ARMSTRONG v STEVIC

[2020] FCCA 1025

FEDERAL CIRCUIT COURT OF AUSTRALIA

ARMSTRONG v STEVIC [2020] FCCA 1025

Catchwords:
INDUSTRIAL LAW – SMALL CLAIMS – Underpayment of wages and entitlements – payments made over a period of time on a payment plan – application for interest up to judgment on outstanding payments – application for interest dismissed – application for payment of outstanding superannuation payments allowed.

Legislation:

Federal Circuit Court of Australia Act 1999 (Cth) s.76.
Hair and Beauty Award 2010 (Cth).

Applicant: SHANIA ARMSTRONG

Respondent: LOUISE STEVIC

File Number: MLG 2093 of 2019

Judgment of: Judge Mercuri

Hearing date: 25 March 2020

Date of Last Submission: 25 March 2020

Delivered at: Melbourne

Delivered on: 25 March 2020

REPRESENTATION

Advocate for the applicant: In person

Solicitors for the applicant: None

Advocate for the respondent: In person

Solicitors for the respondent: None

ORDERS

1. Within 7 days of these orders, the respondent pay to the applicant the sum of $585.47 into a superannuation fund account nominated by the applicant.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLG 2093 of 2019

SHANIA ARMSTRONG

Applicant

and

LOUISE STEVIC

Respondent

REASONS FOR JUDGMENT

(revised from the transcript)

1. These reasons for judgment were delivered orally. They have been corrected from the transcript. Grammatical errors have been corrected and an attempt has been made to render the orally delivered reasons amenable to being read.

2. This is an application which has come before the court in its small claims jurisdiction.

3. The applicant seeks underpayment of wages, annual leave entitlements, school fees, superannuation, interest and the like.  In essence, the claim which was made by the applicant relates to underpayment of entitlements pursuant to the Hair and Beauty Award 2010.

4. Both the applicant and the respondent appeared at this hearing by telephone and they both gave evidence and answered questions, largely in response to the matters raised in the application. 

5. The respondent effectively conceded the underpayment claim.

6. The only outstanding issues were in relation to whether or not the court should exercise its discretion and order the payment of interest in respect of the amounts that were outstanding.  It was also agreed that the only substantive amount still outstanding at trial was an underpayment of $585.47 which the respondent conceded she still owed to the applicant’s superannuation fund.

7. The respondent has otherwise paid the full amount of the applicant’s claims, either by:

   a)making payments directly to the applicant over the period from 19 February 2019 through to 1 March 2020; or

   b)making payments to the applicant’s superannuation fund; and/or

   c)making payments on the applicant’s behalf to the Australian Tax Office.

Background

1. The applicant raised the issue of underpayments with the respondent in December 2018.  At that time, the respondent replied in a timely manner and invited the applicant to identify the nature of the underpayment.  The applicant then provided an email claiming an underpayment of $5,000. 

2. The respondent immediately sought to pay through a payment plan and commenced paying the underpayment claimed by the applicant in February 2019.  The parties engaged in mediation with the assistance of the Fair Work Ombudsman and tried to resolve the issues between them.

3. There was further correspondence from the applicant to the respondent in March 2019.  The applicant recalculated the claimed amount and said that she was now claiming $9,629 which included course fees. 

4. In the course of giving evidence, the applicant indicated that the more that she investigated the underpayment issue, the greater clarity she obtained on what was actually outstanding.  She said that this explained the changes in the amounts that she claimed over time. 

5. In any event, in approximately April or May 2019, there were attempts made to arrange a mediation between the parties.  However, that did not ultimately proceed because the applicant was unable to participate at that time due to undergoing further surgery.

6. The respondent continued making instalment payments to the applicant throughout the period from February 2019 to March 2020.  The respondent has also given evidence, which I accept, that she has paid tax on the applicant’s behalf in respect of the amounts owing to the applicant.

7. The respondent conceded that the sum of $585.47 was still outstanding in respect of the applicant’s superannuation, and indicated she will pay this immediately.  The applicant seeks interest on the amount claimed in the sum of some $3,900.

8. Section 76(2) of the Federal Circuit Court of Australia Act 1999 (Cth) provides that:

   (2)    A party to proceedings that are:

   (a)    in the Federal Circuit Court of Australia; and

(b)for the recovery of any money (including any debt or damages or the value of any goods) in respect of a particular cause of action;

may apply to the Federal Circuit Court of Australia or a Judge for an order under subsection (3).

1. Section 76(3) deals with interest and is in the following terms:

   (3)    If:

   (a)    an application is made under subsection (2); and

   (b)the Federal Circuit Court of Australia or the Judge is not satisfied that good cause has been shown for not making an order under this subsection;

   the Federal Circuit Court of Australia or the Judge must either:

   (c)order that there be included in the sum for which judgment is given interest at such rate as the Federal Circuit Court of Australia or the Judge thinks fit on the whole or any part of the money for the whole or any part of the period between:

   (i)the date when the cause of action arose; and

(ii)the date as of which judgment is entered; or

(d)without proceeding to calculate interest in accordance with paragraph (c), order that there be included in the sum for which judgment is given a lump sum in lieu of any such interest.

1. The question here is whether the court should exercise its discretion to order interest in this instance or whether, in the words of section 76(3), I am satisfied that good cause has been shown for not making an order under that subsection.

2. The applicant has claimed interest of over $3,900.  She says that the court should exercise its discretion and order interest on the basis that:

   a)this matter has now continued for a very long period;

   b)it is not fair that an apprentice should have to be put through this process;

   c)the emotional cost and financial cost and expense to pursue a claim such as this; and

   d)it is fair and just to do so.

3. The respondent says that interest ought not be ordered in circumstances where:

   a)the underpayment was an oversight on the respondent’s part;

   b)when the underpayment was brought to her attention, she immediately sought to rectify it;

   c)she operates a small business and therefore was not able to repay the underpayment immediately but paid what she could through a payment plan;

   d)the respondent has not caused any of the delays which have arisen in this matter coming to final resolution;

   e)importantly, that she tried to engage in mediation as early as May 2019, only some five or six months after the matter was initially raised with her; and

   f)the delay is not due to any action on her part.

4. The first delay caused to the mediation was as a result of the applicant not being able to participate at the time. Similarly, the matter was initially listed before this court on an earlier date and was adjourned not as a result of any action taken by the respondent. 

5. On balance, I am satisfied that in this instance there is not good cause for making an order for interest.  Whilst the applicant should have been paid correctly, I accept the respondent’s evidence that the underpayment was an oversight and was not intentional.  Moreover, the respondent has done what she could to remedy the situation as soon as it was brought to her attention.

6. The respondent has indeed paid over $17,445 to the applicant and has indicated that the remaining $585.47 will be paid into the applicant’s superannuation fund immediately.

7. In addition to the $17,000 paid directly to the applicant, the respondent has also paid an additional $2,000 on the applicant’s behalf to the Australian Tax Office and a further sum of $565 to the applicant’s superannuation fund. 

8. In all of the circumstances, and given that the applicant’s claim has now been all but satisfied in full, I do not propose making any order for interest in this case.

9. I do, however, order that the respondent pay the applicant the remaining sum of $585.47 to the applicant’s nominated superannuation fund and that such payment be made within seven days. 

I certify that the preceding twenty-five (25) paragraphs are a true copy of the reasons for judgment of Judge Mercuri

Associate: 

Date: 4 May 2020