more prominent as the likely engager of the Workers. For example, Spotless had a significant presence with respect to onboarding the cleaners at the beginning of the relationship, but Mr Lamsal took that over as time elapsed. That is also the case with respect to rostering and allocation of work, timesheet management, and general management of the staff. Oddly, given the Ombudsman’s submissions, Mr Chambers’ role is not terribly prominent relative to the involvement of Mr Shannon, Mr Tait and Mr Lamsal.

109    As to the Ombudsman’s submissions about the evidence, they were replete with assertions which were not supported by the evidence, and the Court was asked to draw inferences which simply could not be drawn on the available evidence. Such submissions included (1) that the lack of a written agreement between iGuard and ProClean was evidence of deliberate concealment, and that Spotless’ prohibition on subcontracting warranted treating the allegedly intentional opaqueness of iGuard and ProClean’s arrangements as symptomatic of a sham arrangement; (2) that every instruction provided by Mr Lamsal originated from Mr Chambers; (3) the “murky” nature of the case and the Workers’ confusion were emblematic of the arrangements being a sham. If I am, as the Ombudsman submitted, to follow the documents, the most extensive and clear evidence is that of the emails showing the roles adopted by Spotless and Downer.

110    The parties filed extensive objections to evidence, in relation to which it would be unwieldy to set out and make individual rulings. Mr Simpson took numerous objections to conclusions in the Workers’ affidavits that any email sent to or from the iGuard Payroll Email Address was an email sent to or from him. I uphold that objection to the extent that the Workers’ evidence was that the iGuard Payroll Email Address being in Mr Simpson’s name indicated that the emails were sent to and from him. I note that while the sender’s email address was expressed as “craig simpson ”, and emails displayed his email address as such and sometimes were signed off as “Craig”, on other occasions there was no signoff. On this basis, the various statements in the Workers’ affidavits as to who was sending and receiving emails from the iGuard Payroll Email Address can be admitted as statements of their belief that Mr Simpson was the sender or recipient behind the email address.

111    Several pieces of email correspondence annexed to Mr Simpson’s affidavits were objected to on the basis that they were hearsay documents. I agree with Mr Simpson’s response that they can be admitted as proof that the statements or representations contained therein were made: Subramaniam v Public Prosecutor [1956] 1 WLR 965 at 970. Further, they are admissible as going to the intention of the sender, and shed light on the intention of the recipients where there was no evidence that they had contradicted the contents of that correspondence: see Walton v The Queen [1989] HCA 9; 166 CLR 283 at [18] – [19].

ISSUES

112    As noted above, I agree that the approach of Kirk JA in Agrigrain is the correct approach to be followed when determining the identity of the employing entity where multiple entities may be the employing entity. That approach requires the Court to consider, ultimately, what a reasonable person in the position of all the potentially relevant parties would understand as to which entity was party to the contract, as the employing entity: Agrigrain at [40]. While noting that the questions of identification and characterisation were separate, Kirk JA accepted at [36] that “[n]otions from the characterisation context may assist in” determining the true employing entity, subject to the qualification that they “be factors which are still relevant in that context” in light of Rossato, Personnel Contracting and Jamsek: at [36]. In that regard, relying on the judgments in Rossato and Personnel Contracting, his Honour referred to the following relevant factors: the ability of an entity to exercise control over work tasks (at [61]), who exercised control (at [61]), which entity paid wages (at [63]), which entity had the right to “hire or discharge” workers (at [63]), which entity had the custody of tools and appliances to be used for work (at [63]), whether the relevant entity was carrying out its own business activities (at [65]), and whether there was an “intelligible business purpose” in a certain entity being the engaging entity (at [65]). Ultimately, these matters go to the issue of which business the individual was working in: at [62] – [63]. However, evidence of the parties’ subjective understanding is “not to the point”: Agrigrain at [49].

113    This judgment will therefore make findings of fact which are broadly responsive to the above factors, before proceeding to determine, in light of the above findings, which entity engaged each of the Workers based on the objective contractual inquiry articulated in Agrigrain.

Who recruited the Workers?

114    There are a number of events and key documents surrounding the recruitment of the Workers. They include emails and a series of meetings and phone calls which took place around January and February 2018.

115    The strongest evidence as to who recruited the Workers is found in the email correspondence of 29 January 2018 and 2 February 2018. Most of these emails were annexed to the First Jambekar Affidavit. First, there are several emails, annexed to the First Jambekar Affidavit, between Mr Tait, Mr Shannon and Mr Chambers, with the subject “Catch up re AMC mobilisation” dated 29 January 2018 from Mr Tait of Spotless, to Ms Croft, Contracts Manager, Sydney Trains Accounts Rail at Downer, copying Ms Blinkhorn of Spotless, as follows:

Great to speak with you today. I’m looking forward to working with you and Ross through the mobilisation and ongoing service delivery of cleaning services to the AMC.

As discussed, I will come to site at 09:00 on Thursday (meeting request pending) where we can go through our on boarding strategy and ensure that we will have everything in place for a smooth transition on 15th Feb. I will have David Blogg with me, who will assist to manage the mobilisation on the ground. David is one of our experienced Contract Managers, and collectively David and I will work through this process with you.

I apologise for recent shortcomings with operational delivery. Rest assured that we will continue to work towards a Feb 15th transition, and we will keep you fully informed of all onboarding activities and any potential issues as they arise.

116    Following this email is an email from Ms Croft to Mr Tait, copying Ms Blinkhorn of Spotless and Mr Stafford of Downer, in which Ms Croft states:

Many thanks for your positive response today. I also attach an email of names and contact details of staff that had been approached by our Maintenance Delivery Managers (mdm's) to see if they wanted to continue with spotless there is one in the email and 4 in the attachment. These people were only approached as they represented the only portion of workers that we would recommend from the current supplier.

117    Immediately after this email in that chain, Mr Tait on 29 January 2018, in response to Ms Croft, copying Ms Blinkhorn and Mr Stafford, states:

I have spoken to Aaron and he confirmed that he has the details of these 5 potential candidates. I have instructed Aaron to make contact with each of them directly as a priority and arrange a time to interview them. I will ensure that this gets actioned.

118    Ms Croft replies to the above email on 30 January 2018 to Mr Tait only, with details of site requirements for accessing the AMC. On 30 January 2018, Mr Tait forwards this email chain to Mr Shannon, who forwards it to Mr Chambers.

119    In a similar vein is another email chain, also annexed to the First Jambekar Affidavit, with subject “Syd Trains Roster” which contains, first, the following correspondence on 2 February 2018 from Mr Blogg to Mr Myers of “CleanEvent” and Mr Katsik, with Mr Tait copied:

Can you please start populating the attached roster with the staff that we know we have or will be coming over from the incumbent.

This way we will know what gaps we need to recruit for.

120    In the same chain is an email from Mr Tait to Mr Chambers on 2 February 2018, forwarding the abovementioned email, and including the following:

Can you put names next to shift rotations?

121    There is a further email dated 2 February 2018, which Mr Simpson tendered as an exhibit at the hearing, entitled “Meeting follow up” from Mr Tait to Ms Croft and Mr Stafford, copying Mr Blogg and Ms Blinkhorn, which provided “a recap of where we are at so far”. It was put to Mr Chambers in cross-examination by counsel for the second respondent, whereupon he gave evidence that he had been introduced by Mr Tait, Mr Stafford and Mr Katsik to his role and to various aspects of the work to be completed at the AMC. He said that Mr Katsik was involved with him in facilitating recruitment.

122    It addressed the following:

(1)    “David”, presumably referring to Mr Blogg, had formulated “a working roster based on total daily hours required across both the AMC and the ASY”. Mr Tait gave details of the number of cleaners required, noting that it provided for some redundancy, and that the plan was to “assess actual operational requirements over the first couple of months and adjust the manning schedule if and where required”. It further referred to induction and training of further staff for backfill purposes.

(2)    The draft roster was with Mr Stafford for further assessment; however, Mr Tait stated, “we have commenced our recruitment process based on this proposed manning chart”.

(3)    “Aaron” had contacted “the 5 incumbent cleaners” who had been recommended, two of whom had responded seeking employment, and Aaron would follow up with the other three.

(4)    Aaron had identified up to six other cleaners “within our existing business seeking to work on this contract”, and would facilitate their transfer across.

(5)    In relation to Mr Chambers, the email stated as follows:

Tim Chambers – who you met yesterday, is fairly new into his role of Cleaning Supervisor and we are still in the process of setting up his profile (email address etc). Hopefully we will have him up and running shortly, however either way Tim will be in contact with Ross today to arrange for a site visit at Eveleigh to sure up arrangements with our current team of 7 cleaners. I have arranged for Cleaning Operations Manager John Katsik to also be involved in this process. We are aware that one of the dayshift cleaners will finish up on Feb 9th and is heading back overseas. Tim and John will formalise arrangements with the other 6 cleaners in terms of site transfer and rosters etc. They will also assess suitability for potential team leaders/leading hands.

Tim will also accompany Ross on a nightshift at AMC to observe the incumbent cleaners in the working environment, and identify other potential candidates that might be suitable to transfer across to Spotless. John may also be involved.

Separately, Tim and John are facilitating an external recruitment process to fill remaining positions. We have a number of placements booked on 7/8 Feb for RISI training/medical for those candidates that do not yet have the required certification.

(6)    Once all the identified candidates were confirmed, and their training completed, “we will send you a list of names and relevant details in order to facilitate the online induction process”. Further, suitable times were to be arranged for site inductions.

(7)    “David”, presumably Mr Blogg, had interviewed potential candidates for a “Contract Delivery Manager and Assistant Contract Delivery Manager” who would “provide coverage across all shifts and be a direct liaison point of contact for Downer operational representatives”. Mr Tait stated, “we hope to initiate appointments … by the end of next week, with introductions to yourselves by early the following week”.

(8)    All resources necessary to undertake the contract had been ordered and would be delivered prior to commencement. This included cleaning equipment, uniforms, personal protective equipment and consumables. Task-appropriate cleaning trolleys would be ordered.

(9)    In relation to “[e]xisting staff issues”:

(a)    “Aaron” was instructed to work through identified pay concerns with each current staff member.

(b)    The current roster at the Eveleigh Maintenance Centre was unsustainable, and measures were being taken to mitigate fatigue.

(c)    “John and Tim” would meet with the “employees at Eveleigh” to provide support and assistance. All of these staff would transfer to the AMC on 15 February 2018, where they would be “accommodated with a sustainable roster pattern”.

(d)    Mr Tait had asked Mr Katsik to be involved in managing the shift schedules for the remaining week and a half to ensure that “our obligations” were met, and cleaners showed up to shifts.

(e)    Mr Katsik would assess cleaning product supply levels and “facilitate the required top up”.

(10)    Mr Tait would “be in touch regularly with updates”.

123    Under Mr Tait’s email signature was the following:

State Manager NSW | QLD | NT

TechGuard Security

State Manager NSW | QLD | ACT

Soft Services – Business & Industry

…

TGS

TechGuard Security

SPOTLESS

We’ll take care of it.

124    There is an email of 7 February 2018, annexed to the First Chambers Affidavit, in which a Mr Ansari writes to Mr Stafford as follows:

I would like to inform you that I got your contact information from Bikram Pokharel at EMC, Eveligh. [sic]

I have been working at AMC, Auburn since last two years and I am quite experienced regarding all the work loads carrying out at that place. I would like to inform you that I am full time available to work in night time at AMC and I would like to continue to work under the supervision of new contractors Spotless.

Its [sic] a humble request you to accept my application and allow me to show my abilities to work at AMC.

125    This correspondence is consistent with Mr Chambers’ affidavit evidence that on 6 February 2018, he was introduced as “Customer Service Manager at Spotless” at a meeting at Downer where Mr Shumack, Mr Tait, Mr Katsik, Mr Shannon, Mr Stafford and Ms Croft were present, as well as with his evidence that Spotless’ head office and Human Resources contacted him to set up a Spotless email account, to discuss his work experience and Spotless’ policies, and register him for a “Railway Course” which he needed to complete to access the AMC.

126    In these circumstances, the Ombudsman’s submission that Mr Chambers was “involved with building the original roster”, based on the emails of 2 February 2018 (above at [119] – [120]), needs to be qualified. Mr Chambers was “involved” to the extent that he was, insofar as this evidence shows, directed to “put names next to shift rotations”. But Downer and Spotless were essentially directing the entirety of the recruitment and onboarding of the cleaners.

127    The evidence regarding the recruitment of Mr Chambers was contained in the affidavits filed by the respondents. Mr Simpson’s understanding based on his conversations with Mr Chambers in January 2018 was that Mr Shannon had told Mr Chambers of an opportunity for ProClean to provide “cleaning consultancy services to” iGuard, which did not have much cleaning experience, so that it could improve standards and avoid audit fines. This was to be done via iGuard, rather than a new business. Around late January or early February 2018, Mr Chambers told Mr Simpson that iGuard had agreed to this arrangement, and that Mr Chambers and Mr Shannon had a verbal agreement to equally divide the profits of the arrangement after expenses. On or around 5 February 2018, following a meeting with Mr Tait and Mr Shannon, Mr Simpson was informed that Mr Chambers would be a Spotless representative, and Spotless did not want ProClean “to exist on site”. Mr Tait had organised Spotless email accounts for Mr Chambers and Mr Shannon, which Mr Chambers accepted he used during the Work Period. While Mr Simpson conceded that some of his evidence in this regard was hearsay evidence, it can be admitted as proof of the conversations between Mr Chambers and Mr Simpson.

128    Mr Chambers’ evidence is that initially, Mr Shannon approached him to assist iGuard and Spotless with the cleaning at the AMC in his personal capacity. At a meeting with Mr Tait and Mr Shannon on or around 20 January 2018, he was told that the role was to ensure that trains were “cleaned to a high standard”, with Spotless to supply the equipment. A few days later, he was hired as Spotless’ Cleaning Operations Manager to “keep Audits down and deal directly with Downer and at night with contractors on trains”. Mr Tait made clear to him that he was a Spotless representative and that ProClean could not exist on site, because Downer only permitted Spotless employees and iGuard at the AMC. Mr Chambers and Mr Shannon orally agreed to equally divide the profits of their arrangement. Despite Mr Chambers suggesting it, Mr Shannon refused to set up a new business with Mr Chambers to do the cleaning work, deciding instead to “keep the cleaning work under iGuard”.

129    That affidavit evidence of those discussions is supported by an email dated 5 February 2018 from Mr Tait to Mr Shannon, copying Mr Chambers, asking Mr Shannon to “Please supply rates schedule for cleaning services to Spotless for Downer – Sydney Trains project”, and recording that “We will accept your verbal offer” of “$29.00” for weekday daytime work, “$33.00” for weekday overnight work and “$36.50” for weekend work, with further negotiation to occur for public holiday work. I accept Mr Simpson’s evidence that ProClean would usually provide a cleaner with a cleaning job and have the cleaner quote a total price, rather than paying an hourly rate. This is consistent with Mr Chambers’ evidence that he thought these were rates charged by iGuard to Spotless, rather than rates being paid to cleaners. His evidence was that ProClean’s practice was to pay a lump sum to cleaners, not hourly rates.

130    In light of the above, the Ombudsman’s submission that Mr Shannon contacted Mr Chambers in his capacity as a director of ProClean to help run the cleaning business under the agreement between Spotless and iGuard is not accepted. That may have been an initial starting point. However, the emails between Downer and Spotless, and the respondents’ affidavit evidence, establish Mr Chambers’ involvement in his personal capacity.

131    Consistently with the above emails involving Downer, Spotless, iGuard and Mr Chambers, the evidence of Mr Lamsal, Mr Gnanasothy and Mr Sembakutti linked the commencement of work at the AMC with an understanding that Spotless was taking over, or seeking to take over, the cleaning work. I note that there was no evidence as to the manner of the Workers’ engagement, and it was unclear which entity engaged them, under the prior arrangements.

132    Mr Lamsal stated that Mr Chambers contacted him after he had responded to a Gumtree advertisement regarding cleaning work at the AMC. At the 1 February 2018 Meeting, Mr Chambers “introduced himself as a supervisor from ‘Spotless’” and informed him that “they (which [Mr Lamsal] thought meant Spotless) [were] taking over the other company (which [Mr Lamsal] thought meant ANT)”. He says that Mr Chambers told him that work would commence from 15 February 2018, added him to, inter alia, a WhatsApp Group entitled “Auburn Cleaning” (Auburn Cleaning WhatsApp Group) and messaged him asking him to complete an online site induction and obtain a rail industry worker card. Mr Lamsal also deposed that he received a text message congratulating him, welcoming him to the new team, and stating “[w]e are the new contractors starting This Thursday Feb 15th. It was signed “TIM CHAMBERS SPOTLESS SUPERVISOR”.

133    Mr Chambers’ evidence about the 1 February 2018 Meeting was that he was wearing a Spotless uniform, that Mr Tait participated by phone, and that Mr Lamsal said he knew the processes at the AMC from his prior work there.

134    Mr Gnanasothy and Mr Sembakutti say they attended a meeting at the AMC in about either January or February 2018, respectively, at which the respondents were present and wearing Spotless uniforms. Mr Gnanasothy deposes that “either Mr Chambers or Mr Simpson” said that Spotless was trying to take over the cleaning contract at the AMC, but there was “no discussion about whether we would be employees or who we would be working for”. Under cross-examination, Mr Gnanasothy accepted that he was “not sure who are the people” who attended the meeting, and that although he had met “two people along with” Mr Chambers, he was simply “assuming” one was Mr Simpson. He also accepted that, given the passage of time, he was “not sure who actually mentioned” particular matters, although he recalled that Mr Chambers was “the one who straightly started talking with us” and maintained that Mr Simpson “also mentioned” something, but could not remember “what exactly”. Mr Sembakutti said that because Mr Chambers and Mr Simpson were wearing Spotless uniforms, he thought they were from Spotless, but there was no discussion about pay, employment status, or for whom the cleaners would be working. He says that Mr Chambers told them to return on 15 February 2018 if they wanted the position, and that he thought he would be working for Spotless because he was told that they “contracted to Downer at the AMC”. The evidence as to how Mr Gnanasothy and Mr Sembakutti came to be recruited for work at the AMC is unclear, and generally involved them hearing of work from others, which led to them being contacted by either Mr Chambers or Mr Simpson.

135    Mr Khanal deposes that in late August or early September 2018, he learned of work at the AMC through his brother, who had heard about it from Mr Lamsal. Mr Khanal contacted Mr Lamsal, obtained a rail industry worker card, was added by Mr Lamsal to a WhatsApp group entitled “To be inducted” (Induction WhatsApp Group), who told the members of this group that they needed an ABN and provided instructions to obtain one. At Mr Lamsal’s request, on 18 September 2018 he attended the AMC with “around 5 to 10 other workers”, where “a Nepalese person inducted us”, whom he believed was a supervisor. Under cross-examination, he accepted that he had never had a conversation with Mr Chambers and that he “never engaged [him] as an employee”.

136    Mr Poudel deposes that in or about October 2018, Mr Pokharel told him about a cleaning job at the AMC, “organised the site induction”, and said that “it would be presented by someone from Downer”. Mr Poudel did not know for whom he would be working, but the eventual site induction was “presented by someone in a Downer uniform at the AMC”. He accepted in cross-examination that, before starting at the AMC, he had had no conversation with Mr Chambers and was “engaged” to come to work at the AMC by Mr Pokharel. Although he said under cross-examination regarding his previous job at the Eveleigh Maintenance Centre (EMC), that Mr Pokharel and Mr Lamsal “worked for, like, Spotless, I guess”, that answer appeared to concern his understanding of the entity which engaged Mr Pokharel and Mr Lamsal at the AMC. Mr Poudel’s evidence was otherwise uncertain as to who engaged or paid him at his previous position at the EMC.

137    The Workers each had an ABN listed in their Written Agreements, and each Worker had an ABN before commencing at the AMC. Mr Lamsal deposed that he obtained and previously used his ABN while working for ANT. He conceded that he sent a message in the Auburn Cleaning WhatsApp Group directing workers to obtain an ABN. That evidence was consistent with Mr Khanal’s affidavit evidence and his evidence under cross-examination that Mr Lamsal provided all information and instructions about how to obtain an ABN. Mr Gnanasothy’s affidavit evidence that either Mr Chambers or Mr Simpson asked for his ABN, and told him that he could not work without one, was impugned by his concession under cross-examination that he could not identify with certainty which of them told him that an ABN was required. Mr Sembakutti’s affidavit evidence was that he thought Mr Lamsal told him he needed an ABN to work at the AMC. Mr Poudel deposed that Mr Pokharel told him that he would need an ABN. Mr Khanal’s evidence was that he obtained an ABN after being told by Mr Lamsal in the Induction WhatsApp Group that cleaners would need to apply for one. On the basis of the above, I find that neither Mr Chambers nor Mr Simpson directed the Workers to obtain an ABN. In fact, as he accepted under cross-examination, Mr Lamsal asked the cleaners to obtain one.

138    It was never expressly submitted that the 15 February 2018 Meeting was part of the recruitment of the Workers. However, the conversations which occurred at that meeting inform the question of who recruited the Workers.

139    Mr Lamsal deposes to having attended the 15 February 2018 Meeting, at which Mr Chambers, Mr Simpson, Mr Shannon and Mr Stafford were present.

140    Mr Simpson’s stated reason for attending was that he was curious about the work and the AMC facility, had nothing else planned, and wanted to support Mr Chambers. Generally, his position was that he had, and planned to have, no involvement in the cleaning work at the AMC.

141    Based on the consistent evidence of Mr Chambers and Mr Simpson, I accept that Mr Shannon, Mr Tait and Mr Blogg were also present, and that each of them and Mr Chambers was wearing Spotless uniforms. I accept that each putative worker present was given an identification number beginning with “PHQ” which was prefilled in the timesheets against the Workers’ names. However, while Mr Lamsal asserted in his evidence in chief that Mr Simpson’s role at the meeting involved him sitting at a laptop (though he acknowledged under cross-examination that he took no steps to confirm this), this was contradicted by each of Mr Chambers and Mr Simpson, both of whom gave evidence that the individual sitting at the computer was in fact Mr Blogg, who was preparing a roster. The metadata of that roster showed that the user who created and last modified it was Mr Blogg, at 10:07 pm on 15 February 2018. I accept that it was in fact Mr Blogg sitting at the computer preparing a roster.

142    The evidence given by Mr Lamsal, Mr Gnanasothy and Mr Sembakutti regarding what was said or occurred at the 15 February 2018 Meeting was sparse, vague and inconsistent. Mr Lamsal’s evidence in chief was that Mr Chambers and Mr Simpson told everyone in attendance that they needed an ABN to be paid. However, under cross-examination, and after being taken to transcripts of his interview with a Fair Work Inspector, he conceded that there were “many other agents” there, and that he could not remember them all, and that it was two years or a year ago. Mr Gnanasothy’s evidence was that he could not recall what was said but that he was asked to write his name on a document, although he was unable to recall what that document was. Under cross-examination, he stated firstly that he could not remember whether Mr Chambers represented himself as being from Spotless or ProClean, but as part of the same answer then said that Mr Chambers initially represented himself as Spotless, though he (Mr Gnanasothy) later “got to know about iGuard and ProClean”. Mr Sembakutti’s evidence was that Mr Lamsal introduced himself as the site manager and had a piece of paper containing identification numbers starting with “PHQ”. Under cross-examination he stated that he thought Mr Chambers was from Spotless, but conceded he had never seen him communicate with Downer or perform work.

143    Mr Chambers’ and Mr Simpson’s evidence was that Mr Tait welcomed the meeting attendees “to the Spotless team”. They both gave evidence that Mr Tait and Mr Blogg took fairly prominent roles in the discussions, while they observed. Mr Simpson deposed that neither ProClean nor iGuard was mentioned. They gave evidence that Spotless uniforms were being handed out, although Mr Chambers’ evidence was that a Mr Martin Brown got the uniforms, while Mr Simpson’s evidence was that they were handed out by Mr Tait. Overall, I prefer the evidence of Mr Chambers and Mr Simpson. It was more convincing, more consistent and more detailed.

144    The evidence of the Workers as to the Written Agreement was generally vague and contradictory. Mr Lamsal deposed that when the Written Agreement and invoice template were provided, “there was also a lot of confusion amongst me and the other workers about which company we were working for”. Each of Mr Lamsal, Mr Gnanasothy, Mr Sembakutti and Mr Poudel deposed, in very similar statements, that the receipt of the Written Agreement and invoice template caused them to realise that they were not working for Spotless. Mr Lamsal noted that the Written Agreement and invoice templates referred to iGuard and ProClean. Mr Gnanasothy said he “realised [he] was working for ‘ProClean’ and not for Spotless” once he received the Written Agreement and invoice template on or about 26 February 2018, although in his affidavit he also stated that he did not understand the difference between ProClean and iGuard. Mr Sembakutti said that he realised he was working for ProClean, not Spotless, though he had also heard other cleaners refer to “iguard”, but did not ask questions. Mr Poudel said he understood that he was working for ProClean once he received the Written Agreement and invoice template. According to Mr Khanal, he and other cleaners asked Mr Lamsal and Mr Pokharel about “iGuard” and “ProClean”, and were told by them that “iGuard is like a subsidiary company to Spotless and Spotless is the parent company”, and that they were Spotless employees.

145    Their cross-examination amplified these contradictions. Mr Lamsal stated that he knew that he and the other cleaners “worked for the iGuard or ProClean” after he signed the Written Agreement, but under cross-examination acknowledged that he had not read the Written Agreement before signing it. He also stated that he and the other Workers represented themselves as Spotless workers to Downer employees “until the real Spotless took over”, referring to the period around April 2019 during which Spotless entered into agreements with the cleaners at the AMC. Mr Lamsal claimed that he initially thought he was engaged by Spotless because when he first met Mr Chambers, Mr Chambers had told him, “We are Spotless and we’re taking over the other”. He stated, under cross-examination, “[e]ven I don’t know now, either I to call myself as iGuard, ProClean or the Spotless”. Mr Gnanasothy stated that he “got to know about ProClean” after receiving the Written Agreement, and understood Mr Chambers and Mr Simpson to belong “to iGuard, as well as for ProClean”. Mr Sembakutti stated that there were rumours that “we are working for the Spotless”, but understood that “that’s not Spotless” upon receipt of the Written Agreement and invoice template because “he has mentioned the ProClean in there and iGuard”.

146    Mr Poudel was cross-examined about a “Third Party Contractor Employee Checklist” signed by him as the employee on 30 October 2018, and by Mr Lamsal on 31 October 2018 as the Employer Representative, which noted the employer as “Spotless”. It was printed on Downer’s letterhead and contained the following preamble:

Prior to commencement of work on or at a Downer site, all third party contractors must submit all documentation as requested below before commencement. Failure to do so will result in being refused entry to the site. All documentation must be emailed to your site contact 7 days before intended entry to the facility.

147    The document contained the following declaration:

I declare that all information provided in this application and in documents submitted is true and correct. I understand that I will be the employee attending the site and will not be passing my induction card or any other id [sic] to other individuals for site access.

148    Mr Poudel accepted that he did not tell Downer, after receiving the Written Agreement, that he had discovered that he was not a Spotless employee. He denied that he had failed to correct the record because he thought he “worked for Spotless the whole time”, explaining that he forgot about the document. He also said that he understood that “ProClean is a subcontractor of Spotless”. In re-examination, he stated that “Downer people” helped complete the form. He explained that, on the basis of a message from Mr Simpson in the Auburn Cleaning WhatsApp Group dated 25 February 2019 to the effect that cleaners were not to give information to anyone about “your contract, pay or systems” as they had “all signed a confidentially [sic] agreement”, he and the other cleaners did not talk to anyone as they were fearful about their jobs. I find that explanation unpersuasive. Whatever may have been the motivation for sending that message (and noting that Mr Chambers said that Mr Tait and Ms Croft directed Mr Simpson to send it, so that its lawyers could “deal with” the Ombudsman’s investigation into Spotless and iGuard), the gap in time between the signing of the Third Party Contractor Employee Checklist, and Mr Simpson’s message, means that it does not provide a basis for Mr Poudel failing to communicate that he was not a Spotless employee, if that was indeed the case, given that he received the Written Agreement on 26 November 2018.

149    Mr McKechnie, the Ombudsman’s counsel, made much of two letters of 21 June 2019 and 31 July 2019 from Employsure Law to the Ombudsman, during Mr Chambers’ cross-examination. They do not displace this conclusion. The first of those letters, dated 21 June 2019, sent by Employsure, on behalf of iGuard, to the Ombudsman, contained the following paragraphs:

6. We are instructed by our client that:

6.1     Spotless Facility Services Pty Ltd (Spotless) and iGuard negotiated a verbal contract for cleaning services in or around February 2018 (Spotless Contract). The Spotless representative was David Tait (Mr Tait), State Manager NSW Qld ACT, Security, Cleaning & Soft Services – Hospitality & FM Sector.

6.2     The Spotless Contract involved iGuard introducing ProClean HQ Pty Ltd (ProClean) to Spotless and subcontracting the cleaning services under the Spotless Contract to ProClean.

6.3     Mr Tait instructed iGuard and ProClean:

(a)     what rates Spotless would pay iGuard under the Spotless Contract;

(b)     to engage the current cleaners at the Auburn Stabling Yard who had worked under the previous contractor; and

(c)     Spotless would supply the cleaners their work uniforms and cleaning equipment.

6.4     iGuard and ProClean reached a verbal agreement to equally share the net profit from the Spotless Contract.

6.5     On 11 April 2019, Spotless terminated the Spotless Contract effective 12 April 2019.

    (Original emphasis.)

150    The second of those letters, dated 31 July 2019, sent by Employsure, on behalf of ProClean, to the Ombudsman, was unsigned and contained the following paragraphs:

4. We are instructed by our client that:

4.1     Spotless Facility Services Pty Ltd (Spotless) and iGuard Australia Pty Ltd (iGuard) negotiated a verbal agreement for cleaning services in or around February 2018 (Spotless Contract).

4.2     As part of the Spotless Contract, iGuard managed the cleaning services provided by Spotless’ existing contractor cleaners (cleaners) engaged by Spotless to perform cleaning services at the Auburn Maintenance Facility/Stabling Yard (Auburn site).

4.3     iGuard involved the Company in the management of the cleaning services including payment of the cleaners’ invoices under the Spotless Contract. This did not involve the cleaners being engaged by the Company.

4.4     The Company processed the cleaners’ invoices and invoiced iGuard for the payments made to the cleaners.

4.5     The Company and iGuard agreed to equally share the net profits from the Spotless Contract.

4.6     Spotless provided direction to iGuard and the Company on how it required to manage its cleaners working in the Auburn site. This included:

(a)     the rates the cleaners would be paid;

(b)     how the cleaners would perform their cleaning duties;

(c)     dictating the number of cleaners, their rosters and hours of work; and

(d)     requiring the cleaners wear Spotless uniform and use Spotless equipment and comply with Spotless protocols.

4.7     On 12 April 2019 Spotless terminated its contract with iGuard. iGuard subsequently discontinued the Company's involvement.

(Original emphasis.)

151    Mr Chambers’ evidence about these letters was that the agreement to divide profits equally was to be with ProClean “[i]n the very first conversation” (with Mr Shannon), but once he met Mr Tait, he was hired as a Spotless representative. He stated further that it was never agreed that iGuard would subcontract cleaning services to ProClean, though it said so in the letter of 21 June 2019 (sent on behalf of iGuard). While the letter of 31 July 2019 (sent on behalf of ProClean) stated that iGuard and ProClean (as opposed to Mr Chambers) agreed to equally share the profits of the agreement between Spotless and iGuard, Mr Chambers acknowledged that he had given “most” of the instructions for the preparation of the letter but stated that it only related to ProClean, because Mr Chambers personally was not being investigated at the time of the letter. He said that, as a consequence of the Ombudsman’s investigation being against ProClean, he did not take it seriously, and Employsure was taking instructions from the perspective of ProClean only. Ultimately Mr Chambers said that he did not know why a reference to an agreement between iGuard and ProClean had been inserted.

152    In my view, the Ombudsman somewhat overstated the significance of these letters. It may be accepted that to some degree, the letter of 31 July 2019 indicates an inconsistency with Mr Chambers’ account that the agreement to divide profits equally was between Mr Shannon and him personally, because Mr Chambers gave the instructions that formed the basis of that letter. However, on the other hand, this appears to be the first overt reference to ProClean in the context of the unfolding investigation, suggesting that the narrative that ProClean was the entity engaging the cleaners was at this time also emerging. In the absence of that narrative, it would be odd for Mr Chambers to refer to ProClean in that letter given that, on the Ombudsman’s case, iGuard was prohibited from subcontracting, and therefore ProClean’s involvement could not be known.

153    At its highest, Mr Chambers’ explanation in cross-examination is that in giving instructions to Employsure, he did not distinguish between himself and ProClean, as his personal involvement was not material in the absence of an investigation against him personally. Had he been under an investigation, he might have sought to distinguish which entity had taken the relevant action. As already noted, Mr Chambers displayed a lack of awareness and a general confusion as to the legal niceties surrounding the work undertaken at the AMC. That lack of sophistication goes some way to explaining why a reference to ProClean appears in the letter of 31 July 2019.

154    In any event, the Ombudsman’s submission that the version of events to be believed is that given in the letter of 21 June 2019, being “the one that [iGuard’s] lawyers told the Ombudsman”, should not be accepted. At best, the letters can only be evidence of the instructions received, not that the instructions were true. Further, if I am to accept the truth of their contents, it was not explained to me why I should accept the truth of this letter as to the agreement between Spotless and iGuard to share profits, yet not have regard to the portion of the letter of 31 July 2019 which referred to ProClean’s involvement in paying invoices and expressly stated that it did not engage the cleaners.

155    Several other pieces of evidence, which post-date the 15 February 2018 Meeting, point towards Spotless being the entity which recruited the Workers. As will be set out further below, Mr Lamsal exercised significant managerial control over the cleaners at the AMC, which is demonstrated through WhatsApp messages as well as the weight of the sworn evidence. Several factors pointed to Mr Lamsal having been recruited by Spotless. First, Mr Lamsal represented to Downer itself that he worked for Spotless. For example, when taken to the Third Party Contractor Employee Checklist referred to at [146] – [147], which he described as “the tickets we sent to the Downer”, he acknowledged that he signed them as the employer representative and, when asked whether that meant as “a representative of Spotless”, answered: “Yes, it’s Spotless. Always Spotless”. That checklist was representative of several others he submitted to Downer.

156    Second, Mr Lamsal represented to the cleaners that he, and the cleaners, were part of Spotless. In cross-examination, his evidence about WhatsApp messages in which he represented himself as Spotless management was that he was “just like the other cleaners” and was simply passing on Mr Chambers’ message. However, in re-examination, he stated that he represented himself as Spotless because Mr Chambers told the cleaners to do so, as only Spotless people were allowed to access the AMC. There are several messages in the Auburn Cleaning WhatsApp Group in which Mr Lamsal, either as a follow-on from a message of Mr Chambers, or individually, indicated that the cleaners would enter or access the AMC as Spotless staff. Cleaners with site access issues were to email the spotlessamc@gmail.com email address, to which he had access. Further, there are multiple messages from Mr Lamsal in the Auburn Cleaning WhatsApp Group in which Spotless terminology is used. For example, this included saying “Hello and welcome to the Spotless family”, and referring to himself as “We, Spotless management team”. His explanations for this were variously that he had spoken with Mr Chambers prior to sending the messages, that he was simply providing a formatting example to the cleaners to request site access, or that everyone “always represent ourselves as Spotless”, and that the team leaders and supervisors were called a “management team”.

157    Third, Mr Lamsal represented to Spotless and Downer that he was part of Spotless, and there is no indication that Spotless or Downer took issue with this. He acknowledged in cross-examination that he used the spotlessamc@gmail.com email address to email Mr Stafford or the MDMs and to represent himself as a representative of Spotless. That included an email to Mr Stafford, copying Mr Chambers, Mr Pokharel and Mr Simpson, dated 17 December 2018, in which he referred to himself as “We, spotless management team”. As Mr Simpson submits, in circumstances where Downer was a majority shareholder of Spotless, it defies logic that Mr Lamsal would represent himself as Spotless management to Downer if that were not the case.

158    Taking these messages together, Mr Lamsal’s explanations are not persuasive, and the better inference is that Mr Lamsal was, or thought that he was, a representative of Spotless. In particular, the representations to Spotless and Downer, which do not appear to have been contradicted by either Spotless or Downer, are especially significant because they show that Mr Lamsal felt at liberty to represent himself as Spotless management. They therefore permit a strong inference that he was acting in this capacity, as opposed to acting at the direction of a representative of ProClean.

Who paid the Workers?

159    As to who paid the wages, the key documentary evidence includes the Written Agreement the cleaners were asked to complete shortly after starting work. The agreement is set out in full at [12]. From it the following of particular relevance emerges:

LEGAL AND COMMON:

The Company, ProClean HQ Pty Ltd, (the company) acting for iGuard and Spotless agrees to pay to the contractor for the satisfactory performance of the contractor’s work in accordance with the following terms and conditions

…

SCHEDULE OF PAYMENTS:

Contractor must invoice the Company agreed sum at the completion of work period completed.

TIME AND Scheduling WORK:

Contractor shall commence work as per companies / site requirements. Working days are defined as Monday through Sunday inclusive, holidays included unless notified by the contractor. Scheduling of work, as provided for in this Contract, is based on acceptable industry standards. The above contractor is responsible for all labour provided to complete the works.

…

(Original emphasis.)

160    The Ombudsman referred to the “LEGAL AND COMMON” clause of the Written Agreement as evidence in support of ProClean engaging the Workers. That appeared to be a submission that this clause related to engagement, as opposed to being confined to payment. In light of the evidence as to how the Written Agreement came about, discussed below, the better view is that this clause related to payment only, and provided that ProClean would pay the Workers on behalf of iGuard and Spotless. That view accords with the words “acting for”, when construed according to their plain meaning and against the background of Mr Chambers’ lack of awareness of the legal niceties of contractual drafting and the principles of agency. It also accords with the overall affidavit and documentary evidence suggesting that Spotless delayed in making payments to iGuard.

161    Mr Chambers’ evidence as to how this agreement came about includes that he had discussions with Mr Shannon and Ms Blinkhorn wherein he was told that there was a delay in payment from Spotless to iGuard, leading to cashflow difficulties for iGuard, and as a result agreed with Mr Shannon that ProClean would pay the cleaners. Mr Chambers’ evidence was that the arrangement was meant to be temporary but that iGuard never “caught up” with the payments. Nonetheless, he says that “the whole time, Spotless was in control of these guys”. He maintains that Mr Simpson was not involved in the arrangement, though he cannot remember whether he, or Mr Simpson at his direction, made payments. Mr Chambers also said that he was worried that if ProClean stopped paying, the cleaners would stop working, iGuard would lose the contract and ProClean would lose the money owed to it. He prepared the Written Agreement as a protection for him to record what was happening, and created the iGuard Payroll Email Address to record the payments made and recover money if he was fired. Mr Chambers asserts that that is why the Written Agreement is expressed as ProClean acting for iGuard and Spotless.

162    Mr McKechnie urged that Mr Chambers’ drafting of the Written Agreement was to avoid iGuard or Spotless being in breach of the written contract between Spotless and iGuard (Spotless-iGuard Contract, discussed more fulsomely at [213] – [220]) which prohibits subcontracting without Spotless’ consent. Mr Chambers denied this, stating that it may have been put together incorrectly because he was not a lawyer. Mr McKechnie’s suggestion is untenable in circumstances where, as will be seen below, Spotless was heavily involved in the running of the operations at the AMC, such that if ProClean needed to be present at the AMC or was to receive the subcontract for cleaning services from iGuard, Spotless could have given its consent to permit this. Alternatively, as will also be seen below, there is evidence that Spotless acknowledged it was not paying iGuard on time, and was therefore at least implicitly aware of ProClean’s involvement in making payments.

163    Mr Chambers’ further evidence was that he provided the Written Agreement to the cleaners shortly after the work had commenced together with the invoice template. According to Mr Chambers and the Workers they were asked to provide a copy of the Written Agreement to the iGuard Payroll Email Address. As to who had access to the email address, Mr Chambers stated that among others, he and iGuard accessed it. According to Mr Chambers, Mr Simpson only accessed the email address occasionally, when asked to help out by Mr Chambers. Mr Chambers said that emails sent from this address and any WhatsApp messages sent by Mr Simpson, were often sent in order to create distance between Mr Chambers and the cleaners. He stated, “I [would] use [Mr Simpson] sometimes to represent himself instead of me”. In general, Mr Chambers stated that any emails or WhatsApp messages sent or payments made by Mr Simpson were at his direction.

164    That evidence was broadly consistent with Mr Simpson’s evidence, who could not recall having created the iGuard Payroll Email Address or sending out the Written Agreement (though he accepted he could have sent some emails containing the Written Agreement on Mr Chambers’ instructions), and further denied that any email from that address was necessarily sent by him, or that the address being in his name reflected his custody of invoices and payments. He stated that generally emails or messages sent, his signing of at least four rosters, the drawing of ProClean’s invoices to iGuard, and any transfers of payment made, were at Mr Chambers’ direction. As to some of the WhatsApp messages sent by Mr Simpson, including messages that people “message me directly” in relation to payroll timing and invoicing issues, his evidence was generally that Mr Chambers asked him to send them to “take the heat off Mr Chambers” in relation to questions about pay. Other messages from Mr Lamsal directed the cleaners to email Mr Simpson in relation to pay queries.

165    Mr Chambers also stated that he was required to send details of the hours worked by the workers to both iGuard and Spotless, which processed the hours and emailed Mr Chambers the amounts to pay the cleaners. According to Mr Simpson, they could not be paid until approval had been received from Mr Tait. The Workers sent completed invoice templates to the iGuard Payroll Email Address. Ongoing changes to invoicing and payment arrangements were communicated by Mr Chambers and Mr Simpson. Initially, Mr Chambers entered his name into timesheets with the cleaners, but was later told by Mr Tait to complete iGuard timesheets, and iGuard would pay him directly. However, he accepted that iGuard would pay ProClean, and he would draw money from ProClean’s account as part of his wage. Mr Chambers maintained under cross-examination that while Spotless never paid him, it employed him. In support of this, he noted that he represented himself as Spotless to Spotless and Downer, and that doing so “has to mean something”.

166    Mr Chambers at one point denied that he or Mr Lamsal checked timesheets to ensure they matched hours contained in invoices, whilst accepting that photos of timesheets were sent to maintain records. His assertion that timesheets went to iGuard payroll was supported by his correct recollection of the person checking the invoices as “Harry”, who was identified in the Spotless-iGuard Contract as iGuard’s contact for remittance advice. I do note however, that Mr Chambers later conceded that he checked timesheets and made payments.

167    Mr Simpson provided similar evidence as to his understanding of how ProClean came to be involved in the payments to the cleaners. His understanding was largely based on his communications with Mr Chambers between 15 and 23 February 2018. He accepted in cross-examination that the decision to enter this arrangement was not his “call to make”, and that he was not involved in it. However, he accepted that he lent ProClean $50,000.00 on 28 February 2018 to assist it to pay the cleaners when it became plain that they would not be paid on time by Spotless, though he denied knowing that the arrangement would become long-term. Mr Simpson also denied knowing that iGuard could not subcontract. I accept that Mr Simpson was unaware that the arrangement would become long-term, or that iGuard could not subcontract the services to be provided under the Spotless-iGuard Contract.

168    Mr Simpson’s evidence as to the payroll process also broadly aligned with Mr Chambers’ evidence. He stated that one of Mr Chambers, one of the Customer Service Managers (who were employed variously by Spotless and iGuard) or a site manager would complete a timesheet to be emailed to iGuard for cross-referencing against the rosters. After cross-referencing was completed, Mr Chambers would receive a spreadsheet containing the cleaners’ hours and the amounts to pay them. ProClean would not check that the amounts totalled by iGuard were correct. The spreadsheet would also include a lump sum representing ProClean’s portion of the “50/50 fee” for its cleaning consulting. (I interpose to note that Mr Simpson’s evidence about the spreadsheet including ProClean’s portion of the “50/50 fee” was not consistent with Mr Chambers’ evidence that the agreement to equally divide the profits of iGuard’s contract was between him and Mr Shannon, though I accept, as already noted, that Mr Chambers did not appreciate legal niceties and struggled to distinguish between ProClean and himself.) Mr Simpson’s evidence as to the process for completing timesheets was consistent with Mr Chambers’ earlier version that he did not check timesheets.

169    Mr Simpson further deposed that Mr Chambers would prepare a ProClean invoice with the total amount from the spreadsheet and send it to iGuard. iGuard would then invoice Spotless, and once Spotless made payment, would reimburse ProClean. The truth of these arrangements was bolstered in Mr Simpson’s re-examination when he was taken to an email from Mr Shannon to Mr Shumack of 4 March 2019 which refers to payment delays in the following terms:

Please see the roster attached for our last 2 pay periods which the last fortnight are due to pay this week.

We understand that we are on 30 day behind which all contractors wear which is perfect. Our problem arises when we don’t get paid in a week and sometimes stretches to a fortnight. Your accounts team do a great job catching up on payment with a larger lump sum but our weekly pay is approximately 45k to 55k and it’s a strain to carry that when we missed.

Our team are being paid over the award Mon-Fri and on the award on Saturdays. As from this next pay period we will be paying on the award on Sundays.

Our staff and management have worked tirelessly to bring the best results and to lower the monthly abatements for this past year. If there are anything we can do more efficiently for Spotless and Downer, we will take all advice and fix up any problems.

(Emphasis added.)

170    He confirmed that this appeared to be a reference to the spreadsheet “used to pay lump sums”, provided by “Harry”, who Mr Simpson confirmed, when put to him, was Mr Greenwood. The above email also lends support to the fact that Spotless impliedly acknowledged that there was a delay in its payments to iGuard.

171    Mr Simpson’s evidence is that he sometimes transferred payments when asked by Mr Chambers, helped to draw invoices to iGuard, and accessed ProClean’s account to transfer money as a “ProClean representative”. In 2018 and 2019, he was paid the same wage as Mr Chambers. However, he denied being involved in managing ProClean’s finances.

172    Other relevant documentary evidence includes the emails from Mr Shannon to Mr Shumack on respectively 28 February and 6 March 2019 in which Mr Shannon referred to “our staff” and stated that “We have allowed for all ACL’s Super, Workers Comp, and Payroll tax and leave entitlements for all our employees”, and that one of the “biggest issues” was the “infrequent payments that we receive from Spotless” leading to “a strain on the business to ensure our staff are paid on time”. There are also emails from Mr Shumack dated 11 and 26 March 2019, which refer to issues with iGuard’s compliance and Spotless’ investigations into potential sham contracting and underpayments by iGuard. A letter from Mr Shannon to Mr Shumack sent on 28 March 2019 indicated that iGuard was,

… now 100% focused in insuring [sic] compliance of employment status and acknowledge there is back pay owing to staff by way of super and or overtime. We have engaged Employee Sure to advise on a number of items related to employment status.

173    According to this letter, iGuard was also focused on determining (1) the cleaners’ employment status, (2) whether the cleaners were full-time, part time, casual, or ABN contractors. iGuard had over $80,000.00 to pay, once determined, any superannuation, overtime or other payments to be compliant. The covering email requested time to “put in place and confirm correct procedures”.

174    The Workers’ evidence is broadly that they received the Written Agreements and invoice templates from the iGuard Payroll Email Address, to which they submitted the completed invoices. Changes to the format of invoices was communicated through the iGuard Payroll Email Address. That evidence supported the Ombudsman’s submission that the Workers submitted invoices for their work, which in turn was said to support a submission that ProClean engaged with Workers.

175    On the basis of the above and in the context of the question as to which entity paid the workers, I conclude that ProClean paid the workers on behalf of iGuard. iGuard in turn reimbursed ProClean after being paid by Spotless. That conclusion is not inconsistent with the Ombudsman directing me to Mr Chambers’ statement to Ms Higgins (a FWI), that “Spotless was paying iGuard and then iGuard paid” ProClean. Further, I also accept Mr Chambers’ version of the events that the cleaners could not be paid until Mr Tait gave the approval. Such a finding is consistent with the fact that Spotless would have known of the relevant payment arrangements between iGuard and ProClean based on the email set out at [169] above. On the basis of the above email, the contents of which do not appear on the evidence to have been contradicted by Spotless, Spotless was aware that it was late in paying iGuard. Further, as will be seen, Spotless was heavily involved in the cleaning operations at the AMC, including as to the performance and timing of the cleaning work. That it was in control of when the cleaners would be paid is consistent with that arrangement, and consistent with the fact that iGuard’s lateness in paying the cleaners necessitated ProClean stepping in and assuming the function of paying the cleaners.

Who exercised managerial responsibility?

176    The evidence as to who held managerial responsibility favours Spotless having the primary role in that regard. The emails referred to at [114] – [124] above show that Spotless undertook the bulk of the recruitment and rostering of the cleaners. Spotless recruited and onboarded Mr Chambers. It supplied cleaning products and uniforms and required the cleaners to wear Spotless uniforms. In the email of 2 February 2018 Spotless introduced Mr Chambers to Downer as the “fairly new … Cleaning Supervisor” and stated that “we are still in the process of setting up his profile (email address etc)”. Spotless set the pay rates and hours of work, as referred to in the letters from Employsure dated 21 June and 31 July 2019 (above at [149] – [150]) and Mr Tait’s email of 5 February 2018 to Mr Shannon and Mr Chambers (above at [129]), and required the workers to comply with Spotless protocols.

177    The evidence summarised above at [155] – [158] also supports the conclusion that Spotless had the primary managerial responsibility, which Mr Lamsal exercised in respect of the cleaners. Further evidence confirming the role taken by Spotless is contained in the correspondence of Employsure sent on behalf of both iGuard and ProClean, referring in particular to Mr Tait, and Spotless more generally, giving instructions (above at [149] – [150]).

178    An email from Mr Shannon of 27 July 2023 contained the following:

Spotless contacted iGuard Australia to provide security and eventually cleaning to their site at Aubum Train depot.

I introduced Tim C. to Spotless management David Tait to talk about providing cleaners to the depot. After hearing what they required, Tim , Dave and myself talked about how much staff would be required and how the rosters would be set up. We met with Debra and Ross from Downer to be inducted to the site as Spotless Representatives. We received all the Operating procedures and manuals from Downer/Spotless. Craig was not involved in this process at all. I believe he had only been onsite once during an induction.

David Tait made it clear that all operational and day to day decisions would be made by spotless. Both Tim and Luther would be spotless employees.

Spotless gave out all the rosters, uniforms, and equipment to the staff/cleaners. They controlled all aspects of the job. David Tait made it clear all staff were spotless employees and they had enough staff from the incumbent contractor. We had placed and advert for staff but pulled it when we found out we were not hiring of firing the staff....

…

(Emphasis added, errors in original.)

179    Further, the email from Mr Shannon to Mr Shumack, extracted at [169], where Mr Shannon asks if “there [is] anything we can do more efficiently for Spotless and Downer” reinforces the latter entities’ ongoing control and oversight over the activities at the AMC.

180    Mr Lamsal, Mr Gnanasothy and Mr Sembakutti’s evidence is broadly consistent, namely that while Mr Chambers attended the AMC more frequently at the start of the Work Period, he later attended intermittently. Initially, on Mr Lamsal’s evidence, both he and Mr Chambers would join the auditors, but later on Mr Chambers only attended the “pizza party celebrations after a good audit or if he needed to speak to the workers”. Mr Gnanasothy and Mr Sembakutti’s evidence is broadly to the same effect. Mr Sembakutti generally spoke to Mr Lamsal or team leaders rather than directly to Mr Chambers. Mr Gnanasothy’s evidence that at one pizza party Mr Chambers had bought the pizza was impugned in cross-examination following his concession that he did not know who had actually purchased the pizza, and was unsure whether Mr Tait had done so. His recollection was imperfect in that he was unfamiliar with the names of the pizza party attendees, and was unable to say whether Mr Tait “opened” the pizza parties.

181    That evidence is consistent with messages sent on 5 and 6 March 2018 about an audit-related pizza party, as follows:

[Mr Chambers:]

Hi guys I just landed from Melbourne

WE WILL HAVE PIZZA PARTY TOMORROW NIGHT😊😊

I will try and have pizza there around 9pm

Keep up good work 😊😊😊😊😊😊😊😊😊

…

[Mr Lamsal:]

That was surprised [sic] audit, lucky that Ross was there to notify us at least an hour ahead.

[Mr Chambers:]

EVERYONE MAJOR AND DAILY COME IN 930PM FOR PIZZA 😊😊😊😊😊

Its from Me[,] Craig [Simpson,] Chris[,] Luther [Shannon] and Sandesh [Lamsal] its for thanks for your hard work and 100 percent on Audit

182    Mr Chambers’ evidence was that Mr Tait bought the pizza.

183    The evidence regarding Mr Simpson’s attendance at the AMC was scant, and on balance told against him regularly attending. The Workers’ evidence in this regard was inconsistent. Mr Lamsal accepted that Mr Simpson only attended the AMC three or four times. Mr Gnanasothy’s evidence, however, was that most of the time that Mr Chambers attended the AMC, he was with Mr Simpson. Mr Sembakutti’s evidence about seeing Mr Simpson was uncertain and contradictory, and in any event at its highest only placed Mr Simpson at the AMC at most, three times.

184    There is also evidence referring to Downer’s allocation and oversight of the work including providing train schedules from the MDMs’ work orders without which cleaning could not take place.

185    Mr Poudel’s evidence ultimately indicated that Downer and Spotless exercised direct oversight at the AMC. He deposed that he would report to site managers, but under cross-examination, identified these not as Mr Pokharel or Mr Lamsal, but as “the Downer – MDM”, to whom he would go for help, on the basis that he needed to communicate about train movements. His affidavit evidence that there was nobody between site managers and Mr Chambers and Mr Simpson was undermined by his concession under cross-examination that he had no direct knowledge of this. He deposed that he only saw Mr Chambers “a couple of times”, and did not see him often. When he attended the AMC, Mr Chambers would “talk to Downer people”, Mr Pokharel and Mr Lamsal, but not the cleaners or team leaders. His belief that Mr Chambers “looked after the workers” was based only on Mr Pokharel informing him that he did.

186    Mr Chambers’ evidence was somewhat convoluted, though it tended to favour directions coming from Downer or Spotless, which he would pass to the cleaners. His evidence was that his role was to supervise the cleaners, with persons such as Mr Pokharel and Mr Lamsal under him. He said that he received instructions which he would give to the “supervisors that were hired by Spotless”. He later said that cleaners “followed my instructions. They follow Spotless. They follow the head of Spotless decision. They follow MDM decision. They follow Downer’s Whenever they were on the site, you follow decisions of the supervisor who was there.”.

187    Mr Simpson’s evidence was that he attended the AMC only a few times. His visits of 10 April 2018 and 14 March 2019, where he accompanied Mr Chambers, were the subject of fairly lengthy affidavit evidence, and were each supported by photos of a Spotless shirt with a visitor sticker attached. The sticker for the 10 April 2018 entry contained Downer’s logo and the word “ROSS” underneath the name “Craig Simpson”, and Mr Simpson deposed that the security guard had called Mr Stafford to authorise entry. The sticker for the 14 March 2019 entry contained Downer’s logo, the name “Craig Simpson”, the word “IGUARD” underneath, and the word “Visiting”, below which was “Ross Stafford”. Mr Simpson’s evidence was that he put on a Spotless shirt to avoid “sticking out” and because ProClean was not allowed on-site, and denied that he was visiting the AMC because it was part of ProClean’s business. Mr Simpson did not recall the purpose of these visits. Mr Simpson also gave evidence of his attendance at a Spotless pizza party at the AMC following a successful cleaning audit, where Mr Tait purchased the pizza.

188    Mr McKechnie urged, in Mr Chambers’ cross-examination, that Mr Simpson wearing a Spotless uniform on these occasions demonstrated that he was pretending to be a Spotless representative, and that Mr Chambers was at pains to “ensure that ProClean wasn’t mentioned on site”. Mr Chambers denied this, noting that Mr Stafford escorted Mr Simpson into the AMC and that a high-visibility vest was required to enter the site.

189    I am not persuaded that Mr Simpson changing from a ProClean shirt to a Spotless vest shows any attempt to conceal any involvement of ProClean at the AMC. The stickers recording Mr Simpson’s site visits suggest that Mr Stafford, and by extension Downer, was involved at some level in Mr Simpson’s attendance at the AMC on the relevant dates. A finding that Mr Simpson and Mr Chambers were seeking to conceal the fact of ProClean’s involvement and presence at the AMC would require a finding, in respect of these entries, that Mr Stafford was under a false impression that Mr Simpson was connected to or worked for Spotless. I find any suggestion of such a false impression to be implausible in circumstances where Spotless was a subsidiary of Downer, and Downer had had such a preeminent role in setting up the cleaning arrangements at the AMC. Mr Stafford, in particular, was directly involved in setting up these arrangements. The more probable finding is simply that Downer or Spotless controlled access to the AMC and that in this instance, there was no objection to Mr Simpson’s entry to the AMC. A finding that is, in my view, not open, is that Mr Stafford was under a false impression that Mr Simpson was employed by Spotless.

190    Mr Lamsal, Mr Gnanasothy and Mr Sembakutti’s evidence identified Mr Simpson’s role as being with respect to documents, invoices and pay. Mr Lamsal’s characterisation of Mr Simpson’s role as such was based on WhatsApp messages that Mr Simpson sent in the Auburn Cleaning WhatsApp Group and invoicing and pay, referred to above at [163] – [164], as well as directions from Mr Chambers that Mr Lamsal direct queries about invoicing and pay to Mr Simpson. This characterisation was also based on his evidence that Mr Chambers told him that Mr Simpson looked after these matters. Mr Gnanasothy and Mr Sembakutti similarly formed this view on the basis that they would contact Mr Simpson at the iGuard Payroll Email Address in relation to these matters. Their belief that they specifically contacted Mr Simpson appeared to be based in part on the fact that the account name displayed on the iGuard Payroll Email Address was “Craig Simpson”. That evidence was broadly consistent with Mr Simpson’s own evidence that he sometimes transferred payments and helped to draw invoices at Mr Chambers’ request (see at [171]). As noted above, I find it implausible that Mr Simpson had no active role in the payroll or invoicing process. However, that does not detract from his role being administrative and confined to the payroll and invoicing.

191    I accept that he lent money to ProClean to pay the cleaners, and from time to time assisted with certain functions to do with responding to pay enquiries and paying the workers. However, like much of the other evidence, it is not clear in what capacity he undertook those tasks. It should be noted that Mr Chambers, against his own interests, was unequivocal in stating that Mr Simpson only undertook specific tasks at his express request.

192    Taking all of the above evidence into account, I conclude that Spotless had the greatest managerial responsibility. The Ombudsman’s submission that the messages sent by Mr Chambers and Mr Simpson in the Auburn Cleaning WhatsApp Group supported that ProClean was in charge of and communicated with the cleaners, does not detract from this finding, as the balance of the evidence points to directions being received from Spotless.

193    To the extent that the Ombudsman relied on an email of 6 January 2019, which Mr Khanal deposed to as having been “from Mr Simpson” and which would “only be seen by Tim and Craig”, seeking feedback on improving the cleaning service, it might be accepted that this was sent by Mr Chambers or Mr Simpson from the iGuard Payroll Email Address. However, the mere fact of Mr Chambers or Mr Simpson (by hypothesis) seeking feedback does not detract from the above evidence that Spotless was exercising managerial oversight at the AMC. In a similar vein, the fact that Mr Simpson at times facilitated payments to the cleaners and prepared invoices (see above at [171]) does not detract from the fact of Spotless exercising managerial oversight at the AMC.

Who had the power to direct and control the performance of the cleaning work?

194    Spotless, through Mr Tait, Mr Blogg and Mr Katsik and other Spotless personnel had the power to direct the work. Spotless also controlled access to the site. Similarly, Downer had control over the performance of the work through the MDMs, production of work orders and scheduling.

195    Downer also supplied the bulk of the cleaning chemicals at the AMC. Mr Lamsal and Mr Sembakutti’s affidavit evidence confirmed as much. Mr Lamsal’s evidence was that if further supplies were needed, he would message Mr Chambers who would arrange delivery. Downer’s involvement was, however, demonstrated by a message from Mr Lamsal on 16 March 2018 to the Auburn Cleaning WhatsApp Group which was a forward of Mr Stafford’s message, and stated:

Dear all,

I have spoken to the supplier and they have changed the product, but it has been tested and is better for the user.

Please try diluting it a bit more as per the attached MSDS. Any further issues please let me know.

Regards,

Ross Stafford

Presentation Delivery Manager – NSW Passenger Fleets Rail

196    Mr Lamsal’s explanation was that Downer had changed the chemical, the cleaners were unhappy with it, and Mr Stafford was asking them to “give [it] a go for some day”. Mr Lamsal and Mr Sembakutti’s accounts differed as to how much of the equipment Mr Chambers arranged to be supplied. Further, Mr Sembakutti acknowledged under cross-examination that he was unsure whether Mr Simpson was involved in ordering, and that there were “another two people over there, but I don’t remember the name”, indicating that his recollection of who ordered the equipment was poor. Mr Chambers’ evidence was that on occasions he used a Spotless credit card, or sometimes his own money which was reimbursed, to replenish the cleaning equipment at the AMC, though Downer had the primary responsibility for obtaining cleaning equipment. His evidence was that the purchases he arranged were dwarfed by the monthly product orders which Downer arranged. Mr Simpson’s account, based on what Mr Chambers told him, was that Spotless provided the tools and equipment and kept them on-site, requiring them to be signed in and out. If more supplies were needed, Mr Chambers would contact Spotless’ supplier or personally buy smaller items for which he was reimbursed. That evidence was also supported by an email from Clear Choice Products Pty Ltd stating that verbal and written purchase orders were invoiced to “Spotless Berkley Challenge”.

197    On the basis of the message from Mr Stafford extracted above at [195], two invoices which recorded relatively small amounts for supplies, and the evidence of Mr Chambers, the better view is that Downer supplied the bulk of the chemicals and the cleaning supplies. Accordingly, the Ombudsman’s submission that ProClean supplied cleaning equipment, is not accepted, though it is accepted that Mr Chambers organised for ad hoc supplies to be delivered, if needed.

198    Mr Chambers had oversight of the cleanliness of the trains and acted as a liaison between Spotless and the cleaners. However, Mr Lamsal had a similar function but with far more frequent and regular day-to-day contact with the cleaners. He oversaw their work directly, ascertained their availability, rostered their work hours, and oversaw timesheets and work records. Much of the evidence of Mr Chambers’ role derived from messages he sent in the Auburn Cleaning WhatsApp Group. Evidence was led of Mr Chambers’ messages regarding rest breaks, requests for days off, audit results, and various iterations of “good job team”, among others. Others included variations of “we all failed this audit”. His evidence in cross-examination was that his messages in this regard were connected with his responsibility to “get audit fines down”. The fact of Mr Chambers communicating with the cleaners in the Auburn Cleaning WhatsApp Group in relation to such matters, which the Ombudsman points to as indicating that ProClean was “in charge of and communicated with” the cleaners, is not inconsistent with a finding that Mr Chambers acted as an overseer of the cleaners and conduit for Spotless’ instructions.

199    Mr Chambers said that strong directions to cleaners which appeared to be from him, “came from Downer” after his meetings with them. The appearance that these were his directions came from the fact that his job was to deal directly with people (who he said were Spotless), rather than them being “[his] workers”. His evidence was that Downer approached him with such directions because he was Spotless. He gave a similar explanation for why he had congratulated Mr Pokharel on his promotion in the Auburn Cleaning WhatsApp Group.

200    The fact that Mr Chambers was an administrator of the Auburn Cleaning WhatsApp Group, the absence of Mr Tait, Mr Stafford or Mr Shannon, and the fact of most members having “PHQ” designations do not, in my view, render that group a “ProClean group” or establish Mr Chambers’ control over its members.

201    While Mr Lamsal asserted that he acted only upon the instruction of Mr Chambers, as became obvious under cross-examination he had considerable authority in terms of instructing the workers as to how to undertake the work. Both Mr Lamsal’s sworn evidence and the documentary evidence demonstrated that authority. First, many cleaners referred to him as “Site Manager” or “Manager”, and Mr Chambers referred to him as “supervisor”. Second, he deposed that he would sign off Downer Third Party Contractor Employee Checklists for new cleaners and give them to Mr Stafford, would read train schedulers and work orders from Downer MDMs, assign cleaners to tasks, obtain their availability, prepare rosters, meet Sydney Trains auditors, and sign off timesheets.

202    Third, the other Workers’ general evidence regarding the roles of site managers and team leaders was consistent with this. It appeared from that evidence that team leaders, who would allocate work, would in turn receive instructions from site managers, who were one level above team leaders. At one point, Mr Lamsal and Mr Pokharel, as site managers, asked Mr Gnanasothy to become a team leader. On Mr Poudel’s account, site managers would also liaise with Downer, check cleaning work for audits, make rosters and prepare Downer paperwork. On the other Workers’ account, Mr Lamsal and Mr Pokharel appeared integral to preparing and managing rosters at the AMC for the night shift cleaners, consistently with Mr Lamsal’s own sworn evidence and the evidence of messages sent in the Auburn Cleaning WhatsApp Group. It appears that these rosters were based on the cleaning plan worked out by reference to the train schedules.

203    That arrangement is broadly consistent with Mr Chambers’ account that Downer or Spotless would set the man hours and types of cleans for the night shifts and provide them to Mr Chambers, though his evidence went further, naming individual representatives of Downer and Spotless as giving him instructions, as well as sometimes giving them directly to Mr Lamsal and Mr Pokharel. He said that the MDMs controlled the cleaning, and that “Downer operated the facility”. He said that he responded to the MDMs, and did not distinguish conceptually between Downer and Spotless.

204    The extent of Mr Lamsal’s managerial oversight over the cleaners was demonstrated in several strongly worded messages in the Auburn Cleaning WhatsApp Group. In relation to these messages, his general response under cross-examination was that it was Mr Chambers and Mr Simpson’s idea to send them, but he accepted that there was no indication of this. For example, in April 2018, he sent messages ranking cleaners or train carriages based on performance (which he said was by reference to audit reports from Downer), and a message admonishing a cleaner for using his phone on a train. He accepted that in some instances he had put together the rankings himself, that Mr Chambers and Mr Simpson had not asked him to do so for the purpose of removing poor performers, but denied that he was assessing cleaners. On 8 May 2018, he sent the following message which he accepted he had not discussed with Mr Simpson, but said that it was provided on behalf of the respondents given his instruction to reduce audit fines:

Floor looks like not even been moped [sic]. And too many marks around seat legs, on the roof, gangways [sic] is totally fucked up, road tracks. I gave you full 2.5 hours for daily , still the performance is poor.

I asked team leaders to do first and last carriages. They did everything within same time, so why can't you.

I will take all of you again into the same train and you can see the difference between your carriage and team leaders.

Totally disappointed !!

205    On other occasions, he accepted that he was giving feedback in the Auburn Cleaning WhatsApp Group regarding cleaners’ work, but maintained that it was either one or both of the respondents’ idea, or that it came from them.

206    Mr Lamsal’s overarching statement that he acted on Mr Chambers’ instruction following a telephone discussion or communication via message was undermined, inter alia, in cross-examination by the very short gap in time between two messages of 19 March 2018 regarding invoices. In the first message, timestamped 1:02:45pm, his instruction was to carbon copy invoices to spotlessamc@gmail.com, and the second message, timestamped 1:03:22pm, said that “if things don’t get match [sic] we will have look on that individually”. As to whether he had spoken to anyone in the short period between the two messages, he said in cross-examination that he “didn’t spoke [sic] before the first message”.

207    The above evidence contradicts Mr Lamsal’s evidence that his role was to always follow Mr Chambers’ instructions, or that all his instructions to cleaners came from Mr Chambers. Overwhelmingly, the evidence points to Mr Lamsal giving the bulk of instructions to cleaners, and Downer or Spotless personnel being the direct contact points for work at the AMC. For example, Mr Sembakutti says he would write his start and finish times in a document kept in Mr Lamsal’s office, and Mr Lamsal would report to Downer about train cleans. Mr Poudel, after becoming a team leader, said he would oversee cleaning work, report to site managers and speak to “Downer’s duty manager each morning” at the site office. I do not accept Mr Gnanasothy’s evidence, in light of the above, that Mr Lamsal simply stood between the cleaners and Mr Chambers and Mr Simpson, or that he needed their approval for pay increases. Mr Chambers’ evidence that Mr Lamsal took directions from multiple sources, including Mr Tait, the MDMs, Mr Stafford and Mr Chambers, is more plausible, though the evidence points to Downer or Spotless having the primary role in this regard. These contradictions significantly undermine the Ombudsman’s submission that Mr Lamsal worked under the instruction of ProClean, or that the members of the Auburn Cleaning WhatsApp Group were acting under ProClean’s control.

208    It may be accepted that from the evidence led, Mr Chambers and Mr Lamsal had significant roles in the day-to-day operations of the work. On the basis of the discussion contained at [176], I am satisfied that Spotless recruited Mr Chambers. The circumstances surrounding the commencement of work at the AMC (summarised at [114] – [126], [131], [138] – [147]) as well as the particular circumstances of Mr Lamsal’s oversight of cleaning work (summarised at [155] – [158]), support the conclusion that Spotless also recruited Mr Lamsal. As discussed above at [183], the evidence regarding Mr Simpson’s attendance at the AMC was scant and told against him attending regularly at the AMC or indeed having any role in the day-to-day operations of the work.

How did the relationship work in practice?

209    From the evidence before the Court, I consider that the Workers were recruited by way of a process managed and run by Spotless, in conjunction with, and with the approval of, Downer. Spotless also organised onboarding, training, rosters, uniforms and equipment. Spotless and Downer decided the number of workers needed to perform the work and the scheduling thereof. The evidence of the discussions between Spotless and Downer, contained in the emails of January and February 2018 referred to above at [114] – [123] exemplifies how the relationship worked. Those emails read as if Spotless treated Downer as its client, which approved and facilitated Spotless’ proposed course of action in recruiting and onboarding the cleaners. Spotless carried out the groundwork by contacting them and readying Mr Chambers to oversee the work at the AMC. Spotless and Downer also prescribed the operational standards. Mr Chambers was the supervisor and liaison between Spotless and the workers. Mr Lamsal acted as a team leader. The Workers presented themselves as part of the Spotless workforce.

210    At this juncture, I note the inherent implausibility of Spotless, and Downer as a parent company of Spotless, being unaware of, or showing no curiosity regarding, the basis upon which the Workers, Mr Chambers and Mr Simpson were involved at the AMC. As already highlighted, they were significantly involved in recruiting and onboarding, but also had their own staff members present at the AMC (e.g., MDMs). On this basis, it could not be accepted that non-Spotless staff were present at the AMC in Spotless uniforms performing work at the venue when they were not meant to be there, without Spotless’ knowledge. This is exemplified by the instances in which Mr Stafford granted Mr Simpson access to the AMC (see above at [187] – [189]). Either Mr Stafford knew Mr Simpson as part of Spotless, or he knew ProClean to be involved at the AMC.

What do the documents show?

211    In closing submissions the Ombudsman submitted that the Spotless-iGuard Contract was “plainly an arrangement for the provision of cleaning services”, which was inconsistent with the Workers being employed by Spotless, and that cl 8, which prohibited iGuard from subcontracting, was the only plausible basis for the requirement that ProClean “did not exist” and was not allowed at the AMC. She submitted that cl 8 provided the motivation which explained a significant amount of the respondents’ behaviour. I do not find that persuasive for the following reasons.

212    It may be accepted that a contract exists between Downer and Spotless (i.e., the Downer-Spotless Contract) for:

Supply of staff and cleaning equipment for the cleaning requirements of Auburn Maintenance Centre (AMC), Waratah, Millennium and SGT trains at AMC and Auburn Stabling Yard as per the statement of work – Refer to Schedule 1

213    Of more importance is the Spotless-iGuard Contract, entered into on 25 January 2018. The Ombudsman placed much reliance upon the description of work to be performed as security and cleaning, and on the clause prohibiting subcontracting. She asked the Court to conclude from that, that the arrangements entered into by the respondents and iGuard were part of a carefully crafted plan to avoid being seen to be in breach of that clause. The relevant clauses of the Spotless-iGuard Contract are as follows:

…

7. CONTRACTUAL TERMS

LEGAL NOTICE: Each order placed by Spotless for the purchase of Goods/Services from the Supplier [iGuard] will be governed by Spotless Standard Terms of Procurement (as set in para 8 below) and Spotless Standard Payment Terms (as set out in para 4 above) (and any Supplier terms and conditions supplied to Spotless, including as printed on consignment notes or other documents, will be of no legal effect), except if the duly authorised representatives of the parties have executed a legally binding, written contract specifically governing such Goods/Services, in which case the terms of such contract will apply instead of Spotless Standard Terms of Procurement. By signing here, you confirm the Supplier’s agreement to the foregoing.

…

Goods means the goods to be provided by the Supplier to Spotless as set out in the Purchase Order.

…

Purchase Order means any purchase order (whether in electronic or written form) issued by or on behalf of Spotless to the Supplier for the supply of Goods and/or Services by the Supplier and each schedule and document accompanying the Purchase Order.

…

Services means the services or works to be performed by the Supplier, as set out in the Purchase Order and any services necessarily incidental to them.

…

8 Sub-contracting

(a)     The Supplier may not sub-contract any part of the supply of Goods and/or Services without Spotless’ consent, which consent may not be unreasonably withheld.

(b)     Any consent from Spotless to sub-contract any part of the supply of Goods and/or Services does not relieve the Supplier from any of its liabilities or obligations under this Agreement.

(c)     If it subcontracts any part of the supply of Goods and/or Services, the Supplier will ensure that any subcontractors (including any second and third level subcontractors) and their employees comply with all applicable Laws, including but not limited to Laws relating to conditions of employment (including the Fair Work Act and any applicable industrial instruments under the Fair Work Act), visas, and workplace health and safety.

(c)     The Supplier is liable to Spotless for any act or omission, default or negligence of any sub-contractor or any employee or agent of the sub-contractor as if it were the act, omission, default or negligence of the Supplier.

…

11 Insurance

11.1 Supplier’s insurances

(a)     The Supplier must, before commencing supply of the Goods and/or Services, effect and maintain any necessary insurances in relation to the Goods and/or Services (to a minimum coverage as specified in the Supplier Details Form or if no amounts are specified in the Supplier Details Order, in the amounts set out in this clause, including, but not limited to:

(1)     workers’ compensation insurance as required by law;

(2)     public (and product) liability insurance to a minimum cover of $10 million per claim;

(3)     professional indemnity insurance (if required), to a minimum cover of $10 million per claim and to be maintained for a period of 6 years from the cessation of the supply of the Goods and/or Services;

(4)     motor vehicle third party property insurance to a minimum cover of $10 million per claim for all types of motor vehicles and equipment owned or controlled by the Supplier; and

(5)     any other insurances required by law or regarded as sound commercial practice.

(b)     The Supplier must provide evidence of the currency of insurance to Spotless or its agent upon the request of Spotless or Spotless’ agent.

(c)     The Supplier must ensure that any sub-contractor engaged by the Supplier in relation to the Goods and/or Services effects and maintains the insurances in clause (a) above.

(d)     The Supplier must not do anything which may provide grounds for an insurer to refuse payment of a claim made under any policy of insurance, or which may prejudice the interests of Spotless under any policy of insurance.

214    However, I do not accept the submission of the Ombudsman that the Spotless-iGuard Contract was an arrangement for these particular cleaning services, and was entirely inconsistent with the Workers being engaged by Spotless. Nor do I accept that the prohibition on subcontracting is the only plausible basis for the requirement that ProClean “did not exist” or was not allowed at the AMC. This is for the following reasons.

215    The “Business Activities” set out in iGuard’s certificate of insurance, which formed part of the “Documents to Return” to Spotless on signing the Spotless-iGuard Contract, were the following:

Security Services, including supply, installation & maintenance of security systems; mobile patrols; static guarding; alarm response, use of dogs; body guarding; traffic control; monitoring of alarms and crowd control

216    The “Class of Insurance” was “Security Services Liability”.

217    On the basis of those provisions, first, there was no direct evidence advanced from either Spotless or iGuard as to how the cleaning services were provided. Second, iGuard’s insurance documents, annexed to the Spotless-iGuard Contract, make clear that it provides security services and makes no mention of cleaning.

218    Third, while there is a letter from Spotless to Downer of 11 April 2019 advising of Spotless’ termination of iGuard’s contract for the provision of security and cleaning, crucially neither that letter nor one from Spotless to iGuard of the same date, terminating iGuard’s contract for the provision of security and cleaning, mentioned a breach of cl 8 of the Spotless-iGuard Contract.

219    Fourth, as Mr Simpson submitted, the email of 5 February 2018 (above at [129]) from Mr Tait to Mr Shannon, copying Mr Chambers, asking Mr Shannon to “Please supply rates schedule for cleaning services to Spotless for Downer – Sydney Trains project” and the correspondence of iGuard’s lawyers, Employsure, of 17 June 2019 to the Ombudsman, indicate that a verbal contract was entered into between Spotless and iGuard for the provision of cleaning services in about February 2018.

220    In light of the foregoing, I do not accept that the Spotless-iGuard Contract included cleaning services. Rather, to the extent that iGuard was contracted to provide cleaning, it was under an oral contract concluded later in around mid-February 2018.

221    As to the iGuard invoices, the Ombudsman submits that these are consistent with an arrangement whereby iGuard had contracted with ProClean for the provision of services, for which Spotless was paying. However, as will be seen below, that does not of itself support that ProClean was the entity which engaged the workers.

222    The Ombudsman next turned to the contract and contended that “on its face” this was “a document which involves [ProClean] engaging the relevant workers”. The Ombudsman asked the Court to reject the Second Respondent’s explanation for this document, namely that it is an agency agreement, and adopt a particular interpretation of the First Respondent’s concession under cross-examination that the words “acting for” was, in the Ombudsman’s words, “just something he came up with” and “not reflective of any arrangement”. However, while the words “acting for” may be interpreted as being part of a broader fabrication, they are also capable of being interpreted consistently with Mr Chambers’ explanation that the agreement was just something he came up with at short notice to protect himself in the context of paying the workers due to the inability of Spotless to pay in a timely manner.

223    With respect to the WhatsApp messages the Ombudsman submitted that their existence and contents are “consistent only with the workers being engaged by and controlled by” ProClean. This is so, the Ombudsman submitted, because the Auburn Cleaning WhatsApp Group “did not involve anyone from Spotless, Downer or iGuard” and showed that the “day to day operations of the cleaning work was [sic] done under” Mr Chambers’ direct supervision and control (through supervisors such as Mr Lamsal).

224    First, it may be accepted that Mr Chambers was prominent in the WhatsApp messages, but so too was Mr Lamsal. However, as it is not clear, at this stage of the consideration, by which entity they were engaged, that is not determinative. Second, there is no contest that Mr Chambers had a role; what is not clear is in what capacity. On any of the various scenarios advanced by the parties Mr Chambers’ presence in the WhatsApp messages would be expected in circumstances where he is the Cleaning Manager. Third, the messages make it clear that Mr Lamsal is equally if not more prominent than Mr Chambers and often acted independently of Mr Chambers, undermining his evidence that he only acted on Mr Chambers’ instructions. Fourth, in any case, and as I have said earlier, while taken in isolation I accept that the WhatsApp messages reveal some of the activities of Mr Chambers and Mr Lamsal, but they are not the only documentary records of the arrangements at the AMC. Notably, the emails of 29 and 30 January, and 2 February 2018 which reveal the involvement of Spotless and Downer, cannot be ignored.

225    Next, the Ombudsman submitted that the timesheets referring to the Workers by a designation commencing with PHQ, which was also contained in their invoices and at times referenced in the Auburn Cleaning WhatsApp Group, was evidence of the Workers being engaged by ProClean. The Ombudsman made this submission referring to Mr Chambers’ acceptance that PHQ was a reference to ProClean, and to Mr Simpson’s acceptance that he sometimes signed off the timesheets (though at Mr Chambers’ request). The Ombudsman made similar submissions in relation to the invoices. I accept that this militates in favour of ProClean engaging the workers, however, as has already been set out, the evidence as a whole must be considered, to determine what a reasonable person in the position of all the potentially relevant parties would understand as to which entity was party to the contract as the engaging entity: Agrigrain at [34].

WHICH ENTITY ENGAGED THE WORKERS?

The parties’ submissions

The Ombudsman

226    As already discussed, the Ombudsman’s case was that ProClean engaged the Workers. The Ombudsman accepted that it needed to succeed on this point in order to succeed in the proceeding. The Ombudsman advanced her case on the basis that identifying the true employing entity required me to consider the “substance and totality of the relationship” between ProClean and the Workers, which included consideration of post-contractual conduct. However, the approach that I will adopt is the objective contractual approach set out in Agrigrain.

227    The Ombudsman submitted that the contract was partly written, partly oral, and partly varied by conduct. She said that to the extent that it was written, it comprised the Written Agreement. The Written Agreement was “plainly not an entire agreement” because the Workers were not contracted to perform specific tasks or jobs, but were “contracted to provide their labour in whatever manner was required or specified” by ProClean. She rejected a conclusion that the “LEGAL AND COMMON” section established a relationship of agency, because it was not possible for ProClean to be an agent for two principals (i.e. both iGuard and Spotless) on the same subject matter. She said that neither bare assertions of agency nor the use of a label conferred a legal character on a relationship that it does not possess. Rather, it must be shown that one person performed work at another person’s request, for the other person’s benefit. Further, she said that Mr Chambers’ evidence that he added the words “acting for iGuard and Spotless” to be able to recover any money owed told against there actually being an agency relationship.

228    To the extent that the contract was partly oral, it comprised discussions regarding payment being based on a time basis, engaged in by Mr Chambers, Mr Khanal’s brother, Mr Pokharel and Mr Lamsal.

229    To the extent that it was varied by conduct, it was so varied by reason that:

(1)    Notwithstanding the “SOLE AGREEMENT” clause, the Written Agreement contemplated further unstated requirements and therefore left capacity to issue variations, because it provided that “[t]he above named contractor/s agrees to provide the following described labour, materials and construction in accordance with plans and specifications”.

(2)    Such plans and specifications were not contained therein or provided in writing, but ProClean provided instructions and directions to the Workers through the site supervisor and/or team leaders under the respondents’ instructions.

(3)    The Written Agreement provided that “[c]ontractor shall commence work as per companies / site requirements”. The Workers attended the AMC at rostered times, performed work in accordance with site supervisors’ or team leaders’ instructions, who acted under the respondents’ instructions as directors of ProClean.

(4)    The Workers were unable to subcontract, despite the Written Agreement contemplating that they could. They were aware of this requirement and accepted the variation by continuing to work pursuant to that requirement. ProClean accepted the Workers’ work, which can be inferred from it continuing to pay the Workers.

(5)    The Workers were aware of the requirements in (2) – (4) above and accepted them by continuing to work for ProClean. ProClean in turn accepted the Workers’ work.

230    The Ombudsman submits that it was a term of the contracts that (1) the Workers would work the hours according to rosters set by ProClean, (2) ProClean would pay the Workers on an hourly basis, (3) the Workers would at all times follow ProClean’s instructions and directions, and (4) the Workers were not able to subcontract.

231    In closing submissions, the Ombudsman urged that while the Workers’ understanding of the engaging entity was a factor in identifying the engaging entity, it was not determinative. She urged me to accept that any confusion was either instigated directly by Mr Chambers’ instructions or was contributed to by his behaviour. She made the serious allegation that Mr Chambers had even “steep[ed] to dishonest means” to ensure ProClean did not exist and was absent from the AMC. Therefore, little weight should be placed on the Workers’ views of the contractual arrangements.

232    As to the factors said to show that ProClean engaged the Workers, the Ombudsman relied on:

(1)    The Written Agreement, which she said was the only document purporting to be a written contract of engagement, was between ProClean and the Workers.

(2)    The assertion that Mr Chambers set and controlled the Workers’ daily tasks.

(3)    The Auburn Cleaning WhatsApp Groups, which included the Workers, Mr Chambers and Mr Simpson, involved matters such as rostering, pay rates, leave requests and termination threats.

(4)    The fact that the Workers completed timesheets using “PHQ” designations, which referred to ProClean, and used them on invoices sent to ProClean.

(5)    ProClean paid the Workers.

233    As to Mr Chambers’ case, she said that (1) there was no documentary evidence supporting the existence of an employment relationship between the Workers and Spotless, (2) the fact of the Spotless-iGuard Contract, and invoices issued thereunder, being for cleaning services, was inconsistent with Spotless employing cleaners directly, (3) Spotless’ termination of the Spotless-iGuard Contract and subsequent engagement of the Workers were inconsistent with the Workers being directly engaged by Spotless initially, (4) Mr Chambers’ evidence that he and the Workers were engaged by Spotless was circular and illogical, and only explicable as him doing everything to ensure that ProClean did not appear on-site at the AMC.

234    As to Mr Simpson’s case, she said that iGuard’s representations to the Ombudsman that they had subcontracted cleaning services to ProClean were entirely inconsistent with the Workers being employed by iGuard, and there was no evidence of Mr Shannon, or anyone on iGuard’s behalf, having supervision or control over the Workers for matters such as rosters and daily tasks.

Mr Chambers

235    Mr Chambers’ case was that at all times he was an employee of Spotless, and gave directions to “Spotless employees” at the direction of “Spotless Management”. The Workers, in turn, were Spotless employees. He said that he was introduced as a Spotless employee, and constantly attended Spotless’ head office. He said, in particular, that the Written Agreement was not used to engage the Workers. Rather, it was his attempt to make clear that ProClean was acting for iGuard and Spotless, and to enable him to get his money back if necessary. In this regard, he “only involved ProClean at the last minute to help [Mr] Shannon”. He said that the date of the Written Agreement, being after the work commenced on 15 February 2018, showed that he did not engage the Workers.

Mr Simpson

236    Mr Simpson’s case was that the Workers were not at any material time employees of ProClean. He referred to “the paucity of evidence” supporting the Ombudsman’s case. In oral submissions, he emphasised that in this context, a “key facet[] of the employment relationship is that of control”, and that the Court would not be satisfied that ProClean exercised “any significant control over” the Workers.

237    In relation to the Written Agreement, to the extent that it was relevant to the identity of the engaging entity, he submitted that ProClean was acting as an agent for iGuard and Spotless, as evidenced by the “LEGAL AND COMMON” clause, which was consistent with Spotless’ and iGuard’s heavy involvement in establishing the cleaning contract with iGuard, and therefore represented “the reality of the business arrangements”. He emphasised that at no time did iGuard ever assert that ProClean was the Workers’ putative employer, including in its correspondence to Spotless dated 28 March 2019 (above at [172]). Further, he said that the evidence pointed to Spotless exerting significant, if not total, control over the performance of the work, when it would be performed, the uniforms to be worn, and site access. He said that the terms of the Written Agreement showed that ProClean was acting as agent for iGuard and Spotless, and said that the principles relating to agency were relevant. He said that iGuard was aware ProClean that was acting on its behalf, and ratified the Written Agreements entered into by ProClean on its behalf. He also said that Spotless was aware through Mr Stafford that Mr Lamsal was representing himself as a representative of Spotless.

238    He said that the ambiguity regarding the “principal” in the Written Agreement did not lead to a conclusion that ProClean was the engaging entity, “particularly when it was clear that ProClean was acting as an agent for iGuard and Spotless”.

239    As to the alleged oral terms, insofar as they were communicated by Mr Pokharel and “Mr Khanal’s brother”, Mr Simpson said that there was no evidence of them acting with the scope of their actual or apparent authority on ProClean’s behalf within the meaning of s 793(1)(a) of the Act, or at the direction or with the consent or agreement of an official of ProClean, if giving that direction, consent or agreement was within the scope of the actual or apparent authority of that official. As to Mr Lamsal, he said that he was acting within the actual or apparent authority on behalf of Spotless within the meaning of s 793(1)(a) of the Act, or at the direction, or with the consent or agreement, of an official of Spotless, if that direction, consent or agreement was within the scope of the actual or apparent authority of that official. He said that Mr Chambers was at all material times the Cleaning Supervisor for Spotless. He represented himself as a Spotless employee, and engaged Mr Lamsal in the scope of his actual or apparent authority on behalf of Spotless. Further, at all material times Mr Lamsal represented himself as an “employer representative” of Spotless.

240    Mr Simpson said that, for the purposes of assessing whether the Written Agreement had been varied by conduct, the parties’ conduct could not be taken into account on the basis that it contained an entire agreement clause, and the parties’ relationship had been “comprehensively committed … to a written contract the validity of which is not in dispute”.

241    Mr Simpson said that even if the Written Agreement were found to be varied by conduct, ProClean should not be found to be the engaging entity on the basis that ProClean acted as agent for Spotless or iGuard. Further, he drew an analogy with the facts in Resilient and said that (1) ProClean had minimal assets and revenue from which to pay the workers, (2) ProClean had no labour hire agreement with iGuard or Spotless, and (3) all payments to the Workers were made on behalf of iGuard, and ProClean was simply the disclosed agent of iGuard. Further, he said that, unlike the position of Aspirio in Resilient, which was found not to be the employer (4) ProClean was not recorded as the employer in the contracts, (5) ProClean did not issue payslips, and (6) ProClean did not “pay as you go” withholding tax. He said that despite Aspirio engaging in (4) – (6), that did not prevent a finding that Spitfire, rather than Aspirio, was the employer.

242    In written closing submissions, Mr Simpson said that the documents relied upon by the Ombudsman did not support a conclusion that ProClean engaged the Workers.

A preliminary matter: the Ombudsman’s allegation of a sham

243    Before turning to the identification and construction of any contract to which the Workers were party, it is convenient to mention the Ombudsman’s case at various points as to whether the Written Agreements were themselves shams. At no point in the amended statement of claim was the Written Agreement directly pleaded to be a sham. Rather, the Ombudsman’s case as pleaded in the amended statement of claim, and advanced in her written submissions, was that to the extent that the contract between ProClean and the Workers was partly written, it was contained in the Written Agreement. The Ombudsman’s pleaded case was that the Written Agreements, “to the extent that they purported to be contracts for services, did not reflect the true nature of the contract between [ProClean] and each of the Workers”. However, that part of the pleadings was directed to the Ombudsman’s allegation that ProClean contravened s 357 of the Act. In the Ombudsman’s written submissions, it was alleged that the Written Agreements purported to be contracts for services, though the relationship between ProClean and the Workers was one of employment. However, that submission was again directed to alleged representations by ProClean which were proscribed by s 357 of the Act. The Ombudsman’s written submissions that the entity engaging the Workers was ProClean were made partly in reliance on the terms of the Written Agreement. Additionally, the Ombudsman’s arguments in her written submissions as to variation by conduct took as their starting point the terms of the Written Agreement.

244    In oral submissions, in relation to ProClean purportedly acting for Spotless and iGuard, recorded in the Written Agreement, Mr McKechnie’s submission was that “essentially the applicant’s case is that this document is not evidence of an agency agreement. This document is a sham. That’s the applicant’s entire case”. However, soon afterwards, in oral submissions, Mr McKechnie submitted that the documents, including the Written Agreement, “are the only thing that your Honour can reliably base a decision on”. Later, in oral submissions, Mr McKechnie submitted that to the extent that the contract between the Workers and (on the Ombudsman’s case) ProClean was in writing, that part was alleged to be a sham. Finally, in written closing submissions, the Ombudsman referred to “the only document in evidence which purports to be a written contract of engagement” (emphasis added), namely the Written Agreement, being entered into by ProClean and the Workers, again alluding to the possibility of the Written Agreement being a sham. However, later in those submissions the Ombudsman referred to “the written aspect of the agreement” not being a complete contract, suggesting that the Written Agreement was indeed part of the contractual arrangements to which the Workers are party.

245    It was clear that the Ombudsman alleged that ProClean contravened s 357 of the Act, and that the first respondent was knowingly involved in the contraventions. However, what was not clear was the Ombudsman’s position as to whether the Written Agreement was a sham in the sense described at common law and, relevantly, in the sense described in Rossato, Personnel Contracting and Jamsek, following an allegation of which it is permissible to consider the totality of the parties’ relationship. In circumstances where it was not clearly pleaded or submitted that the Written Agreement is a sham, nor were the common law requirements as to sham transactions addressed, I am not inclined to engage in a consideration as to whether the Written Agreement was a sham. However, I consider that for the purposes of the inquiry set out in Rossato, Personnel Contracting and Jamsek, even looking at the totality of the parties’ relationship, I would not be satisfied on the balance of probabilities that ProClean was the employing entity; rather, I would find that Spotless was the employing entity.

What matters were objectively known to the parties?

246    In Moon Recruitment (Court of Appeal), in engaging in the objective contractual inquiry for the purposes of determining the identity of the engaging entity, the Court had regard to what objectively known matters had occurred: at [49]. I will do the same. However, as this matter involved five Workers, rather than one individual (as in Moon Recruitment (Court of Appeal)), I consider it necessary to set out the objectively known facts as between each Worker. Those matters have been distilled into a table which notes which entities objectively knew each of the relevant facts, which is contained in Annexure A. Although Downer, Spotless and iGuard were not parties to the proceeding, they have been included because they were active parties in the arrangements that are the subject of this proceeding, and their involvement is revealed to the extent possible from the documentary and affidavit evidence adduced.

Application of the objective contractual approach to each of the Workers

Mr Lamsal

247    Applying an objective theory of contract formation, I consider that up to and including Mr Lamsal’s receipt of the Written Agreement in late February 2018, he was to be engaged by Spotless. Mr Chambers had met him in a Spotless uniform on 1 February 2018, had introduced himself as a Spotless supervisor, and sent later messages signing off as such. He had also directed Mr Lamsal’s queries to Mr Tait. Viewed in the context of an objective theory of contract formation, Mr Chambers’ invitation to Mr Lamsal to return to the AMC on 15 February 2018 to commence work was an offer to enter into a contract which Mr Lamsal accepted by attending the 15 February 2018 Meeting. A reasonable person on behalf of all the parties would understand that Mr Chambers made an offer on Spotless’ behalf. Mr Chambers held himself out as a Spotless representative, and the email of 2 February 2018, extracted above at [122(5)] provides support that he had authority on behalf of Spotless to recruit cleaners.

248    While not known to Mr Lamsal, that is also consistent with the email between Ms Croft, of Downer, and Mr Tait, of Spotless, copying Mr Stafford of Downer extracted at [116] which refers to an arrangement whereby “our MDMs” were liaising with cleaners to “see if they wanted to continue with [S]potless”. The emails at [117] and [119] which refer to Spotless directly engaging cleaners and populating rosters, are also consistent with this. The email of 2 February 2018 between Spotless and Downer personnel extracted at [122] confirms that this had taken place via several Spotless personnel, including by way of Mr Chambers. Spotless at that point knew and managed the minutiae of the recruitment of cleaners at the AMC. Spotless also appeared to intend to continue to manage the process, as appears from the assertion that Mr Tait would provide regular updates: see at [122](e). Finally, Mr Ansari’s email to Mr Stafford seeking work at the AMC, extracted at [124] above, provides some support that Spotless or Downer continued to be involved in recruitment and onboarding and exercised the right to do so.

249    The 15 February 2018 Meeting had been chaired by Mr Tait of Spotless, who had welcomed Mr Lamsal and other cleaners present “to the Spotless team”. Neither iGuard nor ProClean was mentioned at that meeting. Spotless uniforms and/or high-visibility vests were required to be and had been worn at the AMC in the course of cleaning work from that very first meeting. The above is consistent with the arrangements that had been occurring between Downer, Spotless, iGuard and ProClean in late January and early February 2018 whereby Downer and Spotless were managing the recruitment and onboarding of cleaners “to transfer across to Spotless”, and had engaged Mr Chambers as a Cleaning Supervisor (though those circumstances were not known to Mr Lamsal). Notably, no mention was made of ProClean in the initial emails between Downer and Spotless from January and February 2018. Rather, they contemplated that the cleaners would be transferred to Spotless. The allocation of “PHQ” designations at that meeting, assessed in the context of the above circumstances, does not detract from the fact that Spotless was undertaking the recruiting and onboarding, was representing to the cleaners that they would be part of the “Spotless family”, and was preparing the roster.

250    The presentation by Spotless representatives at that meeting regarding work at the AMC can be seen, in the alternative to the offer extended by Mr Chambers on 1 February 2018, as an offer to enter into a contract for the performance of work, which Mr Lamsal accepted by in fact performing that work from that evening onwards. In the above circumstances, a reasonable person in the position of the parties would conclude that up to and including 26 February 2018 (i.e., the earliest date the Written Agreement was sent), Spotless was the engaging entity.

251    Relevant post-contractual conduct (i.e., post-dating the 15 February 2018 Meeting) supports the proposition that Mr Lamsal was engaged by Spotless, having regard to the objectively known circumstances from which further terms can be distilled on the basis that the parties are taken to have agreed to them: see Agrigrain at [39], quoting Personnel Contracting at [178]. The evidence established that Mr Lamsal represented himself as part of Spotless, including to Spotless and Downer. Furthermore, he prepared rosters, allocated cleaners to tasks, oversaw timesheets, dealt with auditors and communicated with Downer personnel. Those duties were not carried out as a representative of ProClean or iGuard. Further, Spotless’ tacit acceptance that Mr Lamsal referred to himself as “Spotless management” supports that he was engaged by Spotless. The evidence also established that Spotless exercised significant ongoing control over the activities performed at the AMC, including by determining the hours to be worked, communicating this to team leaders and site managers, regulating access to the site and managing the cleaning equipment used to clean trains.

252    As far as concerned the cleaning equipment, the evidence established that Spotless would be invoiced for cleaning equipment, and that Mr Chambers would use a Spotless credit card to make small purchases. That fact is significant because it would be unlikely that Spotless would give an individual who was not engaged by it a credit card, and strongly supports a finding that Mr Chambers was at all material times told that he was, and represented as, engaged by Spotless. In the event that Mr Chambers were not engaged by Spotless I consider it even less likely that he would have been provided with a Spotless credit card without Spotless being satisfied that he was only providing services to the AMC in a manner consistent with any relevant contractual obligations.

253    In these circumstances, I find that the following were oral terms of the contract between Mr Lamsal and Spotless:

(1)    Mr Lamsal was to perform cleaning work at the AMC while wearing a Spotless uniform or high-visibility vest, commencing on 15 February 2018.

(2)    Spotless and Downer were entitled to give directions to site managers and team leaders as to what types of cleans were required, the hours of work required and scheduling, having regard to train schedulers.

(3)    Spotless and Downer were entitled to control access to, and the procedures at, the AMC.

(4)    Spotless and Downer were required to provide, and exercise custody of, the relevant equipment used at the AMC, with Mr Chambers purchasing only a small surplus quantity where needed.

(5)    Mr Lamsal was required to comply with the operational, safety, access and cleaning requirements applicable to the AMC, including requirements communicated by Spotless or Downer.

(6)    Mr Lamsal was to provide supervisory functions at the AMC in response to Spotless and Downer’s directions.

(7)    Mr Lamsal was entitled to be remunerated for cleaning work calculated by reference to the hours worked and the applicable rate.

(8)    Mr Lamsal was entitled to hold himself out as part of Spotless.

254    The Written Agreement does not displace that position. Rather, it states that ProClean, “acting for iGuard and Spotless”, agreed to pay the Worker. The accompanying invoice was addressed to “ProClean HQ (care of iGuard)”. While it is accepted that an agent cannot act for two principals in the same matter, and one party cannot unilaterally establish a relationship of agency, it is to be borne in mind that neither the Workers nor Mr Chambers appeared to appreciate the legal niceties of this relationship. The objective contractual inquiry is to be undertaken with that consideration in mind. In fact, the concept of the ordinary reasonable person is not that of a person standing outside the relationship; rather, it is that of one standing within the particular relational context, imbued with the characteristics and skills of that person: see The Contract of Employment at [7.10]. In this regard, importantly, the inquiry is objective, and therefore any subjective understanding or realisation as to which entity was in fact the engaging entity does not form part of the inquiry.

255    The Written Agreement is capable of being understood as creating a payment arrangement, rather than specifying which entity engaged the Workers (see the “LEGAL AND COMMON” section at [12]). Notably, no express identification of the entity supplying the work opportunity is made in the Written Agreement. That accords with the arrangement as found whereby ProClean paid the cleaners on iGuard’s behalf, and iGuard reimbursed it after receiving payment from Spotless. That arrangement in turn supports that Spotless was the engaging entity, because ProClean was not ultimately responsible for the obligation to pay the cleaners: see Mosaic Brands at [36] – [37]; Resilient at [178].

256    As to the “SOLE AGREEMENT” clause, on either of the approaches adopted when construing such clauses, it does not exclude the existence of oral terms from the contractual relationship involving Mr Lamsal and Spotless. As the Ombudsman submitted, various details of the work to be performed were not included in the Written Agreement. For example, the following are not specified:

(1)    “the contractor’s work” in the “LEGAL AND COMMON” section;

(2)    “Labour”, in the “DESCRIPTION OF WORK” section;

(3)    “work period completed” in the “SCHEDULE OF PAYMENTS” section; and

(4)    “companies / site requirements” in the “TIME AND Scheduling WORK” section.

257    While the “SOLE AGREEMENT” clause purports to restrict the Written Agreement to “all terms and conditions hereof”, those terms and conditions, were they to relate to cleaning, would not be spelled out, such that even on the written terms of the entire agreement clause, were the Written Agreement to relate to cleaning, it would not be effective to limit the terms of the Written Agreement to those written terms contained in it. Alternatively, accepting that the entire agreement clause is only an evidentiary indication that the contract is wholly in writing, the extrinsic circumstances suggest that the parties did not intend for the contract to be wholly in writing. As already indicated, the terms of the Written Agreement related to payment, which was consistent with the arrangement as found that ProClean would pay the cleaners on behalf of iGuard. The arrangements regarding cleaning appeared to have been agreed orally at the 15 February 2018 Meeting and are evidenced by post-contractual conduct over the course of the Work Period, during which Downer and Spotless instructed and directed the cleaners.

258    In this regard, the Ombudsman’s arguments as to the relevant conduct which allegedly varied the contract under which the Workers were said to be engaged, do not arise, because the genesis of the contractual relationship regarding cleaning to which the Workers are party is an oral contract entered into on 15 February 2018. It is not the Written Agreement, which relates to payment. Therefore, any conduct said to vary the contract for cleaning would not vary the Written Agreement. In any event, many of the bases which the Ombudsman contended supported her argument as to variations by conduct have been considered when determining what were the oral terms of the arrangement, having regard to the objective contractual approach articulated in Agrigrain, or in the context of the finding that the “SOLE AGREEMENT” clause was not effective as an entire agreement clause in the Written Agreement.

259    Ordinarily, no one fact will be decisive in determining the engaging entity. The question remains one of in whose business the person was engaged: see Agrigrain at [63] – [64], quoting Personnel Contracting at [36]. The terms identified above, considered in the light of the factors considered relevant in Agrigrain and Moon Recruitment (Court of Appeal), lead to the conclusion that Mr Lamsal was engaged in the business of Spotless. First, the initial offer involved Mr Lamsal agreeing to perform work for Spotless at the AMC, via Mr Chambers who was authorised to recruit cleaners for work at the AMC. Spotless was managing the identification, recruitment and onboarding of cleaners, as appears from the email correspondence referred to above. Spotless in this way exercised the right to hire cleaners. Second, by the oral terms of the contract, Spotless exercised control over the work tasks performed by Mr Lamsal at the AMC, as well as of the relevant equipment. That control also extended to the allocation of work by those exercising oversight at the AMC, which included Mr Lamsal. Mr Lamsal was required to comply with directions issued by Spotless.

260    Third, and relatedly, this accorded with Spotless exercising control over the AMC, which in turn provided an intelligible business purpose in Mr Lamsal being required to comply with Spotless’ directions. An intelligible business purpose in Spotless engaging the Workers is also demonstrated by the fact that it would supply staff and cleaning equipment to Downer under the Downer-Spotless Contract. There also is an intelligible business purpose in Spotless exercising oversight and control over the Workers, in light of its emails to Downer in January and February 2018 which showed it managed the recruitment and onboarding.

261    Fourth, while ProClean paid Mr Lamsal, that is not inconsistent with another entity being the engaging entity: see Agrigrain at [72] – [73]. As already found, its role was principally that of a payroll company. Further, there was not an intelligible business purpose in ProClean being the engaging entity because, as already found, ProClean simply paid the Workers on behalf of iGuard, which reimbursed it. iGuard had issues with cashflow, yet may have had a verbal contract with Spotless to provide cleaning services at the AMC (see above at [211] – [220]). These factors supply an intelligible business purpose in ProClean merely being a payroll entity in these circumstances. The Ombudsman’s case that the explanation for ProClean’s involvement is that it sought to evade the bar on subcontracting in the Spotless-iGuard Contract does not disclose an intelligible business purpose. It would not make sense for ProClean to engage the cleaners via the Written Agreement (particularly in that form) yet attempt to hold them out as Spotless cleaners at a site controlled by Spotless and Downer, for the purpose of evading the prohibition on subcontracting. Additionally, were the bar on subcontracting as important as the Ombudsman contended, one would have expected iGuard to have engaged directly with the cleaners, given that it was contemplated that iGuard was the entity supplying the cleaning. The intelligible business purpose of the Written Agreement is that ProClean paid the cleaners, and that Mr Chambers, in an entirely amateurish manner, attempted to protect himself and ProClean at the last minute from the possibility that he or it would not be paid for the wages paid to the cleaners.

262    Taking the above factors together, the circumstances point to Mr Lamsal working in the business of Spotless, especially in light of the significant control which Spotless exercised over him in respect of the manner and timing in which he performed tasks at the AMC. Mr Lamsal working in the business of Spotless provides a more intelligible business purpose than if he were to be found to work in the business of ProClean. Those considerations are not inconsistent with ProClean having the initial responsibility to pay Mr Lamsal, and being subsequently reimbursed. The relevant post-contractual conduct supports contractual terms which are consistent with Mr Lamsal having been engaged by Spotless, and which would lead a reasonable person in the position of all the parties to conclude that Spotless was the engaging entity.

263    It is worthwhile addressing the evidence that could possibly lead to the conclusion that iGuard was the engaging entity in the alternative to Spotless, applying the objective contractual approach.

264    It could be said that there is an intelligible business purpose in iGuard engaging Mr Lamsal, in light of the fact that it may have held a verbal contract for cleaning services with Spotless which required labour. Additionally, given that the Written Agreement specified that ProClean was acting for iGuard, as well as Spotless, and iGuard later reimbursed ProClean, these facts could support a finding that it was a term that iGuard was ultimately obliged to pay the cleaners for their work at the AMC. The invoice template also was addressed to “ProClean(care of iGuard)”. The cleaners were required to record hours and submit invoices to the iGuard Payroll Email Address, and iGuard verified and reconciled hours claimed before making payment. Further, the emails from Mr Shannon of 28 February and 6 March 2019 (referred to above at [172]) refer to “our employees” and “our staff” in the context of a discussion about backpay of, inter alia, superannuation and overtime, suggesting that the cleaners might have been regarded as being engaged by iGuard. That position was reiterated in Mr Shannon’s letter to Mr Shumack dated 28 March 2019, where iGuard also noted that it had over $80,000.00 set aside to pay any monies owing.

265    Additionally, the email from Mr Shannon to Mr Shumack dated 4 March 2019, referred to at [169], wherein he asks Mr Shumack to advise “[i]f there are anything we can do more efficiently for Spotless and Downer”, suggests that he was speaking as if the cleaners were engaged by iGuard, and that he was able to direct the manner and performance of their work. Further, Downer’s letter to the Ombudsman dated 18 April 2019, referred to above at [15], stated that Spotless “ha[d] met with all iGuard workers at the Sydney trains facility and offered them employment directly with Spotless” (emphasis added). It referred to “iGuard workers” at other points throughout.

266    However, for the following reasons, the better view is as expressed above, that on the evidence before me Spotless was the engaging entity. First, as discussed, Spotless via Mr Chambers, or alternatively via its personnel at the 15 February 2018 Meeting, made the offer of work to Mr Lamsal. Second, as already indicated, Spotless and Downer overwhelmingly exercised control over the AMC and the work performed thereat, and directed Mr Lamsal in this regard. Third, Mr Lamsal represented himself as “Spotless Management”, and Spotless and Downer did not object to this. Fourth, the fact that an entity takes care of administrative matters such as payroll and superannuation is a relevant but not a determinative factor. Even if it were a term that iGuard was obligated to pay Mr Lamsal for work performed at the AMC, that would not be determinative: Agrigrain at [73]. In any event, ProClean was the entity which paid the cleaners. The above factors do not displace the fact that the contractual terms as found indicate that Spotless engaged Mr Lamsal.

Mr Gnanasothy and Mr Sembakutti

267    Similar conclusions can be drawn in respect of Mr Gnanasothy and Mr Sembakutti, save that:

(1)    The relevant offer to enter into a contract to engage in cleaning work at the AMC can be seen as their meeting at the AMC with Mr Chambers in January or February 2018, at which meeting Mr Chambers informed them that they should return on 15 February 2018 if they wanted the position (see above at [134]). A reasonable person in the position of all the parties would understand that he made the offer on behalf of Spotless, and the email extracted above at [122(5)] provides support that he had authority on behalf of Spotless to recruit cleaners.

(2)    Mr Gnanasothy and Mr Sembakutti did not exercise the same managerial oversight as Mr Lamsal in respect of the other cleaners, nor was there clear evidence that they represented to others that they were part of Spotless. Notwithstanding the above, Mr Lamsal’s representations to the cleaners that they were part of Spotless are relevant post-contractual conduct going to the objective assessment of the contract’s terms, and they support the conclusion that Mr Gnanasothy and Mr Sembakutti were engaged by Spotless. This is partly the case because Spotless and Downer did not object to Mr Lamsal holding himself out as “Spotless management”, which though not established to be objectively known by Mr Gnanasothy and Mr Sembakutti, supports that Mr Lamsal had authority to act on behalf of Spotless.

268    The oral terms are the same as those set out above at [253], save that Mr Gnanasothy and Mr Sembakutti were not to exercise the same supervisory functions at the AMC as Mr Lamsal (though I note that Mr Gnanasothy became a team leader during the Work Period). There is also no indication that Mr Gnanasothy or Mr Sembakutti were entitled to hold themselves out as Spotless. These terms are not displaced by the Written Agreement, for the reasons set out at [254] – [258]. As with Mr Lamsal, any subjective confusion on the part of Mr Gnanasothy and Mr Sembakutti about which entity engaged them is not relevant to the objective contractual inquiry. Similarly to the conclusion expressed at [258], the Ombudsman’s arguments about the variation of the contractual arrangement by conduct are effectively subsumed by the discussion as to the oral terms of the contract, and the “SOLE AGREEMENT” clause in the Written Agreement.

269    Save that Mr Gnanasothy and Mr Sembakutti did not exercise the same managerial oversight as Mr Lamsal, for the same reasons as set out at [259] – [262], the objectively known circumstances indicate that Mr Gnanasothy and Mr Sembakutti were engaged by Spotless. For the reasons given above at [264] – [266], save that neither Mr Gnanasothy nor Mr Sembakutti was found to have represented themselves to Spotless and Downer as part of Spotless, the same reasoning leads to the conclusion that iGuard was not the entity that engaged them. The relevant post-contractual conduct supports contractual terms which are consistent with them having been engaged by Spotless, and which would lead a reasonable person in the position of all the parties to so conclude.

Mr Poudel

270    The analysis relating to Mr Poudel is different from that which applies to the first three Workers, as he was recruited in or about October 2018. Nevertheless, the objectively known circumstances also point to him having been engaged by Spotless. A person wearing a Downer uniform presented his site induction at the AMC. A reasonable person in his position would therefore understand Downer to be directly involved in onboarding him for the work at the AMC. No conversations were had with Mr Chambers prior to commencing work, and during the Work Period, Mr Poudel had little to do with him. Significantly, a fact objectively known to Mr Poudel, Mr Lamsal and Downer was that Mr Poudel had, on 30 October 2018 with the assistance of Downer personnel, completed the Downer “Third Party Contractor Employee Checklist” which identified Spotless as his employer. That strongly supports the conclusion that Mr Poudel was engaged by Spotless. The following post-contractual conduct further supports that Spotless was the engaging entity in respect of Mr Poudel:

(1)    Spotless exercised significant control over the work tasks performed by Mr Poudel.

(2)    Mr Poudel wore a Spotless uniform when performing cleaning work at the AMC.

(3)    Though ProClean paid Mr Poudel’s wages, as already found, that was on behalf of iGuard, which in turn was reimbursed by Spotless. The fact of the reimbursement arrangement was not objectively known to Mr Poudel, but explains the involvement of ProClean. That ProClean was involved only in a payroll capacity is evident from the Written Agreement which, as discussed above, refers to payment only and specifies that ProClean acts for iGuard and Spotless.

(4)    Mr Lamsal’s representations to Mr Poudel and the other cleaners at various times that they were Spotless personnel are an objectively known circumstance.

271    The oral terms arising from post-contractual conduct are the same as those set out above at [253], save that Mr Poudel commenced work in around October 2018, and did not exercise the same supervisory functions at the AMC as Mr Lamsal, though I note that he became a team leader approximately two months after commencing work.

272    The Written Agreement and the circumstances surrounding it do not compel a different conclusion; rather, they strengthen the conclusion that Spotless was the engaging entity. First, as set out above, the express terms relate to payment, rather than the provision of cleaning work. ProClean did not have the ultimate responsibility to pay the cleaners, as discussed above. Second, as above, the fact that ProClean was expressed to be “acting for iGuard and Spotless” suggests that ProClean was not to be the engaging entity. Again, the circumstance of Mr Poudel being an unsophisticated party to the relationship is relevant to assessing what an objective reasonable person would have understood to be the arrangement having regard to the circumstances. Relatedly, his subjective understanding or realisation as to for which entity he was working was not relevant.

273    Third, that Mr Poudel did not inform Downer that the Written Agreement had led him to understand that Spotless was not the engaging entity lends support to the conclusion that his objectively known dealings relating to his work at the AMC continued on the basis that Spotless was the entity that engaged him. Fourth, when considering either the express words of the entire agreement clause contained in the Written Agreement, or the surrounding circumstances, the terms of the Written Agreement do not provide for the way in which the cleaning work at the AMC was to be carried out. Rather, the way in which the cleaning was to be carried out was contained in the oral terms which arose from the post-contractual conduct. Fifth, the representations of Mr Lamsal to the Workers, of which Mr Poudel was one, that they were part of Spotless, are a circumstance that constitutes post-contractual conduct which a reasonable person in Mr Poudel’s position would take as indicating that Spotless was the engaging entity.

274    Taken together, having regard to the terms of the contract, Spotless was the engaging entity, and ProClean’s role was confined to payment. First, by the terms of the contract, Spotless exercised significant control over the work performed at the AMC. That control also extended to the allocation of work by those exercising oversight at the AMC. Mr Poudel was required to comply with directions that ultimately came from Spotless and Downer. Second, Spotless and Downer provided, and exercised custody over, the tools required to complete the work. Third, these terms accorded with an intelligible business purpose, as Spotless had control over the AMC and was discharging the Downer-Spotless Contract. Fourth, for the same reasons as indicated above at [261], the fact that ProClean paid Mr Poudel is not inconsistent with Spotless being the engaging entity, and there was no intelligible business purpose in ProClean being the engaging entity.

275    Similarly to the conclusion expressed at [258], the Ombudsman’s arguments about the variation of the contractual arrangement by conduct are effectively subsumed by the discussion as to the oral terms of the contract, and the “SOLE AGREEMENT” clause in the Written Agreement.

276    For the same reasons as those expressed at [264] – [266], iGuard was not the entity that engaged Mr Poudel. Those reasons are qualified only by the fact that Mr Poudel, while having represented to Downer that he was a Spotless employee in the Downer “Third Party Contractor Employee Checklist”, did not engage in the same kinds of representations that he was Spotless, as did Mr Lamsal.

Mr Khanal

277    Mr Khanal’s position is similar to that of Mr Poudel, save that he commenced working at the AMC after being added to the Induction WhatsApp Group by Mr Lamsal, and attended the AMC in September 2018 at Mr Lamsal’s request. Mr Khanal’s evidence was that he had never had a conversation with Mr Chambers or been engaged by him as an employee.

278    The objective circumstances also indicate that he was engaged by Spotless. First, Mr Lamsal had been recruited by Mr Chambers, who as already discussed was engaged by Spotless, and Mr Lamsal was, generally, representing himself as Spotless to the Workers, and additionally was representing to them that they were part of Spotless. A reasonable person in the position of the parties would consider that the contract Mr Khanal was entering into was with Spotless. Second, Mr Lamsal exercised managerial oversight over the cleaners, as already discussed. Third, as set out above, Spotless and Downer controlled site access, the equipment, train schedules, work orders and the relevant cleaning requirements.

279    The oral terms arising from post-contractual conduct are the same as those set out above at [253], save that Mr Khanal commenced work in around September 2018 and did not engage in managerial oversight. As with the above Workers, the contents of the Written Agreement did not displace the oral terms as to how the cleaning operations at the AMC would occur, nor did they displace the position that Mr Khanal was contracting with Spotless. The Written Agreement, as with the other Workers, did not provide for the way in which the cleaning operations were to occur, nor did it provide more than that ProClean was the entity paying the cleaners. Further, the circumstances indicate that ProClean did not bear the ultimate responsibility for paying the Workers.

280    In the above circumstances, a reasonable person in the position of all the relevant parties would understand that the arrangement that Mr Khanal was entering into was for him to provide cleaning services for Spotless, with ProClean carrying out payments. That position is confirmed by the oral terms whereby Spotless exercised significant control over the work that he performed at the AMC, controlled the cleaning materials and controlled site access at the AMC. The fact that ProClean paid him is not determinative and is consistent with ProClean acting on behalf of Spotless and iGuard.

281    Similarly to the conclusion expressed at [258], the Ombudsman’s arguments about the variation of the contractual arrangement by conduct are effectively subsumed by the discussion as to the oral terms of the contract, and the “SOLE AGREEMENT” clause in the Written Agreement.

282    For the same reasons as those given at [264] – [266], save that the relevant offer of work was made in September 2018 by Mr Lamsal, Mr Khanal was not engaged by iGuard.

CONCLUSION

283    The above analysis supports the conclusion that I cannot be satisfied that ProClean was the entity that engaged the Workers. The Ombudsman accepted that if I were not satisfied of this, then the entirety of her application would fail. Accordingly, it is dismissed.

Associate:

Dated:    2 October 2026

ANNEXURE A – OBJECTIVELY KNOWN FACTS AS BETWEEN THE VARIOUS PERSONS