Kodari Securities Pty Ltd v Tran

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FEDERAL COURT OF AUSTRALIA

Kodari Securities Pty Ltd v Tran [2020] FCAFC 164

Appeal from: Tran v Kodari Securities Pty Ltd [2019] FCA 968
File number: NSD 1203 of 2019
Judgment of: KATZMANN, MORTIMER AND JACKSON JJ
Date of judgment: 1 October 2020
Catchwords: INDUSTRIAL LAW — general protections claim — adverse action — where primary judge upheld employee’s claim that his employment was terminated because he exercised a workplace right and rejected employer’s version that he had resigned — where claim turned on whether employee had informed employer that he wanted to seek legal advice before signing a new contract and primary judge preferred his evidence to evidence of employer’s witnesses, whether primary judge fell into appealable error — whether finding contrary to compelling inferences or incontrovertible facts — whether primary judge erred in approach to assessment of economic loss
Legislation:

Evidence Act 1995 (Cth) s 140(2)

Fair Work Act 2009 (Cth) ss 340, 343, 361
Cases cited:

Abalos v Australian Postal Commission (1990) 171 CLR 167

Branir Pty Limited v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424

Briginshaw v Briginshaw (1938) 60 CLR 336

Devries v Australian National Railways Commission (1993) 177 CLR 472

Fox v Percy (2003) 214 CLR 118

Lee v Lee (2019) 266 CLR 129

Liquor Hospitality and Miscellaneous Union v Arnotts Biscuits Ltd (2010) 188 FCR 221

Queensland v Masson [2020] HCA 28; 94 ALJR 785

Warren v Coombes (1979) 142 CLR 531

Division: Fair Work Division
Registry: New South Wales
National Practice Area: Employment and Industrial Relations
Number of paragraphs: 74
Date of hearing: 21 August 2020
Counsel for the Appellants: Mr A Cornish
Solicitor for the Appellants: Mitry Lawyers
Counsel for the Respondent: Mr D Mahendra
Solicitor for the Respondent: Danny King Legal

ORDERS

NSD 1203 of 2019
BETWEEN:

KODARI SECURITIES PTY LTD (ACN 147 963 755)

First Appellant

YASHAR (MICHAEL) KODARI

Second Appellant

GEORGE KODARI

Third Appellant
AND:

STEVEN TRAN

Respondent
AND BETWEEN:

STEVEN TRAN

Cross-Appellant
AND:

KODARI SECURITIES PTY LTD (ACN 147 963 755) (and others named in the Schedule)

First Cross-Respondent

ORDER MADE BY:

KATZMANN, MORTIMERAND JACKSON JJ

DATE OF ORDER:

1 OCTOBER 2020

THE COURT ORDERS THAT:

1.The appeal be dismissed.

2.The cross-appeal be dismissed.

3.There be no order as to costs.

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


REASONS FOR JUDGMENT

THE COURT:

  1. This appeal challenges two factual findings which underpinned the conclusions of the primary judge that the appellants, Kodari Securities Pty Ltd, Michael Kodari and George Kodari, took adverse action against an employee of Kodari Securities, Steven Tran, because he had exercised or sought to exercise a workplace right.  For convenience, we will call each of the Kodaris by his first name.  No discourtesy is intended.

    The proceeding below

  2. In the proceeding below, Mr Tran alleged that Kodari Securities took adverse action against him, contrary to s 340 of the Fair Work Act 2009 (Cth), by terminating his contract of employment…

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Details
Case
[2020] FCAFC 164
Decision Date

CaseChat Overview and Summary

Kodari Securities Pty Ltd v Tran involved a dispute between an employer and an employee regarding the termination of employment under the Fair Work Act. Kodari Securities, a family-owned investment services firm, employed Mr Tran as Chief Operations Officer until his abrupt termination in November 2016. Mr Tran claimed that his employment was terminated due to his exercise of a workplace right to seek legal advice before signing a new employment contract, while Kodari Securities argued that he had resigned. The primary judge found in favour of Mr Tran, leading to the current appeal.

The legal issues the court had to address centred on whether the primary judge correctly assessed the evidence presented by both parties. Specifically, the court needed to determine whether the primary judge erred in finding that Mr Tran had sought legal advice before signing the new contract and whether this led to his termination. Additionally, the court examined whether the primary judge's findings were contrary to compelling inferences or incontrovertible facts and whether he erred in his approach to assessing economic loss.

In its reasoning, the court held that the primary judge did not fall into appealable error. The court found that the primary judge gave adequate consideration to the evidence and that his conclusions were reasonable. The court emphasised that appellate courts must give weight to the trial judge's observations and the advantage they had in seeing and hearing the witnesses. The court concluded that the primary judge's findings were not contrary to compelling inferences or incontrovertible facts and that there was no error in his approach to assessing economic loss.

The court dismissed the appeal and upheld the primary judge's decision, resulting in the following orders: 1) the appeal be dismissed, 2) the cross-appeal be dismissed, and 3) there be no order as to costs.

Orders

Orders of the court

1. The appeal be dismissed.

2. The cross-appeal be dismissed.

3. There be no order as to costs.

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

Background

Background to the litigation

At the trial the allegation that George was involved in the adverse action was not pressed, nor was the claim that Michael was involved in the alleged coercion. The primary judge upheld both claims under the Fair Work Act and made orders requiring Kodari Securities, Michael (by reason of involvement in the adverse action), and George (by reason of his involvement in the coercion) to pay Mr Tran penalties and compensation.The relevant factual background Kodari Securities is a family-owned investment services firm. Since December 2010 the sole shareholder and director has been Yashar Kodari, known as Michael. Michael is George’s son. George was employed or retained by Kodari Securities at the time of the events the subject of the proceedings. Mr Tran is a martial arts champion who worked as a bodyguard since about 1989 and has held senior security positions in the Philippines and Australia. Between 2009 and 2015 he operated his own business providing security services. He holds an Advanced Diploma in Security Risk Management and a Diploma in Business Management. Kodari Securities employed Mr Tran from May 2016 until November 2016, pursuant to an oral contract. His annual salary was $150,000, plus superannuation, and he was provided with a company car, first a Mercedes S-Class, then a 2015 Maserati. Part of his job involved driving the vehicle to pick up and drop off Michael. Between May and October 2016 Mr Tran was involved in establishing an internal administrative structure for the company. He was given the title of Chief Operations Officer. His role, subject to Michael’s direction, was to manage everything in the business that did not amount to financial securities trading. That included obtaining legal advice; setting up an accounting team to assist with ongoing compliance issues concerning wages, superannuation and record-keeping; hiring a marketing consultant to boost Michael’s image and the image of the company; engaging an IT contractor to implement security procedures and protect the business against cyber-attacks; implementing a recruitment system; and setting up a system to improve conditions at the workplace, including work health and safety, and curtail staff turnover. Mr Tran’s employment came to an abrupt end on 11 November 2016. In the period leading up to that fateful event, Mr Tran had a discussion with Michael about implementing new employment contracts for all of the company’s employees. On behalf of Kodari Securities, he engaged two lawyers from HWL Ebsworth to prepare two types of employment contracts, one for award employees and the other for non-award employees. Late in the afternoon of 11 November 2016, with no prior notice, Mr Tran was told that George wanted to see him in the boardroom. In the boardroom George presented Mr Tran with a new contract. Mr Tran recognised it as a contract in the same form he had issued to staff during the week. He told George it was “for normal staff, not for me”. Mr Tran was not happy, either with the terms of the contract or, as the primary judge put it, “its applicability to him and the position he had occupied”. Although Mr Tran’s salary would not change, his status was reduced. He would no longer be employed as Chief Operations Officer, reporting directly to Michael. Rather, his new title would be “Risk Manager” and he would be reporting to George. His “key responsibilities” were listed (without alteration) as:•Write and submit reports to George Kodari in all matters of importance•Manage Risk Internally and report to George Kodari•Assist George Kodari in all aspects of the business that is necessary

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The appellants submitted that Mr Tran was untruthful on two important matters going to the heart of the claim, including, relevantly, his evidence about what was done at the meeting with a second copy of the contract which was said to have been printed after the first copy was ripped up.The decision of the primary judge The primary judge found that, at the meeting in the boardroom on 11 November 2016, Mr Tran said that he wanted to seek legal advice before signing the proposed new contract. He also found that George told Mr Tran that “[i]f you don’t sign it now, you will not be working here”. His Honour found that this was “an unconscionable threat to take action directed towards Mr Tran because he wanted to exercise his workplace right to seek legal advice about the effect of the new contract on his existing contract and that George made the threat with intent to coerce Mr Tran into signing the new contract. His Honour held that the presumption that the action was taken for a prohibited reason was not rebutted by the bare denials in the Kodaris’ affidavits. The primary judge also found that Mr Tran did not resign from his employment at the meeting, as the appellants maintained. Rather, his Honour found that his employment was terminated after he left the meeting because he had sought to exercise his workplace right to seek legal advice about the new contract. The effect of his Honour’s findings is that, by arranging for the police to contact Mr Tran after he had sent the text message reasserting his workplace right to obtain legal advice about the new contract and retrieve its property, Kodari Securities had repudiated his contract of employment and, by returning the Maserati with its keys and three mobile phone handsets, Mr Tran had accepted the repudiation. The primary judge rejected the appellants’ alternative case because he was not satisfied that there was any impropriety of the kind alleged. Rather, his Honour accepted Mr Tran’s evidence that there was an arrangement by which sometimes Mr Tran paid for things for Kodari Securities and was reimbursed and sometimes, including in the instance giving rise to the allegation, Kodari Securities paid for things for Mr Tran and was reimbursed. His Honour concluded that this claim and the allegations concerning mobile phones were no more than ex post facto justifications for the conduct that took place on 11 November 2016 in the event that that amounted to termination of employment without a proper basis.The appeal Two grounds of appeal were pleaded. Ground 1 alleged that the primary judge erred in finding that Kodari Securities terminated Mr Tran’s employment (the first finding) and should have found that he had resigned. Ground 2 alleged that his Honour erred in finding that during the meeting on 11 November 2016 Mr Tran had said that he wanted to obtain legal advice and thereby exercised or sought to exercise a workplace right (the second finding). As the case was argued, however, the only issue was whether the primary judge fell into appealable error with respect to the second finding. The appellants informed the Court that the outcome of that ground determined the fate of the appeal. No challenge is made to the findings concerning the appellants’ alleged justifications for termination or to the finding that the appellants had not rebutted the statutory presumptions.

Ratio Decidendi

Legal Principle Established

The appellants also took issue with the primary judge’s finding at [51], where his Honour said:Mr Tran then ripped up the contract which he had just signed, but he said that he did not do this in an aggressive manner. In my view, it was not an irrational response for Mr Tran to rip up the signed new contract in the face of not getting answers to his questions, and therefore not wanting to be bound by the new contract. The undisputed fact of having ripped up the new contract aligns better with his account of the lead up to this event. On Mr Tran’s version of events, Mr Kodari and George Kodari obfuscated about what the change to his employment contract would mean, and pressure was being placed on him to sign. This is more plausible than the accounts given by Mr Kodari and George Kodari of a spontaneous and unexplained event. It also better aligns with the instructions that Mr Kodari gave to George Kodari to secure the signing of the new contract by Mr Tran.(Emphasis added.) The description of the accounts of Michael and George, emphasised above, was said to be inaccurate. The appellants described their evidence in the following way: The evidence of Michael was that Mr Tran ripped up his contract after resigning from his employment. Mr Michael Kodari said that after signing the contract in the presence of himself, George and Michael Wayne, Mr Tran become agitated and made a telephone call from his mobile telephone and began speaking in a language that he did not understand. Mr Tran then raised his voice and said words to the effect of “I have no position at KOSEC anymore. It’s clear I have no position, I resign”. It was after saying these words that Mr Tran tore up the contract. Mr George Kodari’s evidence was that Mr Tran said “[t]here is no position here for me anymore” and ripped up his contract saying “I resign” and immediately departed the premises of Kodari Securities. Mr Tran then said to George “that it is for normal employees, not me”. The appellants submitted that the tearing up of the contract was not a “spontaneous and unexplained event” but the “physical manifestation of Mr Tran’s resignation after he decided that the new position was not acceptable to him”. They argued that leaving the premises without a copy of the contract was not consistent with the act of someone genuinely seeking legal advice. They submitted that the primary judge did not consider this “inherent inconsistency”.The relevant principles It is convenient to begin with the relevant principles. The appeal is in the nature of a rehearing, not a new hearing, and therefore the appellants must show that the primary judge fell into error: Branir Pty Limited v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424 at [20]–[22] (Allsop J, Drummond J and Mansfield J agreeing at [1] and [2] respectively). In such an appeal a court is required to conduct “a real review” of the trial and the trial judge’s reasons: Fox v Percy (2003) 214 CLR 118 at [25] (Gleeson CJ, Gummow and Kirby JJ). As Allsop J observed in Branir at [28], appellate judges are required to make up their own minds, but they do not go about this task as if they are sitting on the trial. Weight must be given to the views of, and advantages enjoyed by, the trial judge. Thus,[I]f a choice arises between conclusions equally open and finely balanced and where there is, or can be, no preponderance of view, the conclusion of error is not necessarily arrived at merely because of a preference of view of the appeal court for some fact or facts contrary to the view reached by the trial judge.