Johnson v Celik Investments Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Johnson v Celik Investments Pty Ltd [2007] FCA 846

ANITA JOHNSON v CELIK INVESTMENTS PTY LTD T/AS CAFE REMA
VID 1536 OF 2007

GORDON  J
11 MAY 2007
MELBOURNE


IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

VID 1536 OF 2007

BETWEEN:

ANITA JOHNSON
Applicant

AND:

CELIK INVESTMENTS PTY LTD T/AS CAFE REMA
Respondent

JUDGE:

GORDON  J

DATE OF ORDER:

11 MAY 2007

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:

1.A penalty of $1,000 be imposed on the respondent.

2.The $1,000 penalty be paid to the applicant.

3.The respondent pay the applicant compensation in the sum of $8,878.80.

4.The respondent pay the penalty and the compensation to the applicant within 28 days of this order.

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


IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

VID 1536 OF 2007

BETWEEN:

ANITA JOHNSON
Applicant

AND:

CELIK INVESTMENTS PTY LTD T/AS CAFE REMA
Respondent

JUDGE:

GORDON  J

DATE:

11 MAY 2007

PLACE:

MELBOURNE

EX TEMPORE REASONS FOR JUDGMENT

  1. Anita Johnson, the applicant, was employed at the Café Rema from about May 2004 until 15 September 2005 when the applicant’s employment was terminated.  The circumstances in which her employment was terminated were described by her in the following terms:

    “2.I was employed at the Café Rema from about May 2004 until the date my employment was terminated on 15 September 2005.

    …

    5.…The business was a small city restaurant that employed about 6 or 7 people mainly casuals.

    …

    7.On or about 30 August 2005 I informed Anna [a director of the respondent] that I was pregnant.  Anna replied “I thought so.  You should have told me earlier.”

    8.Because of Anna’s remark, I felt it necessary to disclose to her that I had had a miscarriage with my last pregnancy, and that this time I had wanted to see how the pregnancy developed for a while before telling people about it.

    9.Anna said, “Ok, sorry, but you still should have told me because if you injured yourself you could sue us.”  I said that I was healthy and that I would continue working until Christmas, then less hours after that, if possible.

    10.Anna replied, “We’ll see.”

    11.On Thursday, 15 September 2005, I was ill with gastroenteritis.  I rang work and spoke to another employee, Chelsea, who had answered the phone.  I left a message with her to say that I had gastroenteritis and would not be able to attend work that day.

    12.Chelsea subsequently called me from work, and told me I had to speak to Ali [another director of the respondent].  I then rang Ali.

    13.Ali was very aggressive about the fact that they were short staffed, and that I had spoken to Chelsea and not to him.  I said I knew they were busy, but there was nothing I could do.  He told me I had to come in to work,…

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Details
Case
[2007] FCA 846
Decision Date

CaseChat Overview and Summary

In the Federal Circuit Court, Ms Johnson initiated proceedings against Celik Investments Pty Ltd for unlawful termination of her employment, seeking compensation, a penalty, and costs. The central dispute centred around the calculation of compensation for lost wages and the appropriateness of a penalty and costs, given the employer's conduct and the statutory framework governing termination claims. The court was required to determine the correct amount of compensation in light of the statutory cap and to assess whether a penalty and costs were warranted under the circumstances.

The court meticulously evaluated the compensation by considering the statutory factors outlined in s 170CH(7) and (8). It determined that the statutory limit on compensation did not exceed the independently calculated amount, resulting in no adjustment. The court acknowledged Ms Johnson's claim of contributing factors to her post-natal depression but found insufficient evidence to support it, thereby not awarding additional compensation for this claim. Regarding the penalty, the court exercised its discretion, taking into account the gravity of the employer's conduct, which warranted condemnation. A penalty of $1,000 was imposed, payable to Ms Johnson. The court also considered the costs under s 170CS of the Act but concluded that the respondent's failure to accept a settlement offer did not warrant an award of costs.

The court's reasoning was grounded in statutory interpretation and the specific provisions of the Fair Work Act. It ensured that the compensation calculation adhered to the legislative framework, and the penalty was appropriate given the employer's actions. The court's decision was precise, reflecting a balanced approach between statutory requirements and the unique circumstances of the case.

The final orders included a penalty of $1,000 payable to Ms Johnson, compensation of $8,780.80, and mandated that both the penalty and compensation be paid within 28 days of the order. This decision underscored the importance of statutory adherence in employment termination claims while also allowing for discretion in penalty imposition based on the employer's conduct.

Orders

Orders of the court

1. A penalty of $1,000 be imposed on the respondent.

2. The $1,000 penalty be paid to the applicant.

3. The respondent pay the applicant compensation in the sum of $8,878.80.

4. The respondent pay the penalty and the compensation to the applicant within 28 days of this order.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

GORDON J
Ms Johnson’s sworn evidence was that she suffered from post-natal depression after the birth of her child. She believes that her unlawful termination was a contributing factor towards this depression. No expert medical or psychiatric evidence was tendered to support the claim. In the circumstances, I have allowed no additional amount of compensation under this subsection. Conclusion as to amount of compensation Given the analysis set out above, I have assessed the applicant’s compensation at $8,780.80 gross for lost wages. It is then necessary to examine whether this amount exceeds the statutory limit. The statutory limit is calculated at the equivalent of 6 months remuneration: s 170CH(8). Ms Johnson submits that her gross weekly wage was $392.00. Given the lack of evidence to the contrary, it is appropriate to assume that her period of employment six month prior to termination was continuous (thus not enlivening s 170CH(8)(b)) and that her rate of pay was consistent with award requirements. The statutory limit (assessed to be $10,192 gross) is greater than the amount of compensation independently calculated above. Accordingly, there is no adjustment to the amount of compensation to be awarded to the applicant. PENALTY The applicant seeks a penalty of $5,000 payable to her personally under s 170CR(1)(a). Such an order is discretionary. In Laz v Downer Group Ltd (2000) 108 IR 244 Moore J stated at [44]:“…the mere fact that there has been a termination in contravention of the Act does not, without more, give rise to a situation where a penalty should (rather than might) also be imposed.” When assessing whether a penalty was appropriate, French J in Fox v St Barbara Mines Ltd [1998] FCA 621 cited with approval by Moore J in Laz at [45] said:“…[penalties] are punitive in character and must be assessed having regard, inter alia, to the gravity of the conduct complained of, the existence of mitigating circumstances and the need to deter the repetition of the conduct whether by the employer in question or generally.” In all the circumstances of this case, I consider that a penalty should be imposed in addition to the order awarding compensation. The conduct of the respondent in its dealings with the applicant was such as to merit condemnation by imposing a penalty of $1,000. Section 356(b) provides that a penalty can be paid “to a particular ... person”. The penalty can be paid to the applicant: see Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union v DMG Industries Pty Ltd (1999) 89 IR 360 and Stewart v Nickles [1999] FCA 888 at [78].COSTS The general rule under s 170CS of the Act is that no costs orders are made, except where the proceeding was instituted “vexatiously or without reasonable cause”, or where a party has caused costs to be incurred by another party as a result of some “unreasonable act or omission…in connection with the conduct of the proceeding”. Mr McHugh, the applicant’s solicitor, submitted that the respondent ought to pay the applicant’s costs on a party and party basis from 12 September 2006, being the date on which the applicant made an offer to settle the proceedings. Put simply, the applicant submits that it was an unreasonable act by the respondent not to accept that settlement offer. The applicant referred to the decision of Marshall J in Sallehpour v Frontier Software Pty Ltd [2005] FCA 663. The facts of that case were very different. I do not consider that the respondent’s failure to accept the settlement offer did fall within s 170CS(1) of the Act. Moreover, as Finkelstein J said in Zhang v The Royal Australian Chemical Institute Inc (No 2) [2004] FCA 1626 at [7]: “… even if a case falls within one of the limbs of s 170CS(1), there is still a discretion whether or not to award costs against a party.”

Ratio Decidendi

Legal Principle Established

Established by: GORDON J

In Vickery at [14]-[15], Finkelstein J described the approach to be adopted in calculating an amount of compensation in the following terms:“The factors that I must consider in calculating the amount of compensation payable to a person whose employment is terminated in breach of s 170CK(2) are set out in ss 170CH (7) and (8): see 170CR(2). Relevantly those subsections provide:170CH(7) Subject to subsection (8), in determining an amount … the [Court] must have regard to all the circumstances of the case including:(a)the effect of the order on the viability of the employer’s undertaking, establishment or service; and (b)the length of the employee’s service with the employer; and (c)the remuneration that the employee would have received, or would have been likely to receive, if the employee’s employment had not been terminated; and (d)the efforts of the employee (if any) to mitigate the loss suffered by the employee as a result of the termination; and (e)any other matter that the [Court] considers relevant.170CH(8) In fixing an amount … for an employee who was employed under award conditions immediately before the termination, the [Court] must not fix an amount that exceeds the total of the following amounts: (a) the total amount of remuneration: (i) received by the employee; or (ii) to which the employee was entitled; (whichever is higher) for any period of employment with the employer during the period of 6 months immediately before the termination (other than any period of leave without full pay) …(b) …I am required to consider and give effect to each of the factors listed in s 170CH(7): GH Operations Pty Ltd t/as The Grant Hyatt Melbourne v V Smith (14 May 2001, AIRC, Giudice P, O’Callaghan SDP and Smith C, Print PR904136) at 10. After assessing the appropriate compensation independently of the statutory limit, I must then determine whether the assessment is over that limit. If it is the statutory limit is applied: Cox v South Australian Meat Corporation (1995) 60 IR 293, 302. In determining the amount of compensation payable to the applicant, and consistent with the approach adopted by Finkelstein J, each subsection of s 170CH(7) must be addressed. For the purposes of s 170CH(7)(a), the onus is on the employer to bring evidence of the effect of the award of compensation on the business: see D A Moore v Highpace Pty Ltd (18 May 1998, AIRC, Boulton J, Watson SDP and Whelan C, Print Q0871), cited in Vickery at [16]. The respondent has not submitted any evidence. However, the Court has been told by the respondent’s former solicitor that the directors of the respondent has informed him that the respondent is not trading and the respondent does not have sufficient funds to continue to engage legal representation to defend this matter. For the purposes of s 170CH(7)(b), it was common ground between the parties that the applicant was employed by the respondent and/or its predecessor in title for approximately 16½ months from about May 2004 to 15 September 2005 and that she normally worked about 28 hours per week.