Border Lifting and Safety Pty Ltd and Russell and Russell
[2023] VCC 258
•28 February 2023
| IN THE COUNTY COURT OF VICTORIA AT Melbourne COMMERCIAL DIVISION - GENERAL LIST | Revised Not Restricted Suitable for Publication |
Case No. CI-21-00195
| Border Lifting and Safety Pty Ltd | Plaintiff |
| and | |
| Tania Russell | First defendant |
| and | |
| Second defendant |
James Russell
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JUDGE: | Her Honour Judge Burchell | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 24 - 27 October 2022, written submissions 25 November 2022 and 12 December 2022 | |
DATE OF JUDGMENT: | 28 February 2023 | |
CASE MAY BE CITED AS: | Border Lifting and Safety Pty Ltd and Russell and Russell | |
MEDIUM NEUTRAL CITATION: | [2023] VCC 258 | |
REASONS FOR JUDGMENT
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Subject:CONTRACTS – BREACH OF EMPLOYMENT CONTRACT
Catchwords: Employment contract – Whether defendants deprived plaintiff through unauthorised wage, bonus, and credit card payments – Whether the plaintiff has satisfied the onus of proof given nature and seriousness of allegations – Whether contractual basis for claims proven – Mistaken overpayment of wages – whether restitution for unjust enrichment being appropriate remedy – No basis for claim in contract – Costs incurred for expert reports held not admissible or relied upon at trial.
Legislation Cited: Evidence Act 2008 (Vic) s140(2); Supreme Court Rules 2015 (Vic) r63.29; County Court Rules 2018 (Vic).
Cases Cited:Martin v Norton Rose Fulbright Australia [2021] FCAFC 216; Briginshaw v Briginshaw (1938) 60 CLR 336; D’Sylva v Ellenbrook Family Medical Centre Pty Ltd [2021] FedCFamC2G 319; Csomore v Public Service Board of New South Wales (1987) 10 NSWLR 587; Wiluszynski v London Borough of Tower Hamlets (1988) IRLR 154; The State of Western Australia v Clarke [2019] WASC 162; Welbourn v Australian Postal Commission (1984) VR 257; Gapes v Commercial Bank of Australia Ltd (1980) 37 ALR 20; Zomojo Pty Ltd v Hurd (No 4) [2014] FCA 441; Commonwealth v Verwayen (1990) 170 CLR 394; Automatic Fire Sprinklers v Watson (1946) 72 CLR 435; Jones v Dunkel (1959) 101 CLR 298; Browne v Dunn (1893) 6 R 67; Wambo Coal Pty Ltd v Ariff (2007) 63 ACSR 429; Ancient Order of Foresters in Victoria Friendly Society v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1; Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221; David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; Winterston Constructions Pty Ltd v Hambros Australia Ltd (1991) 101 ALR 363; Hadley v Baxendale (1854)156 ER 145; Koufos v C Czarnikow Ltd [1969] 1 AC 350; Wenham v Ella (1972) 127 CLR 454; Pathway Investments Pty Ltd v Doystoy Pty Ltd [2012] VSC 97; Challenger Group Holdings Ltd v Concept Equity Pty Ltd (No 2) [2008] NSWSC 1002; University of Western Australia v Gray (No 28) (2010) 268 ALR 467; Pathway Investments Pty Ltd v National Australia Bank Ltd [2012] VSC 97.
Texts Cited: R P Coutts and H Selby, ‘Problems with cell phone evidence tendered to ‘prove’ the location of a person at a point in time’ (2016) Digital Evidence and Electronic Signature Law Review 13; Mark Irving KC, The Contract of Employment, LexisNexis Butterworths Australia (2nd ed, 2019); K Barker, ‘Unjust enrichment in Australia: What is(n’t) it? Implications for legal reasoning and practice’ (2020) 43(3) Melbourne University Law Review 903 at 932; G E Dal Pont ‘Law of Costs’ 4th edition; S Drew, "Costs Column: Legal Costs as damages" (2019) 151 Precedent 48.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr L Faust | Morgan Couzens Legal |
| For the Defendant | Mr A Crocker | James G Sloan Lawyers |
HER HONOUR:
1In this proceeding, the plaintiff (“Border Lifting”) applies for judgment against the defendants (“the Russells”) for breach of their respective employment contracts. Border Lifting claims Mrs Russell, over a six-year period, deprived it of over $100,000.00 through payments from its funds to the Russells comprising of unentitled bonuses and wages, a misuse of the work credit card and unauthorised spending on meal and accommodation allowances. The Russells deny the allegations. Border Lifting also seeks costs in respect of expert reports prepared by RSM Australia Pty Ltd (“RSM”).
2This matter concerns a perceived loss of trust in the defendants who were long-time friends and employees of one of the plaintiff’s directors and his former wife. The current directors of the plaintiff first became suspicious of the defendants’ work credit card use at around the time they dismissed the defendants for alleged serious misconduct. Mr and Mrs Robinson embarked on a process of “building a story” against the defendants. Unfortunately for the plaintiff, “building a story” does not necessarily satisfy the burden of proof required to prove a legal case such as the present action against the defendants.
3For the reasons set out below, I find that the plaintiff has failed to discharge the onus of proof in relation to claims F.1A, F.2, F.3, F.3A, F.7 and F.10. In respect of claim F4, no contractual right to recover additional payments arises as sought by the plaintiff. The appropriate recovery for overpayment is restitution for unjust enrichment, which has not been pleaded.
4The plaintiff conceded, in its closing submissions, that it could not meet the requisite standard of proof in relation to some of the items in the F.7 claim and the entirety of the F.8 claim. I, therefore, do not need to deal with the F.8 claim.
5In the parties’ statement of key issues dated 18 October 2022, Border Lifting did not pursue the claims in relation to misuse of company vehicle and unauthorised fuel expenses, being claim F.9.[1] Further, Border Lifting did not pursue the claims in relation to the failure to return the car roof ladder rack, forming part of claim F.12.[2] The balance of the F.12 claim, in relation to an angle grinder in the sum of $698.00, was withdrawn on day 3 of the trial. The roof rack was given to the Victoria Police on 5 February 2021. I, therefore, do not need to deal with these claims.
[1] See plaintiff’s Further Amended Statement of Claim dated 22 April 2022 at paragraphs 48 and 49.
[2] Ibid at paragraph 57(b).
6Accordingly, I order that this proceeding be dismissed. I also order that the plaintiff pay the defendants’ costs of and incidental to the proceeding on a standard basis to be taxed in default of agreement, unless either party has a basis for seeking a different order as to costs. I invite the parties to prepare draft orders to give effect to these reasons. I will determine any issue concerning costs on the papers.
Factual Background
7Border Lifting is a company involved in the sales and servicing of tested lifting and rigging equipment, safety equipment, industrial safety supplies, personal protective equipment and safety signage operating out of a premises in Wodonga, Victoria, however, conducting business throughout Australia.
8Mr Russell, the first defendant, was employed by Border Lifting as a safety inspector from approximately 20 April 2005 until his termination on 18 June 2020. Mrs Russell, the second defendant, was employed, initially by one of the directors of Border Lifting, Andrew Robinson, in another business from approximately October 2000 and then by the plaintiff from approximately 7 March 2005 until her employment was terminated on 15 June 2020. Mrs Russell worked in the role of a bookkeeper and general office clerk. Mrs Russell reported to Mr Robinson and, among other duties, was responsible for payroll, which included processing payments to Border Lifting’s employees, including her husband, Mr Russell and herself.
9Border Lifting alleges the Russells, over a six-year period, deprived it by making unauthorised wage, bonus and credit card payments and spending in relation to meal and accommodation allowances. It alleges that payments were either made by Mrs Russell through her job position involving payroll duties or via work credit cards provided by Border Lifting to the Russells. Further, that Mrs Russell made unauthorised payments of bonuses to other Border Lifting employees and that Mr Russell received unauthorised payments as reimbursements for meals and accommodation in excess of a ‘cap’ instituted under Border Lifting’s policies. All matters are disputed.
10It is common ground that both defendants owed Border Lifting the following duties pursuant to their employment contracts:
(a) a duty of fidelity;
(b) a duty to act faithfully, honestly, and diligently at all times; and
(c) a duty to act in the plaintiff’s best interests at all times.
11The defendants did not admit that they owed Border Lifting fiduciary duties including:
(a) a duty of loyalty and fidelity;
(b) a duty to act in good faith;
(c) a duty not to use information obtained in the course of employment to their own advantage or the advantage of another person;
(d) a duty not to place themselves in a position where their interest conflicted with their position of trust; and
(e) a duty not to profit from their position of trust.
12The plaintiff relied upon the implied duty to provide services in return for wages and that the duty to disclose any knowledge of any misappropriation of the plaintiff’s funds or property or any misuse of the plaintiff’s funds or property. The defendants denied any such implied duties and argued that the Russells were required to perform services for Border Lifting in accordance with the terms of their respective employment contracts.
13It was common ground between the parties that it was an express term of Mr Russell’s employment contract that:
(a) he had a duty to ensure he was performing solely work-related activities in work time (clause 5.2(c);
(b) he was required to work at the plaintiff’s business location unless otherwise (reasonably) requested by the plaintiff or required to travel as reasonably necessary for the performance of his duties (clause 7); and
(c) he was required to work 38 hours per week plus any additional hours which were reasonably necessary to fulfil the requirements of his duties, or as reasonably required by the plaintiff (clause 8.2).
14Border Lifting further claims damages for the two RSM forensic accounting reports prepared. The Russells deny that they caused the costs to be incurred and further reject that the costs constitute a head of damage as claimed by the plaintiff.
The Issues
15The central issues in dispute fall within the broad categories of Mr Russell’s wages and bonus payments, Mrs Russell’s wages, Mr Russell’s credit card use and Mr Russell’s meal and accommodation allowance. Further, and if established, whether Border Lifting is entitled to recover those amounts, as a matter of contract, in part or in whole. An additional category relates to costs claimed by Border Lifting for the forensic accounting RSM reports dated 30 July 2020 and 26 March 2021 as a head of damage. In turn, and as agreed by the parties, the Court must determine the following issues in this proceeding:
(a) whether Border Lifting paid Mr Russell wages in respect of hours that he did not work (“F.1A Claim”);
(b) whether Mrs Russell made unauthorised bonus payments to herself, Mr Russell, and five other Border Lifting employees (“F.2, F.3 and F.3A Claim”);
(c) whether Mrs Russell made unauthorised wage payments to herself (“F.4 Claim”);
(d) whether Mr and Mrs Russell made unauthorised credit card purchases using Border Lifting’s credit card (“F.7 Claim”);
(e) whether Mr Russell claimed and was paid unauthorised meal and accommodation expenses (“F.10 Claim”);
(f) if the matters of the F.1A, F.2, F.3, F.3A, F.4, F.7 and F.10 Claims are respectively established by Border Lifting, whether it is entitled to recover those amounts, as a matter of contract, in part or in whole; and
(g) if Border Lifting is entitled to costs claimed in relation to expert reports by RSM as a head of damage.
Standard of Proof
16Section 140(2) of the Evidence Act 2008 (Vic) provides that a Court is to consider “the gravity of the matters alleged” in determining whether the plaintiff can discharge the onus of proof. Findings of the degree of seriousness alleged should not be made on the basis of “inexact proofs, indefinite testimony or indirect inferences.” [3]
[3] Martin v Norton Rose Fulbright Australia [2021] FCAFC 216 at [59] (Jagot, Katzmann and Banks-Smith JJ), citing Briginshaw v Briginshaw (1938) 60 CLR 336 at 362 (Dixon J).
17Justices Jagot, Katzmann and Banks-Smith in Martin v Norton Rose Fulbright Australia[4] observed:
[4] Ibid.
In a case of this kind the objective contemporaneous evidence is by far the best evidence. In assessing what inferences are to be drawn from that evidence it is important to apply the precept that, ultimately, a tribunal of fact “must feel an actual persuasion” of the fact or inference from fact before that fact or inference can be found. Mere speculation about possibilities is always insufficient. Further, where inference involves “grave moral delinquency”, the standard of proof remains on the balance of probabilities but the application of that standard, as s 140(2) of the Evidence Act reflects, recognises that “exactness of proof” is required.[5]
[5] Ibid at [60], citing Briginshaw v Briginshaw (1938) 60 CLR 336 at 362; D’Sylva v Ellenbrook Family Medical Centre Pty Ltd [2021] FedCFamC2G 319, [105] (Lucev J).
18The defendants referred to the decision of D’Sylva v Ellenbrook Family Medical Centre Pty Ltd[6] which concerned proof in relation to hours worked by an employee and the standard of proof required where serious allegations of falsification of documents, conspiracy to defraud and theft are made. Lucev J said that:
[6] [2021] FedCFamC2G 319.
Section 140(2) of the Evidence Act sets out a list of non exhaustive factors that the Court must take into account in determining whether it is satisfied that a case has been proven on the balance of probabilities. With respect to the gravity of an issue it has been observed that that is a circumstance which the Court must take into account when determining whether or not the burden of proof has been discharged, and the more serious the issue of which proof is required the more cogent or clear the evidence needed to establish it: Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336; …
Alleging the falsification of documents and a conspiracy to defraud and, ultimately, theft, by inflating hours and wages payable over a period of more than two and one-half years, are grave allegations, which the Court must, as outlined above, treat accordingly. Apart from the barest of assertions made by EFMC through Dr Wamono, there is no evidence to support the allegations made, and the bareness of the assertions made means the assertions themselves are almost devoid of content. There is, therefore, in this case, no evidence capable of sustaining the serious allegations of falsification, conspiracy and theft made by EFMC. On the evidence, there is no credible evidence that Ms D’Sylva was engaged in any misconduct or deception in relation to the recording or working of, or payment for, the hours she worked at EFMC.[7]
[7] Ibid at [105].
19Given the seriousness and gravity of the plaintiff’s allegations which are denied by the defendants, the Court must accordingly have regard to s140(2) of the Evidence Act 2008 (Vic).
Witness Credibility
Plaintiff’s witnesses
20The plaintiff called two witnesses to give oral evidence at trial:
(a) Andrew Robinson; and
(b) Patricia Robinson.
Mr Robinson
21Mr Robinson is one of two directors of the plaintiff Border Lifting. He was not a compelling witness. He presented as very emotional, unsophisticated, his memory was unreliable and confused and he gave inconsistent evidence. Mr Robinson had difficulty in reading documents. He claimed to be a co-author of the 588-page analysis of Outlook calendar entries, phone records, invoices, and credit card statements despite admitting that he is not very good doing the bookkeeping and accounts which is why he relied on Mrs Russell.
22There were occasions in which Mr Robinson’s evidence significantly departed from the plaintiff’s pleaded case. In cross-examination when asked if he had signed Mr Russell’s employment contract Mr Russell responded “no, I don’t believe that I did” which Border Lifting relied upon in its pleaded case. Further, Mr Robinson initially agreed that the bonus policy of 8 July 2016 was not in place at the relevant time, however, later said he believe “it was a clarification of the policy” which had been in place earlier.
23Overall, I am unable to be confident that I can rely on the evidence of Mr Robinson absent of any objective foundation.
Mrs Robinson
24Mrs Robinson is one of two directors of the plaintiff since April 2022. She is the HR manager and has overseen administration since 1 July 2020. The issues in dispute between the parties occurred before Mrs Robinson’s time as a director and manager of the business. Although she presented as an opinionated witness who has undertaken the enormous and meticulous task of analysing the business’ accounts and records in relation to the Russells’ movements between 2016-2020 and authored the schedules and analysis documents, she is not a qualified accountant and she is not an independent witness, being the current spouse of Mr Robinson who acted under his instructions as she was not working with the plaintiff during the relevant period.
25Critically, Mrs Robinson confirmed that she commenced employment with Border Lifting “in about mid 2020” and accepted that she did not work with Mr and Mrs Russell before that date. Indeed, when asked about the alleged conduct being largely based on documents, she responded that it was based on “documents and observing what my husband went through during that time and the devastation that he experienced”.
26Overall, much of Mrs Robinson’s evidence consisted of hearsay and opinion and I, therefore, give little weight to her evidence.
Defendants’ witnesses
27The defendants called three witnesses to give oral evidence at trial:
(a) James Russell;
(b) Tania Russell; and
(c) Elayne Heiner.
Mr Russell
28Mr Russell presented as a careful and considered witness. There were certainly gaps in his recollection, however, his memory lapses were generally explicable by the extensive effluxion of time involved in this case.
29Mr Robinson gave direct and clear responses to questions put to him and made necessary concessions where appropriate. Mr Russell acknowledged that there were concerns about the way he organised his inspection calendar and when the $200.00 accommodation and food limit was put to him agreed that “yes, it had to be within the $200”.
30Although not a perfect witness, I have preferred the account of Mr Russell over that of Mr Robinson and Mrs Robinson.
Mrs Russell
31Mrs Russell was very nervous but presented as a careful and considered witness and did her best to recall events despite the effluxion of time (which was considerable) and made appropriate concessions under cross examination.
32Like Mr Russell, Mrs Russell made concessions where appropriate and, therefore, I have generally preferred the account of Mrs Russell over that of Mr Robinson and Mrs Robinson. Mrs Russell agreed that the pay rise to $29.50 was not communicated in a performance appraisal and, further, when put to Mrs Russell when her rate of pay changed next that “I wasn’t aware that my rate of pay changed”. Mrs Russell also made concessions about who could change pay rates in the payroll system at that point in time being “Andrew Robinson and myself”.
33I prefer the evidence of Mrs Russell, particularly where it is inconsistent with the evidence of Mr Robinson and Mrs Robinson.
Ms Heiner
34Ms Heiner presented as a frank and straightforward witness. The plaintiff sought to make an attack on her credit by suggesting that she was antagonistic towards Mr Robinson. This attack was based on an extraneous matter to the pivotal case, that is, whether she thanked Mr Robinson after receiving her $3,000.00 bonus in June 2019.
35I preferred the account of Ms Heiner in relation to this meeting. Ms Heiner gave evidence that she received a bonus of $3,000.00 for which she thanked Mr Robinson. When it was put to Ms Heiner that the conversation between her and Mr Robinson did not happen, she responded “it did…I remember it clearly”.
Issue 1: F.1A Claim – Mr Russell’s unentitled wages
Plaintiff’s submissions
36The plaintiff submits that between 1 January 2017 and 18 June 2020, Mr Russell received unentitled wages in the amount of $44,483.60 and that it is entitled to damages equal to those wages. It says that Mr Russell was not entitled to be paid those amounts as he breached his employment contract by failing to ensure he provided services to Border Lifting, performing solely work-related activities in work time, working from Border Lifting’s primary business location as required and working 38 hours per week.
37The plaintiff proceeds on the basis that, whether expressly by contract or by implied mutual duty, the first defendant was required to provide work or services in return for the wages he received. The plaintiff refers to Automatic Fire Sprinklers v Watson[8] as authority for the implied mutual duty and the core proposition that unless service has been provided, there is no entitlement to pay. Further, that this implied duty remains intact even where a failure to provide service is the fault of the employer.[9]
[8] (1946) 72 CLR 435.
[9] Ibid at 465.
38In respect of the employment contract itself, the plaintiff relies on Clause 7.5 of the Employee Handbook which provided for the time off in lieu (“TOIL”) policy. It provided that:
You will only be entitled to TOIL if this has been approved in advance by management.
You must keep a record of any additional hours worked, and provide this to management by the end of the pay period. This record must include the date and time on which the additional hours were completed, the nature of the tasks being performed during these hours, and the manager who approved these hours to accrue as TOIL.
The Employer operates a ‘use it or lose it policy’.
Any TOIL must be taken at a mutually convenient time agreed between yourself and the Employer, but no later than four weeks after its accrual (unless a prior arrangement has been approved by management).
TOIL will not be payable on termination from the Employer.
Any fraudulent or dishonest attempt to claim TOIL is considered serious misconduct and may lead to disciplinary action, up to and including the termination of your employment
39Further, Clause 7 and Item 5 of Mr Russell’s 2016 Employment Contract provided that the primary business location was 3 Mint Street, Wodonga. The employee was required to work at this location unless otherwise reasonably requested by the employer.
40Additionally, Clause 8.2 and Item 6 of the Mr Russell’s 2016 Employment Contract stated that the business’ normal span of hours was 8.30am to 4.30pm. Mr Russell was required to work 38 hours per week plus any additional hours which were reasonably necessary to fulfil the requirements of his duties or as reasonably required by the employer.
41Clause 10.4 of the Border Lifting and Safety Pty Ltd Employee Handbook (undated) provided for “Banking and Expenses” which included:
We will reimburse you for any reasonable expenses incurred where these are authorised by management.
You must provide receipts for any expenditure.
You are required to ensure that the use of any Employer card and/or bank accounts is limited to business related expenses and is completed in a safe and secure manner.
42The plaintiff also rejects the defendants’ arguments in respect of waiver. Referring to Csomore v Public Service Board of New South Wales[10] whereby an employer may waive the entitlement to reject part performance, and may accept the work done, the plaintiff submits that even where there is a waiver, the employer may, nevertheless, claim damages for the value of the deficiency in performance.[11]
[10] (1987) 10 NSWLR 587 at 599.
[11] Ibid referring to Wiluszynski v London Borough of Tower Hamlets (1988) IRLR 154.
43In support of its arguments, the plaintiff sought to rely on four analyses prepared by Mr and Mrs Robinson, after the commencement of the proceeding, which set out their collective opinion of the hours worked by Mr Russell. The analyses were based on credit card use, mobile telephone bills and Outlook calendar entries. Whilst the analyses were excluded from evidence as being inadmissible opinion evidence, the underpinning source documents were tendered. The plaintiff further contends that business records, being the documents referred to in its analyses prepared, show approximately where Mr Russell was at any given time.
44The plaintiff also relies on a list of acknowledgments made by Mr Russell in respect of his work obligations and hours, including:
(a) that he always worked 37.5 hours per week;
(b) that if he worked more than 37.5 hours per week, he was paid for those hours;
(c) that unless he was requested to work elsewhere, or he was on the road, he was required to be at the plaintiff's business location;
(d) that he was always at the plaintiff’s business location, unless those other two exemptions applied;
(e) that he always met Mr Russell's expectations that he would work from the plaintiff’s business location, unless those two exemptions applied, unless he was on annual leave;
(f) that if he was working at the plaintiff’s office, he would be there to start work at 8:30am;
(g) of the duties he had at the plaintiff's office;
(h) that he did the opposite of what was alleged against him in the Further and Better Particulars of the plaintiff’s claim, that is, starting work late, finishing work early, not working at all and not engaging in appropriate time management;
(i) that if he was not inspecting, there was plenty of other work he could do;
(j) that he was required to work at the plaintiff’s office unless he was required to travel for the performance of his duties, or he was requested to work away from it; and
(k) that there were no times when he did not turn up at the plaintiff’s office even though he did not have to travel for work.
45The plaintiff submits that the above listed evidence makes categorically clear that Mr Russell knew what was expected of him in terms of his work hours and work location at Mint Street, Wodonga. Further, that Mr Robinson gave evidence that he paid Mr Russell for overtime hours he worked.
46The plaintiff also refers to Mr Russell’s evidence of his use of the Outlook calendar and about who populated various parts of the calendar. It rejects any arguments about the accuracy of the Outlook calendar entries which was not made clear, and that these matters were not put to Mr and Mrs Robinson.
Defendants’ submissions
47The defendants submit and emphasise that the Border Lifting analyses were excluded from evidence and that the underpinning documents tendered constitute the whole of Border Lifting’s documentary evidence in support of its allegations in respect of Mr Russell’s entitlement to wages paid.
48The defendants rely on Mr Russell’s evidence that, during his employment as a lifting inspector, he travelled frequently to inspect clients’ lifting equipment and that during his employment he worked at least 37.5 hours every week, and often (for approximately 8 months of each year) more.
49The work that Mr Russell performed for Border Lifting’s clients, including overtime work, was charged to the plaintiff’s clients.
50Additionally, that Mr Russell gave evidence that, apart from short breaks and downtime (where there were no inspections and employees spoke with each other), he performed solely work-related activities during work time.
51Mr Russell further gave evidence that he used his Outlook calendar to allocate days or weeks he was going to see a client. Both Mr and Mrs Russell gave evidence that they were not responsible for populating several of the calendar entries.
52The defendants also refer to Mr Robinson’s evidence of questions raised and “suspicions” that Mr Russell was not working the hours required under the employment contract. Further, that Mr Robinson continued to pay Mr Russell for ordinary and overtime hours of work despite the alleged “suspicions”. Mr Robinson agreed that Mr Russell typically notified him by email of overtime worked and conceded that Mr Russell did not refuse to perform his job.
53The defendants also draw attention to the fact that no evidence was led in support of Border Lifting’s allegations that Mr Russell did not work particular hours on a particular day and that no particular allegation regarding an alleged failure to perform his hours of work was put to Mr Russell during cross-examination.
54The defendant argues that the credit card statements, telephone bills and Outlook calendar entries shed no light on the hours worked by Mr Russell. Critically, that Microsoft Outlook calendars are not timesheets and are not a reliable indication of hours works. The Russells both gave evidence that several entries were not populated by them. Additionally, the defendants referred to Corby J in The State of Western Australia v Clarke[12] in which the Court observed that telephone invoices do not necessarily reliably identify a person’s location. Alternatively, the plaintiff says that Mr Russell was required to travel extensively through various locations which does not establish that he was not working and, therefore, the date and time of credit card purchases suffers similar defects.
[12] [2019] WASC 162 referring to R. P. Coutts and H. Selby, ‘Problems with cell phone evidence tendered to ‘prove’ the location of a person at a point in time’ (2016) Digital Evidence and Electronic Signature Law Review 13.
55The defendant reiterates Border Lifting’s onus to prove that Mr Russell did not work his contracted hours and argues that it cannot prove this given the gravity of allegations. Mr Robinson’s evidence was of a general nature and failed to identify any instance where it was alleged Mr Russell failed to perform his hours of work. Additionally, that specific allegations were not put to Mr Russell in cross-examination and Mr Russell was, therefore, not provided with an appropriate opportunity to respond to said allegations. In turn, the defendants submit that the Court should not find that Mr Russell breached his employment contract.
56In the alternative, the defendants argue that, if the Court were to find that Mr Russell did breach his employment contract, that the plaintiff faces difficulty in establishing damages. Citing Welbourn v Australian Postal Commission[13], they submit that an employee earns wages by rendering substantial performance of the essential obligations of the employment contract and that Mr Russell performed his duties pursuant to his employment contract with Border Lifting for 15 years.
[13] (1984) VR 257 at 267.
57Further, referring to Gapes v Commercial Bank of Australia Ltd[14], even if Mr Russell did not work certain hours, the remedy is a measure of damages that would put Border Lifting in the same position as if Mr Russell had worked those hours. The defendants argue that there is no evidence of any loss or damage to Border Lifting flowing from Mr Russell’s alleged failure to work. Additionally, it relies on Mr Russell’s uncontested evidence that Border Lifting clients were charged for the hours he performed inspection services. In turn, the defendants distinguish the present case from Zomojo Pty Ltd v Hurd (No 4)[15] and submit that to the extent Border Lifting has been paid for the hours it alleged Mr Russell did not work, there is no loss or damage.
[14] (1980) 37 ALR 20 (Smithers and Evatt JJ).
[15] [2014] FCA 441.
58Further, in the alternative, the defendants submit that Mr Robinson gave evidence that he had ongoing “suspicions” that Mr Russell was not working the hours required under his employment contract yet continued to employ and pay Mr Russell. Referencing Mason CJ in Commonwealth v Verwayen[16], the defendants submit that in these circumstances Mr Robinson should be taken to have waived the alleged breach.
[16] (1990) 170 CLR 394.
Analysis
59A promisor who is discharged by performance may enforce the promisee's obligations.
60The plaintiff relied on the High Court case of Automatic Fire Sprinklers v Watson[17] for the proposition that, unless service has been provided, there is no entitlement to pay. The employer’s entitlement not to provide pay unless services have been rendered remains intact even where that failure to provide service is the fault of the employer, for example, in instances in which the employee has been wrongfully dismissed.
[17] (1946) 72 CLR 435.
61However, in most situations this is now qualified by the concept of “substantial performance” in which the courts are reluctant to allow a minor failure in performance to be a basis for refusal of contract obligations and has enabled recovery where a plaintiff has substantially performed the contract.[18]
[18] Carter v Scargill (1875) LR 10 QB 564.
62The learned author of Contract of Employment[19] stated that:
[19] Mark Irving KC, The Contract of Employment, LexisNexis Butterworths Australia (2nd ed, 2019).
An employee must exactly perform their obligations under the contract in accordance with the standard of the duty applicable. However, where an obligation to serve is an entire obligation, as it normally is in employment and as it is here, there are a range of duties that need to be performed pursuant to the contract, what is required is substantial performance in order to earn the wage. Whether or not those obligations have been substantially performed of course is a question of fact.
63In Wiluszynski v London Borough of Tower Hamlets[20], the Court dealt with a case about an estates officer who engaged in industrial action by boycotting enquiries from council members. The Court observed that:
[20] (1988) IRLR 154.
Where an employee has not provided the full performance of their employment contract, an employer is not entitled to refuse payment to the employee but the employer may claim damages against the employee for failure of the deficiency in performance.
64In Welbourn v Australian Postal Commission[21], Justice Fullagar reasoned that an employer could hold back the entirety of an employee’s wages because of a total failure of consideration for the requisite period where a refusal was carried into effect. However, no wages could be withheld by an employer where an employee has performed most of their duties with the knowledge they would not be stopped from performance and where the employer intended to take benefit of the work completed and the employer has in fact taken benefit of the work done. In such a circumstance, Fullagar J concluded that the employer was bound to pay the whole of the wages provided for under the contract.[22]
[21] (1984) VR 257 at 267.
[22] Ibid.
65Further, per Smithers and Evatt JJ in Gapes v Commercial Bank of Australia Ltd[23], under the respective award in that case, the obligation to pay a salary was not conditional on the performance of work but on the continued existence of the state of employment, and this state had still existed on the relevant dates. However, Smithers and Evatt JJ reasoned that this did not mean that a breach of the promise of an employee to perform his duties is not a breach in contract with necessary legal consequence. Indeed, the remedy would be in damages measured according to the loss suffered by an employer because of the breach.[24]
[23] (1980) 37 ALR 20 at 21 (Smithers and Evatt JJ).
[24] Ibid.
66In Gapes v Commercial Bank of Australia Limited[25] the Court held that:
[25] Ibid.
… Where some or most duties of an employment are performed, and others are not, it would be an unusual case where the measure of damages suffered by the employer equalled an amount calculated, for instance, on the basis of the proportion to the total period of employment of the number of days during which the employee’s default continued. Deduction of such a sum would normally be inappropriate in the case of an employment on annual salary payable periodically even where no award was involved.[26]
[26] Ibid at 22.
67Mr Russell agreed that pursuant to Clause 7.1 and Item 5 of the Schedule to his employment contract that if he was not on the road, he was expected to be on site at 3 Mint Street, Wodonga.
68Mr Russell denied that he failed to turn up to the office when he was not on the road. Clauses 8.2 and Item 6 of the Schedule to his contract required work between 8.30am-4.30pm. Mr Russell said he was required to work 37.5 hours. He denied that he breached Clause 5.2(c) which provides that he must “ensure you are performing solely work-related activities in work time”. He said that they had toilet breaks, snack times and down times.
69The line of questioning in relation to whether Mr Russell accepted that Mr Robinson was critical of his work performance, other than that he was working too much overtime, was not relied on for the purposes of a disentitlement to wages, but rather, to attack Mr Russell’s credit.
70In my view, Mr Russell gave direct and clear answers to the questions put to him by the plaintiff. He gave explanations for why he considered the issues set out in the 12 December 2018 performance appraisal were not concerns as he had subsequently dealt with the identified issues, such as not delegating future jobs to Joshua Fairley and Aaron Williams unless he was told to delegate.
71Mr Russell also did not accept that there were concerns about his workplace calendar. He said that the issues were not just about his workplace inspection calendar but all employees. The concerns were about the travel to and from the plaintiff’s customers and how the customers were organised on the calendar entries so that the employees did not have to travel as much. I accept Mr Russell’s evidence that he used his Outlook calendar to allocate days or weeks he was going to see a client. I also accept the Russells evidence that they were not responsible for populating several of the calendar entries and that the plaintiff had a general direction to all staff in regarding calendar coordination and efficient use of time.
72In my view, there is no basis under Mr Russell’s employment contract, or at law, to claim damages by reference to Mr Russell’s wage. The plaintiff has drawn inferences, based on a range of business records, and then decided that Mr Russell has not worked certain hours. It now seeks repayments of those amounts as overpaid wages. The analysis of the Microsoft Outlook calendar, telephone records and credit card use does not advance Border Lifting’s case. It cannot prove the claim that Mr Russell did not work certain hours, particularly given the gravity of the allegations, by asking the Court to draw inferences from the documents referred to in the analysis. The Court cannot rely on inexact proofs or indirect references given the seriousness of the matters alleged against the Russells.[27] The plaintiff has not satisfied the onus of proof in relation to the alleged overpayment of Mr Russell’s wages by reason of a failure to perform work in accordance with his employment contract.
[27] State of Western Australia v Clarke [2019] WASC 162.
73Alternatively, and in agreeance with defendants’ submissions, there is no evidence of any loss suffered by Border Lifting because of Mr Russell’s alleged breaches. The claim for damages is not recovery of the wage that has been paid, it is what the employer has lost by reason of the work not being done. In the present case, there is no legal basis for Border Lifting to be entitled to recover Mr Russell’s wages in circumstances where:
(a) an employee earns wages by rendering substantial performance of the essential obligations of the employment contract;[28]
[28] Mark Irving KC, The Contract of Employment, LexisNexis Butterworths Australia (2nd Edition, 2019) at(b) Mr Russell performed his duties pursuant to his employment contract for 15 years, which performance was accepted by Border Lifting such that the plaintiff has waived any alleged breach; and
(c) even if Mr Russell did not work certain hours, which I have not been satisfied of, the appropriate remedy is the measure of damages that would put Border Lifting in the same position in if Mr Russell had worked those hours.[29] Border Lifting has not given any evidence of any loss or damage flowing from the Mr Russell’s alleged failure to work contracted hours and would have difficulty in doing so given the fact that the work Mr Russell performed, including overtime work, was charged to Border Lifting’s clients.
[29] Ibid at 755 [12.27]; Gapes v Commercial Bank of Australia Ltd (1980) 37 ALR 20 (Smithers and Evatt JJ).
74For the foregoing reasons, I find that Border Lifting’s loss would not be measured by reference to the wage paid to Mr Russell.
Issue 2: F.2, F.3 and F.3A Claims - Mr Russell’s bonus payments
Submissions
Plaintiff’s submissions
75The plaintiff claims that Mr and Mrs Russell received, and that Mrs Russell facilitated, two tranches of bonus payments without authorisation.
76The plaintiff claims that, during the period 1 July 2015 to 30 June 2016 (“2016 bonus”) and for the pay period ending on 10 June 2019 (“2019 bonus”), Mrs Russell made payments from the plaintiff’s funds to Mr Russell that were described as bonus payments to which he was not entitled.
77The plaintiff variously claimed $2,066.34 in the original claim, then $5,066.34 in the amended claim and finally $4,800.26 at trial in unentitled bonus payments to Mr Russell in its revised pleadings and particulars of loss. In relation to the 2016 bonus, Border Lifting claims that over the financial year ending 30 June 2016, that Mr and Mrs Russell received bonus payments in excess of the $1,000.00 ‘cap’ during each quarter. In relation to the 2019 bonus, Border Lifting claims that, on 10 June 2019, Mrs Russell made a bonus payment of $3,000.00 to seven employees.
78The plaintiff denies that Mrs Russell was directed verbally, or otherwise, to make the payments and further says that:
(a) the bonus payment for the period 1 July 2015 to 30 June 2016 included unpaid bonus amounts to which Mr Russell was entitled that related to previous years or that it was approved by the plaintiff;
(b) in or about 2016, Mr Robinson told Mrs Russell that he would limit bonus payments to $1,000.00 per quarter, rather than $1,000.00 per month; and
(c) that the bonus payment for the pay period which ended 10 June 2019 was approved by the plaintiff.
2016 Bonus
79In respect of the 2016 bonus the plaintiff places reliance on an email dated 2 June 2016 to the plaintiff’s accountant, Chantelle Matthews of Findex Pty Ltd, purportedly from Mr Robinson and time stamped 5.14 (“the 2 June 2016 email”).
80The 2 June 2016 email noted, inter alia, that the first bonus had been paid and the second bonus was pending. The plaintiff relies on the evidence of Mr Robinson as follows:
(a) that he did not believe he sent the 2 June 2016 email;
(b) that he had an appointment at the dentist at the time; and
(c) that he did not have the ability to work from home until 2018 and so could not have sent the email from home.
81Mrs Russell gave evidence that she:
(a) worked from home, maybe, once a month before 2020;
(b) could access the plaintiff’s databases from her own computer; and
(c) occasionally used Mr Robinson’s office computer when he was not there.
82Further, Mrs Robinson gave evidence that, prior to commencing working for the plaintiff, she would visit Mr Robinson at work and, on occasions, found Mrs Russell on his computer. Mrs Russell also gave evidence that the 2 June 2016 email was sent in the morning rather than the afternoon given the time and date stamp, and that, at best, this was Mrs Russell’s opinion of the time it was sent. Additionally, the plaintiff relies on the email chain thread dated 6 June 2016 and time stamped 5.25 and says, in the absence of expert evidence, if it is found that the email was sent in the morning not the afternoon of the 2 June 2016, it maintains its position that Mr Robinson did not send the email and, consistent with Mr Robinson’s evidence, that the email in any event was sent outside the hours that the 3 Mint St Wodonga premises was open and when the alarm at the business premises was disarmed at 8.14am on 2 June 2016.
83Further, the plaintiff submits that Mr Robinson’s evidence on bonuses is telling in respect of timing. Mrs Russell gave evidence that the 2016 bonuses were paid because the company made a profit and that Mr Robinson had directed them to be paid. She wrote to the accountant by email dated 4 October 2016 confirming that all bonuses owed to staff had been paid through wages.
84Mr Robinson gave evidence in relation to the 6 June 2016 email chain being that, at that date, he did not believe he had authorised the bonuses which is supported by the email. In the 6 June 2016 email, Ms Matthews relevantly informs Mr Robinson that “the changes we have made form (sic) our tax planning meeting are as follows: … Additional bonus’s of 7K payable in June….. June Action items…Bonus’s 7K….I will call you to discuss.”
85Further, Mr Robinson said that the first part of the bonus had already been paid on 31 May 2016 to Mr and Mrs Russell. Mr Robinson also said that the company made a substantial loss in June 2016 in the sum of $100,653.53, which was a factor he would have considered in whether to give bonuses or not, and because of this, would not have authorised the bonus. Additionally, that at that stage, he had not decided to pay bonuses, because it was too early in the month and that he did not direct the bonuses to be paid.
2019 Bonus
86In respect of the 2019 bonus, the plaintiff relies on Mr Robinson’s evidence that:
(a) Border Lifting made a loss in June 2019 in the sum of $130,037.31;
(b) he did not authorise the payment of the bonuses; and
(c) he was in Fiji from late May until around 12 or 13 June 2019.
87Mr Robinson gave evidence that he did not have a work computer with him in Fiji and returned to the work premises at 3 Mint St Wodonga for about 2 hours on the Monday and then flew out to New Zealand where he spent approximately one week. The plaintiff further submits that Mr Robinson’s phone records do not indicate a call to Mrs Russell to support his authority in respect of the bonuses (although Mrs Russell now says that the authority was delivered by email). Mrs Russell agreed that, at the time of the 2019 bonus, there was a cap of $1,000.00 per quarter per bonus, although, that this was at the discretion of Mr Robinson.
88The plaintiff says that the first bonus payments were made to Aaron Williams and Michael Spiteri on 4 June 2019 and to the Russells on 11 June 2019. The plaintiff clarifies that this is the reason the date “prior to 11 June 2019” appears in the Amended Defence at paragraph 23(c)(ii) being a date prior to which approval to pay a $3,000.00 bonus to seven of the plaintiff’s employees was purportedly given. It concedes that the date is prior to 11 June 2019. Mrs Russell’s evidence suggest that, rather than sending an email to Mrs Russell, Mr Robinson printed out an email and then left it on her desk which the plaintiff says is inconsistent with the amended defence.
89Further, the plaintiff submits that Mr Robinson’s evidence, through his phone records from 1 June 2019, supports that he was away from at the very latest the end of May. Mrs Russell referred to an email from Mr Robinson to the plaintiff’s accountant on 30 May 2019, also put to Mr Robinson in cross examination, which refers to the bonuses being paid prior to 30 June 2019. Mr Robinson states in the email that there are possible expenses to consider for the 2019 tax planning which the plaintiff submits is at odds with him having left an email directing bonuses to be paid on Mrs Russell’s desk. It also leaves a gap in the period from which the 30 May 2019 email was sent to the first bonuses being paid on 4 June 2019. When the 6 June 2019 email was put to Mr Robinson, with a suggestion that the bonuses were to be paid prior to 30 June 2019, Mr Robinson denied this and said that the email did not say the bonus was going to be paid but rather that it was part of the planning and depended on figures. Additionally, that the 2019 bonus was around three times as much as employees had received previously.
90The plaintiff also refers to Mrs Russell’s evidence that Mr Robinson was ‘thanked’ which it says is a departure from the amended defence whereby at a ‘toolbox’ meeting, several employees thanked Mr Robinson for the payment of the bonus and the defendants did not call or identify any of them as a witness. In relation to Ms Heiner, the plaintiff says that she was clearly antagonistic towards Mr Robinson. Ms Heiner received the bonus into her bank account on 18 June 2019, however, was not able to pinpoint with any accuracy the date she allegedly ‘thanked’ Mr Robinson save to say that it was a few days afterwards.
Defendants’ submissions
91The defendants admit that during the period 1 July 2015 to 30 June 2016 and for the pay period which ended on 10 June 2019, that Mr Russell received bonus payments from the plaintiff and claim that:
(a) Mr Robinson directed Mrs Russell verbally to make the payments;
(b) the bonus payment for the period 1 July 2015 to 30 June 2016 included unpaid bonus amounts to which Mr Russell was entitled that related to previous years and was approved by the plaintiff;
(c) on about 2016, Mr Robinson told Mrs Russell that he would limit bonus payments to $1,000.00 per quarter, rather than $1,000.00 per month; and
(d) the bonus payment for the pay period which ended 10 June 2019 was approved by the plaintiff.
92In relation to the 2016 bonus, the defendants submit that the relevant payments included unpaid bonus amounts from previous years which were approved by Border Lifting. Further, that no per quarter ‘cap’ was in place until 8 July 2016, after the relevant payments had already been made.
93In relation to the 2019 Bonus, the defendants submit that Mr Robinson directed Mrs Russell to make those payments in the course of the end of year tax planning which is supported by contemporaneous evidence subpoenaed from Border Lifting’s accountants. Ms Heiner also gave evidence that she received the bonus, for which she thanked Mr Robinson.
2016 Bonus
94In respect of the 2016 bonus, the defendants rely and refer to Mrs Russell’s evidence that Mr Robinson directed her to pay bonuses, that the bonuses were not always paid on time by Border Lifting and that unpaid bonuses were entered in Border Lifting’s financial records, in consultation with its accountants, as a liability. They say that this evidence was supported by email correspondence and financial documents between Border Lifting and its accountants, Findex Australia Pty Ltd. Further, and consistent with email correspondence dated 30 June 2014, 30 September 2014, 2 June 2016 and 6 June 2016, Mrs Russell gave evidence that the bonuses paid in 2016 included unpaid bonus amounts which had accrued from previous financial years. Further, that at the time of the relevant bonus payments, there was a $1,000.00 per month cap and from 8 July 2016 a new policy was introduced that limited payment to quarterly. This policy was attached to meeting minutes dated 8 July 2016 and circulated by Mrs Russell via email dated 13 July 2016 which included Mr Robinson.
95The defendants also refer to Mr Robinson’s evidence that he attempted to read every email but was not aware that the bonus payments between 1 July 2015 and 30 June 2016 included bonus payments from previous years. Mr Robinson disputed authorship of the 2 June 2016 email to Ms Matthews of Findex Pty Ltd and said that he did not believe he sent the document, as his Outlook calendar recorded a dental appointment at 4.30pm, and, further, that he was unable to log on to Border Lifting’s server remotely until around 2018. However, Mr Robinson ultimately conceded that he was able to send emails using his mobile phone without logging onto the server.
96Additionally, Mr Robinson gave evidence that the written bonus policy was not in place until 8 July 2016 and, when asked about the monthly cap of $1,000.00 on bonuses prior to the policy introduction, he responded that “yes and it was out of control”. The defendants submit that Mr Robinson inconsistently gave evidence that the written policy was not a new policy but a clarification of an existing policy. Mr Robinson still denied authorising the 2016 bonus payments in June 2016.
2019 Bonus
97In respect of the 2019 bonus, the defendants primarily rely on an email from Mr Robinson to Mrs Russell sent prior to 11 June 2019 directing her to pay a $3,000.00 bonus to seven of Border Lifting’s employees: Mr Russell, Mrs Russell, Teale Putland, Joshua Fairley, Aaron Williams, Michael Spiteri, and Elayne Heiner. Further, after the email directed Mrs Russell to make other payments on the plaintiff’s behalf around 11 June 2019, that Mr Russell called Mr Robinson by telephone to thank him for the bonus. The defendants also claim that at a ‘toolbox’ meeting in mid-2019, at which Mrs Russell and Mr Robinson were both present, several of the above-named employees thanked Mr Robinson for payment of the bonus.
98Mrs Russell gave evidence that, before 11 June 2019, Mr Robinson directed her by email to pay $21,000.00 in bonuses, the payments of which were staggered. The defendants refer to an email from Mr Robinson to Ms Matthews dated 30 May 2019 which attached a document titled “EOFY19.docx” containing a table the first line item being “bonus”, under “cost” it states “21-28G” and under “timing of payment” it provides “Prior to June 30”. The bonus payments were made to seven employees and Mr Russell gave evidence that he recalled receiving a bonus in mid-2019 which he thanked Mr Robinson for. Elayne Heiner, a former employee, also gave evidence that she received a bonus of $3,000.00 at that time for which she thanked Mr Robinson for.
99The defendants further rely on Mr Robinson’s evidence in which he denied that he directed Mrs Russell to pay the 2019 bonuses and that he had any communications with Mrs Russell in the days prior to June 2019 because he was overseas on holiday. Mr Robinson conceded that he sent the email dated 30 May 2019 to Ms Matthews which related to tax planning and that the attachment to the email referred to a bonus payment of $21,000.00 to $28,000.00 prior to 30 June 2019. Mr Robinson denied that either bonus amount was to be paid and said that it was part of planning.
Analysis
100For the following reasons, the plaintiff has not satisfied the onus of proof in relation to the alleged 2016 or 2019 bonus payments.
2016 bonus
101In agreeance with the defendants’ submissions, in respect of the 2016 bonus, the evidence does not sufficiently demonstrate that there was a quarterly ‘cap’ in place at Border Lifting prior to 8 July 2016. On its pleaded case, Border Lifting claimed that the Russells were not entitled to bonus payments made between 15 July 2015 and 30 June 2016 as the payments exceeded the quarterly cap of $1,000.00.
102Mr Robinson at trial for the first time contended that the 2016 bonus payments were not authorised at all and, further, that the $1,000.00 quarterly bonus policy was a clarification of an existing policy in place before 8 July 2016. This is inconsistent with Mr Robinson’s own evidence that the cap was not implemented until 8 July 2016 and the Further and Better Particulars dated 1 June 2021 provided that “the plaintiff advised employees at a meeting on 8 July 2016 about a bonus payment system. It advised that it would pay a bonus not exceeding $1,000 per full time employee after a set profit was made, and the same on a sliding scale for part time staff”. Critically, Border Lifting did not seek to amend its pleadings which stated that the 2016 bonus payments exceeded a $1,000.00 quarterly cap and, therefore, its pleaded claim in respect of the purported quarterly cap must fail.
103Mr Robinson gave inconsistent evidence in relation to whether he had authorised a bonus for 2015/2016. Mr Robinson variously said that he could not remember if he authorised the $913.24 bonuses set out in the 7 June 2016 payslips of the defendants. He subsequently gave evidence that at the time of the email of 2 June 2016 and the payslips of 7 June 2016 he had not made a decision about payment of bonuses for the 2015/2016 year. Given Mr Robinson’s varying evidence on this topic, I find that his evidence is unreliable on the question of authorisation.
104Historically, in July 2012, Mr Robinson accepted that the cap for bonuses was $1,000.00 per month. The balance sheet for June 2014 allowed for bonuses in the sum of $19,183.26. Mr Robinson said that he did not know about the provision for bonuses despite the balance sheet documents being sent to him by his accountant, which set out the wage bonuses in the schedule.
105The email dated 30 June 2014 to Mrs Russell, and copied to Mr Robinson from Ms Matthews, the business accountant, requested confirmation of approval of bonuses. Mr Robinson said he was not right across the figures as he was a “profit and loss man” and that balance sheets were not “his cup of tea”.
106Mr Robinson attended the team meeting on 8 July 2016, and he accepted that prior to this meeting, the bonuses had a cap of $1,000.00 per month and said it was “out of control”. Mr Robinson said that he was not aware that the bonuses for this period captured previous years’ bonuses. Mr Robinson acknowledged that the plaintiff’s claim is for alleged unentitled bonus payments for 2015/2016 because it exceeded the cap of $1,000.00 per quarter. Despite giving evidence that the policy prior to 8 July 2016 was a cap of $1,000.00 per month, Mr Robinson said that he did not believe that the allegation was incorrect and obfuscated the question that the claim for 2015/2016 was incorrect as the policy of a cap of $1,000.00 per quarter was not in place at that time by saying there was “so much stuff in it – it is mind blowing”.
107In relation to the payslips for the Russells dated 31 May 2016, Mr Robinson agreed that he categorially could not remember if he had authorised them and admitted that it is possible that he authorised these. He denied that he authorised all bonus payments. His evidence on this issue is less than definitive.
108Mr Robinson gave evidence for the first time under cross examination that the bonus policy made on 8 July 2016 clarified the previous situation and denied that it was a recent invention. However, as noted above, his recent evidence on this issue was not reflected in the Further Amended Statement of Claim and Reply and was inconsistent with his evidence that the written bonus policy was not in place until 8 July 2016 and that there was a monthly cap of $1,000.00 on bonuses prior to its introduction.
109In the alternative, and even if Border Lifting had sought to amend its pleadings, I would nevertheless find that Mr Robinson did authorise the bonus payments in 2016 which is supported by the contemporaneous correspondence between Mr Robinson and Ms Matthews regarding the bonus payments and Mrs Russell's evidence that Mr Robinson sent the email in which he directed her to pay the bonuses, which I accept.
110Further, in relation to the purported email from Mr Robinson to his accountant dated 2 June 2016 at 5.14pm, recording that the first bonus had been paid and the second bonus was pending, he said that he did not believe that he had sent it as his Outlook calendar showed a dentist appointment at 4.30pm on that day. Mr Robinson claimed that he did not have remote access to the email system from home. Mr Robinson said that he did not believe that he agreed to pay the bonus of $7,000.00 recorded in the email from his accountant. Mr Robinson could not remember how many employees were given a bonus in the year of 2016 and said that he would have to check this.
111Mr Robinson said that he paid bonuses when the business had performed above expectations. The 2015/2016 profit and loss statements show losses.
112In my view, the highest the plaintiff’s evidence in relation to the bonuses is that he cannot remember authorising it or does not remember agreeing to it. This does not satisfy the onus of proof that he positively did not authorise or agree to the bonuses.
113Further, I reject the plaintiff's assertions that Mr Robinson did not send the email dated 2 June 2016, as well as its authorship, given Mr Robinson ultimately did concede that that he was able to send emails using his mobile phone in 2016 without need to be present at the 3 Mint St, Wodonga location, whether the time stamp is to be read as 5:25 am or pm.
114Mrs Russell said that Mr Robinson, the two sales representatives and three inspectors had laptops in 2016 and mobile phones. They could send emails from their laptop and from the mobile phones. Mrs Russell said that Mr Robinson had time off work for medical reasons and worked from home and would send emails to Mrs Russell directing her to do things with work.
115The staff were given a mobile with a hot spot icon and there was an IDP log in and that in around 2016 when the new server was installed, staff could access MYOB remotely which was the invoicing and stock inventory system. One did not need access to the server in order to send an email.
116Given my finding that Mr Robinson was an unimpressive witness who departed from the plaintiff’s pleaded case and gave internally inconsistent evidence, I find his denial of authorship of the 2 June 2016 email to be uncompelling and I do not accept it.
117Mr Robinson had a laptop but claimed that he did not have access to the system until 2018. On his own evidence, he accepted that he could send emails from his mobile in 2016. The email dated 2 June 2016 was discovered by the plaintiff’s accountant pursuant to a subpoena. None of the documents in relation to bonus payments had been discovered by the plaintiff in this proceeding. Mr Robinson agreed that they are critical documents and had not been discovered by him and he knew of their existence. Further, Ms Matthews, the business accountant had not been called to give evidence on behalf of the plaintiff and I draw an inference that her evidence would not have assisted Border Lifting in this proceeding in accordance with the rule in Jones v Dunkel[30].
[30] (1959) 101 CLR 298.
118For the reasons set out above, I find that there was no quarterly cap in place at the time the 2016 bonuses were paid. Therefore, the plaintiff’s pleaded case fails.
2019 bonus
119In agreeance with the defendants’ submissions, in respect of the 2019 bonus, the evidence fails to support the plaintiff's assertions that Mr Robinson did not direct Mrs Russell to make the 2019 bonus payments.
120Mr Robinson conceded that the email dated 30 May 2019 from him to Ms Matthew, the business accountant, listed items for possible expenses which included bonuses in the sum of $21,000.00 which Mr Robinson agreed was in fact paid.
121Mr Robinson said that he did not recall Ms Heiner thanking him for her bonus. He agreed that he decided when bonuses were to be paid and how much would be paid. Mr Robinson said that if he made a decision to pay a bonus, he would direct Mrs Russell sometimes verbally and sometimes by email.
122I find that the email dated 30 May 2019 from Mr Robinson to Ms Matthews very clearly contemplated bonus payments between $21,000.00 to $28,000.00 as part of Border Lifting’s end of year tax planning. A necessary inference can, therefore, be drawn from bonus payments of $21,000.00 being made by Mrs Russell around this time. Consistently, both Mr Russell and Ms Heiner gave evidence that they had thanked Mr Robinson for the bonus payment and, further, in relation to the ‘toolbox’ meeting at which several employees thanked Mr Robinson for the payment of the bonus.
123In relation to the 2019 bonuses, Mr Robinson said that he did not approve bonuses in that financial year. He was on holiday in Fiji from late May to 12 June 2019 and was at work for 2 hours and then went to New Zealand for a week. Mr Robinson’s telephone records show that he was in Fiji from 1 June to 10 June 2019. He was then in Australia from 10 June to 13 June 2019 and then flew to New Zealand. Mr Robinson returned to Australia on 18 June 2019. His evidence in relation to his movements overseas cannot be relied on.
124The Amended Defence says that on or around 11 June 2019, Mr Russell called Mr Robinson by telephone and thanked him for the bonus and Mr Robinson said, “no worries”. Mr Russell said that he did both, that is, he called Mr Robinson and went into the office to thank him. The plaintiff relied on Mr Robinson’s telephone records which show that no incoming calls came in when he was overseas. However, on 11 June 2019 he was not overseas. He had returned from Fiji and was about to go away to New Zealand for the week. I, therefore, find that this telephone call occurred between Mrs Russell and Mr Robinson on 11 June 2019 while he was in between overseas trips, and the phone records cannot be relied on to disprove the alleged phone call.
125For similar reasoning in relation to the 2016 bonus, I do not give weight to the plaintiff’s assertion that Mr Robinson could not have authorised the payments on the basis that he was in Fiji from late May until around 12 or 13 June 2019 and did not have a work computer with him. Indeed, Mr Robinson admits that he had sent the email to Ms Matthews and that he was involved in Border Lifting’s tax planning.
126Again, the highest the plaintiff’s evidence in relation to the bonuses is that he cannot remember authorising it or does not remember agreeing to it. This does not satisfy the onus of proof that he positively did not authorise or agree to the bonuses.
Issue 3: F.4 Claims - Mrs Russell’s wages
Submissions
Plaintiff’s submissions
127The plaintiff claims that Mrs Russell increased her rate of pay, that Border Lifting did not “authorise, approve or agree” to any increase to Mrs Russell’s wage beyond $27.50 per hour, that Mrs Russell was not entitled to those wages, and claims $14,475.00.
128The plaintiff claimed that the unentitled wages paid Mrs Russell in the sum of $14,475.00 were as follows:
(a) 13 September 2016 to 31 December 2016: $1,155.00
(b) 1 January 2017 to 30 June 2020: $13,095.00
(c) 26 May 2020 to 15 June 2020: $225.00
129The alleged number of unentitled wages was subsequently amended in the Further and Better Particulars dated 25 October 2022 in the sum of $15,752.24, however, the amounts of $1,282.50 and $122.24 were objected to on the basis of an amendment of overtime termination pay that had not previously been pleaded. The final revised amount of alleged unentitled wages relied on by the plaintiff was the sum of $14,347.50.
Pay Rise to $28.50
130The plaintiff submits that Mrs Russell was given a pay rise to $27.50 at a performance appraisal on 26 February 2015. The Russells agreed with Mr Robinson that pay rises were only awarded at a performance appraisal. The plaintiff argues that no pay increase was discussed at Mrs Russell’s performance appraisal on 27 April 2016, which is supported by documentary evidence of the appraisal itself. Mrs Russell then gave evidence that the 2016 pay rise was authorised verbally by Mr Robinson a week after her appraisal, contrary to the defendants’ pleadings. In cross examination, Mrs Russell maintained her evidence about pay rises only being indicated in performance appraisals and that the 2016 pay rise was authorised verbally which the plaintiff submits is inconsistent.
131The plaintiff further relies on Mr Robinson’s evidence that he was not aware of the 2016 increase in pay rate to $28.50 and, further, that at times Mrs Russell may have had to sign things on his behalf or use his electronic signature to which she had access as well as being the sole signatory on the payroll account. The plaintiff claims that Mrs Russell deceptively affixed Mr Robinson’s signature to the employment contract and that an unsigned version of the same employment contract, omitting the schedule, applied to Mrs Russell’s employment.
132The plaintiff’s reply provided that it did not at any time agree to the purported 11-page written agreement which is headed “Part Time (Award) Employment Contract” and which on page 10 was on 7 September 2016 purportedly signed by Mrs Russell and purportedly witnessed by Mr Robinson (the 11 Page Written Agreement).
133The plaintiff relied on paragraph 3 of its Reply dated 10 June 2022 which provides that:
(b) … (Mr Robinson) did not at any time physically execute the 11 Page Written Agreement;
(c) in the event that Mr Robinson’s signature was affixed by electronic means, Mr Robinson and the Plaintiff did not at any time authorise or approve Mr Robinson’s electronic signature being affixed to the 11 Page Written Agreement be electronic means;
(d) the Second Defendant deceptively affixed Mr Robinson’s signature to the 11 Page Written Agreement without the permission or authority of Mr Robinson or the Plaintiff; and
(e) the Second Defendant deceptively filed and stored a copy of the 11 Page Written Agreement in the personnel files of the Plaintiff; (f) the Second Defendant failed to file and store the original version of the 11 Page Written Agreement in the personnel files of the Plaintiff; …
134The plaintiff also put to Mr Robinson its Reply dated 11 May 2021 and contends that, in the absence of Mr Robinson having authorised the pay rise to $28.50 per hour, the only alternative is the options in the pleading for the completion of the 2016 contract and Mrs Russell’s pay rise. The plaintiff submits that the pay rise to $28.50 should not be viewed in isolation and is linked to the further $1.00 per hour pay rise which followed a week later. Mrs Russell did not implement the pay rise to $28.50 until 13 September 2016.
Pay Rise to $29.50
135The plaintiff submits as per paragraph 30(b) of the Further Amended Statement of Claim dated 22 April 2022, that on or around 20 September 2016, Mrs Russell increased her pay rate from $28.50 to $29.50 per hour on Border Lifting’s payroll system. It refers to its evidence of a pay slip of Mrs Russell on 13 September 2016 at $28.50 per hour and on 20 September 2016 at $29.50 per hour.
136The plaintiff also relies on Mrs Russell’s outline of evidence, at paragraph 15, in which she says that she did not know how her rate of pay increased. Mrs Russell gave evidence that Mr Robinson trusted her with the payroll role, the pay rise was not communicated in a performance appraisal and that she was not aware of the pay rise. Additionally, that only herself and Mr Robinson had the ability to change the rate of pay of Border Lifting’s employees. Mr Robinson had access to her payslips in mid-2016, she did not change her pay rate and that she could have changed the pay rate.
137Further, the plaintiff relied on the fact that counsel for the defendants did not put to Mr Robinson that he changed Mrs Russell’s pay rate to $29.50 and that Mr Robinson gave evidence that in 2016, he did not have remote access to the AccountRight software.
138Accordingly, the plaintiff submits that, consistent with the Further Amended Statement of Claim and Mrs Russell’s evidence, the hourly pay rise was amended by either Mr Robinson or Mrs Russell in the one-week period in September 2016. Further, that the absence of a performance appraisal and any notification of a pay rise is telling, which must be the case, as Mrs Russell says she was unaware of the pay rise, and it contrasts Mr Robinson’s conduct in notifying her of the 2015 pay increase.
Defendants’ submissions
139The defendants argue that the allegations contained in the plaintiff’s reply amounted to speculation on the part of Mr Robinson and that there was no direct evidence of any of the allegations of deception or forgery, which are serious allegations to make against another party.
140The defendants contend that the pay increase from $27.50 to $28.50 per hour is supported by Mrs Russell’s employment contract specifying an hourly rate of $28.50 in its Schedule. Further, that Mrs Russell did not know how the rate increased to $29.50 and that, to succeed in its claim, Border Lifting must establish that Mrs Russell knowingly increased her wage without authority, which the evidence establishes was not the case.
Pay Rise to $28.50
141The defendants rely on the evidence of Mrs Russell who said that Mr Robinson signed the employment contract and when asked how she knew this to be the case gave evidence that she saw Mr Robinson sign the contract.
142The defendants also refer to Mr Robinson’s evidence that he did not sign the employment contract increasing Mrs Russell’s rate of pay to $28.50 per hour and that Mrs Russell’s previous pay rise to $27.50 was implemented in February 2015. Mr Robinson gave further evidence that neither employment contract applied to Mrs Russell’s employment.
143Additionally, that Mr Robinson denied signing the employment contract on the basis that the signature did not have a “…big enough gap between the A and the R” and because the employment contract was dated several months after he recalled conducting Mrs Russell’s performance appraisal. Mr Robinson’s name is printed beneath the signature and when asked whether that name was his handwriting Mr Robinson responded, “yes it looks to be”.
Pay Rise to $29.50
144The defendants rely on Mrs Russell’s evidence that she was not aware that her hourly rate changed from $28.50 to $29.50 per hour and that she did not change her rate of pay in the payroll system. Further, that Mrs Russell gave evidence that the total increase of her weekly wage was $37.50 being an amount she did not notice. Mr Robinson had access to the payroll system and changed employee wages from time to time.
145The defendants further refer to Mr Robinson’s evidence that he did not know that Mrs Russell’s rate of pay was $29.50 until after her employment ended and his claims that he did not have access to the payroll system.
Analysis
146For the following reasons, the plaintiff has not satisfied the onus of proof in relation to the pay rise claims.
Pay Rise to $28.50
147In relation to the $28.50 pay rise, there is no evidence of the alleged conduct that Mrs Russell deceptively affixed Mr Robinson’s electronic signature. Indeed, it is merely based on the assertions of Mr Robinson that Mrs Russell had access to systems and the spacing of the affixed signature, without the benefit of any forensic handwriting expert evidence. Accordingly, little weight can be afforded to this. Further, Mr Robinsons evidence in respect of the dates of review and the implementation of the pay rise is not compelling.
148Mr Robinson said that Mrs Russell’s performance appraisal took place on 27 April 2016 and the date of the contract was 2 August 2016. The execution clause was dated 7 September 2016. Mr Robinson said that he had concerns about the dates. That is, that 5 months had passed since the performance appraisal that did not mention a pay raise and something “did not fit”. He also noted that his purported signature was under the ‘witness’ section and not under the ‘authorised officer’ execution block for the contract. This raised concerns for him.
149For the first time under cross examination, Mr Robinson also denied signing Mr Russell’s employment contract dated 29 July 2016. He variously said that he could not be sure that he signed it and that he “would have to say ‘yes’” that the document was signed by a representative of the plaintiff. Mr Robinson said that he could not be sure if the signature on Mrs Russell’s contract dated 2 August 2016 was his electronic signature. He recalled signing the earlier contracts dated 10 January 2006 and 7 March 2005. However, he now says that he cannot recall signing the most recent contracts.
150Mrs Russell conceded Mr Robinson’s comments in Mrs Russell’s performance appraisal on 26 February 2015 which indicated that ‘there would be a pay rise of $1.50’ and ‘along with profit based Bonus and personal achievement bonus your wage has the potential to exceed 40,000’. Mrs Russell’s performance review of 26 February 2015 also records that there is ‘a pay rise was given = $27.50… Next appraisal Feb 16’.
151Mrs Russell gave evidence that she had a written contract of employment dated 2 August 2016. Mrs Russell said it was signed and dated 7 September 2016 by herself and Mr Robinson. The rate of pay was $28.50 per hour under the contract (Item 9 of the Schedule). Clause 16.1 contains a discretionary bonus provision which provides “the employer may from time to time elect to pay a discretionary bonus based on various considerations, including profitability and future forecasts of the business.” On 13 September 2016, Mrs Russell’s pay rate increased from $27.50 to $28.50.
152Mrs Russell gave evidence that the plaintiff had two payroll systems during her time with the plaintiff. In December 2016, the plaintiff transitioned from MYOB AccountRight to MYOB EXO. Under MYOB AccountRight, both Mrs Russell and Mr Robinson had access to the system but with MYOB EXO only Mrs Russell had access. Mrs Russell said, and I accept, that Mr Robinson had changed employee wage rates from time to time.
153Accordingly, given my prior credibility findings, I prefer the defendants’ evidence that Mrs Russell witnessed Mr Robinson sign the employment contract in her presence, given the lack of credible or applicable evidence to the contrary, and that the inference can be made that Mr Robinson authorised her pay increase from $27.50 to $28.50 per hour. This is further supported by the employment contract itself which specifies an hourly rate of $28.50 in its Schedule.
154I find that Mr Robinson did sign Mrs Russell’s new contract dated 2 August 2016 which provided for a rate of pay of $28.50 per hour excluding superannuation. I find that Mrs Russell’s rate of pay was increased on 13 September 2016 from $27.50 to $28.50 in accordance with the contract and it was so authorised.
Pay Rise to $29.50
155In relation to the $29.50 pay rise, it is common ground between parties, and consistent with evidence, that both Mrs Russell and Mr Robinson were not aware of the hourly rate change from $28.50 to $29.50 per hour. Evidentiary documents of Mrs Russell’s pay slips show her pay rate on 13 September 2016 as $28.50 per hour and on 20 September 2016 as $29.50 per hour supporting that she was not entitled to the pay rise to $29.50 per hour. Further, both Mrs Russell and Mr Robinson agreed that only they had the ability to change the rate of pay of Border Lifting’s employee and both denied increasing Mrs Russell’s pay rate.
200Accordingly, I am of the view, that the plaintiff has not satisfied the onus of proof in relation to Mr Russell’s alleged unauthorised credit card expenses.
Issue 5: F.10 Claim - Mr Russell’s meal and accommodation expenses
Submissions
Plaintiff’s submissions
201The plaintiff claims that Mr Russell was entitled to charge $200.00 as an allowance when he was required to stay overnight to perform services for its clients, however, he exceeded this allowance on occasions. Border Lifting says, as a result, it has suffered $3,016.12 in loss. This amount was amended on 25 October 2022 to $2,835.84 comprising of $2,169.28 in alleged unpermitted purchases and $676.56 in alleged over expenditure.
202The plaintiff relies on Mr Russell’s evidence in which he conceded that he was not entitled to seek reimbursement for groceries if he was not traveling, not even for a coke or a chocolate bar. Mr Russell did seek to qualify this evidence by saying that he was told in around 2006/2007 that if he bought a coke or mars bar every now and then it would not break the bank and that he was allowed to purchase a mars bar or drink every now and then.
203The plaintiff submits that on Mr Russell’s own evidence he conceded that these items, being the food and drink purchased when not staying away overnight, and expenditure in excess of $200.00 per day were not authorised contrary to the amended defence claiming the allowance was subject to “swings and roundabouts”. Mr Robinson denied the $200.00 limit was subject to “swings and roundabouts” or “the give and take rule”.
204In relation to the grocery purchases, the plaintiff refers to Mr Russell’s evidence that he used the work credit card for the purchase of groceries. Mr Robinson gave evidence of the $200.00 per day allowance and other purchases which was conceded by Mr Russell. Mr Russell gave evidence that the plaintiff’s policy allowed him to buy anything he liked if it was within the $200.00 limit for accommodation and food. He gave evidence that the grocery purchases were all on days when he was staying away.
Defendants’ submissions
205Mr Russell alleges that:
(a) where Mr Russell was required to stay overnight to perform services for one of the plaintiff’s clients, the client would be charged $200.00;
(b) Mr Russell was entitled to accommodation and meal expenses; and
(c) the plaintiff did not direct Mr Russell that the expenses must be less than $200.00 on each occasion.
206Mr Russell argued that on some occasions, the expenses were less than the $200.00 charged by the plaintiff to its clients. On other occasions, the expenses exceeded $200.00. Prior to 2015, in a conversation between Mr Russell and Mr Robinson, Mr Robinson described this as “swings and roundabouts” and the “give and take rule”.
207The defendants submit that Mr Russell gave clear evidence regarding the $200.00 allowance and his use of the allowance which is to be preferred to Mr Robinson’s inconsistent recollection of the policy. Mr Russell said, in relation to groceries, that the plaintiff did not have a written or verbal policy about groceries. He said that, as long as the expense was for supplies for breakfast or lunch, for meals and accommodation, it had to be within the $200.00 cap. He agreed that if he was not travelling, then he would not be entitled to purchase groceries.
208When questioned about his expenses on 11 September 2017, Mr Russell said he stayed with a friend in Alexandra, and he was the able to spend $178.54 on groceries which was under the $200.00. Similarly, on 11 October 2017, he stayed with a friend and spent the sum of $131.70 on groceries. Mr Russell said that Mr Robinson knew that if he worked in Eildon or Alexandra he would stay with a friend and purchase breakfast and lunch items for a couple of days and dinner.
209The defendants rely on Mr Russell’s evidence that he was entitled to a $200.00 allowance when working away overnight to cover food and accommodation and that the relevant expenses were incurred on the Border Lifting work credit card. Mr Russell gave evidence that on some occasions he spent less than $200.00 and on some more on the basis that certain locations were more expensive than others. Additionally, that Mr Robinson told him the $200.00 allowance was subject to “swings and roundabouts” and “the give and take rule”.
210The defendants further rely on Mr Robinson’s evidence in which he said that Border Lifting charged its clients a flat rate of $200.00 for each night Mr Russell was away for work, irrespective of how much of that allowance was spent. It was put to Mr Robinson that Mr Russell had raised with him that sometimes he spent more and sometimes less than $200.00, to which Mr Robinson said that “I couldn’t clarify or deny that, but it’s quite possible”.
211The defendants additionally refer to Mr Robinsons evidence in chief that the $200.00 allowance was not subject to “swings and roundabouts” or the “give and take rule” which was inconsistent with his evidence in cross examination that he could not recall saying to Mr Russell that this was a matter of “swings and roundabouts”.
Analysis
212It is agreed between the parties that during Mr Russell’s employment with the plaintiff, he was regularly required to travel for work and be away from home overnight.
213It was common ground that Mr Russell travelled to service Border Lifting’s customers. Mr Russell gave evidence that he travelled widely, to Cairns, Perth, South Australia, New South Wales and throughout Victoria. He was away on average 6 months a year and he paid for expenses on the work credit card. He accepted that there was a $200.00 allowance for accommodation and food. It was a verbal policy that Mr Robinson told the inspectors. Mr Russell said that some places would be more expensive, (e.g., Melbourne compared to Shepparton). Mr Russell said that Mr Robinson told Mr Russell that there would be “swings and roundabouts” and the “give and take rule” and he worked towards "levelling” it out.
214Mr Russell said there were times when he did not use the whole allowance. He did not receive anything for not using the whole allowance. He conceded that sometimes he went above the allowance.
215Mr Robinson acknowledged that accommodation may cost more than $200.00 at certain locations. Mr Robinson said he did not recall saying the phrase “swings and roundabouts”. He denied that there was a “swings and roundabout” rule in relation to the allowance and said that he did not recall the alleged conversation. He said there was a “give and take rule”, for example, with a current employee who lives adjacent to work. Mr Robinson also gave the example of, if the plaintiff got an afterhours phone call that required the employee to open the shop, they would do that and in return, the employee who has three young kids, was able to “duck out” to pick them up from school. Mr Robinson said it “is just traded off”.
216In my view, given the credibility findings set out above, I prefer the evidence of Mr Russell in relation to the conversation between him and Mr Robinson about the flexibility of the policy which was a matter of “swings and roundabouts” or the “give and take rule”.
217Further, I accept that, in or about 2006/2007, Angela Robinson, Mr Robinson’s ex-wife and a former director of the plaintiff, authorised Mr Russell on behalf of the plaintiff to make non-work related purchases on the work credit card to the effect that “a chocolate bar or a bottle of Coke isn’t going to break the bank”.
218There is no written policy or evidence to the contrary other than Mr Russell’s assertions regarding the $200.00 meal and accommodation allowance. Further, when it was put to Mr Robinson that Mr Russell had said that sometimes he had spent more or less than the allowance, Mr Robinson did not clarify or refute this, which was inconsistent with previous evidence.
219In respect of the work-related expenses claimed, being the groceries subject to the $200.00 accommodation and food allowance conceded by Mr Robinson, I prefer Mr Russell’s evidence that the grocery purchases were all made on days when he was staying away and, therefore, were work-related expenses. I, further, accept that Mr Russell was entitled to a $200.00 allowance for each night away, on the basis that he would sometimes spend more and sometimes less than that amount. In each case, the plaintiff on-charged the full $200.00 to the client.
220Accordingly, I am of the view, that the plaintiff has not satisfied the onus of proof in relation to Mr Russell’s alleged unauthorised meal and accommodation expenses.
Issue 6: Contractual basis for recovery
221Considering my above reasoning, I have found that the plaintiff has failed to discharge its onus of proof in relation to claims F.1A, F.2, F.3, F.3A, F4, F7 and F.10.
222In respect of the F.4 Claim, Border Lifting has sought recovery on a contractual basis, however, there is no contractual right to recover additional payments. The appropriate remedy for a mistaken overpayment is unjust enrichment as set out above.
223As the plaintiff has not established its claims, it is unnecessary to consider if Border Lifting is entitled to recover amounts as a matter of contract, in part or in whole.
224If I am wrong in my primary findings in relation to whether Mr Russell breached his employment contract, then as set out above, in my view, damages do not flow from the breach and, in respect of Mrs Russell’s overpayment of $1.00 an hour from 20 September 2019 to 15 June 2020, there is no contractual right to recover the additional amount.
Submissions
Unentitled Wages
Plaintiff’s submissions
225As set out above, the plaintiff rejects the defendants’ arguments in respect of waiver. The plaintiff refers to Csomore v Public Service Board of New South Wales[33] whereby an employer may waive the entitlement to reject part performance and may accept the work done.
[33] (1987) 10 NSWLR 587 at 599.
226The plaintiff submits that, even where there is a waiver, the employer may nevertheless claim damages for the value of the deficiency in performance.[34]
[34] Referring to Wiluszynski v London Borough of Tower Hamlets (1988) IRLR 154.
227Border Lifting is not claiming the first defendant’s full wages for the periods that he failed to fully perform the service he was required to, but only the monetary equivalent (calculated via his wage) between the service he was required to perform and the service he did in fact perform.
Defendants’ submissions
228The defendants submit that there is no apparent legal basis upon which Border Lifting is entitled to recover Mr Russell’s wages as an employee earns wages by rendering substantial performance of the essential obligations of the employment contract.[35]
[35] Welbourn v Australian Postal Commission (1984) VR 257 at 267 [50].
229If Mr Russell did not work certain hours, the remedy is the measure of damages that would put Border Lifting in the same position in if Mr Russell had worked those hours.[36]
[36] Gapes v Commercial Bank of Australia Ltd (1980) 37 ALR 20.
230Border Lifting’s loss would not be measured by reference to the wage paid to Mr Russell.[37]
[37] Ibid.
Analysis
231For the reasons set out above, applying the principles in Gapes v Commercial Bank of Australia Ltd[38], in circumstances where there has been substantial performance, it would be an unusual case where the measure of damages for the employer would equal the proportion of the total period of employment of the number of days during which the employee’s default continued.
[38] Ibid.
232The case of Wiluszynski v London Borough of Tower Hamlets[39] is distinguishable on its facts which involved an action by the employee for payment of his wages not paid while taking strike action. Mr Wiluszynski carried out his normal duties except for replying to inquiries from council members. The plaintiff relies on the decision at first instance which held that the employer could not reject part performance and the employee had to be paid the whole of his pay for the relevant period. However, this case was overturned on appeal and the Court of Appeal held that the council was entitled to reject the part performance and withhold payment. [40] This is consistent with the Australian legal position as set out in the Supreme Court of Victoria’s decision in Welbourn v Australian Postal Commission.[41]
[39] (1988) IRLR 154.
[40] Ibid.
[41] (1984) VR 257.
233The decision on appeal simply stands for the proposition that an employer may refuse part performance and withhold payment. It does not stand for the proposition that an employer, who has made payment to an employee, may subsequently sue the employee for the wages as damages.
234The decisions of Gapes and Welbourn also concern industrial action and the duty to pay in relation to an employer’s withholding of pay where an employee has undertaken industrial action. That is not the present case. Border Lifting seeks repayment of wages paid on the basis of inferences drawn from a range of business records to determine that Mr Russell has not in fact worked certain hours. The plaintiff claims it is entitled to those amounts as damages. Conceptually, if allowed, this would extend to times an employee is using the toilet, reading the paper, and getting coffee. It cannot be that an employer is entitled to scrutinise every minute that an employee has worked to recover “down time” paid as wages as damages.
235Further, none of the authorities relied on by the plaintiff demonstrate that Border Lifting is entitled to claim, as damages, wages paid to Mr Russell for time it now says he did not work.
236In my view, if Border Lifting was able to prove a loss by reason of work not being performed, the claim for damages is not recovery of the wage that has been paid, it is what the employer has lost by reason of the work not being done (e.g., loss of profits). There is no evidence of any such loss in the present case.
237Finally, Mr Robinson gave evidence of ongoing suspicions that he had that Mr Russell was not working the hours required under his contract but continued to employ and pay Mr Russell over the 6-year period. I accept that in those circumstances, Mr Robinson has waived any alleged breach.
Increase to $29.50
Plaintiff’s submissions
238The plaintiff’s closing submissions have not addressed the issue of the appropriate remedy to recover overpayment. Border Lifting’s pleaded case is based in contract.
Defendants’ submissions
239The defendants submit that, regardless of the evidence before the Court, overpayment does not give rise to a claim in contract which is what Border Lifting has pleaded and has based its case on. They submit that if Border Lifting has overpaid Mrs Russell, this does not constitute a breach in contract. Instead, the claim for recovery of overpayment is unjust enrichment which has not been raised by Border Lifting at trial or in its pleadings.
240The defendants argue that, if pleaded, this would require Border Lifting to demonstrate that Mrs Russell had been enriched at its expense and that there is a sufficient and specific ground for restitution. Citing Wambo Coal Pty Ltd v Ariff[42] and Ancient Order of Foresters in Victoria Friendly Society v Lifeplan Australia Friendly Society Ltd[43], the defendants submit this would require Border Lifting to establish that Mrs Russell had knowledge of the pay rise and was a knowing recipient of the benefit. The plaintiff has not established this based on the evidence.
[42] (2007) 63 ACSR 429 at [43] (White J).
[43] (2018) 265 CLR 1 at 12 [7] (Kiefel CJ, Keane and Edelman JJ).
241Alternatively, the defendants submit that Mrs Russell gave evidence that she provided, at Mr Robinson’s request copies of her payslips, which, if accepted, should infer that Mr Robinson reviewed the payslips and was aware of Mrs Russell’s rate of pay. Referring to Mason CJ in Commonwealth v Verwayen[44], the defendants submit, in the circumstances, Mr Robinson should be taken to have intended that the wage continued to be paid and waived the alleged breach.
[44] (1990) 170 CLR 394 at 407.
Analysis
242Although the term “restitution” and “unjust enrichment” are often used interchangeably, they are not synonymous. Restitution is the remedial response to any unjust enrichment. In turn, restitution is the claimed relief, whereas unjust enrichment is the basis of the claim seeking restitution.
243The High Court’s reasoning in Pavey & Matthews Pty Ltd v Paul[45] and David Securities Pty Ltd v Commonwealth Bank of Australia[46] confirm that restitution is a response to an established unjust enrichment. The basic elements of a claim is (1) the enrichment; (2) the enrichment being obtained at the plaintiff’s expense; and (3) the enrichment is unjust. Critically, Gummow J in Winterston Constructions Pty Ltd v Hambros Australia Ltd[47] observed that it is not sufficient to assert unjust enrichment in the absence of facts supporting the claim. Additionally, Mason CJ, Deane, Toohey, Gaudron and McHugh JJ in David Securities Pty Ltd v Commonwealth Bank of Australia said that recovery of monies paid under a mistake of fact or law is a claim that has been clearly recognised as based on unjust enrichment.[48]
[45] (1987) 162 CLR 221 at 256–7.
[46] (1992) 175 CLR 353 at 379 and 392.
[47] (1991) 101 ALR 363.
[48] (1992) 175 CLR 353 (Brennan and Dawson JJ agreeing).
244In my view, and considering the established authorities, recovery of money paid in error is a claim in restitution for unjust enrichment because of the mistake. The plaintiff has pleaded and run its case in relation to its F.4 claim as a breach of contract. There is no contractual basis for recovery of Mrs Russell’s overpayment in respect of the pay rise to $29.50 per hour.
245Accordingly, the plaintiff has no basis in contract to recover the overpayment to Mrs Russell.
Issue 7: Costs in relation to RSM reports as a head of damage
Submissions
Plaintiff’s submissions
246The plaintiff claims the first RSM report as a separate head of loss and damage in the amount of $34,021.01, being the cost of the initial investigation RSM report dated 23 July 2020 (pre-proceeding). It does so on the basis that the plaintiff, not its legal representatives, engaged RSM and did so on or around 17 June 2020 at the time it dismissed the defendants. Further, that it needed the assistance of RSM to assist with possible criminal proceedings against the defendants and engaged its solicitors Morgan Couzens Legal after dismissing the defendants.
247The plaintiff says that it falls within the Hadley v Baxendale[49] range of damages given that it was ‘natural’ upon discovery that Mr Russell had for a good amount of time been making excessive overtime claims, through Mrs Russell in her position as pay roll officer, to commission a report into those matters and any other financial misuse which came to the plaintiff’s attention. The first RSM report was prepared prior to the issuing of proceedings on 21 January 2021.
[49] (1854) 156 ER 145.
248The plaintiff further submits, citing Koufos v C Czarnikow Ltd[50] and Wenham v Ella[51], that it is only necessary that such a report would be a ‘serious possibility’ as a result of any of the defendants’ breaches.
[50] [1969] 1 AC 350 at 388, 415 and 425; [1967] 3 All ER 686 at 693, 711 and 718.
[51] (1972) 127 CLR 454 at 471-2.
249Additionally, the plaintiff also contends that the report may satisfy the second limb of Hadley v Baxendale as damages that may be reasonably be in the contemplation of both parties, not necessarily the degree or extent of the loss, but the precise circumstances that give rise to the loss. The cost is, therefore, not a factor determining whether the RSM report is claimable as damages. The plaintiff further cites G.E Dal Pont’s ‘Law of Costs’[52] in relation to legal costs and the circumstances in which such an expense might be recovered on taxation of the costs if the plaintiff is successful.
[52] Dal Pont, G.E ‘Law of Costs’ (4th edition) at 605 – 609.
Defendants’ submissions
250The defendants noted that the plaintiff’s closing submissions only claimed the first RSM report as a head of damage. The plaintiff’s pleading referred to both RSM reports dated 30 July 2020 and 26 March 2021. The defendants made their submissions in respect of both reports, as pleaded.
251The defendants deny that they caused the costs to be incurred and that the costs of the RSM reports constitute a head of damage. In respect of the first RSM report obtained before issuing these proceedings, they refer to Davies J in In Pathway Investments Pty Ltd v Doystoy Pty Ltd[53] whereby it was reasoned that pre-proceeding costs may be recoverable in certain circumstances, namely, on the basis that costs were “necessary or proper”.
[53] [2012] VSC 97 at [3].
252The defendants argue that Border Lifting’s claim for the RSM reports should be rejected for the following reasons.
253First, the costs incurred from the RSM reports do not constitute a head of damage, which they say is agreed by Border Lifting in its closing submissions in which it states that, if the plaintiff is successful, the expense may be recovered on taxation of costs. If successful, the first RSM report would be recoverable as a pre-proceeding cost, however, it does not in its submissions point to any authority for the proposition that the costs of an expert report properly form a head of damage.
254Second, with reference, again, to Davies J in Pathway Investments Pty Ltd v Doystoy Pty Ltd[54], that the costs of the RSM reports were not necessary or proper in the attainment of justice. The defendants refer to Border Lifting’s counsel’s address in which he states that “there was no particular value in having the RSM expert appear when he would essentially just be saying ‘Well, I’m relying on what the plaintiff told me was the case”.
[54] Ibid.
255Third, Mrs Robinson conceded that RSM reports were not needed to make out Border Lifting’s case against the Russells and she further agreed that she had prepared detailed analyses upon which the plaintiff sought to rely. Whilst Mrs Robinson maintained that RSM was needed to “…assist us in understand what happened” no justification beyond this assertion was provided.
256Fourth, Border Lifting has not relied on the RSM reports in the proceeding. The defendants referred to Young CJ in Challenger Group Holdings Ltd v Concept Equity Pty Ltd (No 2)[55] whereby costs were not recoverable where an expert report was inadmissible and not relied upon at trial.
[55] [2008] NSWSC 1002 at [14]-[16].
257Fifth, that the RSM reports are not in evidence and, therefore, it is unclear what basis the Court could view the RSM reports as “necessary or proper”, absent of reviewing their content.
Analysis
258As S Drew emphasised in ‘Costs Column: Legal Costs as damages’[56], citing Cockburn v Edwards[57], there is a distinction between damages and legal costs and a general principle that the legal costs a person incurs in the course of either prosecuting or defending a civil proceeding are not recoverable as damages, either as part of damages awarded in the primary proceeding or in a subsequent proceeding for damages.[58] Justice Barker affirmed this principle in University of Western Australia v Gray (No 28)[59] as follows:
[56] Drew, S, "Costs Column: Legal Costs as damages" (2019) 151 Precedent 48.
[57] Ibid referring to (1881) 18 Ch D 449.
[58] Ibid.
[59] (2010) 268 ALR 467 at [30].
The general principle that costs of a civil proceeding are not recoverable as damages in that proceeding or in a related or subsequent proceeding, as noted above, is undoubted.[60]
[60] Ibid at [30].
259The basic rule governing the law of remoteness of damages in contract, as espoused in Hadley v Baxendale, is that a plaintiff may recover such damages as may fairly and reasonably be considered as arising naturally from the breach of contract or that may have been reasonably in the contemplation of both parties at that at the time, they made the contract as a probable result of its breach.
260In Pathway Investments Pty Ltd v National Australia Bank Ltd[61], Davies J reasoned in relation r63.29 of the Supreme Court Rules 2015 (Vic), and similar provisions, as follows:
[61] [2012] VSC 97.
Legal costs incurred for work undertaken in reasonable anticipation of litigation in principle can be allowable although the simple fact that the costs were so incurred does not mean that they will be allowable on taxation. Such costs must be shown to have been “necessary or proper for the attainment of justice” and the satisfaction of that test requires some real relationship between the work done and the subject matter of the litigation, once commenced.[62]
[62] Ibid at [3].
261Justice Davies considered that whether the above factors can be shown will be a fact specific to the particular case. Further, on the question of whether pre-commencement costs may be allowable on a taxation, referred to G.E Dal Point who said in the Law of Costs:
Drawing the line between what is, and what is not, allowable on taxation in respect of pre-proceedings costs, is not capable of precise determination simply by statements of principle; the matter remains based in the discretion of the taxing officer dependant upon the particular facts of each case.[63]
[63] Dal Pont, G.E ‘Law of Costs’ (4th edition) at 605 – 609.
262Relevantly, Challenger Group Holdings Ltd v Concept Equity Pty Ltd (No 2)[64], was a matter concerning the question of costs in respect of a report that was abandoned prior to the first day of hearing. The defendant argued that the report was necessary to be prepared in view of the evidence put on by the other side and it should not be penalised for abandoning its reliance on the report.[65] Chief Justice Young of the Supreme Court of New South Wales concluded that this was no answer to the fact that the report was inadmissible and was not in fact relied upon at trial. Accordingly, that the defendant should not get its costs of and incidental to that report.[66]
[64] [2008] NSWSC 1002.
[65] Ibid at [14].
[66] Ibid at [15]-[16].
263The RSM report dated 23 July 2020 and the RSM report dated 29 March 2021 were not tendered into evidence. They were objected to by the defendants on the basis of hearsay, in that the maker of the document, being the accountant, was not called to give evidence by the plaintiff at trial. In the plaintiff’s counsel’s opening address, Mr Faust said, in response to questions about calling the RSM expert to give evidence, which given parts of the F.1 Claim had been withdrawn “the rest of the claim essentially relies on the say-so of the plaintiffs to RSM. In other words, there was no particular value in having the RSM expert appear when he would essentially just be saying, Well, I'm relying on what the plaintiff told me was the case.”
264Accordingly, based on the plaintiff’s submissions, I made a ruling that the reports were not admissible nor relevant to the cause of action and, therefore, ought to be removed from the Further and Better Particulars of the claim.
265Turning to the evidence, Mrs Robinson conceded that the RSM reports were not needed to make out Border Lifting’s case against the Russells and that she had prepared detailed analyses which the plaintiff sought to rely on, together with the source documents, of which were in fact tendered and relied upon at trial.
266In the present circumstances, there is no nexus between the fact of the RSM reports or the findings of the reports and the matters relied upon by the plaintiff in Court. The plaintiff chose to undertake a business review and investigation and the RSM reports, where it is noted that, first, they are not independent (having been retained by the client direct and not through legal representatives), second, they did not contribute anything to the proceeding, as the Reports were not independently compiled but, rather, the analysis of data and documentation and information had been compiled by Mrs Robinson, and such documentation had not been verified or audited by RSM, third, the fact of the plaintiff not relying on the reports in any way at trial demonstrates that the reports were irrelevant to the proceedings.
267The RSM reports provide no independent analysis or opinion because, as counsel for the plaintiff conceded, there was no value in having the expert appear because it essentially extracted information that the client had told them and relied on material prepared by the plaintiff at its own instigation and cost. I find that there is no basis to claim the costs of the RSM reports, as the reports were not relied on at trial and could not have been used in any event because of the Court’s ruling.
268In my view and affirming the principles of the relevant authorities discussed above, the RSM reports were inadmissible and not relied upon at trial. Accordingly, the plaintiff should not be entitled to recover costs incurred in relation to the RSM reports. This is supported by the plaintiff’s counsel’s statements and Mrs Robinson’s own concessions.
269In the alternative, in my view, the RSM reports would not satisfy the remoteness of damages principles established in Hadley v Baxendale[67]. The RSM reports could not be fairly and reasonably considered as arising from any alleged, despite unfounded, breaches by the defendants of their employment contracts with Border Lifting.
[67] (1854) 156 ER 145.
270In addition, the plaintiff has failed to justify how costs associated with the RSM reports were, per Davies J in Pathway Investments Pty Ltd v National Australia Bank Ltd[68], “necessary and proper for the attainment of justice”, which requires a relationship between the report and subject matter of the litigation once commenced.
[68] [2012] VSC 97 at [3].
271Again, the RSM reports were inadmissible and not relied upon at trial by the plaintiff who did not intend to call the author of the RSM reports to give evidence. The plaintiff’s assertions of the first report arising because of possible criminal proceedings, that upon discovery of Mr Russell’s purported conduct, a report was required to be commissioned and that the first report was prepared prior to the issuing of proceeding are deficient for the reasons set out above.
272Further, in agreeance with the defendants, the plaintiff has not addressed or referred to any authority for the proposition that the costs of the RSM reports properly constitute a head of damage as opposed to a disbursement as part of the costs of the proceeding, nor does it clarify whether it is seeking the costs incurred from RSM as pre-proceeding costs or legal costs incurred as damages.
273If the plaintiff had been successful in its claim, it would be a different question, even if the expert reports had not been introduced at trial, to determine if they had been reasonably incurred to respond to issues in dispute. In that circumstance, it would be an issue as to whether the plaintiff could recover the cost of the expert reports as a disbursement as part of the costs of and incidental to the proceeding. However, that is not the present case.
274Given my above reasoning, I am of the view that the plaintiff is not entitled to recover costs associated with the RSM reports as a head of damage.
Conclusion
275For the reasons set out above, I find that the plaintiff has drawn inferences, based on a range of business records, and decided that Mr Russell has not worked certain hours and it seeks repayments of those amounts as overpaid wages.
276The plaintiff has not satisfied the onus of proof in relation to the alleged overpayment of wages, bonus payments, alleged credit card misuse, and overpayment of accommodation and meal allowances.
277Further there is no basis under Mr Russell’s employment contract, or at law, to claim damages by reference to Mr Russell’s wage.
278Finally, Mrs Russell’s wage increase was authorised by the plaintiff by reason of her new contract dated 2 August 2016 which provided for a rate of pay of $28.50 per hour excluding superannuation.
279Although, since 20 September 2016 to 15 June 2020, Mrs Russell had received $1.00 per hour extra pay than her contractual entitlement, the plaintiff cannot recover the excess amount on its pleaded contractual case.
280For the foregoing reasons, the proceeding is dismissed with costs.
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Certificate
I certify that these 73 pages are a true copy of the judgment of Her Honour Judge Burchell delivered on 28 February 2023.
Dated: 28 February 2023
Nikki Thomson
Associate to Her Honour Judge Burchell
751 [12.23]; Welbourn v Australian Postal Commission (1984) VR 257,267 [50].
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