Degenhardt v Ambulance Victoria (No.3)
[2018] FCCA 1113
•9 May 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| DEGENHARDT v AMBULANCE VICTORIA (No.3) | [2018] FCCA 1113 |
| Catchwords: INDUSTRIAL LAW – “On-call” – casual employee – principles of construction of award and of contract of employment – whether former employee entitled to casual loading – whether former employee entitled to penalty rates. COMPENSATION – Assessment of applicant’s evidence. EXPERT EVIDENCE – Alleged expert not an expert – Dasreef Pty Ltd v Hawchar considerations – applicant claiming almost $800,000 – no sufficient profits – applicant awarded $154,841. |
| Legislation: Evidence Act 1995 |
| Cases cited: Dasreef Pty Limited v Hawchar (2011) 243 CLR 588 |
| Applicant: | GABRIELLE DEGENHARDT |
| Respondent: | AMBULANCE VICTORIA |
| File Number: | MLG 1366 of 2015 |
| Judgment of: | His Honour Judge Wilson |
| Hearing date: | 14 February 2018 |
| Date of Last Submission: | 14 February 2018 |
| Delivered at: | Melbourne |
| Delivered on: | 9 May 2018 |
REPRESENTATION
| Solicitors for the applicant | Maddison & Associates |
| Counsel for the respondent | Mr M. G. Rinaldi |
| Solicitors for the respondent | DLA Piper Australia |
ORDER
Within 30 days, the respondent pay the applicant the sum of $154,841.
DIRECTION
Within seven days the parties email the chambers of his Honour Judge Wilson at [email protected] with directions to address the evidence and submissions in relation to penalties and consequential orders.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 1366 of 2015
| GABRIELLE DEGENHARDT |
Applicant
And
| AMBULANCE VICTORIA |
Respondent
REASONS FOR JUDGMENT
Introduction
These reasons are the third in a trilogy of decisions in this litigation. In the first, I determined liability (Degenhardt v Ambulance Victoria).[1] In the second, I determined which of nine factual and arithmetical scenarios was applicable, having regard to findings that were made on liability (Degenhardt v Ambulance Victoria (No.2)).[2] Following judgment on liability the parties produced an agreed document that set out nine possible constructions of the findings of fact and holdings of law that arose from the liability judgment. The parties requested I identify which of those nine scenarios best encapsulated the tenor and import of the judgment on liability. I selected scenario seven and gave reasons for that on 13 September 2017 in Degenhardt v Ambulance Victoria (No.2).[3]
[1] Degenhardt v Ambulance Victoria [2017] FCCA 543
[2] Degenhardt v Ambulance Victoria (No.2) [2017] FCCA 2223
[3] Degenhardt v Ambulance Victoria (No.2) [2017] FCCA 2223
Counsel for the parties were directed to bring in minutes that reflected scenario seven. Each filed submissions. Arithmetical calculations were the subject of a report prepared by Michael Rosner, a forensic accountant dated 26 September 2017. Neither party expressed a desire to question Mr Rosner when I heard submissions on quantum on
14 February 2018.
Mr Addison for Ms Degenhardt contended that based on Mr Rosner’s arithmetical calculations the quantum due to Ms Degenhardt representing the sum she was underpaid in the period from
17 June 2009 to 21 April 2015 (erroneously called 2105 by Mr Rosner on page six of his report) was the sum of $799,940. Mr Rinaldi, counsel for the respondent, contended that a sum approximating $800,000 was “pie in the sky”.[4] Mr Rinaldi submitted that I erred in selecting scenario seven, that the case was still at an interlocutory phase and that it was open for me to select a different scenario, that an award of near $800,000 was “industrially ludicrous”[5] and that I should award a sum in favour of Ms Degenhardt in an amount much less than the sum for which Mr Rosner contended.
[4] Transcript of proceedings, Degenhardt v Ambulance Victoria (Federal Circuit Court of Australia, MLG1360/201, his Honour Judge Wilson, 14 February 2018), pg 19.
[5] Ibid pg 21.
Synopsis
For the reasons that follow, in my judgment Ms Degenhardt is entitled to be paid $154, 841 rather than the amount advocated by Mr Rosner of $799,940.
Mr Rosner’s evidence
Before going to the arithmetical aspects of Mr Rosner’s evidence it was relevant to record details of his qualifications and previous experience. That was important by reason of the observations of the High Court in Dasreef Pty Limited v Hawchar.[6] Mr Rosner purported to give evidence as an expert. He declared in part eight of his report that he had read the Federal Circuit Court Rules 2001 (although I presume he was intending to say that he read only so much of the rules as bore upon expert evidence) and he said he had read and agreed to be bound by the Expert Evidence Practice Note of the Federal Court of Australia.[7] Mr Rosner’s report was on the letterhead of a business known as ‘Experience Counts’ and his report was addressed to someone whose role in this litigation was not adequately explained, Alan Dircks of a business called ‘Just Relations’. How that person interacted with Ms Degenhardt’s solicitor was not stated. More importantly, the letter of instructions to Mr Rosner was not attached to Mr Rosner’s report in the way letters of instruction are universally appended to an expert’s report. In consequence, it was not possible to scrutinise in detail on what information Mr Rosner proceeded. He did not even state that he read the judgment on liability in this case.
[6] Dasreef Pty Limited v Hawchar (2011) 243 CLR 588
[7] Federal Court of Australia, Expert Evidence Practice Note (GPN-EXPT), 25 October 2016
Mr Rosner’s covering letter was addressed to Alan Dircks, not the solicitor on the record for the applicant in this case. The first paragraph of the letter recorded that Mr Dircks acted for Ms Degenhardt in this proceeding. That was wrong. Mr Addison was the solicitor on the record from Ms Degenhardt. Precisely how and in what circumstances Mr Dircks came to be representing to Mr Rosner or anyone else that Mr Dircks was the solicitor on the record for Ms Degenhardt was not explained. Only legally qualified legal practitioners are permitted to represent litigants in this court. Precisely how or why Mr Dircks engaged Mr Rosner to give expert evidence in this case was not stated, especially as it is customary for the solicitor on the record, here, Mr Addison to retain the expert.
It seemed that a letter of retainer existed in fact. Mr Rosner referred to it in paragraph 1.1 of his report. He did not exhibit, attach or append that letter, however. He should have.
Mr Rosner provided a snippet of his qualifications in his evidence in section seven of this report. In order for his report to be utile, he needed to demonstrate that he was an expert, properly so called, within the meaning of that phrase for the purposes of the Evidence Act 1995[8] and for the purposes of the analysis given by the High Court in Dasreef Pty Ltd v Hawchar.[9] In my judgment his recital of his qualifications and the extremely short statement of his firm’s past work did not enable me to assess his capability of giving the evidence he purported to give. In those circumstances, I was not willing to receive his evidence as that of an expert in forensic accounting who was purporting to extrapolate industrial awards against time-based claims to unpaid remuneration entitlements.
[8] Evidence Act 1995
[9] Dasreef Pty Limited v Hawchar (2011) 243 CLR 588
Let me explain.
Mr Rosner gave his tertiary qualifications and a statement of his firm’s experience. He said he was a bachelor of commerce, although he did not say when he obtained that qualification. He stated he had previously been an auditor and a tax agent. This case did not call for the application of audit skills nor taxation expertise. To that extent, his previous experience in audit and taxation was irrelevant. He said he held a graduate certificate in applied finance. This case did not call for the application of expertise in applied finance. He said he was a member of the family law section of the Law Council. That membership was irrelevant to this case. He said he was a member of a discussion group of persons associated with forensic and financial investigations. So far as actual day-to-day past experience was concerned, he said he had more than 35 years in professional accounting. That statement was meaningless without elaboration. He said he had been a principal or partner in two accountancy firms. While he did not say so in terms, it seemed that those firms dealt in a broad range of accountancy activities. Mr Rosner did not say what he specifically did. Nor did he say that any of his previous experience equipped him to speak of the matters about which he purported to give evidence in this case. To the extent that one of his two previous firms may have dealt with general accountancy issues, in my view any previous experience of the sort mentioned by Mr Rosner had no bearing on the issues in this case such as health care, childcare, and construction, automotive, deceased estates or franchises. No relevant previous experience was demonstrated by Mr Rosner.
The discussion by Heydon J in Dasreef Pty Limited v Hawchar[10] illuminates the expertise an expert properly so called must possess and to which he must depose before his evidence can and should legitimately be accepted in any case. In my view Mr Rosner did not give evidence sufficient in this case for me to accept his evidence as evidence from an expert.
[10] Dasreef Pty Limited v Hawchar (2011) 243 CLR 588
That conclusion rendered his evidence of little to no utility in this case.
Then when the information on which he relied was taken into account, especially facts he was asked to assume, it was not apparent to me what Mr Rosner was provided with or requested to embrace. As mentioned above, he did not exhibit the letter of instructions on which he proceeded. He did not say he had even read the liability judgment in which dispositive factual findings were made. He did not say he had read the second judgment I handed down in this case. Instead, he purported to recite in part two of his report a collection of matters the relevance of which to the expression of his opinions he did not connect. For example, in paragraph 2.1 of his report he spoke of a letter of offer dated 13 November 2006 and he then stated, inferring that the rate arose from that letter, that Ms Degenhardt’s remuneration was at the rate of $80 per hour per 12 hour shift. That statement ignored most of the agreed facts on which this case proceeded as mentioned in paragraph six of the liability judgment. It also ignored my finding that a new contract was formed in April 2013 about which I made findings in the liability judgment from paragraph 25 and following, the legal consequence of which was recorded in paragraph 30 of the judgment on liability. The overlay in the operation between the 2006 contract and the 2013 contract was explained in paragraph 47 of the liability judgment. Mr Rosner wholly ignored what I said, instead proceeding with the statement in paragraph 2.1 of his report about the operative provisions of the contract, that is to say, the superseded contract.
Returning to paragraph two of Mr Rosner’s report, he offered in paragraph 2.2 a statement about the entities that merged to become the respondent in this case, a matter wholly irrelevant to questions involving the calculation of quantum.
In paragraph 2.3 of his report Mr Rosner spoke of another offer of employment being extended to Ms Degenhardt. In reality Mr Rosner was there addressing the emergence of the April 2013 contract about which I wrote in detail in the liability judgment. In the final sentence of paragraph 2.3 of his report, Mr Rosner confidently asserted that back pay to 4 October 2010 was specified. Once again Mr Rosner wholly ignored what I said about that that provision in the April 2013 contract. It is as well to remind the parties that provision purported to introduce a term that operated retrospectively. In paragraph 47 of the liability judgment I said that according to ordinary canons of construction, contractual provisions operate prospectively, not retrospectively. In paragraph 48 of my reasons in the liability judgment I said that neither party addressed whether the back payment regime set out in the schedule to the April 2013 contract applied retrospectively, including in the manner that Mr Rosner said it operated. I reject Mr Rosner’s assertion in the final sentence of paragraph 2.3 of his report. It did not lie in his mouth to base calculations on, or for that matter to purport to express the application of a provision on which counsel for the parties did not address nor in relation to which I made findings. Further, in the running of the trial on liability, Ms Degenhardt’s solicitor argued that neither the 2006 contract or the 2013 contract applied in this case yet with stunningly apparent inconsistency, the so-called expert witness engaged by the same party adopted a fundamentally different position.
In paragraph 2.4 of his report Mr Rosner stated that Ms Degenhardt was normally rostered on for four 12 hour shifts back to back commencing at 7 am on Monday until 7 am on Wednesday. That statement was inconsistent with the case advanced by the respondent at trial. In fact, it was the respondent’s case that Ms Degenhardt was not rostered in that manner. Mr Cullen’s evidence on point was addressed by me in paragraphs 85 and following of the liability judgment. Based on a resolution of conflicting evidence on point, I made a factual finding that Ms Degenhardt was required by the respondent to work four shifts. The finding was not as Mr Rosner put the matter in paragraph 2.4 of his report.
No finding was made in terms that Mr Rosner set out in paragraph 2.5 of his report. It was not appropriate for Mr Rosner to go beyond my two judgments on factual matters other than to the extent that was necessary for the purpose of drawing on his special expertise in his capacity as an expert witness. Yet based on the foregoing I did not accept that Mr Rosner adequately qualified himself to give expert evidence in this case.
In paragraph 2.8 Mr Rosner stated that the claim period was from 17 June 2009 to 21 April 2015. The phrase “claim period” is a phrase typically used in litigation involving building cases. This was not such a case. But at all events, it is not a phrase that I endorse nor have I thus far in this case.
It seemed that Mr Rosner adopted a period for the purposes of his calculations that had a temporal coincidence to a six-year limitations period. How or why he adopted that course was not stated. This proceeding was commenced in June 2015. For the purpose of calculating a common law limitation of actions period, a proceeding for breach of contract must be commenced within six years of the cause of action accruing. This proceeding was commenced in the fair work division of this court, the proceeding itself being brought under the Fair Work Act 2009.[11] In her prayer for relief Ms Degenhardt sought compensation for underpayment, declaratory relief under the Fair Work Act 2009 and also penalties pursuant to the Fair Work Act 2009. It could not be said that in this proceeding the claim was cast as a breach of contract simpliciter claim. Accordingly, it was not stated at any stage that a six-year common law limitation of action regime was appropriate. No-one addressed on point. The defence settled by Mr Rinaldi did not take the point. Instead, in the particulars subjoined to paragraph 14 of the statement of claim the solicitor for the applicant made a blanket and unqualified assertion that the sum of $820,766 was unpaid. A different sum, equally ambit and unparticularised, was set out in the particulars subjoined to paragraph 17, namely $677,688. Then, Mr Rosner ventured yet another figure of $799,940. Those very considerably different amounts led me to view the amount sought by Ms Degenhardt in this case with enormous suspicion. Customarily, amounts of that magnitude are supported by very detailed calculations and they are underpinned by incontrovertible assumptions. That was not the case in this case.
[11] Fair Work Act 2009 (Cth)
On the hearing of the quantum argument, Ms Degenhardt’s solicitor did not identify the portion of Ms Degenhardt’s evidence on which he relied to support the loss he said she sustained. Nor did Mr Addison put before me propositions of fact and law by which he invited me to conclude that common law limitations of action periods, enshrined in the Limitation of Actions Act 1958[12] were applicable in a case in a federal court on which the mainstay of applicable jurisprudence was federal legislation, being the legislation under which the applicant said the proceeding was brought, namely the Fair Work Act 2009.[13] I was not persuaded that a six-year period of unpaid amounts was the correct period nor was I persuaded that the relevant legislation was a state enactment.
[12] Limitation of Actions Act 1958 (Vic)
[13] Above n 11.
In section five of his report Mr Rosner recorded the books and documents examined. A number of observations must be made about those entries. Taking the first bullet point first, Mr Rosner did not identify nor paraphrase the discussions he had with Mr Dircks nor the overview Mr Dircks gave, whether verbally or in writing. It was not possible therefore to know about the evidentiary providence of the material supplied by Mr Dircks to Mr Rosner. In the second bullet point Mr Rosner stated that Mr Dircks provided certain calculations to him. Mr Rosner did not identify those calculations, he did not say who was the author of those calculations, he did not address the reliability of those calculations nor verify them in any way, still less did he say in what way Mr Rosner incorporated those calculations for the purpose of his report.
In the third bullet point Mr Rosner referred to an extract from scenario seven in my second judgment in this case. The extract faithfully transposed scenario seven as agreed by the parties.
Between the fourth and ninth bullet points Mr Rosner stated that he examined various documents including two offers of employment, two 2006 collective agreements, the 2010 enterprise agreement and the 2014 enterprise agreement. I addressed the contractual and legal significance of each of those documents in the liability judgment. As for the tenth bullet point in which Mr Rosner stated he examined aspects of Ms Degenhardt’s evidence, it was not appropriate for Mr Rosner to go behind the reasons for judgment in this case because the evidence is taken to have merged in the judgment and in the reasons given for the ultimate decision. If Mr Rosner had focused on a specific aspect of Ms Degenhardt’s evidence for a specific purpose, and had he stated why he had done so, then that much of his report may have survived. But he did not do that.
In section six of his report Mr Rosner set out seven bullet points under a heading “facts, matters and assumptions”. He did not say who requested him to make those assumptions or why nor did he say on what other information in this litigation those assumptions were premised. It was necessary to go to each. In the first bullet point Mr Rosner said that it was assumed (by whom and based on what he did not say) that when the respondent came into existence on 1 July 2008 pay and conditions of employment were “normalised and the superior conditions of the 2006 MAS agreement prevailed.” He did not explain what he was endeavouring to convey in that concept. It did not matter. If Mr Rosner was endeavouring to convey his assumption about the interrelationship between Ms Degenhardt’s November 2006 contract with the novated regime that formed on 1 July 2008 upon the commencement of the respondent, I addressed that between paragraphs 28 to 52 of the liability judgment. I also set out the way provisions in a private contract coalesced with the terms of a certified agreement. That discussion was between paragraphs 96 to 110 of the liability judgment. In essence, I held that the terms of the certified agreement prevailed over the terms and conditions of Ms Degenhardt’s 2006 and 2013 employment contracts, to the extent of any inconsistency. In the specific context of the construction of industrial agreements, in paragraph 108 of the liability judgment I set out the propositions that emerged from the leading decided cases on point. In this case, one collective agreement operated and three enterprise agreements operated. To the extent that the terms and conditions of those four industrial instruments were inconsistent with the provisions of Ms Degenhardt’s 2006 and 2013 employment contracts then the industrial instruments prevailed. In this case the respondent came into existence on 1 July 2008. The prevailing industrial agreement of relevance was that 2006 Metropolitan Ambulance Service and Health Services Union (Management and Administrative Staff) Collective Agreement. Successive enterprise agreements in 2010, 2011 2014 then operated. For only a short period in the relevant chronology in this case the 2006 collective agreement operated. So the statement in the first bullet point in section six of Mr Rosner’s report was only partially correct but not entirely correct.
In the second bullet point in section six of his report Mr Rosner stated he assumed that the hourly base rate for the calculation of entitlements under each collective agreement and enterprise agreement was Ms Degenhardt’s annual salary divided by 1976 (being 38 hours times 52 weeks). That assumption was erroneous. Ms Degenhardt was not paid an annual salary. She was to be remunerated as a casual employee at a particular rate upon her working a prescribed period. Whether it was appropriate to engage in the arithmetical exercise referred to in the second bullet point in the way Mr Rosner did was not stated by him or anyone else in this litigation. In my view no basis for the assumption in the second bullet point was established.
The third bullet point introduced the document described by Mr Rosner as appendix 1. It was headed “calculation of pay entitlement” below which was another heading entitled “actual pay”. Then the appendix set out five lines of entries, one under the next. The first line read GD1 17-Jun-09 $80. The second line read GD2 04-Oct-10 $82.40. The third line read GD2 27-Jun-11 $84.87. The fourth line read GD2 23-Mar-12 $87.42. The fifth line read GD2 01-Dec-12 $90.04.
The importance of the information in appendix 1 seemed to be the fluctuating rate of remuneration per 12 hour shift. No narrative accompanied the dates or numerical entries on appendix 1. Precisely why the dates in the centre column were selected was not given. Nor was it said why in three years the amount per hour increased by more than $10. It was not for me to guess at an interpretation of the appendix. I was unable to make out the tenor and import of appendix 1.
In appendix two Mr Rosner seemed (although in the absence of explanation I was guessing) to use rates that emerged from the enterprise agreements in this case. In the extreme right-hand column he set out a dollar amount per hour that ranged from $25.61 in July 2005 to $34.39 in October 2014. In the absence of an explanation by Mr Rosner I had no real basis to do anything but speculate what appendix two actually meant of relevance in this case.
Appendix three was a spreadsheet and the alleged source of the assertion that Ms Degenhardt was underpaid $799,940. The spreadsheet incorporated a number of columns that were not explained. Mr Rosner did not say that he was the author of the spreadsheet. He did not personally verify the entries on it. He did not explain how the spreadsheet was to be interpreted. Instead, over 11 separate time periods that commenced on 17 June 2009 and ran until 21 April 2015 Mr Rosner asserted that the underpayments allegedly due to Ms Degenhardt aggregated $730,538. To that he added superannuation allegedly due in the sum of $69,401 thereby arriving at the total sum due, he said, of $799,940.
At the outset I record that I was not persuaded that the information in the spreadsheet of the conclusion that purported to address the total sum allegedly due to Ms Degenhardt was correct. I say that are several reasons.
First, nowhere did Mr Rosner demonstrate that the spreadsheet was the product of his own calculations or investigations. He did say that Mr Dircks provided him with certain information. I was not persuaded that the spreadsheet’s author or creator was Mr Rosner or anyone else. The point was not addressed in any shape or form in the evidence. Second, the column headed “award annual salary” was of dubious validity as Ms Degenhardt was a casual employee who did not have a fixed predetermined annual income. The column headed “should have got” was unexplained. Applying the first line of the spreadsheet, Mr Rosner asserted that Ms Degenhardt received $640. Without explaining his logic or calculations he said Ms Degenhardt should have received $4,999. From that he deducted the sum she actually received to arrive at the alleged underpayment for that period, namely $4,359.
How Mr Rosner calculated the column for the sum Ms Degenhardt should have received went unexplained.
The column with entries for sums allegedly underpaid had large figures in it. In order to make sense of the column representing sums underpaid, it was necessary to first understand how the entries were arrived at for the column headed “should have got”. Based on the information supplied by Mr Rosner I was unable to reach a state of persuasion that the entries in that column were properly due.
That was sufficient to dispose of Mr Rosner’s evidence. Not only do I find that he was not qualified to give expert evidence in this case, but such evidence as he did offer was mostly unexplained and I was not able to reach a state of persuasion that the sum Mr Rosner said was owing was in fact owing.
In debate with Mr Addison, I raised with him the possibility that I may not accept Mr Rosner’s arithmetic or even the logic of his calculations with the consequence that he did not persuade me that Ms Degenhardt was entitled to the sum claimed. I asked Mr Addison what happened in that eventuality. Mr Addison referred to the manifest injustice of that conclusion.[14] He initially agreed that in that situation Ms Degenhardt would fail in this case then he later submitted[15] that I was empowered to choose a different one of the nine scenarios that were the subject of my consideration in the second judgment in this case.
[14] Transcript of proceedings, above n 4, pg 10.
[15] Transcript of proceedings, above n 4, pg 15.
In my view there was no valid reason or logic in terms of forensic proofs to award Ms Degenhardt the sum that Mr Rosner said was owing. To award Ms Degenhardt a sum slightly less than $800,000 was absurd. Her entitlement to that amount was not proved.
Mr Rinaldi invited me to revisit the applicable scenario to be applied to the facts of this case. Mr Addison recognised that if I did not accept the position that Mr Rosner advanced (and in case it is necessary for me to do so again, I formally state that I reject Mr Rosner’s position) then some other scenario was to be applied. To my mind both Mr Addison and Mr Rinaldi were correct. It became necessary for me to select a scenario that produced a realistic award for Ms Degenhardt. Both parties agreed that Ms Degenhardt was entitled be paid while on-call and she was entitled to a casual loading. She should be paid for her telephone work and all work associated with the preparation for those telephone calls and, to the extent that the records did not adequately record her actual activities, then it is appropriate to add an uplift. It seemed to me that none of the scenarios presented on 29 August 2017 adequately met the circumstances of this case as it has unfolded.
Expressed arithmetically, Mr Rinaldi agreed that Ms Degenhardt was entitled to $108,041 in respect of the on-call component of this case. To that Mr Rinaldi said Ms Degenhardt was entitled to $11,756 making in total $119,770. In my view it is appropriate to apply an uplift in accordance with Mr Rinaldi’s suggestion of 300%.[16] That led to an award of $154,841. That approach seemed to reflect the approach adopted by Mortimer J in Polan v Goulburn Valley Health (No.2)[17] as well as the Full Court’s approach in Warramunda Village Inc v Pryde.[18]
[16] Transcript of proceedings, above n 4, pg 19.
[17] Polan v Goulburn Valley Health(No.2) (2017) FCA 30
[18] Warramunda Village Inc v Pryde (2002) 116 FCA 58
To my mind, fixing the amount of $154,841 by way of quantum is appropriate. The proposal put forward by Mr Rosner was, as Mr Rinaldi submitted, absurd.
I order the respondent to pay Ms Degenhardt the sum of $154,841 within 30 days.
I direct the parties to email my chambers within seven days with directions to address the evidence and submissions in relation to penalties and consequential orders.
I certify that the preceding forty-one (41) paragraphs are a true copy of the reasons for judgment of his Honour Judge Wilson
Associate:
Date: 9 May 2018
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