LarnÉ-Jones v Human Synergistics Australia Limited
[2015] FCCA 968
•17 April 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| LARNÉ-JONES v HUMAN SYNERGISTICS AUSTRALIA LIMITED & ORS | [2015] FCCA 968 |
| Catchwords: INDUSTRIAL LAW – Where employee dismissed summarily – whether dismissal constituted adverse action for a proscribed reason under the Fair Work Act 2009 (Cth)–whether employer contravened the Fair Work Act by failure to give employee notice required under s.117 of the Act – whether directors involved in any contravention of the Act – whether employer breached the Long Service Leave Act 1955 (NSW) – whether employment agreement discharged by change to the terms and conditions of the employment and replaced by a contract containing implied terms as to an entitlement to a bonus and reasonable notice – whether breach of express term as to notice – damages for breach of a term of the contract in relation to notice. |
| Legislation: Evidence Act 1995 (Cth), s.140 Federal Circuit Court Rules 2001 (Cth), r.1.03 |
| Board of Bendigo Regional Institute of Technical and Further Education v Barclay and Another (No 1) (2012) 248 CLR 500; [2012] HCA 32 Brackenridge v Toyota Motor Corporation Australia Ltd (1996) 142 ALR 99; [1996] IRCA 628 Construction, Forestry, Mining and Energy Union v Coal and Allied Operations Pty Ltd (1999) 140 IR 131; [1999] FCA 1531 Khiani v Australian Bureau of Statistics [2011] FCAFC 109 Larné-Jones v Human Synergistics Australia Limited & Ors [2012] FMCA 1209 Whittaker v Unisys Australia Pty Ltd (2010) 192 IR 311; [2010] VSC 9 |
| Applicant: | MARGHERITA LARNÉ-JONES |
| First Respondent: | HUMAN SYNERGISTICS AUSTRALIA LIMITED ACN 093 428 098 |
| Second Respondent: | SHAUN THOMAS MCCARTHY |
| Third Respondent: | MICHAEL JOSEPH GOURLEY |
| File Number: | SYG 2736 of 2011 |
| Judgment of: | Judge Barnes |
| Hearing dates: | 10, 11 and 12 February 2014 |
| Delivered at: | Sydney |
| Delivered on: | 17 April 2015 |
REPRESENTATION
| Counsel for the Applicant: | Mr S. Meehan |
| Solicitors for the Applicant: | Kemp Strang |
| Counsel for the Respondents: | Ms K. Nomchong SC |
| Solicitors for the Respondents: | FCB Workplace Law |
THE COURT ORDERS THAT:
The parties are to bring in Short Minutes of Orders giving effect to these reasons on or before 1 May 2015.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 2736 of 2011
| MARGHERITA LARNÉ-JONES |
Applicant
And
| HUMAN SYNERGISTICS AUSTRALIA LIMITED ACN 093 428 098 |
First Respondent
| SHAUN THOMAS MCCARTHY |
Second Respondent
| MICHAEL JOSEPH GOURLEY |
Third Respondent
REASONS FOR JUDGMENT
Background
These are proceedings under the Fair Work Act 2009 (Cth) (the FWA) in which it is also alleged that there was a breach of the Long Service Leave Act 1955 (NSW) (the LSL Act) and breaches of a contract of employment.
The Applicant, Ms Larné-Jones, was employed by the First Respondent, Human Synergistics Australia Limited (HSA), from March 2003 until 22 September 2011 when her employment was summarily terminated. Mr McCarthy and Mr Gourley, the Second and Third Respondents, are directors of HSA who, it is alleged, were involved in contraventions of the FWA.
HSA, a subsidiary of Human Synergistics Australasia Limited, conducts a management consultancy business in Australia. Ms Larné-Jones was initially employed by HSA as Senior Consultant/State Manager, Victoria. She was engaged pursuant to a written employment agreement (the 2003 Employment Agreement) dated 1 February 2003. There is a dispute between the parties, considered below, as to whether this contract continued to apply to the Applicant’s employment until the date of her termination in 2011.
In May 2004 Ms Larné-Jones married Mr Quentin Jones, who was the Managing Director of HSA until his employment was terminated on 24 June 2011. In or about June 2005 Ms Larné-Jones moved from the Melbourne office to the Sydney office of HSA and to the position of Senior Consultant. Her duties and the relevance of such duties to her claims are discussed further below.
On 10 May 2011 Ms Larné-Jones was suspended on full pay pending an investigation into allegations of harassment and bullying of present and former employees of HSA. Allegations were also made against Mr Jones. Mr McCarthy (the Chairman of HSA) arranged for Ms Jessica Fisher of FCB Lawyers (FCB) to conduct an investigation into the allegations.
Ms Larné-Jones was provided with written summaries of the allegations made against her and responded to these allegations by letter from her solicitors.
On or around 21 June 2011 Mr McCarthy and Mr Gourley received Ms Fisher’s report of that date into the allegations against Mr Jones and the Applicant. Meetings with Ms Larné-Jones and Mr Jones were arranged for 24 June 2011.
The meeting with Mr Jones proceeded on 24 June 2011. He was summarily dismissed. Ms Larné-Jones did not attend the scheduled meeting with HSA on 24 June 2011. Her solicitor gave HSA’s solicitor a medical certificate dated 23 June 2011 which stated that she was “undergoing medical treatment” and was “not medically fit to be interviewed by legal representatives on 24/06/2011”. It was provided to HSA after the meeting with Mr Jones.
In addition, on 27 June 2011 Ms Larné-Jones’ solicitor provided HSA (through its solicitor) with a WorkCover medical certificate in relation to Ms Larné-Jones and gave notice of a workers’ compensation claim lodged on 27 June 2011. Ms Larné-Jones began receiving provisional payments from HSA’s insurer Allianz Australia Workers’ Compensation (NSW) Ltd (Allianz) on 11 August 2011 on the basis that the injury date was 10 May 2011. On 24 November 2011 her worker’s compensation claim was rejected.
On two occasions, after periods covered by WorkCover certificates had expired, HSA’s solicitors directed the Applicant to attend a meeting to discuss the findings of the investigation. As discussed below, Ms Larné-Jones did not attend any such meeting.
On 22 September 2011 HSA terminated Ms Larné-Jones’ employment by letter of that date. The termination was said to be summary termination under cl.12(a) of her contract of employment dated 1 February 2003 on the basis of serious breach of the contract and gross misconduct.
These Proceedings
On 30 November 2011 Ms Larné-Jones filed an application in this Court under the FWA. Relevantly, she alleged that she was employed by HSA, between March 2003 and 22 September 2011, that her employment was terminated on 22 September 2011 and that her dismissal amounted to adverse action in contravention of the general protection provisions of the FWA, in particular ss.340 and 351 of the Act. She alleged that her employment was terminated for the reason or reasons that included the reason that she had a workplace right consisting of a right to make a claim under the Workers Compensation Act 1987 (NSW); that she exercised her workplace right, including by lodging a claim for workers’ compensation payments with HSA’s insurer; and/or that she had a mental disability for the purposes of s.351 of the FWA. Ms Larné-Jones claimed that the Second and Third Respondents were involved in such contraventions.
In addition, Ms Larné-Jones alleged that HSA had contravened ss.44(1) and 117 of the FWA by reason of its failure to give her five weeks’ written notice, or payment in lieu thereof, on termination of her employment and that the Second and Third Respondents were involved in that contravention.
The Applicant’s claims were expanded in a Statement of Claim filed on 25 June 2012 to include a claim that HSA had breached s.4 of the LSL Act by failing to pay her any amount in respect of her accrued long service leave pursuant to the LSL Act upon the termination of her employment.
Ms Larné-Jones also alleged that HSA had breached implied terms in her contract of employment as a Senior Consultant in the Sydney office from May 2005: terms that she would continue to be entitled to an annual bonus in an amount that was reasonable in the circumstances and that HSA could only terminate her employment by giving her reasonable notice of termination save and except in a circumstance where there was a right to summary dismissal for serious and wilful misconduct.
The Applicant sought unparticularised compensation for loss suffered due to the alleged contraventions of the FWA and the imposition of pecuniary penalties and payment of outstanding long service leave. She also sought damages for breach of contract.
The Respondents filed a Defence and an Amended Response on 29 August 2012. As discussed further below, the Respondents disputed the asserted contraventions of the FWA. In the Defence it was pleaded that the terms and conditions of the Applicant’s employment were as expressed in the 2003 Employment Agreement for the duration of Ms Larné-Jones’ employment with HSA and that on 16 August 2012 HSA, without admission of liability and in order to avoid prolonged litigation, had determined to meet the Applicant’s claim by treating the termination of the Employment Agreement as if done by payment in lieu of notice, in accordance with the express terms in cl.12(b), (c) and (d) of the 2003 Employment Agreement, and had made payments to her in respect of notice, accrued leave and interest.
In response to the Applicant’s claims to be entitled to notice and long service leave payments, HSA relied on the payment in August 2012 in lieu of four weeks’ notice under the 2003 Employment Agreement and one additional week’s notice in relation to HSA’s obligation pursuant to s.117 of the FWA, as well as payment of an amount said to be in lieu of Ms Larné-Jones’ accrued and untaken annual leave and long service leave payable on the termination date together with interest up to the date of payment.
HSA denied that Ms Larné-Jones was entitled to a bonus under her contract of employment (which was said to be limited to the express terms in the 2003 Employment Agreement). It was asserted that any bonus payments made were at the absolute discretion of HSA. It was also denied that there was a reasonable notice term in the contract or that Ms Larné-Jones was entitled to notice or to any other termination payment beyond the payment made in August 2012.
HSA’s solicitor, FCB, sent a cheque to the Applicant’s solicitor, Kemp Strang, in relation to these amounts (less an overpayment of salary) on 16 August 2012. After Kemp Strang queried the calculation (and returned the cheque) FCB sent cheques for an increased total amount to Kemp Strang on 12 October 2012. No issue is taken with the calculation of the amount paid in October 2012. Ms Larné-Jones did not present these cheques. A fresh cheque was issued and provided by HSA prior to the hearing.
After three interlocutory proceedings (see Larné-Jones v Human Synergistics Australia Limited [2013] FCCA 1498, Larné-Jones v Human Synergistics Australia Limited & Ors [2013] FMCA 206 and Larné-Jones v Human Synergistics Australia Limited & Ors [2012] FMCA 1209) the substantive application was heard on the basis that if any contraventions of the FWA were made out, the issue of penalty would be addressed in a separate hearing.
The Applicant relied on her affidavit sworn on 19 March 2013 and an affidavit of the same date sworn by her husband, Mr Quentin Jones. Ms Larné-Jones and Mr Jones were both cross-examined on their evidence.
The Respondents relied on affidavits of Shaun Thomas McCarthy (the Second Respondent) sworn on 22 May 2013 and 11 February 2014; affidavits of Michael Joseph Gourley (the Third Respondent) sworn on 22 May 2013 and 11 February 2014; affidavits of Bridget Anne Murray sworn on 22 May 2013 and 12 February 2014; and an affidavit of Matthew Paul Croxford sworn on 27 May 2013. Each of the deponents was cross-examined.
There were some differences in the evidence, emphasis and opinions of the various witnesses. These are discussed below where relevant. There were not, however, significant credibility concerns in relation to any of the witnesses. It is convenient to consider first the events preceding the termination of the Applicant’s employment.
Chronology of events preceding the termination of Ms Larné-Jones’ employment
Ms Larné-Jones gave evidence in relation to events in 2011 leading up to the termination of her employment and attached relevant correspondence. Her evidence was relatively uncontentious, except insofar as she asserted that the allegations of bullying or harassment were false and took issue with the nature and conduct of the investigation. It is not necessary to resolve these matters, given that HSA does not maintain for the purposes of these proceedings, any contention that Ms Larné-Jones in fact engaged in serious misconduct.
Mr Jones gave limited evidence in relation to the events of 2011, but attested that on 24 June 2011 he attended a meeting in relation to the outcome of an investigation into allegations against him and that in that meeting his employment with HSA was terminated without notice due to alleged misconduct.
Each of Mr McCarthy and Mr Gourley and, to a lesser extent, Ms Murray (an employee of HSA since 2010 who became Finance Director with effect from 24 June 2011), addressed the events of 2011. Their evidence as to the sequence of events substantially accords with that of Ms Larné-Jones.
The chronology that follows reflects a consideration of all the evidence. The sequence of events provides a starting point for the consideration of the Applicant’s claims of adverse action (her dismissal) for reasons that included asserted proscribed reasons within ss.340 and 351 of the FWA. Insofar as the evidence addressed the reasons for the dismissal of Ms Larné-Jones, it is discussed in relation to the adverse action claims.
As indicated, Ms Larné-Jones was employed by HSA from early March 2003 to 22 September 2011.
On 9 May 2011 Mr McCarthy advised Ms Larné-Jones by email that he wanted to meet with her on 10 May 2011. On 10 May 2011 Ms Larné-Jones attended a meeting with Mr McCarthy, Mr Gourley and Ms Fisher. During the meeting Mr McCarthy advised Ms Larné-Jones that allegations of misconduct, including bullying and harassing behaviour, had been made against her by current and former HSA staff. She was not given detailed particulars of the allegations. She was advised that she was being suspended on full pay while a full investigation into the allegations was conducted. The circumstances in which the investigation was initiated were the subject of evidence from Mr McCarthy, Mr Gourley and Ms Murray, as discussed further below where relevant. According to Ms Larné-Jones this was the first occasion on which she was made aware of such allegations.
Ms Larné-Jones was handed a copy of a letter signed by Mr McCarthy dated 10 May 2011 which confirmed the decision to suspend her until further notice pending such investigation. The letter suggested that if the allegations were found to be substantiated they may amount to breaches of Ms Larné-Jones’ employment obligations. It stated that the investigation process would be undertaken by Ms Fisher and that Ms Larné-Jones would be given an opportunity to respond to the allegations “before any decision is made”. Ms Larné-Jones was instructed that as part of the investigation process she would be required to attend a formal interview at which time she would be provided with full details of the allegations against her and that she would be required to respond to those allegations. The letter also stated that HSA had formed no view at that stage with respect to the allegations. Mr Jones was also suspended on the same day.
On 31 May 2011 Ms Larné-Jones met with HSA’s solicitors in relation to the allegations. She was provided with a detailed written summary of the allegations made against her in a letter from FCB dated 31 May 2011. Ms Larné-Jones described the meeting as short, but did not otherwise give evidence of what occurred. Ms Fisher did not provide her with copies of any written complaints or interview notes made in respect of the investigation.
The letter of 31 May 2011, a copy of which is in evidence, advised Ms Larné-Jones that HSA had instructed Ms Fisher to investigate complaints that had been made about her conduct, that during the investigation serious allegations had been made against her which Ms Fisher was also instructed to investigate and that on 31 May 2011 Ms Larné-Jones (with an appropriate support person present at her election) would be interviewed by Ms Fisher in relation to the allegations to allow her to provide an initial response. It advised that she would have the opportunity to consider and make a further written response or to provide any other relevant information after the interview of 31 May 2011 and that she could meet to discuss the allegations at her election. She was given until close of business on 6 June 2011 to provide further information or response.
The letter also advised that after receiving any further response Ms Fisher would consider all the information provided and would reach findings and that in the event that she found allegations proven, HSA would consider “what, if any, disciplinary action [was] to be taken”.
Annexed to FCB’s letter to the Applicant of 31 May 2011 was a document which set out details of allegations that Ms Larné-Jones had breached her employment obligations in that she was said to have bullied, harassed or otherwise subjected former and current HSA employees to unfair conduct either by herself or with others, and that she had allowed other employees to bully, harass or otherwise subject employees to unfair conduct. Specific allegations in relation to named former and current HSA employees and other general allegations were outlined.
On 3 June 2011 Ms Fisher of FCB wrote to Mr Godding of Kemp Strang referring to the interview with Ms Larné-Jones on 31 May 2011 and attaching a marked up copy of the letter of 31 May 2011 (dated 2 June 2011) incorporating changes and additional allegations and a fresh letter from FCB to Ms Larné-Jones dated 2 June 2011 reflecting such amendments.
Ms Fisher also advised that as the interview with Ms Larné-Jones “did not substantively proceed” on 31 May 2011, HSA required that Ms Larné-Jones’ solicitors provide specified information from her, including in relation to any delegated management responsibilities, as part of her response to the allegations. The right was reserved to put further matters related to the allegations to Ms Larné-Jones, including possible invitations to attend further interviews and/or provide written responses in the event it was considered necessary prior to the conclusion of the investigation process. Mr Godding was invited to contact Ms Fisher if he required any further period to respond to the allegations.
By letter dated 8 June 2011 Kemp Strang provided detailed responses to the allegations against each of Ms Larné-Jones and Mr Jones. Further information, including a copy of the investigation report in respect of each of Mr Jones and Ms Larné-Jones, was requested. Issue was taken with the conduct of the investigation. Kemp Strang indicated that, as was said to have been discussed at the “interview meetings” of 31 May 2011, it would be appreciated if on conclusion of the investigation and a decision being made by HSA “as to the employment status” of Ms Larné-Jones and Mr Jones, such decision could be notified to Mr Godding on behalf of his clients as soon as it was made.
On 20 June 2011 Kemp Strang again wrote to FCB referring to earlier correspondence, noting the absence of a response to the letter of 8 June 2011 (including the request for further information) and seeking an estimate as to the date on which a decision was likely to be made.
On 21 June 2011 Mr McCarthy received a copy of an Investigation Report (the Report) of that date prepared by Ms Fisher. Mr Gourley received a copy on or about the same date. The Report canvassed the background and scope of the investigation, the investigation process, summarised the allegations and made findings (in detailed appendices) in relation to the allegations against each of Mr Jones and Ms Larné-Jones. It recommended that if HSA made findings consistent with those of the Report, disciplinary action was warranted and legal advice should be sought as to the appropriate action.
On 21 June 2011 FCB replied to Kemp Strang’s letter of 20 June 2011, advising that HSA did not intend to provide any further details of the complaints made by particular individuals or a copy of the Report. It was noted that Mr Jones and Ms Larné-Jones had declined the opportunity to further meet with Ms Fisher to discuss the allegations and their responses. They were invited to raise specific queries in relation to the allegations. This letter also responded to criticism about the conduct of the investigation and as to whether the allegations were “trivial”.
In response to Mr Godding’s request that he be informed as soon as a decision had been made by HSA in relation to the investigation, FCB stated “In this respect, our client directs your clients to each separately attend our offices for a meeting to discuss the findings of the investigation into the Allegations, and your clients’ responses to them, this Thursday, 23 June 2013 at 10 am for Mr Jones and 12 pm noon for Mrs Larné-Jones respectively. Your clients may of course attend with yourself or another suitable person if desired”.
On 22 June 2011 Ms Fisher advised Mr McCarthy and Mr Gourley by email that as Mr Godding was unable to attend meetings on 23 June 2011 the meetings had been changed to 24 June 2011.
On 23 June 2011 Ms Fisher sent copies of draft termination letters on HSA letterhead (prepared at the request of HSA) addressed to each of Mr Jones and Ms Larné-Jones to Mr McCarthy and Mr Gourley for their review. Ms Fisher proposed that they give the letters to Ms Larné-Jones and Mr Jones in the form they appeared with “draft” across them in the meeting and that once HSA had approved the final version it could be “executed at the time in the event that we don’t resolve under a negotiated outcome”.
Separate draft termination letters dated 24 June 2011 were provided in relation to each of Mr Jones and Ms Larné-Jones. The draft letter in relation to Ms Larné-Jones canvassed the allegations against her and the findings of the Report in that respect and stated that “based on the findings of the investigation, HSA has determined that your actions concerning the Allegations and some of your denials set out in your Responses amount to gross misconduct”. After alleging breaches of contractual and common law duties and unparticularised breaches of various statutes, the draft letter referred to the provision in cl.12(a) of the Employment Agreement dated 1 February 2013 in relation to termination without notice and stated that Ms Larné-Jones was being summarily terminated under cl.12(a) for serious breach of her contract and gross misconduct.
Ms Larné-Jones did not attend the scheduled meeting on 24 June 2011. Mr Jones (with Mr Godding) did attend a meeting on 24 June 2011 (with Mr McCarthy, Mr Gourley, Ms Fisher and another solicitor) during which Mr McCarthy handed him a copy of a termination letter dated 24 June 2011 which informed him of the decision to terminate his employment summarily for gross misconduct with effect from 24 June 2011.
During that meeting Mr Godding advised that Ms Larné-Jones was “unwell”. Mr Godding handed Ms Fisher a medical certificate stating that Ms Larné-Jones was undergoing medical treatment and was not medically fit to be interviewed by legal representatives on 24 June 2011.
On 27 June 2011 Mr McCarthy received an email from Ms Fisher forwarding an email of that date from Mr Godding which attached a copy of a WorkCover medical certificate in respect of Ms Larné-Jones dated 24 June 2011. This certificate stated that she was suffering from “acute stress disorder” and was unfit to work from 17 June 2011 to 8 July 2011. The date of injury was said to be 10 May 2011.
In his email of 27 June 2011 Mr Godding also gave notice to FCB, on behalf of HSA, of a WorkCover claim by Ms Larné-Jones. He stated that he presumed that Ms Fisher would notify her client of its obligations under the workers’ compensation legislation and indicated that “[a]s a result of her illness” Ms Larné-Jones would be unable to attend any interview with Ms Fisher or the directors of HSA concerning the allegations of harassment and bullying “for the duration of her period of absence as specified in the certificate”.
On 27 June 2011, following receipt of the first WorkCover medical certificate for Ms Larné-Jones, Ms Murray of HSA notified HSA’s insurer Allianz of the Applicant’s claim. By letter of 28 July 2011 Allianz advised HSA of its acceptance of provisional liability from 17 June to 8 September 2011 and advised HSA of its obligation to participate and cooperate in the development of an injury management plan, to comply with the requirements of the plan as agreed, to liaise with the injury management adviser and to provide suitable employment for an incapacitated worker who was able to return to work.
On 11 July 2011 FCB wrote to Kemp Strang addressing various issues. Relevantly, it was noted that the medical certificate that had been provided had stated that Ms Larné-Jones would be unfit to perform her duties until 8 July 2011 and that such period had expired. Ms Larné-Jones was directed by HSA to attend FCB’s offices for a meeting on 12 July 2011 to discuss the findings of the investigation into the allegations and her responses to them.
However on 12 July 2011 Kemp Strang sent FCB a medical certificate of that date stating that Ms Larné-Jones was unfit to be interviewed by legal representatives from 12 July 2011 to 26 July 2011 and also a further WorkCover medical certificate referring to a diagnosis of “adjustment disorder” and stating that she was unfit to work from 12 July 2011 to 26 July 2011. Kemp Strang advised that accordingly Ms Larné-Jones would not be able to attend the meeting scheduled for that day.
On 27 July 2011 FCB wrote to Kemp Strang about various matters, including the fact that the period covered by the medical certificates had ended on 26 July 2011, but that neither Ms Larné-Jones nor Mr Godding had contacted them in regard to her return to HSA. Ms Larné-Jones was directed to attend a meeting at FCB’s office on 28 July 2011 to discuss the findings of the investigation into the allegations and her responses.
On 27 July 2011 Kemp Strang replied to FCB by email and advised: “[o]ur instructions are that Ms Larné-Jones will not be attending any meeting to discuss the outcome of your investigation”.
On 28 July 2011 Kemp Strang wrote to FCB and stated:
Attendance at Meeting by Margherita Larné-Jones
The reason for [Ms Larné-Jones’] refusal to attend a meeting at your offices to discuss the findings of the investigation into the Allegations is because such a meeting will aggravate her existing stress related condition (which, as you are aware is the subject of a workers compensation claim) on the basis that it is her expectation that her employment will be terminated at the meeting.
The rights of your client are not affected in any way by the failure of [Ms Larné-Jones] to attend any such meeting.
If you or your client have any further enquiries of [Ms Larné-Jones] in relation to the matters which are the subject of the Allegations, please put such enquiries in writing to the undersigned who will obtain instructions from [Ms Larné-Jones] in relation to same.
On 28 July 2011 Allianz advised Ms Larné-Jones that it had accepted “provisional” liability under s.267 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW).
On 29 July 2011 a further WorkCover medical certificate of that date was provided to HSA’s solicitors for the period from 26 July 2011 to 26 August 2011.
On 11 August 2011 Ms Larné-Jones began receiving workers’ compensation payments, with a back payment for the period from 17 June 2011.
On 22 August 2011 Allianz wrote to HSA thanking it for helping to develop an attached injury management plan. The letter stated that Allianz would monitor the progress of the plan and would contact HSA as required. HSA was asked to notify Allianz if there was a change in the worker’s condition or work status and also advised that if it did not agree with the plan, amendments or changes may be made as required. The attached injury management plan stated that HSA was required to communicate with all parties, to notify Allianz immediately of any changes in working environment, conditions, duties or payment details that would affect the claimant, to forward WorkCover medical certificates to Allianz as received and to communicate any issues or concerns to the Case Manager.
As discussed further below, Ms Larné-Jones obtained further NSW WorkCover medical certificates for the periods from 30 August 2011 to 20 September 2011 and 21 September 2011 to 20 November 2011.
The Dismissal
By letter of 22 September 2011, which was in substantially the same terms as the draft letter dated 24 June 2011, HSA terminated Ms Larné-Jones’ employment. The letter, signed by Mr McCarthy, stated that Ms Larné-Jones’ employment was summarily terminated under cl.12(a) of her contract for serious breach of the contract and gross misconduct with effect from 22 September 2011 and continued “As you are aware we have been unable to meet with you in person due to your lengthy and continuing absence from work”. A copy of this letter was sent by Ms Fisher to Mr Godding on 22 September 2011.
The letter summarised the allegations in the letter of 3 June 2011, referred to the investigation, the suspension of Ms Larné-Jones on full pay from 10 May 2011 and Ms Larné-Jones’ response of 8 June 2011. The letter advised that HSA had considered the allegations, the evidence, the response and other information. It described the allegations that had been “found to be made out” and advised that “[b]ased on the findings of the investigation” HSA had determined that Ms Larné-Jones’ actions concerning the allegations and some of the denials in her response amounted to gross misconduct. The letter advised of the manner in which HSA considered Ms Larné-Jones had breached her contract. It referred generally to breaches of certain legislation. It informed Ms Larné-Jones that her employment was summarily terminated with effect from 22 September 2011.
In a further letter of 22 September 2011 headed “termination payment” HSA asserted that Ms Larné-Jones had been overpaid because she had been paid both workers’ compensation payments and salary for specified periods. HSA sought the return of the overpayment after an adjustment for accrued and untaken annual leave.
Ms Larné-Jones’ workers’ compensation claim was rejected on 24 November 2011. HSA was notified on 24 November 2011. Ms Larné-Jones’ was sent a letter from Allianz dated 17 November 2011 (sic) informing her that her workers’ compensation claim had been rejected. It appears that the date of 17 November 2011 on the letter from Allianz is incorrect as it refers to an Allianz decision and review on 24 November 2011.
The last workers’ compensation payment was made to Ms Larné-Jones on 24 November 2011. She commenced these proceedings on 30 November 2011.
The Applicant’s claims under ss.340 and 351 of the FWA
The Applicant contended that HSA, her employer, took adverse action against her, consisting of her dismissal on 22 September 2011, because she had and/or had exercised a workplace right in contravention of s.340 of the FWA and/or because she had a mental disability in contravention of s.351 of the FWA and that Mr McCarthy and Mr Gourley were involved in such contraventions within s.550 of the FWA. It is not in dispute that at all material times HSA was a national system employer within the meaning of s.14 of the FWA and that at all material times the Second and Third Respondents were directors of HSA and were the decision-makers for HSA.
Section 340 of the FWA (which is a civil remedy provision) is as follows:
(1)A person must not take adverse action against another person:
(a)because the other person:
(i)has a workplace; or
(ii)has, or has not, exercised a workplace right; or
(iii)proposes, or proposed not to, or has at any time proposed or proposed not to, exercise a workplace right; or
(b)to prevent the exercise of a workplace right by the other person.
Section 351(1) of the Act (which is also a civil remedy provision) provides:
An employer must not take adverse action against a person who is an employee, or prospective employee, of the employer because of the person’s race, colour, sex, sexual orientation, age, physical or mental disability, marital status, family or carer’s responsibilities, pregnancy, religion, political opinion, national extraction or social origin.
Under s.342(1) Item 1, dismissal of an employee by an employer amounts to adverse action. It is not in dispute that Ms Larné-Jones’ employment with HSA was terminated on HSA’s initiative on 22 September 2011 and that such a dismissal constituted circumstances in which HSA took adverse action against Ms Larné-Jones within s.342(1) of the Act.
The meaning of “workplace rights” is relevantly addressed in s.341 of the Act as follows:
(1) A person has a workplace right if the person:
(a) is entitled to the benefit of, or has a role or responsibility under, a workplace law, workplace instrument or order made by an industrial body; or
(b) is able to initiate, or participate in, a process or proceedings under a workplace law or workplace instrument; or
(c) is able to make a complaint or inquiry:
(i) to a person or body having the capacity under a workplace law to seek compliance with that law or a workplace instrument; or
(ii) if the person is an employee--in relation to his or her employment.
(2) Each of the following is a process or proceedings under a workplace law or workplace instrument :
(a) a conference conducted or hearing held by the FWC;
(b) court proceedings under a workplace law or workplace instrument;
(c) protected industrial action;
(d) a protected action ballot;
(e) making, varying or terminating an enterprise agreement;
(f) appointing, or terminating the appointment of, a bargaining representative;
(g) making or terminating an individual flexibility arrangement under a modern award or enterprise agreement;
(h) agreeing to cash out paid annual leave or paid personal/carer's leave;
(i) making a request under Division 4 of Part 2-2 (which deals with requests for flexible working arrangements);
(j) dispute settlement for which provision is made by, or under, a workplace law or workplace instrument;
(k) any other process or proceedings under a workplace law or workplace instrument.
Sections 360 and 361 are as follows:
360 Multiple reasons for action
For the purposes of this Part, a person takes action for a particular reason if the reasons for the action include that reason.
361 Reason for action to be presumed unless proved otherwise
(1) If:
(a) in an application in relation to a contravention of this Part, it is alleged that a person took, or is taking, action for a particular reason or with a particular intent; and
(b) taking that action for that reason or with that intent would constitute a contravention of this Part;
it is presumed that the action was, or is being, taken for that reason or with that intent, unless the person proves otherwise.
(2) Subsection (1) does not apply in relation to orders for an interim injunction.
Ms Larné-Jones alleged that she had a workplace right under a workplace law, consisting of the right to make a claim under the Workers Compensation Act on the basis that such legislation was a “workplace law” for the purposes of Part 3-1 of the FWA and also that on 27 June 2011 she exercised a workplace right by lodging a claim for workers’ compensation payments with HSA’s insurer.
In the Statement of Claim it was pleaded that, in addition to exercising her workplace right by lodging a claim for workers’ compensation, the Applicant also had a workplace right to continue to receive workers’ compensation payments while she remained unfit for work, where her injury arose out of, or in the course of, her employment, and her employment was the substantial contributing factor to the injury, in accordance with the Workers Compensation Act.
Ms Larné-Jones also alleged that due to HSA’s treatment of her in relation to the allegations made against her, the investigation and her suspension, she became unwell and was suffering from a psychological injury, and that she had a mental disability for the purposes of s.351 of the FWA. She relied on the WorkCover medical certificates in support of this claim.
Ms Larné-Jones alleged that HSA terminated her employment on 22 September 2011 for the reason or reasons that included the reason that she had a workplace right; exercised a workplace right, including by lodging the workers’ compensation claim; and had a mental disability.
The Applicant’s submissions proceeded on the basis that she had established the objective facts necessary to enliven the reverse onus on the Respondent under s.361 of the Act. It was submitted that HSA had not met such onus and that Mr McCarthy and Mr Gourley, as the relevant decision-makers, were involved in the asserted contraventions of s.340 and 351 of the Act.
Ms Larné-Jones sought compensation from the Respondents pursuant to s.545 of the FWA for loss suffered due to the alleged contraventions together with interest and also pecuniary penalties.
The Respondents denied the asserted contraventions. It was submitted first that Ms Larné-Jones had failed to prove the existence of objective facts which provided a basis for the contention that HSA terminated her employment for any of the proscribed asserted reasons because the decision to dismiss her was reached by 22 June 2011 before HSA was made aware of any workers’ compensation claim or mental disability.
In the alternative, the Respondents submitted that even if the Applicant had made out objective facts such as to enliven the onus on HSA under s.361 of the Act to prove on the balance of probabilities that it was not motivated by any of the asserted proscribed reasons, HSA had fully met that onus (see Board of Bendigo Regional Institute of Technical and Further Education v Barclay and Another (No 1) (2012) 248 CLR 500; [2012] HCA 32 at [44] – [45] per French CJ and Crennan J and at [105] – [106] per Gummow and Hayne JJ).
HSA submitted that the weight of the evidence was more than sufficient for the Court to find that the decision-makers’ expressed reasons for the dismissal were (both subjectively and objectively) the actual reasons for such termination and that the Court should be satisfied that the reasons did not include the mental disability or the lodgement or any progress of the workers’ compensation claim by the Applicant.
HSA contended that the issue was not whether there was, in fact, to the satisfaction of the Court, a viable or valid reason for the dismissal or whether Mr Gourley’s or Mr McCarthy’s beliefs in this respect were true and accurate. Rather, the issue was said to be whether the Respondents had established that the proscribed reasons did not form any part of the reason for the decision (see Khiani v Australian Bureau of Statistics [2011] FCAFC 109 at [35] – [36]).
In response, the Applicant submitted that the evidence did not establish that Mr McCarthy and Mr Gourley had made a dismissal decision before 27 June 2011 (when HSA was notified of the workers’ compensation claim and Ms Larné-Jones’ medical condition) and that the decision in issue was the decision to dismiss Ms Larné-Jones on 22 September 2011. It was also submitted that the Respondent had not proven on the balance of probabilities that the Applicant’s dismissal on 22 September 2011 was not for reasons that included her mental disability or her workers’ compensation rights or the exercise of such rights.
Whether the onus shifted to HSA under s.361
In Stevenson v Murdoch Community Services Inc (2010) 202 IR 266; [2010] FCA 648 Gordon J described the operation of a provision such as s.361 of the FWA (albeit in relation to the Workplace Relations Act 1996 (Cth)) as follows (at [100]):
1. where there is an allegation of termination of employment by an employer for a proscribed reason, it is sufficient for it to be presumed that the conduct was engaged in for that reason unless the employer proves to the contrary … That presumption is rebuttable … ;
2. however, notwithstanding that presumption, an applicant must prove the existence of objective facts which the applicant contends provide a basis for the respondent’s contravening conduct: see Construction, Forestry, Mining and Energy Unit v Coal and Allied Operations Pty Ltd (1999) 140 IR 131 [161]–[162]. The presumption “simply … alleviate[s] the evidentiary difficulty facing the applicant of providing proof of the intent or reason which motivated, or formed part of the motivation for, the respondent’s conduct following the absence of the employee from work” (emphasis added);
3. if an applicant proves those facts and alleges that the conduct was carried out for a prohibited reason, then the onus shifts to the respondent to prove, on the balance of probabilities, that it was not motivated by a proscribed reason … Why? Because, as Nicholson J stated, “[t]he reversal of the onus in respect of proof of the reasons for the conduct is a recognition that ‘the circumstances by reason of which an employer may take action against an employee are, of necessity, peculiarly within the knowledge of the employer’”; and
4. where the onus has shifted, an employer will usually need to adduce evidence of the real reason for the dismissal, consistent with the absence of a prohibited reason, to rebut the presumption …
Thus, Ms Larné-Jones bears the onus of establishing that she had or had exercised a workplace right or had a mental disability at the relevant time and that adverse action was taken against her. If objective facts providing a basis for such contentions are established then HSA bears the onus of establishing that the adverse action was not taken because Ms Larné-Jones had or had exercised a workplace right or because she had a mental disability.
As indicated, HSA submitted that Ms Larné-Jones had failed to prove the existence of objective facts which provided a basis for contending that HSA had terminated her employment for any of the asserted proscribed reasons. The critical issue was said to be identification of the reasons for the dismissal, rather than the reason for the timing of the dismissal. It was submitted that the proper construction of s.342 of the FWA must mean that the conduct in issue was the decision to dismiss the Applicant rather than any decision to defer the actual communication or “effectuality” of the dismissal itself. The Respondents submitted that there was no temporal connection between the date of 22 June 2011 on which HSA determined to terminate Ms Larné-Jones’ employment and the date of 27 June 2011 on which it was made aware of her alleged mental disability and of her workers’ compensation claim.
This submission was put on the basis that the evidence established that Mr McCarthy and Mr Gourley (the decision-makers for HSA) had decided to terminate Ms Larné-Jones’ employment by 21 or 22 June 2011, before HSA (or the decision-makers) became aware of Ms Larné-Jones’ claimed medical condition or of her workers’ compensation claim on or about 27 June 2011. It was contended that the evidence established that both Mr McCarthy and Mr Gourley had come to a decision to terminate the Applicant’s employment well before the date of 24 June 2011 on which it was first intended to be communicated to her and that the only reason it was not effected on 24 June 2011 was that the Applicant did not attend the meeting scheduled for that date. Indeed, it was submitted that a decision to terminate the Applicant’s employment with HSA had been made by Mr McCarthy and Mr Gourley in April or May 2011, but that a subsequent decision was made on 21 June 2011 and confirmed on 22 June 2011 (after the decision-makers read the Report prepared by Ms Fisher) to terminate her employment for gross misconduct before Ms Larné-Jones had advised HSA of the medical condition said to constitute a mental disability or of her workers’ compensation claim. It was submitted that if the Court accepted that the decision to terminate the Applicant’s employment for misconduct was made on 21 or 22 June 2011 (albeit it was not put into effect until 22 September 2011) then Ms Larné-Jones had not proven the existence of objective facts providing a basis for the Respondent’s contravening conduct.
However, it is notable that the relevant provisions of the FWA (ss.340, 342, 351, 360 and 361) all relate to “action” and to an employer “taking action” within s.342 of the Act. Section 342(1) contains a table that “sets out circumstances in which a person takes adverse action against another person”. Item 1 states that adverse action is taken by an employer against an employee if the employer “dismisses the employee”. There is no reliance in these proceedings on any other kind of asserted adverse action or any contention that HSA threatened to take other action covered by the table in s.342(1) or organised such action (cf. s.342(2) of the Act).
In the Statement of Claim it was alleged that HSA terminated Ms Larné-Jones’ employment on 22 September 2011 for the reason or reasons that included that she had and had exercised a workplace right by lodging a workers’ compensation claim and had a mental disability. In other words, the “adverse action” alleged and relied on by Ms Larné-Jones in these proceedings was her dismissal on 22 September 2011.
I am satisfied that, consistent with the prohibition on “taking” action in ss.340 and 351 of the Act, the adverse action in question within s.342 of the Act was the dismissal, not the decision to dismiss Ms Larné-Jones. Hence, even if HSA made a decision to dismiss Ms Larné-Jones before it became aware of the existence or exercise of a workplace right or a mental disability (a matter discussed below), that would not mean that Ms Larné-Jones had failed to prove the existence of objective facts which provided a basis for contending that HSA terminated her employment for any of the asserted proscribed reasons.
That is not to say that the timing of the decision to dismiss the Applicant is not relevant. On the contrary, a causal link must be established between the adverse action complained of and the matters in s.340 and s.351 respectively. It is necessary to determine whether the adverse action was taken “because” of any of the proscribed circumstances and such inquiry directs attention to the reasons the action was taken. However there is a rebuttable presumption in s.361 of the Act that adverse action was taken for a proscribed reason if the prohibited reason was one of the reasons such action was taken (see s.360).
As indicated, in order for the reverse onus of proof imposed on the Respondent by s.361 to arise, the Applicant must clearly and adequately allege that HSA dismissed her for a particular reason and that taking that action for that reason would constitute a contravention of Part 3-1 of the FWA. The Applicant must prove the fact of dismissal and the claimed workplace rights and mental disability (see Stevenson at [101] and also see Construction, Forestry, Mining and Energy Union v Coal and Allied Operations Pty Ltd (1999) 140 IR 131; [1999] FCA 1531 at [161] – [162] and Rojas v Esselte Australia Pty Ltd (No 2) (2008) 177 IR 306; [2008] FCA 1585 at [49] – [50]).
In this case Ms Larné-Jones has alleged that her dismissal on 22 September 2011 (the asserted adverse “action”) was for the reason or reasons that included that she had or had exercised a workplace right or because she had a mental disability.
It is not in dispute that HSA dismissed Ms Larné-Jones on 22 September 2011. I am satisfied that the Applicant has established objective facts that provide a basis for the allegation that the First Respondent took adverse action against her in dismissing her from her employment on 22 September 2011. She has alleged, clearly, that HSA took such action for a proscribed reason, thus addressing the motivation for the dismissal.
“Workplace law” is defined in s.12 of the FWA to include a law of a State that regulates the relationships between employers and employees (including by dealing with occupational health and safety matters). I am satisfied that the NSW workers’ compensation legislation is a workplace law, as a State law which regulates the relationship between employers and employees and that the Applicant, being entitled to the benefit of such legislation, could initiate and make a claim under it which, in turn, constituted the exercise of a workplace right under a workplace law. (See Fox v Stowe Australia Pty Ltd (2012) 271 FLR 372; [2012] FMCA 976; Stephens at [25]; Stephens v Australian Postal Corp (2011) 207 IR 405; [2011] FMCA 448 at [15] – [16]; Construction, Forestry, Mining and Electrical Union v Leighton Contractors Pty Ltd (2012) 225 IR 197; [2012] FMCA 487 at [62] – [63]; and Corke-Cox v Crocker Builders Pty Ltd [2012] FMCA 677 at [92] and ss.12(1) and 341 of the FWA).
The Applicant has established that she had a workplace right to make a claim under the Workers Compensation Act and that she exercised that right in lodging the claim on 27 June 2011. This suffices to bring into operation the reverse onus under s.361 of the FWA.
The Applicant also pleaded that she had a right to receive workers’ compensation payments on an ongoing basis that constituted a workplace right. It was alleged that, in effect, Ms Larné-Jones had, for the period after her workers’ compensation claim was provisionally accepted until it was denied (which was after the time of her dismissal), a workplace right to continue to receive workers’ compensation payments (albeit that her claim was ultimately denied on the basis that it was a non-compensable injury because it was wholly or predominantly due to reasonable action taken by her employer in relation to transfer, demotion, performance appraisal, discipline, retrenchment, or dismissal in accordance with s.11A of the Workers Compensation Act). In principle this may be correct but this issue was not addressed in the Applicant’s submissions. The Respondents’ submissions proceeded on the basis that there may be such a right. Given my conclusions, it is not necessary to determine this issue in the absence of submissions. As discussed below, I am satisfied that if there was such a workplace right HSA has met the onus of establishing that the dismissal of Ms Larné-Jones was not for a reason that included her receipt of workers’ compensation payments on a provisional basis.
Ms Larné-Jones also alleged that when she was dismissed she was suffering from a mental disability for the purposes of s.351(1) of the Act. The Respondents’ submissions proceeded on the basis that the WorkCover medical certificate dated 24 June 2011 provided to HSA on 27 June 2011 asserted a diagnosis (of acute stress disorder) “consistent with a mental disability”. Ms Larné-Jones obtained further WorkCover medical certificates for periods which extended beyond the date of her dismissal in which a medical practitioner certified that she had an adjustment disorder.
There is no statutory definition of “disability” for the purposes of the FWA. Hence, as the Applicant submitted, it should be construed according to its ordinary meaning (see Hodkinson v Commonwealth (2011) 207 IR 129; [2011] FMCA 171 at [145] – [146] and Stephens v Australian Postal Corp at [86] – [89]). There is no suggestion that HSA disputed the diagnoses specified in the WorkCover medical certificates. For present purposes, I have considered whether HSA met the onus under s.361 on the basis that Ms Larné-Jones has established that she had a medical condition which constituted a mental disability that was in existence when her employment was terminated on 22 September 2011.
HSA was made aware of the workplace right, the exercise thereof and the asserted mental disability prior to Ms Larné-Jones’ dismissal on 22 September 2011. In these circumstances the Applicant has proved the existence of objective facts which provide a basis for the alleged contravening conduct (see Stevenson at [100]).
Whether HSA met the onus under s.361
Hence it is for HSA to prove, on the balance of probabilities, that in dismissing Ms Larné-Jones on 22 September 2011 it was not motivated by a proscribed reason (Stevenson at [100]), that is that the adverse action was not taken because Ms Larné-Jones had or had exercised a right to make a workers’ compensation claim or because she had a mental disability consisting of the medical diagnosis in her WorkCover medical certificate. In this context it is relevant to identify and have regard to the reasons for the dismissal, including the time at which HSA, through Mr McCarthy and Mr Gourley, decided to terminate Ms Larné-Jones’ employment with HSA.
The question of why an employer took adverse action against an employee is one of fact, to be determined on the balance of probabilities having regard to all the evidence (see Board of Bendigo Regional Institute of Technical and Further Education v Barclay and Another (Barclay) and s.140(2) of the Evidence Act 1995 (Cth)). As French CJ and Crennan J stated in Barclay (at [44] – [45]):
There is no warrant to be derived from the text of the relevant provisions of the Fair Work Act for treating the statutory expression “because” in s 346, or the statutory presumption in s 361, as requiring only an objective inquiry into a defendant employer’s reason, including any unconscious reason, for taking adverse action. The imposition of the statutory presumption in s 361, and the correlative onus on employers, naturally and ordinarily mean that direct evidence of a decision-maker as to state of mind, intent or purpose will bear upon the question of why adverse action was taken, although the central question remains “why was the adverse action taken?”.
This question is one of fact, which must be answered in the light of all the facts established in the proceeding. Generally, it will be extremely difficult to displace the statutory presumption in s 361 if no direct testimony is given by the decision-maker acting on behalf of the employer. Direct evidence of the reason why a decision-maker took adverse action, which may include positive evidence that the action was not taken for a prohibited reason, may be unreliable because of other contradictory evidence given by the decision-maker or because other objective facts are proven which contradict the decision-maker’s evidence. However, direct testimony from the decision-maker which is accepted as reliable is capable of discharging the burden upon an employer even though an employee may be an officer or member of an industrial association and engage in industrial activity. (Footnotes omitted).
Their Honours also made the point (at [54]) that “it is not possible in a curial process to plumb the depths of "[an employer's] unconscious”” and pointed out (at [62]) that:
…it is [an] error to treat an employee's union position and activity as necessarily being a factor which must have something to do with adverse action, or which can never be dissociated from adverse action. It is a misunderstanding of, and contrary to, Bowling to require that the establishment of the reason for adverse action must be entirely dissociated from an employee's union position or activities. Such reasoning effectively institutes an interpretation of the relevant provisions indistinguishable from that of Isaacs J in Pearce, which was rejected in Bowling. The onus of proving that an employee's union position and activity was not an operative factor in taking adverse action is to be discharged on the balance of probabilities in the light of all the established evidence.
While these remarks were made in relation to s.346 of the FWA, the same may be said in relation to ss.340 and 351 which also turn on the word “because”. As Gummow and Hayne JJ observed in Barclay (at [101]) the use of the term “because” in an expression that refers to a proscribed reason “invites attention to the reasons why the decision-maker[s] so acted”. Gummow and Hayne JJ highlighted that any suggestion that regard should be had to “unconscious reasoning” on the part of the person who took the adverse action was “apt to confuse and mislead the finder of fact” (at [124] and see [134]). Their Honours pointed out (at [126] – [127]) that:
The relevant frame of reference in this case is a statutory provision in which neither the words “objective” nor “subjective” appear. There is an inherent risk of misguidance when seeking to imply tests or requirements in the application of a statutory provision absent some persuasive basis to do so. Nothing was put in argument, nor are there any decisions of this Court, to provide such a basis. Indeed, no direct challenge was made to what had been said by Mason J in Bowling.
In determining an application under s 346 the Federal Court was to assess whether the engagement of an employee in an industrial activity was a “substantial and operative factor” as to constitute a “reason”, potentially amongst many reasons, for adverse action to be taken against that employee. In assessing the evidence led to discharge the onus upon the employer under s 361(1), the reliability and weight of such evidence was to be balanced against evidence adduced by the employee and the overall facts and circumstances of each case; but it was the reasons of the decision-maker at the time the adverse action was taken which was the focus of the inquiry.
In the context of alleged contraventions of ss.340 and 351 of the Act factors such as the decision-makers’ “particular reason” for dismissing Ms Larné-Jones, her position as the holder or exerciser of workplace rights within s.341 and as a person with a mental disability within s.351 and any relevant nexus between the adverse action and any such factors are to be considered, bearing in mind that s.340 is intended to protect the exercise of workplace rights and s.351 to provide protection in relation to conduct which is generally considered to be discriminatory.
Heydon J made the point in Barclay that to satisfy s.360 the particular reason referred to must be an “operative or immediate reason for the action” (and see Gummow and Hayne JJ at [103]) and observed that an examination of whether a particular reason was an operative or immediate reason for action “calls for an inquiry into the mental processes of the person responsible for that action” (at [140]).
Where, as here, there are two decision-makers, it is necessary to inquire into the mental processes of each decision-maker. As Heydon J acknowledged, “mere declarations” by a witness as to his or her mental state may not be sufficient to discharge the employer’s burden of proof under s.361, insofar as “[e]xternal circumstances could put into question the reliability or credibility of those declarations” (at [141]).
Insofar as the Applicant submitted that whether the Respondent met the reverse onus in s.361 would turn on the view taken by the Court as to the credit of the Respondents’ witnesses, it is clear from Barclay that the question of whether an adverse action was taken “because” of a proscribed reason is a question of fact to be determined by an analysis of all the facts and circumstances, with a focus on the actual reasoning of the person or persons who acted at the time the adverse action was taken. External circumstances may put into question the reliability or credibility of any declaration by a witness as to his or her mental state.
In relation to the search for the “reason” for adverse action, Heydon J stated in Barclay (at [146]) that this was a “search for the reasoning actually employed by the person who acted” (emphasis added) and that nothing in the Act expressly suggested, and nor could it be implied, that courts were to search for “unconscious” elements in the impugned reasoning of the person or persons who acted.
In short, the onus is on HSA to prove that Ms Larné-Jones’ workers’ compensation claim, the exercise thereof or her mental disability was not "a ‘substantial and operative factor’ as to constitute a “reason”, potentially amongst many reasons” (Barclay at [127]) for the adverse action taken against her.
It is clear that reliable direct evidence of the decision-makers’ states of mind, intention and purpose will bear upon the issue of why adverse action was taken. What is in issue is why HSA took the action of dismissing Ms Larné-Jones. Direct evidence of Mr McCarthy and Mr Gourley as to their state of mind, intent or purpose “will bear on” the question of why they dismissed Ms Larné-Jones. The reliability and the weight of the evidence led by HSA in this respect is to be balanced against any contradictory evidence, any evidence adduced by Ms Larné-Jones and the overall facts and circumstances of the case. While the focus of the inquiry is, as Gummow and Hayne J pointed out in Barclay (at [127]), on the reasons of HSA at the time of the adverse action in question (the dismissal of Ms Larné-Jones), it is relevant to consider when and for what reason or reasons the decision-makers decided to take such action.
The adverse action in question was the dismissal on 22 September 2011. It cannot be said that Mr McCarthy and Mr Gourley were at that time unaware of Ms Larné-Jones’ workers’ compensation claim or of the fact that she had provided medical certificates for that purpose that included a medical diagnosis consistent with the concept of mental disability in s.351 of the Act (albeit that Mr Gourley appeared only to be aware of the diagnosis of stress). However, the mere fact of the existence of a workplace right, the exercise thereof or a mental disability does not impose a heavier onus on the employer (Barclay at [66]). The Court is not required to determine whether any proscribed reasons subconsciously influenced the decision-makers. The decision-makers’ knowledge of such facts is not of itself sufficient to lead to an inference that any of these matters in fact formed part of the reason for the dismissal.
It is necessary to determine the actual reason or reasons which motivated the decision-maker. If the decision-maker does not give direct testimony it will be difficult to displace the statutory presumption in s.361 of the FWA. However in this case Mr McCarthy and Mr Gourley (the acknowledged decision-makers) have each given direct testimony. Both decision-makers stated that they acted solely for non-proscribed reasons.
Before considering the evidence, it is perhaps important to note that in this case the issue is whether HSA dismissed Ms Larné-Jones because she had or had exercised a workplace right or because of her mental disability. The issue is not whether Ms Larné-Jones was unfairly dismissed or whether she in fact engaged in serious or wilful misconduct. HSA has not sought to establish in these proceedings that Ms Larné-Jones in fact engaged in serious and wilful misconduct such as to justify summary dismissal. In that sense the merits of the decision to terminate her employment are not the focus of these proceedings. An application under this part of the FWA:
…is not intended to provide an opportunity for the appellant to raise whatever issues she wishes to about the validity of the steps taken before her dismissal. The crucial issue in such an application is the causal relationship between adverse action and one or more of the factors mentioned in the various provisions of Pt 3-1. The issue is whether the person who has taken the adverse action has done so because the person against whom the adverse action has been taken has one or more of the relevant characteristics or has done one or more of the relevant acts. In the present case, the question is whether the respondent has taken adverse action against the appellant because she had a workplace right to be on sick leave, or because she had exercised that right.
(see Khiani v Australian Bureau of Statistics at [31]).
It would be possible for HSA to discharge the onus on the basis that the decision-makers genuinely held (even if erroneously) a belief that Ms Larné-Jones had engaged in serious and wilful misconduct and this belief was the reason they dismissed Ms Larné-Jones in the manner that they did.
In order to consider the adverse action claim it is relevant to have regard to all the relevant evidence, including the chronology outlined above and the witnesses’ evidence as to their states of mind and the reason or reasons for their actions leading up to and at the time of the dismissal. As indicated, Mr McCarthy and Mr Gourley each gave extensive evidence relevant to when and why they reached the decision to dismiss Ms Larné-Jones and the reason or reasons for the dismissal.
Mr McCarthy, the chairman and a shareholder in HSA, explained the background to the investigation into allegations of bullying and harassment against the Applicant and Mr Jones and the decision to dismiss Ms Larné-Jones. His evidence is that in March 2011 his wife, Lorraine McCarthy (who had performed work for HSA since 2005 assisting in the presentation of workshops), reported to him a conversation she had had with Bridget Murray and the Executive Assistant to Mr Jones. Mrs McCarthy (and the Executive Assistant) were not witnesses in these proceedings but Ms Murray attested to that conversation.
I accept Ms Murray’s evidence that in the last week of March 2011 she told Mrs McCarthy words to the effect that if Mr Jones or Ms Larné-Jones:
do not like you or you challenge them in any way, they either make your life so difficult you just leave or they sack you, pay you out and make you sign a Deed of Release so you can’t take legal action against them. I believe they bully and harass employees.
Mr McCarthy’s evidence is that he was very concerned about the stories his wife reported to him about claims that Mr Jones and Ms Larné-Jones bullied present or former HSA employees. He decided to initiate an investigation into what was going on in the Sydney office. His evidence is also that as a result of what he was subsequently told by Mr Jones’ Executive Assistant, he began to develop serious concerns about the Sydney office of HSA and resolved to appoint an external person to conduct an investigation.
On 30 March 2011 Mr McCarthy arranged for Ms Fisher of FCB to conduct an investigation. She was to commence by conducting some preliminary interviews with three current or former employees of HSA. After the investigation commenced, a number of HSA employees approached Mr McCarthy after being interviewed by Ms Fisher for the investigation. In his affidavit of 11 February 2014 Mr McCarthy identified seven current or former employees with whom he had had discussions about their personal experiences of working with and the conduct of Ms Larné-Jones.
Mr McCarthy was aware of the detailed written allegations put to Ms Larné-Jones in the letters of 31 May 2011 and 2 June 2011. He read Ms Larné-Jones’ response of 8 June 2011. He received and read a copy of the Investigation Report on 21 June 2011.
Mr McCarthy’s evidence is that he was “shocked” by what he regarded as “an overwhelming amount of damning evidence” against Mr Jones and Ms Larné-Jones individually. He attested that on reading the Report he decided to terminate the employment of both Mr Jones and Ms Larné-Jones. He claimed that he formed the opinion that Mr Jones and Ms Larné-Jones had acted individually and in concert to create “a toxic work environment” where they had “simply picked off employees and got rid of those whom they disliked, using HSA funds to pay them out”. He claimed he relied on the findings in the Report in forming a decision, on 21 or 22 June 2011, to terminate Ms Larné-Jones’ employment.
In the Report Ms Fisher made detailed adverse findings about allegations about Ms Larné-Jones, including that she had engaged in specific instances of bullying and harassment; had placed unnecessary and unreasonable pressure, demands and requirements on several HSA employees; and had engaged in unlawful surveillance of internet and email use by specified HSA employees. The concerns attested to by Mr McCarthy are consistent with these findings.
On 21 and 22 June 2011 Mr McCarthy had several discussions with Mr Gourley regarding the Report. During one such discussion he told Mr Gourley that he was appalled at the extent of Mr Jones’ and Ms Larné-Jones’ bullying behaviour and the obvious negative impact their behaviour had on staff in the office, that he thought matters were very serious and that the “only choice we have here is termination of both their employment for gross misconduct.” His evidence is that Mr Gourley agreed.
Mr McCarthy recalled telling Mr Gourley on 21 June 2011:
I’m quite shocked by what I’ve read about both Quentin and Margherita together and individually. Unless Quentin and Margherita come up with something exceptional to convince us otherwise, I think we should dismiss them both. (transcript p.107).
Mr McCarthy’s evidence was that by 22 June 2011 he had “firmly resolved” that both Mr Jones and the Applicant should each be dismissed for gross misconduct. He claimed that he had formed this decision in respect of Ms Larné-Jones primarily based on his reading of the Report, but that he also took into account the list of allegations that had been put to her between 31 May 2011 and 2 June 2011, her response through her solicitor and his discussions with HSA employees. At this time he had no knowledge of any workers’ compensation claim by Ms Larné-Jones or of any claimed mental disability.
Mr McCarthy gave direct evidence that in forming the decision to terminate Ms Larné-Jones’ employment he did not have regard to any workers’ compensation claim by Ms Larné-Jones or any alleged mental disability. He explained that he had decided on 22 June 2011 to terminate her employment for gross misconduct and at that stage he was not aware of any workers’ compensation claim or alleged mental disability.
As discussed with Mr Gourley, Mr McCarthy had Ms Fisher draft termination letters and set up meetings (ultimately for 24 June 2011) with both Mr Jones and Ms Larné-Jones. The draft termination letter is consistent with Mr McCarthy’s evidence that the meeting was to inform Ms Larné-Jones that he had decided to terminate her employment for gross misconduct. The letter stated that her actions concerning the allegations and some of her denials in her response amounted to gross misconduct. In addition to summarising the findings of the Report, the draft letter stated that HSA had formed the view that Ms Larné-Jones had, in breach of her employment obligations, deleted the material from the HSA email system prior to the start of the investigation to obstruct it. The draft letter advised that she was “being” summarily terminated under cl.12(a) of her contract for serious breach of contract and gross misconduct.
In cross-examination Mr McCarthy acknowledged that he had discussed with Mr Gourley whether Ms Larné-Jones was entitled to a right of reply before any decision was made about her as a matter of continuing employment (transcript pp.105-6). He agreed that he and Mr Gourley decided that a meeting should be arranged so that Ms Larné-Jones might have an opportunity to learn about the content of the Report and exercise her right of reply. He agreed, when asked, that following such a meeting he and Mr Gourley would take into account her reply before any decision was made about the appropriate disciplinary action. However this was in relation to whether the Applicant’s employment would be terminated on notice or summarily. Mr McCarthy’s evidence was that he had decided that the Applicant’s employment should be terminated. I am not persuaded that this evidence is contrary to his evidence that he had already decided by 22 June 2011 that Ms Larné-Jones’ employment with HSA must come to an end. He explained that “The plan was to meet. The plan was to terminate unless we could hear a response that changed our minds”. He claimed that they had “already made the decision to terminate” but were affording her the “opportunity to meet to listen to her response” and that he and Mr Gourley “could change our approach on the spot”.
During the proposed termination meeting with Mr Jones on 24 June 2011 Mr McCarthy summarily dismissed Mr Jones for alleged gross misconduct. However Mr Godding told him that Ms Larné-Jones was “unwell” and asked to reschedule the meeting. Mr McCarthy agreed and advised that this could be arranged with Ms Fisher. Between 24 June and 22 September 2011 Mr McCarthy did not make any decision to change the suspension arrangement.
I accept that it was not until 27 June 2011 that Mr McCarthy became aware from the information provided by her solicitors to HSA’s solicitors that Ms Larné-Jones claimed to be suffering from an acute stress disorder and that she was making a workers’ compensation claim and would be at least temporarily absent from work for those reasons. Mr McCarthy acknowledged that this meant that he could not meet with her until after Ms Larné-Jones’ medical certificate expired. He indicated that he did not feel it was the “right thing” to effect her dismissal while she was medically unwell and he made a decision for that reason to put on hold rescheduling the meeting originally arranged for 24 June 2011 (transcript p.112). This initial action and delay does not support any inference that Ms Larné-Jones was dismissed because of her workers’ compensation claim and/or her mental disability (at that stage described as a “stress disorder”). Mr McCarthy’s evidence is that at that stage he was unsure of how long Ms Larné-Jones would be unwell “and so decided to postpone the termination meeting”.
Mr McCarthy forwarded the WorkCover medical certificate to Ms Murray (who was by then Finance Director of HSA) to notify Allianz of the claim. He instructed her to liaise with the insurer on behalf of HSA. She did so. There is no evidence of any lack of co-operation on the part of HSA.
In relation to dealings with HSA’s insurer, Mr McCarthy’s evidence was that this was left to Ms Murray who had informed him that an injury management plan was established for Ms Larné-Jones. I accept that Ms Murray had the responsibility to ensure that HSA complied with its obligations in that respect.
Mr McCarthy acknowledged that HSA received WorkCover medical certificates for Ms Larné-Jones dated 12 July 2011 and 30 August 2011. After 27 June 2011 he twice instructed Ms Fisher to reschedule the termination meeting with Ms Larné-Jones to coincide with the expiry of periods for which she was certified to be unfit, but no such meeting occurred. These attempts are consistent with his evidence about trying to put into effect the process decided on by 22 June 2011. As set out above, on 27 July 2011 Ms Larné-Jones’ solicitors advised that she would not attend any such meeting. The failure by HSA to schedule any further meeting with Ms Larné-Jones is to be seen in light of this advice. Reasons were given in an email of 28 July 2011.
Mr McCarthy agreed that the fact that continuing WorkCover medical certificates were provided by the Applicant was a source of “inconvenience” to HSA, but he explained that this was in the sense that clients were impacted because the Applicant was not attending work (transcript p.118). He also explained that he wanted to resolve the disciplinary process in a timely way and that his concern was the frustration of the rescheduling of the meeting with Ms Larne-Jones and the completion of the termination process (transcript p.149). Mr McCarthy agreed that as a result of such frustration, instead of again rescheduling such a meeting, he and Mr Gourley had resolved in September 2011 not to hold a rescheduled meeting but rather to summarily dismiss Ms Larné-Jones (transcript p.119).
I accept his evidence that “[i]n or around early September 2011” he resolved that HSA would terminate Ms Larné-Jones’ employment “even though she had not attended a termination meeting” and that “[a]s a consequence of this decision, [he] instructed Ms Fisher to prepare another termination letter for [Ms Larné-Jones] attaching the updated calculations for termination pay”.
On 22 September 2011 HSA terminated Ms Larné-Jones’ employment for gross misconduct.
Mr McCarthy stated that the factors that led him to terminate the Applicant’s employment on 22 September 2011 were the 27 July 2011 email that said that she would not attend any meetings, his view that attempts to persuade her to attend a meeting were futile, the fact that HSA was “starting to experience stress in the marketplace” as they were unable to advise clients as to the whereabouts of the Applicant, and because he wanted to get the termination “over and done with” (transcript p.153).
The termination letter of 22 September 2011 was in essence identical to the draft letter prepared for the 24 June 2011 meeting, save for the additional reference to the fact that there had not been a meeting. It is consistent with Mr McCarthy’s evidence that the decision that the Applicant’s employment should be terminated summarily had been made prior to 24 June 2011.
In cross-examination Mr McCarthy agreed that from the start of these proceedings he had taken the position that Ms Larné-Jones had in fact engaged in gross misconduct, although subsequently HSA made a decision that it would not advance in these proceedings a contention that Ms Larné-Jones had engaged in gross misconduct. His evidence was that it was decided to pay out Ms Larné-Jones as if she had been terminated on notice for economic reasons and because he did not want to put HSA staff through having to give evidence. He did not concede that there was no lawful basis to terminate Ms Larné-Jones employment summarily on 22 September 2011. He agreed that no reason had been communicated by HSA to Ms Larné-Jones for her dismissal other than the allegations in relation to serious misconduct.
In cross-examination Mr Gourley acknowledged he had limited involvement in activities in the Sydney HSA office and that he did not observe Ms Larné-Jones in the performance of her day-to-day role during and after May 2005. However Mr Gourley attested that Ms Larné-Jones’ role in Sydney was “certainly not far more demanding” than her role in Melbourne, that there were other members in the Sydney team to support her with non-consulting duties and that more clients approached HSA in Sydney, whereas the Applicant would have to have done more personal business development in Victoria. He also pointed out that her role in Sydney did not include her former State Manager responsibilities.
Mr Gourley acknowledged that the Applicant had also been temporary Acting Practice Leader in 2006 and 2010. He was aware of her consulting activity and that she had some temporary managerial responsibility and involvement in projects.
Ms Larné-Jones never told Mr Gourley that there had been a fundamental change in her duties or that the hours she worked were significantly in excess of the hours she had worked in Melbourne. Nor did she seek any variation to her employment agreement.
Matthew Paul Croxford has been a Senior Consultant at HSA since 2010. Between 2004 and 2010 he was a business relationship manager with HSA. His evidence was that during his 2004 interview process Ms Larné-Jones had mentioned to him that she would be moving to Sydney because she was about to marry Mr Jones. His observation was that in Sydney she performed the same duties and roles as other consultants.
On the evidence before the Court I am not satisfied that there was a change in role or responsibility on Ms Larné-Jones’ move to Sydney in 2005 that was sufficiently fundamental to constitute a discharge of the 2003 Employment Contract.
In 2005 Ms Larné-Jones was in essence a senior consultant in Melbourne – the role she moved to in Sydney. There is no suggestion that the move involved demotion. Ms Larné-Jones contended that the move was a promotion. However, in cross-examination Ms Larné-Jones conceded that there was no change in her role on her move insofar as she had no direct reports when she left Melbourne nor in her role in Sydney, she reported to Mr Jones in both locations, the type of consulting and training work was the same, and some of the clients were the same.
While Mr McCarthy did not observe a change to Ms Larné-Jones’ hours of work, he did not work full-time in Sydney. I accept that she came to work longer hours in Sydney, but not that there was a significant change in the hours she worked in 2005. There is no evidence that Ms Larné-Jones made any complaint to anyone in HSA that she was working longer hours in Sydney, or to otherwise support her claims about any change in her role or responsibility. Moreover, Ms Larné-Jones performed the duties of a senior consultant in Melbourne and in Sydney. She worked on a project in Melbourne and on projects in Sydney, as was the obligation of Senior Consultants. Her billing targets were adjusted in consequence.
Mr McCarthy was regularly in the Sydney office of HSA. He observed and, to some extent monitored, the work being done by employees in the Sydney office. I accept his evidence that the project on which the Applicant worked when she moved to Sydney in 2005 was the same one she had been working on in Melbourne and that while she undertook other project work in Sydney, other consultants also did project work.
I accept there was a larger client base in Sydney and that Ms Larné-Jones conducted more accreditation workshops. She claimed that her revenue targets in Sydney had increased from 2.5 times her salary to 2.7 times her salary. This would suggest that there was some (but not a substantial) increase in clients or workload. I accept that this was so. However Mr Jones’ evidence (in relation to bonuses) is that the 2.7 multiplier was an input or tool to judge a consultant’s performance but that on occasions consultants negotiated “special” projects or had their time allocated to company initiatives reflected in adjusted revenue targets. Ms Larné-Jones’ billing targets were reduced when she was engaged in projects. Such involvement was part of her job in Melbourne as well as in Sydney.
While Mr Jones gave evidence about bonus discussions and calculation, the Applicant called no evidence from him as to any change in her duties on her move to Sydney, let alone a “profound” or significant change in her duties, even though he was Managing Director of HSA at all relevant times and the person to whom she reported both in Melbourne and Sydney. She bears the onus of establishing this aspect of her claim. While Mr Jones did give some evidence to support other parts of the Applicant’s claim, it can be inferred that any evidence that he would have given about the Applicant’s duties and responsibilities in Melbourne and Sydney would not have supported her case in this respect.
In some respects the Applicant’s role in Sydney was made less onerous, in that she had more immediate and/or easier access to Client Service Managers and professional development employees in HSA’s business. In addition, she was no longer the public face of HSA in the way in which she was as Victorian State Manager.
Ms Larné-Jones was a member of the Management Team in both Sydney and Melbourne. The evidence does not establish any change of significance in her role and responsibilities in that respect.
Insofar as Ms Larné-Jones relied on her two periods as Acting Practice Leader in 2006 and 2010 to support the claim that her role had changed, her contention in this case was that a new contract came into effect in 2005 (not at a later date). In any event, in some respects the role of Practice Leader CST was less onerous than that of a Senior Consultant/State Manager. The remuneration HSA paid the Practice Leader CST was approximately half that paid to Senior Consultants (although Ms Larné-Jones’ salary was not reduced when she acted in this role).
There is no evidence to suggest that there was any significant change in the Applicant’s remuneration when she moved to Sydney.
On all the evidence, while I accept Ms Larné-Jones worked longer hours in Sydney and had more clients, some of whom were more “senior”, provided technical advice and conducted more accreditation workshops in Sydney, there is no evidence that the essential nature of her consulting activities changed. She did the same kind of consulting and training work in Sydney. In contrast to her role as State Manager, Victoria, Ms Larné-Jones was not the “face” of HSA in Sydney. She continued to report to Mr Jones. As a Senior Consultant in Sydney in 2005 she had no direct reports (except in subsequent acting positions). She had access to internal support staff in Sydney. While her revenue targets increased (from 2.5 to 2.7 times her salary), these were ‘targets’, and were adjusted when she took on project work. She was required to, and did, project work both in Melbourne and Sydney. She did not have significantly increased on-going managerial responsibility following her move in 2005. She was a member of the management team in both cities. While she subsequently took on management projects, I accept that this was part of the role of a Senior Consultant. Her billing targets were adjusted when this occurred. While she acted as a Practice Leader for two periods in 2006 and 2010, with some leadership responsibility, it has not been suggested that there was a consensual discharge of her contract at that time. It has not been established that there these subsequent acting positions were such that it could be said that in 2005 there was a significant change in Ms Larné-Jones’ role or responsibilities. Moreover I accept Mr McCarthy’s evidence that in some respects the role and responsibilities of Practice Leaders (who were normally paid roughly half what a senior consultant was paid) were less onerous than those of Senior Consultants.
Thus, while there were some changes in Ms Larné-Jones’ work, it has not been established that there were significant changes to the duties, role, level of responsibilities, remuneration or other aspects of her employment when she moved from the position of Senior Consultant/State Manager, Victoria in Melbourne to the position of Senior Consultant in Sydney.
Moreover, such changes as did occur were able to be accommodated by the terms of the 2003 Agreement and have not been shown to be outside the contemplation of the parties when the 2003 Agreement was reached.
Unlike the circumstances considered in some of the authorities cited, this is not a case in which HSA required or directed Ms Larné-Jones to move to Sydney or to change her employment duties. Ms Larné-Jones did not give affidavit evidence as to the circumstances in which the 2005 move occurred, other than to attest that during discussions between herself and Mr Jones “regarding [her] move from Melbourne to Sydney” he said that there would be “more opportunities” for her in Sydney in HSA’s head office. In cross-examination she acknowledged that part of the reason for moving to Sydney was to be with her husband. She did not give any other reason. There is no evidence to support any contention that Ms Larné-Jones was directed by HSA to move to Sydney, Mr McCarthy’s evidence was to the contrary. Mr Jones, the then Managing Director of HSA (to whom Ms Larné-Jones reported) gave no evidence in this respect. His failure to do so supports the conclusion that there was no business need or direction by HSA for Ms Larné-Jones to move.
On the evidence before me I am satisfied that the move was voluntary on Ms Larné-Jones’ part. No reason other than a desire to live with her husband was suggested by her. I am not satisfied that HSA required or directed Ms Larné-Jones to move to Sydney. This was not a change imposed by the employer. I am satisfied that HSA and Ms Larné-Jones agreed that she would cease to be Senior Consultant/State Manager Victoria and would work in Sydney as a Senior Consultant.
The 2003 Agreement specifically provided in cl.17 that it was the sole agreement between the parties relating to the terms and conditions of Ms Larné-Jones’ employment. The parties expressly acknowledged that no representations or warranties had been given by either of them, other than those contained in the Agreement. It was an express provision of the 2003 Agreement that it would continue to operate unless otherwise agreed to in writing (cll.16 and 17 of the 2003 Employment Agreement).
Ms Larné-Jones gave evidence that she understood these terms when she executed the contract. She agreed in cross-examination that she made no application for variation of the 2003 Agreement or for the formation of a new contract to either Mr Jones or Mr McCarthy at the time of her move to Sydney or at any time thereafter. Nor is there any evidence of such an approach by Mr Jones or Mr McCarthy or by anyone else on behalf of HSA.
There is no evidence of any variation by written agreement as required by cl.16 in circumstances where the contract expressly provided that upon satisfactory completion of the probationary period, that contract “shall continue indefinitely until terminated by either party in accordance with the provisions of cl 12” (cl.2(b)).
Critically, while cl.1(a) of the 2003 Agreement referred to the employment of Ms Larné-Jones as “a Senior Consultant/State Manager Victoria”, cll.1(b) and (c) were broadly drafted as follows:
1.(b) The Company may direct the Employee to work at different locations provided that such a move does not cause undue hardship or inconvenience to the Employee.
1.(c) The parties accept that the nature of the Employee’s role and levels of responsibility may change significantly during the period of this Agreement. The terms and conditions set out in the Agreement will continue to apply to the Employee irrespective of any change to the Employee’s position unless otherwise agreed to in writing by the parties.
I am satisfied that a change in the location of the employee’s work was contemplated in cl.1(b). Insofar as the Applicant’s evidence is she thought that clause referred only to temporary travel, it is clear that the phrase “such a move” contemplated and encompassed a more permanent transfer. It has not been established that the possibility of a change in location, such as a move to the Sydney office, was outside the contemplation of the parties when the 2003 Agreement was reached. Such a move was able to be accommodated by the terms of the 2003 Agreement.
Further, importantly, a change in role and levels of responsibility of the nature and extent that occurred in this case was contemplated by the operation of cl.1(c) of the 2003 Agreement. Indeed, even if the change in Ms Larné-Jones’ role and level of responsibility was, contrary to my view, such as to amount to a significant change, the contract contemplated and provided in cl.1(c) for its continued operation despite such a change or contingency (cf. Quinn v Chia at 101). Such a change could be accommodated by the terms of the 2003 Agreement (Martech at [158]). The effect of cl.1(c) is that such new role and responsibility would not amount to a rescission of the 2003 Employment Agreement. HSA was specifically permitted to alter the Applicant’s role and the parties agreed that the 2003 Agreement would continue to apply to Ms Larné-Jones’ position irrespective of “any” change, unless otherwise agreed to in writing. There was no such agreement in writing.
The fact that Ms Larné-Jones’ title changed is not such as to take the change outside the operation of cl.1(c), given the evidence as to the nature of the work performed by her in Melbourne and on her move to Sydney in 2005.
Such changes as there were in Ms Larné-Jones’ duties and responsibilities were in fact contemplated by and able to be accommodated by the terms of the 2003 Agreement (Martech at [162]). While there is no evidence that in 2003 the parties actually contemplated the particular move that occurred in 2005 both a move and change in duties and responsibilities were contemplated (given the provisions of cl.1 of the contract). The terms of the 2003 Agreement contained terms that were objectively appropriate to what occurred in 2005 (cf Quinn v Chia). It was not a change of such magnitude that there was a consensual discharge of the 2003 Agreement by implication (see Martech at [159] – [160]).
Hence the 2003 Agreement was the operative contract throughout the Applicant’s employment by HSA, including as at the date of her dismissal.
In relation to the claim for a bonus, it is not in dispute that there was no provision in the 2003 Agreement that gave Ms Larné-Jones an entitlement to an annual bonus (and see cl.17). Ms Larné-Jones acknowledged that she was told that a bonus was a matter for the discretion of HSA. It was known and accepted that bonuses were a matter of discretion. Ms Larné-Jones had no contractual entitlement to a bonus under the 2003 Agreement. Similarly there were express terms in the 2003 Agreement in relation to notice. There was no provision for “reasonable” notice.
Counsel for the Applicant conceded that insofar as the Applicant relied upon an implied term as to bonus or an implied term as to reasonable notice neither argument could succeed if the Court concluded that the 2003 Agreement remained in effect. Hence it is not necessary to consider further the submissions in that regard.
Breach of the 2003 Employment Agreement in relation to notice and measure of damages
While the Applicant’s claim that she was entitled to reasonable notice under a term to be implied in a 2005 contract falls away, in light of the conclusion that no such contract came into force it is necessary to consider the alternative submission that if the 2003 Agreement remained in effect, the notice provision in cl.12 of that Agreement did not permit summary dismissal absent serious and wilful misconduct, serious breach, or repudiation by Ms Larné-Jones.
As discussed above, there is no allegation by HSA in these proceedings of serious breach, repudiation or serious and wilful misconduct on the part of Ms Larné-Jones. In particular, HSA did not seek to establish that Ms Larné-Jones in fact engaged in serious and wilful misconduct.
Ms Larné-Jones contended that in these circumstances there was a breach of contract in that on 22 September 2011 HSA terminated her employment other than on four weeks’ written notice or payment in lieu thereof in accordance with cll.12(b) and (c) of the 2003 Agreement.
In paragraph 31 of the Statement of Claim the Applicant pleaded that her employment could have been lawfully terminated on 22 September 2011 by the payment of four weeks’ notice (calculated by reference to the express terms of cl.12(b) of the 2003 Agreement) as well as the additional week’s notice required for employees over the age of 45 years as required by s.117 of the FWA. Such claim was fully met by HSA in August 2012. This was comparatively early in the litigation and before any of the interlocutory hearings. The Applicant was sent a cheque in full payment of five weeks’ notice together with interest calculated from 22 September 2011. HSA’s pleading in this respect was not put into issue by any reply on the part of the Applicant.
While the Applicant chose not to present the cheques sent to her in August 2012 (and thereafter), HSA issued a fresh cheque to her in February 2014 to address any possibility that the earlier cheques may be “stale”. The Applicant’s failure to accept the monies proffered does not of itself warrant any increase in the damages to which she is entitled in relation to the breach of contract consisting of HSA’s failure to give her notice in accordance with cl.12 of the 2003 Agreement.
The Applicant conceded that without admitting liability, in August 2012 HSA had paid her an amount equivalent to the notice to which she was entitled under the express terms of the 2003 Agreement (as well as under the FWA). It was nonetheless ultimately contended that an issue arose as to her entitlement to further damages for the breach of contract consisting of HSA’s failure to comply with cl.12 of the 2003 Employment Agreement.
The Applicant acknowledged that the minimum amount of damages to which she would be entitled for such a breach would be an amount equivalent to the four weeks’ notice to which she would be entitled under cll.12(b) and (c) of the 2003 Agreement (see Robinson v Harman [1843-60] All ER Rep 383; (1848) 1 Exch 850 at 855 per Parke B; The Commonwealth of Australia v Amann Aviation Pty. Limited (1991) 174 CLR 64; [1991] HCA 54 at 80 per Mason CJ and Dawson J, at 98 per Brennan J, at 117 per Deane J, at 134 per Toohey J, at 148 per Gaudron J and at 161 per McHugh J). This amount (together with interest) was subsequently paid to her by HSA.
However, it was pointed out that in Fishlock v The Campaign Palace Pty Ltd (2013) 234 IR 1; [2013] NSWSC 531 Sackar J had stated (at [276]):
It is a general principle in the assessment of damages for breach of contract that where there are two or more ways in which a defendant might perform the contract, the court, in assessing damages, adopts the mode of performance which is most beneficial to the defendant (Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 92 per Mason CJ and Dawson J). However, this does not prevent the making of an assessment of damages based upon the evidence and the findings of primary fact (see Walker v Citigroup Global Markets Australia Pty Ltd (2006) 233 ALR 687 at [79] – [80] and [83] per Gyles, Edmonds and Greenwood JJ). In McDonald v Parnell Laboratories (Aust) Pty Ltd (2007) 168 IR 375, Buchanan J said (at [79]):
[79] Normally a party to a contract is entitled to perform the contract in a way which is open to it. Sometimes damages are assessed by reference to a principle that a defendant would have performed a contract, if not in breach, in the manner least burdensome to it. However, it is clear that such a principle does not operate as an automatic restriction on the quantum of damages (see TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 at 154-156; Amman at 93). Instead a court will look to the facts. It is not obliged, nor entitled, to proceed upon “an improbable factual hypothesis”.
The Applicant submitted that on the basis that the assessment of damages was a factual inquiry (as considered in Transport Workers Union of Australia v K & S Freighters Pty Ltd (2010) 205 IR 137; [2010] FCA 1225 at [186] – [191]) the Court was entitled to make an assessment as to when the entitlement to lawfully terminate Ms Larné-Jones’ contract might have been exercised by HSA. It was submitted that the quantum of damages was not necessarily confined to the remuneration to which the Applicant would have been entitled had she been lawfully dismissed upon notice given on 22 September 2011 (the date of the breach of contract). It was said to be necessary to determine how long the Applicant would have remained in her employment had HSA not breached the employment contract by its wrongful conduct (see Walker v Citigroup Global Markets Australia Pty Ltd (2006) 233 ALR 687; [2006] FCAFC 101 at [79] to [86] and Fishlock at [276]).
In support of this proposition, reference was made to the principles applied to determine what was reasonable notice as a matter of judicial discretion reflecting the particular circumstances of the case such as the nature of the employment, the degree of responsibility and the required dedication to the job, the importance of the position, the length of service, the professional standing, age, qualifications and experience of the employee and the expected period of time it would take to find alternative employment (see Rankin v Marine Power International Pty Ltd (2001) 107 IR 117 at 139, [2001] VSC 150, Taske v Occupational & Medical Innovations Ltd (2007) 167 IR 298; [2007] QSC 118 per Moynihan J at 149 and Macauslane v Fisher & Paykel Finance Pty Ltd (2002) 1 Qd R 503; [2002] QCA 282 per Holmes JA at [15]).
The Applicant submitted that on the evidence, the Court would conclude that HSA would not have moved (hypothetically) to dismiss Ms Larné-Jones lawfully in September 2011, but rather that it would have continued to participate in the injury management plan in accordance with the obligations it had under the workers’ compensation regime and would not have terminated the Applicant’s employment for some months, so that damages should be assessed on a basis that would include such a period. The Applicant’s submissions in this respect appear to contemplate either a period of time calculated by reference to what was occurring in relation to processing of the Applicant’s workers’ compensation claim (which was refused in November 2011) or a period akin to an asserted reasonable notice period.
Counsel for the Applicant acknowledged that if the Court found that HSA would, in any event, have dismissed the Applicant on notice on the same day as it summarily dismissed her or shortly thereafter (as attested to in the affidavit evidence of Mr McCarthy, Mr Gourley and Ms Murray) then in a practical and legal sense the period of notice would be the period provided for in the 2003 Agreement (and under the FW Act) and that payment had been proffered by HSA by way of a cheque that had been calculated in a way that covered that period of notice. However it was submitted that the evidence of HSA’s witnesses in this regard should be treated with caution given that while they claimed that HSA could have lawfully terminated Ms Larné-Jones’ employment at any time on the giving of notice, that had not in fact occurred.
HSA asserted that any claim to damages for breach of the 2003 Agreement had been met by its payment to Ms Larné-Jones in 2012 as such damages should be limited to the amount for which HSA could have lawfully terminated the contract. It was submitted that the Applicant had not established an entitlement to damages for loss of an expectation created by the contract. HSA contended that the evidence established that if Ms Larné-Jones had not been summarily dismissed in September 2011 she would not have remained in employment with HSA beyond the contractual period of notice and that there was no adequate factual foundation for speculation that she would not have been dismissed at that time. On this basis it was submitted that she was not entitled to damages beyond the amount paid to her in 2012.
The 2003 Agreement was in operation at the date of the termination of Ms Larné-Jones’ employment. There was a breach of the contract in that Ms Larné-Jones was not given the requisite contractual period of notice when dismissed on 22 September 2011. HSA has not sought to establish in these proceedings a basis on which Ms Larné-Jones could be dismissed summarily.
Given that there was a breach of the 2003 Agreement, the starting point in the cases cited for the Applicant is that damages are to be assessed on the basis of the “least burdensome” rule and limited to the amount for which the Respondent could have lawfully terminated the contract (see Amann at 92 – 93 and McDonald v Parnell Laboratories(Aust) Pty Ltd (2007) 168 IR 375; [2007] FCA 1903 at [79]). In this case the contract provided for a period of 4 weeks’ notice or payment in lieu thereof.
While it is open to the Applicant to claim damages in relation to a claim of loss of an expectation created by the contract she “must prove, on the balance of probabilities, that his or her expectation of a certain outcome, as a result of performance of the contract, had a likelihood of attainment rather than being mere expectation” (Amann at 80 per Mason CJ and Dawson J). As stated in Amann (at 80) “the amount of damages awarded will be commensurate with [the Applicant’s] expectation objectively, determined, rather than subjectively ascertained”. If, as in McDonald v Parnell Laboratories (Aust), there is found to be “no adequate factual foundation for speculation that she would not have been dismissed at all, if not summarily… there is no basis upon which to conjecture about the loss of a chance to remain in employment” (per Buchanan J at [82]).
The Applicant contended that she would not have been dismissed in September 2011 if HSA had not breached the contract and that the damages should include an amount in respect of an additional period of employment (as well as the payment in lieu of notice). The Respondent was given the opportunity to file additional evidence in response to this late claim. That evidence, filed in February 2014, is outlined above.
As pointed out in Fishlock, it is necessary to consider the facts as to when HSA might have exercised its entitlement to terminate Ms Larné-Jones’ employment. This issue is to be objectively rather than subjectively ascertained (see Amann at 80). The only evidence from the Applicant in relation to this issue was her affidavit evidence that prior to the events which began on 10 May 2011 she viewed her employment with HSA as a long-term career, that she enjoyed working there and that she had no intention of leaving her employment with HSA. Such a subjective statement of what the Applicant desired does not meet the burden of proof in relation to expectation damages.
In contrast, I am satisfied on the evidence before the Court, particularly the evidence of Mr McCarthy, Mr Gourley and Ms Murray set out above, that prior to 22 September 2011 a decision had been made by HSA that the Applicant was not going to continue in the employment of HSA, as any expectation that she may have personally held in that respect was not shared by those who worked with her, those who supervised her (other than her husband whose employment had been terminated in June 2011) or the directors of HSA. I accept the evidence of the witnesses for HSA that as at September 2011 the Applicant’s employment with HSA was going to be terminated and that the only question was whether it would be on a summary basis for gross misconduct or with notice. In the event, Mr McCarthy and Mr Gourley determined to summarily dismiss Ms Larné-Jones. I am satisfied however that, as they attested, if they had not summarily dismissed Ms Larné-Jones from her employment in September 2011 they would have terminated her employment by giving her notice.
I accept the evidence of Mr McCarthy and Mr Gourley that over a period of time in 2011 they had each formed the view that Ms Larné-Jones employment with HSA had to come to an end and that had it not been for the results of the Report (which they each saw as justifying summary dismissal) she would in any event have been terminated with notice because they were each of the view that her position in HSA was no longer tenable. The delay in effecting her termination after the directors received the Report has been explained by reference to the desire to give her an opportunity at a meeting to respond to the Report. The evidence as to the postponement and unsuccessful attempts to reschedule such a meeting (after WorkCover medical certificates expired) is outlined above. HSA was then advised that Ms Larné-Jones would never attend such a meeting.
As outlined above, Mr McCarthy formed his opinion having regard to factors such as the range of sources of complaint within HSA and his view that Ms Larné-Jones had lost the confidence of her colleagues and that there could be no viable working relationship with other HSA employees. He had regard to discussions with other employees in forming this view. I accept that this was his view.
Similarly, I accept Mr Gourley’s evidence that while he relied on the findings in the Report in forming his decision to summarily dismiss the Applicant for serious and wilful misconduct, had the Report found differently he would still have terminated Ms Larné-Jones’ employment on notice. He reached the view, based on conversations with HSA employees that Ms Larné-Jones’ conduct was such that she could not remain employed by HSA. He expressed particular concern about the impact on staff and hence on the business if she returned to work (from her suspension).
I am satisfied on the balance of probabilities that the evidence is consistent with a decision having been made to terminate the Applicant’s employment prior to 22 September 2011 and the decision being effected on that date. Apart from the Applicant’s assertion, there is no evidence to support her contention that she would not have been dismissed on 22 September 2011 if the First Respondent had not breached the contract by dismissing her without notice (cf Amann at 80). I am not satisfied that the absence of the pleaded breach (by summary dismissal) that the Applicant’s employment by HSA would have continued beyond the period of notice required under her contract of employment. It follows that “there is no basis upon which to conjecture about the loss of a chance to remain in employment” (McDonald v Parnell Laboratories (Aust) per Buchanan J at [82]). Hence it is not necessary to consider the submissions in relation to calculation of any longer or “reasonable” period of notice on the speculative basis suggested by the Applicant that, had she not been dismissed as she was, her employment may have continued for an extended period of time.
Under cl.12 of the 2003 Agreement Ms Larné-Jones was entitled to four weeks’ notice or payment in lieu of notice on termination. HSA breached the contract by failing to give her such notice in September 2011. However I am not satisfied that there is any basis for an entitlement to damages for breach of contract beyond four weeks’ notice (together with interest). Such an amount has been proffered by HSA. In these circumstances it appears to be unnecessary to order HSA to pay her this amount but, on the basis discussed above, the parties should have liberty to apply.
Conclusion
The Applicant is entitled to declarations that HSA breached the contract of employment in relation to the period of notice, contravened s.44 of the FWA and s.4 of the LSL Act and as to the involvement of Mr McCarthy and Mr Gourley in the contravention of s.44 of the FWA. As indicated, it does not appear necessary to order that HSA pay Ms Larné-Jones the money already paid to her in respect of these breaches as HSA has met its liability. However the parties should have liberty to apply in case there remains an issue in this respect.
The application for a penalty in respect of the contravention of s.44 be listed on a date to be fixed. The parties are to bring in Short Minutes of Orders within fourteen days to give effect to these reasons.
I certify that the preceding three hundred and sixty-eight (368) paragraphs are a true copy of the reasons for judgment of Judge Barnes
Associate:
Date: 17 April 2015
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