WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION. Industrial Relations Act 1979. S & M Bennett Pty Ltd trading as Rockingham Sheet Metal Works (Appellant) and Yvonne Scott (Respondent) No 1837 of 1997. BEFORE THE FULL BENCH. HIS HONOUR THE PRESIDENT P J SHARKEY. CHIEF COMMISSIONER W S COLEMAN. COMMISSIONER S A CAWLEY. 11 February 1998. Reasons for Decision. THE PRESIDENT: This is an appeal brought under s.49 of the Industrial Relations Act 1979 (as amended) (hereinafter called “The Act”) by the appellant employer against a decision of the Commission constituted at first instance by a single Commissioner. By that decision, made on 17 September 1997, the Commissioner ordered the respondent to pay to the applicant the amount of $10,907.43 being benefits denied to her under her contract of employment with the respondent. The decision was made following an application by Ms Scott, the respondent upon this appeal, under s.29(b)(2) of the Act. The application was heard and determined by the Commissioner. GROUNDS OF APPEAL It is against that decision that the appellant appeals on the following grounds which were amended by leave. “1. The Commissioner erred in finding a contract of em- ployment existed between the parties according to the evidence of the applicant. In doing so, the Com- missioner was satisfied that— 1.1 The applicant was to be paid a token wage; WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 78 W.A.I.G. 1116 2.2(sic) Upon the financial arrangements for the Re- spondent being resolved, the balance between the token wage and $570.00 per week was to be made up to her; 2.3(sic) $570.00 was the rate agreed between herself and Mr McNally; whilst disregarding evidence to the contrary, and the applicant did not show sufficient proof under s.29(b)(ii) of the Industrial Relations Act 1979 that the claim for outstanding contractual benefits should be made out. 2. In accepting as true the evidence of the Applicant, where there was conflict in the evidence between herself and Mr McNally, the Commissioner— 2.1 acted without evidence or sufficient evidence; 2.2 took account of irrelevant considerations; and 2.3 failed to give weight, or sufficient weight, to the undertakings given by the Director for the respondent, Mr Wayne McNally. 3. A letter from Seagate Structural Engineering Pty Ltd, which says the Applicant was receiving $560 (gross) per week, was relied upon as providing evidence that she commenced employment at Rockingham Sheetmetal Works on terms that were no less favour- able in monetary terms than she was enjoying previously. The Commissioner erred in failing to take into ac- count the circumstances under which the applicant came to be employed at Rockingham Sheetmetal Works, in that a personal relationship was being en- tered into. Mr McNally provided for the applicant, as she herself attested, thus the employment with the respondent was inextricably linked to the personal relationship the applicant had with Mr McNally. 4. The Commissioner erred in disregarding an Austral- ian Taxation Department Employment Declaration, completed by the applicant on 3 May 1995, and which clearly indicates the basis of the employment to be part-time. 5. The Commissioner erred in disregarding the essen- tial conditions of the contract of employment which were agreed to by the parties. The most significant of these was that the applicant was to be paid a wage of $282.95 (gross) per week for services rendered to the company. The employment contract was for no more than $282.95 per week. 6. (Withdrawn by leave of the Full Bench.) 7. (Withdrawn by leave of the Full Bench.) 8. The appeal alleges that the Commission has exceeded its jurisdiction, as the standard of proof for a claim under s.29(b)(ii) of the Industrial Relations Act 1979 is the same as required in the Industrial Magistrates Court, according to the Industrial Relations Com- mission, and given by Fielding SC.” BACKGROUND The applicant, Ms Scott, at first instance, claimed that, as an employee, she had not been allowed by her employer, the appellant in these proceedings, a benefit, not being a benefit under an award or order to which she was entitled under her contract of service. The benefit claimed was not a benefit “under an award or order”. The parties agreed that the terms of a letter sent to them by the Associate to Beech C dated 15 July 1997 (see page 93 of the Appeal Book (hereinafter referred to as “AB”)), which followed a conference for the purpose of conciliation between the parties, set out matters for determination and the respective positions of the parties. By that letter, the Commission noted that— (1) It was agreed that Ms Scott was employed in a sec- retarial position by the respondent (and, as I understood it, that this was a contract of service). (2) Ms Scott’s employment was not governed by an award of the Commission. (3) That Ms Scott claimed that she was employed for two periods of employment between 5 April 1995 to 2 February 1996 and from 5 July 1996 to 11 October 1996. (4) Ms Scott also claimed that she was employed on a full time basis. (5) Ms Scott claimed that she and the respondent agreed on a weekly wage to be paid, but she also agreed to work for a “token wage” whilst the financial affairs of the respondent became organised when she would be paid the difference in salary. (6) The applicant also claimed that her annual leave and superannuation entitlements should have been paid at the higher agreed rate of wage. (7) The respondent stated that Ms Scott had been paid all entitlements agreed to between the parties. (8) The respondent stated that Ms Scott was employed on a part time basis for the first period of her em- ployment and that Ms Scott was employed on a full time basis for the second period of her employment. (9) The respondent stated that annual leave and super- annuation entitlements had been paid at the agreed rate of wage. There was evidence before the Commission from Mr Wayne Ronald McNally, a director of the appellant. It was not in issue that Ms Scott and Mr McNally had entered into a personal relationship. Some difficulties arose with the business because Mr McNally’s wife had departed with financial records. Mr McNally agreed to employ Ms Scott at the same rate as she received in her previous employment with Seagate Structural Engineering Pty Ltd, where she was paid $560.00 a week. It was Ms Scott’s evidence that when she agreed to receive an amount of $282.95, it was only until the financial situation of the appellant had been resolved, it was to be only a token wage and the difference between that amount and the amount of $560.00 would be made up when financial matters were more settled (see pages 36-37 (AB)). Ms Scott said that she was engaged and worked on a full time basis but was away from the business on a number of occasions with the consent of Mr McNally. Ms Scott’s evidence was that she was looking forward to the future in both the personal and business relationships with Mr McNally and was thus prepared to accept that arrangement, i.e. to receive a token wage only. Ms Scott was quite unequivocal in her evidence that she did not expect the arrangement whereby she was to receive a token wage only to continue for a period of ten months, as it did (see pages 44-45 (AB)). What she said in evidence (see page 38 (AB)) was, together with the question asked of her as follows— Q. “I’m just asking you to tell the Commission what you thought would happen about the difference; whether it would be made up or whether your (sic) forewent it, or what you believe to be the case?” A. “It was the understanding with Wayne that when he was on solid ground with his business, financially I would be reimbursed. So the token wage I accepted until he had the knowledge of where he was in his business and with his director.” She raised the question of the underpayment after ten months (see page 39 (AB)). After ten months, Ms Scott ceased working for the appellant and her annual leave payments were calculated in accordance with exhibit 4 on a weekly rate of $570.00 per week. Mr McNally later refused to pay Ms Scott that alleged shortfall in wages, saying, according to Ms Scott, that it was a hard lesson learned by her. Ms Scott then recommenced employment with the respondent and was paid $570.00 per week. Mr McNally’s evidence was that Ms Scott was employed on a part time basis, he denied agreeing to pay $570.00 per week, but he did concede that Ms Scott was paid $570.00 per week during annual leave and this was the correct weekly rate as revealed in exhibit 4. He said that this $570.00 per week was paid on the advice received by the business. There was evidence from Mr Henry Charles Hinschen, the factory foreman, who worked for the appellant on two separate WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 1117 78 W.A.I.G. occasions for approximately eleven months, the first commencing in December 1994, when Ms Scott worked about two days per week, but that that varied from week to week. THE FINDINGS OF THE COMMISSION The issue was not whether the applicant was fairly paid, but whether there was a contract between the parties for the applicant to be paid $570.00 per week during the first period, and, if so, whether she was paid this. The Commissioner made the following findings— (1) Where there was a conflict in the evidence, it was necessary to consider the way in which the witnesses had given their evidence and make an assessment of it. (2) Having observed the witnesses, she made the fol- lowing finding— (a) Where there was a conflict in the evidence, she had no hesitation in accepting as true the evidence of the applicant. (b) She rejected the evidence of Mr McNally as not being credible, when that evidence con- flicted with that of the applicant. (c) In relation to Mr Hinschen’s evidence, she was of the opinion that he had answered the ques- tions put to him honestly and in doing so, acknowledged that he had no knowledge of the detail of the contract between Mr McNally and the applicant and, further, that he was not in a position to assess whether she was in the office or undertaking other duties away from the office at any given time. (3) That matter was not one as to whether the applicant was employed to work part time, full time or casual, and that she was satisfied that the contract was that the applicant was to be paid a token wage and that upon the financial arrangements of the respondent being resolved, the balance between the token wage and $570.00 per week was to be made up to her. (4) The Commissioner therefore found that she was en- titled to be paid $570.00 per week which was the rate agreed. (5) That even though the employment declaration com- pleted by the applicant on 3 May 1995 (exhibit 5) indicated that her employment was part time, the Commissioner was still satisfied that the employ- ment contract was for no less than $570.00 per week. CONCLUSIONS This was a discretionary decision. It was for the appellant to establish that the exercise of the discretion miscarried, accord- ingly to the principles in House v The King [1936] 55 CLR 499, otherwise it is not for the Full Bench to interfere with the exercise of the discretion at the first instance and substitute its own exercise of discretion. In addition, the well known principle in Devries and An- other v Australian National Railways Commission and Another [1992-1993] 177 CLR 472 (HC) applies. To paraphrase, the Full Bench will not interfere where findings have been made by the Commission at first instance as to credibility, relying on the advantage which the Commissioner enjoyed in seeing and hearing the witnesses at first instance, unless it has been demonstrated that the Commission mistook the evidence or palpably misused its advantage. In this case, the Commissioner clearly reached her decision, having regard, inter alia, to her view of the credibility of the witnesses. There were two businesses. One called “Rockingham Steel Fabrications” and one called “Rockingham Sheet Metal Works”. The only company by which the respondent was em- ployed was “S & M Bennett Pty Ltd trading as Rockingham Sheet Metal Works”. The respondent, Ms Scott, was not at any time employed by Mr McNally or any other person carrying on business as “Rockingham Steel Fabrications”. It was conceded in submissions that no store should be placed on the evidence of Mr McNally by Mr Beedham. It is fair to say that Mr McNally’s evidence at pages 63 to 67 of the Appeal Book and pages 75 to 76 quite clearly could be read as admissions that the amount agreed to be paid to the respondent was $570.00 per week, but that an actual token amount was to be paid until, as it were, financial circumstances changed. That evidence cannot be interpreted as evidencing any intention not to pay the respondent at the rate of $570.00 per week. I say that because Mr McNally admitted as follows— (a) That $570.00 per week as a gross wage would be in fact a suitable payment for a part time worker (see page 75 (AB)). He later was led into contradicting that but his first answer seemed to me to have more force. (b) That Rockingham Steel Fabrications did not trade at all (see page 59 (AB)). (c) (i) That the applicant was paid $570.00 per week for annual leave (see exhibit 4 page 97 (AB)) (which would reflect what the agreed weekly wage in fact was). (ii) That a person under his instructions entered an annual leave amount of $570.00 at the agreed rate of wage (see page 66 (AB)). (d) That $570.00 was the correct weekly wage (see page 64 (AB)), and that from 5 April 1995 to the end of the first period of employment, the rate applicable to the employment of Ms Scott was $570.00, and there was a very significant difference between what she was paid, namely $282.95 per week and $570.00. Generally, with some intermittent and equivocal denials, there was an admission that the amount to be paid and agreed to be paid to Ms Scott was $570.00 per week. That is borne out, too, by her own evidence on a fair reading of it, although Mr Beedham submitted incorrectly that her own evidence was not to that effect (see page 30 of Transcript on Appeal). The substance of the Grounds of Appeal were that there was an error in findings based on the evidence. The question of what the contract of employment was, depended upon whether Ms Scott’s evidence was accepted instead of that of Mr McNally. If Ms Scott’s evidence were accepted, then the contract included the following terms— (a) That the applicant was to be paid a token wage until the appellant’s (and Mr McNally’s) financial situa- tion improved. (b) That upon the financial situation being resolved, the balance between the token wage and $570.00 per week was to be made up to her. (c) That the agreed rate to be paid was, at all times, $570.00 per week. That the Commission was correct in accepting the evidence of Ms Scott in preference to that of Mr McNally was conceded by Mr Beedham in submissions. The Commissioner accepted that evidence. There was no reason apparent, on a fair reading of the transcript, why the Commission should not have preferred, and every reason ap- parent, upon the concession of Mr Beedham, why the Commission should have preferred the evidence of Ms Scott to that of Mr McNally. Once that was done, the correct find- ing was that the sum of $570.00 per week was the agreed rate and that Ms Scott was entitled to claim and be paid the differ- ence between $282.95 (the “token amount” which Ms Scott was paid) and $570.00 per week. Therefore, those findings and the other findings made by the Commissioner, were properly open to the Commission to be made on the only correct view of the respondent, Ms Scott’s, evidence. I have considered all of the submissions and all of the evi- dence and material. There was, further, no error in the exercise in the Commissioner’s discretion as I find. No ground of appeal is made out, the Commission did not err, and I would dismiss the appeal. CHIEF COMMISSIONER COLEMAN: I have read the draft reasons of the Honourable President and agree that this appeal should be dismissed. The appellant has failed to establish that any error of law is manifest or that the Commissioner’s discretion miscarried. The argument in these proceedings that the evidence before the WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 78 W.A.I.G. 1118 Commissioner in the first instance should have carried the matter despite the acknowledged failings of the respondent’s witness, was fundamentally flawed. COMMISSIONER CAWLEY: This is an appeal by S & M Bennett Pty Ltd T/A Rockingham Sheet Metal Works (‘the appellant’) against the decision of a single Commissioner to award Yvonne Scott (‘the respondent’) the sum of $10,907.43 as payment of denied contractual benefits. The appeal as filed was on eight grounds. Grounds 6. and 7. were withdrawn by leave. The appellant sought to add another ground. The respondent objected and, after consideration, the Full Bench refused leave to add the further ground. The grounds of appeal then are as follows— 1. The Commissioner erred in finding a contract of employment existed between the parties according to the evidence of the applicant. In doing so, the Commissioner was satisfied that— 1.1 The applicant was to be paid a token wage; [1.2] Upon the financial arrangements for the Re- spondent being resolved, the balance between the token wage and $570.00 per week was to be made up to her; [1.3] $570.00 was the rate agreed between herself and Mr McNally; whilst disregarding evidence to the contrary, and the applicant did not show sufficient proof under s29(b)(ii) of the Industrial Relations Act 1979 that the claim for outstanding contractual benefits should be made out. 2. In accepting as true the evidence of the Applicant, where there was conflict in the evidence between herself and Mr McNally, the Commissioner— 2.1 acted without evidence or sufficient evidence; 2.2 took account of irrelevant considerations; and 2.3 failed to give weight, or sufficient weight, to the undertakings given by the Director for the respondent, Mr Wayne McNally 3. A letter from Seagate Structural Engineering Pty Ltd, which says the Applicant was receiving $560 (gross) per week, was relied upon as providing evidence that she commenced employment at Rockingham Sheetmetal Works on terms that were no less favour- able in monetary terms than she was enjoying previously. The Commissioner erred in failing to take into ac- count the circumstances under which the applicant came to be employed at Rockingham Sheetmetal Works, in that a personal relationship was being en- tered into. Mr McNally provided for the applicant, as she herself attested, thus the employment with the respondent was inextricably linked to the personal relationship the applicant had with Mr McNally. 4. The Commissioner erred in disregarding an Austral- ian Taxation Department Employment Declaration, completed by the applicant on 3 May 1995, and which clearly indicates the basis of the employment to be part-time. 5. The Commissioner erred in disregarding the essen- tial conditions of the contract of employment which were agreed to by the parties. The most significant of these was that the applicant was to be paid a wage of $282.95 (gross) per week for services rendered to the company. The employment contract was for no more than $282.95 per week. 6. [withdrawn by leave] 7. [withdrawn by leave] 8. The appeal alleges that the Commission has exceeded its jurisdiction, as the standard of proof for a claim under s29(b)(ii) of the Industrial Relations Act, 1979 is the same as required in the Industrial Magistrate’s Court, according to the Industrial Relations Com- mission, and given by Fielding S.C. The appellant seeks an order that the decision at first instance be quashed. The first five grounds of appeal may be summarised as, in effect, claims that the Commission at first instance erred in making certain findings of fact either with no or insufficient evidence and/or has misdirected herself as to the evidence in making those findings. The remaining ground of appeal was not specifically addressed in the submissions and it is not nec- essary to deal with that further. In my view the Commissioner at first instance correctly sum- marised the issues to be determined in the matter as being whether or not there was a contract of employment between the parties and, if so, whether it included a provision that the applicant was to be paid the sum of $570.00 per week in the relevant period, and corollary questions from that. The onus of establishing the contractual benefit claimed was due fell on the applicant with the determination to be a matter of fact and law for the Commission. There was no dispute at first instance that the applicant worked for the respondent between 5 April 1995—2 February 1996 and again between the 5 July 1996—11 October 1996. The benefits claimed are in relation to the first of these two periods when she was paid $282.95 per week. The fundamen- tal issue then was whether or not it was a condition of the contract of employment that, as the applicant at first instance claimed, the sum of $282.95 gross was a part payment of a total weekly entitlement to $570.00 gross, with the balance to be paid to her subsequently. Oral evidence as to the contract of employment was given by Ms Yvonne Scott, (the respondent here), an employer prin- cipal Mr Wayne Ronald McNally and the factory foreman for the employer Henry Charles Hinschen. As the Commissioner at first instance observed the question to be decided did not go to any judgement as to fairness of the arrangements between the parties but to issues of fact as to what had been agreed. That largely turned on the competing oral evidence of the applicant and Mr McNally; a matter of discretionary judgement for the Commission. The proper approach to appeals against discretionary judge- ments was canvassed in a recent decision by Kennedy J in an Industrial Appeal Court matter [Appeal IAC 21 of 1996, The Registrar and Automotive, Food, Metals, Engineering, Print- ing and Kindred Industries Union of Workers—Western Australian Branch, (1998) 78 WAIG 289 at 293]. His Honour cited with approval the conclusions by Kitto J in Australian Coal and Shale Employees’ Federation v The Commonwealth (1953) 94 CLR 621 at 627. It is reproduced here in part — ... the true principle limiting the manner in which an appel- late jurisdiction is exercised in respect of decisions involving discretionary judgement is that there is a strong presumption in favour of the correctness of the decision appealed from, and that that decision should therefore be affirmed unless the court of appeal is satisfied that it is clearly wrong. A degree of satisfaction sufficient to overcome the strength of presumption may exist where there has been an error which consists in acting upon a wrong principle, or giving weight to extraneous or irrelevant matters, or failing to give weight or sufficient weight to relevant considerations, or making a mis- take as to the facts. Again, the nature of the error may not be discoverable, but even so it is sufficient that the result is so unreasonable or plainly unjust that the appellate court may infer that there has been a failure properly to exercise the dis- cretion which the law reposes in the court of first instance: House v The King (1936) 55 CLR 499 at 504-505. This approach, which emphasises the long established prin- ciple that an appellate court must not interfere with a discretionary judgement appealed against unless it is satisfied, that some palpable error or substantial wrong has occurred. The Commissioner at first instance, who had the significant advantage of observing the witnesses, preferred the evidence of the applicant to that of Mr McNally. That is, where there was a conflict in evidence given by these two witnesses as to the terms of the employment, the applicant’s version was ac- cepted. The appellant alleges in Grounds 1, 2 and 5 that in accepting the applicant’s evidence on the existence of a con- tract of employment and its terms the Commissioner disregarded contrary evidence, or in the alternative the claim was not made out and/or the Commissioner took account of irrelevant considerations and/or failed to give weight or suffi- cient weight to the evidence of McNally. None of these grounds WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 1119 78 W.A.I.G. or parts thereof are made out. It was open to the Commis- sioner to conclude as she did as to the credibility of the applicant and McNally. It was not established that irrelevant considera- tions were of account in the decision or that an error in according weight to the evidence of McNally occurred. So far as Grounds 3 and 4 are concerned it is clear from the reasons for decision at first instance that the Commissioner did have regard for the personal relationship between Scott and McNally at the time the contract of employment was ar- rived at as well as the declaration of Scott that the employment was part time in arriving at conclusions as to the terms and conditions of employment. Again, no error has been estab- lished by the appellant with respect to a lack of regard or an application of weight in these considerations. Having regard for what has been put to the Full Bench, the appellant has not met the test of establishing a palpable error in the exercise of what is a discretionary judgement. Accord- ingly the Full Bench must not intervene. I would dismiss the appeal. THE PRESIDENT: For those reasons the appeal was dis- missed. APPEARANCES: Mr C J Beedham on behalf of the appel- lant Mr K Trainer on behalf of the respondent.