TASMANIAN INDUSTRIAL COMMISSION

Industrial Relations Act 1984
s.29 application for hearing of an industrial dispute

Philip Noel Turner
(T8219 of 1999)

and

Property Marketing & Management Pty Ltd ACN 069 552 718 trading as
Raine & Horne Eastern Shore

Industrial dispute - alleged unfair termination of employment - Auctioneers and Real Estate Act 1991 - commission payments - advertising costs - application dismissed

REASONS FOR DECISION

This was an application for a dispute hearing made pursuant to section 29(1A) of the Industrial Relations Act 1984 (the Act) by Philip Noel Turner of Hobart (the employee).

The employee was in dispute with Property Marketing & Management ACN 069 552 718, trading as Raine & Horne Eastern Shore (the Company) over the alleged unfair termination of his employment with the Company and alleged breaches of the Estate Agents Award (the Award) with respect to his employment.

At the hearings the employee ultimately represented himself and the Company was represented by the Tasmanian Chamber of Commerce and Industry Limited (the Chamber).

The application was lodged in late January 1999, and was brought on for hearing first on 17 March 1999. After that date, a number of hearings took place the last being on 19 July 1999. Initially the parties had discussions with a view to a settlement and some matters were resolved: then the employee confirmed that his outstanding claims were for payment of commissions due and for the deletion of outstanding advertising debts.

The employee commenced employment with the Company as a real estate sales consultant in May 1997. He submitted his resignation as an employee on 16 December 1998. The employee initially claimed his employment had been terminated.

At the time of the commencement of his employment the employee had signed a letter of appointment indicating his agreement to the terms set out in the letter (the original agreement) (Exhibit T3). Those terms included a provision for the method of the payment of commission to the employee for any sales he completed.

With regard to commission payments, the Award prescribed in particular at Clause 33(c)(v) as follows:

"(v) Where an employee is to be remunerated by any commission and/or incentive payments the letter of appointment shall contain the following additional particulars:

(1) the method of calculating such commission and/or incentive payments and the method by and times at which such commission and/or incentive payments are to be paid.

(2) Where the employee is to be entitled to receive any commission and/or incentive payments after the termination of his employment, the method by and the times at which such commissions and/or incentive payments are to be paid. Provided it shall also be stated that in the case of unconditional sales effected prior to termination of employment which subsequently becomes settled sales, that full commission which would have been paid to that real estate sales consultant as if he were still employed by the estate agent, be paid to that salesman."

Also included in the original agreement was a clause:

"6. ADVERTISING & PROMOTION

6.1.1. On 1^st July annually a personal budget to $1000 will be allocated. This budget will be used at your discretion to cover non vendor paid advertising and advertising overruns. For properties sold within the agreed budget $100 will be credited. Advertising overruns will be debited.

6.2 In the event that the individual budget goes into debit, such debit may be recovered from commission."

On 27 January 1999, the Company sent a cheque to the employee together with a statement of explanation (Exhibit T6) which included, amongst some other items, reference to an amount of $90 deducted for the non-return of an "Open House" sign originally allocated to the employee by the Company for his use. The employee denied he had ever received or had responsibility for the missing sign.

On 4 February 1999, the Company sent a further letter (Exhibit T1) to the employee in the form of an account rendered which claimed a balance owing to the Company of $1,152.87. The letter listed final sales commission payments due to the employee, pay advances (for the three final weeks) to be deducted (because of commissions due), outstanding advertising costs to be deducted, and half the cost of a window display stand to be deducted.

Apart from giving sworn evidence himself, the employee brought two other former sales consultants of the Company as witnesses.

The Chamber brought as witnesses for the Company Mr Nigel Heaven, the Company owner and manager, and four other sales consultants currently employed by the Company.

In essence, the employee claimed that the final sales commission payments mentioned in the letter dated 4 February 1999 should have been paid to him, but, he claimed he was not liable to pay the outstanding advertising costs, nor was he liable to pay for the "Open Home" board elsewhere alleged to have been allocated to him.

There was also some disputation between the Company and the employee over the cost of the purchase of a window display stand: there were claims and counter claims and eventually the Company (through Mr Heaven) indicated this element of the disputed matters could be resolved.

The employee submitted that personal budget advertising overrun costs were only permitted to be deducted from sales commission payments for two reasons: first, in the event of a sale having been effected; or secondly, in the event of the delisting of a property from sale.

The Company, relying on Clause 6.2 of the original agreement, said there was a third reason, that where an employee ceased employment with the Company having personal budget advertising overrun costs outstanding.

The employee further submitted it was illegal for the Company to deduct advertising cost overruns on one property from commission monies due to a consultant from the sale of a second property. The employee's submission seemed to be based on a lawyer's letter of advice to another sales consultant which posited that the provisions of Section 24 of the Auctioneers and Real Estate Agents Act 1991 prohibited the deduction of advertising costs on one sale from the commission due to a sales consultant on another sale.

The Company in response argued that the lawyer's advice was wrong since the prescriptions in Section 24 of the Auctioneers and Real Estate Act applied only to relations between a real estate agent (as defined) and a client vendor. In the Act, a real estate agent is defined as:

" ... means a person who carries on the business of -

(a) selling, buying, exchanging, leasing or otherwise dealing with, or disposing of, real estate or businesses; or

(b) negotiating the sale, purchase, exchange, lease or any other dealing with, or the disposition of, real estate or businesses; or

(c) collecting rents for real estate or businesses; or

(d) managing real estate let or leased -

pursuant to instructions received from other people, and includes a person who, by publishing information or reports, represents himself or herself as carrying on that business; ...",

whereas, a real estate sales consultant is defined as:

" ... a person who, acting for a real estate agent -

(a) induces or attempts to induce, or negotiates with a view to inducing, people -

(i) to acquire, dispose of or lease real estate or businesses; or

(ii) to make an offer to acquire, dispose of or lease real estate or businesses; or

(iii) to enter into contracts for the acquisition, disposal or leasing of real estate or businesses; or

(b) collects rents for real estate or businesses; or

(c) manages real estate let or leased; ..."

The amount of the employee's alleged outstanding advertising cost overruns was inflated by additional overrun costs on the properties for sale which he had taken responsibility for by mutual agreement with the Company when another sales consultant, Mr Clive Roper, left the Company's employment in March/April 1998. The employee and Mr Roper had worked in an unofficial, internal partnership prior to Mr Roper's departure.

Findings

Put simply, the Award provides for an employer and a sales agent to reach written agreement at the commencement of the sale agent's employment as to arrangements for sales commission payments. In this case, the requirement was fulfilled and the employee did sign such an agreement (the original agreement) in 1997.

For the purposes of this decision, the key provision in the original agreement was Clause 6.2:

"In the event that the individual budget goes into debit, such debit may be recovered from commission."

I find that this provision, established under the Award at Clause 33(c)(v), gave the Company the authority and the power to recover advertising cost overrun debts incurred by the employee and, there being no other means of recovering those debts after the employee ceased employment with the Company, it was in order for the Company to deduct the amount of those debts from commission monies remaining to be paid to the employee.

In the context of my conclusions about the significance of Clause 6.2 of the original agreement, I accept that the system of the "slush fund" and the debiting of advertising cost overruns was unique to the Company and hence comparisons with the practices of other agencies in these matters were neither necessary nor appropriate. I also accept the need for strict control of advertising cost overruns.

There was dispute between the parties as to the primary reason for the existence of the Company's unique advertising costs system; was it cost containment or Company profile promotion? I consider both reasons to be legitimate and I am not concerned with priorities in that regard.

During the course of the hearing much was made by both sides as to the terms of a new employment agreement (the new agreement) sought to be completed by the Company in late November and early December 1998. At that time the Company had sought to improve the terminology of the original agreement so that the rights and procedures specified in it were clarified and better explained, but, in essence meaning the same thing. The employee disputed that the new agreement applied to him because there had been some heated arguments over it at the time between the employee and Mr Nigel Heaven, the proprietor of the Company; the employee indicated in writing on the new agreement that he had signed it under duress.

I find the dispute over the new agreement was comparatively irrelevant, in that the original agreement certainly did apply (in the manner I have already indicated) if the new agreement did not. In any case, the disputation over the new agreement related only to a proposed prohibition on ex-employees (like the employee) from working for another real estate office within a set period after leaving the Company's employment (a restrictive covenant). I am satisfied that, at the time, the employee did not dispute the proposed clarified advertising cost overrun debit provision and I am not prepared to rule that he was not bound by the new agreement for the short period he was employed under it.

As to the dispute over the window display stand, I am satisfied on the evidence that Mr Heaven did contribute half of the cost of the stand and I reject the employee's submissions in that regard. In the same way, I am satisfied on the evidence that the employee did accept responsibility for the missing "Open Home" sign board which was found eventually in Swansea.

In relation to these last two matters, the Commission notes they are not industrial matters, rather they are commercial arrangements between the Company and the employee not connected with wages, conditions or commission payments and therefore they are not within the jurisdiction of the Commission. In any case, because of the evidence, I am not prepared to rule against the Company on either point.

During the course of the hearing there were a number of allegations against Mr Heaven as to violence, intimidation and threats. There was no evidence to support those allegations and I reject them.

I accept the Chamber's submission in relation to the deduction of costs on one property from the commission due on another property. I agree that the provisions of Section 24 of the Auctioneers and Real Estate Act do not apply to the dealings between a real estate agent (an employer) and a real estate sales consultant (an employee).

The employee questioned the basis for the amounts quoted by the Company as advertising cost overruns on certain properties and, in a few cases, the Company accepted the corrections or agreed to reduce or waive the amount in them. I am satisfied, however, that the Company's records were reliable and, in any case, the resulting change in the calculations was not such as to render the Company liable. In this context, I accept the Chamber's submission that such queries should have been raised when any alleged mistake occurred. One of the employee's witnesses epitomised just this point in that he said he always scrutinised the Company's detailed weekly reports on these matters and did not let any mistakes slip by at the time. I am also satisfied with the explanations given by Mr Heaven to the various questions put to him by the employee.

For all the reasons mentioned, I am satisfied that the Company is not liable to pay the amounts claimed by the employee.

The application is dismissed.

P A Imlach
COMMISSIONER

Appearances:
Ms F Hughes (17/3/99) for Philip Noel Turner.
Mr P Turner (26/5/99, 9/7/99, 12/7/99 and 19/7/99), self-represented.
Mr D Dilger (17/3/99, 26/5/99, 9/7/99, 12/7/99 and 19/7/99), Tasmanian Chamber of Commerce and Industry Limited for Property Marketing & Management Pty Ltd ACN 069 552 718 trading as Raine & Horne Eastern Shore with Mr N Heaven.

Date and place of hearing:
1999
March 17, May 26, July 9, 12 and 19
Hobart