Butlin v ACA Home Improvements Pty Ltd
[2018] FCCA 3555
•5 December 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BUTLIN v ACA HOME IMPROVEMENTS PTY LTD & ORS | [2018] FCCA 3555 |
| Catchwords: INDUSTRIAL LAW – Adverse action – termination of employment for a prohibited reason – where employer contended applicant was dismissed by reason of redundancy – where employer offered applicant the opportunity to continue working as a subcontractor – accessorial liability – third respondent the guiding mind of the first respondent – liability of second respondent not proved. |
| Legislation: Fair Work Act 2009, ss.358, 361, 368, 550(2) |
| Cases cited: Adams v Cape Industries PLC [1990] Ch 433 Board of Bendigo Regional Institute of Technical and Further Education v Barclay (2012) 248 CLR 500 Brunskill v Sovereign Marine and General Insurance Co Ltd (1985) 59 ALJR 842 General Motors Holden Pty Ltd v Bowling (1976) 136 CLR 676 Hobart Bridge Co Ltd v Federal Commissioner of Taxation (1951) 82 CLR 372 Klein v Metropolitan Fire and Emergency Services Board (2012) 208 FCR 178 Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500 Moteki v Legnor Pty Ltd (2018) FCCA 1988 Multinational Gas & Petrochemical Co v Multinational Gas and Petrochemical [1983] Ch 258 |
| Other material: Davies & Worthington, Gower & Davies’ Principles of Modern Company Law (Sweet & Maxwell, 7th ed, 2003) |
| Applicant: | RODNEY BUTLIN |
| First Respondent: | ACA HOME IMPROVEMENTS PTY LTD (ACN 168 432 317) |
| Second Respondent: | DAVID BAKER |
| Third Respondent: | VINCENT SHEN |
| File Number: | MLG 437 of 2017 |
| Judgment of: | His Honour Judge Wilson |
| Hearing dates: | 15 February 2018, 7 June 2018 and 14 September 2018 |
| Date of Last Submission: | 19 October 2018 |
| Delivered at: | Melbourne |
| Delivered on: | 5 December 2018 |
REPRESENTATION
| Counsel for the Applicant: | Mr M Latham |
| Solicitors for the Applicant: | Anderson Gray Lawyers |
| Counsel for the First Respondent: | Mr J Hooper |
| Solicitors for the First Respondent: | Jasper Lawyers Pty Ltd |
| Counsel for the Second Respondent: | Mr J Hooper |
| Solicitors for the Second Respondent: | Jasper Lawyers Pty Ltd |
| Counsel for the Third Respondent: | Mr J Hooper |
| Solicitors for the Third Respondent: | Jasper Lawyers Pty Ltd |
DIRECTION
On or before 19 December 2018 the applicant and the respondents submit a minute of the precise form of orders they seek, including orders for the filing and service of affidavit material addressing damages, penalty and other relief.
ORDERS
This proceeding is adjourned to a date to be fixed.
The second respondent is removed as a party to this proceeding and the third respondent henceforth be known as the second respondent.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 437 of 2017
| RODNEY BUTLIN |
Applicant
And
| ACA HOME IMPROVEMENTS PTY LTD (ACN 168 432 317) |
First Respondent
| DAVID BAKER |
Second Respondent
| VINCENT SHEN |
Third Respondent
REASONS FOR JUDGMENT
Introduction
By his amended claim filed in this proceeding on 26 July 2017, the applicant sought compensation, declaratory relief and other orders arising out of the termination of his employment with the respondent. In essence, he alleged that his employment was terminated on the basis of there being no available work. Yet soon after his termination, the first respondent (“ACA”) employed a different person, Jeff Dickinson, to perform the same work the applicant had undertaken. The respondent denied the applicant’s contentions arguing that the person who replaced the applicant performed wholly different tasks and hence, so the respondents argued, ACA did not contravene the Fair Work Act 2009 (“Act”) whether on the grounds alleged by the applicant or at all. The applicant said his dismissal was for a prohibited reason and that the respondent failed to discharge the reverse onus that fell to it to discharge.
The trial of this proceeding addressed liability only.
Synopsis
For the reasons that follow, in my judgment the applicant succeeded in his claims in this proceeding. In my view –
a)ACA terminated the applicant’s employment for a prohibited reason;
b)ACA failed to prove that the applicant’s dismissal was not effected for a prohibited reason;
c)the third respondent but not the second respondent is liable as an accessory to ACA’s contraventions of the Act;
d)the applicant is entitled to damages to be determined at a later date; and
e)the respondents are liable for civil penalties, the precise findings in respect of which are to be determined at a later time.
Relevant factual narration
It was common cause that ACA carried on business by providing to the public by retail and wholesale a range of products including roller blinds, roller shutters, aluminium windows, door awnings and plantation shutters. From 2005 ACA first offered a service for windows and doors installation and removal. It thereby enabled ACA’s customers to place orders for the removal of windows and doors and for the installation of new doors and windows.
At all relevant times ACA’s principal shareholder and director has been Wei Shen, also known as Vincent Shen. According to ACA’s operations manager, at all times relevant to this litigation Mr Shen made important decisions for ACA in respect of such matters as hiring employees, fixing their salaries, and terminating the employment of ACA’s employees.
The applicant gave evidence in this case by affidavit and he was cross‑examined. His working career in the period from 1986 to 2015 was not contested. During that period, the applicant worked in various capacities, both employed and on a self-employed basis, in the window installation industry in the motorcycle accessory business, in the property services industry and as a gym supplements retailer. None of the applicant’s activities in the period 1986 to 2015 was relevant to this litigation.
In 2014 ACA decided to commence the services it later provided of removing windows and doors and installing replacement windows and doors. On behalf of ACA, evidence was given to the effect that ACA hoped the window replacement part of the business would do well.
In late 2015 (possibly October or November) ACA advertised for a window installer position. According to the applicant the advertisement stated that the successful candidate could work as an independent contractor or as a full-time employee. The applicant said he responded to the advertisement by sending his curriculum vitae to ACA although he did not say whether he indicated to ACA that he chose to work with ACA as an independent contractor or as an employee. In response, the applicant said Mr Baker of ACA telephoned the applicant, the upshot of which was Mr Baker’s request to meet the applicant in person. Mr Baker and the applicant met on 2 December 2015 at ACA’s factory in Seaford. After discussions about the details of ACA’s requirements, the applicant gave evidence that he wanted to commence with ACA as an independent contractor then to see how matters progressed. Mr Baker gave largely corroborative evidence about those discussions. Mr Baker added that the applicant was at the time running his own business so when the applicant commenced as an independent contractor with ACA, the applicant’s business, Home Fix Services, provided the services to ACA and, according to Mr Baker, the applicant was free to work for other people.
The applicant gave evidence that he was engaged by ACA as a window and door installer and check measurer. In undertaking those roles, he said he was required to –
a)attend worksites to take final measurements;
b)provide those measurements to the proper officer at ACA; and
c)transport doors and windows to worksites by trailer then install those doors and windows.
The applicant gave evidence that he undertook work for ACA on that basis between December 2015 and January 2016 during which time he sent ACA an invoice on completion of the relevant work, which was paid, although ACA did not pay superannuation.
In January 2016, after discussions between the applicant, Mr Baker and Mr Shen, ACA commenced to employ the applicant on a permanent full‑time basis at the annual salary of $75 000. For the first three months they agreed that superannuation was to be part of the $75 000 and after the first three months superannuation would be in addition to the annual payment of $75 000.
The applicant gave evidence that he commenced as a full‑time employee with ACA on 27 January 2016. Mr Baker’s evidence corresponded precisely in respect of the applicant’s commencement date with ACA. The written contract of employment between the applicant and ACA went into evidence in this case. So far as the applicant’s duties under his employment contract were concerned, clause 2.2 set them out to include check measuring, installing and servicing window coverings and security doors and grills, collecting payments along with such other duties or projects within his skills, qualifications, and experience as ACA required. The applicant gave evidence that he executed his written contract of employment on 14 April 2016.
The applicant gave evidence that he noticed his superannuation entitlements had not been paid so in June 2016 he discussed the matter with Mr Shen who agreed to rectify the situation.
Mr Baker gave evidence that ACA’s business in window replacement did not do well for the financial year July 2016 to June 2017 yet Mr Baker made no criticism in his evidence of the applicant’s quality of work.
In October 2016 ACA engaged a worker called Jeff Dickinson. Mr Baker said in evidence that ACA engaged Mr Dickinson because certain of ACA’s customers required window installation work to be completed on weekends and that the applicant refused to work on weekends so ACA needed some other person to work on weekends. The applicant gave evidence that he was surprised that ACA retained Mr Dickinson in the first place having regard to the fact that ACA was suffering a dip in work (the applicant’s words) in October 2016.
By late 2016, ACA concluded that ACA was unable to continue to employ the applicant on a full‑time basis installing windows and doors as ACA did not have sufficient work to justify that expenditure. Mr Baker gave evidence that ACA had contractors who were willing and able to perform other work such as plantation shutter installation or the installation of roller blinds, security doors, roller shutters and awnings. Yet the applicant, so Mr Baker said, was either not experienced to do that work or he was not willing to do that work.
On 10 November 2016 Mr Shen met with the applicant to discuss the applicant’s employment. Differing versions of the events at that meeting emerged. The applicant said Mr Shen requested him to attend at Mr Shen’s office which the applicant did. According to the applicant Mr Shen handed the applicant a letter that had already been signed by Mr Shen stating that the applicant’s employment with ACA was terminated on the day of the meeting, 10 November 2016. According to the applicant Mr Shen said at that meeting that ACA did not have work for the applicant. The applicant said he was shocked at his termination and the reason given for it. The applicant disputed the suggestion that ACA had no work for the applicant as the applicant said he knew of seven jobs that were then current each involving the installation of windows and doors and in respect of which there was a significant volume of work yet to be done. The applicant stated that Mr Shen suggested that the applicant may wish to stay with ACA but as a contractor to which the applicant said he would consider the matter.
Mr Shen’s version of the meeting was different. He admitted he called the meeting on 10 November 2016 in his office and that he told the applicant that the applicant was redundant. Mr Shen did not refer to his providing the applicant with the 10 November 2016 letter. Mr Shen disputed that he invited the applicant to name his rates although Mr Shen admitted inviting the applicant to consider returning to work with ACA as a contractor.
On 11 November 2016 the applicant returned to ACA for a farewell. He again returned to ACA on 15 November 2016. On a date between 14 and 18 November 2016 (the precise day the applicant was unable to recall) he sought legal advice about his rights.
This proceeding
After passing through the formulaic phase of s 368 of the Act, the dispute between the applicant and ACA did not resolve so the applicant commenced this proceeding. In his amended application in this court the applicant contended as follows –
a)that pursuant to s 358 of the Act an employer was not permitted to terminate an employee’s contract of employment then re‑engage the same employee under a contract for services;
b)ACA through Mr Shen and Mr Baker took adverse action against the applicant by terminating the applicant’s employment and immediately thereafter proposing to engage him under a contract for services intending the applicant to perform exactly the same work under a contract for services as he performed under a contract of employment; and
c)the real reason ACA took adverse action against the applicant was not on the ground that his position was surplus to requirements but because it was cheaper for ACA to employ Mr Dickinson than it was to employ the applicant.
The applicant alleged that Mr Baker and Mr Shen were involved in a contravention of the Act for the purposes of s 550(2) of the Act.
The dismissal letter
No dispute emerged in this case that on 10 November 2016 the applicant’s employment was terminated, effective immediately. ACA gave the applicant no advance notice of its intention to do so. A dispute emerged about the precise content of the discussions at the meeting on 10 November 2016. It was necessary for me to resolve the disputed factual issues relating to the matters discussed, especially the issue of whether Mr Shen told the applicant that the applicant could return to ACA performing the same work as the applicant had previously performed, but as a contractor.
I find that on 10 November 2016, by instrument in writing dated 10 November 2016, ACA terminated the applicant’s employment and in so doing took adverse action against the applicant for the purposes of the Act.
In addressing the next issue, that is to say, in considering whether ACA took adverse action against the applicant for a prohibited reason it became necessary to scrutinise the whole of the evidence more thoroughly. In making the observations that follow it is useful to highlight the advantages that a trial judge enjoys when synthesising competing versions about the same or similar contested issues. Kirby ACJ spoke of those advantages in the decision of the Court of Appeal of the Supreme Court of New South Wales in Galea v Galea.[1]
[1] (1990) 19 NSWLR 263
In Galea, Kirby ACJ (as his Honour once was prior to his Honour’s appointment to the High Court) pointed out an array of advantages that a trial judge enjoys in the fact-finding process. Those observations apply to any decision‑maker, curial or administrative, who sees and hears a witness giving evidence before that decision-maker, it seems to me. Those advantages include the decision‑maker –
a)hearing the evidence in its entirety;
b)hearing and seeing all evidence in context, chronologically and logically advanced;
c)having time during adjournments and during the running of the case to reflect upon the evidence and to weigh it against all other evidence while fresh;
d)hearing and seeing interruptions, hesitations and delays in the giving of testimony; and
e)observing body language, sometimes important for interpreting communication.
In this case, it was necessary for me to make findings of fact in respect of conflicting factual evidence. It was necessary in that situation for me to determine whose version of a particular event I preferred. Part of the process of assessing a witness’s evidence involved not only hearing what the witness actually said but also observing the manner in which the witness said it. Another point of the process involved assessing the extent to which one witness’s version of events was corroborated by one or more other witnesses who gave evidence on the same issue. Similarly, the existence or otherwise of contemporaneous documentation supportive of the version of events given by a particular witness was relevant. I have taken those matters into account in arriving at the factual findings that are recorded below.
In arriving at conclusions about the veracity of witnesses in their evidence, to some extent it was necessary for me to address the demeanour of those witnesses in the witness box. The task of assessing a witness’s demeanour in an oath against oath case, as was this case, is of special relevance, as Kirby J pointed out in State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq).[2] Yet that is not to say that every case involves an assessment of a witness’s demeanour in isolation. In fact, in Devries v Australian National Railways Commission,[3] Deane and Dawson JJ held that cases in which findings of fact and assessment of credit are based on demeanour are the exception rather than the rule. In the later decision of the High Court in Fox v Percy,[4] Gleeson CJ and Kirby J observed that judges increasingly tend to limit their reliance upon the appearances of witnesses and to reason their conclusions as far as possible on the basis of contemporaneous materials, objectively established fact and on the apparent logic of events.
[2] (1999) 73 ALJR 306
[3] (1993) 177 CLR 472
[4] (2003) 214 CLR 118
As I stated in AKD16 v Minister for Immigration and Border Protection & Anor,[5] the significance of the decision maker assessing a witness’s demeanour has been the subject of a large volume of judicial writing at the highest level over the last century. Not all observations in those decisions point in the same direction. Many of the observations in the decided cases were made in the context of whether an appellate court was in as good a position as was the trial judge when assessing credit or whether the appellate court should defer to the trial judge’s assessment of a witness’s credit. The authorities are extensive and they include Coghlan v Cumberland,[6] Dearman, Owners ofSS Hontestroom v Owners of SS Sagaporack; SS Hontestroom v SS Durham Castle,[7] Paterson v Paterson,[8] Warren v Coombes,[9] Brunskill v Sovereign Marine and General Insurance Co Ltd,[10] Jones v Hyde,[11] Galea v Galea,[12] State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liquidation),[13] Fox v Percy[14] and Husain v O & S Holdings (Vic) Pty Ltd.[15]
[5] (2016) 315 FLR 228
[6] [1898] 1 Ch 704
[7] [1927] AC 37
[8] (1953) 89 CLR 212
[9] (1979) 142 CLR 531
[10] (1985) 59 ALJR 842
[11] (1989) 63 ALJR 349
[12] (1990) 19 NSWLR 263
[13] (1999) 73 ALJR 306
[14] (2003) 214 CLR 118
[15] [2005] VSCA 269
Stripped to its essence, the applicant contended that ACA’s reason for his termination was a prohibited reason. He supported that contention with the following –
a)ACA did in fact have incomplete works underway warranting the applicant’s continued employment;
b)Mr Dickinson did largely if not precisely the same work as did the applicant; and
c)the applicant’s was not a genuine redundancy.
Conversely, on behalf of ACA Mr Shen cast his reasons as reasons that were not prohibited reasons for terminating the applicant’s employment. In essence, Mr Shen argued –
a)in the overall, ACA’s window installation business was in decline as documents adduced in evidence bore out;
b)the applicant was reluctant to undertake work beyond window installation; and
c)he (Mr Shen) did not terminate the applicant’s employment then immediately thereafter offer to engage the applicant pursuant to a contract for services.
In order to resolve the conflict in the evidence identified above, it was necessary to say a little about my assessment of the credibility of each witness of relevance in this case. In that regard, the applicant and Mr Shen were the only persons privy to those discussions at the meeting on 10 November 2016. It seemed that Mr Dickinson, Mr Baker, the applicant and Mr Shen were capable of deposing to events at grass roots level in respect of ACA’s workload and whether ACA did in fact have enough work for the applicant in November 2016 when ACA terminated the applicant’s employment.
With that preliminary observation let me now move to matters concerning the credibility of each of Messrs Shen, Baker, Dickinson and Butlin.
As for the applicant, I found Mr Butlin to be a credible witness who was frank, candid and honest throughout his evidence. At no stage did I take the view that he embellished his evidence or gave evidence designed to cast the event he described in the best way he could so as to thereby enhance his case. He made appropriate concessions. He did not argue when cross‑examined. It seemed to me he was a reliable witness who gave a truthful account of the 10 November 2016 meeting of ACA’s business activities at that time and about the work he did as well as the work Mr Dickinson did.
So far as the 10 November 2016 meeting was concerned, the applicant gave evidence in answers to questions put to him in cross‑examination that ACA was in a quiet period at that time. He said ACA regularly experienced quiet periods of which the situation in November was normal. He said an ebb in the work was upon ACA in November 2016. The applicant said that once Mr Shen told the applicant that his employment was terminated, the applicant asked who was to do the applicant’s job to install various tasks that were waiting to be installed. Mr Shen’s version was specifically put to the applicant that it made no sense for Mr Shen to inquire about the applicant’s rate as a contractor to which the applicant stated that Mr Shen actually asked whether the applicant was interested if ACA paid the applicant more than the applicant’s base rate of $260 per window. The applicant was firm in his evidence on the issue. The applicant said that Mr Shen said to him that ACA would pay the applicant more than the applicant’s base rate as a subcontractor. The applicant had conveyed that proposition several times. Then ACA’s counsel put the following to the applicant –
[MR HOOPER] Yes. So after Mr Shen terminated your employment – so immediately after – I mean, he didn’t suggest that you become a contractor, did he?‑‑‑He offered me.
You raised the issue of ‑ ‑ ‑?‑‑‑I ‑ ‑ ‑
[MR HOOPER] You raised the issue of what was happening with the installing work?‑‑‑I was curious as to who was going to install the windows; that’s all I asked.
[MR HOOPER] Yes. Because you had formed the belief that you were being – your employment was being terminated so Mr Dickinson, who was paid less than you ‑ ‑ ‑?‑‑‑That’s right.
‑ ‑ ‑ could do the work you performed?‑‑‑Correct. And he did.
[MR HOOPER] So you were of the view that Mr Shen was terminating your employment so you could be replaced by Mr Dickinson?‑‑‑Who was on a lower pay rate.
Mr Shen’s evidence of the same conversation was the subject of cross‑examination. When compared with the frank, open and forthright way the applicant responded to questions about that meeting, I did not reach the same state of persuasion in respect of Mr Shen’s evidence that I did in respect of the applicant’s. I say that for several reasons. First, after deposing to having checked the accuracy of an Excel spreadsheet concerning bookings of window installations, Mr Shen conceded that the spreadsheet was incomplete and that he did not cross‑check it for accuracy and that any questions in relation to the accuracy of the detail on the spreadsheet were matters for ACA’s employee Christina. While I accept that Mr Shen, as the guiding mind of ACA, was not to be expected to have an entry‑perfect command of the detail on an Excel spreadsheet, he readily deposed to its accuracy then hastily retreated from that accuracy when pressed on the point. That told me that Mr Shen was not a careful witness and that the accuracy of anything he said needed to be closely checked. Conversely, I did not reach the same conclusion about the applicant’s overall veracity.
Next Mr Shen denied saying to the applicant that he (Mr Shen) told the applicant a subcontractor would take over the applicant’s work duties. Yet Mr Shen also gave evidence that he tried to keep the applicant on, despite the falling windows market, and in so doing Mr Shen could have given the applicant a different job. Mr Shen was forced to focus on whether it represented a possibility for ACA to convert the applicant’s status from a full-time employee to that of a contractor. Once pressed, Mr Shen agreed. I took the view based in part on that exchange that Mr Shen, when cornered, eventually admitted the point put to him. I regarded him as less than forthright.
Third, Mr Shen was challenged for his version of the ailing windows market and specifically for his response to the applicant’s proposition that the ebbs and flows of the window installation market were such that a flow would follow an ebb as it had historically done. Mr Shen denied the proposition. He said ACA’s Chinese supplier took between 12 to 16 weeks to deliver material so that April was the likely supply date in respect of materials manufactured in China if ordered from Australia by Christmas. And when that material was supplied ACA would use a subcontractor to install that material. In that eventuality Mr Shen acknowledged that by using a subcontractor to install materials that were delivered by April ACA had been spared the need to pay the applicant his salary between Christmas and April.
To my mind, that was likely to be the real reason for terminating the applicant’s employment, namely, a desire by ACA to reduce its outgoings by reducing its need to pay the applicant his salary entitlements. Of course, in any analysis of that sort it was necessary to examine whether ACA was in fact suffering a decline in business in the way Mr Shen said. Mr Shen relied on the accuracy of the Excel spreadsheet prepared by another employee named Christina. She did not give evidence in this case. Mr Shen acknowledged he was unable to verify the accuracy of the spreadsheet. He also recognised that the spreadsheet was defective in that it omitted financial information that it should have included. I was not persuaded on the balance of probabilities that the spreadsheet on which Mr Shen relied to support his contentions about ACA’s state of work was accurate. In addition, whatever conclusion may have been drawn from the entries on the spreadsheet the best witness to have given evidence on point was Christina rather than Mr Shen and she was not called. In addition, Mr Shen conceded that Christmas was the busiest time of the year for ACA. It was highly peculiar for ACA to terminate one of its employees immediately prior to Christmas if ACA was entering its busy phase by November. Yet its capacity to service its customers was impaired with the termination of the applicant. As it transpired, on the evidence in this case, soon after the applicant’s employment was terminated Mr Dickinson’s workload significantly increased.
Fourth, Mr Shen’s evidence about ACA’s business falling away near the applicant’s termination of employment was not corroborated by Mr Dickinson. Mr Dickinson gave evidence that he was unable to keep up with the number of tasks he was required to perform. In re‑examination, Mr Dickinson gave evidence that the applicant’s departure from ACA meant that ACA did not have enough people to perform installation work. That squarely contradicted Mr Shen’s evidence about ACA’s work suffering a downturn. Mr Dickinson’s evidence that ACA did not have enough people to perform installation work rendered more improbable Mr Shen’s stated reason for procuring the applicant’s termination. Further, Mr Shen’s evidence about the delay in obtaining supplies from China was near meaningless when Mr Dickinson’s evidence (to which no serious challenge was advanced) was to the effect that ACA could not keep up with its existing workload.
In short I found Mr Shen to be an unreliable witness. In my view he was more concerned to convey the suggestion that ACA’s work had run out than he was to give accurate evidence of the truthful reason for his decision to terminate the applicant’s employment. I accept Mr Dickinson’s evidence that immediately after the applicant’s employment was terminated Mr Dickinson’s workload escalated.
Then there was the document that ACA filed with the Fair Work Commission (“fair work form”). The entries on the form were completed by Mr Baker. Several handwritten entries by Mr Baker assumed significance in this case. They included the following –
a)the words in paragraph 5.1 – “This was not a dismissal for bad work”;
b)the words elsewhere in paragraph 5.1 – “We offered subcontract work to the applicant so that he would still have some income after his redundancy”; and
c)the words in paragraph 6.1 – “Our legal advice was that we had the right to make the applicant redundant as we did”.
Mr Shen denied that Mr Baker wrote the words in paragraph 5.1 of the fair work form upon Mr Shen’s instructions. The relevant exchange unfolded in the following way –
MR LATHAM: What I’m putting to you is that you told Mr Baker that after you had made Rodney redundant that you offered him work as a subcontractor.
THE WITNESS: No, I didn’t.
MR LATHAM: And that is why he wrote what he did in the form.
THE WITNESS: I didn’t tell him that. I didn’t say that to Ronny (sic).
MR LATHAM: Now, at the time this form was completed you didn’t have solicitors, did you?
THE WITNESS: No.
MR LATHAM: And it wasn’t until after you had engaged solicitors that you realised you weren’t allowed to dismiss someone and then try and engage them as a subcontractor?
THE WITNESS: Actually, that knowledge I already know long, long time before this. I know this knowledge. It come ‑ ‑ ‑
MR LATHAM: You have this knowledge?
THE WITNESS: I have this knowledge.
MR LATHAM: Are you aware of your obligations under employment law?
THE WITNESS: No, I didn’t think that much, but you said my solicitor tried to tell me lying, but that’s not true. I didn’t – I didn’t – I didn’t offer Ronny subcontractor job. I didn’t ask David to – you know, to offer subcontractor job. That’s all .....
MR LATHAM: So you say you knew that you weren’t allowed to dismiss someone – just to be clear, you knew that you weren’t allowed to dismiss someone and then make them a subcontractor?
THE WITNESS: I don’t know exactly, but I do use a lot of subcontractor before. I know, you know, sometime if ‑ ‑ ‑
I reject Mr Shen’s denial that he instructed Mr Baker to write paragraph 5.1 of the fair work form. Mr Shen was the controlling mind of ACA. Mr Baker had some limited authority but the authority was focused on factory operations rather than bigger employment issues with which Mr Shen was concerned. I also reject Mr Shen’s denial that after Mr Shen terminated the applicant’s employment ACA offered the applicant work as a subcontractor. I find that the fair work form said what it said, correctly, because Mr Baker complied with Mr Shen’s instructions to complete the form in that manner.
Turning therefore to my assessment of the four witnesses in this case, I accept Mr Butlin’s evidence as that of a frank, open, and honest witness. I do not accept Mr Shen’s evidence where it conflicted with evidence on the same point as given by Mr Butlin and I find that his evidence was essentially unreliable. Insofar as Mr Baker gave evidence, it was limited to mainly factory operational matters and I find that Mr Baker completed the fair work form on the instructions of Mr Shen. I accept Mr Dickinson’s evidence in relation to the increase in work that ACA encountered which evidence contradicted the evidence given on point by Mr Shen whose evidence on point I reject.
Adverse action
I find that the termination of the applicant’s employment was “adverse action” for the purposes of the Act. That was for the reason that it had the effect of altering the applicant’s position to his detriment, as was espoused in Klein v Metropolitan Fire and Emergency Services Board.[16] It fell to ACA to demonstrate that the substantial and operative factor of ACA’s reasons for taking the adverse action was not a prohibited reason, as was required by s 361(1) of the Act, as was held in General Motors Holden Pty Ltd v Bowling.[17] According to the High Court’s decision in Board of Bendigo Regional Institute of Technical and Further Education v Barclay,[18] an assessment of the reason why ACA actually took the adverse action and whether that reason was a prohibited reason is to be made at the time the action was taken. The relevant date was 10 November 2016.
[16] (2012) 208 FCR 178
[17] (1976) 136 CLR 676
[18] (2012) 248 CLR 500
In this case, ACA contended that it dismissed the applicant by reason of his redundancy as ACA did not have sufficient window installation work for the applicant to perform. I reject that contention.
Let me explain why.
The person who is to be taken as having made the decision to terminate the applicant’s employment in this case was Mr Shen. It was not seriously put otherwise. ACA bore the reverse onus under s 361 of the Act to show that ACA’s reason for terminating the applicant’s employment was not a prohibited reason. Where the evidence of the relevant decision‑maker is accepted as being reliable, that evidence is capable of discharging the burden that fell to ACA to discharge. According to Barclay, the Act calls for a detailed examination of the reason or reasons for the adverse action.
I reject the evidence adduced by Mr Shen of ACA to the effect that ACA terminated the applicant’s evidence by reason of the applicant’s redundancy. For the reasons developed earlier –
a)I attach very little weight to the evidence of the decision-maker, Mr Shen, as I found him to have been an unreliable witness;
b)I do not accept the accuracy of the information in the Excel spreadsheet to the effect that ACA’s business in window and door installation was in decline in November 2016 as I find the spreadsheet was wanting in material information, it was wrong in certain respects, and it was not verified by ACA’s employee Christina, its author;
c)fluctuations in ACA’s work had been historically evident, so if ACA’s work had been light for a period in or around the middle of April 2016, having regard to historical guides, the work would first ebb and then it would flow;
d)I reject Mr Shen’s evidence that ACA had no work for the applicant in November 2016 as both the applicant and Mr Dickinson said ACA had several jobs “in the system” (to use the applicant’s words) and in Mr Dickinson’s case he was overwhelmed with work almost immediately following the applicant’s departure from ACA; and
e)I accept the applicant’s evidence and prefer it over the contrary version given by Mr Shen that during the conversation on 10 November 2016 and immediately following Mr Shen’s provision of the letter terminating the applicant’s employment Mr Shen offered the applicant work with ACA as a subcontractor.
In those circumstances, I find that ACA took adverse action against the applicant for a prohibited reason and that ACA failed to discharge the onus that fell upon it to discharge under s 361 of the Act. It follows that declaratory relief must be ordered in favour of the applicant to the effect that ACA contravened the Act.
I direct the parties within 14 days to bring in minutes of the precise form of orders they seek. Those minutes should make additional provision for the filing of affidavit material that addresses damages, penalty, and other relief.
Second and third respondents
Relief was sought against Mr Shen and Mr Baker on the basis that they were liable as accessories.
One of the important issues in this case was the nature of the second and third respondents’ liability. It was alleged to have been accessorial. The first respondent was the primary actor in the events, at least at a level consonant with proper legal personality. In other words, the applicant’s employer in law was the first respondent. It was true that the third respondent was the guiding mind and a controlling influence of the first respondent. Nevertheless, according to basic principles of the company law the first respondent was the separate legal entity the existence of which was independent of its corporator. That proposition is so entrenched in Anglo Australian jurisprudence that authority for it need not be cited. Lest authority is required, I have applied the reasoning in Salomon v Salomon & Co Ltd,[19] Gas Lighting Improvement Co Ltd v Inland Revenue Commissioners,[20] Australasian Temperance and General Mutual Life Assurance Society Limited v Howe,[21] Hobart Bridge Co Ltd v Federal Commissioner of Taxation,[22] Multinational Gas & Petrochemical Co v Multinational Gas and Petrochemical,[23] Adams v Cape Industries Plc,[24] Meridian Global Funds Management Asia Ltd v Securities Commission,[25] Sons of Gwalia (Subject to Deed of Company Arrangement) v Margaretic[26] and New South Wales v The Commonwealth.[27]
[19] [1897] AC 22, 57
[20] [1923] AC 723,
[21] (1922) 31 CLR 290
[22] (1951) 82 CLR 372
[23] [1983] Ch 258
[24] [1990] Ch 433
[25] [1995] 2 AC 500
[26] (2007) 231 CLR 160
[27] (2006) 229 CLR 1
One of the most useful explanations of the separate entity doctrine in company law was given by Isaacs J in Howe.[28] There, his Honour held as follows –
A corporation once created is by common law a “person” (see Royal Mail Steam Packet Co. v. Braham (1); Pharmaceutical Society’s Case (2); Grant on Corporations, p. 4 (n.), and Foote on Private International Jurisprudence, 4th ed., p. 125). This is one of the most deeply rooted doctrines of our law (Coke’s Institutes, 2 Inst., 722) and it is the starting-point from which the Courts in England, basing themselves purely on the common law, have by its beneficial flexibility kept abreast in the case of corporations of the general advance of a progressive society.
[28] (1922) 31 CLR 290, 301
A helpful analysis of the principle is given in the most recent addition of Davies & Worthington, Gower & Davies’ Principles of Modern Company Law[29] and following.
[29] (Sweet & Maxwell, 7th ed, 2003) 93
It is necessary to separately consider the liability of each.
Mr Shen was at all relevant times the guiding mind of ACA. ACA did nothing of significance unless authorised by Mr Shen. Mr Shen hired staff. He dismissed staff. He made important decisions. He left unimportant decisions in respect of operational issues to Mr Baker. Mr Shen was the relevant decision‑maker in this case. I entertain no doubt whatsoever that Mr Shen was an accessory to the contravention that I found above.
Mr Baker fell into a wholly different category. While he gave his occupation as operations manager, it was readily apparent that his authority within ACA was extremely limited. He may have had a say, even a significant say, in the operations of the factory but important decisions were squarely the preserve of Mr Shen. I do not accept that Mr Baker had any effective role in the employment or termination of the applicant. Mr Baker did have a role in the day‑to‑day discharge of the applicant’s tasks although that is not relevant to this proceeding.
In my judgment, accessorial liability should follow in respect of Mr Shen. However, it should not follow in respect of Mr Baker. I do not accept the contention of counsel for the applicant that Mr Baker was implicated on an accessorial liability basis merely because he completed the fair work form. Accessorial liability travels well beyond that as the authorities cited above bear out.
The further conduct of this case must deal with evidence and submissions that flow from there being a finding about Mr Shen’s personal liability for ACA’s contraventions.
I will adjourn this case to a date to be fixed.
I certify that the preceding sixty-one (61) paragraphs are a true copy of the reasons for judgment of his Honour Judge Wilson
Associate:
Date: 5 December 2018
Key Legal Topics
Areas of Law
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Employment Law
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Contract Law
Legal Concepts
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Breach
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Remedies
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Contract Formation
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Intention
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