McConvill & Associates Pty Ltd v Carbone

BACKGROUND 6 The relevant factual and procedural background is set out without controversy in the Primary Judgment ([2]-[21]). It is unnecessary to repeat it all here, save to note the following (Primary Judgment, [14]-[15]): On 29 October 2018, the [respondent] filed an originating application in the Federal Court of Australia under the FW Act, claiming that: (1) he was dismissed in contravention of s 340(1)(a)(ii); (2) the [first appellant] took adverse action against him within the meaning of s 342(1), Item 1; (3) the [first appellant] coerced him not to exercise a workplace right within the meaning s 343; (4) the [first appellant] failed to provide him with pay slips or proper pay slips, contrary to s 535 and s 536; and (5) the [second appellant] was partly liable for the contraventions by the [first appellant]. The statement of claim was amended a number of times, and on 14 June 2019, the Further Amended Statement of Claim was filed. The FASOC alleges breaches of the 'Post Admission Agreement', breaches of the employment agreements (Contract 1 and Contract 2), breaches of the general protection provisions of the FW Act and breaches of s 18 and s 31 of the Australian Consumer Law ("the ACL"), as set out in Schedule 2 of the Competition and Consumer Act 2010 (Cth). The Court notes that at the hearing before this Court, the [respondent] withdrew reliance on the contractual claims and relied solely on the claims brought pursuant to the FW Act and the ACL.

STATUTORY FRAMEWORK 7 Part 3-1 of the FW Act is entitled "general protections". Amongst other things, it provides for a suite of protections designed to safeguard the exercise of "workplace rights". One of those protections is provided for by s 340(1) of the FW Act, which provides (and, at all relevant times, provided) as follows: 340 Protection (1) A person must not take adverse action against another person: (a) because the other person: … (ii) has, or has not, exercised a workplace right; or … 8 Section 342(1) of the FW Act defines (and defined) "adverse action". It is unnecessary to rehearse that definition here. It is not presently controversial (indeed, it is the subject of the default judgment referred to above) that the appellants took adverse action against the respondent in contravention of s 340(1)(a)(ii) of the FW Act. 9 Section 343(1) of the FW Act prohibits the taking of action against a person with intent to coerce him or her to not exercise a workplace right. Again, it can be accepted, for present purposes, that the first appellant contravened (indeed, it is deemed by effect of the default judgment to have contravened) that injunction. 10 It is also not presently controversial that the appellants contravened ss 535(2)(b) and 536(1), which relate to the maintenance and provision of certain employment records. 11 Section 539(1) of the FW Act is entitled "applications for orders in relation to contraventions of civil remedy provisions". Amongst other things, it identifies the provisions of the FW Act that qualify as "civil remedy provision[s]". Sections 340(1), 343(1), 535(2) and 536(1) are amongst them; and s 539(2) of the FW Act confers jurisdiction upon the FCCA to hear applications for relief relating to contraventions of those sections. If satisfied that such a contravention has occurred, the FCCA is empowered to grant such relief, including in the form of declarations, compensation and penalties (amongst other things), as it considers is appropriate: FW Act, ss 545 and 546. In the case of relief in the form of penalty, that discretion is tempered by s 546(2), the terms of which needn't here be repeated. 12 Section 546(3) assumes some prominence in this appeal. It provides as follows: … (3) The court may order that the pecuniary penalty, or a part of the penalty, be paid to: (a) the Commonwealth; or (b) a particular organisation; or (c) a particular person. 13 Section 570 of the FW Act also assumes some prominence in this appeal. It prohibits (amongst other things) the FCCA from making an award of costs in relation to a matter unless one of the preconditions listed in s 570(2) is met. Relevantly for present purposes, costs may be awarded if the court is satisfied that they were occasioned by an unreasonable act or omission (or acts or omissions): s 570(2)(b). 14 Section 236 of the ACL permits a person who suffers loss or damage on account of conduct that contravenes a provision of chapter 2 or 3 to recover as damages the amount so lost. In the action below, the respondent alleged - and, by reason of the judgment entered in default, the appellants were deemed to have admitted - that the appellants had contravened such provisions.

THE APPEAL 15 The appellants' notice of appeal advances four grounds: 1. The learned primary judge erred in fact and in law in concluding, at paragraph 55 of the primary judgment, that the respondent: "would have remained employed (by the first appellant) for a further 26 week period, rather than the shorter six week period put by the respondents", because: (a) that conclusion was directly contradicted by the sworn evidence of the second appellant, in respect of which the second appellant was not cross-examined or otherwise challenged; and (b) the learned primary judge did not refute that sworn evidence of the second appellant. 2. The learned primary judge erred in fact and law in concluding that the respondent was owed $5,061.54 in accrued annual leave, because that conclusion was contrary to the uncontroverted evidence of the first appellant's bookkeeper, Jane Quirk, who swore an affidavit, filed 18 May 2020, which disclosed that the respondent had a leave balance, at the time of the termination of his employment, of 4.6 hours, which put the value of his accrued annual leave at $78.12, based on a $35,000 per annum salary. 3. The learned primary judge erred in fact and law in concluding that: (a) the respondent's decision to abandon his claims made under "contract 1 and contract 2" at the hearing was not an "unreasonable act or omission", for the purpose of section 570(2)(b) of the FW [Act]; and (b) the respondent's decision to abandon those claims was referable to, or as a consequence of, any alleged failure by the appellants to provide full disclosure of financial documents to the respondent, because the appellants had made full disclosure of the financial documents the subject of the respondent's claim. 4. The learned primary judge erred in fact and in law in ruling that the penalties imposed upon the appellants, totalling $21,690, be paid to the respondent, and not to the Commonwealth of Australia, because the respondent's receipt of those penalties represents a "windfall" which the respondent ought not receive. 16 The hearing of the appeal was more punctuated than might normally be preferred. The matter first came on for hearing on 27 September 2022. Senior and junior counsel appeared for the appellants and made submissions in support of the appeal. A short time after those submissions commenced, they were abruptly halted, apparently because the parties had reached an agreement behind the scenes - or, at least, some kind of in-principle agreement - as to the resolution of the appeal. The court was asked to (and did) adjourn the appeal hearing to permit the parties to have further discussions to that end. 17 Those discussions ensued but the appeal remained unresolved. It was rescheduled for hearing on 6 April 2023. The parties indicated some willingness to have the court determine it on the strength of written submissions that they had earlier filed; but, in light of some questions that I wished to ventilate with them, the appeal proceeded as scheduled. The second appellant appeared at that hearing on his own behalf. The first appellant did not appear (although, as might be clear, its interests were very much aligned with those of the second appellant). Mr Rinaldi, of counsel, appeared for the respondent. 18 It is convenient to deal with each of the four appeal grounds in sequence.

GROUND ONE: ERROR IN ASSESSING COMPENSATION 19 The appellants charge the learned primary judge with having erred insofar as he concluded that, but for the termination of his employment, the respondent would have remained in the employ of the first appellant for 26 weeks. They maintain that, on the evidence before him, his Honour ought to have concluded that he would have remained employed only for six weeks. 20 It is not controversial (at least not now) that, in consequence of the default judgment, the appellants were taken to have admitted the contraventions of the FW Act that were alleged against them. It fell to the court below, then, to assess what, if any, amount should be awarded to the respondent in consequence of those contraventions. That, in turn, called for an exercise of discretion: the court was required to determine what amount it considered appropriate to award in the circumstances: FW Act, s 545(1). 21 In order that they might succeed on this ground, the appellants will need to demonstrate that the primary judge's exercise of that discretion miscarried in one or more of the ways famously essayed in House v The King (1936) 55 CLR 499, 504-505 (Dixon, Evatt and McTiernan JJ; hereafter "House v The King"): The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. 22 There can be no doubt that, in considering what compensation was appropriate, the court below was required to consider the hypothetical that it did: namely, for how long might the respondent have remained in his employment with the first appellant had the contravening conduct not occurred. That, of course, called for an assessment to be made having regard to the evidence and the deemed admissions within the pleadings that were before the court. 23 That is precisely what occurred. On appeal, there is no suggestion that the learned primary judge failed to take account of matters that he was required to consider, or considered matters of which he was obliged not to take account. The argument on appeal is simply that the evidence favoured a different result. Whether it did or not is not for this court, on appeal, to say. The appellants have not demonstrated any discretionary error. 24 It follows that the first ground of appeal must fail.

GROUND TWO: ERROR IN ASSESSING UNPAID LEAVE ENTITLEMENTS 25 By their second ground of appeal, the appellants charge the primary judge with having erred by accepting that the respondent was owed, upon the termination of his employment by the first appellant, $5,061.54 by way of accrued, unpaid annual leave. They complain that that finding was inconsistent with unchallenged evidence. 26 The appellants' submission is not without force. At the hearing of the appeal, counsel for the respondent conceded that the evidence that was tendered before the primary judge was all tendered without objection and that none was made the subject of cross-examination. It was said that all of the parties took what was described as a "let it all in approach" to the evidence and, as to any competing versions of fact as might arise, were content to "leave it up to the judge". 27 Without wishing to sound critical of anybody (and appreciating, as I do, the relatively small sums that this part of the respondent's case involved), that was an unfortunate approach; and for at least two reasons. First, as it happens, the evidence that was admitted painted very different pictures of the annual leave that remained accrued in the respondent's favour at the time that his employment terminated. Second, there is reason to doubt that all of that evidence was properly admissible. 28 The evidence upon which the appellants rely for the purposes of ground two assumed the form of a "reconciliation report" that was annexed to an affidavit sworn by Ms Jane Quirk. Ms Quirk was employed in the role of "Business Manager" for the first appellant. The report to which she attested was apparently prepared on 18 May 2020, the same day that she swore her affidavit. She deposed to having been assisted in its creation by an associate, Ms Cann. 29 In her affidavit, Ms Quirk deposed to having been provided "…with dates upon which the [respondent] had taken annual leave…prior to the accounting system (Xero) being implemented in January 2018". Ms Cann, said Ms Quirk, "…had been responsible for preparing payroll and maintaining all records prior to Xero being implemented". 30 The "reconciliation report" itself comprises two pages. It is headed "Joseph Carbone Annual Leave Reconciliation" and consists principally of two tables. The first (and larger of the two) has three columns, headed "Payroll Date", "Leave Accrued" and "Leave Balance". Under the first of those headings appears a series of dates, commencing with "15-May-15" and proceeding in what appear to be 14-day increments (for example, "29-May-15", "12-Jun-15", "26-Jun-15", etc) through until "1-Aug-18". There is one exception to that pattern: the row that records "23-Jun-17" is followed by "30-Jun-17"; but the 14-day cycle appears to continue thereafter. 31 The other two columns of the report then purport to record periodic and cumulative leave accruals (expressed, it appears, in hours). "6.1538" appears in each row of the second column (save for the row in which the "Payroll Date" is recorded as "30-Jun-17", the second column of which reads "3.0769") and the third column contains numbers that commence with "6.1538" and increase from row-to-row by that number (or, in the case of the "30-Jun-17" row, by "3.0679"), eventually reaching a final figure of "513.8423". 32 There is then a second table to the report that purports to identify the "Total Annual Leave Accrued" of "513.8423" and then a series of periods referrable to "Leave Taken". Each such period is expressed by reference to dates and what appear to be a number of hours. Those hours add up to 509.2. The second table concludes with a row that begins "Leave Balance", next to which is recorded "4.6423" (which is equal to 513.8423 minus 509.2). That appears to be the number of hours of unpaid leave that the appellants contended was owing to the respondent at the time that his employment terminated. 33 It is anything but clear how the respondent saw fit to permit the receipt into evidence of the "reconciliation report". It seems quite evidently to offend the rule against hearsay: Evidence Act 1995 (Cth) ("Evidence Act"), s 59. It is difficult, to say the least, to see how it might qualify as a business record: Evidence Act, s 69. It appears to be nothing more than a series of assertions, made well after the event and very much in the context of (indeed only a few months prior to) a contested hearing before the FCCA. To my eye (I say without having to decide the issue), it appears to be wholly without any evidential worth. 34 Regardless, against that "evidence" was evidence from the respondent himself. Amongst other things, he deposed to the times and lengths of periods of annual leave that he took whilst employed by the first appellant. Indeed, he did so in response (which is to say, by way of challenge) to what the "reconciliation report" purported to record. For reasons that are not apparent, he too was spared the rigours of cross-examination. 35 That evidential landscape left the primary judge in an unenviable position. His Honour was confronted with inconsistent accounts as to the periods of annual leave that the respondent took during his employment by the first appellant, neither of which was tested. In the circumstances, it is not clear to me what the appellants say that the learned primary judge ought to have done. 36 The appellants submit that his Honour erred by finding that their failure to provide payslips was a basis for rejecting Ms Quirk's "reconciliation report". That submission cannot be accepted. His Honour made no such finding. On the contrary, his Honour concluded (Primary Judgment, [86]): By reason on the entry of Judgment against the [appellants], the [first appellant] is taken to have admitted to not providing payslips as alleged in [30] - [31] of the FASOC. I do not accept that the annual leave reconciliation report is an accurate record of entitlements that was maintained over the course of the [respondent's] employment. In those circumstances the value of annual leave entitlements accrued over the course of Contract 2, calculated based on a salary of $35,000, is $5,061.54. That is calculated by multiplying the weekly pay, being $673.07 (calculated on $35,000), by 4 weeks, and then multiplying that amount by 1.88 years, being the period of time worked under Contract 2. 37 The appellants also maintain that the respondent "…did not adduce any evidence which could cause Ms Quirk's evidence to be questioned". That proposition also cannot be accepted. By his affidavit evidence, the respondent quite clearly challenged what the reconciliation report purported to record. 38 Although the question is not free from doubt, I do not accept that the primary judge erred by preferring the direct, sworn testimony of the respondent over a report to which little, if any, probative evidential value attached. The error alleged by ground two of the notice of appeal - in effect (if not terms), that the primary judge erred by rejecting "the uncontroverted evidence of…Jane Quirk" - is not made good. 39 It may well be, with respect, that the figure at which his Honour arrived was improperly calculated. If it was, I consider that to be very much a consequence of the unfortunate way in which the parties - including the appellants - saw fit to conduct this aspect of the inquiry. As it is, it is unnecessary that I should explore other potential errors. It suffices to conclude, as I have, that the error to which ground two gives voice was not made.

GROUND THREE: ERROR IN DECLINING TO AWARD COSTS 40 By their third ground of appeal, the appellants contend that the learned primary judge erred by not awarding them their costs in respect of an aspect of the application that the respondent abandoned. 41 Some context is required. By his originating application, the respondent sought (amongst other things) damages against the first appellant for breach of contract. By reason of the default judgment, the appellants were taken to admit the matters alleged against them in that regard (including that the contractual breaches that were alleged had occurred). It then fell (or would have fallen) to the FCCA to determine what loss the respondent endured in consequence of those admitted contractual breaches. 42 Proof of that loss would have required proof that the respondent did certain things by reason of which he was eligible to but did not receive monetary entitlements that were conferred upon him contractually. Additionally, it would have required proof as to the quantum of those entitlements, which in turn depended upon proof of other matters, including matters relating to sums that the first appellant billed to certain of its clients over a defined period. 43 It is apparent that the respondent laboured under some difficulty in acquiring evidence sufficient to prove those matters (and thus establish the loss that he hoped to recover as damages). There is some suggestion - though, for reasons to which I shall shortly come, it doesn't much matter - that those troubles ensued partly through difficulties that the respondent had in securing from the appellants documents by way of discovery. 44 Ultimately, the respondent did not press his claim to damages for breach of contract. He gave notice of that choice on 29 July 2020, which was the day of the hearing before the FCCA. The appellants sought to characterise the withdrawal of that claim as an unreasonable act or omission, in respect of which, they said, it was appropriate to grant them an award of costs. 45 The learned primary judge determined that claim as follows (Primary Judgment, [108]-[110]): In my view the decision on the part of the [respondent] to make that decision was not an "unreasonable act or omission": see s 570(2)(b) of the FW Act. The decision was made for practical reasons, particularly the immense difficulty of seeking to ascertain damages under the contractual claims when the [appellants] had not provided full disclosure of financial documents which might readily establish the quantum of the claim. Had that decision not been made at the time of the final hearing, the hearing would have taken substantially more time, increasing the costs for all parties and making the Court's task of determining the matter even more difficult. As the Court said to Counsel for the [respondent] at the hearing, to require the Court to digest all the material that was being relied upon to prove the contractual damages was onerous. Whilst the volume of material that the Court was provided with has been onerous, particularly in the absence of a paginated Court Book, it is nothing like the task that the Court would have faced had the alternative course been pursued by the [respondent]. On that basis, I am not minded to award the [appellants] costs on the grounds that the [respondent] elected to abandon its contractual claims in this matter. 46 In PIA Mortgage Services Pty Ltd v King (No 2) [2020] FCAFC 53 (Rangiah, Charlesworth and Snaden JJ; hereafter "PIA (No 2)") the court made the following observations that are relevant to this aspect of the present appeal (at [14]-[15]): The narrowing of issues that are to be ventilated before a court is always to be encouraged. By itself, the withdrawal of an otherwise live contention cannot amount to unreasonableness of the sort to which s 570(2)(b) of the FW Act refers, no matter when it occurs. Unreasonableness may, however, arise by reason of the nature of the contention that is withdrawn or the circumstances in which that withdrawal occurs (or both). A litigant who fails until the proverbial eleventh hour to withdraw a speculative contention might more readily be thought to have committed an unreasonable omission for the purposes of s 570(2)(b) of the FW Act than would a litigant who withdraws an arguable contention at the same point or earlier. Similarly, the failure to withdraw a contention before the eleventh hour might more readily qualify as an unreasonable omission if there is reason to think that the party withdrawing it could, with proper care, have withdrawn it more promptly. In combination, the timing of the withdrawal, the quality of the withdrawn contention and the circumstances in which the withdrawal was effected inform whether a particular withdrawal trespasses into the realm of unreasonableness. It is, in that sense, that unreasonableness is a question of impression and degree, to be assessed by reference to the particular circumstances of a given case: Construction, Forestry, Mining and Energy Union v Clarke (2008) 170 FCR 574, 582 [28] (Tamberlin, Gyles and Gilmour JJ). 47 There are two reasons why the third ground of appeal should fail. The first relates closely to the disposition of the first ground. The learned primary judge's conclusion - namely that the respondent's decision not to press his claim for contractual damages was not unreasonable - involved the exercise of a statutory discretion. On appeal, it is vulnerable to interference only insofar as it may be shown that the exercise of that discretion miscarried in some way. By their submissions, the appellants do not identify any such discretionary error. Instead and more simply, they contend that the primary judge ought to have been satisfied that the withdrawal of the contractual damages case was unreasonable; and that his Honour "erred in fact and law" in concluding that it wasn't. Many circumstances - none of which it is necessary here to trace - are identified in support of that contention; but none of them is (and no combination of them are) said to give rise to error of the kind identified in House v The King. 48 Second, it is to be recalled that the act that the appellants here seek to establish as unreasonable is "…the respondent's decision to abandon his [contractual damages] claims at the hearing". For the reasons identified in PIA (No 2), such a decision, by itself, can never be unreasonable. In relation to claims that are abandoned, unreasonableness may lie in a decision or willingness to press for longer than is advisable that which is later abandoned; but even that depends upon assessments of the contentions in question, and the timing of and reasons for their withdrawal. Perhaps by their submissions, the appellants sought to bring those considerations into play; but by their notice of appeal, they did not. 49 I am not satisfied that there is any error - discretionary or otherwise - to the conclusion of the primary judge that the respondent's decision to abandon his claim for damages in contract was not unreasonable. 50 The third ground of appeal must, therefore, fail.

GROUND FOUR: ERROR IN MAKING PENALTIES PAYABLE TO RESPONDENT 51 In light of their admitted (or deemed admitted) contraventions of the FW Act, the learned primary judge was moved to impose penalties upon the appellants totalling $21,690.00. It was ordered that that sum should be made payable to the respondent. By their fourth ground of appeal, the appellants submit that his Honour erred by ordering that the penalty amounts be made payable to the respondent. It is suggested, instead, that his Honour ought to have ordered that 50 per cent of the total penalty amount should have been made payable to the respondent and the rest should have been payable to the Commonwealth. 52 The learned primary judge's conclusions on this front were succinct (Primary Judgment, [105]): I direct that the penalties, as set out above, be paid to the [respondent] pursuant to s 546(3)(c). This order is appropriate given that the [respondent] was required to bring the application for penalties at considerable cost, both in terms of time and expense: see Sayed v Construction, Forestry, Mining and Energy Union [2016] FCAFC 4 at [116]. 53 The appellants correctly recognise that the court's order making the penalty amount payable to the respondent was one that involved an exercise of discretion. They maintain that that discretion miscarried because the primary judge: …failed to consider the following matters: (a) the [r]espondent has had his costs of the Proceeding up to judgment; (b) the [r]espondent is [or, presumably at some point, was] a self-represented litigant; (c) up until 28 July 2020 (i.e. the date before the Assessment), the [r]espondent sought penalties in excess of $18,000,000 for contraventions of the FW Act; (d) the time and cost of the Proceeding and the Assessment were needlessly inflated by the pursuit of defective claims, over-complicated pleading of workplace rights and wildly unrealistic penalty payments which took no account of the principles of course of conduct. 54 The appellants' contentions may swiftly be addressed. None of the four matters that are said to have gone unconsidered was material to the exercise of the court's discretion to make the order that was made. The learned primary judge's conclusion was that the respondent should have the benefit of the penalty sums because he had been put to considerable expense in securing the outcomes that he secured. That proposition cannot be doubted and the appellants don't urge the court on appeal to doubt it. Even assuming (which I do only for the sake of argument) that some of that expense was ameliorated or could have been avoided, that is not a consideration that bears materially upon the exercise of the discretion that was exercised. 55 Further, the appellants' submission presumes that the matters identified were, in fact, not considered. There is good reason to doubt as much. It could hardly be said, for example, that the learned primary judge made the decision that he made ignorant of the nature of the case that the respondent had initially advanced. 56 Regardless, even were I minded to accept that the primary judge's discretion to make the penalty amounts payable to the respondent miscarried; and, so accepting, to re-exercise that discretion afresh in the appeal, I would in any event reach the same conclusion as did his Honour. The power conveyed by s 546(3) of the FW Act "…is ordinarily to be exercised by awarding any penalty to the successful applicant": Sayed v Construction, Forestry, Mining and Energy Union (2016) 239 FCR 336, 354 [101] (Tracey, Barker and Katzmann JJ). Even assuming, momentarily, that the matters to which the appellants point are properly founded and fair observations, I do not consider that they should warrant any departure from the "usual practice" to the exercise of the power conferred by s 546(3) of the FW Act: PIA Mortgage Services Pty Ltd v King (2020) 274 FCR 225, 240 [63] (Rangiah and Charlesworth JJ, Snaden J dissenting in the result). The respondent was entitled to the order that the learned primary judge made for the reasons that his Honour made it. 57 The fourth ground of appeal must fail.

DISPOSITION 58 None of the appellants' grounds of appeal is made good. The appeal must and will be dismissed. Despite the operation of s 570(1) of the FW Act - which serves generally to preclude the making of an order as to costs in relation to matters arising under the FW Act - the respondent requested at the hearing of the appeal that the parties be afforded an opportunity to make submissions on costs. If, upon consideration of these reasons, any party considers that an application for costs should be made, they may make it in the usual way. In the interim, there shall be no order for costs. I certify that the preceding fifty-eight (58) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Snaden.