Fair Work Ombudsman v Austrend International Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Fair Work Ombudsman v Austrend International Pty Ltd [2018] FCA 171

File number(s): WAD 131 of 2017
Judge(s): GILMOUR J
Date of judgment: 28 February 2018
Catchwords:

PRACTICE AND PROCEDURE – summary judgment application – whether the applicant has no reasonable prospect of successfully prosecuting the proceeding or part of the proceeding

INDUSTRIAL LAW – adverse action – whether a former employee of the first respondent was constructively dismissed through the respondents’ conduct or course of conduct – consideration of requirements of constructive dismissal claim – Fair Work Act 2009 (Cth) (‘FW Act’) s 351

COSTS – whether costs should be awarded in a matter arising under the FW Act pursuant to s 570 – whether the claim has no real prospects of success – consideration of the Court’s discretion to award costs other than on a party and party basis – whether applicant should pay the respondents’ costs on an indemnity basis

Held: application allowed with costs.
Legislation:

Fair Work Act 2009 (Cth) ss 12(1), 342(1) item 1, 351, 386

Federal Court of Australia Act 1976 (Cth) ss 31A(2), 37N(4), 37M(1), 43(2), 43(3)(g)

Workplace Relations Act 1996 (Cth)

Federal Court Rules 2011 (Cth) r 26.01(1)(a)
Cases cited:

Allison v Bega Valley Council (1995) 63 IR 68

Australian Securities and Investments Commission v Cassimatis [2013] FCA 641

Council of Kangan Batman Institute of Technology and Further Education v AIRC (2006) 156 FCR 275

Danthanarayana v Commonwealth of Australia [2016] FCAFC 114

Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397

George v Fletcher (Trustee) [2010] FCAFC 53

Jefferson Ford Pty Ltd v Ford Motor Company of Australia Ltd (2008) 167 FCR 372

Kanan v Australian Postal & Telecommunications Union (1992) 43 IR 257

R v Prince Alfred College (1979) 46 SAIR 598

Sheffield v Oxford Controls Co Ltd (1979) IRLR 133

Spencer v Commonwealth of Australia (2010) 241 CLR 118

Three Rivers District Council v Governor and Company of the Bank of England (No 3) [2003] 2 AC 1

White Industries Australia Ltd v Cmr of Taxation (2007) 160 FCR 298
Date of hearing: 8 February 2018
Registry: Western Australia
Division: General Division
National Practice Area: Employment & Industrial Relations
Category: Catchwords
Number of paragraphs: 108
Counsel for the Applicant: Mr AJ Power
Solicitor for the Applicant: Fair Work Ombudsman
Counsel for the Respondents: Mr J Blackburn SC
Solicitor for the Respondents: HWL Ebsworth

ORDERS

WAD 131 of 2017
BETWEEN:

FAIR WORK OMBUDSMAN

Applicant
AND:

AUSTREND INTERNATIONAL PTY LTD (ACN 095 733 092)

First Respondent

DENZIL GODFREY RAO

Second Respondent

JUDGE:

GILMOUR J

DATE OF ORDER:

28 FEBRUARY 2018

THE COURT ORDERS THAT:

1.The applicant’s claims that:

(a)the first respondent contravened s 351 of the Fair Work Act 2009 (Cth) by constructively dismissing Ms Aragon on 19 July 2016; and

(b)that the second respondent was involved in this claimed contravention,

(Claims) be dismissed.

2.The applicant pay the respondents’ costs of the respondents’ interlocutory application and the costs…

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Details
Case
[2018] FCA 171
Decision Date

CaseChat Overview and Summary

In the case of Fair Work Ombudsman v Austrend International Pty Ltd, the Fair Work Ombudsman (FWO) brought an action against Austrend International Pty Ltd and its director, Mr Rao, seeking relief in relation to a claim of constructive dismissal by a former employee, Ms Aragon. The matter was heard in the Federal Court of Australia, where the primary issue was whether the FWO had a reasonable prospect of successfully prosecuting its claim that Ms Aragon had been constructively dismissed by Austrend through their conduct or course of conduct, contrary to section 351 of the Fair Work Act 2009. The court also considered whether it should award costs to the respondents under section 570 of the Fair Work Act.

The court found that the FWO's claim lacked merit and that the FWO had no reasonable prospect of successfully prosecuting its claims. The court held that the constructive dismissal claim was based on the premise that Austrend had engaged in a course of conduct that led to Ms Aragon's resignation, which was not supported by the evidence. The court found that there was no evidence that Austrend had forced Ms Aragon to resign, and that she had willingly resigned for a financial settlement. The court also found that the FWO had failed to properly plead its case, relying on irrelevant evidence and conflating separate allegations of adverse action. The court further found that the FWO's claim had no real prospects of success and that it should pay the respondents' costs on an indemnity basis.

In conclusion, the court dismissed the FWO's claims and ordered that the FWO pay the respondents' costs on an indemnity basis. The court held that the FWO's claims were not supported by the evidence and that it had failed to properly plead its case. The court also found that the FWO's claim had no real prospects of success and that it should pay the respondents' costs on an indemnity basis. The orders were made pursuant to Rule 39.32 of the Federal Court Rules 2011.

Orders

Orders of the court

1. The applicant’s claims that:

(a) the first respondent contravened s 351 of the Fair Work Act 2009 (Cth) by constructively dismissing Ms Aragon on 19 July 2016; and

(b) that the second respondent was involved in this claimed contravention,

(Claims) be dismissed.

2. The applicant pay the respondents’ costs of the respondents’ interlocutory application and the costs associated with the Claims on an indemnity basis, to be taxed if not agreed, and paid forthwith.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Such a circumstance does not constitute a ‘forced’ resignation so as to come within the definition of ‘dismissed’ in s 386(1)(b) of the FW Act. Rather, the person has resigned willingly ‘as the result of being offered terms which are to (that person) satisfactory terms on which to resign’.The facts leading up to the 19 July 2016 meeting Ms Aragon was employed by Austrend as a full-time sales executive. On or about 10 July 2015 Ms Aragon commenced a period of maternity leave. In March 2016, Ms Aragon informed Austrend that she wished to return to work on 4 April 2016. On 1 April 2016 Mr Rao informed Ms Aragon that she would need to provide a medical certificate before returning to work. There is an issue in another part of the proceedings as to whether she was required, in law, to provide such a certificate. It does not concern the present application. Ms Aragon emailed Mr Rao on 5 April 2016 asserting a right to return to work but did not then provide a medical certificate. She did not contact Austrend again until 5 July 2016. On 5 July 2016, Ms Aragon sent Mr Rao an email attaching a medical certificate and, among other things, asked him to contact her to discuss a date for her return to work. In the same email, Ms Aragon gave notice that she intended to commence a further period of maternity leave from 13 September 2016. Thus, she was seeking to return to work for a period of 10 weeks at most. She also requested payment for the time she had not been able to return back to work from 4 April 2016 onward. On 7 July 2016 Mr Rao replied to Ms Aragon's email. His email to her included the statement that Austrend would like her to commence full time work on a ‘fulltime (5 days a week – 38 hours) basis as agreed earlier’. It concluded by asking her to advise Austrend when it could expect her back at work. On 8 July 2016 Ms Aragon replied to Mr Rao's email saying:In response to your email I would like to inform you that I will be in contact with you next week once I have a clearer picture of what comes next but I believe that a scheduled meeting between yourself, Vinnie, Myself and my support person is the next step needed before a date of return can be agreed on. In saying that I will also need to find suitable care arrangements for my daughter as Zac and our extended families all work full time.Thank you again for your response and I shall be in contact with you next week. This response was somewhat enigmatic but certainly operated to delay Ms Aragon's return to work. What was clear was that she wanted a meeting, together with her support person, with ‘Vinnie’ (Mr Rajaratnam), and Mr Rao. In an exchange of emails that followed, Austrend said they would work around her request and were looking forward to meeting with her and her support person ‘as requested’. The meeting was arranged for 19 July 2016. On 19 July 2016, at about 5 pm or shortly after, Ms Aragon and her partner Zac Altmann, as her support person, attended Austrend’s premises and met with Mr Rao and Mr Rajaratnam (the 19 July Meeting).

Evidence

Evidence Before The Court

In the Reply filed on 9 August 2017, the FWO, at paragraph 18, makes a series of mostly bare denials in response to paragraph 59 of the FAD. However, at paragraph 18(n) of the Reply, the FWO alleges that the Letter of Resignation (which Ms Aragon signed) ‘was in a file sitting on the table in the meeting room in which the 19 July Meeting was conducted and remained in that file on the table from the start of that meeting until it was handed to Ms Aragon by Mr Rajaratnam’.The evidence concerning the 19 July meeting The respondents rely on the affidavits of Ms Airey and Mr Rajaratnam. Among other things, Mr Rajaratnam deposes that:(a)he said to Ms Aragon and her partner that they were there ‘to discuss where this was going and Lindsey getting back to full-time work’, that Ms Aragon should tell him ‘what she really wanted. If it was full-time employment, that was fine; if she was looking for monetary compensation then [he] would talk to [Mr Rao]’;(b)he then asked Mr Rao to leave the room, which he did, to enable Ms Aragon and her partner to explore options with Mr Rajaratnam;(c)he said to Ms Aragon and her partner that Ms Aragon could return to work full time if she wished to but if she wanted a financial settlement he was happy to speak to Mr Rao and that he then left the room to allow Ms Aragon and her partner to talk;(d)when he returned to the room, Ms Aragon and her partner said they wanted to take a financial settlement, there was some discussion about how much and ‘[e]ventually they said if Austrend was happy to pay Lindsey her full-time salary from April to the meeting they would consider it’;(e)he went and spoke to Mr Rao who agreed to pay that amount but ‘wanted the FWO complaint withdrawn’ and that Mr Rajaratnam then returned to the meeting room and said to Ms Aragon and her partner that Mr Rao ‘was happy to pay the amount asked for in return for [Ms Aragon] agreeing to resign and withdraw her complaint to the Fair Work Ombudsman’;(f)Mr Altmann said Mr Rao should ‘pay another two weeks’ and that they needed the money transferred that night because it was required for ‘something to do with a house either a deposit or a bond’;(g)Mr Rajaratnam then went and spoke to Mr Rao who agreed to pay the additional amount;(h)Mr Rajaratnam then returned to the meeting room and said to Ms Aragon and her partner that Mr Rao would pay the additional two weeks and that, in return for the settlement, Ms Aragon would tender her resignation and withdraw all complaints and any matters lodged with the FWO and Fair Work Commission and that, if Ms Aragon and her partner were happy with that, Mr Rajaratnam would prepare some letters, to which they said ‘yes’;(i)Mr Rajaratnam then went back upstairs and drafted two letters on one of the office computers to record the agreement that had been reached. One was to be signed by Mr Rao agreeing to pay the settlement amount and the other by Ms Aragon agreeing to resign and withdraw any complaints or applications that that had been made to the FWO and Fair Work Commission;(j)he drafted the letters only after the agreement had been reached with Ms Aragon;(k)he took the letters, one signed by Mr Rao, downstairs and gave a copy of the letter that Mr Rao had signed to Ms Aragon along with the Letter of Resignationfor her to sign, that he asked Ms Aragon if the contents were as requested and she said ‘Yes’, that he then left the room for a few minutes and that when he returned Ms Aragon signed the letter ‘without hesitation or pressure’;(l)once the money was transferred to Ms Aragon's account Mr Rao came downstairs and said thank you and Ms Aragon and her partner left;(m)during the meeting, there was no discussion from Ms Aragon about when she wanted to come back to work, that Mr Rajaratnam did tell her that she could come back to work full time but that because Ms Aragon did not raise the issue of a return to work date, it was not discussed;(n)Mr Rao had made clear that if Ms Aragon came back to work Austrend would refer her to a medical practitioner and request a fitness for work certificate which Austrend would pay for and that it would be up to the doctor to say whether Ms Aragon was fit to do particular tasks or ‘whether there were any requirements [that] would need to be accommodated’; and (o)the request for a financial settlement came from Ms Aragon and her partner and that Ms Aragon was not forced to accept an offer of a financial settlement – ‘That was her choice’.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

At no time did Mr Forwood allege or even suggest to Mr Rao that Ms Aragon had been forced to resign.Consideration Contrary to the submission of the FWO, the relevant facts which require determination are not complex. Rather they are in short compass and quite straight forward. The FWO sought to create in argument a complexity that does not exist and, significantly, was not pleaded. This it did by the construct of an argument that the alleged constructive dismissal was by virtue of Austrend’s ‘course of conduct’, drawing on the language of s 386(1)(b) FW Act. The FWO sought to rely on the five matters pleaded in its ASOC and set out at [3] above as constituting adverse action. One of these is the allegation of constructive dismissal. In the ASOC, the FWO relies on the particulars provided in relation to the 19 July meeting in support of the claim of constructive dismissal. Those particulars are (with amendments incorporated):A.The Letter of Resignation was prepared by management personnel of the First Respondent and an unsigned copy of it was handed to Ms Aragon by Mr Rajaratnam during the 19 July Meeting. B.The Letter of Resignation was in the form of a typed letter dated 19 July 2016, signed by Ms Aragon and witnessed by Mr Altmann. C.A copy of the Letter of Resignation is in the possession of the Applicant and may be inspected by appointment. D.The First Respondent’s agreement to pay Ms Aragon was in the form of a letter on the First Respondent’s letterhead, dated 19 July 2016, signed by the Second Respondent and witnessed by Mr Rajaratnam. E.A copy of the First Respondent’s letter dated 19 July 2016 is in the possession of the Applicant and may be inspected by appointment. F.The amount of $14,653.80 (net) represented a gross amount of $16,343.80 which was comprised ofa.the equivalent of 15 weeks’ wages for the period between 4 April and 19 July 2016; and b.the equivalent of two weeks’ payment in lieu of notice of termination. It is apparent that the constructive dismissal case against Austrend is confined to those particulars. Relying on the five matters pleaded in its ASOC and set out at [3] above as constituting adverse action is not open to the FWO. The five matters are separate allegations of adverse action. The first four are not allegations of a course of conduct for the purposes of the fifth allegation. Accordingly, I reject every submissions by the FWO based on such a premise. It follows that I do not accept that evidence which may be led in relation to the first four allegations of adverse action is also relevant to the fifth allegation. Accepting the evidence on behalf of the FWO at its highest, which I have summarised above, nothing which Mr Rajaratnam or Mr Rao said or did in the 19 July meeting could even arguably be construed as having ‘forced’ Ms Aragon to resign her employment. It is not alleged, nor is there evidence, that Mr Rajaratnam or Mr Rao told Ms Aragon that she could not return to work. Rather, Mr Rajaratnam said that the respondents ‘would have to restructure the role and change [her] duties’ because of safety concerns. This indicated that her return to work remained an option. However, as I have indicated, I proceed, for present purposes only, on the basis that Austrend’s preferred option was to reach an agreement with Ms Aragon whereby she resigned for a monetary consideration.