Ardelle v Spastic Society of Victoria Ltd - [2001] FCA 220 - FCA 2001 case summary — Zoe

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Ardelle v Spastic Society of Victoria Ltd

[2001] FCA 220

Federal Court of Australia|2001-03-13|Before: Marshall J

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Source facts

Court

Federal Court of Australia

Decision date

2001-03-13

Before

Marshall J

Source

Original judgment source is linked above.

Judgment (543 paragraphs)

[1]

REASONS FOR JUDGMENT 1 These reasons for judgment should be read together with the reasons for judgment in Ardelle v Spastic Society of Victoria [2000] FCA 1429 ("the previous judgment"). The previous judgment was delivered on 20 October 2000. The substantive application before the Court sought the imposition of penalties upon the respondent pursuant to s178 of the Workplace Relations Act 1996 (Cth) ("the Act"). Relief was also sought pursuant to s178(6) of the Act in the form of payment of underpayment of award obligations, and pursuant to s179A of the Act in the form of interest. 2 In the previous judgment, I found that the respondent had failed to pay the applicants: (a) between 20 December 1993 and 2 August 1995 in accordance with cl 6 of the former Residential Child Care Workers Award of the Industrial Relations Commission of Victoria ("the State Award"), and had thereby committed a breach of the Health Services Union of Australia (Private Sector) Interim Award 1993 ("the 1993 Award"); and

[2]

(b) between 3 August 1995 and 1 July 1998 in accordance with cl 23(l)(ii) of the Health (Residential Care-Victoria) Award 1995 ("the 1995 Award"). 3 I made orders on 20 October 2000 including orders in the form of declarations containing my views as to whether the 1993 Award and the 1995 Award had been breached. 4 My conclusions in the previous judgment concerning the relevant interpretations of each Award were largely founded on the parties' agreed statement of facts filed on 20 April 2000. Apart from one matter, which is not presently relevant (and which is discussed at pp 2 and 3 of the transcript dated 5 September 2000), the agreed statement of facts also provides the factual underpinning for the making of final orders. It is therefore worth quoting the agreed statement of facts at length. 5 Paragraphs 1 to 35 (omitting the attachments referred to herein) of the agreed statement of facts provided as follows: "STATEMENT OF AGREED FACTS

[57]

(4) in 1997, the Applicants were granted 10 days in lieu of public holidays." 6 By way of notice of appeal filed on 9 November 2000, the respondent sought to appeal from the previous judgment. On 9 February 2001, a Full Court set aside the appeal on the basis that an appeal did not lie as of right from the previous judgment because the judgment did not finally dispose of all issues in the proceeding: see Spastic Society of Victoria Ltd v Ardelle [2001] FCA 70. 7 In particular, the Full Court held the declarations I had made concerning breaches of the Awards did not declare the rights of the parties. At [10] of its reasons, the Full Court said: "(The declarations) reflect the fact that his Honour has taken a certain view of the construction of the award clauses, but do not in terms declare the proper construction of those clauses. His Honour appears to have gone beyond the agreement of the parties, to which he referred in his reasons for judgment, by purporting to make declarations that a breach or non-observance of each award clause had occurred within the range of dates specified. The declarations in this case are more specific than those with which the Court dealt in Warramunda Village, but we do not think that they are specific enough as to the nature of the breaches to be regarded as other than a convenient recording of the conclusions his Honour has reached in his reasons for judgment." 8 The current application was called on for mention on 19 February 2001. Counsel for both parties informed the Court that they did not consider the declaratory orders made in the previous judgment went "beyond the agreement of the parties". 9 The Full Court also referred at [7] to [9] of its reasons to a consent order in which the parties had agreed to an amount of underpayment on the understanding that my interpretation of the relevant award breaches would withstand the scrutiny of a Full Court. 10 For the reasons referred to at [9] of the Full Court's judgment, it was strictly inappropriate for that consent order to be made. At the mention on 19 February 2001 I set aside the consent order pursuant to O35 r7(2)(f) of the Rules of Court on the understanding that the parties agreed to such a course "without resiling from the agreement as to the calculation of amounts". Ultimately, the parties (despite some confusion early in the mention) did not resile from the calculation of these amounts. Further, there was agreement that a document would be supplied to the Court setting out how these amounts were calculated in respect of each applicant. This document has been provided and is Schedule "A" to these reasons. I have examined this document and am satisfied that the amounts calculated justify the making of final orders pursuant to s178(6) of the Act. There can be no valid criticism of the specificity provided by the applicants (and agreed on by the respondent for the purposes of the calculations only), which supply the foundation for the making of final orders when read with the agreed statement of facts. 11 Consequently, I am satisfied that it is appropriate to make an order that pursuant to s178(6) of the Act the respondent pay: (a) the first applicant $53,774.58; (b) the second applicant $49,576.91.

[58]

12 The next question which arises is the amount of interest payable on the above amounts pursuant to s179A of the Act. The parties provided written submissions on this topic. An oral hearing was not requested on this topic or on the question of penalty. In the respondent's written submissions it was submitted that the respondent did not oppose an order for interest. However, the respondent submitted that interest should not be payable for the whole of the period during which the underpayments were outstanding and that it should not be payable on the total amounts outstanding. 13 Section 179A of the Act compels the Court, "unless good cause is shown to the contrary", to order the payment of interest on "whole or any part of the money for the whole or any part of the period between the date when the cause of action arose and the date on which the order is made or judgment entered". It is a materially identical provision to s51A of the Federal Court of Australia Act 1976 (Cth). The respondent submitted that the purpose of an award of interest is to compensate the applicants for the detriment they have suffered by being kept out of their money, not to punish the respondent. That submission is correct. It was not challenged by the applicants and is in accord with an observation of Gibbs CJ to that effect in Batchelor v Burke (1981) 148 CLR 448 at 455. 14 At [10] of the respondent's written submissions it said that: "In awarding damages generally the Court has adopted the practice of awarding interest at the rate supplied by the Supreme Court of the State or Territory in which it is dealing with the matter." 15 The respondent went on to submit at [12] that when an award breach is based on a "long held mistaken, but genuine belief about the construction proper of an award", the use of the maximum rate of interest used by the Supreme Court of Victoria under the Penalty Interest Rates Act 1983 (Vic), on the whole of the money over the whole of the period allowed by s179A of the Act, would go beyond mere compensation for the applicants and work injustice against the respondent. 16 The respondent referred to the fact that no issue was raised with it concerning its interpretation of the relevant awards before 1998. It contended at [16] of its submission that "the relevant starting date for the purposes of calculating interest is the date on which the proceeding commenced. The application is dated 6 September 1999." It also observed that "(t)he dispute about the construction proper of the award arose in May 1998." 17 At [17] of its submission the respondents said: "If the Court considers that the date of the commencement of the proceeding is not the appropriate starting date for the period in which interest is to be calculated according to the penalty interest rate applied in the State of Victoria, it is submitted that the appropriate starting date ought to be not before the date on which the Applicants first raised with the Respondent their contention about the construction proper of the awards. It was at that point and not before, that the Respondent learned that it might be liable for a debt to the Applicants and the possibility of an amount of interest. It was only at that point that there was any consciousness of the Applicants being held out of their money."

[59]

18 In their written submissions the applicants submitted that they should not be denied money to which they were entitled under the 1993 Award and the 1995 Award. I agree generally with that submission. If interest only accrued from May 1998 it would only relate to two mere months of underpayment. Interest accruing from the commencement of the application would result in no payment of interest because the underpayments preceded the filing of the application. 19 I am not unsympathetic, however, to the respondent's plea that its view of the relevant awards operation was not put in issue before May 1998. An appropriate way to recognise the respondents' valid concern and to avoid a potential injustice to the applicants is for the Court to depart from its usual practice, and order a percentage rate of interest which is lower than the rate which would ordinarily be imposed. A fair interest rate in the circumstances would be the rate of 6.5% rather than the rate applied by the Supreme Court of Victoria under the Penalty Interest Rates Act 1983 (Vic). The rate of 6.5% represents a "half way house" between the respondent's position that 5% is the appropriate rate and the applicants' fall back position that 8.5% is the appropriate rate. I see no reason to apply a higher rate of interest to the monies owing from 1 June 1998 as suggested by the applicants. The just outcome in the exercise of my discretion is to award interest at the rate of 6.5% on the moneys which the applicants have been kept out of up until 20 October 2000. 20 On the question of penalty, I consider that a penalty in the lower range of that available should be ordered. The respondent had an honest and not unreasonable belief that it was complying with its award obligations in the relevant periods. The respondent's view as to its obligations may have been affected by "the infelicitous language used in the relevant provisions"; see [24] of the previous judgment. 21 The maximum penalty that can be imposed for breach of the 1993 Award is $1,000. I consider that the appropriate penalty is $200 in respect of the breaches of the 1993 Award. The maximum penalty for breach of the 1995 Award is $10,000. I would ordinarily order a penalty of $2,000 in respect of the breaches of the 1995 Award. However, as I consider the conduct in breach of the 1995 Award to be conduct adjunct to the breaches of the 1993 Award, I will discount the penalty by the sum of $200 and order that a penalty of $1,800 be awarded in respect of the breaches of the 1995 Award. 22 I will take the usual course and order that the total sum of $2,000 in penalties be made payable to the applicants, with $1,000 being payable to each applicant. 23 I will order as follows:

Pursuant to s178(1) of the Workplace Relations Act 1996 (Cth) ("the Act"), a penalty of $200 be imposed on the respondent in respect of the breaches of the Health Services Union of Australia (Private Sector) Interim Award 1993 ("the 1993 Award") identified in the reasons for judgment delivered today and in the reasons delivered on 20 October 2000.

Ardelle v Spastic Society of Victoria Ltd

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Judgment (543 paragraphs)

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