Joseph v Worthington
[2016] VCC 1883
•15 November 2016
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE | Revised Not Restricted Suitable for Publication |
Case No. AP-16-1112
| DAVID JOSEPH (T/A DAVID JOSEPH & CO LAWYERS) | Appellant |
| v | |
| JAYNE WORTHINGTON (DEPARTMENT OF STATE DEVELOPMENT BUSINESS AND INNOVATION) | Respondent |
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JUDGE: | HIS HONOUR JUDGE MURPHY | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 15 November 2016 | |
DATE OF RULING: | 15 November 2016 | |
CASE MAY BE CITED AS: | Joseph v Worthington | |
MEDIUM NEUTRAL CITATION: | [2016] VCC 1883 | |
REASONS FOR RULING
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Subject: CRIMINAL LAW
Catchwords: Appeal – failure to pay accrued superannuation entitlements – jurisdiction – limitation of action – quantum of claim – de novo hearing – contract law – costs
Legislation Cited: Long Service Leave Act 1992 (Vic); Fair Work Act 2009 (Cth)
Cases Cited:Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; R v Industrial Appeals Court; ex parte Barelli’s Bakeries Pty Ltd [1965] VR 615; R v Industrial Appeals Court; ex parte Circle Realty Pty Ltd [1980] VR 459; John Mann International Ltd v Vehicle Inspectorate [2004] All ER (D) 434 (May); Maughan Thiem Auto Sales Pty Ltd v Cooper (2014) 222 FCR 1
Judgment: Appeal dismissed with costs
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APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Mr K McDonald | David Joseph & Co Lawyers |
| For the Respondent | Mr P Hanks QC | Maddocks |
HIS HONOUR:
- This is an appeal brought by the appellant against a decision of the Magistrates’ Court in relation to a claim under the Long Service Leave Act.[1] The matter is to be dealt with as a hearing de novo. Mr Hanks QC had the carriage of the case on behalf of the respondent informant from the relevant government department.[2] The claim was resisted by Mr McDonald on behalf of the appellant/defendant.
[1] 1992 (Vic) (“Long Service Leave Act”).
[2] The relevant government department was the Department of State Development, Business and Innovation which is now referred to as the Department of Economic Development, Jobs, Transport and Resources.
- There were three issues agitated on the appeal, which apparently was on a narrower set of grounds than what was dealt with in the Magistrates’ Court:
a. The first was whether the court had any jurisdiction to determine the matter or whether the matter should be dealt with under the Fair Work Act[3] by way of a claim in the Fair Work Commission.
b. If that jurisdictional point was not applicable, the next point taken by the employer, Mr Joseph, was that the matter was subject to a limitation of action, and that therefore the proceeding had not been issued in time.
c. The third point was the quantum of the claim.
[3] 2009 (Cth) (“Fair Work Act”).
Jurisdiction
- Dealing with the points in that order, first jurisdiction, I accept the submissions of Mr Hanks QC on behalf of the respondent that this court has jurisdiction. The matter is not uncomplicated, but I am satisfied that the structure of the Fair Work Act is such that it did preserve the provisions of the Long Service Leave Act in Victoria, and in particular the fact that new awards, or modern awards, were not to have a long service leave provision in them under section 155:
“A modern award must not include terms dealing with long service leave.”[4]
[4] Fair Work Act 2009 (Cth), s. 155.
- Mr McDonald raised an argument that as a result of provisions in the 2004 award,[5] which was the relevant employment instrument for the employee in 2004, the provisions of the Long Service Leave Act were incorporated or given legal effect by the Fair Work Act, and on that basis any claims for outstanding long service leave are to be dealt with as though they arise out of an industrial instrument that operates under the power of the Fair Work Act.
[5] Victorian Legal Professional, Clerical and Administrative Employees Award 2004.
- I am satisfied that this analysis is of no validity, and I accept the submissions of Mr Hanks QC on this point. It is clear that, at some stage before 2010, long service leave could be incorporated in an award, and, if that was the case, and it still remained a continuing obligation, then it may be that in certain circumstances claims for long service leave could and ought to be dealt with within the jurisdiction of the Fair Work Act.
- In this case, however, I am satisfied that firstly, the relevant provisions of the 2010 award make no reference to long service leave. Secondly, in fact the entitlement, which is the termination entitlement that is being sued on, only arose on 7 December 2012, so any awards that might have been applicable earlier are well and truly inapplicable in the present case.
- Further, the point made by Mr Hanks QC that the provision of the 2004 award which makes reference to, in clause 36:
“An employee is entitled to long service leave in accordance with the provision of the Long Service Leave Act 1992 (Vic)”
is not applicable for a number of reasons. Firstly, that relevant award has been terminated, and the relevant termination instrument was provided.
- Secondly, as I said, from 2010 the modern award does not have any provision for long service leave. Under the provisions of Project Blue Sky,[6] the interpretation of statutory schemes, which in this case involves the Fair Work Act that followed the reference of power by the Victorian Government, and the Long Service Leave Act, which has not been repealed, each have to be given a harmonious analysis.
[6] Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355.
- The provision must be considered as an overall whole, and doing that, the Fair Work Act obviously allows for the maintenance of long service leave provisions at the State level, and also allows at some stage for award provisions to govern long service leave. There is no award provision here.
- I am satisfied by Mr Hanks’ second point that, even if the 2004 provision was governing at some stage, when it was repealed, the Victorian Act was revived. In my analysis, I accept that Mr Joseph, the employer, does not get to first base, because the long service leave that was to govern his employee’s were to be dealt with under the Long Service Leave Act and no other Act.
- Mr McDonald also relied on the case of Maughan Thiem Auto Sales Pty Ltd v Cooper,[7] a decision of the Full Court of the Federal Court involving a South Australian industrial award.[8] That award had contained in it a comprehensive long service leave provision. Therefore, this shows the distinguishing feature when compared to this case, where no such provisions are present in the relevant award.
[7] Maughan Thiem Auto Sales Pty Ltd v Cooper (2014) 222 FCR 1.
[8] Vehicle Industry – Repair, Services and Retail (Long Service Leave) Award 1977.
- The main provision of that award[9] made it expressly clear that the long service leave is to be governed by that particular award, and that of itself expressly says that the award is to govern long service leave. It is Clause 4 of the Vehicle Industry – Repair, Services and Retail (Long Service Leave) Award 1977 which expressly says:
“An employee shall be entitled to long service leave with pay in respect of service with an employer as in this award provided”.
[9] Vehicle Industry – Repair, Services and Retail (Long Service Leave) Award 1977.
- Here, on the other hand as Mr Hanks put, section 36 of the award before me merely signposts the fact that award deals with a whole lot of things, but you get your long service leave under the Long Service Leave Act.
14.The Long Service Leave Act and the Fair Work Act, therefore, act in harmony. Accordingly, for all these reasons, I do not accept the point that the obligation on Mr Joseph to pay long service leave is derived as a matter of jurisprudential power, or jurisdiction, under the Fair Work Act.
Limitation of Action
- The second matter to be determined is the limitation period. Mr McDonald put that this was not a continuing offence, and that the offence had been committed on the day of termination when the money was not paid, being the outstanding accrued annual leave. Mr Hanks, on the other hand, put that this is a continuing offence, and continued up until the money was actually paid.
- There are two decisions that were argued before me, considering analogous provisions, that address this issue, namely Barelli’s Bakeries[10] and then Circle Realty.[11]
[10] R v Industrial Appeals Court; ex parte Barelli’s Bakeries Pty Ltd [1965] VR 615.
[11] R v Industrial Appeals Court; ex parte Circle Realty Pty Ltd [1980] VR 459.
- I am satisfied that both of those decisions are fully on point. I do not accept the proposition that there is some sort of disjunct between the criminal offence and the civil obligation to pay the outstanding long service leave. I am satisfied that the analysis put by Mr Hanks that I should follow the reasoning of the majority, or the plurality, in Barelli’s Bakeries together with the reasoning of Smith J.
- Similarly, the Circle Realty case which was relied on by Mr McDonald also supports that analysis, so I do not accept the proposition that this is a not a continuing offence.
- Mr McDonald also relied on the case of John Mann International.[12] This case considered a different legislative scheme and there was a requirement that money be paid upon the termination of employment. In a sense, it was a remedial piece of legislation designed to have monies owed to terminated employees paid, with a criminal sanction to enforce payment. It must have a remedial approach to it, which in a sense, is not so applicable in the case of John Mann International, so it is distinguishable in any event.
[12] John Mann International Limited v Vehicle Inspectorate [2004] All ER (D) 434 (May).
- Mr McDonald has not put anything forward that satisfies me that I should not follow the reasoning of all of the judges in the two cases of Barelli’s Bakeries and Circle Realty.
Quantum of compensation
- The next matter to be dealt with in this appeal was the question of the quantum of compensation. In his affidavit, Mr Joseph accepted that he has to pay long service leave to the employee if the jurisdictional points are against him, but disputed the quantum of the claim that was being made.
- Mr Hanks QC put that the quantum of the amount sought is the sum of $8,405.79, whereas Mr McDonald put that the quantum of the compensation should be less than that sought, because the rate of pay of the employee was in fact about $100 a week less than what she claimed.
- The matter was to be dealt with on affidavits, as there had been some order made that the competing evidence be by way of affidavit. Neither of the deponents have been cross-examined, which makes it difficult to determine on what basis to make a finding as to what the ordinary rate of pay was.
- The respondent submitted that the ordinary rate of pay was as set out in the affidavit of the employee and as set out in an annexure to her affidavit, which was the wages book. As I said, Mr McDonald put that the amount was about $100 a week less, on the basis that the employee was to be paid at the award rate, however, was also being paid an extra $100 a week as a result of an agreement between herself and Mr Joseph in or about 2008, soon after he took over the business, which was in lieu for a number of entitlements, including holiday pay and long service leave, he believed.
- The response of Mr Hanks QC on that point was, first, that there was no power to contract out of long service leave under the Long Service Leave Act. I accept that proposition. Secondly, I accept the submission of Mr Hanks QC that the amount of the ordinary pay should be the amount of $941.70 as set out in the wages book as this is what the employee was being paid. In a sense, the wages book is a business record of the employer and therefore, is prima facie evidence of what it contains.
- As I indicated during argument, there is an issue of estoppel. Mr Joseph argued that he was not bound to say that her ordinary amount of pay was $941.70 per week given that she had been working for Mr Joseph for four years being paid that amount, which was recorded in the wages book.
- Paragraph 5 of Mr Joseph’s affidavit is somewhat equivocal. Mr Joseph is seeking to retrospectively explain that the employee was a bookkeeper, and was in a sense required to accrue moneys for the additional $100 Mr Joseph states that they agreed upon as additional moneys in lieu of leave. Again, however, there is a lack of specificity here. I do not accept this part of Mr Joseph’s affidavit that there was some agreement that the employee’s ordinary pay was $100 per week less, and that therefore, the amount for the long service leave should be at some lower level.
- Contract law is an objective test – the test is what an objective observer, looking at the contractual relationship between the parties, would have said what the agreement was. The wage book of the company states that the employee was being paid $941.70 per week, and this is how much the employee was being paid. The employee was on an award wage, and was given a $100 per week pay rise soon after Mr Joseph took over the firm. The employee was then paid this amount week-in, week-out.
- Given that Mr Joseph was the employer, he had access to his own set of pay books that the employee was filling in every week to outline her wages.[13] I do not accept the proposition that any amount other than $941.70 was her ordinary rate of pay for the purposes of the long service leave claim.
[13] The wage record is Exhibit SCS-05.
- Even though there has been no cross-examination on the contents of the two affidavits of either of the two deponents, I do not accept the submission of Mr McDonald that I must make a decision on this point on the criminal standard of beyond reasonable doubt. The quantum of the claim is really a civil amount which I need find on the balance of probabilities.
- On the balance of probabilities, I am satisfied that the ordinary rate of pay was the $941.70 a week. Even if I were required to find on this point on the criminal standard of beyond reasonable doubt, I would find so on that basis, because I cannot find any matter to give me a reasonable doubt in this respect.
- In coming to reach that conclusion, I do not accept that the affidavit of Mr Joseph creates any reasonable doubt on the point as to how much the employee’s ordinary rate of pay was, and from that ordinary rate of pay the quantum of the long service leave claim that follows.
- Accordingly, for the above reasons, I do not accept the appeal.
Penalty and Costs
- Mr Hanks QC, for the respondent, has sought a proposed Order. I do not propose to make a declaration. In a sense, a finding of a breach of the Act is equivalent to a declaration, so I do not propose to make the declaration sought. I will, however, make an Order that the appellant pay Susan Scorah the outstanding amount of $8,405.79 pursuant to section 161 of the Long Service Leave Act.
- In relation to interest, there is power to order interest be paid under the Act,[14] and there has been nothing put to me as to why the employee should not be entitled to interest as calculated under the Long Service Leave Act in the amount of $3,386.91.
[14] Long Service Leave Act 1992 (Vic), s. 160(5).
- In relation to penalty, Mr Hanks QC, in a bold submission, demanded the maximum penalty. I do not accept his submission on that point. The breach was not deliberate, but it was, at the very least, negligent, in the sense that Mr Joseph, in his own affidavit, said he did not believe he had to pay long service leave. He does now, however, accept that he does have to pay it.
- So, in those circumstances, I propose to impose the same penalty as the learned Magistrate, without conviction. The fine is $1500.00 and I give Mr Joseph a stay of three months to pay the fine.
- The next issue is costs. The respondent informant sought legal costs as an agency prosecuting the matter on behalf of the employee, Ms Scorah, and a schedule of costs was tended on the civil scale of the County Court, which is 80 per cent of the Supreme Court scale.
- The usual practice in relation to prosecutions by agencies, other than Victoria Police, is that they are awarded legal costs, and it is usually dealt with by way of summary justice by the relevant judge or magistrate.
- The magistrate ordered $4580.00 in costs in the Magistrates’ Court. The matter has now escalated to this court, where the claim is now in excess of $51,000. This amount includes the approximate amount of $4000 that was ordered in the Magistrates’ Court and includes all costs to date.
- The matter was not reached on a couple of occasions in this court, which has again raised additional costs. The matter was the subject of extensive written submissions by each party, and the preparation of affidavits which was, in addition to oral evidence, how the proceedings were conducted below. Nevertheless, supplementary submissions and affidavits were filed by both parties.
- Costs are ultimately a matter of discretion of the Court. One of the continuing problems in the legal system is the sheer quantum of costs, often deterring people from exercising their legal rights. However, at the same time, a well-advised litigant would understand that, in a case like the present, there was always a risk of costs if the matter goes further and there is an adverse outcome.
- I do not propose to engage in a nit-picking analysis of the items put on the Schedule by the respondent – where do you get the $51,000 from, Mr Hanks?
(Discussion)
- This court is operating effectively as an appeal against the Magistrates’ Court. I do not accept that the Supreme Court scale or 80 per cent of it in the civil scale is an applicable way to deal with the matter. I propose a rough and ready approach to the question of costs, and do not see that the amount of costs should be analogous to a party/party cost in a civil matter.
- The amount of costs that was fixed in the Magistrates’ Court was $4,580. With all respect to Mr Hanks’ seniority, what I propose is that the relevant amount of costs for this court should be fixed at $13,740, which is three times the amount of the costs in the Magistrates’ Court, plus the amount in the Magistrates’ Court, which makes a total amount of $18,320.
- The Orders of the Court are as follows:
a)I set aside the Orders of the learned Magistrate;
b)ORDER that the appellant pay Susan Scorah the outstanding entitlement, being $8,405.79, pursuant to section 161 of the Long Service Leave Act;
c)ORDER that the appellant pay Susan Scorah interest on the outstanding entitlement, pursuant to section 160(5) of the Long Service Leave Act, which calculated at this day, amounts to $3,386.91;
d)ORDER that no conviction against the appellant be recorded;
e)ORDER that the appellant is liable to a fine of $1,500.00 with a stay of three months to pay the fine;
f)ORDER that the appellant is to pay the respondent’s costs, fixed at $18,320.00.
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