Jetgo Australia Holdings Pty Ltd v Goodsall (No.2)

[2015] FCCA 1911

FEDERAL CIRCUIT COURT OF AUSTRALIA

JETGO AUSTRALIA HOLDINGS PTY LTD v GOODSALL (No.2) [2015] FCCA 1911

Catchwords:

INDUSTRIAL LAW – Awards – breach of award – pecuniary penalties – payment of penalties to Consolidated Revenue Fund of the Commonwealth.

PRACTICE & PROCEDURE – Costs sought – no order as to costs.

Legislation:  

Fair Work Act 2009 (Cth), s.45

Mason v Harrington Corporation Propriety Limited (2007) FMCA 7

United Voice v MDBR 123 Proprietary Limited (No.2) 2015 FCCA 76
Director of Fair Work Building Industries Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCAFC 59
Goldman Sachs JBWere Services Pty Ltd v Nikolich [2007] FCAFC 120
Shea v Energy Australia Services Pty Ltd [2014] FCAFC 167

Applicant: JETGO AUSTRALIA HOLDINGS PTY LTD

Respondent: ANDREW GOODSALL

File Number: BRG 135 of 2014

Judgment of: Judge Vasta

Hearing date: 3 July 2015

Date of Last Submission: 3 July 2015

Delivered at: Brisbane

Delivered on: 3 July 2015

REPRESENTATION

Counsel for the Applicant: Mr Harding

Solicitors for the Applicant: M + K Lawyers

Counsel for the Respondent: Mr J. Murdoch QC

Solicitors for the Respondent: Mooloolaba Law

ORDERS

1. The Respondent is to pay penalties pursuant to s.546(1) of the Fair Work Act 2009 (Cth) in the amount of $2,550.00 in respect of the Respondent’s contravention of s.45 of the Fair Work Act 2009 (Cth) such penalty is to be paid to the Consolidated Revenue Fund of the Commonwealth pursuant to s.546(3)(a) of the Fair Work Act 2009 (Cth) within 28 days of the date of this Order.

2. The Applicant is to pay penalties pursuant to s.546(1) of the Fair Work Act 2009 (Cth) in the amount of $2,550.00 in respect of the Applicant’s contravention two contraventions of s.45 of the Fair Work Act 2009 (Cth) such penalties are to be paid to the Consolidated Revenue Fund of the Commonwealth pursuant to s.546(3)(a) of the Fair Work Act 2009 (Cth) within 28 days of the date of this Order.

3. There be no order as to costs.

FEDERAL CIRCUIT COURT
OF AUSTRALIA

AT BRISBANE

BRG 135 of 2014

JETGO AUSTRALIA HOLDINGS PTY LTD

Applicant

And

ANDREW GOODSALL

Respondent

REASONS FOR JUDGMENT

(Ex Tempore)

1. On 28 May 2015, I gave judgment in this matter and made certain findings and orders. Part of those orders dealt with findings that the Applicant, Jetgo Australia Holdings, had breached s.45 of the Fair Work Act 2009 (Cth) (“FW Act”) in that it had not paid superannuation and it did not pay the annual leave. I also made a finding that the Respondent had breached that same section of the FW Act in not giving the two weeks’ notice that was required under the Award.

2. I adjourned the hearing of the appropriate penalties to a date to be fixed as well as the question of costs to a date to be fixed.  Those matters have been heard by me today.  I have been greatly assisted by the submissions of both Counsel who have succinctly and concisely put their arguments to me, both orally and in written form. 

3. Firstly, to the breach of the Award made by the Respondent.  In that matter, it would seem, on my view of the evidence, that the Respondent was oblivious to the requirements under the Award that he was required to give two weeks’ notice.  I am of the view that he was under the belief that he had to give eight weeks’ notice.

4. The fact is eight weeks is outside the Award and the Award must be construed that a person cannot be worse off by their contractual arrangements than they would be under the Award.  So it seems from all sides that the two weeks’ notice is the extent of the breach.  When one looks at what has happened, it has been more than inconvenient for the Applicant that the Respondent left his position when he did and as he did, given he had just completed training in the United States. 

5. One need not have particular evidence on this point to realise that if he had stayed for another two weeks, the benefit of that training may have been able to have been handed down to other people in the company; that a successor may have been able to be appointed and that person may, even though they may themselves have had to undergo even more training, have been in a position to assume responsibilities very quickly.

6. In that respect, to my mind, the Respondent did owe the duty to the Applicant. It is for that reason that the Act, when looking at breaches of the Award, does not differentiate between employers and employees as far as liability is concerned.  So, having said that, I do regard the breach as a not insignificant breach.  In assessing what the penalty is, I am guided by a number of decisions.  However, it would seem that all of those decisions contemplate the employer as being the entity that has breached the Act.

7. When looking at what are the common factors relevant to the imposition of a penalty I have been assisted by what has been summarised by Mr Harding in his written submissions. In the matter of Mason v Harrington Corporation Propriety Limited (2007) FMCA 7, paragraphs 26 to 59, Judge Mowbray, or Mowbray FM as he then was, looked at:

   a)the nature and extent of the conduct which led to the breaches,

   b)the circumstances in which their conduct took place,

   c)the nature and extent of any loss of damage sustained as a result of the breaches,

   d)whether there had been similar previous conduct by the respondent,

   e)whether the breaches were properly distinct or arose out of the one course of conduct,

   f)the size of the business enterprise involved,

   g)whether or not the breaches were deliberate,

   h)whether senior management was involved in the breaches,

   i)whether the party committing the breach had exhibited contrition,

   j)whether the party committing the breach had taken corrective action,

   k)whether the party committing the breach had cooperated with the enforcement authorities,

   l)the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and finally

   m)The need for specific and general deterrence.

8. As I say, most of those considerations contemplate an employer as being the person who has committed the breach.  When one is looking at an employee, a lot of those considerations do not apply.  In the judgment that I have given on 28 May, I’ve gone through the nature and extent of the conduct which led to the breaches and the circumstances in which it took place.  I’ve earlier, in these reasons, detailed what I see as the nature and extent of the loss, though I do also talk about that as well in the judgment. 

9. A significant factor is whether or not the breaches were deliberate. As I found, they were most certainly deliberate, though at that stage, I do not think that the Respondent believed he was breaching the FW Act. I am of the view that he believed he was breaching the contract which allowed for eight weeks’ notice rather than the two weeks’ notice. I need to look at whether there is the need for specific and general deterrence.

10. In my view, there is a need for both specific and general deterrence in this case. The penalty needs to bring home to the respondent that he cannot flout the conditions of employment. The penalty also needs to illustrate to employees that complying with the FW Act is a “two way street” and that breaches of the FW Act that damage employers will also be met with condign penalties.

11. Given that the maximum penalty for this conduct is 60 penalty units (which at this point in time equates to $10,200.00), it is my view that the conduct of the Respondent as an individual is appropriately worthy of 25 per cent of the maximum.  That is a total of $2,550.00.

12. As far as the breaches of the award by the Applicant, Jetgo, are concerned, it is correct that the Respondent sought some assistance from the Australian Tax Office as to the non-payment of the superannuation.  Once the Tax Office contacted the Applicant, they did pay the arrears and were subject to a penalty from the Australian Tax Office. 

13. Notwithstanding those matters, it is still a breach and it’s a breach that should not have occurred in the first place.  One may say that the departure of the Applicant in the manner in which it occurred meant that such things hadn’t been calculated.  It still seems, to my mind, that those matters should have been part of the remuneration that was being paid to him or had been paid to him on three different occasions in the course of his employment.

14. Whilst that is of significance, in the overall scheme of things, I do not find that the breach is of such a nature that a very significant penalty ought to be made.  In my view, a penalty of five penalty units, or 1.666% of the maximum, ought be made for this particular breach.  That is a total of $850.00. 

15. As far as the annual leave is concerned, it was obvious that there was some annual leave owing to the Respondent.  The calculation of such was complicated because of the three days “personal” leave.  There did seem to be a “stubbornness” about the conduct of the Applicant in this regard.  My recollection of the evidence of Mr Ryder was that he said that because the Applicant had taken his three days of personal leave, that was all he was entitled to and there wasn’t any annual leave due.

16. Of course, that was not a correct assessment of what he was owed and certainly not a correct assessment of the law. It was not until the final submissions were made that sensible and reasonable submissions, as to the proper amount of annual leave that was due, were made. 

17. In my view, a penalty of 10 penalty units, or 3.333% of the maximum, ought to be made.  That is a total of $1,700.00. 

18. As to whom those pecuniary penalties ought be paid, I have been referred to an authority of United Voice v MDBR 123 Proprietary Limited (No.2) 2015 FCCA 76, a decision of Rangiah J delivered on 4 February 2015.  At paragraph 24, his Honour says:

    “Section 546, subsection (3) of the Act allows the Court to order that a pecuniary penalty or part of a pecuniary penalty be paid to the Commonwealth or a particular organisation or a particular person.  The applicant submits that the pecuniary penalty should be paid to it, while the respondents submit that the whole or part of the penalty should be paid to the Commonwealth.  It is well established that the “usual order” is that a pecuniary penalty is paid to the applicant in a proceedings for breach of provisions, such as section 340 and section 346 of the Act…. This recognises the trouble, risk and expense of bringing proceedings which are in the public interest which advance the objects of the legislation and which benefit the wider community. 

19. As against that statement by His Honour, more recently in the Director of Fair Work Building Industries Inspectorate v Construction, Forestry, Mining and Energy Union, reported at [2015] FCAFC 59, a judgment of the Full Court of the Federal Court of Australia delivered on 1 May 2015, it was said that it must be remembered that penalty hearings are proceedings for breaches of the law of the State. For this reason, the considerations that are applicable in sentencing in criminal matters are also somewhat apposite in setting the penalties in relation to breaches of the Fair Work Act 2009 (Cth).

20. In my view, this aspect should be at the fore of such proceedings and it is a matter for which the Full Court has given a timely reminder. The Act talks about the pecuniary penalty needing to be paid to the Commonwealth or a particular organisation. His Honour, Rangiah J, talked about the trouble, risk and expense of bringing proceedings which are in the public interest which advance the objects of the legislation and which benefit the wider community. However, in my view, whilst that is a consideration, the fact is that where persons have infringed against the State, then the penalties imposed ought then be paid to the State. The legislation allows otherwise but, in my view, such should be the exception rather than the rule. Prosecutions for breaches should not be seen as another method by which aggrieved applicants can be compensated. Persons should pursue breaches of the FW Act, not because it may enrich them but because it is the right thing to do in a fair and just society.

21. So therefore the penalties that I have just awarded against both the Applicant and Respondent shall be paid to the Commonwealth of Australia. 

22. With regard to costs, this action has been taken under the Fair Work Act 2009 (Cth). Notwithstanding that there have been other matters, such as matters of contract and the common law remedies also litigated in this matter, it is conceded by both parties that s.570 of the FW Act applies to the whole of the proceeding including the claims and counter claims in the jurisdiction under the FW Act, as well as that in the accrued or associated jurisdictions.

23. I have been referred to Goldman Sachs JBWere Services Pty Ltd v Nikolich [2007] FCAFC 120 at paragraphs 81 to 95, 164 to 166 and 372 to 380 by Counsel as authority for that proposition. Whilst the Applicant has also pointed to recent decisions of this Court that have been able to compartmentalise the action, in my view, this was not such a case. In my judgment, I found that there had been, on the facts, a breach of contract. I then had to look at whether the Air Pilots Award, meant that those sorts of contractual obligations were, in any way, counteracted.

24. In finding that they were not and that the common law remedy could be given, it still entailed an examination of the Award and therefore, of the Fair Work Act. I do not find that I can compartmentalise any part of this proceeding, so therefore, s.570 would apply to it all.

25. Section 570, subsection (1) starts:

    “A party to proceedings, including an appeal, in a Court, including the Court of a State or Territory in relation to a matter arising under this Act, may be ordered by the Court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or section 569 or 569A.”

    Subsection (2) says:

    “The party may be ordered to pay costs only if the Court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or

    (b)The Court is satisfied that the party’s unreasonable act or omission caused the other party to incur the costs.”

26. What I must be satisfied of is that, in relation to the whole of this proceeding, it was the unreasonable act of the Respondent that caused the Applicant to incur the costs that they did.  The Applicant has referred me to letters that were sent.  These letters were annexed to the affidavit of Mr Mossman sworn on 30 June 2015.  The first letter dated 2 February 2015 and labelled “without prejudice save as to costs” says importantly, this:

    “We are instructed that our client is prepared to settle all matters between the parties in exchange for the payment of $25,000 from your client.  Our offer is open until 5 pm on Wednesday 4 February 2015.”

27. When that deadline passed on 5 February 2015, a further letter was sent by the applicant to the Respondent, which read:

    “Our client is prepared to settle all matters between the parties upon payment by your client of the sum of $15,000.  The offer is subject to the parties entering into a mutually acceptable deed of release and no binding agreement will be made until both parties have signed a deed.  This is offer is open to 4 pm on 6 February 2015.”

28. I should say that these occurred just before trial.  The trial started on Monday 9 February 2015, so they were made just before that date.  The question then is whether the failure to accept that offer, or either of those offers, but more importantly, the first offer, was an unreasonable act or omission causing the other party to incur costs. 

29. In Shea v Energy Australia Services Pty Ltd [2014] FCAFC 167, a decision of the Full Court of the Federal Court delivered on 8 December 2014 at paragraph 80, the Court said:

    “Caution should be exercised as to how a Calderbank offer, even a generous one, is viewed in such circumstances. Calderbank letters presuppose what might be called a “costs jurisdiction” in contrast to the usual rule in the Fair Work Act claims. To group together contractual and Fair Work Act claims in an offer may permit the conclusion that the refusal of the offer was unwise, even unreasonable, but it does not follow that such is an unreasonable act or omission for the purposes of section 570, subsection (2)”

30. To my mind, the Court there was clearly differentiating between a refusal of an offer being unreasonable and an unreasonable act.  An unreasonable act in the circumstances, to my mind, is not simply the rejection of the offer.  That refusal may have been unwise, given the eventual result, but that may not mean that it is necessarily unreasonable. 

31. On my notations of the trial, after the first day, it was somewhat obvious that the Chief Executive Officer, Mr Ryder, did not really know what it was that he was claiming in regard to the costs of the initial training.

32. There were a number of emails that had not yet come through.  Mr Ryder, at that point, was steadfast that $39,600.00 that he had invoiced Mr Goodsall was an appropriate amount, but he could not, as it were, talk about what was the actual cost to Jetgo by Mr Goodsall’s refusal to pay his tuition at that point. 

33. This issue turned very much on a number of emails that had not yet been discovered and those matters had to be discovered overnight.  Eventually, it was that I found, (and I did seem to put some of the words in Mr Ryder’s mouth), that it was the fact that, rather than disturb cash flow by paying $39,600.00 itself,  Jetgo simply used one of the training vouchers, as it were, because of the ECC lease agreement and that in doing so he could not quantify what that was until there was the discovery of another email which said that there was $21,000.00 in the internal reckonings between ECC and Jetgo.

34. It was that email that I eventually relied upon in setting what was the amount of $21,000.00 plus interest in regard to the claim made by the Applicant. In that situation, I cannot see that, whilst it may have been unreasonable or unwise to have rejected the offer made by the Applicant, the act or rejection itself was unreasonable. For that reason, I do not think that the provisions of s.570(2) have been met. In all the circumstances then, I make no order as to costs.

I certify that the preceding thirty-four (34) paragraphs are a true copy of the reasons for judgment of Judge Vasta

Date:  15 July 2015