CLIFFORD v The Trustee for Healthy Hearing and Balance Care Trading as Healthy Hearing and Balance Care

[2016] FCCA 1637

FEDERAL CIRCUIT COURT OF AUSTRALIA

CLIFFORD v THE TRUSTEE FOR HEALTHY HEARING AND BALANCE CARE TRADING AS HEALTHY HEARING AND BALANCE CARE [2016] FCCA 1637

Catchwords:
INDUSTRIAL LAW – Fair Work Act Small Claim – dispute about payments on termination.

Legislation:

Fair Work Act 2009, ss.117, 546, 570

Federal Circuit Court Rules 2001, r.16.05

Cases cited:

Colgate-Palmolive Company & Anor v Cussons Pty Ltd [1993] FCA 536

Applicant: KARINA CLIFFORD

Respondent: THE TRUSTEE FOR HEALTHY HEARING AND BALANCE CARE TRADING AS HEALTHY HEARING AND BALANCE CARE ABN 28 747 531 072

File Number: SYG 1358 of 2015

Judgment of: Judge Altobelli

Hearing date: 23 June 2016

Date of Last Submission: 23 June 2016

Delivered at: Sydney

Delivered on: 21 July 2016

REPRESENTATION

Counsel for the Applicant: Santone Lawyers

Solicitors for the Respondent: Moisson Lawyers

DECLARATIONS

1. The Respondent contravened ss. 87 and 90(2) of the Fair Work Act 2009 (Cth), by failing to pay leave entitlements;

2. The Respondent contravened its agreement with the Applicant to give four week’s notice of termination, and by paying one week’s notice instead of four; and

3. The Respondent contravened Part 4 of The Health Professionals and Support Services Award 2010 (Cth) [MA000027] and s.45 of the Fair Work Act 2009 (Cth), by underpaying wages by $2.34 per hour during the Applicant’s period of casual employment between 18 December 2012 and 28 February 2013.

ORDERS

1. Subject only to the deduction of any PAYG taxation payment in relation to the below amounts and pursuant to s.545(2)(b) of the Fair Work Act 2009 (Cth), the Respondent pay the Applicant the sum of $10,204.58 within 42 days of this order, as particularised below:

   (a)payment of the Applicant’s unused annual leave, being $3,138.46 (9 days);

   (b)payment in lieu of the Applicant’s notice period, being $5,230.76 (3 weeks);

   (c)underpayment of wages during the period of casual employment, being $698.72;

   (d)interest as agreed, or failing agreement as determined by the Court.

2. Pursuant to s.570 of the Fair Work Act 2009 (Cth), the Respondent pay the Applicant’s costs in the sum of $10,000.00 within 42 days of this order.

3. Parties have leave to relist in relation to the interpretation, implementation or enforcement of these Orders.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 1358 of 2015

KARINA CLIFFORD

Applicant

And

THE TRUSTEE FOR HEALTHY HEARING AND BALANCE CARE TRADING AS HEALTHY HEARING AND BALANCE CARE ABN 28 747 531 072

Respondent

REASONS FOR JUDGMENT

Introduction and Background

1. This small claim under the Fair Work Act 2009 (Cth) (‘the Act’) has an unfortunate history. Matters of background are set out in reasons for judgement published as [2016] FCCA 322 and will not be repeated in these reasons. Orders were made on 12 February 2016 in the absence of the Respondent. On 8 April 2016 the Court ordered that those Orders be set aside pursuant to r.16.05(2)(a) of the Federal Circuit Court Rules 2001. The matter was heard de novo on 23 June 2016, and these reasons for judgement explain the orders the Court has made.

Issues

1. The issues had, fortunately, narrowed by the time of the hearing. For example, the parties has agreed that in respect of the agreed period of the Applicants casual employment by the Respondent, 18 December 2012 to 1 March 2013, she had been underpaid by $2.34 per hour, and was owed $698.72 plus interest. Annual leave remained an issue. The Applicant claimed more than the Respondent was prepared to concede. The determination of this issue depended on factual findings as to whether the Respondent has agreed with the Applicant, as the Applicant contends, that attendance at certain professional conferences was to be paid normal time, rather than annual leave. There was a further dispute about the period of notice required on cessation of employment. The determination of this depended on factual findings about whether the Respondent had agreed with the Applicant that the notice period should be four (4) weeks, or whether the statutory two (2) week period should apply.

2. The legal costs of this case are completely disproportionate to the value of the claim. Another issue is that the Applicant seeks costs under s.570 of the Act, preferably on an indemnity basis. Without in any way prejudging this issue, it is obvious that emotion clouded the Respondent’s reaction to the claim. Indeed a strong impression is formed that it was not until the Respondent obtained legal representation, shortly before the final hearing, that it became possible to clarify the issues and make appropriate concessions.

Pleadings and Evidence

1. The orders sought by the Applicant are contained in her Further Amended Application filed 9 September 2015. She sought an order that the Respondent pay her $9005.71, together with interest and legal costs. An order for the payment of a pecuniary penalty under s.546 of the Act was not pressed at the final hearing. The Applicant’s evidence was primarily contained in her affidavit affirmed 12 August 2015. The Applicant gave further evidence in chief, and was cross-examined at the hearing.

2. By way of a Further Amended Response filed 27 October 2015 the Respondent opposes the Orders sought by the Applicant and seeks dismissal with costs on the basis that the claim was unmeritorious and without foundation. The Respondent’s case was supported by six (6) affidavits of its principal, Dr Celene McNeill, sworn 11 August 2015, 27 October 2015, 25 February 2016, 31 March 2016, 6 May 2016 and 3 June 2016. The Respondent also relied on an affidavit of Erica Caiuby sworn 3 March 2016. Both Dr McNeil, and Ms Caiuby, gave evidence in chief and were cross-examined at the hearing.

3. It must be noted that there was much irrelevant evidence in these affidavits.

Preliminary Observations about the Evidence

1. In closing submissions the solicitor for the Applicant submitted that Dr McNeil was dishonest in her evidence. The Court does not agree with this characterisation. The Court does prefer the Applicant’s evidence over that of Dr McNeil, but that does not mean the latter was dishonest. Dr McNeil created the impression through her evidence of being disorganised in the administration of her audiology practice, emotional in response to the Applicant’s claim, unable to focus on what was relevant, and unconvincing in seeking to explain the inconsistencies in her evidence that will be discussed below. The Court finds that it is  more likely than not that any representations made by Dr McNeil at the time of or close to the time of, relevant events such as the termination of the Applicant’s employment, is more likely to be true than a representation made by her at a later date such as after the commencement of the claim. The passage of time, and Dr McNeil’s emotional response to the termination and subsequent claim, has clouded her recollection of what happened.

2. When a Court makes findings about an alleged agreement, it looks primarily to what was said and done at the time of the alleged agreement, and not to how one party subsequently construes what was said and done. History is so easily reconstructed by the person who is unhappy with decisions made in the past. That does not, of course, make that person dishonest.

3. The Applicant was an impressive witness. She gave her evidence clearly, succinctly, reasonably, co-operatively and politely. Whilst this claim was, no doubt, just as important to her as it was to the Respondent, she impressed the Court by her objective and level-headed manner in the witness box. Dr McNeil for the Respondent struggled at times in the witness box. She was keen to advocate on her own cause, perhaps forgetting that was capably represented by a lawyer. She was often argumentative and unresponsive on cross-examination. She had to be reminded to simply answer the question she was asked rather than the question she wanted to answer. Her emotional response to the claim pervaded all of her evidence. This does not necessarily mean that the Court automatically prefers the Applicant’s evidence over that of the Respondent. It is one factor, however, together with other considerations pertaining to the evidence, that leads the Court to prefer the Applicant’s evidence on the key issues.

Annual Leave

1. The Applicant claims that at the time her employment was terminated, she was entitled to nine (9) unused days of accrued annual leave.

2. The Respondent claims that the Applicant was absent from her employment for 47 days which consists of:

   a)22 days annual leave

   b)7 days RDO (Rostered day off)

   c)11 days conferences and seminars

   d)5 days sick leave

   e)1 day university graduation

   f)1 day bereavement leave

3. The Respondent conceded that the graduation day, sick days and bereavement leave should not be treated or taken as annual leave. The Respondent conceded that seven (7) of the conference and seminar days should not be treated or taken as annual leave because Dr McNeil required the Applicant to attend.

4. Thus, the Respondent contends that the Applicant should be treated as having taken annual leave for 33 days as follows over the course of her employment:

   a)22 days annual leave

   b)7 days RDO

   c)4 days seminar

5. As the Applicant was entitled to only 30 days over the relevant period, the Respondent contends that the Applicant was in fact over paid for three (3) days.

6. The Applicant contends that:

   a)She only took 21 days leave, not 22.

   b)Dr McNeil agreed with her that she should have a paid RDO in consideration for commencing work at 8.30am each day rather than 9.00am. She said by the time her employment was terminated she has accrued 13 days of RDO but had only taken 9 days.

   c)Dr McNeil agreed that the Applicant should attend the other four (4) days of seminars and at no time suggested this be on the Applicant’s own time.

7. The Court makes the findings as set out below.

8. In July or August 2013 Dr McNeil on behalf of the Respondent and the Applicant agreed that if the Applicant started work at 8.30am instead of 9.00am, the Applicant would have one paid day off each month. There was no agreement that the day off be treated as annual leave. It was entered in the audiology clinic’s calendar as an RDO. It is quite likely that in the discussions between Dr McNeil and the Applicant the word RDO was not used. What was agreed, however, was that the one day monthly would be taken in lieu of payment for the extra time worked. There is no evidence before termination that in the Respondent’s business records this time was treated as annual leave, to which, of course, loading should have been added. This is consistent with the arrangement being as contended by the Applicant. The Court does not accept Dr McNeil’s contention that the 8.30am start was for the benefit of the Applicant only, and inferentially not to the benefit of the Respondent. The Court does not accept Dr McNeil’s contention that there “was no work to do” from 8.30am. Indeed her own evidence speaks of the busy audiology practice conducted. The Court finds, therefore, that the Respondent agreed that the Applicant should have a monthly RDO in lieu of a daily 8.30am start. By the time of termination of employment the Court finds that 13 RDO’s had accrued, but only 9 were taken. The Applicant does not appear to press any claim in relation to the four (4) day difference. What is abundantly clear from the evidence is that the Respondent was at no time entitled to treat the 9 days RDO as annual leave; Exhibit ‘A3’, being the Respondent’s own business record, confirms it is 9 days RDO, and not 7 as the Respondent asserts in its Case Outline. The Respondent’s business record, Exhibit ‘A2’, confirms that the Applicant took 21 days annual leave, not 22 as is asserted in the Respondent’s Case Outline.

9. In relation to the four (4) days of seminars, the Court again prefers the Applicant’s evidence to that of Dr McNeil. Indeed Dr McNeil’s own evidence is consistent with the Applicant’s contention that attendance at the seminar was on the Respondent’s time, and not the Applicant’s time. Dr McNeil conceded that the Respondent’s records at the time did not reflect her contention that it was annual leave. She agreed in cross-examination that she never told the Applicant that attendance at the seminar was on the Applicant’s own time. The Court finds that the Respondent was at no time entitled to treat those four (4) days at the seminars as annual leave.

10. The Court finds that the Applicant is entitled to be paid for nine (9) days in respect of unpaid annual leave, together with interest.

Notice of Termination

1. The Applicant contends that the Respondent, through Dr McNeil, agreed that four (4) weeks’ notice of termination of employment was required. The Respondent contends that the relevant statutory period was only 2 weeks, and that one week was paid at the time.

2. The Court finds that the parties agreed that there should be a four (4) week notice period. The Court again prefers the Applicant’s evidence over that of Dr McNeil. The most compelling evidence in this regard is Exhibit ‘A2’, Dr McNeil’s email to the Applicant dated October 13,2014, shortly after the termination of employment. In the third paragraph of that email Dr McNeil refers to the Respondent’s “informal policy a 4 week notice was required”. This is consistent with the Applicant’s own evidence. The unsigned employment contract which became Exhibit ‘A1’ is not evidence of any agreement between the parties about notice (or anything else) but is some evidence corroborative of the Applicant’s belief as early as March 2013 that she was required to give four (4) weeks’ notice.

3. When Dr McNeil became aware that the Respondent’s “informal policy” of four (4) weeks’ notice provided a notice period greater than that provided by the Act, she sought to resile from the clear policy that was in place at the time. That is clearly impermissible. The Applicant was required, by agreement with the Respondent, to give four (4) weeks’ notice. The Respondent was required to pay the Applicant four (4) weeks’ in lieu of notice if, as transpired in this case, the Applicant was not required to work out her period of notice.

4. The obligation for the Respondent to pay the Applicant in the circumstances of this case is partly statutory (s.117 of the Act) as to the requirement to pay in lieu of working out the notice period, and partly contractual (the agreement referred to above) as to the period of the notice, ie four (4) weeks. Having regard to this, therefore, the fact that the Applicant re-entered the work force with a new employer before the expiration of the 4 week period is irrelevant.

5. The Court finds that the Applicant is entitled to four (4) weeks payment in lieu of notice of termination of her employment, together with interest. The Respondent has only paid her for one (1) week.

Summary of the Applicant’s Entitlements

1. The Respondent agrees that the Applicant is entitled to be paid $698.72 representing under-payment in the period 18 December 2012 to 1 March 2013.

2. The Court finds that the Applicant is entitled to paid for nine (9) days of annual leave, together with loading. The Applicant contends that this amounts to $3138.46. The Court is not aware of the Respondent taking issue with this amount.

3. The Court finds that the Applicant is entitled to be paid 3 weeks payment in lieu of notice. The Applicant contends that this amount to $5230.76. The Court is not aware of the Respondent taking issue with this amount.

4. The Applicant is entitled to interest on the amounts ordered. The matter may be relisted if this figure cannot be agreed.

5. The Respondent is entitled to deduct from the amount payable to the Applicant anything which has already been paid to her on account of its liability for these items, together with the overpayment of leave loading paid to the Applicant on 22 January 2015, namely $290.38.

6. These payments may affect the amount of superannuation that the Respondent was obliged to pay on behalf of the Applicant. Whilst this is not raised directly by the Applicant, the Court is zealous to ensure that all outstanding issues between these parties are resolved.

7. The clearly ascertainable component of the Respondent’s liability is $9067.94. The relevance of this becomes apparent in the discussion of costs below.

Costs

1. The Applicant seeks costs under s.570(2)(b) of the Act on the basis that the Respondent’s unreasonable acts or omissions caused the Applicant to incur costs. Indeed the Applicant seeks indemnity costs. The Respondent strongly opposes the costs order.

2. In support of her costs application the Applicant pointed to the following matters.

3. She was entirely successful on her application, and the Respondent entirely unsuccessful. The amount ultimately ordered in her favour is greater than the amount she sought in her original application that came before the Court in July 2015; is comparable to the amount awarded to her in the Court’s Orders of 12 February 2016, and is consistent with the amount sought in her Further Amended Application filed 9 September 2015.

4. The amount awarded to her significantly exceeds an offer of settlement made 23 February 2015.

5. All the relevant findings of contentious facts went in favour of the Applicant. Indeed, some of Dr McNeil’s own evidence supported those findings.

6. The Respondent’s own business records (for example, Exhibits ‘A2’ and ‘A3’) supported the findings in favour of the Applicant.

7. Ultimately the emotional response to the Applicant’s cessation of employment with the Respondent resulted in the a totally unnecessary and protracted case. An example of the emotional response of Dr McNeil is plainly evident in the way she gave her evidence, but also in Exhibit ‘A4’, her email of 22 November 2014.

8. The Respondent submits that nothing it has done or failed to do brings this matter within the exceptional circumstances that would warrant a costs order under s.570(2)(b) of the Act. It was not unreasonable for the Respondent to put in contention the alleged agreement about RDO’s, attendance at seminars, annual leave and period of notice. It was perfectly appropriate for the Respondent to robustly defend claims for contravention. Moreover, even if the Court did not accept the evidence led on behalf of the Respondent, that did not mean it acted unreasonably.

9. Both parties referred to various authorities in support of their submission as to costs. The Court has had regard to these authorities.

10. Section 570(2)(b) empowers the Court to order costs “only if” the Court is satisfied that, in this case, the Respondent’s “unreasonable act or omission caused the other party to” incur the costs. The focus is on the Respondent’s “act or omission” – in other words Dr McNeil’s conduct at the time of termination and subsequently. Her own evidence indicates she was angry and emotional, and the consequent lack of clear thinking pervaded the Respondent’s subsequent actions. She failed to make concessions when they should have been made. She failed to accept offers of settlement that were far more advantageous to the Respondent than the present outcome of the case. As a consequence the Applicant was indeed forced to incur costs.

11. But there is another important context of the application of s570 of the Act that is easy to overlook. The present claim is a small claim. The practical implementation of this is that costs have a far greater impact on parties in small claims, but especially a successful Applicant like the present one. The evidence in fact before the Court is that she has incurred at least $10,000 in legal fees as at the date of the hearing, a figure that is quite reasonable given the history of this case. The practical impact of not ordering costs is that the Applicant receives nothing. What is ‘reasonable’ or ‘unreasonable’ often depends on the context of the case. If this were a more substantial claim, the concept of reasonableness might be viewed differently. The question for the Court is whether the Court is satisfied that the Respondent’s actions were reasonable in a case where the claim was not substantial in quantum, but where the Applicant has been put to substantial legal cost on pursuing the claim. The Court finds that the Respondent was unreasonable in its defence and management of the claim, and thus the Applicant was put to substantial legal cost.

1. The claim for indemnity costs is not made out. This case does not cross the Colgate-Palmolive Company & Anor v Cussons Pty Ltd [1993] FCA 536 threshold.

2. It is appropriate for the Court to assess costs in accordance with the Federal Circuit Court Rules 2001. The assessed costs will, of necessity, need to take into account the original hearing. The unavailability of Dr McNeil at that hearing is certainly not the Applicant’s fault, and there is no reason why she should be prejudiced by it financially.

Item	Description	Amount including GST ($)
1	Initiating Application up to first court date	2,375
6	Preparation for final undefended hearing – 1 day matter	6,150
6	Preparation for final defended hearing – 1 day – court allows 50% x $6,150	3,075
13	Final hearing – undefended half day	1,024
13	Final hearing – defended 1 day	2,048
TOTAL	$15,032

1. The Court still retains a discretion, even on an application of the schedule to the Court’s own rules. To award $15,032 would be not just to indemnify the Applicant but to award her costs in excess of what she has incurred. In the circumstances the Court believes that an order in the sum of $10,000 is adequate.

I certify that the preceding forty-five (45) paragraphs are a true copy of the reasons for judgment of Judge Altobelli

Date: 21 July 2016