Barhoum v All Districts Coating Pty Ltd & Ors
[2008] FMCA 172
•22 February 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BARHOUM v ALL DISTRICTS COATING PTY LTD & ANOR | [2008] FMCA 172 |
| INDUSTRIAL LAW – Unlawful termination – whether proscribed reason – whether employee’s work related injury was the reason, or part of the reason, for the termination – whether employer was first, second or third respondent – respondents claimed employment was terminated because company ceased its operations and “closed down” – applicant was singled out and treated differently to all other employees – other employees’ employment “continued” – piercing the corporate veil – companies used interchangeably – penalty imposed at the high end of the scale. |
| Workplace Relations Act 1996 ss.580, 659, 663, 664, 665, 841 Workplace Relations Regulations 2006 reg.2.12.8 |
| Jones v Dunkel (1959) 101 CLR 298 |
| Applicant: | EAD BARHOUM |
| First Respondent: | ALL DISTRICTS COATING PTY LTD |
| Second Respondent: | ALL DISTRICTS COATING (AUST) PTY LTD |
| Third Respondent: | CARLOS HABIBEH |
| Fourth Respondent: | RITA HABIBEH |
| File Number: | SYG 1589 of 2007 |
| Judgment of: | Nicholls FM |
| Hearing dates: | 9 February, 8 March, 25 May 2007 |
| Date of Last Submission: | 17 July 2007 |
| Delivered at: | Sydney |
| Delivered on: | 22 February 2008 |
REPRESENTATION
| Appearing for the Applicant: | Ms L Charlson |
| Appearing for the Respondents: | Mr A Sandroussi |
ORDERS
The first respondent and/or second respondent and/or third respondent, having breached the requirements of s.659(2)(a) of the Act, pay a penalty of $7,000.
The payment of such penalty be made to the NSW Branch of the Construction Forestry Mining and Energy Union within twenty-eight (28) days of the making of this order.
Within fourteen (14) days of the making of these orders, each of the parties file and serve written submissions and/or evidence by way of affidavit in relation to the reinstatement to employment of the applicant, and the amount of compensation to be paid to the applicant.
Each of the parties file and serve written submissions within fourteen (14) days of the making of these orders on the issue of costs in these proceedings to the date of this judgement.
Leave is granted to the parties on three (3) days notice to seek further directions in relation to the matters arising from Orders 3 and 4.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 1589 of 2007
| EAD BARHOUM |
Applicant
And
| ALL DISTRICTS COATING PTY LTD |
First Respondent
| ALL DISTRICTS COATING (AUST) PTY LTD |
Second Respondent
| CARLOS HABIBEH |
Third Respondent
| RITA HABIBEH |
Fourth Respondent
REASONS FOR JUDGMENT
(As Corrected)
This is an application made on 2 June 2006 pursuant to s.663 of the Workplace Relations Act 1996 (“the Act”) seeking orders pursuant to s.665 of the Act in respect of what is said to be a contravention of s.659 of the Act, constituting the unlawful termination of the employment of Mr Ead Barhoum (“the applicant”) by the respondents.
The applicant has been assisted and represented in this matter by the New South Wales Branch of the Construction Forestry Mining and Energy Union (“the union”).
Ultimately, the respondents before the Court are:
1)All Districts Coating Pty Ltd (“the first respondent”).
2)All Districts Coating (Aust) Pty Ltd (“the second respondent”).
3)Mr Carlos Habibeh (“the third respondent”).
4)Mrs Rita Habibeh (“the fourth respondent”).
Background
In short, the applicant’s complaint is that he was employed by Mr and Mrs Habibeh in a painting business, that in a day-to-day sense, he worked for Mr Habibeh, and that in the conduct of this business the respondents’ used two companies (the first and second respondents) through which the business was conducted. He claimed that he was employed as a painter (and on occasion as a foreman) by the respondents for two discreet periods: sometime in 1998 to May 2002, and 22 September 2004 to 10 April 2006.
While he had been injured previously, the applicant claimed that, relevantly, he injured his back on 20 February 2006 during the course of his employment with the respondents, but that he continued working with this injury. The applicant claims that on 3 April 2006, following advice from a medical specialist, he sent certain WorkCover medical certificates relating to his injury to Mr Habibeh, and that he had a telephone conversation with him on that date regarding his injury. He then claims that on 6 April 2006, he received a letter advising him of the termination of his employment. The applicant asserts that this action was in breach of the requirements of s.659(2)(a) of the Act, and seeks relief from this Court pursuant to s.665.
Orders sought
Ultimately, the orders sought by the applicant against all the four respondents are:
1)An order imposing a penalty of $10,000 against the first respondent and/or the second respondent and/or the third respondent and/or the fourth respondent.
2)An order requiring the first respondent and/or the second respondent and/or the third respondent and/or fourth respondent to reinstate the applicant.
3)An order that the first respondent and/or the second respondent and/or the third respondent and/or the fourth respondent pay to the applicant the amount of compensation which the Court thinks appropriate.
4)An order for moiety of 100% of any penalty to be paid to the union.
5)Costs.
Legislation
The legislation relevant to this matter is:
1)Section 659(2)(a):
“ … (2) Except as provided by subsection (3) or (4), an employer must not terminate an employee's employment for any one or more of the following reasons, or for reasons including any one or more of the following reasons:
(a) temporary absence from work because of illness or injury within the meaning of the regulations …”
2)Section 664:
“In any proceedings under section 663 relating to a termination of employment in contravention of section 659 for a reason (a proscribed reason ) set out in a paragraph of subsection (2) of that section:
(a) it is not necessary for the employee to prove that the termination was for a proscribed reason; but
(b) it is a defence in the proceedings if the employer proves that the termination was for a reason or reasons that do not include a proscribed reason (other than a proscribed reason to which subsection 659(3) or (4) applies).”
[Section 663 provides for application to this court in relation to an alleged contravention of, amongst others, s.659].
3)Workplace Relations Regulations 2006, reg.2.12.8:
“Temporary absence because of illness or injury
(1) For paragraph 659 (2) (a) of the Act, an employee's absence from work because of illness or injury is a temporary absence if:
(a) the employee provides a medical certificate for the illness or injury within:
(i) 24 hours after the commencement of the absence; or
(ii) such longer period as is reasonable in the circumstances; or
(b) the employee:
(i) is required by the terms of an industrial instrument to:
(A) notify the employer of an absence from work; and
(B) substantiate the reason for the absence; and
(ii) complies with those terms; or
(c) the employee has provided the employer with a required document in accordance with section 254 of the Act …”
4)Section 665 sets out the orders available to the Court:
“(1) If the Court is satisfied that an employer has contravened section 659 in relation to the termination of employment of an employee, the Court may make one or more of the following orders:
(a) an order imposing on the employer a penalty of not more than $10,000;
(b) an order requiring the employer to reinstate the employee;
(c) subject to subsections (2), (3), (4) and (5), an order requiring the employer to pay to the employee compensation of such amount as the Court thinks appropriate;
(d) any other order that the Court thinks necessary to remedy the effect of such a termination;
(e) any other consequential orders.”
5)Section 841 relates to the imposition of a penalty:
“A court that imposes a pecuniary penalty under this Act (other than a penalty for an offence) may order that the penalty, or a part of the penalty, be paid:
(a) to the Commonwealth; or
(b) to a particular organisation or person.”
Evidence
The affidavit evidence before the Court:
1)The applicant’s affidavit of 19 September 2006 with annexures (“the applicant’s first affidavit”).
2)The affidavit of Mr Habibeh of 1 November 2006 (“the third respondent’s affidavit”).
3)The applicant’s affidavit of 20 December 2006 (“the applicant’s second affidavit”).
4)The affidavit of Chris Marshall, administrative assistant employed by the union, of 15 September 2006.
5)The affidavit of Leah Charlson, industrial legal officer employed by the union, of 15 September 2006.
6)The affidavit of Leah Charlson of 21 December 2006 with annexures.
7)The affidavit of Sargon Sheba, painter, of 12 December 2006.
8)The affidavit of Warren Myles Kelly, State organiser for the union, of 19 December 2006 with annexures.
9)The affidavit of Leah Charlson of 15 February 2007 with annexures.
The progress of this matter before Court was characterised by a number of directions hearings dealing primarily with the production of documents by the respondents and delays encountered in this regard. During the course of three days of hearing of this matter, a number of other documents were tendered in evidence before the Court. From all of this material, the following can be discerned as the factual basis upon which the parties rely.
It is not in dispute between the parties that on the company letterhead of the second respondent, and signed by Mr Habibeh, as managing director of the second respondent, the following letter dated 6 April 2006 was sent to the applicant:
“Dear Ead
We wish to inform you that All Districts Coating (Aust) Pty Ltd ABN: 66 084 767 895, will cease trading at the 13th of April 2006 and close down. Please find enclose cheque number 2102 to the amount of $ 1,305.67 for one week pay as a notice and one week holiday. For any further information please do not hesitate to contact me at the above numbers.
Yours faithfully
Carlos Habibeh
Managing Director
Districts Coating (Aust) Pty Ltd.”
[Errors in Original]
(see, amongst other documents, the annexure to the application to the Court).
Applicant’s Claim
The applicant’s claim is that he was, in reality, employed by all of the respondents; that he injured his back at work on 20 February 2006, and that he continued working with only a few days absence until 18 March 2006, when he attended his doctor who certified the applicant as unfit to work, and referred him to a medical specialist.
The applicant attended a medical specialist on 3 April 2006. The applicant asserts that following this, on the same day, he telephoned Mr Habibeh and that the following conversation (or words to the effect of the following conversation) took place:
““Ead Barhoum: “The specialist told me to go for an x-ray and a scan for my back and my wrist. Are you going to pay for my medical expenses and time off?”
Carlos Habibeh: “No. I’ll pay for your medical expenses but not your time off. Go to Centrelink and tell them that you cannot work due to sickness.”
Ead Barhoum: “How can I go to Centrelink when I’m employed and I had an accident at work?”
Carlos Habibeh: “If this is how you look at it, you send me papers and I will defend myself and you can defend yourself.””
The applicant asserts that some days later he received, by post, the letter of 6 April 2006.
The applicant’s position is that, although he received, as the reason for termination, the notice that the second respondent was to cease operating, all the other employees in the painting business “continued” working for Mr Habibeh, albeit having “formally” been “transferred” as employees of the first respondent.
The applicant submits that, for all practical purposes, the applicant’s employer was really Mr Habibeh, and while the respondents may assert that the second respondent was the actual employer, the evidence before the Court shows that it is not clear that only one of the respondents was the employer, to the exclusion of the others.
The applicant asserts that the evidence establishes a close interchangeable relationship between the first and second respondents, and that the business was conducted by the third respondent in particular, using the names of the first and second respondents interchangeably. In this regard, the applicant points to the name of the first respondent appearing on “pay slips” (pay advice notes and other similar documents) given to the applicant. (Noting that many pay slips were not provided to the applicant during the course of his employment, and that even after a number of subpoenas and directions hearings, it was difficult to obtain copies of the complete set of pay slips from the respondents).
Further, the applicant relies on other evidence that the respondents were content to receive invoices addressed to either the first or second respondent at relevant times. Also (according to the evidence of the applicant and Mr Sheba, who gave evidence on his behalf) that in day-to-day operations on building and constructions sites, where employees of other companies and industries also worked (sometimes as site supervisors) the understanding was that Mr Habibeh’s employees worked for him through the “vehicles” of his two companies. Therefore, it could not be said with certainty that the second respondent was the sole employer to the exclusion of the first respondent or the third respondent.
The applicant also submits that the applicant’s employment was terminated in breach of s.659 and that, unlike all the other employees of Mr and Mrs Habibeh and their two companies, he was “not transferred from All Districts Coating (Aust) to All Districts Coating.” The applicant relies on the proposition that a transmission of business (see Part 11 of the Act and in particular s.580) had occurred between the second and first respondents, and that if orders were to be made against the second respondent then similarly, the first respondent should be included.
Further, that given the evidence, Mr and Mrs Habibeh used these companies interchangeably, and the transfer of shares and directorship from Mr Habibeh to Mrs Habibeh, in relation to the first respondent, occurred only because of tax and other legal problems faced by the second respondent, and that the Habibehs continued to operate their business by using the first respondent exclusively after the termination of the applicant’s employment in a manner to limit, if not to avoid, the “fallout” from the difficulties of the second respondent.
The Court was also asked to “pierce the corporate veil” and to see that the operation of this painting business involved all four parties prior to the time of termination, at the time of termination, and subsequently the first, third and fourth respondents..
During the course of these proceedings, the Court specifically asked the applicant as to whether he pressed his claim against the fourth respondent. The applicant’s position is that he continues to press his claim against each and all of the respondents, including the fourth respondent, for the reason that she is now the shareholder and director of the first respondent, that the reality of the business situation and the nature of relationships between all of the respondents is such as to include her in the relevant business. The applicant also presses that an order against the second respondent only, or even the second and the first respondents, would enable both the third and fourth respondents to avoid their “legal responsibilities and liability,” by transferring the painting business from one company to another entity and “closing down the first company” (that is, the first respondent; noting that the second respondent ceased trading in April 2006). The applicant’s submissions were to express a concern that the third respondent may attempt to avoid an order made against him by transferring further assets into his wife’s name and that, therefore, she should remain as a respondent in these proceedings.
Respondents’ Claims
The respondents’ position is that the applicant was employed solely by the second respondent whom Mr Habibeh was the sole director. The respondents claim that, due to certain difficulties involving the second respondent (including litigation against the second respondent and debts owed both to and by the second respondent), Mr Habibeh informed the employees of the second respondent sometime in late February 2006 that the second respondent was to cease trading by mid April 2006. The respondents claim that on 6 April 2006, the third respondent sent a letter terminating the applicant’s employment on the basis, as it informed him, that the second respondent would cease trading on 13 April 2006. The respondents asserted that a similar letter was sent to all of the employees of the second respondent.
The respondents argue, with s.664(b) of the Act in mind, that they have established a defence in these proceedings because the evidence before the Court “proves,” on balance, that the termination of employment of the applicant was not for a proscribed reason, and was for reasons not including any proscribed reason.
The respondents argue that the decision taken by Mr Habibeh to “close down the second respondent and cease trading” was taken at some time earlier than the termination, even as far back as December 2005, and that this decision was made because of the various problems faced by the second respondent, which made it increasingly difficult for it to trade efficiently. The respondents submit that the applicant, and other employees, were advised in late February 2006 of this decision, and that this predates any knowledge of the applicant’s injury which caused the applicant’s temporary absence from work, and on which he now relies to say was the reason for his termination.
The respondents’ position is that at all relevant times, the applicant’s “employer” was the second respondent, and only the second respondent. The respondents reject the applicant’s evidence that as between the respondents he did not know who exactly his employer was, and that he could have known that the second respondent was the employer by referring to the “ABN number” of the second respondent which appeared on all relevant documents (for example, pay slips) which were provided to the applicant. That, irrespective of what name of which company appeared on these documents, the “ABN number” was always the number of the second respondent.
In submissions, the respondents placed great emphasis on their argument that the applicant’s evidence (and for that matter, the evidence in support from Mr Sheba) as to the identity of the employer should not be accepted by this Court in the circumstances because it was incumbent on the applicant as an employee to make investigations with references to the “ABN” appearing on documents provided to him which would establish the identity of the employer.
Termination of Employment
Turning first to the issue of the termination of the applicant’s employment. It was not at issue between the parties that at the relevant time the applicant was temporarily absent from his work because of an injury. The evidence before the Court is that the relevant matters set out in reg.2.12.8 of the Regulations were satisfied.
The issue between the parties’ is whether the applicant’s temporary absence from work because of the applicant’s injury was the reason, or a part of the reason, for the termination of the applicant’s employment. In this regard, I find that, on balance, I do not accept the respondents’ “defence” in these proceedings that the termination was not for, or did not include, a proscribed reason as set out in s.659(2)(a) of the Act.
The respondents submit that the termination of the applicant’s employment stemmed from the decision that was made that the second respondent cease trading, due to the various difficulties that had been encountered, and that this then led to the termination of all employees including the applicant. In these circumstances, whether or not the applicant was absent due to injury, was not relevant to, and not part of, the termination.
Even accepting the evidence of the third respondent that the decision to cease trading of the second respondent was taken sometime in late 2005, and certainly by February 2006, which predated the latest and relevant injury suffered by the applicant, this is not, in my view, sufficient, in all the circumstances of this case, to exclude the relevant proscribed reason (s.659(2)(a)) from the set of reasons for the termination of the applicant’s employment. A clear distinction can be drawn between the decision taken by the third respondent for the second respondent to cease trading (whenever that decision may have been taken) and the termination of the applicant’s employment.
I am persuaded by the applicant’s submissions in this regard because of (on the evidence) the view that I take about the conduct of the business involving all four respondents, the difficulties that I have with some relevant aspects of the evidence of the third respondent, and that the applicant was dealt with differently to all other employees.
The respondents’ position is that the second respondent, being a separate entity, was the sole employer of the applicant. That a decision was taken, on the respondents’ submission (see paragraph 40 of the submissions of 9 July 2007), by Mr Habibeh that the second respondent should cease trading.
Mr Habibeh’s evidence was that because of the problems encountered by the second respondent and the stress that these problems had caused him, he decided to cease the trading of the second respondent. Mr Habibeh’s evidence was (see in first instance paragraphs 15-16 of his affidavit of 1 November 2006) that Mrs Habibeh came up with the idea after he had come to the realisation that he “had enough of all the problems with the company” to transfer what was said to have been described as the “new company” into her name, and that she would start a “new painting business,” that he could then cease operations under the second respondent, and that he could then work for Mrs Habibeh as a “supervisor” in her new business which she would run through her new company.
I have difficulty in accepting the submission that the respondents seek to draw from this evidence. First, the company which the respondents referred to as the “new company” was a company which was already in existence for some time. In evidence not disputed by the respondents (and in this regard, see also the affidavit of Ms Charlson, and the printouts of the company searches relating to the first and second respondents) reveal that the first respondent company, which Mr Habibeh has sought to present as a “new company,” (at the very least his claim that this is how his wife described it) had been registered in August 2004, and that Mr Habibeh was the sole shareholder, director and secretary of that company. On his own evidence, even now, after having transferred his shareholding, and since Mrs Habibeh became the director of this company in January 2006, he continues to be the secretary of this company.
Second, both sides made lengthy submissions as to who exactly was the employer at the relevant times. The applicant made lengthy submissions that this Court should “pierce the corporate veil” and look at the reality of the situation as to the running of the painting business as it involved the four respondents.
The preferable view of the evidence before the Court in this regard is that Mr Habibeh is the holder of a painters contractor licence since 1997, he had completed study for a building diploma in 1998, and is the holder of a business licence, and commenced a painting business in 1998. It was at that time that he registered the second respondent, with the first respondent being registered some time in 2004. On the best view of the evidence before the Court, it is clear that Mr Habibeh managed and controlled the painting business and its operations, and made all of the business decisions relating to this business up to, and including, the date of the termination of the applicant’s employment.
The applicant submits, with reference to the evidence, that it is disingenuous of Mr Habibeh to now submit, while admitting that he made the decision to terminate the applicant’s employment, that the only employer was the second respondent, and that if the termination of employment is in breach of the relevant provisions, he should take no responsibility, nor take responsibility for any consequences that might flow.
I am not satisfied, given the evidence before the Court, that during the course of the applicant’s employment, that the affairs of the first and/or second and third respondents were kept separate in relation to the business. The evidence is that the prime operator of the painting business was the third respondent. I am satisfied that he used the first and second respondents interchangeably, as part of a corporate structure for the purpose of business, taxation and other relevant arrangements. Both companies at the relevant times were under the control of the third respondent.
In relation to the fourth respondent, however, I am not satisfied, nor is there any evidence to show, that she was actively involved in the management, or even the operations, of the painting business up to, and including, the time of termination of the employment of the applicant (albeit that she became the shareholder and director of the first respondent in January 2006). It is clear on the evidence that the relevant decision making of the management, conduct and operation of the painting business, through the first and second respondents, was at the control and direction of Mr Habibeh, the third respondent.
While, clearly, the first and second respondents are separate entities, on balance and given the evidence before the Court, I am satisfied that the third respondent used both entities interchangeably in the conduct of the affairs of the painting business, in which both he and the applicant were engaged at the relevant times. The respondents plainly had some difficulty in producing, even before this Court, relevant documentation going to the issue of who, or which entity, it was exactly that employed the applicant, or was given to the applicant during the time of his employment.
Even additional documentation subsequently produced to this Court (for example, pay slips, group certificates etc) reveal that the third respondent used the first and second respondents interchangeably in the conduct relating to the business and, in particular, in the discharging of obligations relating to the pay, remuneration, and conditions of employment of the applicant (and other employees) and was perceived by others to have done so.
The respondents have submitted that the business was plagued by computer problems and, in particular, this led to the word “(Aust)” which was the distinguishing difference in the names between the first and second respondents being omitted from relevant documentation including “the pay advice report.”
The respondents put before the Court an undated letter signed by a director of AZCO Systems P/L (see Respondents’ Exhibit 1), which, the respondents’ claimed, supported this assertion. In other words, the respondents’ position was that the documentation showed that the use of both the first and second respondents in the documents related to the conduct of the business, was due to a “computer error,” and did not truly reflect the intention of operating the painting business through the first respondent.
In the circumstances, I saw this submission as self-serving, and a convenient excuse. There was no satisfactory evidence from the third respondent (the only party who gave evidence on behalf of the respondents in these proceedings) to explain to any degree of satisfaction, the quite obvious difficulty in providing relevant pay advice and other documentation to the applicant and presumably other employees. (In this regard see Mr Sheba’s evidence). Nor was there any satisfactory evidence to show what steps were taken to remedy this situation, which appears to have occurred over a lengthy period, at least over the period of the applicant’s second round of employment (from 2004) with Mr Habibeh and his companies.
The applicant provided evidence (for example, invoices from various companies with whom Mr Habibeh and his companies did business), which reveal that companies with whom they did business sent invoices and correspondence using both companies’ names interchangeably. The respondents submission was that they could not be held liable for the actions of others, who may have mistakenly and incorrectly, addressed their invoices. There was no evidence, however, from Mr Habibeh to show that he took any steps to disabuse these people with whom he did business of their “mistake” over the length of time that this occurred.
In relation to the termination of the applicant’s employment, it is clear that even on his own evidence, it was Mr Habibeh who made the decision to terminate his employment. It was submitted on his behalf, and it was his evidence, that the decision to terminate the employment of the applicant flowed directly and exclusively (and certainly exclusive of any reason relevant to s.659(2)(a)) from the decision to “close down” the second respondent.
Annexed to his affidavit, Mr Habibeh has provided to the Court copies of letters, which he said were sent to all of the employees (of the second respondent), notifying them of the decision to cease trading, on behalf of the second respondent as of 13 April 2006.
The letter to the applicant is at annexure “F.”:
“Dear Ead
We wish to inform you that All Districts Coating (Aust) Pty Ltd 66 084 767 895, will cease trading at the 13th of April 2006 and closed down. Please find enclose cheque number 2102 to the amount of $1,305.67 for one week pay as a notice and one-week holiday. For any further information please do not hesitate to contact me at the above numbers.
Yours faithfully
Carlos Habibeh
Managing Director
All Districts Coating (Aust)Pty Ltd
From Mr Habibeh’s evidence, letters were sent to the four other employees (these are reproduced at annexures G, H, I and J). (The best evidence is that these were all other employees involved, other than for Mr Habibeh himself, who for some purposes was also named as an employee of the second respondent). The wording of the letters sent to , in effect, all the other employees is identical:
“We wish to inform you that All Districts Coating (Aust) Pty Ltd ABN: 66 084 767 895, will cease trading at the 13th of April 2006 and close down.
For any further information please do not hesitate to contact me at the above numbers
Yours faithfully
Carlos Habibeh
Managing Director
All Districts Coating (Aust) Pt Ltd.”
What is immediately noticeable as between the letter sent to the applicant and the letter sent to all the other employees, is that while the word “termination of employment,” or words to that effect, are not directly used in the letter to the applicant, such intention is clearly implicit with the reference to an enclosed cheque as payment for notice (presumably, in context, notice of termination). Only the applicant’s letter contains such a plain inference. The letters to the other employees merely inform the addressee that the second respondent will cease trading as of 13 April 2006. There is no other evidence before the Court that the other employees were sent any other letter notifying them of the termination of their employment.
This, even on its own, clearly reveals that the applicant was dealt with differently to the other employees at that time. In evidence, the third respondent stated that “termination payments” were given “in hand” to the other employees at the relevant time. There is no other evidence before the Court to corroborate the third respondent’s evidence in this regard. However, even if this was the case, what still remains clear is that the applicant was dealt with differently to the other employees even in this regard, as at the time of the stated ceasing of operations of the second respondent. While all the other employees “continued” in their employment (albeit formally for the first respondent) and in one case, on what is, in effect, a contractual basis, only the applicant was in the position of not continuing in employment for any of the respondents.
The respondents have produced these letters as evidence that the second respondent ceased trading as of 13 April 2006 and, importantly, that notification of this was given to all the employees. In my view, however, what these letters reveal is that the applicant was dealt with differently to other employees. That is, importantly, that he alone, of all the other employees, was notified (and there is no evidence before the court to the contrary) that his employment was to be terminated.
This is with reference to what is stated in, and the meaning of, the letters themselves and subsequent events involving the continuing employment of the other employees in the painting business.
The evidence before the Court, in particular documents produced as a result of subpoena served on the respondents (see, for example, the “Construction and Building Industry Superannuation” documents relevant to the employees) reveal that superannuation payments were made in relation to five employees, these are said to be employees of the second respondent as at April 2006. Three are: Mr A Makhfi, Mr M Abd Rabo, and Mr B El-Hamad, whose letters of 6 April 2006 are reproduced at annexures “H”, “I” and “J” to the third respondent’s affidavit. One was Mr Habibeh himself, and another, the applicant.
The evidence before the Court now is that all of these three employees were, within a matter of weeks, “employees” of the first respondent (albeit, that the evidence before the Court is that Mr M Abd Rabo is retained as an employee “on ABN,” which I understood to mean that he was employed on some contractual basis). The other employee who was sent a letter on 6 April 2006, Mr Amin Nysf (see annexure “G”) was, on the evidence put before the Court, a former employee who had left previously to go overseas, is now subsequently also “employed” by the first respondent.
Warren Myles Kelly, a State Organiser with the union, gave evidence (unchallenged by any other evidence) about common practices in the building (and with relevance to the painting) industry. His evidence was that it was not uncommon for employees to be moved from one company to another company within a group, and that this is often done for a variety of reasons, including, relevantly, tax or legal difficulties for liabilities, and that such movements were in that sense “technical” with no direct impact on the workers concerned.
While obviously the Court needs to be very cautious in applying what may be said to be “common practices” in an industry to a particular situation, it is, in my view, reasonable on balance to view in the circumstances of the current case, given what is set out above that all employees, other than the applicant, continued to be employed in the painting business operated by Mr Habibeh (see below as to the issue of who runs the business now as between Mr and Mrs Habibeh, or both) to say that there was no intention on the part of Mr Habibeh to terminate the employment of any of the employees other than the applicant in April 2006.
The third respondent’s evidence was that the idea of “closing down” the second respondent was his own, but that when he informed his wife of his intention to close down the business and to start working for “someone else for a while,” given the problems faced by the second respondent, (which he claimed amongst other things had lost the confidence of suppliers and builders) that his wife have gave him the idea of transferring the shares and directorship of the first respondent to him, and that he could then work for her. The third respondent’s evidence was that he agreed with this idea, given also that his wife had told him that she would take care of the administrative work for the “new company.”
I have difficulty in accepting the third respondent’s evidence in this regard. His initial evidence was that Mrs Habibeh took no role in the running of the painting business up until April 2006. Even under cross-examination, he would only concede that she did some occasional administrative work around the office. Yet Mr Habibeh would have the Court believe that literally within a matter of weeks, Mrs Habibeh (in circumstances where there was no evidence before the Court as to her having any experience or qualifications relevant to the management and running of a painting business) went from a situation where she had no such experience to managing the business and the affairs of the first respondent. That he (notwithstanding all his experience and qualifications) took direction from her, not only on such matters as the strategy relevant to business operations, but even down to such operational matter as to which painting jobs would be would be undertaken.
Mr Habibeh was at great pains in his evidence to distinguish the situation between the management of the business up until April 2006, through the second respondent, and the management of what he said was a completely different business, through the first respondent some weeks later. Mrs Habibeh gave no evidence before the Court in this matter, even though her evidence would have been relevant to this part of the respondent’s case as to the extent of her involvement in the running of the business through the first respondent now, and how this could be distinguished from the previous situation.
I do not note this failure to give evidence in any Jones v Dunkel (1959) 101 CLR 298, sense as invited to do so generally by the applicant. But what remains, however, is that there is an implausibility in the third respondent’s evidence where, in seeking to distinguish what he says are two separate phases of the painting business - the first up to April 2006, involving the second respondent, and the second after April 2006, involving his wife and the first respondent - with only a minimal supervisory role on his part, is implausible in circumstances where there is no evidence as to the capacity of the fourth respondent to manage the business and, importantly, to give him direction not only on the administrative “paperwork,” but on day-to-day operations such as the choice of work.
Mr Habibeh is the holder of building qualifications and relevant licences. He has been, and continues to be, the holder of a painter’s licence. There was no evidence before the Court that Mrs Habibeh ever held any such qualifications or licences, nor indeed that these were held subsequent to April 2006. If Mr Habibeh’s evidence that she had had, at best, minor administrative involvement in the managing of the running of the business before April 2006 is to be believed (and this to some extent is consistent with the applicant’s evidence that would appear to show that he only ever substantially dealt with Mr Habibeh), then I find it difficult to accept that Mrs Habibeh within a matter of weeks could move to manage the day to day, and general, operations of the business. Further, that Mr Habibeh would take a subordinate role and, indeed on his evidence, be told what to do by her.
In all the circumstances, therefore, based on the all the evidence provided to the Court, I take the view that Mr Habibeh was the driving force behind the painting business for some years, that up until April 2006, he used the first and second respondents interchangeably as vehicles for the running of his business. When his business ran into some difficulties in late 2005 and early 2006, he sought to restructure his affairs such as to isolate the legal and tax difficulties into which his business had found itself.
I accept the applicant’s submissions that the preferable view of the evidence before the Court is that the transfer of the directorship of the first respondent and his shares to the fourth respondent was a device to enable the isolation and to address the problems faced by the companies. I did not see this necessarily as an issue of transmission of business strictly within the meaning of Part 11 of the Act. The preferable view of the evidence is that Mr Habibeh operated his business using the first and second respondents interchangeably, and then, for the already stated reasons, sought to isolate his business difficulties from the future running of his painting business and he used, the transfer of shares and directorship of one of his companies to his wife as a means of achieving this objective.
What also must be noted in this regard, despite his protestations now that he is merely a “supervisor” at the direction of his wife, is that Mr Habibeh agreed in evidence that he remained the secretary of the first respondent. In these circumstances, I saw his evidence that, notwithstanding this office, and the legal obligations that flow from the holding of such an office, he had no significant role in the running of the business through the first respondent since April 2006, as being self serving.
The applicant submits that the evidence of the third respondent was generally not reliable as it was self serving in other instances. One such example was drawn out during cross-examination. The respondents provided (see Respondents’ Exhibit 4) three documents being relevant to a worker’s compensation claim involving a former employee of the second respondent: Mr H Al-Moosawy. These documents show that while a worker’s compensation issue involving this employee had arisen earlier, the issue was resolved as of March 2005 (see the Certificate of Determination from the Workers Compensation Commission - part of Respondents’ Exhibit 4) and the respondents’ workers compensation insurer notified the second respondent that the workers compensation insurer notification would cease in relation to Mr H Al-Moosawy in April 2005.
This was consistent with some evidence given in Court by the third respondent.
In his evidence, the applicant said that he had a number of conversations with the third respondent concerning his injury. In particular, as recorded at paragraph 21 of his first affidavit, the applicant reported the following conversation (said to have taken place some time in March 2006):
“Ead Barhoum: “I am really in pain for my hand and my back.”
Carlos Habibeh: “Oh come on, what is the problem with your back now?”
Ead Barhoum: “You know I had a problem since 2000.”
Carlos Habibeh: “Okay, okay, go and do x-rays, and if it’s $100 I will pay that.”
Ead Barhoum: “I know its going to take time and I know it’s going to be cheap with the x-ray and medicine. Just put it in the insurance.”
Carlos Habibeh: “No, no if I put a claim in the insurance I am going to lose my case. Go see the doctor and after, we talk.””
[Errors in Original]
In his affidavit, the third respondent (see paragraph 25(h)) denied having such a conversation with the applicant. He stated further:
“ … I do have a worker’s compensation case pending, the case being for a previous worker called haidar AlMousawy however, I am not directly involved in this matter as Mr AlMoussawy’s claim had initially been rejected and finalised by GIO and the Work Cover Commissioner and, in any case, the case does not affect me as my premiums are being paid on time as and when they become due.”
[Errors in Original]
Ms Charlson for the applicant drew the Court’s attention, subsequently, to the contradiction in the third respondent’s evidence in this regard. In rejecting the applicant’s version of the alleged conversation, the respondents assert that the version of this conversation that the applicant gave in his affidavit could not have taken place because this insurance claim had already been resolved, a situation confirmed earlier in evidence by the third respondent before the Court. Yet in his earlier affidavit made on 1 November 2006, the third respondent had given evidence that there was a worker’s compensation case “pending.” Ms Charlson submitted that there was clearly a contradiction in the third respondent’s evidence between whether, at the relevant time, this particular matter was “resolved” or “pending.”
The respondents’ representative made submissions on their behalf that generally the evidence given by the third respondent should be preferred to that of the applicant because he gave evidence in what was described as a “straightforward manner.” In written submissions, the respondents state (see paragraph 23 of the respondents’ submissions) that “during the hearing of this matter it has been proven that this conversation (that is, the conversation reported at paragraph 21 of the applicant’s first affidavit) at best be considered as fictitious, as Mr Habibeh has provided evidence of the previous case having been rejected by GIO.”
What these submissions appear to ignore is that the issue is not as much as whether it was “proven” that the workers compensation claim had been rejected by the relevant insurer or not, but the state of the evidence provided by the third respondent before this Court, going to the issue of his credibility, and as to which evidence should be preferred as between the third respondent and the applicant.
The third respondent, in re-examination, sought to explain the contradiction between the two sets of evidence as having “used the wrong words.” Even accepting that may have been the case, it still leaves the Court with the view that even on this explanation the third respondent’s evidence tended to be imprecise, in contrast with the applicant’s evidence, which was not shown to suffer from a similar condition.
In this respect, the respondents’ submission is that the applicant’s version of the alleged conversation (refer to paragraph 21 of the applicant’s first affidavit) “makes no sense as it has been proven that the second respondent had no case with GIO. … ” Even if it was the case that, as at the time of the conversation which the applicant alleges occurred, the insurance matter had been settled, and even if that was accepted as fact, that does not, of itself, amount to the applicant’s claimed version of the conversation “making no sense.” The applicant himself also gave evidence (see paragraph 22 of the applicant’s first affidavit):
“I believe that Carlos had a previous dispute with the insurance company, but I am not aware of the details”
Clearly, the applicant himself stated that he was not in a position to be aware of the details and noted that his belief was that the dispute with the insurance company was a “previous dispute.” The issue relevant to credibility is that where the applicant was unsure of events, he was prepared to say so.
Ultimately, however, the issue is the presentation of evidence, and which evidence is to be preferred over the other in circumstances where the parties are in conflict as to what they say occurred. For all the reasons stated above, I accept submissions for the applicant that in critical relevant respects, his evidence is to be preferred.
The applicant’s evidence is that he sustained an injury to his back at work on 20 February 2006 and that he continued working with the injury, subject to some few days away from work, he attended his doctor on 18 March 2006 who then certified the applicant as unfit for work and referred him to a medical specialist. While the applicant subsequently returned to work, he required some further time off due to his injury. On 3 April 2006, he attended a medical specialist.
Relevant to the issue of his injury, and the subsequent termination, which he says involved his absence from work due to injury, the applicant’s evidence was that the following conversations took place between him and Mr Habibeh:
1)Sometime in March 2006 (given the applicant’s evidence, probably some time after 18 March 2006):
“Ead Barhoum: “Carlo I feel very bad pain in my hand.”
Carlos Habibeh: “This is nothing, this is just a cheesy growth.”
Ead Barhoum: “I am in pain.”
Carlos Habibeh: “Go to the doctor and see what is going to say.”
Ead Barhoum:” Okay.””
2)At about the same time:
“Ead Barhoum: I am really in pain for my hand and my back.”
Carlos Habibeh: “Oh come on, what is the problem with your back now?”
Ead Barhoum: “You know I had a problem since 2000.”
Carlos Habibeh: “Okay, okay, go and do x-rays and if it’s $100 I will pay that.”
Ead Barhoum: I know its going to take time and I know it’s not going to be cheap with the x-ray and the medicine. Just put it in the insurance.”
Carlos Habibeh: “No, no if I put a claim in the insurance I am going to lose my case. Go see the doctor and after, we talk.””
3)On 3 April 2006 (after seeing his medical specialist):
“Ead Barhoum: “The specialist told me to go for an x-ray and a scan for my back and my wrist. Are you going to pay for my medical expenses and time off?”
Carlos Habibeh: “No. I’ll pay for your medical expenses but not your time off. Go to Centrelink and tell them that you cannot work due to sickness.”
Ead Barhoum: “How can I go to Centrelink when I’m employed and I had an accident at work?”
Carlos Habibeh: If this is how you look at it, you send me papers and I will defend myself and you can defend yourself.””
Mr Habibeh’s evidence is that:
1)On 20 March 2006 he had the following conversation with the applicant:
“I said: “ why, what’s wrong with you?””
He said: “my hand is hurting me”.
I said: “what is wrong with your hand?”
He said: “I have a cist on my wrist and I am thinking about claiming worker’s compensation for it”.
I said: “what is the purpose of claiming worker’s compensation?”
He said:” so and get paid for the lost time.
I said: “you can’t claim worker’s compensation for that type of injury as it is not a work related injury however, if you want to go home, I will pay you your medical expenses and cover some of your wages until you are ok”.
He said: “No, do not like that arrangement”.”
2)On 27 March 2006, the following conversation with the applicant:
“He said: I did not go to work today because i thought i’d go and see my specialist as my cyst is hurting my hand and my arm”.
I said: “I already told you that I would pay your medical expenses so you could have an operation and remove the cyst. Why have’nt you done it yet?”
He said: “Oh, i don’t know, i have a doctor’s appointment on 3 April 2006 and i will see then”.
He then said: “i will not be coming to work tomorrow as i am not feeling well”.
I said: “ you should not work if you are not up to it and, if you want to be on light duties until the company closes down, tell me”.
He said: “no, it’s ok, i will see you on Wednesday”.
I then said: “ok, but Ead, you have been taking too many days off work lately, if you want light duties tell me”.
He said: “No, i will see the doctor on Monday and let you know”.
3)Mr Habibeh denies having the conversation as alleged by the applicant at paragraph 21 of his first affidavit. At paragraph 25k of his affidavit the third respondent says:
“In relation to paragraph 22 [of the applicant’s first affidavit] I deny the conversation alleged in that paragraph and say that on 30 April 2006, the plaintiff and i had the following conversation:
“He said: “i fell on my hand, the one that has the cyst on it and now it’s a work injury”.
I said: “what happened? Are you okay?”
He said: “the builder’s foreman had to go at 2.00 pm. while i was still working and a woman came and told me that i had to leave the site. As i was walking outside the building, I fell on my hand and now it is swollen”.
He then said: i wish i could have some ice to put on my hand”.
I said: “what about the woman that was there, ask her for some ice”.
He said: “she did not give me any ice and now there is no one left”.
I said: “do you know her name, did she see you fall?”
He said: “no i don’t know her name and no one saw me fall”.”
[Errors in Original]
I note the reference to “30 April 2006,” on which the respondent says this conversation took place, is well after the date of the letter of termination of the applicant’s employment (6 April 2006).
On 3 April 2006, the third respondent says he had the following conversation with the applicant:
“He said: “I have some papers I want to give you from my doctor”.
“I said: “what kind of papers?”
He said: “medical certificates and bills from 18 March until today”.
I said: “why did’nt you give me those reports before today?”
He said: “Oh, i don’t know but i will fax them to you”.
I said: “that’s fine but please send me the originals in the mail”.
I then said: “why did’nt your doctor send me these reports by mail?”
He did not reply
Then he asked me: “who is going to start paying me?”
I said: “there is a legal procedure that will take place and you will be paid by the insurer shortly””
[Errors in Original]
The applicant rejects the respondents’ version of the conversation, which he says occurred on 20 March 2006 (with reference to paragraph 25g of the third respondent’s affidavit). The applicant also denies having told Mr Habibeh that he went to the specialist on 27 0March 2006, and that Mr Habibeh offered him “light duties.” The applicant also denies that the conversation alleged to have occurred on 30 April 2006 occurred (with reference to the third respondent’s paragraph 25k. of his affidavit). The applicant gave evidence that he did not speak to Mr Habibeh since receiving the letter terminating his employment on 6 April 2006.
The applicant denies that the conversation of 3 April 2006 occurred in the terms as set out by the third respondent, and in reference specifically to the version put forward by the third respondent, gave subsequent evidence that a conversation involving “a lady” and “ice” took place approximately on 28 March 2006 in the following terms (see paragraph 31 of the applicant’s second affidavit):
“Carlos Habibeh: ‘How did you go finishing the urgent job?’
Ead Barhoum: ‘I finished the job. When I was going to clean up my tools, there was a lady parked and she said to me ‘Are you still here’. I said, “No, I’m going now when I clean my tools.’ Because I was in a hurry, I slipped on a little strip of garden when I was going a step. I fell and landed on my right hand. It started to hurt badly. I went down to see the foreman and the foreman had already gone home. I put my tools in the lunchroom.”
Carlsos Habibeh: “Relax until you see a specialist. I will do sick days for you from this day.”
The applicant’s evidence was that he did not attend work. He then saw his specialist on 3 April 2006, and that it was on that dated that this conversation occurred with Mr Habibeh, as he had set out in paragraph 23 of his first affidavit.
Plainly, there is substantial variance between the applicant and the third respondent as to what exactly was said, and when, as between them in relation to the applicant’s injury. What he is clear, though, from the evidence before the Court, is that the applicant’s injury is a workplace injury, which was reported by the applicant to his supervisor (even though Mr Habibeh may claim not to have personally known of it until some time later). I also accept, on the evidence before me, that this injury was reported to the senior representative of the contractor on the site where the applicant was working. In any event, it is clear that the applicant’s claim has been accepted by the workers compensation insurer, and the applicant has been receiving weekly compensation benefits. Further, that require medical certificates and notification requirements were all complied with by the applicant.
I also agree with submissions made on behalf of the applicant that the version of the conversation given by Mr Habibeh at paragraph 25g of his affidavit does bear a “marked similarity” to the conversation which the applicant says took place in on 3 April 2006 (see paragraph 23 of the applicant’s first affidavit). I agree with the applicant’s submissions that on balance, the evidence of the applicant is to be preferred to that of the third respondent, noting that in addition to the matters already set out above, the third respondent’s evidence that he had a conversation with the applicant on 30 April 2006 (see paragraph 25k) is not credible, given the nature of what was alleged to have been discussed in that conversation, and given that it was said to have taken place three weeks after the applicant’s employment had been terminated.
The applicant was injured at work and this caused him to be absent temporarily from work, even if the third respondent personally did not know of this injury at an earlier time. Even on his own evidence, however, he knew by 3 April 2006, and it was the third respondent’s own evidence, given his version of what was claimed to have been said on 3 April 2006, that he knew as of that date that the applicant’s injury was work-related, and that he would receive payment by the relevant insurer (see paragraph 25k of his affidavit. In particular: “I said: there is a legal procedure that will take place and you will be paid by the insurer shortly”).
In all, therefore, I find that given all of the above, that the applicant’s employment was terminated in circumstances in which, at least, included a reason proscribed by s.659(2)(a) of the Act, that is his temporary absence from work because of a work related injury.
Remedies
I agree with submissions made by Ms Charlson for the applicant that s.665 of the Act is of such nature, and of sufficient breadth, to enable the Court to make orders relating to the imposition of a penalty, reinstatement of the employee, and the payment of compensation where there has been contravention of s.659 by an employer in relation to termination of the employment of the employee. In this regard, I note, in particular, the provisions of s.665(1)(d)
“Any other order that the Court thinks necessary to remedy the effect of such a termination.”
Taking in turn each of the remedies sought by the applicant, s.665(1)(a) permits the Court to impose on the employer a penalty of not more than $10,000. The applicant asks that such an order be made. In my view, it is appropriate that such a penalty be imposed. While the respondents press the submission, and deny, that the termination was wrongful, it appears that, at best, the respondents’ alternate submission is that should the Court reject this submission and find for the applicant, the penalty should be at the low end of the scale (see paragraph 89 of the respondents’ submissions).
The applicant’s employment was wrongfully terminated. On the preferred view of the evidence before the Court, this was because the applicant had been injured. The nature of the injury was such that the applicant would be unfit to perform full duties for some time, and while the third respondent was in the process of restructuring his relevant corporate arrangements for the running of his painting business, the opportunity was taken to terminate the applicant’s employment.
On the issue of the imposition of a penalty, and the appropriate amount, the applicant has referred the Court to a number of the authorities (albeit, some in the context of the earlier relevant legislation) but nonetheless, providing guidance on the issue of considering the appropriate penalty in circumstances where an employer dismisses an employee for a prohibited or now relevant proscribed reason or reasons.
These were:
1)Andrew James Fox v St Barbara Mines Ltd [1998] FCA 621 (4 June 1998) per French J.
2)McIlwain v Ramsey Food Packaging Pty Ltd (No. 4) [2006] FCA 1302 (4 October 2006) per Greenwood J at [92] to [99].
3)Construction, Forestry, Mining and Energy Union v Coal & Allied Operations Pty Ltd (No. 2) (1999) 94 IR 231 per Branson J.
4)Finance Sector Union v Commonwealth Bank of Australia [2005] FCA 1847 (16 December 2005) per Merkel J. at [24].
In short, the applicant submits that the circumstances in which the employer’s conduct took place (emphasising that the conduct was undertaken in deliberate defiance or disregard of the Act) requires that a high penalty be awarded, particularly as the consequences of the conduct were very serious for the applicant. The applicant noted the need to deter employers from conduct of this nature in the future.
I also note the applicant’s submissions that further to the deliberate conduct in terminating the applicant’s employment for a proscribed reason, the respondents’ conduct involving obligations to employees (and certainly the obligation to the applicant to regularly provide pay advices in a timely fashion) is conduct consistent with a disregard of obligations towards employees and that these circumstances should be taken into account in the payment of the penalty.
Having regard to the circumstances of this case, it is appropriate that that a penalty be imposed. The relevant conduct was, at least, undertaken in disregard of the Act.
The respondents seek the imposition of a penalty at the low end of the scale, citing the “fact” that the second respondent was “in genuine difficulty” at the time when the decision was taken to cease trading. The respondents further submitted that due to the applicant’s failure to request “reinstatement” by the first respondent, the Court should, at best, only find the respondents “negligent” in not reinstating the applicant, thus imposing a penalty at the lower end of the scale.
The evidence before the Court is that the applicant was “singled out” from all the other employees, in contrast to the other employees who continued to be “employed by Mr Habibeh,” albeit, from late April 2006 through the vehicle of the first respondent. The respondents ask the Court to take into account that the second respondent was in genuine difficulty at the time when it was decided to cease trading.
That may indeed be the case, but this submission ignores the circumstance that the business operation, on the view of the evidence preferred by the Court as set out above, continued under the direction of the third respondent, albeit even accepting those parts of the evidence relating to his wife, with some increased participation by her in the activities of the business. I note in this regard the third respondent’s evidence that she was responsible for the researching, and purchasing of new types of ladders for the business.
It is clear even on the evidence of the third respondent (see paragraph 25 of his affidavit) that at least at 20 March 2006, the third respondent had a conversation with the applicant regarding his illness (notwithstanding in part it is not clear whether it was the wrist injury which had occurred earlier in February). But what is clear is that even on the third respondent’s own evidence there were a number of conversations relating to the applicant’s medical condition, including on his own account that at by at least 27 March 2006, he knew of the injury for which the applicant subsequently received compensation, and that the issue of “light duties” was raised, but only “until the company closes down.”
Having had a number of conversations with the applicant about his medical condition over some weeks, a few days after the last reported conversation (even going on the third respondent’s version), the applicant received a letter which, in effect, singled him out from the employers’ conduct towards the other employees.
In the circumstances, it is not exactly clear as to the meaning of the respondents’ reference to the Court: “at best find them negligent in not reinstating the applicant.” I cannot see that the termination of the applicant’s employment, in circumstances where all the other employees continued to be employed in the painting business, can be seen as a negligent act on the part of the respondents, or somehow an oversight.
However, what is in favour of the respondents in this regard is that there was no evidence from the applicant that he sought reinstatement, or some continuation of employment in the respondents’ painting business. It was the applicant’s evidence that he had no conversation with the third respondent after 3 April 2006. Within this context, at the time, the applicant appears to have accepted what had occurred, and pursued the issue of benefits from Centrelink as he was not being paid worker’s compensation at that time (see paragraph 29 of his first affidavit). His only contact with the respondents was a telephone conversation that he said he had with the fourth respondent, where he asked her to ask the third respondent to complete a relevant form required for his application for sickness benefits with Centrelink.
On balance, therefore, while bearing in mind the guidance provided by relevant authorities, I agree with the applicant’s submission that the penalty payable should be towards the higher end of the scale. It is appropriate to discount the penalty, given the applicant’s, at the time, apparent acquiescence in the termination, and certainly the failure to press for reinstatement or continuation of employment. In this regard, a penalty of this $7,000 would appear appropriate.
The issue now becomes whether the payment of the penalty should be made payable by all, or some, of the respondents.
As set out above, the view that I have taken of the evidence and the circumstances presented to the Court, is that Mr Habibeh operated a painting business for some years and had registered, and was the shareholder and director of the second respondent from 1998, and the first respondent from 2004. On the evidence before the Court, that at least since 2004, his business operated using the two companies interchangeably for business purposes. The decision to terminate the employment of the applicant was plainly taken by Mr Habibeh (and from his letter of termination) purportedly acting on behalf of the second respondent. It is clear, therefore, that this order should be made as against the second and third respondents.
The preferred view of the evidence is that, notwithstanding the transfer of the shares and directorship in the first respondent to his wife, I accept the applicant’s submissions that the painting business continued with the use of the first respondent as the sole vehicle for its continuation. I take the view that the third respondent continues to be the active force in the operation of the painting business now and conducted through the vehicle of the first respondent. In this regard, and given this circumstance, the order as to penalty should also be made against the first respondent.
I have some difficulty, however, in making such an order against the fourth respondent. There was no evidence that the fourth respondent took any role above, at best, minimal administrative tasks in the operation of the painting business up to, and including, the date of termination. There was no evidence before the Court that she took any role in the decision to terminate the applicant’s employment. Nor was there any evidence that she was approached by the applicant regarding reinstatement, or continuation of working, in the painting operation.
On the applicant’s evidence, the only conversation he appears to have had with the fourth respondent at the relevant time was, in fact, to ask her to ask her husband to complete a particular form required by the applicant for lodgment with “Centrelink.” The fourth respondent’s involvement with the first respondent since the end of April 2006 (noting of course that the share and directorship transfer took place in January of 2006), must be seen in light of the view that I have taken of the relevant evidence, that the prime force behind the painting business was Mr Habibeh. Consistent with my rejection above, of what the respondents’ claim was to be the importance of her involvement in the business since April 2006 given her directorship and shareholding of the first respondent, I cannot see that it is appropriate that any order as to penalty should be made against her.
On the preferred view of the evidence, it was Mr Habibeh who had made the decision to terminate the applicant’s employment. The first and second respondent companies were the vehicles through which the business was operated at the time, and the first respondent since that time. But even if Mrs Habibeh could be said to have a somewhat higher role and involvement in the business now, what must be borne in mind is that the penalty is to be made payable in respect of the termination of the applicant’s employment for a proscribed reason. In these circumstances, I cannot see that there is evidence before the Court of her involvement in that decision, such that she should be penalised for the decision made by her husband. It is not appropriate to make any assumption as to her involvement arising only from her marital status in relation to the third respondent which, to a large part, is what the applicant relies on in this regard.
In submissions, the applicant expresses fears that should any orders made by the Court be made only against some of the respondents, then they may move to transfer assets to those respondents not made liable for the payment of any penalty (or for that matter any order providing a remedy to the applicant). I do not see this argument as appropriate, however, in justifying an order against the fourth respondent in the absence of any evidence as to her involvement in the employment termination in breach of the statutory obligations, which, after all, is the basis for the making of an order that a penalty be paid.
The applicant also seeks an order made against any or all of the respondents that the applicant be reinstated to his employment. The applicant referred to the Court to Greater Dandenong City Council v Australian Municipal, Clerical and Services Union [2001] FCA 349 (“Greater Dandenong City Council”) to argue that reinstatement is not impracticable and that there are no just and compelling reasons not to award reinstatement of employment to the applicant. Given that reinstatement is “the primary remedy” it should be awarded to the applicant.
The respondents submit that reinstatement is not an appropriate remedy in all the circumstances, given that the nature of the business (that is, a painting business), which requires lifting and carrying of materials and standing for long hours, would not be suitable for the applicant given the nature of his injuries. The respondents assert that the only “light duties” available are those of an administrative nature, and that there was no evidence before the Court that such duties would be suitable for the applicant. Further, given that there was no evidence of his having any relevant administrative skills that could assist him to perform such duties.
The applicant submits that reinstatement is not impracticable, but does not point to any evidence in support of that submission. It appears to be common ground between the parties that the applicant is fit for “light duties.” However, the state of the evidence before the Court, in particular, the WorkCover certificates (provided as various annexures to the applicant’s affidavits) do not provide any relevant guidance on what is meant or encompassed by “light duties,” and the applicant’s fitness for this. That is, it is not clear exactly what duties the applicant could perform.
However, the respondents’ submissions may well be reflective of the reality of the operation of a painting business, but have also been made in the absence of evidence put before the Court.
Further, I also note, with guidance provided relevantly by the Full Court in Greater Dandenong City Council, that given the passage of time since the making of submissions, and this judgement, an opportunity should be given to the parties, in addition to putting on evidence as to the applicant’s fitness for duty, and what may be practically available in the painting business, that this will also enable the parties to put before the Court the current situation in relation to both issues. I propose, therefore, to make orders enabling the parties to do so on the question of the appropriateness of reinstatement.
The applicant also seeks an order pursuant to s.665(1)(c) that he be paid compensation in the maximum amount available. The respondents submit that since the termination of his employment, the applicant has been in receipt of worker’s compensation payments of a substantial amount, and that any compensation should be of a minimal nature, and in any event, should not exceed the difference between the applicant’s “wages and the amount of weekly compensation he receives.”
As to compensation, it is appropriate that, in the circumstances set out above and as relevantly derived from the reasoning above, that the applicant should receive some compensation. The respondents’ submissions (see paragraph 94) appear to accept, that in circumstances where the Court finds that the termination was for a proscribed reason, that compensation should be paid, but that it should be “of a minimal nature”.
I note the relevant provisions of s.665(3), and I also note in this regard annexure “P” to the applicant’s first affidavit. However, on the material before the Court, it is not readily discernible as to the relevant detail, or amounts, as against each of the matters set out in that sub section for the relevant period so that this Court can properly assess the amount of compensation within the ambit of s.665(3). It is appropriate, therefore, (given also that I propose to give the parties the opportunity to provide further material on the issue of reinstatement) that the parties be given the opportunity to make further submissions as to the amount of compensation to be paid pursuant to s.665(3)).
The applicant also seeks an order that 100% of the penalty be made payable to the union. The respondents are silent on this issue. In this regard, I note the provisions of s.841of the Act and note authorities to which the Court has been referred:
1)Schanka v Employment National (Administration) Pty Limited [2001] FCA 1623 (15 November 2001).
2)Finance Sector Union v Commonwealth Bank of Australia [2005] FCA 1847 (16 December 2005).
3)Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing & Allied Services Union of Australia v ACI Operations Pty Ltd [2006] FCA 7 (16 January 2006).
Given the large amount of material that has been put before the Court, and given the difficulty in obtaining relevant documents from the respondents during the course of this matter, I am satisfied that the union’s costs would certainly exceed the amount of the penalty ordered in this matter. I cannot see any reason why the penalty should not be paid to the union and will make that order accordingly.
The applicant also seeks an order as to costs. In the latest written submissions provided to the Court, the applicant sought the right to put further submissions before the Court in relation to the issue of costs (in respect of either the respondents’ or the applicant’s costs) once a determination had been made in respect to the claim. It is therefore appropriate, in all the circumstances, to give both parties a further opportunity to make submissions on costs. Given the findings above, this would also include any submission on behalf of the fourth respondent.
In all therefore, the orders I propose to make are:
1)The first respondent and/or second respondent and/or third respondent, having breached the requirements of s.659(2)(a), pay a penalty of $7,000.
2)The payment of such penalty be made to the NSW Branch of the Construction Forestry Mining and Energy Union.
3)Within fourteen (14) days of the making of these orders, each of the parties file and serve written submissions and/or evidence by way of affidavit in relation to the reinstatement to employment of the applicant, and the amount of compensation to be paid to the applicant.
4)Each of the parties file and serve written submissions within fourteen (14) days of the making of these orders on the issue of costs in these proceedings to the date of this judgement.
I certify that the preceding one hundred and twenty-three (123) paragraphs are a true copy of the reasons for judgment of Nicholls FM
Associate: C Darcy
Date: 22 February 2008
CORRECTIONS
Paragraph 123 line 3 – delete “s.695(2)(c)” insert “s.659(2)(c)”
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