Fatouros v Broadreach Services Pty Ltd

[2018] FCCA 769

FEDERAL CIRCUIT COURT OF AUSTRALIA

FATOUROS v BROADREACH SERVICES PTY LTD [2018] FCCA 769

Catchwords:
INDUSTRIAL LAW – Workplace right – complaint or enquiry in relation to his or her employee – complaint made regarding proper management of projects which the applicant was required to oversee – compensation for breach of a civil remedy provision – civil penalty.

Legislation:

Fair Work Act 2009 (Cth), ss.340, 341, 341(1)(c)(ii), 342, 545, 546

Cases cited:

Board of Bendigo Regional Institute of Technical and Further Education v Barclay [2012] HCA 32
Shea v TRUenergy Services Pty Ltd (No.6) [2014] FCA 271
Walsh v Greater Metropolitan Cemeteries Trust (No.2) [2014] FCA 456
Construction, Forestry, Mining and Energy Union v Pilbara Iron Company (Services) Pty Ltd (No.3)[2012] FCA 697
Rowland v Alfred Health [2014] FCA 2
Kelly & Fitzpatrick [2007] FCA 1080

Applicant: SPIROS FATOUROS

Respondent: BROADREACH SERVICES PTY LTD

File Number: MLG 2442 of 2016

Judgment of: Judge McNab

Hearing dates: 15 & 16 March 2018

Date of Last Submission: 16 March 2018

Delivered at: Melbourne

Delivered on: 29 March 2018

REPRESENTATION

Counsel for the Applicant: Mr Donaghey

Solicitors for the Applicant: HR Legal

Counsel for the Respondent: Mr Ribbands

Solicitors for the Respondent: T F Grundy

ORDERS

1. The Court orders pursuant to ss.545(2) and 547(3) of the Fair Work Act 2009 (“the FW Act”) the Respondent pay to the Applicant the following sum:

   (a)$131,723.22 for loss of wage, superannuation and leave entitlements;

   (b)$1,266.12 for expenses incurred during the applicant’s employment; and

   (c)$11,581.14 for interest incurred from 22 August 2016.

2. Pursuant to ss.546(1) and (3) of the FW Act the Respondent pay to the Applicant the following penalty in the sum of $12,500.00.

3. The pecuniary penalty of $12,500.00 be paid within 28 days of this order.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLG 2442 of 2016

SPIROS FATOUROS

Applicant

And

BROADREACH SERVICES PTY LTD

Respondent

REASONS FOR JUDGMENT

1. Between 30 March 2008 to 22 August 2016, the applicant was employed by the respondent, Broadreach Services Proprietary Ltd (‘Broadreach’) in various senior roles including Senior Technical Consultant and General Manager - Solutions & Consulting.

2. Mr Fatouros holds a Bachelor of Engineering (Civil and Structural) obtained in 1987 from RMIT. He has worked in information technology and associated systems since about 2005.

3. His considerable work experience in the IT and IT Systems engineering fields are set out in his affidavit of 29 June 2017. The depth of that experience was not the subject of any particular challenge, save that it was alleged that he would from time to time take titles of his own construction to describe his role. He disputed this and there was no challenge to the description of the work that he performed, both prior to and during his work at Broadreach.

4. At Broadreach one of his central roles was to provide systems design and project management advice to customers.

5. In about October 2014, Broadreach was taken over by another company, Electroboard Proprietary Ltd (‘ELB’).

6. In about January 2015, Broadreach staff moved from a central Melbourne premises to ELB premises located in Abbotsford. In about January 2015, Mr Fatouros had a Sydney based pre-sales consultant reporting to him and for Melbourne based Systems engineers and/or project managers reporting to him.

7. In about July 2015, he commenced reporting to a new CEO, Ms Marie Bolton (subsequently, Ms Marie Kaliviotis). Ms Kaliviotis was the CEO of ELB and Broadreach. Mr Fatouros gave evidence that Broadreach staff were advised that Damian Bolton (the son of Marie Kaliviotis) and President of the US arm of ELB would be running the Broadreach business although Mr Fatouros reported to Ms Kaliviotis on a day to day matters.

8. Mr Fatouros gave evidence[1] of his involvement into projects that ELB had at the University of Melbourne – the Arts West and Trinity College projects in July 2016. Both projects involved the installation by ELB of audio visual equipment and digital media equipment throughout the rooms at each site (80+ rooms at Arts West and 30+ room at Trinity College). The projects were being run by contractor engaged by ELB, Melbourne based ELB employees and interstate ELB employees.

   [1] at paragraphs 43 – 47 of his affidavit

9. He said that the projects had fallen behind schedule whilst being managed by other managers whose employment had been terminated or had otherwise ceased (Andrew Memmolo’s employment with ELB had been terminated in about July 2015 and Bruno Cappelli the senior design consultant on each project had ceased working three ELB on about 22 July 2016 after having been “asked to leave” delay notices had been issued by the head contractor client and because of the delays.

10. He was able to get the projects under control and had a good working relationship with the client and subcontractors however he become aware that a significant sub-contractor, Eclipse Electrical Contractors (‘Eclipse’) were concerned because they had unpaid invoices relating to the University Melbourne projects in the sum of about $30,000 and unpaid invoices relating to other projects carried out through ELB in the sum of about $120,000.[2]

    [2] Paragraph [51] of Applicant’s affidavit filed 11 July 2017

11. Mr Fatouros described the situation regarding Eclipse as follows:

    53.Although Marie had told Eclipse that the invoices or some of them would be paid, they had not been. Eclipse had made multiple approaches to Marie for payment and had threatened to stop work, until they were paid. Finally on 9 August 2016, they left the sites. My understanding from discussions with Marie was that she felt Eclipse were cornering ELB to pay the invoices.

    54.It was important to me that these issues were resolved to facilitate the completion of the Arts West and Trinity College projects.

    55.In an immediate sense, I did not want the project to fail. This was exposing us to further delay notices from the client, and the risk of being sued by the client as well as the contractors. Personally, I also did not want the project to fail at the last moment, after having put in such a lot of work to bring them to completion. I also did not want to run the risk of suffering the same fate as Andrew Memmolo and Bruno Cappelli.

    56.These and other matters led to me writing and sending the two emails on 11 August 2016, firstly to Marie, and then to Roger Tiller and Damian Bolton.[3]

    [3] Applicant’s affidavit filed 11 July 2017

12. The Applicant sent an email to Ms Kaliviotis on 11 August 2018 at 7:16 AM which stated:[4]

    [4] Annexure ‘SF-2’ of the Applicant’s affidavit filed 11 July 2017

    Marie

    I am really disappointed by how you have handled this situation. If I, as one of your direct reports cannot depend on you to help me remove roadblocks, who can I depend on? Keep in mind that I volunteered to help resolve one project crisis which has since turned into four when I heard Kon take a call from a very irate site fireman.

    Also the ongoing looming threat of liquidated damages as we are so far past PC at Arts West not to mention the potential for back charges on Arts West, Trinity and the Children's Court, exposes us even further when we make it abundantly clear to customer (sic) that we just don't have the resources in place.

    I can see your point of view that in some way you believe that Eclipse is cornering us, however they are simply reacting the same way we would if one of our customers had not paid us for services we were delivering after months and months and months.

    I spoke to Ali last night and we were not able to get confirmation from that other contractor. So we are still no better off.

    From my perspective given we owe them at least $30K, I don't understand why we are not able to pay/remit them $15k which they will accept and return to site. We can then sort out any incorrect transactions or miscommunicates scopes of work, etc in a week's time or so when we have some breathing space.

    Kind regards,

    Spiros Fatouros

13. The Applicant also sent an email on 11 August 2016 at 7:28 AM to Damian Bolton and Roger Tiller which stated:[5]

    [5] Annexure SF-2 of the Applicant’s affidavit filed 11 July 2017

    Damian/Roger

    Gentlemen, I really need your help.

    It irks me to say this, but sadly I don't believe Marie is acting in the highest and best interests of the business.

    I suspect that one of the underlying reasons for this is because Kon is not at all well. I haven't heard anything official but that is what I am lead to believe.

    I'm also aware of ASIC and other accounts going off the rails causing further pressures not unlike issues I am working through in Kan's (sic) absence.

    Other than what I have highlighted below, there are also other follow-on effects, the least of which is the impact this is having on staff morale in Melbourne let alone significant impacts on customers and our supply chain.

    From a personal standpoint, if disciplinary action is the follow-on effect of my actions here then so be it. However, please be assured, my intent is purely driven by the interests of the business, its employees, our customers and suppliers, all of whom we have obligations to that are presently not being met.

    Kind regards,

    Spiros Fatouros

14. The applicant pleads by paragraph 5 of the statement of claim that the two emails being the email to Marie Kaliviotis dated 11 August 2016 at 7:16 AM (first complaint) and the email to Damian Bolton and Roger Tiller of 11 August 2006 at 7:28 AM (the second complaint) were complaints in relation to:

    a)the applicant’s employment; and

    b)a right which was a workplace right within the meaning of section 341 of the Fair Work Act (“FW Act”).

15. It is alleged by paragraph 9 of the statement of claim that the termination of the applicant's employment and a statement in the termination letter that the respondent will terminate the applicants employment unless the applicant provided an acceptable response were adverse action within the meaning of section 342 of the FW Act in contravention of section 340 of the FW Act.

16. The amended defence filed on behalf the respondent dated 31 March 2017 pleaded relevantly in relation to the claims of adverse action at paragraph 8:

    "It denies the allegations in paragraph 8 and says further the applicant was dismissed because the applicant's conduct in the course of his employment had been inappropriate in that he had failed to follow instructions from the respondent's managing director.

17. Under particulars it is stated:

    The conduct is set out in the termination letter.

18. The applicant also claimed that he has not been paid expenses incurred in the course of his employment those expenses being in the sum of $1,266.12. At trial the respondent did not dispute the applicant's entitlement to be paid that sum.

19. The respondent gave evidence by its director Ms Marie Kaliviotis by an affidavit sworn 9 March 2018 in relation to the reason for termination in the following terms:

    Poor performance of duties

    14.On numerous occasions he failed to provide adequate notice of his absences from work.

    15 Now produced and shown to be in marked ‘MK-8’ eight is a true copy of:

    (a)email correspondence between the Applicant and Matthew Griffiths dated 24 October 2013.

    16 In 2016 the applicant was repeatedly reluctant or failed to follow the directions of executive staff of the respondent, particularly with regard to the reduction of the Respondent’s use casual staff. The Applicant also demonstrated his disagreement with and lack of confidence in my decisions as Director of the Respondent.

    17 On 11 August 2016 the applicant wrote to Damian Bolton and Roger Tiller (Executive Advisors for the Respondent) expressing his disagreement as how I was carrying out my duties as a Director. I believe the Applicant had made similar comments in the past and that this was having the effect of undermining the confidence of the Respondent's customers and causing uncertainty amongst the Respondent's staff.

    …

    Dismissal

    19.On 19 August 2016 I caused to be sent to the Applicant a letter giving notice of Termination of Employment (‘the Termination Letter’), explaining that was the company's intention to terminate the Applicant’s employment at the close of business on Monday, 22 August 2016.

    20.In the Termination Letter I provided the Applicant an opportunity to respond, and I was prepared to listen to any representation that he might wish to put forward as to why we should not terminate his employment. The Applicant was provided with five weeks’ salary in lieu of notice in accordance with the respondent's obligations both under the Applicant's contract of employment, and under the National Employment Standards and the Fair Work Act 2009.

20. The termination letter states that one of the reasons for the termination of employment was the fact that the applicant had sent an email to Damian Bolton and Roger Tiller of 11 August 2016 in which he suggested that I don't believe Marie is acting in the highest and best interests of the business.

21. On the face of the letter, this indicates that one of the reasons for the termination of the applicants’ employment was the fact that he had sent the email on 11 August 2016. No evidence was given by or on behalf of the respondent that the reasons for the termination did not include the fact that the applicant had exercised a workplace right to make a complaint. I am satisfied that the sending of the emails by Mr Fatouros including sending an email to Mr Tiller and Mr Bolton dated 11 August 2016 was a substantial or operative and immediate reason for the termination of employment.[6]

    [6] See Board of Bendigo Regional Institute of Technical and Further Education v Barclay [2012] HCA 32 at [62], [104] and [140]

22. A significant aspect of the respondent's defence as conducted at hearing was whether the complaints contained in the first email of 11 August 2016 and the second email of 11 August 2016 are complaints or enquiries in relation to his employment the purposes of section 341(1)(c)(ii) of the FW Act. That section provides that:

    (1)     A person has a workplace right if the person:

    …

    (c)is able to make a complaint or inquiry:

    …

    (ii)     if the person is an employee--in relation to his or her employment.

23. The applicant relied upon the part of the decision of Dodds-Streeton J in the Shea v TRUenergy Services Pty Ltd (No.6)[7] where her Honour said at [628]:

    In my opinion, a complaint which an employee is able to make is limited to the relevant grievance or accusation which he or she is able, on some identifiable basis, to communicate as a complaint in relation to his or her employment. Once it be accepted that such entitlement is necessary, it governs the definition and extent of the complaint that the employee is able to make. Communications, grievances or accusations which are not themselves complaints that the employee is able to make would not, in my view, assume that character and invoke the statutory protection merely by virtue of being included in, or expressed contemporaneously with, a complaint within the meaning of s 341(1)(c)(ii).

    [7] [2014] FCA 271; 314 ALR346; [2014] IR at 1 at 628

24. It was put that passage stands for the proposition that in order to be a complaint within the meaning of that section, the subject matter of the complaint must be underpinned by the entitlement or right.

25. The respondent gave the following example at [14] of its outline of argument (copied exactly):

    14.…if an employer were to undertake an acquisition of another business in the pursuit of its commercial objectives, there is no capacity for an employee to make a complaint or enquiry about that decision and to thus enliven section 341(1)(c)(ii). Thus, the focus in the correct interpretation of the section is not upon a source of entitlement to make a complaint. Rather, it has an entitlement which, by reason of some conduct on the part of the employer, entitles the employee to make a complaint.

    15.Taken to its logical conclusion, if such were the case any decision undertaken by an employer would leave itself open to an adverse action claim. Outside the rights, duties and obligations of the parties to the employment contract, the employer exists (in this instance) for the purpose of deriving a profit. It is a commercial enterprise and like any such enterprise, it is subject to the vagaries of the economy and in particular, of the market place within which it conducts its sphere of operations. Its directors are charged with the responsibility of making and giving effect to those decisions which enable the corporate employer to fulfil its commercial objectives. In the ordinary course of events, an employee has no entitlement to take issue with those decisions which are directed towards the pursuit of that commercial objective.

    16.In the present instance, the rights of the applicant are underpinned by his contract of employment and the legislation. Those sources of entitlement create protections for the employee which he may rely upon and enforce. They extend to matters such as salary entitlements, leave entitlements and so on. They do not however extend to entitling commentary or criticism of the direction of which the owners of the business choose to take the business.

26. In my view, there is no basis in the legislation or in the decision of Shea to circumscribe the operation of s.341(1)(c) of the Act in the way submitted by the respondent. Consider for example, a person, who in the course of their employment had as part of their duties a responsibility to ensure that the business of the employer honour its covenants to it bankers. If that employee raised a complaint with a superior within the workplace (whether that person be a Director or otherwise) that the company, by entering into a transaction was risking trading whilst insolvent or placing itself in breach of covenants with the bank that would be in my view our complaint in relation to his employment as the subject matter of the complaint arises directly from the work that person performs in his or her employment. In this case the management of the projects at Melbourne University were part of the applicant’s duties arising from his employment and his raising of issues regarding the timely payment of subcontractors in each of the relevant emails was something that arose directly out of the performance of his work and impacted on him as an employee.

27. At [626] of Shea Dodds-Streeton J held that a complaint could be treated as having been made if the:

    …relevant communication, whatever its precise form, would be reasonably understood in context as an expression of grievance or a finding of fault which seeks, whether expressly or implicitly, that the employer or other relevant party at least take notice of and consider the complaint.

28. I also have had regard to Walsh v Greater Metropolitan Cemeteries Trust (No.2) [2014] FCA 456: 243 IR 468 where Bromberg J stated at [41] – [44] as follows:

    41.The words “in relation to” are words of wide import. The use of that phrase in s341(1)(c)(ii) identifies that a relationship between the subject matter of the complaint and the complainant’s employment is required. The nature of that relationship need not be direct and may be indirect: Construction, Forestry, Mining and Energy Union v Pilbara Iron Company (Services) Pty Ltd (No 3)[2012] FCA 697 at [61]- [64] (Katzmann J); Shea v TRUenergy Services Pty Ltd (No 6)[2014] FCA 271 at [631] (Dodds-Streeton J). I respectfully agree with Katzmann J’s observation in Pilbara at [64] that if some limit on the broad language utilised in the phrase “in relation to his or her employment” is to be imposed, it needs to be “found in the nature and purpose of the legislation, which includes the protection of workplace rights”.

    42.Where the subject matter of the complaint raises an issue with potential implications for the complainant’s employment, it is likely that the requisite nexus will be satisfied: Pilbara at [69].

    43.In this case, Ms Walsh raised a probity issue in relation to a contract with a supplier who supplied services including to an operation which Ms Walsh managed in the course of her employment. Whether or not Ms Walsh was under a contractual duty to report the possible misdeed of others (see the discussion in Irving, The Contract of Employment (LexisNexis Butterworths, 2012) at [7.21]), her failure to report suspected wrong-doing had the potential to reflect badly upon her and cause prejudice to her in her employment. By reason of either of those two factors, the Alsco contract complaint made by Ms Walsh raised an issue with potential implications for Ms Walsh’s employment and was “in relation to...her employment” within the meaning of s341(c)(ii) of the FW Act.

    44.In determining the construction issue raised here, I have considered but have not been persuaded by GMCT’s reliance upon Rowland v Alfred Health[2014] FCA 2. In that case, Marshall ACJ determined that a complaint made by a doctor about the competency of another doctor with whom he worked was not a complaint in relation to the complainant’s employment. Whether the clinical competence of the doctor complained about had potential implications for the employment of the complainant is not a matter that appears to have been raised before or addressed by Marshall ACJ. His Honour does not appear to have been referred to Pilbara and did not have the benefit of Shea.

    
    

    A contention that an indirect nexus would be sufficient does not appear to have been relied upon by the applicant in that case. Further, his Honour’s conclusion seems to turn on a factual dispute as to whether the relevant complaint related to the complainant’s employment because it also included a complaint that the doctor concerned had taken a patient from the complainant: see Rowland at [29]-[38].

1. For these reasons, I am satisfied that the emails were complaints and enquiries within the meaning of subsection 341(1)(c)(ii) of the FW Act. It follows that I find that there has been a breach of section 340 of the FW Act, that being a civil remedy provision of the Act.

Compensation for Breach

1. Since the date of termination with the respondent on 22 August 2016:

   a)the applicant was out of work for almost 8 months; and

   b)he applied for approximately 66 positions as well as making informal approaches within his own circle of contacts.

2. On 19 June 2017 he commenced a project role with Toll Holdings.

   
   

   The applicant has been out of work further 265 days being a loss of $112,673.11 based on a salary of $155,000 per annum. This should be added to that calculation superannuation entitlements calculated at 9.5% being $10,703.95 and 2.8 weeks of annual leave based on a weekly rate of $2,980.70 equalling $8,346.16. A total loss of wages and entitlements total $131,723.22.

3. The applicant is also entitled to statutory interest from 22 August 2016 pursuant to s.546(3) of the FW Act.

4. Sections 545(1) and 545(2)(b) of the FW Act provide:

   545(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.

   …

   545(2)Without limitingsubsection (1), orders the Federal Court or Federal Circuit Court may make include the following:

   …

   (b)an order awarding compensation for loss that a person has suffered because of the contravention;

5. As noted above at [18] the respondent admits that the Applicant is entitled to be paid $1,266.12 as reimbursement for expenses paid.

6. The respondent submitted compensation should be limited by regard to the entitlements that the applicant was entitled to upon the terminated his employment or alternatively that if the employment was not terminated on 22 August 2016 it could have been terminated lawfully thereafter on five weeks’ notice.

7. That submission fails to tackle that there has been a breach of the Act and the applicant is entitled to compensation arising from the breach. The consequence of the breach has been that the applicant has been out of work for a considerable period of time. The respondent’s submission would have the Court act as if the breach never occurred or that there was no the benefit to be derived from the existence of protection afforded by the legislation.

8. No evidence has been placed before the court such as to persuade the court that employment was unlikely to continue for an extended period had the contravention not occurred. Whilst the respondent raised as an issue that the applicant had failed to follow directions from executive staff those claims lacked any detail in the evidence filed and did not substantiate those claims. The extent of the respondent’s evidence concerning a failure to follow directions is referred to in [19] above. In relation to concerns that the applicant had  on numerous occasions failed to provide adequate notice of his absences from work, the only evidence in relation to that issue was email correspondence between the applicant and Matthew Griffiths on 24 October 2013 and that email correspondence indicates the applicant was absent from work for short period due to illness.

9. Further, the tone adopted by the applicant in the correspondence to Ms Kaliviotis,  Mr Tiller and Mr Bolton was not such as to indicate that the relationship between the applicant and his employer had broken down to the point that his employment was likely to cease in the near future but for the breach.

10. My view the applicant is entitled to compensation in the sum is outlined above together with interest pursuant to s.546 of the FW Act.

11. The applicant also sought a statutory penalty pursuant to section 546 of the FW Act for breach of section 340 of the Act. Both parties referred to the factors outlined for consideration when considering penalty in Kelly & Fitzpatrick [2007] FCA 1080 at [14].

12. Without setting out each of those factors, in my view the relevant matters are:

    a)the dismissal was a deliberate;

    b)the dismissal took place in circumstances where the termination was an over reaction by the employer to the matters raised by the applicant in the course of his employment which were for the benefit of the employer;

    c)the damage and loss suffered by the applicant as a result of the breaches have been significant.

13. I accept that has been no previous breaches alleged and I do not take into account reference to the involvement of ELB in an unfair dismissal proceeding in the then Fair Work Australia in Queensland. Statements were made from the bar table, which I accept, that the business is a profitable one engaged in a substantial works including projects currently undertaken with BHP. There was no evidence place before the Court that the penalties of the kind sought by the applicant would have any significant impact on the operation of the business or its solvency. Indeed submissions were made by counsel for the respondent that the company was solvent and actively operating on a substantial scale.

14. In relation to general and specific deterrence, there is a role to play in this case for specific deterrence particular in circumstances where the respondent did not accept that there had been any breach of the Act and there was no expression of remorse or corrective action.

15. In all the circumstances I order that the penalty in the sum of $12,500 be imposed on the respondent for breaches of section 340 of the FW Act. It is appropriate that the penalty be paid to the applicant given that he had to initiate these proceedings.

I certify that the preceding forty four (44) paragraphs are a true copy of the reasons for judgment of Judge McNab

Associate:  

Date:  29 March 2018