WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION PARTIES LYNN DIANE DAVIS, APPLICANT v. BLAXLAND PTY LTD, RESPONDENT CORAM COMMISSIONER J F GREGOR DELIVERED FRIDAY 8 MARCH 2002 FILE NO. APPLICATION 1074 OF 2001 CITATION NO. 2002 WAIRC 04930 _________________________________________________________________________________________________________ Result Dismissed Representation Applicant Mr R. Clohessy appeared on behalf of the Applicant Respondent Ms J. Auerbach appeared on behalf of the Respondent _________________________________________________________________________________________________________ Reasons for Decision (given extempore as edited by the Commission) 1 On the 8th of June 2001 Lynn Diane Davis applied to the Commission for orders pursuant to section 29(1)(b)(ii) on the basis that at the completion of her contract of employment with Blaxland Pty Ltd (the Respondent) there were outstanding benefits available to her which had not been paid. 2 The essence of this dispute is that the Applicant contends that she was to be paid a commission based income, commission based bonus payments and, where applicable, rent and referral fees payable on a pro rata basis. Commission was to be paid at the rate of 50% of gross earnings on sales, not reducible by any deductions made by the employer for superannuation or in fact for any other reason. 3 Under the contract of employment her taxable income was a flat 50% of the gross commission received by the Respondent; her superannuation entitlements were additional to such payment. That is the essence of what she says. 4 As I understand, what the Respondent says, it agrees that the taxable income consisted of a commission based income, bonus payments, rent and referral fees. It made superannuation contributions in accordance with the Superannuation Guarantee Administration Act, 1992 into a nominated fund for the benefit of the Applicant, and when the Act prescribed higher superannuation contributions her rate of commission was decreased to take account of those. 5 The Commission has before it a number of documents that have been supplied by the parties. Before I examine the Applicant’s verbal evidence I will review the documentary evidence. 6 It is open to find, and I do, that when the Applicant commenced work in 1993 that the remuneration was as described in a memorandum dated the 5th of August 1993 (Exhibit A1). Under the heading ‘General Sales Commission Scales’ the document contains a schedule based on quarterly sales receipts. For instance, if the sales receipts are between zero and $25,000 then the amount of payment on that was 47%. There is an ascending scale of sales and an ascending scale of earnings up to $60,000. 7 The document provides that a superannuation contribution of 3% would be paid and a 10% advertising allowance and a bonus at the end of the quarter. The document also sets out property management referrals which constituted the other earnings to which I referred and which I do not need to canvas for the purpose of this application. However, it is clear from the document that the 50% of gross sales consists of 47% to be paid on the sales receipts with a superannuation of 3% making a total of 50%. 8 If it needed to be made any clearer that is how the pay advices are set out. Exhibit C1 shows how that is done quite clearly. Exhibits A1 and C1 both show the same form of contractual arrangement. 476 WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 82 W.A.I.G. 9 During the life of the contract, say in 1996, there was another document which described the remuneration. It is in much the same style except that the amount of superannuation contribution paid is increased to 6% and the balance, the commission paid to the Applicant, has been reduced to 44%. That is consistent with the contention of the Respondent that as the superannuation guarantee increased there was a corresponding reduction in the amount of superannuation paid. 10 There is further evidence in Exhibit A5 that the same method of payment continued through into the year 2000. In a document dated the 1st of July 2000 the Applicant was advised, confirmed by her signature on the bottom of the document, that the next level of superannuation, which was then 8%, was to be applied to commissions from the 1st of July. There was then a calculation method, example provided to the Applicant using as an example 100% commission based on a sales figure of $2000. This clearly shows that the total staff benefit of 50% of the commission which would have been $1000 in total consisted of an amount of $926 payable to the staff member, in this case the Applicant, and a levy sum of $74.08 which was payable to the fund. 11 The sales staff were invited to make requests concerning salary sacrifice level and apparently that happened, at least on the Applicant’s part, because on the 28th of July 2000 (Exhibit A6) she wrote to Cheryl, who is mentioned in the letter of the 1st of July 2000, and described her understanding of the example. Clearly that example shows how the $1000 on the example was to be divided and it showed how the Applicant wanted to have her tax deducted. These documents indicate a clear understanding of the contractual structure at that time. 12 I have had the benefit of hearing the Applicant give evidence-in-chief and in cross-examination. I say without any hesitation I think she was a perfectly honest witness. I believe what she told me. She was frank about how she understood the contract as she was about her understanding of what the contract meant. 13 It is difficult sometimes for a lay person to appreciate the legal niceties of these contractual arrangements and what I gather from the Applicant is that she freely admitted that she understood the structure of the arrangement between her and the Respondent, but as time went by she thought it was unfair and she raised that issue of unfairness on a number of times with Mr Bolton. Mr Bolton did not give evidence but I accept the evidence of the Applicant when she said she raised it, and that she was concerned about the fairness of the arrangement. However, the concern about the fairness or not did not result in the arrangement ever being changed. 14 The Applicant certainly did not give any evidence that it had and the documentation which creates a trail through the employment relationship does not show a change which would constitute a variation to the contract so that it was in the form that this application alleges. The Applicant’s own evidence clearly establishes that there was a form of contract which provided that of the 50% commission a varying amount was deducted from superannuation with the balance being paid to the Applicant. That is the clear position on the contract. 15 The law to be applied is set out in Simmons v Business Computers (1985 65 WAIG 2039). When acting under this section of the Act, the Commission is to act judicially, it is to discover the terms of the contract as a matter of law, and give effect to those terms, by issuing orders in favour of an Applicant, if it finds that there has been entitlement which has not been paid. 16 Specifically in embarking upon that task, the Commission does not look at the fairness of the contract. It is not similar to the jurisdiction which resides in, say, the Industrial Commission in New South Wales where the fairness of employment contracts can be tested. 17 I need to touch upon the issue concerning the professional indemnity. I accept the evidence from the Applicant that prior to January 2000 the Respondent paid all of the professional indemnity. There seems to be no doubt about that, and I accept what she says. 18 The Applicant, though, on the 11th of January received a memorandum from “all staff” which told of changes to professional indemnity insurance (Exhibit A7). Why that was originated appears to be because of a letter from an insurance broker. On the information before the Commission, that was not a letter which went to the Respondent as a letter from a broker to a client. It was a letter sent to all Real Estate Institute of Western Australia (‘REIWA’) members giving them advice about professional indemnity insurance renewal and explaining to them that the scheme insurer, HIH, was no longer prepared to tolerate continual losses. In due course, of course, that became more than obvious, and they wanted to increase the premium pool from $950,000 to $1,500,000. The advice to REIWA was that the way that could best be done was by sharing the cost between the member companies and the individual’s representatives. I also think it was done because of some cases where individuals had been sued and had not been subject to cover, and in order that the insurance companies did not exercise subrogation against those uninsured individuals, that was a good idea if they insured themselves. 19 That the preceding is a fair reading of the advice can be seen from Exhibit A7 in the page which has been signed by Neil Pozzi, where it shows that the Respondent was required to pay $3124.15 to cover the company premium of the indemnity, whereas the individual employees were to pay $272.16 to give the firm a total cover of $2 million. 20 This letter was presented to the Applicant. Her evidence is she felt she had to pay it, and she did. She later had some advice from somebody whom she did not identify, that she should not have done so. As result she tried to raise with the Respondent her concern about the unfairness of her having to pay the money. 21 I find when on the 11th of January 2000, the Applicant made a notation on a memo to Cheryl in the form of: “Will pay this via personal cheque when the next commission is paid.” that constituted a variation to the contract, and she accepted that she would pay the individual premium. 22 Whether she should have or not is a matter for people wise in hindsight. One could have said to her: “Well, your best advice would have been to say: ‘I’m not going to do that even though you require me to do it.’”, and that would have been sorted out at the time. However, as a matter of law I find that the contract was varied so that there was a shared pay of the indemnity. 23 I will find that the Applicant’s claims have not been made out. I am required to dismiss the application. I specifically refrain from making any comment on what I might think the situation is with the Superannuation Guarantee Act. 24 An Order to dismiss the application will be issued. _________ 82 W.A.I.G. WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 477 2002 WAIRC 04929