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Amponsem v Laundy (Exhibition) Pty Ltd

Amponsem v Laundy (Exhibition) Pty Ltd

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Case Copied 25 September 2014 85 min read

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FEDERAL CIRCUIT COURT OF AUSTRALIA

AMPONSEM v LAUNDY (EXHIBITION) PTY LTD

[2014] FCCA 2206

Catchwords:
COURTS AND JUDICIAL SYSTEM – Federal jurisdiction – whether the Federal Circuit Court of Australia has jurisdiction to determine a cross-claim based on breach of contractual and fiduciary duties in proceedings brought under the Fair Work Act 2009 (Cth) for the payment of unpaid accrued annual leave – whether employer’s contention that it is entitled to withhold payment of accrued annual leave claimed by employee because it has a claim against the employee for damages or equitable compensation forms part of one justiciable controversy.

EMPLOYMENT LAW – Contract of employment – whether employee’s duties as head chef included a duty to acquire chicken schnitzels (Product) for use in employer’s restaurant of which the employee was head chef – whether contract of employment was subject to an express or implied term that the employee must serve the employer with fidelity – whether in undertaking the duty to acquire the Product the employee was under a contractual or fiduciary duty to undertake that task for the benefit of the employer and not to place himself in a position where the employee’s interests or the employee’s duty to others would conflict with the employee’s duty to the employer – whether the employee disclosed to his employer that the Product the employee had ordered for the employer and which had been supplied by two intermediary businesses was acquired by the employee for a price less than the price the intermediary businesses supplied the Product to the employer and that one of the intermediary businesses was a business that was owned by the employee’s wife – whether the employee delivered to the employer less Product than was paid for by the employer – whether the employee did so in breach of his contractual duty of fidelity or fiduciary duties – whether employer suffered loss or damage as a consequence of the employee’s breach of duty.

EMPLOYMENT LAW – Contract of employment – whether the contract contained a term to the effect that the employee would be paid a bonus – whether the preconditions for paying a bonus came into being.

INDUSTRIAL LAW – Whether claim for compensation for breach of contract or breach of equitable obligation by employee can be set-off against an employee’s claim for unpaid accrued annual leave – whether an order against an employee for payment of compensation to the employer for breach of contract or fiduciary duty can be set-off against an order that the employer pay the employee accrued annual leave.

Legislation:

Civil Procedure Act 2005 (NSW), s.21
Evidence Act 1995 (Cth), s.131
Fair Work Act 2009 (Cth), ss.44, 87, 90(2), 539(1), 540, 545
Federal Court of Australia Act 1976 (Cth), s.32
Federal Circuit Court of Australia Act1999 (Cth), s.18
Federal Circuit Court Rules 2001 (Cth), r.28.09
Judiciary Act 1903 (Cth), s.79

Australian Beverage Distributors v Evans and Tate Premium Wines Pty Ltd [2006] NSWSC 560

Australian Securities and Investments Commission v…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2014] FCCA 2206
Decision Date: 25 September 2014

CaseChat Overview and Summary

The Federal Circuit Court of Australia was asked to determine whether it possessed jurisdiction to hear a cross-claim for breach of contractual and fiduciary duties. This cross-claim was brought by the employer, Laundy (Exhibition) Pty Ltd, against its former employee, Amponsem, in proceedings initiated by Amponsem for unpaid accrued annual leave under the *Fair Work Act 2009* (Cth). The employer contended that it was entitled to withhold payment of the accrued annual leave due to its claim for damages or equitable compensation against the employee, raising the question of whether these claims formed a single justiciable controversy within the court's federal jurisdiction.

The court was required to consider several legal issues concerning the employment relationship. These included whether the employee's duties as head chef encompassed an obligation to acquire a specific product for the restaurant, whether the employment contract contained an express or implied term requiring the employee to serve the employer with fidelity, and whether the employee, in undertaking the acquisition of the product, breached contractual or fiduciary duties by failing to act solely for the employer's benefit and by placing himself in a position of conflicting interests. Specifically, the court examined whether the employee failed to disclose that he acquired the product for less than the price charged to the employer, that an intermediary business was owned by his wife, and whether he delivered less product than was paid for, thereby breaching his duty of fidelity or fiduciary obligations and causing loss to the employer. Additionally, the court considered whether the employment contract included a term for a bonus payment and if its preconditions were met. Finally, the court had to determine if a claim for compensation for breach of contract or equitable obligation by the employee could be set off against the employee's claim for unpaid accrued annual leave, and if an order for compensation against the employee could be set off against an order for payment of accrued leave to the employee.

Judge Manousaridis reasoned that the Federal Circuit Court had jurisdiction to hear the employer's cross-claim. The court found that the employer's claims for breach of contractual and fiduciary duties by the employee, and the employee's claim for unpaid annual leave, arose from the same employment relationship and were so closely connected that they constituted a single justiciable controversy. This connection allowed the court to exercise its accrued jurisdiction to determine the cross-claim, even though the cross-claim itself might not have fallen within the court's original federal jurisdiction. The court applied the principles of accrued jurisdiction, which permits federal courts to adjudicate state or common law claims that are so substantially and intimately connected with a federal claim that they form part of the one controversy. The court also considered the nature of the employee's duties and the alleged breaches, including the duty of fidelity and the potential for conflicts of interest, as well as the employer's alleged losses. The court determined that the employer's claim for damages or equitable compensation could indeed be set off against the employee's claim for accrued annual leave.

Orders