1
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Matthew Tolmachoff
v
Trustee for The Wingrain Trust AKA Grain Brokers Australia
(U2019/9502)
COMMISSIONER HAMPTON ADELAIDE, 31 DECEMBER 2019
Application for an unfair dismissal remedy – jurisdictional objection – high income threshold
– whether applicant protected from unfair dismissal by virtue of his level of earnings –
management employee not covered by award or enterprise agreement – company provided
vehicle available for reasonable private use – whether vehicle a non-monetary benefit at time
of dismissal – whether commuting to office a private benefit – vehicle found to be relevant
benefit for calculation of earnings – dispute as to extent of private use – limited direct
evidence – not satisfied that sufficient private use undertaken to put applicant over the high
income threshold – applicant’s earnings below the threshold – objection dismissed – merits to
be heard.
1. What this decision is about
[1] Mr Matthew Tolmachoff has made an unfair dismissal application to the Fair Work
Commission (Commission) under s.394 of the Fair Work Act 2009 (the FW Act) against the
Trustee for The Wingrain Trust AKA Grain Brokers Australia (Grain Brokers).
[2] In opposing the application, Grain Brokers has raised a jurisdictional objection
contesting Mr Tolmachoff’s eligibility to make this application. Grain Brokers contend
Mr Tolmachoff was not covered by a modern award or enterprise agreement, earned more
than the high income threshold, and is therefore not a person protected from unfair dismissal.1
The threshold was $148,700 as at the time of dismissal.2
[3] It is uncontroversial that Mr Tolmachoff’s salary at the time of the dismissal was
$145,000 per year. Grain Brokers contend that the value of the private benefit enjoyed by
Mr Tolmachoff’s access to a company vehicle, in addition to his salary, places
Mr Tolmachoff’s earnings above the high income threshold. Mr Tolmachoff contends that the
value of his private use of the vehicle did not cause him to exceed the high income threshold
at the time of the dismissal.
1 As a result of s.382(b) of the FW Act.
2 Established under s.333 of the FW Act.
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DECISION
E AUSTRALIA FairWork Commission
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[4] After conducting a Directions Conference on 15 October 2019 I determined that the
Respondent’s jurisdictional objection should be heard as a preliminary issue. Should the
Commission reject the jurisdictional objection and find that Mr Tolmachoff was a person
protected from unfair dismissal, the matter would then be listed for further hearing on the
questions of merit and remedy.
[5] Consequently, this Decision deals with the jurisdictional objection only.
[6] Both parties have sought permission under s.596 of the FW Act to be represented by a
lawyer or paid agent in these proceedings. Given the complexity of the matter and the
capacity to more efficiently deal with the application, this permission was granted during the
Directions Conference. Mr Tolmachoff was represented by Mr Jakobsen of Beger & Co.
Lawyers while Grain Brokers was represented by Mr Boyle and Ms Paolino of Minter
Ellison.
2. The cases presented by the parties
2.1 Grain Brokers
[7] As previously stated, Grain Brokers contends that Mr Tolmachoff was not a person
protected from unfair dismissal under the FW Act as his earnings were above the high income
threshold and his employment was not covered by a modern award or enterprise agreement.
This latter aspect is not in dispute.
[8] Grain Brokers state that Mr Tolmachoff’s base salary at the time of the dismissal was
$145,000 per year. Grain Brokers also made superannuation contributions on behalf of
Mr Tolmachoff at a level that accords with its obligations under the relevant superannuation
legislation3 and those contributions are not relevant for present purposes.4 All of these matters
are also not in dispute.
[9] Grain Brokers further submits that in addition to his salary, Mr Tolmachoff was
entitled to, and was provided, a fully maintained vehicle; a Toyota Hilux SR5. This vehicle
was more expensive to purchase than a Mitsubishi Triton (the vehicle predominantly provided
by Grain Brokers to employees), and it was suggested that this was taken into consideration
when setting Mr Tolmachoff’s salary. Grain Brokers also paid for the vehicle’s registration,
insurance, maintenance and fuelling. The monetary value of this benefit was not agreed
between Grain Brokers and Mr Tolmachoff. Grain Brokers submits that the monetary value of
Mr Tolmachoff’s personal use of this vehicle is to be included in any consideration of his
earnings.
[10] Grain Brokers posits that the formula for calculating the monetary value of private use
of a vehicle is as follows:
“(a) Determine the distance travelled by the employee in the vehicle in question in
the 12 month period prior to the termination of the employee's employment.
3 Superannuation Guarantee Charge Act 1992 (Cth).
4 As a result of s.332(2)(c) and (4) of the FW Act.
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(b) Determine the percentage of that distance that was for private use.
(c) Multiply the above two figures to obtain the annual distance travelled all full
for the employee's private purposes.
(d) Estimate the cost per kilometre for a vehicle of the type used. This information
may be obtained from the Royal Automobile Club of Victoria (RACV),
National Roads and Motorists' Association or like motoring organisations.
(e) Multiply the annual distance travelled for private purpose by the estimated cost
per kilometre. The result is the value of the motor vehicle component of the
employee's remuneration.”5
[11] Applying this formula Grain Brokers contends that Mr Tolmachoff travelled at least
12,340 kilometres (38 % of the total distance) for private travel in the 12 months prior to his
dismissal and that the cost to run the vehicle was $0.91376 per kilometre. Grain Brokers
contended that Mr Tolmachoff’s travel in the vehicle between his residence in Golden Grove,
to Grain Brokers’ office in Mawson Lakes, both in the northern suburbs of Adelaide, was
private use. In addition, a number of fuel records were provided to suggest the vehicle was
refuelled on non-working days and at locations distant from the office and his residence.
[12] Grain Brokers submit that the value to be ascribed to Mr Tolmachoff’s private benefit
of the vehicle is $11,275.06. When combined with his salary, Mr Tolmachoff’s total annual
rate of earnings at the time of his dismissal was at least $156,275.09; an amount in excess of
the high income threshold.
[13] In addition to its submissions, Grain Brokers relied upon witness statements and sworn
evidence from:
Mr Jeffrey Winspear, Managing Director of Grain Brokers; and
Mr David Hanrahan, Group General Manager of Grain Brokers.
[14] Mr Winspear gave evidence regarding Mr Tolmachoff’s engagement and his
perspective of negotiations for the Hilux vehicle. Mr Winspear was also the person who
collected the vehicle in July 2019 and delivered it to another employee of Grain Brokers
whose vehicle had been delayed in freight.
[15] Mr Winspear’s evidence was forthright and with one exception I accept it as to facts
and events directly observed by him. The one exception is that I am not convinced that
Mr Winspear and Mr Tolmachoff discussed the applicant’s alternative vehicle choice at the
initial meeting between them. It is likely that the general salary range was set and an offer
made for a specific salary before Mr Tolmachoff confirmed that he wanted the higher cost
Hilux option. Ultimately, this is not critical to the disposition of this matter.
[16] Mr Hanrahan gave evidence regarding the work performed by Mr Tolmachoff and the
operations of the division of the business in which the applicant was employed. I found his
evidence as to the facts of the matter that he directly observed to be persuasive and credible.
5 Respondent’s Outline of Submissions.
6 Based on estimates published by the Royal Automobile Club of Victoria (RACV) – Annexed to Exhibit R1.
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To the extent that he made assumptions or drew inferences from the available facts to support
Grain Brokers’ calculations of the business and private use of the vehicle, these are ultimately
matters for the Commission to determine based upon the best evidence available. In
particular, I consider that the estimates made about the extent of business trips undertaken by
Mr Tolmachoff to be largely speculation. I also observe that the evidence about the extent of
travel between Mr Tolmachoff’s home and office, is marginally less so.
2.2 Mr Tolmachoff
[17] Mr Tolmachoff rejects the suggestion that his salary, when combined with the limited
private benefit derived from use of the vehicle, exceeded the high income threshold. He
ultimately did so on a number of grounds.
[18] Mr Tolmachoff did not have access to his vehicle in the immediate lead up to the point
of his dismissal. He contends that as the high income threshold requires consideration of his
rate of earnings at the time of dismissal, rather than an average of the previous 12 months, no
private use value should be added to his salary in this case.
[19] Mr Tolmachoff refers to his contract of employment7 which specifies his home
address in Golden Grove as the principal place of work and contends that although an office
was subsequently established, his designed workplace was not changed. On this basis it was
suggested that any “commute” from his residence to the office (or any other place for work)
would be work-related, and not private, travel. He also suggests that commuting between a
place of residence and a workplace may not be private use in the present context.
[20] Mr Tolmachoff also disputes that the vehicle was provided in lieu of salary, suggesting
instead that the salary had been set in his offer of employment before Mr Tolmachoff
requested the more expensive Hilux SR5. He also made a brief submission that as Fringe
Benefits Tax (FBT) was not paid in respect of the vehicle, it was implied that personal use of
the vehicle was “minor, infrequent or irregular.”8 Having raised some concerns about drawing
such an inference, I understand that this aspect was not ultimately pressed by Mr Tolmachoff.
[21] Mr Tolmachoff suggests that the assumptions underlying Grain Brokers’ estimate of
his private use are flawed and demonstrably wrong. He submits that he used the vehicle for
only 10% personal use as opposed to the 38% assumed by the Respondent. In questioning
these assumptions, Mr Tolmachoff also suggested that the Commission should treat the
Respondent’s estimates as suppositions and attribute them little evidentiary weight. To this
end, Mr Tolmachoff claims that Grain Brokers has not discharged its evidentiary onus and
that the jurisdictional objection should be dismissed.
[22] Mr Tolmachoff gave evidence in support of his submissions. I found Mr Tolmachoff’s
evidence about the facts of this matter to be generally clear and reliable. I did however gain
the impression that Mr Tolmachoff was being very careful with his evidence, not just to
ensure its accuracy, but also with a view to his case more generally. This does not lead me to
the question the truth of his evidence about the facts but rather to treat some of the general
statements about the capacity to use of the Hilux with at least some caution. This includes his
7 Annexure JW-1 of Exhibit R1.
8 Applicant’s Outline of Submissions. Based upon his understanding of the FBT laws.
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reference to some unstated limitation on his personal use associated with his understanding of
the FBT rules.
3. Consideration
3.1 Relevant statutory provisions
[23] Before considering the substance of Grain Brokers’ jurisdictional objection and the
responses made by Mr Tolmachoff, it is appropriate to identify the relevant provisions of the
FW Act.
[24] Section 382 of the FW Act sets out when a person is protected from unfair dismissal:
“382 When a person is protected from unfair dismissal
A person is protected from unfair dismissal at a time if, at that time:
(a) the person is an employee who has completed a period of employment
with his or her employer of at least the minimum employment period;
and
(b) one or more of the following apply:
(i) a modern award covers the person;
(ii) an enterprise agreement applies to the person in relation to the
employment;
(iii) the sum of the person’s annual rate of earnings, and such other
amounts (if any) worked out in relation to the person in
accordance with the regulations, is less than the high income
threshold.”
[25] A person’s earnings and the high income threshold are assessed by reference to ss.332
and 333 of the FW Act respectively as follows:
“332 Earnings
(1) An employee’s earnings include:
(a) the employee’s wages; and
(b) amounts applied or dealt with in any way on the employee’s behalf or
as the employee directs; and
(c) the agreed money value of non-monetary benefits; and
(d) amounts or benefits prescribed by the regulations.
(2) However, an employee’s earnings do not include the following:
(a) payments the amount of which cannot be determined in advance;
(b) reimbursements;
(c) contributions to a superannuation fund to the extent that they are
contributions to which subsection (4) applies;
(d) amounts prescribed by the regulations.
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Note: Some examples of payments covered by paragraph (a) are
commissions, incentive-based payments and bonuses, and overtime
(unless the overtime is guaranteed).
(3) Non-monetary benefits are benefits other than an entitlement to a payment of
money:
(a) to which the employee is entitled in return for the performance of work;
and
(b) for which a reasonable money value has been agreed by the employee
and the employer;
but does not include a benefit prescribed by the regulations.
(4) This subsection applies to contributions that the employer makes to a
superannuation fund to the extent that one or more of the following applies:
(a) the employer would have been liable to pay superannuation guarantee
charge under the Superannuation Guarantee Charge Act 1992 in
relation to the person if the amounts had not been so contributed;
(b) the employer is required to contribute to the fund for the employee’s
benefit in relation to a defined benefit interest (within the meaning of
section 291-175 of the Income Tax Assessment Act 1997) of the
employee;
(c) the employer is required to contribute to the fund for the employee’s
benefit under a law of the Commonwealth, a State or a Territory.
333 High income threshold
(1) Subject to this section, the high income threshold is the amount prescribed by,
or worked out in the manner prescribed by, the regulations.
(2) A regulation made for the purposes of subsection (1) has no effect to the extent
that it would have the effect of reducing the amount of the high income
threshold.
(3) If:
(a) in prescribing a manner in which the high income threshold is worked
out, regulations made for the purposes of subsection (1) specify a
particular matter or state of affairs; and
(b) as a result of a change in the matter or state of affairs, the amount of the
high income threshold worked out in that manner would, but for this
subsection, be less than it was on the last occasion on which this
subsection did not apply;
the high income threshold is the amount that it would be if the change had not
occurred.”
[26] Regulation 3.05 of the Fair Work Regulations 2009 (FW Regulations) states how
benefits other than payment of money are to be considered in the context of earnings and the
high income threshold as follows:
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“3.05 When a person is protected from unfair dismissal—high income threshold
(1) For subparagraph 382(b)(iii) of the Act, this regulation explains how to work
out amounts for the purpose of assessing whether the high income threshold
applies in relation to the dismissal of a person at a particular time.
Note: Under section 382 of the Act, a person is protected from unfair
dismissal if specified circumstances apply. One of the circumstances is that the
sum of the person’s annual rate of earnings, and such other amounts (if any)
worked out in relation to the person in accordance with the regulations, is less
than the high income threshold.
… …
Benefits other than payment of money
(6) If:
(a) the person is entitled to receive, or has received, a benefit in accordance
with an agreement between the person and the person’s employer; and
(b) the benefit is not an entitlement to a payment of money and is not a
non-monetary benefit within the meaning of subsection 332(3) of the
Act; and
(c) the FWC is satisfied, having regard to the circumstances, that:
(i) it should consider the benefit for the purpose of assessing
whether the high income threshold applies to a person at the
time of the dismissal; and
(ii) a reasonable money value of the benefit has not been agreed by
the person and the employer; and
(iii) the FWC can estimate a real or notional money value of the
benefit;
the real or notional money value of the benefit estimated by the FWC is
an amount for subparagraph 382(b)(iii) of the Act.”
[27] It is common ground that Mr Tolmachoff’s employment was not covered by a modern
award or an enterprise agreement. It also common ground that Mr Tolmachoff was provided
with a fully maintained vehicle, he was permitted to use this for reasonable private use, and
no value for that access was agreed by the parties.
[28] Provision of a motor vehicle by an employer to an employee, if made available for
personal use, is capable of being considered to be a benefit for the purposes of regulation
3.05(6) and s.382. The Commission has determined9 that where an employee is given access
to a company supplied vehicle, from which they derive a personal benefit, and a reasonable
monetary value has not been agreed for its private use, the method of apportionment to enable
9 Sam Technology Engineers Pty Ltd [2018] FWCFB 1767 at [48] (Sam Technology).
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the Commission to derive the benefit for present purposes is that as set out in H.W. Fewings v
Kunbarllanjnja Community Government Council10 (Fewings).
[29] Fewings requires the following approach:
“In our view the most appropriate method of calculating the value of the motor vehicle
component of an applicant's remuneration is as follows:
1. Determine the annual distance travelled by the vehicle in question.
2. Determine the percentage of the annual distance travelled which was for the
applicant's private purposes.
3. Multiply the figures from 1. and 2. This provides the annual distance travelled for
private purposes.
4. Estimate the cost per kilometre for a vehicle of the type used. This information can
be obtained from the RACV, NRMA or like motoring organisations.
5. Multiply the annual distance travelled for private purposes by the estimated cost per
kilometre. The result is the value of the motor vehicle component of the applicant's
remuneration.
The ATO formula may be used in circumstances where the parties agree that it will
provide a reliable estimate. That is not the case in the matter before us.
The party advancing the proposition that an applicant is excluded from the relevant
provisions of the Act because regulation 30B(1)(f) carries the burden of establishing
the evidentiary basis upon which such a determination can be made.”11
[30] Before dealing with this approach, it is necessary in this case to deal with two
preliminary issues that arise from the facts and the terms of the FW Act and regulations.
3.2 Is the provision of the motor vehicle relevant given the events surrounding the
dismissal?
[31] The evidence reveals that the provision of a fully maintained motor vehicle was part of
Mr Tolmachoff’s employment arrangements and it was agreed by the time that the contract
was signed that the vehicle was to be a Toyota Hilux SR5. The vehicle concerned was
purchased specifically for Mr Tolmachoff and up until immediately before his dismissal in
August 2019 he had sole access to it.
[32] Whilst Mr Tolmachoff was away overseas on leave, he was contacted by Mr Winspear
to obtain access to the vehicle so that it could be provided to another employee, who was
awaiting supply of her own work vehicle. This was arranged and Grain Brokers collected the
vehicle on 23 July 2019 from the Applicant’s house. When Mr Tolmachoff returned from
leave on Monday 29 July 2019, the Hilux was still in the possession of the other employee
10 AIRC Print Q0675, 7 May 1998.
11 Fewings.
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and the Applicant was directed to use a hire vehicle obtained on behalf of the employer for his
own use. Mr Tolmachoff acquired the use of a hire vehicle at or around this time and used it
until shortly before his dismissal.
[33] The sequence of events at the time of dismissal, including when Mr Tolmachoff had
the hire vehicle, requires some consideration. It is clear that by early August 2019 both parties
were aware the employment relationship may be approaching its conclusion. At this time
Mr Tolmachoff still had access to the hire vehicle. On or around the evening of Friday
9 August a discussion took place between Mr Tolmachoff, Mr Winspear and Mr Hanrahan.
Mr Tolmachoff alleges he was told to resign or be terminated, whereas Grain Brokers
suggested he was told that termination would most likely occur but that a decision would be
made next week. There could be little doubt that the employment relationship was ending at
that stage and the effective date of dismissal, 14 August 2019, was ultimately not disputed by
the parties.12
[34] At the conclusion of the 9 August discussion Mr Winspear requested Mr Tolmachoff
to return the hire vehicle. For reasons set out above, it is clear enough that the relationship
would be ending but this was not yet confirmed. The evidence given during the hearing was
that Mr Tolmachoff did indeed return the hire vehicle on Monday 12 August 2019. However,
it was not until Wednesday 14 August 2019 that termination of Mr Tolmachoff’s employment
was confirmed in writing and it was effective on that date. This raises the issue of what was
Mr Tolmachoff’s entitlement, if any, at the time of dismissal. More precisely, the issue is
whether there was the provision of a relevant non-monetary benefit at the appropriate time for
the purposes of s.382 of the FW Act.
[35] Grain Brokers contends that it is the entitlement to a benefit that is material, rather
than provision of that benefit itself. Grain Brokers further submitted that Mr Tolmachoff was
entitled to a vehicle under his contract of employment and, despite the fact a vehicle was not
provided at the exact time of the dismissal – potentially in breach of the contract, this
entitlement was not varied at or before the dismissal.
[36] Mr Tolmachoff contends that the jurisdictional threshold must be strictly applied and it
is the rate of earnings at the time of dismissal that is relevant. Along with the fact that changes
in remuneration are not averaged over the year to determine that rate, the actual provision of
the benefit (the vehicle including for reasonable private use) must be assessed at the time of
the termination. On that basis, Mr Tolmachoff contends that there was no non-monetary
benefit provided at the relevant time and that the rate of earnings should not include that
element.
[37] I accept that the assessment of the rate of earnings for present purposes is to be made
by reference to the circumstances applying at the time of the dismissal and that an averaging
across the year prior to the event is not to be applied.13
[38] This case concerns the provision of a non-monetary benefit and terms of regulation
3.05(6) (set out earlier) are engaged. Amongst the other requirements, under 3.05(6)(a) a
relevant non-monetary benefit includes where, as in this case, the Applicant “is entitled to
receive, or has received, a benefit in accordance with an agreement” with Grain Brokers. It is
12 The evidence of Mr Tolmachoff at transcript PN 328, where he accepts that his employment ended on 14 August.
13 Francesco Zappia v Universal Music Australia Pty Limited T/A Universal Music Australia [2012] FWCFB 6108.
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tolerably clear that a benefit may be relevant where the applicant is entitled to receive it, as
well as where the entitlement has actually been received. Of course, the Commission must
also be satisfied that all of the requirements of sub regulation (6)(b) and (c) have been met and
I accept that in some cases a benefit that may have been an entitlement, but not actually ever
received, should not be included as a matter of discretionary fairness.
[39] In this matter, I am satisfied that:
At the point of termination, Mr Tolmachoff was entitled to the provision of the
Toyota Hilux SR5 with reasonable personal usage. It remained a term of his
employment contract, this was not subject to any mutual or other effective
variation, and he had an enforceable entitlement to that benefit. The fact that a hire
car was used for a period and that vehicle was returned before the dismissal was
effective, does not in my view lead to a contrary position.
The benefit is not an entitlement to a payment of money and is a non-monetary
benefit within the meaning of subsection 332(3) of the FW Act.
In all of the circumstances here, I consider that the benefit should be taken into
account for the purpose of assessing whether the high income threshold applies to
Mr Tolmachoff at the time of the dismissal.
A reasonable money value of the benefit has not been agreed by Mr Tolmachoff
and the employer.
[40] This satisfies all of the requirements of sub regulation 3.05(6), with the exception of
whether the Commission can estimate the real or notional money value of the benefit
(regulation 3.05(6)(c)(iii)), which I will return to shortly.
3.3 Should Mr Tolmachoff’s travel between his residence and the office, when
established, be treated as private usage?
[41] In determining the extent of Mr Tolmachoff’s private benefit of the vehicle, it is
necessary to consider how his travel from his home in Golden Grove to Grain Brokers’ office
in Mawson Lakes should be characterised. It is well-established that the travel between an
employee’s home and their usual place of work is not considered business travel for present
purposes.14 The complexity in this matter is that Mr Tolmachoff’s home was specified in his
employment contract as his place of work.15 Further, at least until January 2019, there was no
office or public place of business for Grain Brokers in South Australia other than that home.
[42] The new office was the subject of discussions between Mr Tolmachoff and more
senior management and it became evident that this should be established. This suited both
parties as Mr Tolmachoff saw the personal benefit of having a place of work outside of his
home, and both parties considered that having a place of work where clients could attend and
any additional South Australian based staff could work from, was appropriate.
14 Sam Technology at [72], see also Francesco Zappia v Universal Music Australia Pty Limited T/A Universal Music
Australia [2012] FWCFB 6108 at [11].
15 Annexure JW-1 at 1.6 of Exhibit R1.
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[43] Mr Tolmachoff scoped out, negotiated and signed the lease on the new office premises
in December 2018 and Grain Brokers commenced operation there on or around 15 January
2019. No steps were taken to amend the written employment contract.
[44] Mr Tolmachoff contends that his home remained his nominated workplace under his
contract of employment and that this was not altered. As such, he was entitled to treat that as
his continuing place of work and all travel from his home to attend the office and all other
work commitments, was business travel. Mr Tolmachoff further contends that he regularly
commenced work from home, including by participating in telephone conferences and
undertaking research. He also contends that at times he continued the telephone conferences
whilst he drove between his home and the office and remained in his vehicle until the
meetings had concluded.
[45] Grain Brokers contends that it was mutually understood that the newly established
office became the place of work and this should be applied regardless of the fact that the
clause in the written employment contract was not updated. Further, given that a person’s
place of work may be wherever their phone is, the fact that someone might do something such
as reading an email whilst travelling to work does not change the character on the trip from
home to the office from that of commuting, which should not be treated as business travel.
[46] The question here becomes whether Mr Tolmachoff’s primary place of work, as
specified in the contract, was varied when the parties began to use the Grain Brokers office in
Mawson Lakes. It is of course open for parties to an agreement to vary its terms by
subsequent agreement, including by implication. So much was stated by Taylor J in the oft
cited extract from Tallerman and Co Pty Ltd v Nathan’s Merchandise (Vic) Pty Ltd16
(Tallerman), below:
“It is firmly established by a long line of cases commencing at least as early as Goss v.
Lord Nugent and ending with cases such as Morris v. Baron & Co and British &
Beningtons Ltd. v. North Western Cachar Tea Co. Ltd – and, indeed, including Goss v.
Lord Nugent itself – that the parties to an agreement may vary some of its terms by a
subsequent agreement. They may, of course, rescind the earlier agreement altogether,
and this may be done either expressly or by implication, but the determining factor
must always be the intention of the parties as disclosed by the later agreement.”17
(notes omitted)
[47] Taylor J’s ratio Tallerman was cited by the High Court with approval in
Commissioner of Taxation of the Commonwealth of Australia v Sara Lee Household & Body
Care (Australia) Pty Ltd,18 where the majority considered that it accorded with principle and
authority.19
[48] The intention of parties to a contract is to be determined objectively, not by their
subjective intentions. Evidence of surrounding circumstances can indicate the parties’
intentions.20 As stated by the High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd:
16 (1957) 98 CLR 93.
17 Tallerman at 144 .
18 (2000) 201 CLR 520 (Sara Lee).
19 Sara Lee at 534.
20 Concut Pty Ltd v Worrell [2000] HCA 64.
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“It is not the subjective beliefs or understandings of the parties about their rights and
liabilities that govern their contractual relations. What matters is what each party by
words and conduct would have led a reasonable person in the position of the other
party to believe. References to the common intention of the parties to a contract are to
be understood as referring to what a reasonable person would understand by the
language in which the parties have expressed their agreement. The meaning of the
terms of a contractual document is to be determined by what a reasonable person
would have understood them to mean.”21
[49] The Tallerman principles, where a mutual intention is to be attributed to the
contracting parties, were also considered by the Full Federal Court in the context of an
employment contract in Westpac Banking Corporation v Wittenberg (Westpac).22
Buchanan J23 stated in that matter that:
“The search, accordingly, in a case where it is said that a contract of employment has
been replaced in an ongoing relationship of employment (or even that its terms have
been varied), is for an imputed mutual intention that such a change in the contractual
landscape has occurred”24
[50] Buchanan J provides further discussion on importing an intention to vary in the
context of a unilateral change, including a caution as to when such should be found. For
reasons I will come to, the potential variation to Mr Tolmachoff’s contract was not unilateral,
as such Buchanan J’s observations regarding consensual variation become apposite:
“A suggestion of consensual variation raises different issues. The variation suggested
must arise directly from the altered circumstances and respond to them in a way which
can be objectively attributed and imputed to both parties. The test for implication of
the term, or the implied abandonment of an existing term, leaving a void to be filled, is
not supplied by the view of a court that the change would itself be reasonable. Unless
it can be said that abandonment of a term represents a common intention it may not be
assumed in my respectful view. A fortiori, the altered circumstances are consensual; so
must be the contractual variation, if any.”25
[51] It is helpful to consider the actions of Mr Tolmachoff and Grain Brokers in
establishing the Mawson Lakes office in this context. It is clear that both Mr Tolmachoff and
Grain Brokers jointly sought to establish a new place of work and that this change would
benefit both parties. Mr Tolmachoff was a key figure in the establishment of the
Mawson Lakes office, having located the site, negotiated the terms and executed the lease in
late 2018/early 2019. While the place of work listed in the employment contract was not
expressly varied at this time, the circumstances of Mr Tolmachoff’s place of work were
undoubtedly altered. I am satisfied that the joint effort to create this alteration, including
Mr Tolmachoff’s particularly active involvement in that process, imputes the necessary
21 (2004) 219 CLR 165 at [40].
22 [2016] FCAFC 33.
23 McKerracher and White JJ concurred on this analysis.
24 Westpac at [257].
25 Westpac at [262].
[2019] FWC 8027
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mutual intention of Mr Tolmachoff and Grain Brokers to vary the employment contract such
that the Mawson Lakes office became his principal place of work.
[52] I accept that Mr Tolmachoff undertook some work at home on occasions before
attending the office; and at times whilst travelling to that office. However, when considered in
context, the travel from home to the office and vice versa in the company provided vehicle
remains a personal benefit in the present context. That is, in the absence of some express
obligation to the contrary, it is the responsibility of an employee to get themselves to and
from the normal workplace. The fact that the employer has provided and fully funded the
means for such travel, and has relieved the employee of the costs of doing so, remains that
case in each of the circumstances outlined above. However, if an employee is obliged by their
work to travel directly from their home to attend a meeting or undertake work at another
workplace or venue, the use of the company vehicle for that purpose would be business usage
for present purposes. Further, travel directly from an external appointment to home would
also be treated in the same manner.
[53] I have applied the above approach in assessing Mr Tolmachoff’s private travel for the
period after the office was established. I consider that all travel from Mr Tolmachoff’s home
to any workplace or work appointment prior to that time to be business travel for present
purposes.
3.4 The estimated proportion and value of Mr Tolmachoff’s personal use of the vehicle
[54] As will become clear, it is feasible in this case to estimate the private use and value of
the vehicle within the meaning of regulation 3.05(6)(c)(iii).
[55] It is important to observe that there is some relatively limited documentary evidence
about the nature and extent of Mr Tolmachoff’s work travel and attendance. There was a
spread-sheet26 of client appointments in the evidence of Mr Hanrahan. There is also some
evidence27 of attendance at the Mawson Lakes office, once it was established; however, there
was no work calendar or diary provided to the Commission that might confirm the extent and
location of business meetings outside of the office or the Applicant’s home. There was also no
log book associated with the use of the Hilux. Mr Tolmachoff largely worked in a self-
directed manner and was unsupervised, and as a result, the evidence provided by Grain
Brokers about his business travel was by necessity general and impressionistic rather than
detailed and direct. Further, Mr Tolmachoff was not pressed under cross-examination about
the detail of his travel that might have been revealed by reference to the office attendance
records and no attempt was made by Grain Brokers to directly correlate the grower
appointment material with the days revealed in the office attendance records in that context.
Ultimately, the absence of this detailed evidence becomes important for reasons that will
become clear.
[56] Mr Tolmachoff was able to use the vehicle for reasonable private usage. The scope of
what was “reasonable” was originally unstated but later defined to include private travel
within 500km of Mr Tolmachoff’s home. There is no indication of any private travel where
this limitation was relevant.
26 Attachment DH-3 to exhibit R3.
27 Attachment DH-2 to exhibit R3.
[2019] FWC 8027
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[57] The distance travelled by Mr Tolmachoff in the Hilux during the 12 months preceding
the dismissal was 32,476 kilometres.28 This does not include any use of the hire vehicle
during the latter stages of the employment and this element was not relied upon by
Grain Brokers in this matter.
[58] Under the approach required by the authorities, it is necessary to estimate the extent of
private travel undertaken by Mr Tolmachoff utilising the company provided vehicle.
[59] Grain Brokers contends that Mr Tolmachoff in the twelve months prior to his
dismissal:
Commuted from his home to the office (once it was established) on at least
100 occasions and that the round trip was 26.7 km;29
Fuelled the vehicle on at least six occasions when on annual leave or weekends,
demonstrating that the vehicle was being used for private purposes;
Attended private appointments from the office using the vehicle; and
Used the vehicle whereby family members drove the vehicle utilising L-plates and
P-plates.
[60] Grain Brokers further contends that applying the formula in Fewings, it only needed to
establish private use of 12.5 per cent and that the Commission “should have no trouble” in
finding that the required private travel occurred.30
[61] Mr Tolmachoff accepts that he used the Hilux for some personal use, but contends that
this was no more than 10 per cent of the distance travelled in the relevant year.31 I observe
that 10 per cent would equate to 3,248 km.
[62] Mr Tolmachoff contends that Grain Brokers carries the onus of demonstrating that he
exceeded the high income threshold and that it had failed to do so. In the absence of any log
book, which he was not required to keep, and his capacity to determine how he would
undertake his various duties, Mr Tolmachoff submits that Grain Brokers did not provide the
required evidence.
[63] Mr Tolmachoff also contends that the basis of Grain Brokers’ proposition is mere
speculation and not supported by the evidence. Further, some of that speculation was wrong
given his evidence about the extent of business trips and the absence of any significant private
usage of the vehicle. This, he submits, included occasions when he travelled to and/or from
client appointments and his home. In addition, the handful of private use examples relied
upon by Grain Brokers “doesn’t get the respondent anywhere near the jurisdictional tipping
point.”32
28 The evidence of Mr Winspear – exhibit R1 at 11 and 12.
29 Adopting the Applicant’s estimate of the commuting distance – transcript PN449.
30 Oral submissions at PN467.
31 Exhibit A1 at 23.
32 Oral submissions at PN516.
[2019] FWC 8027
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[64] It is generally considered that the respondent employer has the evidentiary onus to
demonstrate a jurisdictional objection associated with the high income threshold.33 In
practical terms, this means that the employer must provide the Commission with sufficient
persuasive evidence that enables the Commission to properly assess the level of earnings,
including where relevant to estimate the value of a non-monetary benefit, in order to satisfy
the Commission that the high income threshold has been exceeded.
[65] In this case, the absence of any logbook or other record of vehicle usage provides a
significant limitation on the extent of available evidence. The independent nature of
Mr Tolmachoff’s engagement as a management employee, including the fact that he was
often the only user of the Mawson Lakes office, also meant there was little physical oversight
of his comings and goings using the vehicle. In that light, I have been careful to make my
findings based upon the objective evidence that is available and only relying upon inferences
that are properly supported by that evidence.
[66] The objective evidence before me includes a working document34 developed by
Mr Winspear which comprises (in part) security records of Mr Tolmachoff’s entrance at, and
exit from, the Mawson Lakes office. The inference is open that Mr Tolmachoff privately
commuted on many of the days his security pass was used to enter the office, subject to
certain important caveats. Grain Brokers has submitted that Mr Tolmachoff commuted to the
office on approximately 100 occasions in the relevant period.35 I have considered the relevant
period to be 15 January 2019 to 18 July 2019 inclusive. This is the period in which
Mr Tolmachoff was working from the Mawson Lakes office and had access to the Toyota
Hilux SR5. The end date, 18 July 2019 is his final day before commencing the period of
annual leave, when he went overseas and did not use the vehicle, and during which he lost
access to the vehicle.
[67] Of the total of 134 days set out in the Respondent’s working document, there were
100 days when Mr Tolmachoff was recorded as attending the office. The other 34 days do not
include any demonstrated commuting and are made up of annual leave and public holidays
and 24 days when Mr Tolmachoff was apparently working but did not attend the office at any
stage. This would include days when he was undertaking full day visits to growers or other
external work appointments and/or working from home.
[68] There is also evidence that on average, Mr Tolmachoff spent between a day and a half
and 2 days on the road visiting growers and others each week.36 This informs the reasonable
inferences about the extent to which Mr Tolmachoff was commuting on the days that he
attended the office.
[69] As mentioned, certain adjustments should be made to the suggestion by Grain Brokers
that Mr Tolmachoff commuted each way on at least 100 days, particularly given
Mr Tolmachoff’s evidence that he would sometimes attend grower or other meetings either
before attending the office or after attending the office. There is also some support for this
proposition in the Respondent’s working document and associated materials. Given that
circumstance and the absence of work calendars or other documentary evidence to form a
33 Fewings. See also Slavin v Horizon Holdings Pty Ltd [2012] FWA 2424 at [15].
34 Exhibit R2.
35 Transcript at PN449
36 Transcript at PN404.
[2019] FWC 8027
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contrary view, there is no foundation for the presumption that Mr Tolmachoff commuted both
ways on each of the 100 days when he attended the office. I consider that an estimate of no
more than 75 per cent of the suggested commuting is reasonable, allowing for the above
factors and noting that Mr Tolmachoff may have commuted one way on some days and
potentially both ways on other days despite attending a regional grower meeting. I have also
not included any distance that may have been travelled in the hire vehicle at the end of the
employment relationship given that there is little evidence about this element.
[70] As a result, the objective evidence indicates that Mr Tolmachoff may have commuted
up to 2,000 km37 using the Hilux in the relevant period. I do not consider that a finding
beyond this extent of usage can properly made given the state and nature of the evidence
before the Commission.
[71] There is evidence to support the notion that Mr Tolmachoff used the vehicle on some
weekends and during holidays,38 for private purposes. This includes the fact that the vehicle
was fuelled up on some of these occasions well away from his home and he was not travelling
for work purposes at the time. However, the evidence is that this was limited and whilst I find
that this took place beyond the six refuelling events, Mr Tolmachoff did not generally use the
vehicle for family transport due to the size of his family. In all of the circumstances, I
consider that a distance of no more than 720 km39 in the 12 months prior to the time he lost
access to the Hilux should be allowed given the state of the evidence.
[72] There is also evidence that Mr Tolmachoff travelled in the vehicle from the office to
attend at least some personal appointments. This includes some semi-regular activities such as
medical and dog grooming activities, although the objective evidence about the extent of such
is limited. In all of the circumstances, I consider that a distance of no more than 480 km40 in
the 12 months prior to the time he lost access to the Hilux is reasonable in respect of private
travel to and from the office for personal appointments and the like. I also note that some of
the travel of this nature might also have already been included in the commuting calculations
to the extent that any appointments were undertaken as part of the travel to and from the
office.
[73] In relation to the fact that both P and L Plates and other materials were apparently
found in the Hilux, I cannot be satisfied that this meant that the vehicle was driven by
Mr Tolmachoff’s family. He denied that suggestion and gave an apparently plausible basis for
that position; being the fact that all of his family had unrestricted driving licences, or did not
drive,41 during the period of his employment with Grain Brokers. I also observe that
Mr Tolmachoff was not directly challenged as to why the plates were in the Hilux.
37 Rounded.
38 There were only 4 days of annual leave in the period when Mr Tolmachoff had access to the vehicle.
39 Marginally more than 15 km per week over a 48 week period – allowing for the period of overseas annual leave and the
state of the evidence about the limited extent of such usage. There were 66 days during the relevant period that were annual
leave, public holiday or weekend days. Even allowing for using the vehicle privately on 25% of each of those days at around
40 kms per trip, produces no more than the same general distance estimate.
40 10 km per week over a 48 week period – allowing for the period of overseas annual leave and the fact that on the evidence
such travel was limited and would not have occurred each week.
41 Transcript PN372.
[2019] FWC 8027
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[74] The total private mileage that is supported by the evidence is a figure of no more than
3,200 km. This is about 10 per cent of the total distance travelled in the relevant period.
Applying the cost per kilometre rate suggested by the RACV to drive a Toyota Hilux SR5,
being $0.9137 per kilometre,42 to this distance I find this equates to a value of $2,924.
[75] When this value is added to the remainder of the relevant annual earnings (his wages)
of $145,000, this produces a rate of earnings of $147,924; which is below the high income
threshold.
4. Conclusion
[76] In all of the circumstances of this matter, and based upon the evidence that is before
the Commission, I am satisfied that Mr Tolmachoff’s annual rate of earnings was less than the
high income threshold of $148,700 within the meaning of s.382(b) of the FW Act.
[77] Accordingly, Grain Brokers’ jurisdictional objection is dismissed.
[78] I will now proceed to hear from the parties on merits and remedy and I will convene a
directions conference shortly to make the appropriate arrangements.
COMMISSIONER
Appearances:
P Jakobsen of Beger & Co, with permission, for Mr Tolmachoff.
C Boyle and S Paolino of Minter Ellison, with permission, for the Trustee for The Wingrain
Trust AKA Grain Brokers Australia.
Hearing details:
2019
Adelaide and Perth (by video link)
2 December.
Printed by authority of the Commonwealth Government Printer
PR714597
42 Annexure JW8 of Exhibit R1. There was no dispute about the use of this figure for present purposes.
WORK OMMISSION AUSTRALIA T THE SEAL OF THE FAI
