Commercial Surveillance Pty Ltd v O'Brien

[2002] FCA 836

FEDERAL COURT OF AUSTRALIA

Commercial Surveillance Pty Ltd v O’Brien [2002] FCA 836

COMMERCIAL SURVEILLANCE PTY LIMITED v WAYNE PATRICK O'BRIEN
N1392 of 2001

MADGWICK J
17 JUNE 2002
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N1392 of 2001

BETWEEN:	COMMERCIAL SURVEILLANCE PTY LIMITED APPELLANT
AND:	WAYNE PATRICK O'BRIEN RESPONDENT
JUDGE:	MADGWICK J
DATE OF ORDER:	17 JUNE 2002
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The decision of Chief Industrial Magistrate Miller dated 13 September 2001 be set aside.

2.The respondent pay the appellant an amount of $4,718.00 plus court costs of $109.00 and interest at the rate of 8% from 24 October 1999

3.No order as to costs.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N1392 of 2001

BETWEEN:

COMMERCIAL SURVEILLANCE PTY LIMITED
APPELLANT

AND:

WAYNE PATRICK O'BRIEN

RESPONDENT

JUDGE:	MADGWICK J
DATE:	17 JUNE 2002
PLACE:	SYDNEY

REASONS FOR JUDGMENT
(revised from transcript)

HIS HONOUR:

1. This appeal arises out of a well meant effort by the hard pressed Chief Industrial Magistrate of New South Wales to construct a procedure to deal with an underpayment of wages claim that presented as "small". Section 179(c) of the Workplace Relations Act 1996 (Cth) (“the Act”) has continued an initiative introduced in 1992, to permit a small claims procedure to apply for claims involving relatively small amounts. The limit at that time, of the value of claims operative for such a procedure was $10,000. This was a claim for an underpayment of wages of between $8,000 and $9,000.

2. When the small claims procedure applies, the Court may act in an informal manner.  It is not bound by any rules of evidence, may act without regard to legal forms and technicalities, may amend the papers (I interpolate with a view to trying the real issues) and arrangements may be made under the legislation whereby legal representatives of the parties may be excluded.  It appears that such arrangements were in operation in this case.

3. The present case arose because, in the opinion of an inspector of the relevant department, the respondent to the present appeal, Mr O’Brien, was underpaid in respect of his employment as a casual Security Officer Grade 1, by the appellant, from 1 July 1997 to 24 October 1999.  The learned Magistrate was sitting at Newcastle, and from the transcript, evidently had a busy list to contend with, invited the parties to address him and give their versions of the facts without being sworn to give evidence.  This was in line with the “informal” approach allowed in claims made under the small claims procedure. 

4. Mr Joliffe, the managing director, and the flesh and blood alter ego of the appellant two dollar company, was heard on its behalf.  The parties thus did their best to acquaint the Magistrate with the nature of the dispute and their submissions.  The matter was, to a degree, confused because there was voluminous documentation governing the period of employment from early 1999, when the appellant began to keep records.  There were detailed calculations made by the relevant departmental inspector, Inspector Christie, based on the hours and days of the week worked, as shown by those records.  There were countervailing calculations made by the appellant's accountant, Mr Jones. 

5. As presented before me, the essence of the dispute is really simple to state and does not directly depend upon matters as calculated by Inspector Christie or by Mr Jones.  Mr Jones, in fact, accepted Inspector Christie's calculations of gross wages which should have been paid to Mr O’Brien.  Likewise, Mr O’Brien accepts Mr Jones' arithmetical calculation that he was paid sums totalling $5,380, commencing on 1 April 1999.  Such payments were by way of what was apparently conceived to be, at least, in part a payment in lieu of award entitlements  for use of the respondent's own car, a mileage allowance for times when the car was used and a non-award entitlement to be reimbursed for (a substantial amount I assume of use) of his mobile phone.  Having had the benefit of capable counsel explaining to me what the issues are, it is quite clear what Mr Joliffe and Mr O'Brien were saying to his Worship.  However the impression is inescapable, even though some phrases appear to be missing from the transcript of his Worship's judgment, that the parties did not succeed in making crystal clear to his Worship what the actual dispute was.

6. It suffices to say that it seems to me that there was some misunderstanding of the case by his Worship and I should, to the limited extent to which I can do so, embark on a re-hearing of the matter.  An initial question is whether I should do this or, as the evidence in some respects is quite thin, should simply set aside the judgment appealed from and remit the matter for further hearing in the New South Wales Local Court and/or by a New South Wales Magistrate, whichever would be the technically appropriate procedure.

7. While the case is important to both parties and large enough to concern them, it is from the viewpoint of judicial administration, a small one.  Each party has paid for a solicitor and counsel to prepare their cases on the appeal and to present it, which has been capably done.  Costs do not follow the event in proceedings in this Court of this kind and the public interest, as well as the interest of the parties, demands that I do my best to conclude the matter.

8. Leaving aside small sums, as to which the view may be reasonably taken that the law ought not to notice trifles, the essence of the dispute is whether the sum of $5,380 paid by the appellant in lieu of award entitlements to allowances to which I have referred, should in whole or in part be set off against what really are the admitted underpayments. 

9. It seems to have been common ground between Mr Joliffe and Mr O'Brien that one of the purposes of the allowances that were paid was to compensate Mr O'Brien for the use of his mobile phone.  There was material before the Magistrate that would justify an allowance of about $80 per week on this account.

10. It also seems to have been common ground that another purpose of the allowance was to satisfy what might otherwise have been an award claim in respect of Mr O'Brien's use of his motor vehicle and a mileage allowance in relation to that.  There were considerable stretches of the employment period when Mr O'Brien was not required to use his vehicle and there were other periods, notably the last 13 weeks of the employment when Mr O'Brien regularly drove his vehicle from the Newcastle area to Bankstown and back again to attend to a job his employer had there, without it may be said, being paid for his own time.  Such absence of payment for travelling time, was not taken into account by the departmental inspector as another ground of underpayment.

11. Mr Joliffe explained to the Magistrate, in effect, that he was a small businessman, hard pressed to keep his small business afloat (and there appear to be other indications that that was right), and that he conceived the idea of the allowance following an earlier departmental intervention as a means of doing broad justice between the parties.  This would avoid the necessity for him to spend excessive amounts of time on the niceties of calculations of small but varying amounts of remuneration due under various headings of the award from

    
    
    

    week to week.  It was a practical arrangement of a kind often entered into in very small businesses.

12. The terms of the arrangement however are not entirely clear and, while it appears to me that both parties put the matter honestly to the Magistrate, bearing in mind that each had a self-interest in the matter and each was viewing the matter with the wonderful vision of hindsight, regard needs to be had to all the circumstances to understand the nature of the matter.

13. The parties did intend that, in part, the allowances should compensate for award entitlements not picked up by, for example, the appellant’s practice of paying Mr O'Brien for, say, 52 hours work in a week at the ordinary time rate of 14 dollars or for, say, 42 hours work in a week at the same hourly rate.  It must have been clear to everybody that in each such case that would represent an award underpayment and, in the case of a week where he worked 52 hours, it would represent a very significant underpayment by award standards.  There was no subterfuge about this.  Time sheets were given out by the appellant which showed that this was happening.  Thus I have no hesitation in concluding that, in fact, the allowance was conceived as available to be set-off against any award underpayment.

14. The difficult area relates to the use of the motor vehicle.  I think the true position, as best as I can glean it, was that Mr O'Brien was required to have and to be able to drive a vehicle, which could be required on very short notice to be available for particular shifts.  Thus, Mr O’Brien had, as would have been apparent to both parties, a need to incur the standing expense of having a motor vehicle which might be made available as required.  Both parties were well aware that the award provided (in round figures) $19 per shift for what might be called the standing costs of a vehicle, if the employer required the use of the vehicle for that shift.

15. On the other hand, I think that neither party would have contemplated that, for an average five shift week in which he did not need to use the vehicle at all, except to drive to and from the place of work, Mr O'Brien would be regarded as needing the vehicle for his work for any of those shifts so as to entitle him to nearly $100 a week while the vehicle simply stood idle during the shifts.

16. In my opinion, the parties contemplated that there would be some extra award remuneration made to Mr O'Brien for what might be called the “intermediate” position, namely of owning and having available a car which might and would be called upon from time to time.  With this exception, the probabilities, it seems to me, really favour the reconstruction of events, as put forward by counsel for Mr O'Brien.  However, as indicated, some part of the allowance was to be available in respect of award underpayments generally. 

17. Doing the best I can with the matter, I think that justice between the parties would be served if I reduced the amount of the award made by the learned Magistrate by $1,500, which I propose to do.  This is by way of a broad estimate of the amount of the allowances to which I have referred that were paid that should be regarded, having regard to other matters for which they were made available and to which they should be fairly applied, to be set off against general award underpayments.

18. I should add, for the sake of completeness, that I reject the submission that a deed, whereby the respondent agreed to forsake over $1,000 for $25, (which was then satisfied by handing him an overnight bag), should be regarded as to having the legal effect of absolving the appellant employer from its award obligation. The enactment of the Workplace Relations Act, in my opinion, has made no difference whatsoever in respect of that well established position that an employer cannot contract out of its award obligations. That was the clear tendency of French J’s speculation in Metropolitan Health Service Board v Australian Nursing Federation (2000) 99 FCR 95 at 106-7, and I agree with him. Moore J in Jackson and Wilson v Mondelphous Engineering Associates Pty Ltd (unreported, Industrial Relations Court, Vic, No 281 of 1997, 17 October 1997) posed an entirely hypothetical question which he left unanswered.

19. I add that this is, for everybody, not a very satisfactory outcome.  It means that Mr O'Brien's small award which, after another agreed off-set, was a little over $6,000, will be reduced to a level that may or may not just cover his legal costs of the appeal and leave him with, if anything, a pittance.  On the other hand, for the sake of vindicating a point of view, which point of view has indeed been vindicated by me, although not to the extent claimed, the appellant will have paid a substantial amount of costs too.  Economically, it would have been a lot cheaper to have simply left matters as they were.  This is the consequence of the legislature having opted, for many years, and from keen experience of industrial disputation,

    
    

    for a regime of resolving these disputes which does not, in general, permit me to order costs on an appeal.

20. I set aside the judgment appealed from and, in lieu thereof, I order the appellant to pay the respondent the amount of $4,718 together with the Court costs below of $109 and, in addition, interest at the rate of 8% per annum from 24 October 1999.

I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Madgwick.

Associate:

Dated:             2 July 2002

Counsel for the Appellant:	Mr A A Henskens
Solicitor for the Appellant:	Patrick Woods & Co
Counsel for the Respondent:	Mr R S Warren
Solicitor for the Respondent:	Braye Cragg Solicitors
Date of Hearing:	17 June 2002
Date of Judgment:	17 June 2002