Mendonca v Chan and Naylor (Parramatta) Pty Ltd
[2014] FCCA 1042
•2 June 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MENDONCA v CHAN & NAYLOR (PARRAMATTA) PTY LTD & ANOR | [2014] FCCA 1042 |
| Catchwords: WORDS & PHRASES – “misconduct” – “serious misconduct” – “serious and wilful misconduct”. |
| Legislation: Fair Work Act 2009, ss.43, 44, 87, 90, 117, 123, 340, 341, 342, 351, 352, 360, 361, 539, 545, 546, 550 Fair Work Regulations 2009, reg.1.07 |
| Cases Cited: Browne v S Smith & Son Pty Ltd (1985) 8 FCR 206 Davids Distribution Pty Ltd v National Union of Workers (1999) 91 FCR 463 Rojas v Esselte Australia Pty Ltd (No.2) (2008) 177 IR 306 Construction, Forestry, Mining & Energy Union v Coal & Allied Operations Pty Ltd (1999) 140 IR 131 Randall v Greyhound Australia Pty Ltd [2008] FMCA 1191 United Firefighters Union of Australia v Easy [2013] FCA 763 Board of Bendigo Regional Institute of Technical & Further Education v Barclay (2012) 248 CLR 500 Klein v Metropolitan Fire & Emergency Services Board (2012) 208 FCR 178 North v Television Corporation Ltd (1976) 11 ALR 599 Soliman v University of Technology, Sydney (2012) 207 FCR 277 McDonald v Parnell Laboratories (Aust) Pty Ltd (2007) 168 IR 375 Boral Resources (Queensland) Pty Ltd v Pyke (1989) 93 ALR 89 Gooley v Westpac Banking Corporation (1995) 129 ALR 628 Carter v The Dennis Family Corporation [2010] VSC 406 Lewis v Great Western Railway Company (1877) 3 QBD 195 Bartucciotto v Euro Printing Co Pty Ltd [1996] IRCA 68 Sutcliffe v General Motors-Holden’s Automotive Limited (1998) 80 IR 142 |
| Applicant: | GERARD MENDONCA |
| First Respondent: | CHAN & NAYLOR (PARRAMATTA) PTY LTD AS TRUSTEE FOR CHAN & NAYLOR (PARRAMATTA) TRUST ABN 72 357 709 783 |
| Second Respondent: | CLIVE NELSON |
| File Number: | SYG 2685 of 2012 |
| Judgment of: | Judge Cameron |
| Hearing dates: | 7, 8, 9 and 29 April 2014 |
| Date of Last Submission: | 29 April 2014 |
| Delivered at: | Sydney |
| Delivered on: | 2 June 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr B. Cross |
| Solicitors for the Applicant: | Dooley & Associates |
| Counsel for the Respondents: | Mr R. Warren |
| Solicitors for the Respondents: | AFEI Legal |
ORDERS
Within twenty-one (21) days the parties file a minute setting out the amount payable by the first respondent to the applicant in respect of annual leave and how that amount should be paid.
Failing agreement on that minute, the parties have liberty to apply within twenty-eight (28) days.
In all other respects, the application be dismissed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 2685 of 2012
| GERARD MENDONCA |
Applicant
And
| CHAN & NAYLOR (PARRAMATTA) PTY LTD AS TRUSTEE FOR CHAN & NAYLOR (PARRAMATTA) TRUST ABN 72 357 709 783 |
First Respondent
| CLIVE NELSON |
Second Respondent
REASONS FOR JUDGMENT
Introduction
The first respondent (“Chan & Naylor Parramatta”) is a public accounting practice. The second respondent, Mr Nelson, is a director of Chan & Naylor Parramatta and its managing partner. From 3 April 2006 until 27 August 2012 the applicant, Mr Mendonca, was employed by Chan & Naylor Parramatta as a client manager. He alleged that during his employment he was subject to bullying, harassment and discrimination, partly because of his sex, by Mr Nelson and other employees of Chan & Naylor Parramatta. Mr Mendonca alleged that he made various complaints to the respondents, the Fair Work Ombudsman (“FWO”) and WorkCover in relation to the bullying, harassment and discrimination and in relation to Chan & Naylor Parramatta’s failure to, amongst other things, pay him some of his wages and his annual leave entitlements.
Mr Mendonca alleged that because he had exercised his workplace rights, as defined by s.342 of the Fair Work Act 2009 (“FW Act”), and because he had been temporarily absent from work due to illness or injury, Chan & Naylor Parramatta took adverse action against him in breach of s.340 of the FW Act by terminating his employment. He also alleged that Chan & Naylor Parramatta had underpaid him his long service leave entitlement and had failed to pay him an amount in lieu of notice of termination.
Mr Mendonca initially alleged that Chan & Naylor Parramatta had also taken adverse action against him because of his sex, in breach of s.351 of the FW Act, but that allegation was not pursued. Instead he alleged that his sex was a factor in the discrimination he alleged he faced and that he had exercised his workplace rights by complaining about that discrimination.
Mr Mendonca alleged that Mr Nelson was liable as an accessory for Chan & Naylor Parramatta’s contraventions of the FW Act.
Mr Mendonca sought compensation, payment of his outstanding entitlements, reinstatement to his job and pecuniary penalties against the respondents.
For the reasons which follow, with the exception of an order concerning certain annual leave payments to Mr Mendonca, the application will be dismissed.
Allegations
Mr Mendonca’s allegations were contained in his Form 2 claim form filed on 19 November 2012.
Bullying, harassment and discrimination complaints
Mr Mendonca commenced work as a client manager with Chan & Naylor Parramatta on 3 April 2006. He alleged that he had been repeatedly bullied, harassed and threatened with termination by Mr Nelson since about 1 July 2007. Mr Mendonca alleged that in mid-2010 he complained that Mr Nelson had bullied two other employees, Melanie De Kock and “Prabhjot”. He alleged that from 8 September 2011, he attended weekly meetings during which he requested that the bullying and harassment he faced be stopped, failing which he would lodge a complaint with the FWO and WorkCover. Mr Mendonca alleged that on 15 September 2011 he advised Chan & Naylor Parramatta of several actions taken by Mr Nelson which he believed amounted to bullying and harassment and that that resulted in repeated threats of termination.
Mr Mendonca alleged that on 15 June 2012 Mr Nelson informed him that his assistant, Newch Phiyasatien, was being transferred to another client manager, Elizabeth Pizzardi, and on 22 June 2012 said that the reason for the transfer was that both Ms Phiyasatien and Ms Pizzardi were female. Mr Nelson said that Mr Mendonca would be provided a male assistant, “Gaurav”. Mr Mendonca alleged that he told Mr Nelson that he would file a complaint with the FWO and WorkCover. On 25 June 2012 Mr Mendonca proceeded to file a complaint of discrimination and under-payment of wages with the FWO and a complaint of bullying and harassment with WorkCover.
Workplace injury
Mr Mendonca alleged that on 26 June 2012 he injured his back while lifting heavy boxes and moving a heavy table at work. On 27 June 2012 he informed WorkCover of his injuries. Mr Mendonca alleged that at WorkCover’s request he informed Mr Nelson of the injury on 28 June 2012. Mr Mendonca alleged that as a result of the injury he was absent from work from 29 June 2012 until 9 July 2012 and that he provided Chan & Naylor Parramatta with relevant medical certificates. Mr Mendonca was deemed fit for suitable duties from 10 July 2012.
Mr Mendonca alleged that Mr Nelson contacted him on 29 June 2012 to enquire when he would be returning to work. He alleged that he told Mr Nelson that he would return on 2 July 2012 if he felt better and also informed him of his complaints lodged with the FWO and WorkCover.
Suspension
Mr Mendonca alleged that at around 8am on 2 July 2012 he attended Chan & Naylor Parramatta’s premises to collect some medication. He alleged that Mr Nelson approached him at his car and asked him to withdraw his complaints to the FWO and WorkCover otherwise his employment would be terminated. Mr Mendonca alleged that when they entered the office Mr Nelson shouted at him that he had one more chance to agree to withdraw his complaints. Mr Mendonca refused. He alleged that Mr Nelson then disabled his access to Chan & Naylor Parramatta’s systems, gathered his belongings and took back his office keys.
Mr Mendonca alleged that by way of a letter handed to him on 2 July 2012 Chan & Naylor Parramatta suspended his employment when he was on sick leave. The letter requested that he attend a meeting with Mr Nelson on 3 July 2012 to discuss his future. Mr Mendonca alleged that he was unable to attend that meeting because of his workplace injury and because he had influenza. He alleged that he met with Mr Nelson on 16 July 2012 and provided a written response to the 2 July 2012 letter.
Annual leave
Mr Mendonca alleged that on 19 July 2012 he informed Mr Nelson that if his wages were not paid and his incorrect leave record not rectified, he would file a further complaint with the FWO. Mr Mendonca proceeded to file such a complaint on 27 July 2012. On 17 August 2012 the FWO advised Mr Mendonca that his complaint about annual and personal leave records had been referred for further investigation.
Termination
On 8 August 2012 Mr Mendonca received a letter from Chan & Naylor Parramatta outlining further allegations against him. He responded to that letter by email on 17 August 2012 and sought an opportunity to provide a list of documents to support his claims and an opportunity to meet with Mr Nelson when he was medically fit.
Mr Mendonca alleged that on 27 August 2012 he received a letter at his home terminating his employment on the basis of serious misconduct. He alleged that he was not offered a reasonable opportunity to access documents and information from Chan & Naylor Parramatta’s premises which would have assisted him in his response to the allegations made against him.
Mr Mendonca alleged that before he suffered his back injury at work, before his absence from work due to his injury and before raising the possibility of, and then in fact, filing complaints with the FWO and WorkCover, the respondents had never raised with him issues of alleged neglect of duty and serious misconduct. He alleged that he was dismissed for reasons which included his temporary absence from work due to illness or injury and his exercise of a workplace right.
Accessorial liability
Mr Mendonca alleged that Mr Nelson had accessorial liability for Chan & Naylor Parramatta’s alleged breaches of the FW Act.
Relief sought
Mr Mendonca sought:
a)declarations that the respondents had contravened ss. 44(1), 90(2), 117(2)(b), 340, 341(1), 342(1)(a) and 352 of the FW Act;
b)the payment of his outstanding annual and long service leave entitlements;
c)pay in lieu of notice;
d)pecuniary penalties against the respondents for their alleged breaches of the FW Act;
e)pecuniary penalties against Chan & Naylor Parramatta for its alleged breach of the Long Service Leave Act 1955 (NSW);
f)reinstatement; and
g)interest.
Response and Defence
The respondents opposed the orders sought by Mr Mendonca, alleging that he had not been dismissed on the basis of his temporary absence from work due to illness or injury or because he had exercised a workplace right. They alleged that Mr Mendonca’s employment had been terminated because of serious misconduct on his part and that they had never asked him to withdraw his complaints. The respondents alleged that through their letters of 2 July 2012 and 8 August 2012 they had provided Mr Mendonca with the details of what they said was his serious misconduct and allowed him a reasonable opportunity to respond to the allegations before terminating his employment.
Discrimination
The respondents alleged that prior to a conciliation held before Fair Work Australia Mr Mendonca had never complained to them that he had been bullied or harassed. They alleged that they had no knowledge or documentary proof that Mr Mendonca had asked them to refrain from bullying and harassing him or that he had said that he would complain about this to the FWO or WorkCover. They alleged that they had never been advised that one of their employees, Ms De Kock, had been harassed or bullied.
The respondents alleged that Mr Mendonca’s assistant, Ms Phiyasatien, had been transferred to another client manager because of another employee’s absence on parental leave. They alleged that Ms Phiyasatien was transferred because of her skill and experience levels, not because of the sex of any of the people involved. The respondents alleged that Mr Mendonca would have been provided a new assistant, “Nicholas”, whose skills and experience would not have been detrimental to Mr Mendonca’s ability to perform his work.
Complaints
The respondents referred to Mr Mendonca’s 27 July 2012 complaint to the FWO concerning his annual and personal/carer’s leave entitlements. They alleged that they had co-operated with the FWO by providing documents, initially on 23 August 2012 and then subsequently when the FWO requested further documents. The respondents alleged that WorkCover made contact with them for the first time on 23 October 2012 seeking to discuss allegations about Chan & Naylor Parramatta providing potentially inadequate manual handling systems, a potentially inadequate system for controlling the risks associated with persons being exposed to cold temperatures at work and a potentially inadequate system for reporting hazards or incidents.
Workplace injury
The respondents alleged that Mr Mendonca had not informed them of his alleged workplace injury on 26 June 2012, but had instead stated in an email on that date that he had “viral flu” and in an email on 27 June 2012 that he had a severe headache due to office stress. The respondents alleged that until 9 July 2012, the medical certificates Mr Mendonca had provided to them only stated that he was unfit for work but did not specifically mention any lifting strain, back injury or muscular injury associated with lifting a table or heavy boxes.
The respondents alleged that Mr Mendonca first advised them that he had sustained a workplace injury in an email dated 28 June 2012 but did not disclose the nature of the injury or when it had occurred. They alleged that it was only on 13 July 2012 that they became aware of the nature of the injury, the date it occurred and that it would result in a WorkCover claim and investigation, when Chan & Naylor Parramatta’s worker’s compensation insurer, QBE Insurance, sought confirmation that Mr Mendonca worked for the first respondent.
Suspension
The respondents alleged that on 2 July 2012 Mr Mendonca arrived at work earlier than Mr Nelson and began to collect his belongings. While he was doing so Mr Nelson asked him to attend a meeting in the presence of a witness in order to give him a letter directing him to attend a meeting the next day. The respondents alleged that Mr Mendonca refused to accept the letter or to have the witness present and left the premises after advising that he was going to telephone the police. They alleged that Mr Mendonca later returned with the police, returned the office key, was handed a letter by Mr Nelson dated 2 July 2012 and collected his belongings before leaving with the police. The respondent deposed that Mr Mendonca had not been asked to remove his personal belongings.
The respondents alleged that Mr Mendonca’s response to the 2 July 2012, given at a meeting on 16 July 2012, had not addressed all of the issues in Mr Nelson’s letter.
The respondents alleged that during Mr Mendonca’s absence from work, they became aware of certain serious matters concerning his skills, diligence and work performance. They alleged that Mr Mendonca’s actions exposed Chan & Naylor Parramatta’s clients to additional taxation liabilities, potential fines and penalties and risked damaging client confidence in Chan & Naylor Parramatta. The respondents also alleged that during his absence they became aware that Mr Mendonca had been using Chan & Naylor Parramatta’s resources for his own business activities. As a result, the respondents sent Mr Mendonca a letter dated 8 August 2012 setting out their allegations against him and asking him to attend a meeting on 10 August 2012 to discuss those issues. The respondents alleged that Mr Mendonca responded by email on 17 August 2012 but that response did not address all the issues and did not rebut the allegations made against him.
The respondents alleged that in deciding to terminate Mr Mendonca’s performance they had not taken into account his period of sick leave, his filing of a workers compensation claim or his complaints to the FWO and WorkCover. They denied that he had been dismissed for reasons which included him exercising a workplace right or his temporary absence due to illness or injury. They alleged that the decision was made solely on the evidence of serious misconduct and Mr Mendonca’s inability to provide satisfactory responses to the allegations in the 2 July and 8 August 2012 letters. They alleged that Mr Mendonca had been provided with reasonable opportunities to respond to the allegations against him. The respondents alleged that prior to June 2012 issues of Mr Mendonca’s neglect had also been raised with him in an informal manner.
Leave
The respondents alleged that Mr Mendonca had been paid his full entitlement for annual leave. They alleged that the FWO investigation into Mr Mendonca’s leave entitlement complaint lodged on 27 July 2012 had verified that they had dealt correctly with Mr Mendonca’s leave entitlements.
Sufficiency of pleading and particulars
The respondents noted that a party relying on the reverse onus of proof provided by s.361 of the FW Act must make its claims plain and clear and submitted, with some justification, that Mr Mendonca’s claims had not been pleaded adequately. In a civil matter of this sort, any deficiency in pleading or particularisation ought to be addressed at an interlocutory stage rather than in submissions at the end of a trial but in any event, the matters in issue between the parties did eventually become apparent. Importantly, the respondents have not pointed to any particular prejudice which may have flowed from the deficient pleading in Mr Mendonca’s Form 2 claim form.
Relevant law
Unlawful dismissal
Part 3-1 of chapter 3 of the FW Act provides for employees’ general protections. Division 3 of pt.3-1 provides for the protection of workplace rights and the exercise of those rights. Sections 340-342 of the FW Act are found in div.3 of pt.3-1 and relevantly provide:
340 Protection
(1)A person must not take adverse action against another person:
(a) because the other person:
(i) has a workplace right; or
(ii) has, or has not, exercised a workplace right; or
(iii) proposes or proposes 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. …
341 Meaning of workplace right
Meaning of workplace right
(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; …
342 Meaning of adverse action
(1)The following table sets out circumstances in which a person takes adverse action against another person.
Meaning of adverse action Item Column 1
Adverse action is taken by ...
Column 2
if ...
1 an employer against an employee the employer:
(a) dismisses the employee; or
(b) injures the employee in his or her employment; or
(c) alters the position of the employee to the employee’s prejudice; or
(d) discriminates between the employee and other employees of the employer.
…
Division 5 of pt.3-1 provides for other protections. Section 352 of the FW Act is found in that division and relevantly provides:
352Temporary absence—illness or injury
An employer must not dismiss an employee because the employee is temporarily absent from work because of illness or injury of a kind prescribed by the regulations.
Section 361 of the FW Act is concerned with proof of the reason for action alleged to be contrary to a provision of pt.3-1 of the FW Act. In relation to dismissals which occurred before 1 January 2014 it provides:
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, in proceedings arising from the application, 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.
Section 360 provides:
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.
Payment in lieu of notice
Sections 117 and 123 of the FW Act are found in div.11 of pt.2-2 of that Act.
Section 117 relevantly provides:
117 Requirement for notice of termination or payment in lieu
Notice specifying day of termination
(1)An employer must not terminate an employee’s employment unless the employer has given the employee written notice of the day of the termination (which cannot be before the day the notice is given).
Amount of notice or payment in lieu of notice
(2)The employer must not terminate the employee’s employment unless:
(a)the time between giving the notice and the day of the termination is at least the period (the minimum period of notice) worked out under subsection (3); or
(b)the employer has paid to the employee (or to another person on the employee’s behalf) payment in lieu of notice of at least the amount the employer would have been liable to pay to the employee (or to another person on the employee’s behalf) at the full rate of pay for the hours the employee would have worked had the employment continued until the end of the minimum period of notice.
(3) Work out the minimum period of notice as follows:
(a) first, work out the period using the following table:
Period Employee’s period of continuous service with the employer at the end of the day the notice is given Period 1 Not more than 1 year 1 week 2 More than 1 year but not more than 3 years 2 weeks 3 More than 3 years but not more than 5 years 3 weeks 4 More than 5 years 4 weeks (b)then increase the period by 1 week if the employee is over 45 years old and has completed at least 2 years of continuous service with the employer at the end of the day the notice is given.
Section 123 relevantly provides:
123 Limits on scope of this Division
Employees not covered by this Division
(1)This Division does not apply to any of the following employees:
…
(b)an employee whose employment is terminated because of serious misconduct;
…
Regulation 1.07 of the Fair Work Regulations 2009 relevantly provides:
1.07 Meaning of serious misconduct
(1)For the definition of serious misconduct in section 12 of the Act, serious misconduct has its ordinary meaning.
(2)For subregulation (1), conduct that is serious misconduct includes both of the following:
(a)wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the contract of employment;
(b)conduct that causes serious and imminent risk to:
(i) the health or safety of a person; or
(ii) the reputation, viability or profitability of the employer's business.
(3)For subregulation (1), conduct that is serious misconduct includes each of the following:
(a)the employee, in the course of the employee’s employment, engaging in:
(i) theft; or
(ii) fraud; or
(iii) assault;
(b)the employee being intoxicated at work;
(c)the employee refusing to carry out a lawful and reasonable instruction that is consistent with the employee’s contract of employment.
(4)Subregulation (3) does not apply if the employee is able to show that, in the circumstances, the conduct engaged in by the employee was not conduct that made employment in the period of notice unreasonable.
…
Annual leave
Section 87 of the FW Act relevantly provides that for each year of service with his or her employer, an employee is entitled to four weeks of paid annual leave which accrues progressively during a year of service according to the employee’s ordinary hours of work.
Section 90 of the FW Act provides:
90 Payment for annual leave
(1)If, in accordance with this Division, an employee takes a period of paid annual leave, the employer must pay the employee at the employee’s base rate of pay for the employee’s ordinary hours of work in the period.
(2)If, when the employment of an employee ends, the employee has a period of untaken paid annual leave, the employer must pay the employee the amount that would have been payable to the employee had the employee taken that period of leave.
Penalties and compensation
By virtue of s.43(1)(a) of the FW Act, ss.87, 90 and 117 are provisions of the National Employment Standards (“NES”). Section 44(1) provides that an employer must not contravene a provision of the NES. Section 539 provides that s.44(1) is a civil remedy provision.
In combination, ss.539(2) and 546(2) of the FW Act provide that the maximum pecuniary penalty for a contravention of those civil remedy provisions is 60 penalty units for an individual and 300 penalty units for a corporation. At the time of the alleged breaches s.4AA of the Crimes Act 1914 provided that a penalty unit was worth $110.
Section 545(2)(b) of the FW Act provides that the Court may award compensation for loss suffered because of a contravention of any of the FW Act’s civil remedy provisions referred to above.
Accessorial liability
Section 550 of the FW Act states:
550 Involvement in contravention treated in same way as actual contravention
(1)A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.
(2)A person is involved in a contravention of a civil remedy provision if, and only if, the person:
(a)has aided, abetted, counselled or procured the contravention; or
(b)has induced the contravention, whether by threats or promises or otherwise; or
(c)has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d)has conspired with others to effect the contravention.
Long service leave
The Long Service Leave Act 1955 (NSW) relevantly provides:
4Long service leave
(1)Except as otherwise provided in this Act, every worker shall be entitled to long service leave on ordinary pay in respect of the service of the worker with an employer. Service with the employer before the commencement of this Act as well as service with the employer after such commencement shall be taken into account for the purposes of this section.
(2)
(a)Subject to paragraph (a2) and subsection (13) the amount of long service leave to which a worker shall be so entitled shall:
(i) in the case of a worker who has completed at least 10 years service with an employer be:
(A)in respect of 10 years service so completed, 2 months, and
(B)in respect of each 5 years service with the employer completed since the worker last became entitled to long service leave, 1 month, and
…
(iii) in the case of a worker who has completed with an employer at least five years service, and whose services are terminated by the employer for any reason other than the worker’s serious and wilful misconduct, or by the worker on account of illness, incapacity or domestic or other pressing necessity, or by reason of the death of the worker, be a proportionate amount on the basis of 2 months for 10 years service.
…
(a3)For the purposes of subsections (2), (3) and (3A), month means 4 and one-third weeks.
…
(5)
(a)Where the services of a worker are terminated otherwise than by the worker’s death and any long service leave:
(i) to which the worker was entitled has not been taken, or
(ii) accrues to the worker upon such termination and has not been taken,
the worker shall, subject to subsection (13), be deemed to have entered upon the leave from the date of such termination and the employer shall forthwith pay to the worker in full the worker’s ordinary pay for the leave less any amount already paid to the worker in respect of that leave.
11Recovery of penalties
(1)Proceedings for the recovery of a penalty under this Act are to be taken before the Local Court and may be taken by:
…
(c)a person whose rights are impaired.
(2)In any such proceedings the Local Court may, in addition to the imposition of any penalty, make such an order with respect to any payment due to a worker under this Act as might have been made in proceedings taken under section 12. Such order may be made without motion and shall be a bar to further proceedings under section 12 in respect of such payment.
(3)In any proceedings under this section the Local Court before whom such proceedings are taken may award costs to either party and assess the amount of such costs.
…
12Recovery of long service leave pay
(1)Any worker may apply to the Local Court, or to the Industrial Relations Commission in Court Session, for an order directing the employer to pay to the worker the full amount of any payment which has become due to the worker under this Act at any time during the period of 6 years immediately preceding the date of the application but not earlier than 2 years before the date of assent to the Long Service Leave (Amendment) Act 1980. The Local Court or Industrial Relations Commission in Court Session may make any order it thinks just in the matter and may award costs to either party, and assess the amount of such costs.
Although this Court is not amongst the courts referred to in the Long Service Leave Act, that is no impediment to the Court exercising accrued jurisdiction in relation to the long service leave aspect of this matter: Browne v S Smith & Son Pty Ltd (1985) 8 FCR 206 at 210.
Evidence
Gerard Mendonca
Background
Mr Mendonca commenced work at Chan & Naylor Parramatta as a client manager on 3 April 2006 and signed his employment contract on the same day. His contract stated that he would be paid a salary of $45,000, including superannuation, which was the “award rate” for his experience based on the “Hays Personnel” industry standard. It also stated that his salary would be reviewed every twelve months “in a structured way”.
Mr Mendonca deposed that, under supervision, he had prepared tax returns and financial documents, supervised his assistants and managed his client portfolio but had not provided tax advice, tax planning or tax structuring services. He deposed that he had had no authority to lodge tax returns, had had no system access to do so and had not been trained in how to lodge tax returns. He said that when he had completed a tax return he would tell Mr Nelson that it was ready for checking and the latter would later instruct a clerk to send it to the client for approval.
Discrimination, bullying and harassment
Mr Mendonca deposed that in September 2006, when Simone King, a client manager who had a client portfolio of about $250,000, announced that she was pregnant, he asked Mr Nelson if he could manage her portfolio while she was on maternity leave. He deposed that Mr Nelson said that Ms King’s clients were used to dealing with a female. Mr Mendonca deposed that he was not given an equal opportunity to take over Ms King’s clients or to share her portfolio. Instead Neetu Shankar, a female whom he described as an undergraduate with lesser experience and qualifications than he, was recruited to fill Ms King’s role and offered $48,000 (including superannuation) and a bonus. Mr Mendonca deposed that when he found out that Ms Shankar was employed on a base salary ($48,000) higher than his starting salary ($45,000) he complained to Mr Nelson that he was being discriminated against on the grounds of age and sex. He deposed that the discrimination, bullying and harassment against him started after that conversation.
Mr Mendonca deposed that on 21 February 2007 he informed Mr Nelson that Bianca Von Kauffmann, Chan & Naylor Parramatta’s then-receptionist, was sending private and confidential client mail to the wrong clients. He deposed that after he sent the email Ms Von Kauffmann approached him and told him to stop making complaints about her before throwing client files “upon” him and walking away. Mr Mendonca deposed that when he informed Mr Nelson of Ms Von Kauffmann’s actions Mr Nelson said that he could resign if he wished.
On 2 July 2007 Mr Mendonca sent an email to Mr Nelson and other staff members stating that he had reported Ms Von Kauffmann’s bullying and harassment to the police. He deposed that the police officer he spoke to told him to tell Mr Nelson that if the bullying and harassment did not stop, the police would attend. Mr Mendonca deposed that Mr Nelson told him that if he caused the police to attend the office he would be dismissed.
On 4 September 2007 Mr Mendonca sent another email to Mr Nelson stating that Ms Von Kauffmann had again thrown items into his in-tray and had also thrown his client envelopes on the floor. Mr Mendonca deposed that due to Mr Nelson’s inaction he sent a further email on 27 September 2007 to Mr Nelson and David Naylor, one of Chan & Naylor Parramatta’s directors, stating that Ms Von Kauffmann continued to throw things violently into his in-tray. Mr Naylor responded saying he would ask Mr Nelson to look into the issue as a matter of urgency.
Performance reviews
During the course of his employment with Chan & Naylor Parramatta Mr Mendonca attended half yearly performance review meetings with Mr Nelson. Prior to each of those meetings Mr Mendonca completed a performance review form, the first part of which was a table requiring him to rate his performance against a set of criteria with the second part being open-ended questions to which he could respond. Mr Mendonca deposed that at almost all of his performance review meetings, Mr Nelson had failed to read his responses to the open-ended questions and had made notations on the form after the meetings without his knowledge or consent. He also deposed that at all of those meetings Mr Nelson had said his performance either met expectations or was excellent.
Mr Mendonca’s first performance review was on 15 July 2006. Mr Mendonca deposed that Mr Naylor briefly attended the meeting to explain Chan & Naylor Parramatta’s business culture and how it calculated salaries. He deposed that after Mr Naylor’s departure, Mr Nelson told him that:
a)his performance met expectations;
b)he had successfully completed his probation period and therefore would have his salary increased to $48,000;
c)at the end of the year he would be paid a fixed bonus of $2,000 for the 2005/2006 financial year; and
d)his client portfolio for the 2006/2007 financial year was budgeted at $200,000 and he would receive a soft copy of the bonus calculator when Mr Nelson received it from Chan & Naylor Australia.
Mr Mendonca deposed that at his 15 July 2007 performance review meeting Mr Nelson told him that due to his continued good performance his salary would be increased to $55,000 and his bonus for the 2006/2007 financial year would be $2,000 as already agreed between them. Mr Mendonca deposed to the following conversation:
Mr Mendonca: You told me the $2,000.00 was a fixed bonus for 2005/2006 and you would pay it in December 2006. You haven’t paid that to me yet and now you want to say its actually my bonus for 2006/2007. I don’t agree to that.
Mr Nelson:Oh yes, that’s right sorry. The $2,000.00 was for 2005/2006. We have actually calculated your bonus for 2006/2007 as $1,000.00, which will be paid around December 2007.
Mr Mendonca: That seems very low, can you give me the calculations for the 2006/2007 bonus?
Mr Nelson:I have not yet received the soft copy of the staff bonus calculator previously given to you. I will e-mail it to you when I receive it from Chan & Naylor Australia. However, at the moment the projected bonus for 2007/2008 is nil projected per the staff bonus calculator.
Mr Mendonca deposed that he rejected Mr Nelson’s offer of a salary increase because Ms Shankar had been offered a $17,000 pay increase, bringing her salary to $65,000, plus a bonus of $15,000. After the meeting Mr Mendonca wrote an email to Mr Nelson and Mr Naylor in which he claimed that in 2006 Mr Nelson had promised to increase his 2007 salary to $62,000. Mr Mendonca stated that he would resign unless his salary was increased to that amount or he received the reduced salary of $55,000 but worked only three days a week. Mr Mendonca deposed that on 1 August 2007 Mr Nelson approached him and said that he did not want him to resign. Mr Nelson offered Mr Mendonca a salary of $62,000 and a bonus calculated according to Chan & Naylor Parramatta’s staff bonus calculator.
Mr Mendonca deposed that as with previous performance review meetings, on 15 July 2008 Mr Nelson did not read his responses to the review form’s open ended questions. He deposed when he asked Mr Nelson if he was going to discuss his responses, Mr Nelson told him to speak to Mr Naylor.
Mr Mendonca’s salary was increased to $80,000 at his performance review meeting on 15 July 2009. It was further increased to $87,200 at a performance review meeting on 12 August 2010 and to $95,000 at a performance review meeting on 11 August 2011.
From August 2011 Mr Mendonca was required to attend weekly Friday meetings with Mr Nelson to review his invoices and “tax returns lodged”. He deposed that at those meetings Mr Nelson would provide him with tax planning and general tax advice, review and sign client tax returns and financial documents, review the time he had spent on client jobs and approve invoices. Mr Mendonca deposed that at those meetings he repeatedly informed Mr Nelson that since July 2006 his invoice numbers had been incorrect because of the exclusion of several client invoices and because he had been refused access to “the entity’s” MYOB profit and loss account in order to “calculate the overheads of each person since 1 July 2006”. He deposed that Mr Nelson refused to correct his “income numbers”. Mr Mendonca deposed that he also repeatedly discussed with Mr Nelson the bullying and harassment he said he faced and that Mr Nelson always responded by telling him to do as he was told or he would face dismissal to which Mr Mendonca would reply that he would complain to “Fair Work Authorities” or WorkCover.
Mr Mendonca’s last performance review meeting was held on 18 January 2012. Mr Mendonca deposed that Mr Nelson was hostile during the meeting and asked him what his answer “Inaction and Unchanged” to some of the questions in the review form meant. Mr Mendonca deposed that he told Mr Nelson that he was referring to the discrimination, bullying and harassment which he had faced and listed examples which included being constantly threatened with dismissal and inaction in relation to his bonus issues. He deposed that Mr Nelson told him that he did not care and that he wanted to have a further meeting with him and his solicitor, Mark Paul. That meeting occurred on 16 February 2012. Mr Mendonca deposed that during the meeting Mr Paul asked Mr Nelson to provide documentation verifying Mr Mendonca’s bonus calculations as well as actual calculations of each yearly bonus. He deposed that after Mr Paul left the meeting room Mr Nelson said “Your last work day is not far away”.
Respondents’ misconduct
Mr Mendonca made several allegations that Mr Nelson had given bad advice and had acted improperly, even illegally, in the management of his practice and had threatened Mr Mendonca with dismissal if he did not do as he was told. Given the findings I have made below concerning the credibility of Mr Mendonca’s evidence it is not necessary to rehearse those allegations.
Clients
Ms Roberts
Mr Mendonca deposed that on 14 June 2012 Mr Nelson sent him an email asking him to attend a meeting to discuss payment arrangements, particularly relating to one client, Melinda Roberts.
On 17 June 2012 Mr Mendonca sent an email to Oonagh Kalsy, Chan & Naylor Parramatta’s accounts manager, concerning an amount received from the Australian Taxation Office (“ATO”) and subsequently placed in Chan & Naylor Parramatta’s suspense account. In that email he relevantly said:
The amount you informed me about which is lying in suspense account relates to Melinda’s company. Melinda will e-mail us the BSB Number and Bank Account Number for the Company for transfer of A$[X] from our bank account to her company bank account.
I am not aware if Richard Robert’s 2011 tax refund has been inadvertently credited by the ATO. If A$[Y] for Richard Roberts is inadvertently credited to the bank account of Chan & Naylor (Parramatta). Please refund per Melinda’s details below.
Although in cross-examination Mr Mendonca said that it was possible that the ATO would mistakenly credit Chan & Naylor Parramatta’s account he deposed in his affidavit sworn on 23 May 2013 that, in breach of trust account regulations and without Ms Roberts’s consent, Mr Nelson or a person under his control had deposited tax refunds for entities relating to Ms Roberts into Chan & Naylor Parramatta’s office account. He deposed that when he learned of this he told Mr Nelson that such conduct was unlawful but Mr Nelson said he could make such decisions.
Mr Mendonca deposed that he met with Mr Nelson on 22 June 2012. He said that the meeting was about “payment arrangements”, not about the ATO depositing the tax refund into the office account, but did agree that Mr Nelson had asked him whether he had put Chan & Naylor Parramatta’s bank account details into Ms Roberts’s tax return. He said that he told Mr Nelson that he had not because he had prepared a correct tax return and that Ms Roberts had had tax to pay, not a refund to receive.
Mr Mendonca said that he had known at the time of that meeting that a tax refund for a company controlled by Ms Roberts had been deposited into Chan & Naylor Parramatta’s bank account but said nothing about it. He observed that “every entity is a separate entity in the eyes of the law”. He said that he did not talk about the company because Mr Nelson only asked about Ms Roberts. Mr Mendonca also deposed that he had said to Mr Nelson he could not be blamed for an incorrect return being lodged because he had given the documents to Mr Nelson to check.
Mr Mendonca denied having shouted during the meeting or that Ms Kalsy had been present. He also denied directing the refunds for Ms Roberts and her group of companies into Chan & Naylor’s account in order to cover some outstanding invoices.
Victorian client
Mr Mendonca deposed that he had acted under Mr Nelson’s direction, control and supervision in relation to entities related to one of Chan & Naylor Parramatta’s clients based in Victoria. He annexed to his affidavit a profit and loss statement for a company associated with that client and deposed that the handwriting on that document compelling him to make adjustments to numbers was Mr Nelson’s.
Tasmanian client
Mr Mendonca had a client based in Tasmania and the work which he performed for that client formed part of Mr Nelson’s stated reasons for dismissing him.
Mr Mendonca said that he did not work on the Tasmanian client’s 2011 tax return and did not check or file it. He said that her return was done initially by Mr Nelson. Mr Mendonca denied lodging an amended tax return for this client after one had already been prepared (and apparently lodged) identifying that an amount of tax was payable. Mr Mendonca denied having changed the client’s return in order to give her the benefit of losses incurred by a trust of which she was a beneficiary.
Assistant client managers
In 2007 Mr Mendonca’s assistant client manager was Grace Liwanag. Mr Mendonca deposed that he advised Mr Nelson of Ms Liwanag’s unsatisfactory performance but no disciplinary action was taken against her and instead she was given a pay rise in July that year. He deposed that although on 10 March 2009 Ms Liwanag sent Chan & Naylor employees an email which he described as highly offensive and derogatory, no disciplinary action was taken against her.
Mr Mendonca deposed that on 1 August 2010, after Ms Liwanag had resigned, he asked Mr Nelson if Prabhjot Singh could become his assistant. He deposed that Mr Nelson told him that he would not allow two Indians who knew each other to work together and suggested that he pick a male Chinese assistant.
On 13 March 2012 Mr Mendonca’s then-assistant, Luke De Permentier, resigned. Mr Mendonca deposed that Mr De Permentier told him that he was resigning because he was treated differently from female employees and had been compelled by Mr Nelson to act illegally. He deposed that Newch Phiyasatien then became his permanent and full-time assistant.
Mr Mendonca deposed that on 15 June 2012 Mr Nelson transferred Ms Phiyasatien from her job as his assistant so that he would be unable to perform his job and earn a bonus for that year. He deposed that another client manager, Ms Pizzardi, told him that Mr Nelson intended to move Ms Phiyasatien to her. Mr Mendonca deposed that Ms Pizzardi said that she did not agree with Mr Nelson’s plan because it was established practice that an assistant could not be moved without the client manager’s consent. Mr Mendonca said as much in an email to Mr Nelson.
Mr Mendonca deposed that following a meeting on 18 June 2012 he said to Mr Nelson:
… If you bully and harass me by removing Newch, I will report all your acts of bullying and harassment inflicted upon me since 3 April 2006 to Work Cover [sic]. I will report to Fair Work Ombudsman under-payment of wages due to non-payment of my contractual bonus, discrimination and intentionally incorrect leave issues.
Mr Mendonca deposed that Mr Nelson then asked whether he would like to resign and he said he would not. He deposed that on 22 June 2012 Mr Nelson announced that Ms Phiyasatien was to become Ms Pizzardi’s new assistant. Mr Nelson said that Ms Phiyasatien was to be Ms Pizzardi’s new assistant because they were both female and that Mr Mendonca would be given a male contractor, “Gaurav”, as an assistant. Mr Mendonca deposed that he told Mr Nelson that he would be filing a complaint with the FWO and WorkCover on 25 June 2012.
Performance by other staff
Mr Mendonca deposed that on 23 March 2010 Ms Shankar emailed him and other client managers evidence that she had incorrectly claimed seminar expenses on behalf of a client even though they were not tax deductible. He deposed that Ms Shankar was not suspended or terminated for serious misconduct.
Mr Mendonca deposed that on 5 November 2011 he sent an email to Mr Nelson informing him that Mr Nelson’s assistant, Maeve, had sent an email to clients asking them to lodge outstanding tax returns and that several clients who had already lodged their tax returns were upset by the email. He deposed that no disciplinary action was taken against Maeve for failing to ascertain which clients had outstanding tax returns.
Work terms and conditions
On 25 August 2008 Mr Mendonca sent an email to Mr Nelson, Mr Naylor and Edward Chan setting out his concerns about his salary level and bonus payments. On 22 September 2008 Mr Mendonca also sent an email to Hais Safetli, general manager of Chan & Naylor Australia, who had been tasked with investigating his issues, setting out his issues with his salary, his bonus and the portfolio allocations.
Mr Mendonca deposed that on 19 March 2009 he sent an email to Mr Nelson complaining about errors in his annual leave entitlements. He deposed that Mr Nelson never followed up on the matter. Mr Mendonca deposed that since the start of his employment he had not been able to confirm the accuracy of his leave records because Mr Nelson refused to give him copies of any of his leave application forms or emails received by him or any person under his control.
On 15 August 2011 Mr Mendonca wrote an email to Mr Nelson stating his disagreement with the charge out rate Mr Nelson had determined for him. He queried why his charge out rate of 246.30 had been rounded up to 250 instead of being rounded down to 245 or retained at 246.
On 7 September 2011 Mr Nelson sent Mr Mendonca an email telling him that he would like to be informed when Mr Mendonca left work early for personal reasons. Mr Mendonca replied, complaining that he was being harassed, discriminated against and/or bullied. Mr Mendonca deposed that he had a meeting with Mr Nelson regarding that email where he again raised his complaints of discrimination, bullying and harassment and said he would report them to WorkCover and “Fair Work Authorities”. He deposed that Mr Nelson responded by saying “I don’t care”.
In an email dated 24 September 2011 Mr Mendonca stated that he proposed to work from home on Tuesdays and Thursdays commencing a couple of weeks hence. In response, Mr Nelson advised him that as a full-time employee he was required to attend work on a full-time basis. Mr Nelson asked Mr Mendonca to provide details of the basis of his request for flexible work arrangements. Mr Mendonca deposed that Mr Nelson also said to him:
Put in your hours. Chargeable time is around 360 minutes with around 60 minutes general office and around 30 minutes system problems each work day. If you have any unproductive time for any reason put in the hours. I check time sheets each morning.
On 13 October 2011 Mr Mendonca’s then-solicitors sent a letter to Chan & Naylor Parramatta demanding that it pay Mr Mendonca bonus payments which were owed to him but had not been paid. Mr Mendonca deposed that in response to that letter Mr Nelson said his last work day was not far away and that he replied that he would file a complaint with WorkCover and the “Fair Work Authorities” if he was dismissed.
Events preceding termination
Complaints and injury
Mr Mendonca deposed that on 25 June 2012 he made a written complaint to the FWO concerning the non-payment of his contractual bonus and the discrimination he alleged he had suffered. He also made a telephone complaint to WorkCover about bullying and harassment which he said had occurred since 3 April 2006.
Mr Mendonca deposed that on 26 June 2012 he suffered a back injury while at work and was unwell so he left the office halfway through the day. He sent an email advising of his absence and said that he had “viral flu”. He sent a further email on 27 June 2012 enclosing some medical certificates and complaining of a headache caused by office stress.
On 27 June 2012 Mr Mendonca commenced proceedings in the NSW District Court alleging that Chan & Naylor Parramatta had breached its agreement with him and seeking to have Ms Phiyasatien restored to her position as his assistant. He deposed that on that day he also telephoned WorkCover to advise it of Chan & Naylor Parramatta’s “unsafe acts” and of his workplace injury.
On 28 June 2012 the District Court Statement of Claim was served on Mr Nelson “by express post”. Mr Mendonca sent an email to Mr Nelson that day advising that process had been served on Chan & Naylor Parramatta. Mr Mendonca deposed that after he informed Mr Nelson of his application to the District Court, the latter paid him $4,156.88 as a bonus for the period ending 30 June 2011.
Mr Mendonca deposed that on 29 June 2012 Mr Nelson telephoned him and asked him when he was returning to work. Mr Mendonca said that he would return on 2 July if his back felt better. He deposed that he also told Mr Nelson the date and type of his workplace injury, that he had lodged complaints with the FWO and WorkCover and that he had commenced proceedings in the District Court.
2 July 2012
Mr Mendonca deposed that, accompanied by his friend Brian D’Sylva, he went to the Chan & Naylor Parramatta office at 8am on 2 July 2012 to collect his medication. While Mr Mendonca was still in or by his car, Mr Nelson approached him and said that if he did not withdraw his complaints to the FWO and WorkCover he would be dismissed. Mr Mendonca deposed to having said that he would not withdraw his complaints and to having reiterated that advice when he followed Mr Nelson into the office. Mr Mendonca deposed that he handed Mr Nelson a copy of a medical certificate dated 1 July 2012 and that Mr Nelson shouted:
I don’t care. Do not go to your desk. Be seated in the Boardroom. I’ll disable your system access. I’ll gather your belongings.
Mr Mendonca said that Mr Nelson would not allow him into the office and directed him to a boardroom.
Mr Mendonca denied being at his workstation at 8am on 2 July 2012. He denied having filled a bag with effects from his desk, saying that the only personal things he kept at his desk were his medication and a pen. Mr Mendonca said that Hank Brisbane, a contractor who provided accounting and auditing services to Chan & Naylor and had occasionally assisted him, had not been in the office at 8am and was not telling the truth when he said that he heard Mr Mendonca and then saw Mr Nelson arrive. He also said that Mr Nelson had not said that he wanted to give him a letter.
Mr Mendonca deposed that he told Mr Nelson that he wanted to report his bullying to the police and Mr Nelson told him that he could not use any of the office telephones to do so. He deposed that he then left the office, dropped off Mr D’Sylva and telephoned the police emergency line from his home. He was directed not to re-enter Chan & Naylor Parramatta’s premises but to wait outside for the arrival of the police. Mr Mendonca deposed that he did so and that following their arrival the police interviewed him and then spoke to Mr Nelson. The police then handed him a letter signed by Mr Nelson which required him to attend a meeting the next day in order to discuss his future with Chan & Naylor Parramatta. They also handed him his personal belongings which Mr Nelson had gathered. Mr Mendonca deposed that at Mr Nelson’s request he also handed back his office key and left the premises with the police.
Events subsequent to 2 July 2012
Mr Mendonca deposed that he continued to be unwell and provided a doctor’s certificate on 3 July 2012 and WorkCover medical certificates on 5 July 2012, 9 July 2012 and 20 July 2012. He deposed that he had been ready, willing and able to perform work on 10 July 2012 but Mr Nelson had suspended him on 2 July 2012 and had not allowed him to return to work. However, he later provided another doctor’s certificate on 14 August 2012 and sent an email to Mr Nelson on 20 August 2012 saying that he would not be attending work because he continued to be unwell.
In a letter dated 13 July 2012, QBE Insurance provisionally accepted liability for Mr Mendonca’s workers compensation claim. Liability was subsequently accepted.
Mr Mendonca deposed that he prepared a letter responding to Mr Nelson’s 2 July 2012 letter. He also deposed that he was scheduled to attend a meeting with Mr Nelson on 16 July 2012 and that Mr Nelson “coerced” him into attending the meeting even though his daughter was unwell. Mr Mendonca deposed that at the meeting he asked Mr Nelson to sign a statement of relevant experience to help him gain other employment. He deposed that Mr Nelson had signed such a statement in the past after receiving the necessary advice and that Mr Nelson’s unreasonable refusal to sign the statement on 16 July 2012 was one of the reasons which had obstructed his future prospects of earning an income.
On 27 July 2012 Mr Mendonca filed another complaint with the FWO relating to the non-payment of his wages and incorrect leave records. He deposed that the FWO advised him to file a complaint with WorkCover as well. On 8 November 2012 a FWO inspector advised Mr Mendonca by email that it could not continue to investigate his matter because the evidence was conflicting and suggested that he file an application with this Court. On 3 December 2012 the FWO notified Chan & Naylor Parramatta that its investigation into Mr Mendonca’s 27 July 2012 complaint had not identified any contravention by Chan & Naylor Parramatta.
Other matters said to have emerged in Mr Mendonca’s absence
During Mr Mendonca’s absence from work commencing on 26 June 2012, various deficiencies and improprieties in his work practices were said by Mr Nelson to have been identified.
An issue arose concerning whether Mr Mendonca had done work for private clients of his own using Chan & Naylor Parramatta’s facilities and on its time. Mr Mendonca deposed that around 12 April 2010 Mr Nelson repeated advice he had given him earlier that he could use Chan & Naylor Parramatta’s resources to conduct work for his private clients during lunch breaks and after hours and that that other employees had performed work for personal clients during work hours using Chan & Naylor Parramatta’s resources. Even so, he deposed that he had not performed work for non-clients and that all his work had been for existing or prospective clients of the firm.
In relation to one Cesar Ordona, Mr Mendonca said that he had been a client of Chan & Naylor Parramatta and that he had raised an invoice addressed to him which he thought had been approved by the firm. He said that he did not raise an invoice for himself. He also denied doing any private work for Mr Ordona’s children and said that Chan & Naylor Parramatta did not do any work for them either while he was there.
Mr Mendonca said that although he was alleged to have failed to provide adequate service to five identified clients (“the 2011 tax return clients”), in respect of three of them he had not been involved at all in the preparation of their tax returns. He said that Chan & Naylor Parramatta’s accounting records showed that he had not worked on those returns and deposed that the 2011 tax returns for those three clients had been prepared by Mr Brisbane. In relation to the allegations that he had not filed the 2011 tax returns for any of the 2011 tax return clients in a timely manner, Mr Mendonca deposed that they had had to be approved by Mr Nelson and that in any event, those clients had only provided Chan & Naylor Parramatta with written consent to file their 2011 tax returns in August 2012. He also deposed that part of the reason the tax returns had not been finalised were Mr Nelson’s repeated refusals to obtain written legal advice or a private ruling in relation to issues concerning some trusts.
Termination
On 8 August 2012 Mr Nelson sent Mr Mendonca a letter setting out matters which Chan & Naylor Parramatta considered amounted to serious misconduct on Mr Mendonca’s part. That conduct related to his work in relation to his Victorian and Tasmanian clients and the 2011 tax return clients. The letter also alleged that Mr Mendonca had utilised Chan & Naylor Parramatta’s resources for his own business activities and had worked on his own taxation business while at work. Mr Mendonca was required to attend a meeting on 10 August 2012 to respond to those allegations. On 10 August 2012 Mr Mendonca sent Mr Nelson an email stating that he was unwell and would not be attending work. When Mr Nelson re-scheduled the meeting Mr Mendonca sent another email saying that he was unwell and unable to attend work. By email dated 17 August 2012 Mr Mendonca eventually responded to the 8 August letter. He denied all the allegations made against him and alleged serious misconduct against Chan & Naylor Parramatta.
By letter dated 24 August 2012 Mr Mendonca’s employment was terminated for serious misconduct.
Mr Mendonca deposed that issues concerning his clients were only raised after he threatened to complain, and then in fact did complain, to the FWO about his bonus, annual leave and discrimination, and to WorkCover about bullying, harassment and the injury he had suffered.
Melinda Roberts
Ms Roberts was the sister of Cesar Ordona. Ms Roberts deposed that Mr Mendonca had been her client manager at Chan & Naylor Parramatta and that her brother had been a client of Chan & Naylor Parramatta. She said that Mr Mendonca had done some tax returns for her brother but she had never seen a Chan & Naylor Parramatta invoice for that work.
Ms Roberts confirmed that one of her companies had been due a refund for the 2011 tax year. She said that Mr Mendonca asked her for her son’s bank details and his tax refund was deposited into his account. Mr Mendonca did not tell her that the refund had first been deposited in Chan & Naylor Parramatta’s account.
Brian D’Sylva
Mr D’Sylva is a friend of Mr Mendonca. He deposed that on the morning of 2 July 2012 Mr Mendonca telephoned him and told him that he was unwell and needed to attend work to collect some medication. Mr Mendonca asked Mr D’Sylva to accompany him to his workplace. Mr D’Sylva deposed that when they arrived at Mr Mendonca’s workplace, Mr Mendonca, who was driving, parked the car across the road from his office. He deposed that after about a minute or two Mr Nelson approached the car and said to Mr Mendonca:
If you do not withdraw your complaints to Ombudsman [sic] and WorkCover I will look to terminate your services.
Mr D’Sylva deposed that in response Mr Mendonca said “No” and then got out of the car and walked into his workplace. He deposed that when Mr Mendonca returned to the car five minutes later he appeared preoccupied and unhappy.
The respondents’ requirement that Mr D’Sylva attend for cross-examination was not pressed on the understanding that they would have put to Mr D’Sylva, if he had attended, that his account of the conversation between Mr Mendonca and Mr Nelson on 2 July 2012 was incorrect.
Clive Nelson
Background
Mr Nelson deposed that Chan & Naylor Pty Ltd is the trustee of Chan & Naylor Parramatta, a public accounting practice and part of the Chan & Naylor Group, administered by Chan & Naylor Australia. Mr Nelson is a director of Chan & Naylor Parramatta and its managing partner and in the latter role is responsible for and administers Chan & Naylor Parramatta’s accounting practice. Mr Nelson deposed that on 3 April 2006 Mr Mendonca commenced work with Chan & Naylor Parramatta as a client manager, providing accounting and taxation advice.
Mr Nelson denied checking all of Mr Mendonca’s work. He said that after one and a half to two years with Chan & Naylor Parramatta, Mr Mendonca came to him and said that he did not think it was necessary for Mr Nelson to check all his tax returns. Mr Nelson said that he agreed and extended the revised practice to all the other client managers. Mr Nelson said that if a client manager was satisfied with particular work he or she could submit it to the client for review. Although he was available to be consulted, client managers could handle straightforward matters on their own. Mr Nelson said that Mr Mendonca had approached him with questions from time to time but had not been required to submit to him all the tax returns he processed prior to lodging them with the ATO.
Mr Nelson deposed that Mr Mendonca had provided tax advice on behalf of Chan & Naylor Parramatta on many occasions and was not required to, and in fact did not, submit all advice to him before issuing it. Mr Nelson deposed that he was generally involved in the structuring of advice but that client managers also issued advice from time to time.
Discrimination, bullying and harassment complaints
Mr Nelson deposed that in about March 2006 one of Chan & Naylor Parramatta’s client managers, Simone King, advised that she was pregnant. He deposed that in determining how to accommodate Ms King’s absence while she was on maternity leave he considered the existing workload of other client managers and their capacity to manage the types of clients in Ms King’s portfolio. Mr Nelson deposed that taking those factors into consideration, he decided to recruit a new staff member and consequently hired Ms Shankar as a client manager on 4 September 2006. He deposed that he hired Ms Shankar because of her three years’ experience in the Australian tax industry and offered her a salary consistent with the advertised salary range and consistent with Chan & Naylor Parramatta’s salary guide, which was the same as Mr Mendonca’s salary at that time. Mr Nelson deposed that after Ms Shankar had commenced employment, Mr Mendonca approached him and said that he should have been given Ms King’s portfolio and that Ms Shankar should have taken over his portfolio. He deposed that this was the first time that Mr Mendonca had said that he wanted Ms King’s client portfolio and that by that time it was inappropriate to transfer Ms King’s client portfolio to Mr Mendonca because Ms Shankar had already started work with those clients and he wanted to minimise disruption to them.
Mr Nelson denied that he had ever received requests from clients to work with certain client managers because of their sex or that he had ever made decisions concerning Ms Shankar or Mr Mendonca because of their sex. He denied that he had ever discriminated against Mr Mendonca or any other employee on the basis of age or sex or that he had bullied or harassed Mr Mendonca.
On 2 July 2007 Mr Mendonca sent out an email stating that he had reported “Bianca’s” actions to the police. Mr Nelson deposed that prior to receiving the email he had not been aware that Mr Mendonca had concerns regarding Bianca Von Kauffmann, the then-receptionist. He deposed that he told Mr Mendonca that he did not think it was necessary for him to have involved the police as he and Mr Mendonca could have spoken about the issue.
Performance reviews
Mr Nelson deposed that at Mr Mendonca’s first performance review meeting, on 15 July 2006, he told Mr Mendonca that his salary would increase to $48,000. However, he denied that he had offered Mr Mendonca a fixed bonus of $2,000, deposing that Chan & Naylor Parramatta did not ordinarily offer fixed bonuses because bonus amounts were dependant on staff achievements and the size of their portfolio. He also deposed that he had not said that he would give Mr Mendonca a copy of the bonus calculator because Chan & Naylor Parramatta’s bonus calculator had been introduced in the second half of 2007 for use in 2008 and had not even been contemplated at the time of that meeting. Mr Nelson deposed that he had instead told Mr Mendonca that he could potentially receive a $2,000 bonus subject to his performance and the size of his client portfolio.
On 15 July 2007 during a performance review meeting Mr Nelson offered to increase Mr Mendonca’s salary to $55,000. Mr Nelson deposed that Mr Mendonca rejected that offer. He deposed that he then spoke to Mr Naylor and ultimately decided that Chan & Naylor Parramatta could afford to offer Mr Mendonca the $62,000 he wanted. He deposed that he confirmed this by writing it on the last page of Mr Mendonca’s performance review document on 25 July 2007.
Mr Nelson deposed that at a performance review meeting on 18 January 2012, Mr Mendonca had included with his review form additional information concerning his bonus. He deposed that he told Mr Mendonca that he would be able to meet with him and his solicitor to discuss the bonus issue. Mr Nelson deposed that on 16 February 2012 he attended a meeting with Mr Mendonca and his solicitor, Mr Paul. He deposed that Mr Paul was present during the whole meeting and that when he left the meeting, Mr Paul and Mr Mendonca remained in the meeting room.
Mr Nelson said that Mr Mendonca’s issues were discussed at his performance reviews and that it was not correct to say that he had ignored Mr Mendonca’s complaints about sex discrimination and his bonus entitlements. Although Mr Mendonca complained about what he perceived to be sex discrimination, Mr Nelson did not recall him having threatened legal action in connection with that issue. However, he did recall Mr Mendonca saying that he would take action in relation to his bonuses. Mr Nelson conceded that he did not seek to alter the self-assessments on Mr Mendonca’s performance assessment forms and would sign them if he did not want to make an issue over them.
Weekly meetings
Mr Nelson deposed that in December 2011 he noticed that Mr Mendonca’s invoicing had deteriorated and therefore started having weekly meetings with him to discuss the issue. He deposed that during those meetings Mr Mendonca only spoke in answer to questions and spent as little time as possible in the meetings. Mr Nelson also deposed that Mr Mendonca did not mention that his invoice numbers had been incorrect since 2006 or allege that he was being bullied or harassed. Mr Nelson said that the weekly meetings were concerned only with invoicing, not with tax returns.
Mr Mendonca’s assistants
Chan & Naylor Parramatta’s client managers are assisted by assistant client managers. The assistant client managers report to and are responsible for activities delegated to them by client managers including assisting with preparing financial statements, tax returns, corresponding with clients and various administrative functions. Mr Nelson deposed that he had the authority to make staff movements and had done so before for operational reasons. He deposed that there was never an established practice at Chan & Naylor Parramatta of requiring client managers’ consent to the movement of assistant client managers. Mr Nelson deposed that although client managers were generally involved in the transfer of assistant client managers, they did not make final decisions about the recruitment and transfer of staff.
Mr Nelson deposed that when Ms Liwanag, Mr Mendonca’s assistant client manager, left her employment in 2010 he refused Mr Mendonca’s request that Mr Singh become his assistant because, after interviewing Mr Singh, he did not think he was suitable for the role.
Mr Nelson deposed that on 13 March 2012 Mr De Permentier, Mr Mendonca’s then-assistant client manager, resigned his employment because he said that he could no longer work with Mendonca as a result of the latter’s regular expression of his grievances against Chan & Naylor Parramatta. Mr De Permentier was replaced by Ms Phiyasatien who, prior to Mr De Permentier’s resignation, was employed on a part-time basis as an assistant client manager to two other client managers, Lauren McGinty and Renata Nowak. Following Mr De Permentier’s resignation she commenced work on a full-time basis working three days with Mr Mendonca and two days with Ms McGinty and Ms Nowak.
Mr Nelson deposed that in July 2012 Vivian Ji, an assistant to Ms Pizzardi, commenced maternity leave. He deposed that to accommodate her absence he intended to transfer Ms Phiyasatien to work with Ms Pizzardi, engage a new full-time assistant client manager to work with Mr Mendonca and employ a new assistant client manager to work part-time with Ms McGinty. Mr Nelson deposed that he decided that it would be easier for a new employee to familiarise themselves with Mr Mendonca’s portfolio of PAYG, sole trader and property investor clients than with Ms Pizzardi’s client portfolio of small to medium businesses. He deposed that he determined that Ms Phiyasatien was suitable to work on Ms Pizzardi’s client portfolio because she had previous experience in working with MYOB and an apparent understanding of business clients from her work with Ms McGinty.
Mr Nelson deposed that on 15 June 2012 Mr Mendonca did not return to work after lunch and did not provide a reason for his absence. Later that day Mr Mendonca sent Mr Nelson an email stating that he did not consent to the removal of Ms Phiyasatien from his portfolio. Mr Nelson deposed that he was surprised by the email as that was the first time he became aware that Mr Mendonca had concerns about Ms Phiyasatien’s transfer. He deposed that on 22 June 2012 he met with Mr Mendonca to tell him what he intended to do in relation to the allocation of support staff for the next financial year. He advised him of Ms Phiyasatien’s transfer, saying that she was the most suitable candidate for the role.
On 26 June 2012 Mr Mendonca sent an email to Ms Pizzardi, copied to Mr Nelson, stating that he had filed an application with “the court having competent jurisdiction” regarding Ms Phiyasatien’s transfer. Mr Nelson deposed that he did not understand why Mr Mendonca had sent the email to Ms Pizzardi as she was not a named defendant in the alleged application mentioned in the email and had no authority to make any final decisions concerning Ms Phiyasatien’s transfer. He deposed that he considered that the email only aggravated the matter, denigrated Chan & Naylor Parramatta and discouraged Ms Pizzardi from accepting Ms Phiyasatien as a suitable replacement. Mr Nelson thought that the email was inappropriate and intimidatory.
Events preceding termination
On 26 June 2012 Mr Mendonca sent an email advising that he was unwell and would not be returning to work that day. Mr Mendonca did not return to Chan & Naylor Parramatta to perform work after that.
On 28 June 2012 Mr Mendonca sent Mr Nelson an email stating that due to his “workplace injury” he was unwell and would not be attending work. Mr Nelson deposed that that was the first time he became aware that Mr Mendonca may have suffered a workplace injury and was not aware of its nature or the date on which it allegedly occurred. He deposed that he later received from Mr Mendonca a WorkCover certificate dated 5 July 2012 which stated that he had a back injury. Mr Nelson deposed that on 19 July 2012 he received a letter dated 13 July 2012 from QBE Insurance accepting provisional liability Mr Mendonca’s claim. He deposed that that was the first time he became aware that Mr Mendonca had filed a worker’s compensation claim.
2 July 2012
Mr Nelson deposed that when he arrived at work on 2 July 2012 at about 8.20am, Mr Mendonca was at his work station and appeared to be gathering his personal belongings. He deposed that he told Mr Mendonca that he wanted to meet with him in one of the boardrooms. At the meeting in the boardroom Mr Nelson was accompanied by Mr Brisbane. Mr Nelson deposed that he was attempting to tell Mr Mendonca that he had a letter for him but Mr Mendonca interrupted him and said he did not want Mr Brisbane in the room and intended to telephone the police. Mr Nelson deposed that he told Mr Mendonca that he could telephone the police if he wished but suggested that he go outside to do so.
Mr Nelson deposed that at approximately 9am two police officers arrived at Chan & Naylor Parramatta’s premises and told him that Mr Mendonca wanted to collect his personal belongings. He deposed that he told the police officers that he was happy for that to happen but that he had a letter to give to Mr Mendonca and also wanted him to return his office key. Mr Nelson deposed that one of the police officers then went outside and returned with Mr Mendonca who then collected a bag containing his belongings and handed in his office key. Mr Nelson also gave Mr Mendonca a letter which invited him to attend a meeting to discuss his future with Chan & Naylor Parramatta. That letter relevantly referred to Mr Mendonca’s early departure from work on 15 June 2012, his email to Mr Nelson and Ms Pizzardi about Ms Phiyasatien and a meeting he attended on 22 June 2012 with Mr Nelson and Ms Kalsy. He deposed that Mr Mendonca then loudly said goodbye to Mr Brisbane and left.
Mr Nelson said that he had taken advice from his solicitors concerning the drafting of the 2 July 2012 letter. He said that he had been speaking to his solicitors about Mr Mendonca’s behaviour but the first opportunity he had had to give him the letter was 2 July 2012 because Mr Mendonca had not been in the office since 25 June 2012. Mr Nelson said that his letter of 2 July 2012 was prepared because he wanted to know Mr Mendonca’s reasons for the actions referred to in that letter so he could decide what course of action to take. Mr Nelson said that once he knew of the District Court proceedings, he asked his solicitors whether he should still send a letter to Mr Mendonca.
On 16 July 2012 Mr Mendonca, accompanied by his friend Mr D’Sylva, attended a meeting with Mr Nelson at Chan & Naylor Parramatta’s premises and provided a written response to the 2 July 2012 letter. Mr Nelson deposed that he considered that Mr Mendonca’s written response showed a complete lack of understanding that he had done anything wrong or of the adverse effect his actions had had on other employees and on clients. Even so, Mr Nelson said that Mr Mendonca was not dismissed because of the matters raised in the letter of 2 July 2012 and he did not lose his job because of the way he behaved. Mr Nelson said that other matters came along which were more critical and impelled action. Those subsequent issues, Mr Nelson said, had ramifications for the practice as a whole.
Mr Mendonca’s misconduct
Melinda Roberts
Mr Nelson deposed that on 14 June 2012 the bookkeeper, Ms Kalsy, advised him that there were tax refund deposits in Chan & Naylor Parramatta’s practice account. He deposed that Chan & Naylor Parramatta could not accept deposits of client moneys into its account as it did not have a trust account. Mr Nelson deposed that Ms Kalsy later told him that the money belonged to Ms Roberts, one of Mr Mendonca’s clients, and that after his own investigations he became satisfied that that was so.
On 22 June 2012 Mr Nelson had a meeting with Mr Mendonca and Ms Kalsy to discuss Ms Roberts’s tax refund. He deposed that during the meeting Mr Mendonca raised his voice and did not allow him or Ms Kalsy to speak. Mr Mendonca repeated that he did not want to deal with clients who did not pay their accounts within seven days and that Chan & Naylor Parramatta should not deal with such clients. Mr Nelson said that Mr Mendonca’s behaviour at the 22 June 2012 meeting suggested that he was having a breakdown.
Mr Nelson said that Mr Mendonca was the person who would have put the firm’s bank account details into the relevant tax returns, thereby enabling tax refunds to be deposited into Chan & Naylor Parramatta’s bank account. Mr Nelson said that he would not have done that because he was not allowed to.
Personal clients
Mr Nelson deposed that during Mr Mendonca’s absence from work from 26 June 2012 he became aware that the latter had been using Chan & Naylor Parramatta’s resources for his own business activities, which was a breach of his employment obligations. Mr Nelson said that while Mr Mendonca was away, his private clients were ringing Chan & Naylor Parramatta about Mr Mendonca doing their tax work. He said that he was confident that Mr Mendonca had used Chan & Naylor Parramatta’s resources to service his private clients.
On 3 July 2012 Mr Nelson received an email from a Mark Ordona, which was addressed to Mr Mendonca but had been redirected to him in Mr Mendonca’s absence. In the email Mr Ordona asked Mr Mendonca to attend to his and his wife’s tax returns. Mr Nelson deposed that he examined Chan & Naylor Parramatta’s database but was unable to find a record of Mr Mark Ordona or his wife, Cassandra. However, he did locate a record for a Cesar Ordona whose 2011 tax return had been prepared by Mr Mendonca but who had not paid Chan & Naylor Parramatta for the services he received. Mr Nelson deposed that Chan & Naylor Parramatta’s database indicated that Mr Cesar Ordona was not registered as its client and that it was not registered with the ATO as his tax agent. Mr Nelson deposed that Mr Mendonca had never sought approval to perform work for his personal clients during office hours and denied that he had approved such actions. He deposed that Chan & Naylor Parramatta did not prevent employees from having personal clients outside work hours but it did not permit them to conduct their own activities during work hours or with its resources.
Tasmanian client
On 23 July 2012 Mr Nelson received a redirected email from Mr Mendonca’s Tasmanian client asking Mr Mendonca to advise her whether her trust losses could be used to offset her personal tax as had occurred previously. Mr Nelson deposed that he was aware that it was unlawful to distribute trust losses to an individual. He deposed that he and Mr Brisbane reviewed the Tasmanian client’s previous tax returns, which had been prepared by Mr Mendonca, and discovered that he had recorded “brought forward trust losses” in her 2011 amended income tax return. On 9 August 2012 Mr Nelson and Mr Brisbane telephoned that client and explained to her the error in her tax return. Mr Nelson attached to his affidavit a file note of their conversation, noting that the client claimed that when Mr Mendonca had advised her that she did not have to pay any tax, she had asked him if the tax laws had changed and he said “yes, you can do this, this year”. The file note further recorded:
… Esther had spoken with GM, enquiring how to pay her 2011 Income Tax assessment. GM informed Esther that he had lodged an amended return and that there was no tax to pay. Esther said that she had not received an amended lodgment authority and as such had not authorized the lodgment. …
Mr Nelson said that Mr Brisbane told him that he had prepared that client’s returns up to the client review stage when they were passed to Mr Mendonca.
Victorian client
Mr Nelson deposed that on 26 July 2012 a Chan & Naylor Parramatta finance manager in Victoria telephoned him and told him that the tax return for an entity related to Mr Mendonca’s Victorian client showed a nil taxable income while the tax return for a related entity showed a $198,000 income distribution to the first entity. Mr Nelson deposed that he then reviewed the first entity’s file and discovered that the tax return lodged by Mr Mendonca appeared to be erroneous. He deposed that he was aware that an incorrect recording of income in the entity’s tax return would have led the ATO to refund more than the entity was entitled to receive. He deposed that he was also aware that the correction of the tax return would result in the entity incurring additional tax payable and a penalty interest expense. Mr Nelson noted that Mr Mendonca had also recorded payments to the client’s four minor children although they did not have tax file numbers or Australian Business Numbers (“ABNs”).
He deposed that he reviewed the file again, after Mr Brisbane raised further issues relating to the client’s trust on 21 August 2012, and found that Mr Mendonca had also failed to include in the entity’s 2011 accounts debtors of approximately $200,000. Mr Nelson deposed that on 22 August 2012 he contacted the Victorian client and explained the errors to him and the need to fix them. Chan & Naylor Parramatta then filed an amended tax return.
Mr Nelson did not believe Mr Mendonca when he said that he had not lodged the Victorian client’s tax returns because tax returns were lodged at the directions of client managers and he was the only one with authority to give that direction.
Other
Mr Nelson deposed that further issues relating to Mr Mendonca came to his attention between 26 July and 8 August 2012 which included Mr Mendonca:
a)failing to recognise prior losses in the 2011 tax returns of three of the 2011 tax return clients, which was unlawful and might have resulted in penalties against the clients and Chan & Naylor Parramatta; and
b)failing to lodge tax returns in a timely manner for two of the 2011 tax return clients, which potentially exposed them to late lodgment penalties.
Termination
Mr Nelson deposed that Mr Mendonca’s actions had exposed Chan & Naylor Parramatta’s clients to additional tax liabilities and potential fines and penalties. He deposed that they had also affected Chan & Naylor Parramatta’s reputation, viability and profitability and exposed it to a risk of loss of client confidence. Mr Nelson said that Mr Mendonca was too much of a risk to the business and that an absence of time records for him working on the Victorian client’s file was, to him, evidence that Mr Mendonca knew that what he had been doing on that file was wrong.
On 8 August 2012 Mr Nelson sent Mr Mendonca a letter about his conduct and performance and invited him to attend a meeting to address the allegations in that letter. Mr Mendonca provided an email response on 17 August 2012 which, Mr Nelson deposed, did not address all the issues which had been raised and did not adequately explain Mr Mendonca’s conduct.
Mr Nelson deposed that on 23 August 2012 he decided to terminate Mr Mendonca’s employment because, after considering Mr Mendonca’s response and the evidence before him, he determined that it was more likely than not that Mr Mendonca was responsible for errors in clients’ tax returns and he had conducted his own business during work hours and using Chan & Naylor Parramatta’s resources. Mr Nelson deposed that his decision was also based on his view that Mr Mendonca had not provided a reasonable excuse for his misconduct and that his actions had caused a significant risk to Chan & Naylor’s reputation and viability.
Accordingly, on 24 August 2012 Mr Nelson sent Mr Mendonca a letter advising him that effective 27 August 2012 his employment was terminated for serious misconduct.
Mr Nelson deposed that no part of his consideration to terminate Mr Mendonca’s employment was a result of the latter making allegations of bullying, harassment or discrimination, making allegations concerning his annual leave and/or sick leave, making allegations concerning his pay, making complaints to the FWO and WorkCover and filing a worker’s compensation claim. He deposed that he had also not considered Mr Mendonca’s sex and absence from work due to alleged illness or injury. Mr Nelson deposed that Mr Mendonca was not given payment in lieu of notice or a pro-rata long service entitlement because his employment was terminated summarily for serious misconduct.
Mr Nelson accepted that Mr Mendonca had had issues with his bonuses but said that that was not a reason why he would want to dismiss him. In fact, Mr Nelson said, he had been to see Mr Mendonca’s solicitor about the bonus issue. Mr Nelson also said that although he had doubts about the injury which Mr Mendonca said he had suffered at work, this was irrelevant and not associated with his decision to dismiss Mr Mendonca. Mr Nelson said that he would only dismiss Mr Mendonca for misconduct. In fact he was advised that he only had limited dismissal rights because Mr Mendonca was injured. He said that he had not been trying to find matters which would justify Mr Mendonca’s dismissal but things were brought to him while Mr Mendonca was away.
External investigations
Mr Nelson deposed that on 17 August 2012 someone from the FWO contacted him seeking copies of Mr Mendonca’s leave records in order to investigate a complaint made by Mr Mendonca about unpaid leave entitlements. He deposed that that was the first time he became aware that Mr Mendonca had filed a complaint with FWO on 27 July 2012.
Mr Nelson deposed that on 23 October 2012 he was advised that Mark Cordone from WorkCover had attended the premises. Mr Nelson met with Mr Cordone on 29 October 2012 and was told that WorkCover had received an anonymous complaint about workplace conditions and health and safety issues at Chan & Naylor Parramatta.
Mr Nelson’s evidence was to the effect that none of the FWO or WorkCover investigations led to contraventions being identified or to any action being taken against Chan & Naylor Parramatta.
Mr Nelson’s alleged misconduct
Mr Mendonca deposed that he had never knowingly advised a client to act contrary to their legal obligations. He denied the allegations of impropriety made against him by Mr Mendonca.
Oonagh Kalsy
Ms Kalsy was a bookkeeper contracted to Chan & Naylor Parramatta from July 2011 until 21 March 2013, when she became its accounts manager. She reconciles Chan & Naylor Parramatta’s bank statements.
Ms Kalsy deposed that when she identifies amounts in the operating account which she cannot reconcile with client payments, commission payments or inter-office transfers she transfers those funds into a suspense account. She deposed that she then contacts client managers and other Chan & Naylor Australia offices in Pymble, Melbourne and Perth to determine the origin of the amounts or, as a last resort, puts a trace on the funds through the bank.
Ms Kalsy deposed that Ms Roberts had been a client of Chan & Naylor Parramatta and had been Mr Nelson’s contact person in relation to tax matters for various entities and persons including her son. Annexed to Ms Kalsy’s affidavit was Chan & Naylor Parramatta’s business cheque account statement showing an amount received from the ATO on 12 June 2012. Ms Kalsy deposed that she had initially been unable to reconcile that amount with any known deposits and so she transferred it into the suspense account and contacted client managers to enquire about it. On 17 June 2012 Mr Mendonca emailed Ms Kalsy advising her that the money related to Ms Roberts’s company. He also said that Ms Roberts’s son’s tax refund might have been inadvertently credited to Chan & Naylor Parramatta and that if it appeared in the firm’s account she should send it on to Mr Roberts. On 18 June 2012 the ATO credited Chan & Naylor Parramatta’s account with a tax refund sum for Ms Roberts’s son. Ms Kalsy deposed that she transferred the money into Mr Roberts’s account in accordance with bank details provided by his mother.
Ms Kalsy deposed that she was aware that certain tax agents held clients’ tax refunds as a debt collection strategy but said that Chan & Naylor Parramatta did not do that as it did not have a trust account. Ms Kalsy estimated that it had been in early 2012 when Mr Nelson had said to her that clients’ tax refunds were not to be deposited by Chan & Naylor because it did not have a trust account. As a result Chan & Naylor Parramatta required its client managers to instruct the ATO to transfer clients’ tax refunds directly into their bank accounts or issue them a cheque.
Ms Kalsy deposed that at some point prior to 22 June 2013 [recte: 2012] she attended a meeting with Mr Mendonca and Mr Nelson when Mr Nelson told Mr Mendonca that he was not allowed to have the ATO deposit client tax refunds into Chan & Naylor Parramatta’s account because it did not have a trust account.
On 22 June 2012 Ms Kalsy attended another meeting with Mr Nelson and Mr Mendonca. She deposed that during the meeting Mr Mendonca was shouting and gesticulating, his face was red and tears were running down his cheeks. She deposed that he said to Mr Nelson:
I don’t agree with your approach to business, you are untrustworthy and dishonest
and repeatedly said:
This is not how you run a business.
Ms Kalsy deposed that Mr Mendonca had continually interrupted Mr Nelson when he tried to speak. She deposed that she had never seen anyone so animated, upset and apparently out of control in the workplace as Mr Mendonca had been at that meeting. She deposed that she had been genuinely concerned that Mr Mendonca would have a breakdown or become violent.
Ms Kalsy agreed that in July 2012 after Mr Mendonca had exhausted his sick leave, he was paid annual leave.
Henry Brisbane
Mr Brisbane is an independent contractor who provides accounting services to Chan & Naylor Parramatta, including the auditing of superannuation funds and trust accounts. He deposed that he also assists Chan & Naylor Parramatta’s client managers to prepare tax returns when they have a backlog.
Mr Brisbane deposed that when he arrived at work on 2 July 2012 Mr Mendonca was already there and that at around 8.30am he left his cubicle with what appeared to be a bag. As Mr Mendonca was walking out of the main office he met Mr Nelson who told him he wanted to speak to him. Mr Brisbane deposed that Mr Nelson then approached him and asked him if he could be present while he handed Mr Mendonca some papers. He deposed that he then attended a meeting with Mr Nelson and Mr Mendonca during which Mr Mendonca said he did not want him there as a witness before walking out of the meeting and telephoning the police.
Mr Brisbane deposed that later in the morning he and Mr Nelson went to the reception area and found Mr Mendonca there with a police officer. He deposed that Mr Nelson handed over some documents but could not recall if they were handed to Mr Mendonca or the police officer. As he was handing over the documents Mr Nelson said:
I want to give you this request as to why we shouldn’t terminate your services.
Mr Brisbane deposed that each of Chan & Naylor Parramatta’s client managers had a portfolio of clients. He deposed that in addition to the other work he performed for Chan & Naylor Parramatta he had also assisted Mr Mendonca with matters relating to the latter’s clients and that whenever he did so, he would provide those documents to Mr Mendonca for his final review.
Mr Brisbane deposed that he had received an email from Mr Mendonca’s Tasmanian client, copied to Mr Nelson, asking him to attend to her 2012 tax return and asking that it be prepared in the same manner as Mr Mendonca had prepared it in the previous year so that she would not have to pay any income tax. He deposed that after receiving the email he had a telephone conversation with the Tasmanian client, in Mr Nelson’s presence, during which he told her that she had to pay some tax. Mr Brisbane deposed that when he received the email from the Tasmanian client, he checked the draft of her 2011 tax return, which he had prepared, and noted that it stated that she had to pay $30,000 in tax. He also checked the tax estimate which was attached to the tax return. Mr Brisbane deposed that he had not prepared the tax estimate and was surprised to see that it indicated that no tax was payable. He deposed that he noted a journal entry for interest income in the Tasmanian client’s trust financial account and a corresponding claim in her tax return for an interest deduction. Mr Brisbane deposed that he was aware that trust losses could not be distributed and therefore formed the opinion that the Tasmanian client’s tax return had errors. He deposed that he discussed the Tasmanian client’s tax return with Mr Nelson who said it was not correct and that they would need to lodge an amended return. Mr Brisbane assisted Mr Nelson to lodge an amended tax return for the Tasmanian client who was required to pay penalties for the error and the amendment. Chan & Naylor Parramatta made a successful application for reduction of the penalties.
Mr Brisbane deposed that in July or August 2012 he and Mr Nelson reviewed the tax returns for the trading trust of Mr Mendonca’s Victorian client because the client had applied for refinancing. When reviewing those tax returns they also considered whether they could distribute some of the Victorian client’s income to his minor children. Mr Brisbane deposed that he and Mr Nelson discovered that the trust had paid consulting fee income to the children when they did not have ABNs. He deposed to his understanding that minors without an ABN could not receive operating income.
Mr Brisbane deposed that he had arranged, with Mr Mendonca’s consent, for Ms Phiyasatien, when she was a new staff member, to prepare the tax return for one of the 2011 tax return clients. He deposed that in accordance with his usual approach when assisting Mr Mendonca, he would have checked Ms Phiyasatien’s work and handed it over to Mr Mendonca for final review.
Mr Brisbane deposed that he had always observed Mr Nelson to act in a professional manner with both staff and clients. He deposed that he had never seen Mr Nelson angry at him or anyone else in the office and had never seen or heard Mr Nelson being abusive. Mr Brisbane said that there was always a bit of conflict between Mr Mendonca and Mr Nelson but never any nastiness. He said that they were always very professional and although they had their differences it did not affect the work environment.
Consideration
Although this matter was attended by evidence of considerable detail, the matter turns on whose account I accept. Consequently, my reasons can be expressed comparatively briefly.
The issues
The elements of the cause of action alleged by Mr Mendonca are that:
a)Chan & Naylor Parramatta dismissed him, which is adverse action for the purposes of s.342 of the FW Act;
b)he had one or more of the attributes described in ss.340(1)(a) and 352; and
c)Chan & Naylor Parramatta took the adverse action because he had one or more of those attributes or for reasons that included the fact that he had one or more of those attributes.
While Mr Mendonca has the onus of proving (a) and (b), if they are made out, the effect of s.361 of the FW Act is that the allegation in (c) stands as sufficient proof of the fact alleged unless Chan & Naylor Parramatta proves otherwise: Davids Distribution Pty Ltd v National Union of Workers (1999) 91 FCR 463 at 501 [109]; Rojas v Esselte Australia Pty Ltd (No.2) (2008) 177 IR 306 at 321-322 [49]; Construction, Forestry, Mining & Energy Union v Coal & Allied Operations Pty Ltd (1999) 140 IR 131 at 167 [161]-[162]; Randall v Greyhound Australia Pty Ltd [2008] FMCA 1191 at [112]. In United Firefighters Union of Australia v Easy [2013] FCA 763, Buchanan J expressed the operation of s.361’s reverse onus of proof in the following terms:
The onus does not shift from the applicant to the respondent until the applicant establishes the elements of each of the general protections upon which it seeks to rely. It is not enough for the applicants to merely make assertions regarding these elements, they must be determined objectively. (at [41]) (reference omitted)
Adverse action and protected attributes
As to the taking of adverse action, there is no issue that Chan & Naylor Parramatta dismissed Mr Mendonca by its letter of 24 August 2012. As to whether Mr Mendonca had a protected attribute, I am satisfied that prior to his dismissal he had complained to WorkCover and the FWO, had commenced proceedings in the NSW District Court concerning matters relating to his employment and had made complaints to the respondents over the course of his employment. I am also satisfied that when he was dismissed Mr Mendonca was temporarily absent from work because of an injury he had sustained there.
Reason or reasons for termination
As a result of the above findings that Mr Mendonca had one or more of the attributes protected by ss.340(1)(a) and 352 of the FW Act, and that adverse action was taken against him by Chan & Naylor Parramatta, it is necessary to consider whether Chan & Naylor Parramatta has rebutted the s.361 presumption that it dismissed Mr Mendonca because he had a protected attribute or for reasons which included the fact that he had a protected attribute.
In that connection, Mr Mendonca has alleged that his employment was terminated for the following reasons prohibited by the FW Act:
a)his exercise or proposed exercise of workplace rights (s.340(1)); and
b)his temporary absence from work due to the injury he suffered at work (s.352).
In Board of Bendigo Regional Institute of Technical & Further Education v Barclay (2012) 248 CLR 500 the High Court considered the proper approach to determining whether adverse action has been taken for a prohibited reason. In Klein v Metropolitan Fire & Emergency Services Board (2012) 208 FCR 178 at 205 [100] Gordon J summarised in the following terms that part of the ratio of Barclay’s case relevant to these proceedings:
1.the test of whether action was because of a proscribed reason was neither a subjective nor an objective test … ;
2.direct evidence of the decision-maker as to state of mind, intent or purpose, will bear upon the question of why adverse action was taken … ;
3.direct evidence from the decision-maker which is accepted as reliable is capable of discharging the burden on the employer … ;
4.it is wrong to inquire into the “unconscious” state of mind of the decision-maker … ; and
5.the question is whether the asserted proscribed reason is a “substantial and operative” reason for taking the adverse action … .
Submissions
The respondents submitted that Mr Mendonca was dismissed because of certain of his actions which came to light after he had been stood down, not for any reason prohibited by the FW Act. They acknowledged the letter of 2 July 2012 but argued that the matters referred to in the letter of 8 August 2012 were the reasons for the dismissal.
Mr Mendonca’s argument was, in summary, that in order to succeed in its defence Chan & Naylor Parramatta had to demonstrate that it had had a proper basis to dismiss him for serious misconduct. He submitted, by reference to the matters referred to in Chan & Naylor Parramatta’s letter of 8 August 2012, that the evidence did not support those contentions and that there had been no basis to dismiss him for serious misconduct. He also submitted that he had been unfairly denied access to material which would have helped him to persuade Chan & Naylor Parramatta that he was not guilty of the misconduct alleged against him.
Contrary to Mr Mendonca’s submission, the respondents did not need to demonstrate that he was guilty of serious misconduct in order to make out their defence to the allegation of adverse action for a prohibited reason. That issue turns on whether the adverse action was motivated by a prohibited reason, not on whether the adverse action was taken for a reason which is not shown to have been correct. However, pay in lieu of notice and long service leave were both payable pursuant to statute unless Mr Mendonca was guilty, respectively, of serious misconduct and of serious and wilful misconduct. Consequently, in order to make out its defence to those claims, Chan & Naylor Parramatta had to make out its assertion that Mr Mendonca was guilty of such misconduct.
Witnesses
The reliability of the principal witnesses’ accounts has been important to the resolution of this matter because a conclusion on reliability assists to determine what weight should be given to the descriptions and explanations of the deficiencies and irregularities said to have been the reason for Mr Mendonca’s dismissal.
I did not find Mr Mendonca to be a persuasive witness. Additionally, some aspects of his account of events were significantly different from the accounts of Mr Brisbane, whom I found to be an impressive and apparently disinterested witness, of Mr Nelson, who gave evidence in a straightforward and credible manner, and of Ms Kalsy whom I consider to have been a careful witness endeavouring to give an accurate account of events.
Of considerable concern to me were the different versions of the events which occurred early on 2 July 2012. The conflicts in Mr Mendonca and Messrs Brisbane and Nelson’s versions of those events are too great for them to be explained by differing recollections. One is true and one is not. I prefer the latters’ accounts, which were consistent with each other, and conclude that Mr Mendonca’s version is untrue. In reaching that conclusion I have not ignored the affidavit of Mr D’Sylva but, as he did not attend the hearing, I have attached comparatively little weight to his evidence.
It is also of note that Mr Nelson and Ms Kalsy’s accounts of the meeting on 22 June 2012, which Mr Mendonca said Ms Kalsy did not even attend, are significantly different from Mr Mendonca’s. Mr Mendonca also gave unpersuasive evidence in relation to that meeting that, although Mr Nelson had asked him whether he had put Chan & Naylor Parramatta’s bank account details into Ms Roberts’s tax return, he had not raised Ms Roberts’s company and its tax refund because it was not the same legal person as Ms Roberts. I did not find that evidence credible and I have no confidence in the remainder of Mr Mendonca’s account of the meeting, particularly his assertion that Ms Kalsy was not present. I prefer Mr Nelson and Ms Kalsy’s evidence concerning the meeting.
In light of those findings, I have little confidence in Mr Mendonca’s other evidence including that concerning the work he performed for various of his clients and his explanations of the issues which Mr Nelson and Mr Brisbane said they discovered when he was not in the office. Given my finding that Mr Mendonca’s version of the events early on 2 July 2012 was untrue and the view I have taken of his account of the meeting on 22 June 2012, where his evidence differs from that of Mr Nelson, Mr Brisbane or Ms Kalsy I reject his evidence and prefer the evidence of the other three witnesses.
Serious misconduct
Notwithstanding that the principal question in this proceeding is whether Mr Mendonca’s dismissal was motivated by a prohibited reason, it is useful to consider the question of serious misconduct at this point because it is central to what is said to have motivated Chan & Naylor Parramatta to act on Mr Mendonca’s continued employment.
The terms “misconduct” and “serious misconduct” are not susceptible of comprehensive or complete definition. The meaning of each depends on its context: North v Television Corporation Ltd (1976) 11 ALR 599 at 608-609; Soliman v University of Technology, Sydney (2012) 207 FCR 277 at 286-287 [29]-[34]; McDonald v Parnell Laboratories (Aust) Pty Ltd (2007) 168 IR 375 at 390 [48]. In broad terms, misconduct and serious misconduct involve breaches of the contract of employment of varying seriousness and contextual significance, although serious misconduct, as does “serious and wilful misconduct”, involves a mental element and requires knowledge that, or reckless indifference as to whether, the act in question is wrong in that it amounts to a breach of the contract of employment: Boral Resources (Queensland) Pty Ltd v Pyke (1989) 93 ALR 89 at 97, Gooley v Westpac Banking Corporation (1995) 129 ALR 628 at 636; Carter v The Dennis Family Corporation [2010] VSC 406 at [36]-[38]; Lewis v Great Western Railway Company (1877) 3 QBD 195 at 213; Bartucciotto v Euro Printing Co Pty Ltd [1996] IRCA 68 at 17-18; Sutcliffe v General Motors-Holden’s Automotive Limited (1998) 80 IR 142 at 154.
Although not disclaiming the 2011 tax return clients as his clients, Mr Mendonca sought to distance himself from the preparation of the tax returns for three of them by saying that they had been prepared by Mr Brisbane and not by him. However, Mr Brisbane said that the work he did for Mr Mendonca was performed on a delegated basis and that he returned completed work to Mr Mendonca for checking. Given the conclusions I have reached concerning the credibility of the various witnesses, I accept that Mr Brisbane would have provided any completed work to Mr Mendonca and find that the absence of any record of Mr Mendonca working on those clients’ tax returns is likely to reflect his lack of application not a lack of responsibility for those files. I therefore accept Mr Nelson’s evidence that Mr Mendonca failed to recognise prior losses in the 2011 tax returns of three of the 2011 tax return clients and that those failures potentially exposed the clients involved and Chan & Naylor Parramatta to penalties. The evidence is not sufficiently clear for me to make a confident finding about the circumstances by which the tax returns for two of the 2011 tax return clients were not lodged until August 2012, but I accept that the respondents believed that those late lodgments represented a significant failure on Mr Mendonca’s part.
More important though was the conflict in the evidence of Mr Mendonca and Messrs Nelson and Brisbane concerning the tax returns for the Victorian and Tasmanian clients. As I prefer the evidence of Messrs Nelson and Brisbane I conclude that the deficiencies in the work performed for those clients were Mr Mendonca’s. For the same reasons I conclude that the tax refunds owing to Ms Roberts’s company and her son were deposited into Chan & Naylor Parramatta’s account because Mr Mendonca had inserted that account’s details into their tax returns.
I am also satisfied that Mr Nelson believed that Mr Mendonca performed private work for at least Cesar Ordona and had used Chan & Naylor Parramatta’s time and resources to do so, and that it was in fact the case. I accept that such conduct was prohibited and, quite apart from my lack of confidence in Mr Mendonca’s evidence more generally, reject his evidence to the contrary on that issue as quite implausible and find that it reflected adversely on his credibility.
For those reasons, what Mr Mendonca sought to characterise as “educated guesses” on the part of Mr Nelson about what had happened were, instead, inferences reasonably drawn from the available information. I therefore find that Chan & Naylor Parramatta had sufficient cause to conclude that Mr Mendonca had been guilty of serious misconduct. Indeed, in respect of the matters discussed in the preceding paragraphs, with the exception of the late lodgment of the 2011 tax returns for two of the 2011 tax return clients, I find that Mr Mendonca had in fact acted in the manner alleged by Chan & Naylor Parramatta. I also find that Mr Mendonca knew he should not have performed private work for Cesar Ordona using Chan & Naylor Parramatta’s time and resources and, given his experience, that he must have known that the other actions which were to become of concern to the respondents and which I have found he took were wrong and contrary to his obligations to his employer and its clients. I consequently find that Mr Mendonca’s misconduct was serious misconduct.
Unlawful dismissal
Notwithstanding my finding that Mr Mendonca was guilty of serious misconduct, Chan & Naylor Parramatta may nevertheless have included a prohibited reason amongst its reasons for dismissing him.
Mr Mendonca’s evidence was to the effect that other staff at Chan & Naylor Parramatta had not been disciplined for mistakes or misconduct and appeared to suggest that he had been singled out for dismissal when others in similar circumstances had not. I am not persuaded that any of the conduct of other employees referred to by Mr Mendonca was of the same serious quality as that which was identified in his files or that he was dismissed while others in similar circumstances were not.
Similarly, although Mr Mendonca was dismissed during a period when medical professionals certified him to be unfit for work, the evidence supports a conclusion that the respondents were concerned with the way he performed his work, not whether he was absent because of illness.
Mr Mendonca placed emphasis on Chan & Naylor Parramatta’s letter of 2 July 2012 and the matters it raised but I find that those issues were not the basis for his dismissal. I accept Mr Nelson’s evidence that the matters raised in that letter were superseded by the more serious matters which were referred to in Chan & Naylor Parramatta’s subsequent correspondence, in particular its dismissal letter of 24 August 2012. I find that those matters were the reasons for Mr Mendonca’s dismissal. Specifically I find that Mr Mendonca’s several and various exercises of his workplace rights did not motivate Chan & Naylor Parramatta to dismiss him. If Mr Nelson had been minded to dismiss Mr Mendonca for such matters, I believe he would have done so when Mr Mendonca involved his solicitor in his bonus dispute. I accept Mr Nelson’s evidence that he dismissed Mr Mendonca for the reasons set out in the dismissal letter and for no other reasons.
Conclusion
I conclude that Chan & Naylor Parramatta has discharged its s.361 onus and find that it did not dismiss Mr Mendonca for a prohibited reason or for reasons which included a prohibited reason. I also conclude that because Mr Mendonca was guilty of serious misconduct, he has not made out his claim for payment of an amount in lieu of notice. Further, because there is no material difference in meaning between “serious misconduct”, as discussed in the cases and employed in the FW Act, and “serious and wilful misconduct”, as discussed in the cases and employed in the Long Service Leave Act, it follows from the finding of serious misconduct made above at [189] that the test of serious and wilful misconduct for the purposes of the Long Service Leave Act has also been satisfied. Mr Mendonca has therefore also not made out his claim for an amount in respect of long service leave.
Consequently, with the exception of one remaining matter the application will be dismissed.
The remaining matter concerns Mr Mendonca’s annual leave entitlements. Although initially his claim in this regard was larger, by the conclusion of the trial it only concerned ten days of annual leave paid to him in July 2012. Ms Kalsy made that payment, an action which I accept was taken in good faith and with good intentions, without Mr Mendonca’s authorisation at a time when he was entitled to workers compensation. The correction of this error will involve a small payment being made to Mr Mendonca. The parties should, within twenty-one days, file a minute setting out the amount which should be paid to Mr Mendonca in relation to his annual leave entitlement and how it should be paid. Failing agreement, the parties have liberty to apply within twenty-eight days. Given the quantum involved and the circumstances in which the payment occurred I find that it would not be appropriate to impose a pecuniary penalty in respect of it.
I certify that the preceding one hundred and ninety-six (196) paragraphs are a true copy of the reasons for judgment of Judge Cameron
Associate:
Date: 2 June 2014
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