2002 WAIRC 06122
100212000


WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

PARTIES ROBERT HARWOOD
APPLICANT
-V-

ACE SERVICES PTY LTD TRADING AS DEFENSIVE DRIVING SCHOOL
RESPONDENT
CORAM COMMISSIONER J H SMITH
DELIVERED FRIDAY, 2 AUGUST 2002
FILE NO. APPLICATION 2275 OF 2001
CITATION NO. 2002 WAIRC 06122
_______________________________________________________________________________
Result Declaration that the Applicant was an employee and unfairly dismissed. The Respondent ordered to pay $7,683.00 as compensation.
Representation
APPLICANT MS C CRAWFORD (OF COUNSEL)

RESPONDENT MR R SUTHERLAND (IN PERSON)
_______________________________________________________________________________

Reasons for Decision

1 Robert Harwood ("the Applicant") made an application under s.29(1)(b)(i) of the Industrial Relations Act 1979 ("the Act") for orders pursuant to s.23A of the Act. The Applicant claims that he was harshly, oppressively or unfairly dismissed by Ace Services trading as Defensive Driving School.
2 At the outset of the proceedings the Respondent's representative advised the Commission that the correct name of the Respondent is Ace Services Pty Ltd trading as Defensive Driving School, (hereinafter referred to as "the Respondent"). The Applicant was engaged by the Respondent as a driving instructor. The Respondent says the Commission has no jurisdiction to deal with the Applicant's claim as it did not employ the Applicant. The Respondent says at all material times the Applicant was engaged as a subcontractor and ran his own business as a driving instructor. By consent it was agreed by the parties that both the jurisdictional issue and the evidence whether the Applicant had been harshly, oppressively or unfairly dismissed would be heard together.
Factual Circumstances in Relation to the Nature of Engagement
3 The Applicant has held a Department of Transport Driving Instructors Licence for about ten years. During that period of time the Applicant has worked as a driving instructor for about six years. He has carried out work for the business trading as Defensive Driving School on three separate occasions. He was engaged in 1993 for a period of about six months when the business was owned by a Mr Stevens. He worked again for Mr Stevens in 1995 for about 12 months. In February 2000 he was engaged by Mr and Mrs Caddy who were the owners of the business at that time. Whilst engaged by Mr and Mrs Caddy the Applicant's terms of engagement were as follows:
(a) Initial bookings for a first lesson were provided to each driving instructor by the Defensive Driving School office. The Applicant lived in West Perth and he was allocated an area which spanned from Fremantle through Melville across to Murdoch and down to Munster. Students who telephoned the office for a driving lesson who lived within that geographical area were allocated to the Applicant. The Applicant would communicate daily by email or telephone with the office about times and dates for bookings for new students, cancellations and test arrangements. The Applicant informed the office of bookings he made and the office staff would advise him of bookings and if any students had telephoned and changed lesson times. Although the initial bookings for a student were made by the office, after the first lesson the Applicant was expected to make further bookings with the students. However, in some cases where the student was not able or unwilling to do that the student would contact the office to make further bookings.
(b) The Applicant was provided with a vehicle which was owned by the business and marked with Defensive Driving School signs. The Applicant had custody of the vehicle at all times and could use it for his own private use. The business paid for registration costs and all maintenance costs. The only cost associated with the running of the vehicle that was borne by the Applicant was the cost of petrol.
(c) When the vehicle was required to be serviced the Applicant would advise the office to ensure that he was not booked for lessons at the time of servicing. On occasions he would have the use of a spare car owned by Defensive Driving School.
(d) The fee paid by each student and the portion to be retained by the Applicant was set by the owners of the business. At the end of each week the Applicant was required to tender to the office the school's portion of the fees to be paid by the students and to provide to the school the number of lessons and driving tests conducted. The Applicant was responsible for collecting all fees from the students and ensuring the students paid.
(e) Students could either pay by way of cash, cheque or credit card. Shortly before Mr and Mrs Caddy sold the business, the fee students paid was increased to $34.00 for an hour's lesson and $56.00 for each driving test. Of the $34.00 for each lesson the Applicant was paid an amount of $19.25 and the school was paid $14.75. In relation to each driving test the Applicant retained $30.30 and the school was paid $25.70. At all material times these fees were set by the owners of the business without any discussion with the Applicant.
(f) If a student wished to pay by credit card, the Applicant would contact the office and office staff would arrange for deductions to be made from the student's credit card for payment for lessons.
(g) The Applicant was responsible for the payment of his own income tax.
(h) The business paid workers' compensation insurance payments to cover the Applicant's work.
4 Mr and Mrs Caddy sold the Defensive Driving School to the Respondent. The Respondent is a company owned by Mr Russell Sutherland. Mr Sutherland's company took over the running of the business on or about 1 May 2001.
5 Shortly prior to Mr Sutherland's company taking over the business a dinner was held on 27 April 2001 with all drivers, including Mr Harwood. At that dinner Mr Sutherland informed the Applicant and others that he knew nothing about running a driving school and that "he wanted things to remain the same". It is common ground between the parties that the terms and conditions applied to the engagement of the Applicant whilst engaged by Mr and Mrs Caddy continued to apply once the Respondent took over the ownership of the business.
6 After the Respondent took over the business, the Applicant was supplied with business cards to hand to students. The business card stated the name of the business as Defensive Driving School. On each business card, the Applicant could write his name on the back as a driving instructor. The Respondent continued to be responsible for all advertising and placed an advertisement in the Yellow Pages for the business. The Applicant was also provided with "no-show cards" marked with the Respondent's telephone number which he would leave at students' addresses if they failed to show for a driving lesson.
7 It was not in dispute that the Applicant was generally required to be available to conduct lessons from 7:30am until 6:00pm, Monday to Friday and to be available to work on Saturday mornings. However it is disputed by the Respondent whether he (the Applicant) required the Respondent's permission to make himself unavailable, within the aforementioned times. The Applicant said that he would advise and seek the permission of staff if he was not available at particular times, such as late Friday afternoon and Saturday mornings. Mr Alan Cairns, the General Manager of the business for a short period in October and November 2001, testified that it was expected of all driving instructors that they make themselves available to work within the aforementioned times, however if instructors said they were unavailable they (the Respondent) had to accept that. The Respondent's Office Manager, Ms Merrill Strickland gave similar evidence. It is common ground that the Applicant could refuse to provide instruction to a particular student. The Applicant said the only time he had done so was for non-payment of fees. He conceded however, that he could also refuse to provide instruction on grounds of safety. The Applicant testified that if he had a problem with a student he would advise Ms Strickland so she "could sort it out".
8 During July 2001 until 13 August 2001 the Applicant did not work for about one month. He gave uncontradicted evidence that he had arranged the taking of a holiday with the previous owners, Mr and Mrs Caddy. He said he could not take leave while another instructor was on leave. Whilst he was absent he was not paid any holiday pay, nor did he request that he be paid holiday pay. The Respondent made arrangements for another driving instructor to cover his area whilst he was unavailable. It appears Mr Alan Cairns was engaged as a relief driver although it is not clear whether he relieved the Applicant whilst he was on leave. Mr Cairns later became Manager. After the Applicant returned from his holiday, he was provided with a document to be given to all the students titled "Defensive Driving School Passport". The document contains a letter from Mr Sutherland (as director of the Defensive Driving School) and sets out the responsibilities of the Defensive Driving School to the students and the responsibilities of the students. It also contained a student tuition log book to be completed by the student and a student progress report where following a lesson, an instructor is to make comments. The document also provided a guide to practical driving assessment and information on post assessment education courses.
9 In late August 2001 the Applicant was directed to make himself available for a meeting/dinner with Mr Sutherland and other driving instructors. Prior to this meeting Mr Cairns (who had at that time been engaged by the Respondent as a consultant/driving instructor), had spent time with each instructor observing the way in which they carried out lessons. He had also consulted a number of instructors with a view to introducing uniformity in driving instructing methods and professional standards. The Applicant said Mr Sutherland spoke at the meeting about how they (the instructors) should conduct themselves. He also said Mr Sutherland spoke about introducing "packages" for students for a one-off figure and suggested that if students were not prepared to take a certain number of lessons they could be advised the Respondent could not help them. The Applicant indicated these ideas were discussed and there was opposition by the instructors to these ideas. Mr Cairns testified that at the meeting there was a general discussion about how each of the instructors should conduct themselves as self-employed drivers. Each of the drivers, including the Applicant, was handed a document at that meeting headed "Company Policy" which provided as follows:
"1. The policy of the company is to take a higher "moral and ethical" stance and a more professional approach to instructing Students not to just pass a "P" plate test but to prepare them with skills that will teach and enforce safe driving principles that will last a lifetime.
2. You are to take control of the Students driving instruction program and work towards them achieving both our and their goals. This includes you making future bookings and re-arranging any changes to these with the student. Students must be encouraged to participate in all Post Assessment courses on offer to assist in widening their driving experience.
3. Treat all Students with respect and empathy no matter their individual skill levels.
4. All bookings for future lessons etc. must be confirmed with the Office as soon as possible to avoid conflict with other Student's arrangements.
5. COMMUNICATE AT ALL LEVELS.
Student/Office/Parents etc.
6. Students are to book their own Tests with your guidance as to when you feel they are fully competent and mentally prepared to pass the Test. CONFIRM THESE DATES WITH THE OFFICE as soon as possible.
7. All tuition etc must be carried out within the laws of the Traffic Act. No speeding etc.
8. Be punctual at all times. Contact all parties and keep them informed if you have been delayed.
9. A "DO NOT TOUCH POLICY" applies towards all Students except in an emergency or in the normal course of greeting. This will avoid any claims of inappropriate behaviour.
10. Complaints of any nature by the Student, Parent etc are to be referred to the Office immediately so action can be taken to rectify any problem.
11. Be aware of any actions that may contravene legislation on discrimination.
12. It is your responsibility to ensure all necessary licenses and Permits etc. for both yourselves and the Students are current and that the Company has this information updated where necessary.
13. Vehicles must be clean and maintained in a roadworthy condition at all times. The office must be made aware when vehicle services are due and any other maintenance requirements.
14. No smoking in vehicles. Discretion should be used when smoking near students, parents etc.
15. Dress at all times to be clean "Smart Casual". Collared Shirt, Tailored Slacks, neat jeans or belted shorts. Decent shoes not joggers.
16. Personal hygiene must be of the highest order with the use of deodorant etc. Clean-shaven (except for beards).
17. Instructors are responsible for all monies collected or due from students and should be forwarded to the office weekly.
18. No "Private" lessons are to be conducted without the express approval from the Office and if these are agreed they are to be conducted outside Company working hours."
At that meeting the Applicant was also provided with a copy of a document containing a number of headings in relation to advertising, the duties carried out by the office manager and instructor's responsibilities. Notwithstanding the Respondent's policy and other documents, Mr Cairns maintained in his testimony that each driving instructor had control of content of each lesson and could conduct each lesson as they (the instructor) thought fit.
10 Mr Alan Cairns was appointed as general manager for the Defensive Driving School on 15 October 2001. Following discussion with Mr Sutherland, Mr Cairns prepared a memorandum to instructors whereby each of the drivers was provided with an option to change their system of remuneration. From 29 October 2001, Mr Harwood, along with the other driving instructors was given a choice as to whether they wished to be remunerated by the existing percentage remuneration system or to pay a flat rate of $500.00 per week to the Respondent irrespective of the total number of lessons and driving tests given by a driving instructor each week. The Applicant was also advised that if he accepted the flat rate scheme he could engage other driving instructors to work for him when he was not available and he could return a percentage of client's fees when the lessons and tests were conducted by another driver. It is common ground that the Applicant did not take up the flat rate system. As discussed below there is a dispute as to whether the flat rate system required a payment per week of $450.00 per week or $500.00 per week from each driving instructor who participated in the scheme. The Applicant says that at about that time there was also a discussion about becoming area managers and leasing the Defensive Driving School vehicles however it seems those options were not pursued by the Respondent whilst the Applicant was engaged.
11 From 29 October 2001 the Respondent increased the fee payable by the students for lessons and licence tests to $38.00 and $57.00 respectively. The portion that was to be retained by the Applicant and other drivers who did not change from the existing percentage remuneration system did not change. Their portion remained $19.25 per lesson and $30.30 per test. Mr Cairns maintained that if a driving instructor left the business to work in another driving business they could take their students with them. The Applicant disputed this was the case and said it was his understanding that the clients were the "property" of the business and not the instructors.
12 Both the Applicant and the Respondent kept copies of weekly bookings ("job schedule"). The Applicant recorded on weekly booking sheets, a record of the names of students who had lessons and tests and fees returned by him and amounts paid to the Respondent. It is apparent from these sheets that the Applicant sometimes did not have bookings every hour that he was available to work for the Respondent.
Legal Principles
13 It is not for the Respondent to show that the Applicant was not an employee but for the Applicant to show, on the balance of probabilities, that he was an employee (The Western Australian Builders' Labourers, Painters and Plasterers Union of Workers v R B Exclusive Pools Pty Ltd t/as Florida Exclusive Pools (1996) 77 WAIG 4 at 8 per Fielding SC).
14 The distinction between an employee and an independent contractor is "rooted fundamentally in the difference between a person who serves his employer in his, the employer's, business, and a person who carries on a trade or business of his own" (Marshall v Whittaker's Building Supply Co (1963) 109 CLR 210 per Windeyer J at 217; see also Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313 per McHugh J at 366; approved by Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ in Hollis v Vabu Pty Ltd [2001] HCA 44 at [40]; (2001) 181 ALR 263 at 275).
15 The notion of "control" and its adjustment to the circumstances of contemporary life was recently re-considered by the majority of High Court in Hollis v Vabu Pty Ltd [2001] HCA 44 at [43-44]; (2001) 181 ALR 263 at 276; where Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ observed:
"… In Humberstone [62], Dixon J observed that the regulation of industrial conditions and other statutes had made more difficult of application the classic test, whether the contract placed the supposed employee subject to the command of the employer. Moreover, as has been pointed out [63]:
'The control test was the product of a predominantly agricultural society. It was first devised in an age untroubled by the complexities of a modern industrial society placing its accent on the division of functions and extreme specialisation. At the time when the courts first formulated the distinction between employees and independent contractors by reference to the test of control, an employer could be expected to know as much about the job as his employee. Moreover, the employer would usually work with the employee and the test of control and supervision was then a real one to distinguish between the employee and the independent contractor. With the invention and growth of the limited liability company and the great advances of science and technology, the conditions which gave rise to the control test largely disappeared. Moreover, with the advent into industry of professional men and other occupations performing services which by their nature could not be subject to supervision, the distinction between employees and independent contractors often seemed a vague one.'
It was against that background that in Brodribb [64] Mason J said that, whilst these criticisms might readily be acknowledged:
'the common law has been sufficiently flexible to adapt to changing social conditions by shifting the emphasis in the control test from the actual exercise of control to the right to exercise it, 'so far as there is scope for it', even if it be 'only in incidental or collateral matters': Zuijs v Wirth Brothers Pty Ltd [65]. Furthermore, control is not now regarded as the only relevant factor. Rather it is the totality of the relationship between the parties which must be considered.' "
16 I observed in Howe v Intercorp Services Pty Ltd trading as West Vision Painting Company [2001] WAIRC 2643 at [24] and [25]; (2001) 81 WAIG 1212 at 1214 that:
"The relationship of employer and employee is a contract of service where an employee contracts to provide his or her work and skill (typically to enable an employer to achieve a result). An independent contractor works in his or her own business on his or her own account. Whilst the authorities do not establish a conclusive test for determining whether a person is an employer, regard must be had to the whole of the relationship. In Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 Mason J at 24 and Wilson and Dawson JJ at 36 held that a prominent factor is the degree of control which the person (who engages the other) can exercise over the person engaged to perform work. The High Court also held that the existence of control is not the sole criteria, other relevant matters include, but are not limited to, the mode of remuneration, the provision and maintenance of equipment, the obligation to provide exclusive services, provision for holidays, deduction of income tax, delegation of work, the right to suspend or dismiss, the right to dictate the place of work and hours of work. Further, Mason J in Stevens v Brodribb Sawmilling Co Pty Ltd at 26 to 27 also observed that in some cases the organization test can be a further factor to be weighed (along with control), in deciding whether the relationship is one of employment or of independent contractor. The organization test is whether the party in question is carrying on the business, in the sense of carrying it on for himself or on his own behalf and not for a superior (Montreal v Montreal Locomotive Works [1947] 1 DLR 161 per Lord Wright at 169).
Whilst regard can be had to whether the parties regarded their contractual relationship one of employee/employer or independent contractor, if the evidence shows otherwise the parties cannot alter the truth of that relationship by putting another label on it (Massey v Crown Life Insurance Co (1978) 1 WLR 676 and Narich Pty Ltd v Commissioner of Pay-Roll Tax (1983) 2 NSWLR 601)."
The Facts of the Case
The Terms of the Contract
17 The terms of the Applicant's contract with the Respondent were not governed by any written formal contract. The terms of engagement are set out above.
Control
18 Whilst the Applicant had control over the way in which he performed each individual lesson with a student he was subject to direction and control by the Respondent in respect of the general manner in which he conducted each lesson and test.
Mode of Remuneration
19 The Applicant collected all fees, retained his portion and was responsible for the payment of his own income tax. The Respondent did not pay the Applicant for sick leave or annual leave.
Obligation to Work and Place of Work
20 The evidence establishes that the Applicant was allocated an area in the metropolitan area and he was given all of the bookings in that area. I accept the evidence given by Mr Cairns and Ms Strickland that the Applicant was not given any bookings for times which he was unavailable. The weekly sheets show that the Applicant until late September 2001 always made himself available between 7:30am and 6:30pm each day, except that he was usually unavailable after 5:00pm on Fridays. Sometimes he was unavailable on occasions after 5:30pm on Thursdays. In late September 2001 he advised Ms Strickland that he was unavailable to work on Saturdays but he was available to work on Sundays. There is no evidence that the Applicant was able to conduct driving lessons on behalf of himself.
21 The nature of the Applicant's work patterns, the mode of remuneration and the nature of the booking system are consistent with the nature of engagement being an independent contractor. But all other circumstances must be examined.
Provision and Maintenance of Equipment
22 The Respondent provided the Applicant with a fully maintained vehicle which had signs on the vehicle indicating his business was "Defensive Driving School". The Applicant however paid for all petrol. The Applicant was provided with business cards which also indicated the name of the business as the Respondent. The Respondent was responsible for advertising.
Whether Conducting Own Business
23 It is my view that the Applicant was not conducting his own business. The Applicant did not delegate his work to others. He did not have any ability to set or bargain his rate of remuneration or the amount that the students were charged. Although Mr Cairns contended that the Applicant retained the clients after termination, the evidence does not support that contention. When Mr Cairns came to the view that the Applicant had resigned he immediately took steps to take possession of the Respondent's vehicle as soon as he could so that he could make arrangements for lessons that would have otherwise been conducted by the Applicant on the days following the Applicant's "resignation".
24 When all the relevant factual circumstances are considered I am of the view the Applicant was employed as part of the Respondent's business and his work was done as an integral part of that business. Accordingly I am satisfied that the Applicant was engaged at all material times as an employee working under a contract of service.
Events that Led to the Applicant's Employment Coming to an End
The Applicant's Evidence
25 Prior to the Applicant receiving a memo to instructors dated 29 October 2001 in which the flat rate system was outlined, the Applicant met with Mr Cairns at his (the Applicant's) home to discuss the flat rate system of remuneration. The Applicant testified that Mr Cairns informed him (the Applicant) that the instructors could make more money if they worked smarter and they could be better remunerated if they paid a flat amount of $500.00 per week to the business and kept the remaining fees. The Applicant said he listened to what Mr Cairns had to say and explained to him (Mr Cairns) that he was not in a position to make a decision "on the spot" that he wanted to have an accountant look at the scheme. He said that Mr Cairns also mentioned to him that he (Mr Cairns) thought it would be advantageous to the drivers if they leased the vehicles as the expenses would be 100% tax deductible (to the drivers) and they could become area managers. He said Mr Cairns told him if they entered into a leasing arrangement he (the Applicant) could employ other drivers to take lessons and he (the Applicant) could be paid a percentage of the fees collected by those drivers. The Applicant testified that Mr Cairns did not indicate to him the cost of leasing the vehicle. He said it was a complicated discussion and he became confused at times. He said Mr Cairns also asked him to provide an ABN number and that he told Mr Cairns that he had been advised by the Taxation Office that anything less than $50,000 per annum he was not required to have an ABN number. He said he also told Mr Cairns he did not want to run his own business and wanted to remain employed by the Respondent. The Applicant said Mr Cairns tried very hard to convince him that the flat rate system payment arrangement was a good idea. The Applicant said he did not disagree but he just wanted someone who knew about these matters to give him an opinion.
26 The Applicant said Mr Cairns later telephoned him on a number of occasions and asked whether he (the Applicant) had decided to take up the $500 flat rate system. He said he informed Mr Cairns he had not decided. At one point Mr Cairns asked him (the Applicant) whether he would change from a manual to an automatic vehicle. He said that Mr Cairns informed him that if he did so he would be able to make more money. The Applicant said that he advised Mr Cairns that he did not wish to teach driving lessons using an automatic car as he had a commitment to his existing students and he did not like teaching driving in an automatic vehicle. The Applicant said that Mr Cairns rang him regularly to discuss the flat rate system when he was conducting lessons. He said he found the calls harassing and found it difficult to concentrate on teaching people to drive. The Applicant said that he informed Mr Cairns that it was his view that he could see that the flat rate system could be lucrative during busy times but during winter and times of exams he could see himself running into debt and that was the reason why he did not wish to take up the flat rate system.
27 On 22 November 2001 the Applicant said that Mr Cairns rang him at about 11:30am and asked him why he had so many students paying by credit card. The Applicant said that at the time he received the call that the bailiff was at his house. He testified the bailiff was making a note of his property in the event that he (the Applicant) did not pay some outstanding parking fines. The Applicant said that as a result he felt under stress during the telephone call. The Applicant said he asked Mr Cairns whether there was a problem with students paying by credit card and that Mr Cairns told him that he was not happy to have so many students paying by credit card as they (the Respondent) had to pay a fee on every credit card transaction. The Applicant said he was unaware that such a fee was payable. He (the Applicant) said he informed Mr Cairns that he understood the company advertised that credit card facilities were available and did he want him (the Applicant) to tell the students that they could not pay by credit card. The Applicant said that Mr Cairns informed him "No, I just do not want you to encourage them to pay by credit card." The Applicant said he told Mr Cairns he would not discourage students from paying by credit card but that it was better for him (the Applicant) if the students paid by credit card so he did not have to carry large sums of cash around with him. The Applicant said he had had a problem with carrying cash as on 25 October 2001 he had left his client file and $450.00 in cash in the vehicle and the vehicle had been broken into and the cash, cheques and the client file had been stolen. As a result he was indebted to the Respondent for their share of the fees that had been stolen.
28 During the conversation on 22 November 2001 the Applicant said he discussed the break-in with Mr Cairns. Mr Cairns informed him he did not care how it happened, it was his (the Applicant's) "stupid fault" the car had been broken into. He said the conversation went around in circles for about 25 minutes. He said because the bailiff was in his house taking notes on goods and Mr Cairns was harassing him (the Applicant), he was agitated and frustrated. The Applicant testified that he said to Mr Cairns during the course of the conversation "perhaps I should return the keys because I cannot work like this anymore." The Applicant said Mr Cairns responded by saying, "Whatever you like". The Applicant said he informed Mr Cairns that he had to go because the bailiff was there and he put the telephone down. He said he told him he had a lesson to perform and he was late for that lesson and that he had to get ready for the lesson. The Applicant said shortly after he ended the telephone call Mr Cairns rang back and asked when he could pick up the car and the Applicant replied, "What do you mean?" to which Mr Cairns replied, "You have just resigned." The Applicant said he told Mr Cairns he had not resigned and that he (Mr Cairns) had taken what he (the Applicant) had said out of context. The Applicant said that Mr Cairns said to him again that he had resigned and that they continued to go around in circles again about that issue. The Applicant said he informed Mr Cairns he had a lesson to perform and he was already late and he would speak to Mr Sutherland. The Applicant gave uncontradicted evidence that before he went to the lesson he telephoned Mr Sutherland and informed him (Mr Sutherland) that he had had a verbal disagreement with Mr Cairns which had become heated and that Mr Cairns had got the impression that he (the Applicant) had resigned, when he had not resigned. He asked Mr Sutherland to "sort it out". Mr Sutherland agreed to do so.
29 Whilst he was in the course of the lesson he received another telephone call from Mr Cairns who asked him to meet with him at his (Mr Cairns') home. The Applicant said that Mr Cairns informed him that he had not changed his mind about the resignation and that he had spoken to Mr Sutherland about the matter. The Applicant testified however, that Mr Cairns gave him (the Applicant) the impression that he might be willing to sort the matter out. The Applicant drove to Mr Cairns' home in Scarborough at 7:30pm that evening. The Applicant said that when he arrived he apologised for losing his "cool" because he had been under pressure and had been unnecessarily argumentative with him (Mr Cairns) over the credit card issue. He said he informed Mr Cairns he was sorry for arguing with him, that he had not resigned and that he (Mr Cairns) had misinterpreted what he had said as a comment in order to express to him how ridiculous the credit card issue was. The Applicant said that Mr Cairns informed him that he still had the same opinion about payment options and that they should be parting company as he (the Applicant) had resigned. The Applicant reiterated again that he had not resigned. The Applicant said Mr Cairns asked him to hand over the keys and the booking sheets. The Applicant said he did so because he felt under pressure and he did not have any choice. He said Mr Cairns suggested that he contact another driving school, "Allpass Driving School", who he knew had some vacancies. The Applicant said that he did not wish to work for another school that he wanted to continue to work for the Respondent.
30 The following day the Applicant met with Mr Sutherland at 9:15am. The Applicant said he informed Mr Sutherland that he had not resigned, that he had been unfairly dismissed and asked for reinstatement. Mr Sutherland refused and said that he (the Applicant) had resigned. The Applicant said Mr Sutherland told him that Mr Cairns had made the decision and he (Mr Sutherland) could not go back on that. The Applicant also said that he (Mr Sutherland) told him that he had been trying to help the instructors to make better money and all they could do was "knock a good idea on the head". Further that he (Mr Sutherland) had put money into Yellow Pages advertising and the business was losing money. At the conclusion of the meeting the Applicant said that he told Mr Sutherland he would seek legal advice and take action for unfair dismissal. In cross-examination it was put to the Applicant, but not conceded by him, that he became aggressive towards Mr Sutherland at the conclusion of that meeting.
31 Following the Applicant's termination of his employment, he contacted "Allpass Driving School" and applied for a driving instructor's position. However, he was unsuccessful. The Applicant applied for a number of jobs since his employment was terminated and up to the date of hearing. A list of the job applications was tendered into evidence. It is apparent from that list that the Applicant did not apply for any driving instructor's positions. He said at the time his employment with the Respondent was terminated he had four demerit points left. He said that because he was not in the industry anymore he let his driving instructor's licence lapse in late February 2002 and that he lost his driver's licence in June 2002.
32 Prior to the Applicant's employment being terminated he had worked editing video tapes for CFM Productions at race meetings on Saturdays. After his employment was terminated he continued to work for CFM Productions and increased his hours of work on a casual basis.


The Respondent's Evidence
33 Mr Alan Cairns testified that he has several years experience as a driving instructor having initially worked for the Police Department for four years training police officers as drivers and civilians. He said that he worked in the Eastern States. Mr Cairns was initially engaged as a driving instructor for Defensive Driving School in early 2000. Later in the year he was asked by Mr Sutherland to oversee the system of driving in the business and make an assessment how each of the instructors were performing their tasks. He went out with each of the drivers in their vehicles while they were giving lessons. He also worked as a relief driving instructor relieving instructors who went on holidays. He said he was asked by Mr Sutherland to bring uniformity of teaching methodology across the business. After reviewing the driver's systems of work he provided a report to Mr Sutherland. He then sought assistance from three of the more experienced driving instructors and as a result formulated the driving policy set out in paragraph 9 of these reasons.
34 Mr Cairns strongly contended in his evidence that when the fees were increased on 29 October 2001 to $38.00 per lesson, the reason the increase was made was to give the instructors more money to enable them to make a fair living. However, he was unable to explain why he maintained that to be the case in relation to the percentage remuneration system when the amount paid to the instructors under that system did not increase.
35 Mr Cairns said that the meeting on 31 August 2001 with each of the driving instructors was to discuss the policy and to look at ways of improving the performance of each of the instructors so as to increase their profitability and the profitability of the business. He said that each of the drivers was told that if they did not perform as drivers then they should leave. He said it was made plain to them that they were each self-employed drivers and they were not employees of the business and it was up to them to ensure their own profitability.
36 Mr Cairns said that he went to the Applicant's home on two occasions to discuss the $500.00 flat rate system of remuneration. He said that although the memo to instructors stated that instructors were to pay a $500.00 per week flat fee, in fact the proposal was that for the first 12 months that they would pay $450.00 and the additional $50.00 would not be required to be paid as it would be a contribution by the Respondent to the drivers' petrol. He conceded that there was no mention made of this rate in any of the documents provided to the Applicant or to any of the other drivers. He said that the $500.00 rate was arrived at by the Respondent on the basis that the Respondent needed about $500.00 per week to cover the costs of running the business. He said that when he spoke to the Applicant about the scheme the Applicant indicated to him that he understood the scheme.
37 Mr Cairns said that he met with the Applicant and other driving instructors on 1 November 2001 to further discuss the flat rate scheme. He denied putting anyone under pressure to join the flat rate system. He said the two schemes were run together and no driving instructor was forced to change from the percentage system to the flat rate system. Mr Cairns conceded that the flat rate system had subsequently changed since the Applicant's employment was terminated by reducing the rate of pay the drivers have to pay each week. However, the fee to be paid by each of the students has remained at $38.00 per lesson.
38 On 22 November 2001 Mr Cairns says that he was in the office with the office manager Ms Strickland and was advised by her that the Applicant was informing students that they were to pay by credit card and not by cash or cheque. Mr Cairns said he rang the Applicant and told him that he could not tell students this. He asked the Applicant whether he was refusing to take cash or cheques and in response the Applicant informed him (Mr Cairns) that because his car had been broken into and the money had been taken, he thought the policy "cash, cheque or credit card" was "plain bloody stupid" and that he did not wish to take cash or cheques anymore because he did not want money to be lost. Mr Cairns said he asked the Applicant whether he was refusing to take cash or cheques and that the Applicant responded by saying he was not refusing but he was advising the students to pay by credit card. Mr Cairns said he informed the Applicant the policy stands. He said the Applicant was very angry and swore a number of times. He said during the course of the conversation the Applicant informed him that the sheriff was going to come around to his house to take his things and he could not afford to lose any more money by having his car broken into. He said that the Applicant advised him that he was not going along with the Respondent's policy and the Applicant then said, "I will bring the keys back". Mr Cairns said he then reiterated that the policy would stand and he asked the Applicant, "Are you resigning?" to which the Applicant responded, "I wouldn't be bringing the keys back if I wasn't resigning." Mr Cairns testified that he then said to the Applicant, "Well that's your choice, when will you be bringing the keys back?" and he (the Applicant) said, "I've got another lesson to do before I finish." Mr Cairns said the Applicant was quite agitated and the conversation finished.
39 Mr Cairns said he then turned to Ms Strickland and informed her that the Applicant had resigned and Ms Strickland asked when he (the Applicant) was going to bring the keys around. Mr Cairns said he telephoned the Applicant again and asked when he was going to bring the keys back so he (Mr Cairns) could cover that area the next day. Mr Cairns says he then made arrangements to meet the Applicant at his (Mr Cairns') home at 7:30pm to return the keys and other Defensive Driving School brochures.
40 When Mr Cairns spoke to the Applicant that night, the Applicant asked why he (Mr Cairns) had sacked him. Mr Cairns said he told the Applicant he (Mr Cairns) had not sacked him that he (the Applicant) had resigned. The Applicant asked for his job back and Mr Cairns told him, "I am not going to have you back as a driving instructor because of your attitude, because of how you are." He said the Applicant then threatened to sue the Respondent for unfair dismissal.
41 Earlier in his evidence Mr Cairns said that when he spoke to the Applicant in the first conversation on 22 November 2001, he had not wanted to aggravate the Applicant as the school was starting to increase lessons and he did not want to lose a driving instructor as the school was struggling to cover the areas because of the work that was coming in. Mr Cairns said that Applicant rang him the following day and apologised and again asked for his job back. He also contended in cross-examination that after the break-in of the vehicle, he went to see the Applicant to make sure he (the Applicant) did not leave as they (the Respondent) were desperate for instructors.
42 Ms Merrill Strickland testified that she was employed as the Respondent's office manager. She said that from time to time Mr Harwood would advise when he was unavailable for work and she blanked out those times on the job schedule. She said she understood the Applicant along with the other drivers were self-employed.
43 Ms Strickland testified that on 22 November 2001 she was working in the office. She said she informed Mr Cairns that the Applicant had told her that he was not allowing students to pay by cash or cheque and that they were to only pay by credit card. Despite the Applicant's evidence to the contrary, Ms Strickland's evidence in respect of this conversation was not challenged in cross-examination. She said she was present in the office when Mr Cairns telephoned the Applicant. She said she could hear the Applicant's voice at the end of the telephone. She said the Applicant's voice was raised but she could not hear the words used by the Applicant. She said she heard Mr Cairns say to the Applicant, "Are you resigning?" but she did not hear what the Applicant said in response. She said at the conclusion of that telephone call Mr Cairns informed her that the Applicant had just resigned. When cross-examined Ms Strickland conceded that she did not recall what Mr Cairns had said to the Applicant about the use of credit cards but she was aware the majority of students paid by cash or cheque. She said that some people do not like to use credit cards and some people do not have credit cards. She said that she could recall Mr Cairns saying that other forms of payment other than credit card were to be accepted. She conceded however, that her recollection of the conversation was vague and that the main thing that she could remember was that Mr Cairns informed her that the Applicant had resigned and that the Applicant had offered to bring the vehicle and keys back. She said she thought there was a second conversation between the Applicant and Mr Cairns that afternoon, but she was not sure.
Credit
44 Having carefully considered all of the evidence given by the witnesses in this case I accept the evidence given by Ms Strickland that the Applicant informed her that he had recently adopted a practice of informing all students that they were to only pay by credit card and not by cheque. I found Ms Strickland to be an honest witness. Although she considered her recollection of events was not complete, her evidence in relation to this issue was not challenged in cross- examination. As to Mr Cairns, where his evidence departs from the evidence of the Applicant, except in relation to the use of credit cards by students, I generally prefer the evidence given by the Applicant to the evidence given by Mr Cairns. I did not find Mr Cairns to generally be a reliable witness. He was evasive in that he did not disclose to the Commission that he is the owner of the Driving School until he was asked a question about that in cross-examination. In evidence-in-chief he described his occupation as driving school manager. Further, I do not accept his contention that he did not want the Applicant to resign. If that was the case, why did he accept the Applicant's resignation. Further, he contended in his evidence that the increase in fees made by the Respondent on 29 October 2001 was made so as to increase the driving instructors' remuneration. Plainly that cannot be the case as the driving instructor's remuneration was not increased when the fees increased.
45 In light of my findings on credibility, I find that Mr Cairns rang the Applicant on 22 November 2001 and informed him that he (the Applicant) was to accept payments by cash, cheques and credit card. Further that he was not to refuse payments of cash or cheques. I accept the Applicant's evidence in the first conversation that he informed Mr Cairns that perhaps he (the Applicant) should return the keys because he could not work like this anymore. I accept that the Applicant was contemplating resigning. However, it is my view that those words do not at law constitute a resignation, as there was no clear intention to resign. I accept that in the second conversation and other conversations that the Applicant had with Mr Cairns that the resignation was discussed. Even if I was to accept Mr Cairns' versions of the conversations he had with the Applicant on 22 November 2001 it is my view that at law when the context of the exchange between the Applicant and Mr Cairns is considered, that there was no real resignation.
46 In NGO v Link Printing Pty Ltd unreported Print R7005 (del. 22 January 1999), the Full Bench of the Australian Industrial Relations Commission heard an appeal in relation to whether the appellant had resigned. Mr Ngo had been interviewed by the Respondent's General Manager about his performance. At the conclusion of the interview Mr Ngo informed the General Manager of Production that he was very disappointed that the company did not trust the quality of his work and that he said, "I resign my job because I am so disappointed." The General Manager of Production advised Mr Ngo that he must give them a letter in writing and to give it to him tomorrow. Mr Ngo indicated that he would do so. Mr Ngo then returned to his job and completed his shift. In cross-examination Mr Ngo agreed that he said, "I resign. Is two weeks' notice okay?" He also said in his oral evidence that at the time he resigned his mind was confused, he really nervous and his heart was jumping. On the next day Mr Ngo went to work as usual and commenced work. He was then approached by the General Manager of Production who told him he would have to finish now and that he did not have to work that day as the company would pay him up to the end of the period of his notice. The General Manager of Production also asked Mr Ngo for his letter of resignation. Mr Ngo informed the General Manager of Production that he was not resigning and he did not write the letter because he had checked with his wife and family as well as his solicitor and accountant and he wanted to continue to work. After considering these facts the Full Bench of the Australian Industrial Relations Commission held:
"We have had regard to the various decisions to which we were referred relating to resignations of employment. In particular we have considered the decisions that assert the existence, in certain circumstances, of a duty to clarify a resignation. The position was referred to by Murphy JR in Minato v Palmer Corporation Ltd [(1995) 63 IR 357 at 361-2] as follows:
'The legal position was set out in the case of Sovereign House Security Services Ltd v Savage [1989] IRLR 115 where at 116 May LJ said:
"In my opinion, generally speaking, where unambiguous words of resignation are used by an employee to the employer direct or by an intermediary, and are so understood by the employer, the proper conclusion of fact is that the employee has in truth resigned. In my view tribunals should not be astute to find otherwise …
However, in some cases there may be something in the context of the exchange between the employer and the employee or, in the circumstances of the employee him or herself, to entitle the tribunal of fact to conclude that notwithstanding the appearances there was no real resignation despite what it might appear to be at first sight.'
Those comments were considered in another case: Kwik-Fit (GB) Ltd v Lineham [1992] ICR 183 where at 188 Wood J said that he saw no difference in principle between words or actions of resignation. At 191 he set out the position as follows:
'If words of resignation are unambiguous then prima facie an employer is entitled to treat them as such, but in the field of employment personalities constitute an important consideration. Words may be spoken or actions expressed in temper or in the heat of the moment or under extreme pressure ('being jostled into a decision') and indeed the intellectual make-up of an employee may be relevant: see Barclay v City of Glasgow District Council [1983] IRLR 313. These we refer to as 'special circumstances.' Where 'special circumstances' arise it may be unreasonable for an employer to assume a resignation and to accept it forthwith. A reasonable period of time should be allowed to lapse and if circumstances arise during that period which put the employer on notice that further inquiry is desirable to see whether the resignation was really intended and can properly be assumed, then such inquiry is ignored at the employer's risk. He runs the risk that ultimately evidence may be forthcoming which indicates that in the 'special circumstances' the intention to resign was not the correct interpretation when the facts are judged objectively.'
We are prepared to assume, without so deciding, that it was incumbent on Link, following Mr Ngo's statement that he resigned, to allow a reasonable period of time to elapse to ascertain whether circumstances arose during the period that put Link on notice that further enquiry was necessary to see whether Mr Ngo's resignation was really intended. Mr Ngo spoke his words of resignation on the afternoon of 8 June 1998. He then resumed work for the balance of the shift, went home, resumed work the next day and, when approached by Mr Corrigan, said that he was not resigning. In our view, any reasonable period of time had elapsed well before Mr Ngo said this."
47 In this case the circumstances are different. It is clear from the evidence given by the Applicant, that when Mr Cairns telephoned the Applicant on the second occasion on 22 November 2001, the Applicant informed him (Mr Cairns) that he had no intention of resigning. Even if Mr Cairns' evidence is accepted, the Applicant informed him (Mr Cairns) when he returned the car that he had not intended to resign. Further, the Applicant's evidence that he spoke to Mr Sutherland within five minutes of speaking to Mr Cairns on the afternoon of 22 November 2001, and informed him (Mr Sutherland) that he (the Applicant) had not resigned, was not contradicted by the Respondent. When all the circumstances are considered, in particular the fact that Mr Cairns knew that the sheriff was at the Applicant's home during the first conversation, Mr Cairns should have allowed a reasonable period of time to elapse to ascertain whether the Applicant really intended to resign. Plainly, on the evidence given by the Applicant it should have been clear to the Respondent within a short period of the Applicant's initial conversation with Mr Cairns that he (the Applicant) did not wish to resign.
48 The Full Bench in Ngo v Link Printing Pty Ltd (op cit) referred to the decision of Gray J in Birrell v Australian National Airlines Commission (1984) 9 IR 101 in which Gray J at 110 – 111 approved of a decision in Martin v Yoeman Aggregates Ltd [1983] ICR 314 in which it was held by the Employment Appeal Tribunal (UK), that words of dismissal spoken in the heat of the moment were ineffective if withdrawn immediately the heat had died down. In that case, a director of an employer company had engaged in an argument with an employee, which resulted in the director telling the employee he was dismissed. Within five minutes, the director cooled down and retracted the dismissal. The employee insisted he was dismissed, and sought to pursue his statutory remedies for unfair dismissal. The Employment Appeal Tribunal held it was possible to have second thoughts, and that words of dismissal spoken in the heat of the moment were ineffective if withdrawn immediately the heat died down.
49 When regard is had to the aforementioned decisions it is my view that the Applicant's action cannot be characterised as a valid resignation. In light of the fact that there was no reason put forth on behalf of the Respondent as to why it should terminate the Applicant's employment other than Mr Cairns' and Mr Sutherland's evidence that the Applicant, after he was dismissed, made it plain to them in an aggressive way that he intended to pursue a claim for unfair dismissal, it is my view that the Applicant was unfairly dismissed by the Respondent. In light of the financial circumstances of the Applicant which is evidenced by the presence of a bailiff at his home, one could well understand why he was extremely distressed and expressed anger about being summarily dismissed by the Respondent.
50 The Respondent no longer owns the business and the Applicant no longer has a Driver's Licence, so reinstatement is impractical.
51 Following an unfair dismissal an Applicant is required to diligently seek alternative employment. The duty to mitigate was considered by the Full Bench of this Commission in Growers Market Butchers v Backman (1999) 79 WAIG 1313. At 1316 the President observed the following principles are established:
"1. The duty to mitigate loss in claims of unfair dismissal lies on the claimant employee (see Bogunovich v Bayside Western Australia Pty Ltd 79 WAIG 8 (FB).
2. In practical terms, this requires the employee to diligently seek suitable alternative employment (see Brace v Calder and Others [1895] 2 QB 253).
3. The onus of proof of failure to mitigate loss is on the respondent (see Metal Fabrications (Vic) Pty Ltd v Kelcey [1986] VR 507 (FC), Goldburg v Shell Oil Co of Australia Ltd (1990) 95 ALR 711 (FC), Prus-Grzybowski v Everingham and Others (1986) 45 ALR 468, 87 FLR 182 (Fed Ct FC) and McGregor on Damages (15th Edition 1988) at page 723.
4. (a) The obligation to mitigate loss is an obligation to act reasonably in the mitigation of loss but not an obligation which a reasonable and prudent person would not undertake.
(b) This duty to act reasonably to mitigate damage does not generally require the employee to take employment of a different or inferior kind (see "Truth" and "Sportsman" Limited v Molesworth [1956] AR (NSW) 924; Bostik (Australia) Pty Ltd [1991] v Gorgevski (No 1) 36 FCR 20; 41 IR 452 and compare Dunstan v The National Mutual Life Association of Australia Ltd (1992) 5 VIR 73).
(c) In some cases, it may be unreasonable not to accept employment at a lower status and salary level (see Yetton v Eastwoods Froy Ltd [1967] 1 WLR 104, for example)."
52 The Applicant's evidence establishes that at the time his employment was terminated he had an average income over a period of 23 weeks of employment from 30 April 2001 until 18 November 2001 of $613.15 per week. Although the Respondent does not accept this figure is correct, the Respondent did not produce any evidence to contradict the Applicant's job schedule which showed his weekly earnings. The Applicant says that since his employment was terminated he has earnt $1,496.04 which is money he has earnt through casual employment with CFM Technologies. The Applicant says that he has not had any other income. The Applicant's details of the positions he has applied for since his employment was terminated shows that he has applied for a large number of positions in service industries, in sales and marketing. He has also applied for cleaning positions and positions involving the media. However, as set out above, since the Applicant's employment was terminated he has only applied for one position as a driving instructor. Given that if he had not let his driving instructor's licence lapse in February 2002, the Applicant would have been able to seek employment as a driving instructor until he recently lost his licence a few weeks before the hearing of the matter. It is my view that the Applicant has not taken steps to fully mitigate his loss to the extent that he may have been able to. The Applicant worked for six of the past ten years as a driving instructor. Accordingly I intend to apply a discount for the failure of the Applicant to seek driving instructor positions. It is contended on behalf of the Applicant that the Applicant's remuneration for 26 weeks, less the cost of fuel, is as follows:

26 weeks @ $613.15
$15,941.90
Less fuel average weekly $120.65
$3,136.90
TOTAL
$12,805.00

I will discount this amount by 40% and make an Order that the Respondent pay the Applicant the amount of $7,683.00 as compensation.