Carbone v James McConvill & Associates

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FEDERAL CIRCUIT COURT OF AUSTRALIA

Carbone v James McConvill & Associates [2021] FCCA 661

File number(s): MLG 3620 of 2019
Judgment of: JUDGE MCNAB
Date of judgment: 9 April 2021
Catchwords: INDUSTRIAL LAW – Fair Work application – claims for breach of contract and claims under the Competition and Consumer Act 2010 (Cth) – where default judgment has been entered by the Federal Court in favour of the Applicant with damages to be assessed – matter remitted for hearing in the Federal Circuit Court for the assessment of damages, pecuniary penalties and any question of associated costs – where the Applicant abandoned claims for breach of contract
Legislation:

Competition and Consumer Act 2010 (Cth) sch 2 ss 2, 18, 31, 236.

Fair Work Act 2009 (Cth) ss 16, 90, 340, 341, 342, 343, 545, 546, 547, 570.

Federal Court of Australia Act 1976 (Cth) ss 51A, 52.

Federal Court Rules 2011 (Cth) r 5.23(2)(e).
Cases cited:

Berry v CCL Secure Pty Ltd [2020] HCA 27

BHP v Steuler; Protect v Steuler [2014] VSCA 338

Carbone v James McConvill and Associates Pty Ltd (No 2) [2019] FCA 1594

Carbone v James McConvilland AssociatesPty Ltd [2019] FCA 1305

Cigarette & Gift Warehouse Pty Ltd v Whelan [2019] FCAFC 16

Construction, Forestry, Maritime, Mining and Energy Union v Melbourne Precast Concrete Nominees Pty Ltd (No 3) [2020] FCA 1309

Cummins South Pacific Pty Ltd v Keenan [2020] FCAFC 204

Dafallah v Fair Work Commission [2014] FCA 328

Henville v Walker [2001] HCA 52

Jamieson v Westpac Banking Corporation [2014] QSC 32

Kelly v Fitzpatrick [2007] FCA 1080

Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7

O'Neill v Medical Benefits Fund Ltd [2002] FCAFC 1

PIA Mortgage Services Pty Ltd v King [2020] FCAFC 15

Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543

Sayed v Construction, Forestry, Mining and Energy Union [2016] FCAFC 4

Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550

Shea v TRUenergy Services Pty Ltd (No 6) [2014] FCA 271

The Environmental Group Ltd v Bowd [2019] FCA 951

Westpac Banking Corporation v Jamieson & Ors [2015] QCA 50
Number of paragraphs: 110
Date of last submission/s: 26 August 2020
Date of hearing: 29 July 2020
Place: Melbourne
Counsel for the Applicant: Mr M Rinaldi
Solicitor for the Applicant: Cooper and Sanders Legal
Counsel for the Respondents: Mr M Wyles QC with Ms R Sweet
Solicitor for the Respondents: Carter Newell Lawyers

ORDERS

MLG 3620 of 2019
BETWEEN:

JOSEPH CARBONE

Applicant
AND:

JAME MCCONVILL & ASSOCIATES

First Respondent

JAMES MCCONVILL

Second Respondent

ORDER MADE BY:

JUDGE MCNAB

DATE OF ORDER:

9 APRIL 2021

THE COURT ORDERS THAT:

1.In respect of the Applicant’s claim under the Fair Work Act 2009 (Cth) (“the FW Act”), the First Respondent and Second Respondent jointly and severally pay to the Applicant the sum of $157,693.38 pursuant to section 545 of the FW Act.

2.In respect of the Applicant’s claim…

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Details
Case
[2021] FCCA 661
Decision Date

CaseChat Overview and Summary

This matter concerned an application for the assessment of damages, pecuniary penalties, and costs, remitted to the Federal Court by the Federal Court of Australia. The applicant, a legal practitioner, had been employed by the respondents, a legal partnership and its successor company, under various agreements. The applicant alleged he was not paid his full entitlements, including superannuation and leave, and that the respondents made false and misleading representations regarding his remuneration, financial capacity, record-keeping, and compliance with the Fair Work Act 2009 (Cth).

The court was required to determine the quantum of compensation for loss suffered by the applicant due to admitted breaches of the Fair Work Act. The applicant sought compensation under s 545 of the Fair Work Act, arguing that certain pleadings constituted a deemed admission that fixed the compensation at two years' pay. The respondents contended that the applicant had not pressed his claim for contractual damages and that the assessment of compensation should not be fixed by the pleadings alone.

McNab J found that the applicant's pleadings did not fix the quantum of compensation for breaches of the Fair Work Act. While the pleadings outlined the ambit of the applicant's claim for compensation and asserted loss and damage resulting from contraventions, they did not contain material facts that were deemed admitted to fix the compensation amount. The court held that it was the court's task to assess the appropriate compensation flowing from the admitted breaches.

The court also considered the respondents' submissions regarding costs. The respondents argued that they should be awarded costs for the assessment proceedings and for the hearing on 29 July 2020, as the applicant had not pressed his contractual damages claim and had not adequately trimmed his claims prior to the hearing. The court indicated that it was appropriate to award the respondents their costs in the assessment and potentially some of their costs for the hearing.

Orders

Orders of the court

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Background

Background to the litigation

This matter was remitted to this Court by his Honour Justice Logan of the Federal Court of Australia on 16 September 2019, for the assessment of damages, pecuniary penalties and any related questions as to costs. The matter was heard by this Court on 29 July 2020 and judgment was reserved pending the receipt of written submissions from the parties. BACKGROUNDFactual Background The Applicant was initially employed as a Paralegal from 28 February 2014 to 17 March 2015 by the legal partnership of the Second Respondent and Mr Mark Stanarevic, who operated under the company name McConvill & Associates. The Applicant was paid $40 per hour and he pleads that he was entitled to superannuation benefits and statutory entitlements including leave entitlements. He pleads that he did not receive those entitlements. The Applicant was subsequently employed fulltime from 17 March 2015 to 1 July 2015 as a Legal Practitioner by McConvill and Associates in accordance with what the Applicant calls the “Post Admission Agreement”. Among other things, the terms of the Post Admission Agreement included a provision that the Applicant, as stated at [8] of the Applicant’s affidavit filed on 19 March 2020, would be “remunerated 50% of the fees, less disbursements, received by the partnership from files of which I had carriage”. When the law firm business was transferred to the First Respondent from the partnership, the Applicant was employed by the First Respondent pursuant to an employment agreement which was executed by the Second Respondent and the Applicant on or on about 8 August 2015 (“Contract 1”). The Applicant was employed under Contract 1 from on or about 1 July 2015 to 9 August 2016. Relevantly, Contract 1 included, amongst other things, terms that: (1)the Applicant would receive a salary of $35,000 per annum; and (2)the Applicant would be entitled to commission calculated on 50% of the fees received by the First Respondent from files in respect of which the Applicant was the ‘primary professional fee earner’ (“PPFE”), less employment costs, as defined in Schedule B of Contract 1: see Applicant’s affidavit filed on 18 March 2020, exhibit JAC2. From on or around 9 August 2016, the Applicant continued to be employed fulltime as a Legal Practitioner by the First Respondent under a new written employment agreement (“Contract 2”). Contract 2 provided that the Applicant would receive a salary of $35,000 per annum and commission calculated on 40% (rather than 50% under Contract 1) of the fees received by the First Respondent from files in which he was the PPFE, but there would be no deductions for employment costs (as was the case under Contract 1). In the course of employment under Contract 1 and Contract 2, the Applicant made a series of complaints to the Second Respondent. The nature of the complaints made by the Applicant are outlined at [22] – [23] of the Applicant’s Further Amended Statement of Claim filed in the Federal Court proceedings in this matter on 14 June 2019 (“the FASOC”) (see the FASOC at annexure ‘JAC1’ of the Applicant’s affidavit filed on 19 March 2020). The complaints are so numerous that they had to be set out in a separate annexure to the FASOC. There are said to be “244 complaints” which it is asserted give rise to “244 adverse actions” on the part of the Respondents: see Applicant’s affidavit filed on 19 March 2020 at [49].

Evidence

Evidence Before The Court

The pleading before the Court upon which judgment was given was the FASOC filed on 14 June 2019.EVIDENCE The Applicant relies on: (1)the judgment of the Federal Court of 19 August 2019 (Collier J);(2)the order of the Federal Court (Collier J) dated 19 August 2019;(3)the judgment of the Federal Court of 16 September 2019 (Logan J);(4)the order of the Federal Court (Logan J) dated 16 September 2019;(5)the FASOC filed on 14 June 2019 with the Federal Court;(6)his affidavit affirmed on 18 March 2020;(7)his outline of submissions filed on 18 March 2020;(8)his proposed minute of orders filed on 18 March 2020;(9)his affidavit in reply filed on 18 May 2020 affirmed on 18 June 2020;(10)his outline of submissions filed on 19 June 2020;(11)his submissions in reply filed on 23 July 2020;(12)his Affidavit affirmed on 26 August 2020;(13)his Notice to Produce documents referred served on 24 July 2020;(14)his Notice to Produce served on 24 July 2020; and(15)his document with the title ‘Methodology B” sent by email to the Court on 29 July 2020. The Respondents rely on: (1)the Affidavit of Ms Rebecca Leslyee filed on 18 May 2020;(2)the Affidavit of Ms Jane Quirk filed on 18 May 2020;(3)the affidavit of Ms Michelle Christmas filed on 18 May 2020;(4)the Affidavit of Mr James McConvill filed on 18 May 2020;(5)an outline of submissions filed on 18 May 2020;(6)an outline of submissions filed on 23 July 2020;(7)the affidavit of Mr Brett Heath filed on 12 August 2020; and(8)an outline of submissions filed on 20 August 2020.SCOPE OF THE CLAIMThe Applicant’s Submissions In relation to the ACL claims, the Applicant alleges at [36] of the FASOC that the First Respondent, by the Second Respondent, made representations to him:(a) that he would be remunerated on a 40/60 fee share arrangement pursuant to Contract 2 with no deductions for expenses or disbursements;(b) that he would he would be paid all entitlements under the FW Act;(c) that the First Respondent had the financial capacity to pay the remuneration;(d) that the Applicant would be reimbursed for expenses paid by him on behalf of the First Respondent;(e) that the First Respondent would keep proper records of the financial operation of the First Respondent so as to enable the Applicant to calculate his entitlement under the Contract 2;(f) that the Applicant would earn $500,000.00 per annum; and(g) that the First Respondent would comply with the provisions of the FW Act (collectively, the Representations). The Applicant alleges he relied on the representations to his detriment, as set out at [39] – [41] of the FASOC, which are as follows:39. The Applicant relied upon the Representations and thereby acted to his detriment by:(a) accepting the offer of employment;(b) entering into Contract 2;(c) remaining in the employment of the First Respondent;(d) paying expenses on behalf of the First Respondent; (e) travelling to the US and within Australia in connection with the First Respondent’s business; and(f) assisting to manage the business of the First Respondent.40. In fact the Representations were false and misleading in that:(a) the First Respondent did not pay the Applicant the remuneration agreed upon;(b) the First Respondent did not pay to the Applicant his entitlements under the FW Act;(c) the First Respondent did not reimburse the Applicant for expenses paid by the Applicant on behalf of the First Respondent;(d) the First Respondent did not have the financial capacity to pay the remuneration;(e) the First Respondent did not keep proper records;(f) the Applicant did not earn $500,000.00 per annum;(g) the First Respondent failed to comply with the provisions of the FW Act in relation to the Applicant’s employment.41. As a consequence of the Misleading Conduct, the Applicant suffered loss and damage. ParticularsThe Applicant is unable to quantify his loss and damage until after discovery because he does not have the necessary data. Full particulars will be provided after discovery.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

On that basis, the Respondents submit at [35] – [37], [40] that:35. Mr Carbone has had his costs of the proceeding up to judgment. The McConvill parties have had to prepare for the assessment on the basis that Mr Carbone was pursuing a claim for contractual damages, which was a complex claim and is no longer pressed.36. It is the McConvill parties’ position that, if the assessment of damages had only involved an assessment on the grounds now pressed, it could have been dealt with at a much earlier time and without the need to take up the court time which has been taken up. Indeed, it may have ultimately been able to be dealt with on the papers. 37. Given that there was no material fact pleaded, and thus no deemed admission, that Mr Carbone had performed any work pursuant to Contracts 1 and 2, the determination not to press for an assessment of damages under those contracts was sensible and accorded with ss 37N and 37M of the Federal Court of Australia Act 1976 (Cth). That position was known to Mr Carbone when he sought judgment and it would have assisted the Court and the McConvill parties if he had indicated, prior to 29 July 2020, if he was not pressing for an assessment of damages on that basis.…40. It is appropriate to award the McConvill parties their costs in the assessment in respect of those claims. It is also appropriate to award the McConvill parties all or some of their costs of 29 July 2020, as an oral hearing (or whole day hearing) would likely have been unnecessary, if Mr Carbone had trimmed his claims appropriately prior to the hearing date.CONSIDERATION This case has some curious features. As a very junior lawyer, upon entering into Contract 1, the Applicant was paid $429,877.83 between 1 July 2015 and 8 August 2016 (being 59 weeks): see Applicant’s affidavit filed on 18 March 2020, annexure JAC6, JAC13. This was earned in his first year, post his admission as a legal practitioner. Further, the Applicant received $594,383 in remuneration under Contract 2 during the period from 8 August 2016 to 20 July 2018: see Applicant’s affidavit filed on 18 March 2020, at JAC6, JAC13.Claim that compensation for breach of the FW Act ought to be fixed at two years pay as a result of a deemed admission The Applicant makes a claim for compensation pursuant to s545 of the FW Act. Subsections 545(1) and 545(2) provides that: 1. The Federal Court or the Federal Circuit Court may make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision.2. Without limiting subsection (1), orders the Federal Court or Federal Circuit Court may make include the following: (a) an order granting an injunction, or interim injunction, to prevent, stop or remedy the effects of a contravention; (b) an order awarding compensation for loss that a person has suffered because of the contravention; (c) an order for reinstatement of a person. I do not accept that the pleadings at [29A] of the FASOC fix the quantum of the compensation. The particulars under [29A] of the FASOC plead the ambit of the Applicant’s claim for compensation but do not have the effect of fixing the compensation, as it cannot do so. The particulars are not pleaded as material facts which are deemed to have been admitted. The material fact pleaded is that the Applicant suffered loss and damage as a result of the contraventions. It is the Court’s task to fix the appropriate compensation in assessing the damages flowing from the admitted breaches of the FW Act.