PIA Mortgage Services Pty Ltd v King
FEDERAL COURT OF AUSTRALIA
PIA Mortgage Services Pty Ltd v King [2020] FCAFC 15
Appeal from: King v PIA Mortgage Services Pty Ltd & Ors [2018] FCCA 3426 & King v PIA Mortgage Services Pty Ltd & Ors (No 2) [2019] FCCA 1460 File number: NSD 51 of 2019 Judges: RANGIAH, CHARLESWORTH AND SNADEN JJ Date of judgment: 24 February 2020 Catchwords: INDUSTRIAL LAW – adverse action – appeal and cross-appeal from two decisions of the Federal Circuit Court of Australia – whether respondent was dismissed in contravention of s 340(1) of the Fair Work Act 2009 (Cth) (the “FW Act”) – whether respondent was “able to make” a complaint or inquiry – whether penalties imposed were manifestly excessive – appeal and cross-appeal both upheld in part
CONTRACTS – employment contract – cross appeal against finding that contract of employment was not breached – whether absence from duty triggered an entitlement to summarily terminate – whether employee was absent for a valid reason – whether absence was waived or condoned, or otherwise consented to – whether employee was entitled to damages for breach of contract – no breach of contract – cross-appeal dismissed in part
COMPENSATION – whether statutory compensation awarded was sufficient or excessive – whether judge below erred in awarding compensation in an amount equal to a prior offer that was rejected – whether compensation should be assessed as the value of the remaining contract period – cross-appeal dismissed
Legislation: Australian Consumer Law
Corporations Act 2001 (Cth) s 1317AA
Crimes Act 1914 (Cth) s 4AA
Explanatory Memorandum, Fair Work Bill 2008 (Cth)
Fair Work Act 2009 (Cth) Pts 2-2, 3-1, ss 12, 44, 90, 340, 341, 342, 360, 361, 539, 542, 543, 545, 546, 550, 570, 793
Privacy Act 1988 (Cth) s 36
Workplace Relations Act 1996 (Cth)
Cases cited: Agricultural & Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570
Australian & International Pilots Association v Qantas Airways Limited [2009] FCA 500
Australian Building and Construction Commissioner v Pattinson [2019] FCA 1654
Board of Bendigo Regional Institute of Technical and Further Education v Barclay (2012) 248 CLR 500
Byrne v Australian Airlines Ltd (1995) 185 CLR 410
Carter v Dennis Family Corporation [2010] VSC 406
Cigarette & Gift Warehouse Pty Ltd v Whelan (2019) 285 IR 290
Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482
Commonwealth v Verwayen (1990) 170 CLR 394
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Telstra Corporation Ltd [2007] FCA 1607
Construction, Forestry, Mining and Energy Union v Cahill (2010) 269 ALR 1
Construction, Forestry, Mining and Energy Union v Pilbara Iron Company (Services) Pty Ltd (No 3) [2012] FCA 697
Dafallah v Fair Work Commission (2014) 225 FCR 559
Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (No 2) [2015] FCA 407
General Motors Holden Pty Ltd v Bowling (1976) 12 ALR 605
Hill v Compass Ten Pty Ltd (2012) 205 FCR 94
Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080
King v PIA Mortgage Services Pty Ltd & Ors (No 2) [2019] FCCA 1460
King v PIA Mortgage Services Pty Ltd & Ors [2018] FCCA 3426
Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115
Maritime Union of Australia v Fair Work Ombudsman [2015] FCAFC 120
Milardovic v Vemco Services Pty Ltd (Administrators Appointed) [2016] FCA 19
Morton v Commonwealth Scientific and Industrial Research Organisation (No 2) [2019] FCA 1754
National Tertiary Education Union v Royal Melbourne Institute of Technology (2013) 234 IR 139
NW Frozen Foods v Australian Competition and Consumer Commission (1996) 71 FCR 285
Parker v Australian Building and Construction Commissioner (2019) 365 ALR 402
Plancor Pty Ltd v Liquor Hospitality and Miscellaneous Union (2008) 171 FCR 357
R v Abbott (2007) 170 A Crim R 306
Rankin v Marine Power International Pty Ltd (2001) 107 IR 117
Robinson Helicopter Company Inc v McDermott (2016) 331 ALR 550
Romero v Farstad Shipping (Indian Pacific) Pty Ltd (No 3) [2017] FCAFC 102
Sargent v ASL Developments Ltd (1974) 131 CLR 634
Shea v EnergyAustralia Services Pty Ltd (2014) 242 IR 159
Shea v TRUenergy Services Pty Ltd (No 6) (2014) 314 ALR 346; [2014] FCA 271
Tak Fat Wong v The Queen (2001) 207 CLR 584
The Environmental Group Ltd v Bowd [2019] FCA 951
Veeraragoo v Goldbreak Holdings Pty Ltd (No 2) [2018] FCA 1448
Walsh v Greater Metropolitan Cemeteries Trust (No 2) (2014) 243 IR 468
Whelan v Cigarette & Gift Warehouse Pty Ltd (2017) 275 IR 285
Irving M, The Contract of Employment (LexisNexis Butterworths, 2012)
Date of hearing: 20-21 August 2019 Registry: New South Wales Division: General Division National Practice Area: Employment & Industrial Relations Category: Catchwords Number of paragraphs: 219 Counsel for the Appellants/Cross-Respondents: Mr J Kelly SC with Mr C Cassimatis Solicitor for the Appellants/Cross-Respondents : Rutland’s Law Firm Counsel for the Respondent/Cross-Appellant: Ms P Thew Solicitor for the Respondent/Cross-Appellant: Hicksons Lawyers ORDERS
NSD 51 of 2019 BETWEEN: PIA MORTGAGE SERVICES PTY LTD
First Appellant
YUE (‘JUSTIN’) WANG
Second Appellant
AND: LEIGHTON KING
Respondent
AND BETWEEN: LEIGHTON KING
Cross–Appellant
AND: PIA MORTGAGE SERVICES PTY LTD (and another named in the Schedule)
First Cross–Respondent
JUDGES:
RANGIAH, CHARLESWORTH AND SNADEN JJ
DATE OF ORDER:
24 FEBRUARY 2020
THE COURT ORDERS THAT:
1.The appeal be allowed in part.
2.The cross-appeal be allowed in part.
3.Within seven days, the parties are to confer and provide a draft minute of orders reflecting the reasons of the majority herein.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
RANGIAH AND CHARLESWORTH JJ:
We have had the considerable advantage of reading the reasons of Snaden J in draft. His Honour’s reasons make it unnecessary to describe the facts, issues and submissions in detail. We will generally adopt his Honour’s abbreviations.
The issues in the appeal and cross-appeal are whether the Federal Circuit Court erred in:
(1)holding that Mr King’s employer, PIAMS, and its director, Mr Wang, contravened s 340(1) of the FW Act by dismissing Mr King from his employment;
(2)finding that PIAMS was entitled to terminate the employment contract;
(3)awarding compensation of $100,000 for the contravention of s 340(1);
(4)declining to impose pecuniary penalties for the contravention of s 340(1); and
(5)imposing a pecuniary penalty of $43,200 for PIAMS’ contravention of s 90(2) of the FW Act.
We agree with Snaden J that the penalty of $43,200 for PIAMS’ contravention of s 90(2) of the FW Act was manifestly excessive and that $8,100 is appropriate. We also agree that PIAMS was entitled to terminate the employment contract. We have nothing to add in respect of those issues.
We respectfully disagree, for reasons that will appear, with Snaden J’s conclusion that PIAMS and Mr Wang did not contravene s 340(1) of the FW Act. We consider that pecuniary penalties ought to have been imposed. We conclude that the award of compensation of $100,000 should not be disturbed.
Whether the Federal Circuit Court erred in holding that PIAMS and Mr Wang contravened s 340(1) of the FW Act by dismissing Mr King from his employment
Justice Snaden would hold that Mr King did not exercise any “workplace right” within s 340(1) of the FW Act because his complaint was not one he was “able to make” within s 341(1)(c)(ii). His Honour considers that outcome flows from Mr King’s inability to, “identify the source of an entitlement or right to complain or inquire as he did”.
In our respectful opinion, Mr King identified two sources of his entitlement or right to complain and did exercise a “workplace right” to complain in relation to his employment. Mr King complained to PIAMS that it had breached or threatened to breach the employment contract. As will be discussed, the source of his entitlement to make that complaint was the general law of contract. Further, Mr King complained that PIAMS had engaged in misleading conduct in contravention of s 31 of the Australian Consumer Law (ACL). The source of his entitlement or right to make that complaint was the ACL. In our opinion, Judge Smith (the trial judge) made no error in holding that PIAMS contravened s 340(1) by taking adverse action against Mr King because he exercised his workplace right to make complaints.
Sections 340 and 341 are found within Pt 3–1 of the FW Act, which is entitled “General Protections”.
Section 340 of the FW Act provides, relevantly:
(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.
…
Section 341 of the FW Act provides, relevantly:
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; or
(b)is able to initiate, or participate in, a process or proceedings under a workplace law or workplace instrument; or
(c)is able to make a complaint or inquiry:
(i)to a person or body having the capacity under a workplace law to seek compliance with that law or a workplace instrument; or
(ii)if the person is an employee—in relation to his or her employment.
…
The objects of s 340 of the FW Act include providing an employee with protection against adverse action taken because he or she has exercised a workplace right. The provision evidently seeks to confer protection additional to any protection offered under the general law. Although the protection is broad in its scope, it has its limits, including by the definition in s 341 of “workplace right”. At issue in the present case is the extent of that limitation.
It must be accepted that the phrase “is able to make a complaint or inquiry” in the definition of “workplace right” in s 341(1)(c)(ii) of the FW Act operates to limit the scope of the protection provided. In Shea v TRUenergy Services Pty Ltd (No 6) (2014) 314 ALR 346; [2014] FCA 271, Dodds–Streeton J held (at [65]):
In my opinion, the requirement that the complaint be one that the employee ‘is able to make’ in relation to his or her employment suggests that there are complaints which the employee is not able to make in relation to his or her employment. The ability to make a complaint does not arise simply because the complainant is an employee of the employer. Rather, it must be underpinned by an entitlement or right. The source of such entitlement would include, even if it is not limited to, an instrument, such as a contract of employment, award or legislation.
We respectfully agree with Dodds–Streeton J that s 341(1)(c)(ii) of the FW Act contemplates that not every complaint that an employee makes in relation to his or her employment is one the employee is “able to make” (for present purposes, it is unnecessary to address the ability to make an inquiry). The question then arises as to how the provision distinguishes complaints that come within its reach from those that do not.
Justice Dodds–Streeton considered that the word “able” refers to an entitlement or a right. We respectfully agree. However, her Honour’s statement that a complaint “must be underpinned by an entitlement or right” is ambiguous. On one view, it may indicate that the complaint “must be underpinned by an entitlement or right to make a complaint”. On another, it may indicate that the provision captures any complaint by an employee concerning an entitlement or right related to his or her employment. In our opinion, the former view is consistent with the succeeding sentence in the passage and with s 341(1) of the FW Act as a whole. The phrase “is able to” appears in both s 341(1)(b) and (c). In s 341(1)(b), the phrase indicates an entitlement or right to initiate, or participate in, a relevant process or proceeding. In s 341(1)(c)(i), the phrase indicates an entitlement or right to make a complaint or inquiry to a person or body. Consonantly, in s 341(1)(c)(ii), the phrase describes a right or entitlement to make a complaint or inquiry in relation to the employee’s employment. It may be observed, however, that whichever view is taken makes no difference to the outcome of this case.
On the understanding that s 341(1)(c)(ii) requires an entitlement or right to make a complaint in relation to the employee’s employment, there must be an identifiable source of that entitlement or right. In Shea, Dodds–Streeton J did not suggest that the entitlement or right is limited to one arising under an instrument such as legislation, an industrial instrument, or a contract of employment. In fact, her Honour was careful not to attempt any exhaustive description of the source of the right to make a complaint or inquiry. Nor did her Honour suggest that the entitlement or right must be conferred expressly or directly by the source.
The expression “workplace right” in s 341(1) of the FW Act covers a broad range of rights. Under para (a), a person has a workplace right if the person 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. Under para (b), a person has a workplace right if the person is able to initiate, or participate in, a process or proceedings under a workplace law or workplace instrument. Under para (c)(i), a person has a workplace right if the person is able to make a complaint or inquiry to a person or body having the capacity under a workplace law to seek compliance with that law or any workplace instrument. The expression “workplace instrument” is defined in s 12 to mean an instrument that is made under, or recognised by, a workplace law and concerns the relationships between employers and employees. A “workplace law” is defined to include the FW Act and a law of the Commonwealth, State or Territory that regulates relationships between employers and employees. It was not argued that any law that touches upon relationships between employers and employees is necessarily a “workplace law”. Neither was it argued that the general law of contract is a “workplace law”. Those matters can be left aside for present purposes.
The “workplace rights” under paras (a), (b) and (c)(i) of s 341(1) are confined to rights, roles and responsibilities under, or arising from, workplace laws and workplace instruments. In contrast, s 341(1)(c)(ii) is not so confined, providing that an employee has a workplace right if the employee, “is able to make a complaint or inquiry in relation to his or her employment”. There are three obvious potential sources of an employee’s ability to make complaints which fall outside s 341(1)(a), (b) and (c)(i), but within (c)(ii). Those sources are legislative provisions that are not workplace laws, contractual terms providing a right to make complaints and the general law.
In the first category, there are a number of legislative provisions of general application that encompass the making of complaints by employees in relation to their employment, but are not obviously identifiable as workplace laws. Examples are s 36(1) of the Privacy Act 1988 (Cth) (complaints about breaches of privacy) and s 1317AA of the Corporations Act 2001 (Cth) (disclosures by whistleblowers). The Explanatory Memorandum for the Fair Work Bill 2008 gives an example of s 341(1)(c)(ii) of the FW Act applying where an employee’s hours are cut after writing a letter of complaint to the Australian Competition and Consumer Commission (ACCC) under a mistaken belief that it is able to investigate underpayments of wages. The example demonstrates that s 341(1)(c)(ii) may be engaged even where there is no statutory provision expressly or directly conferring a right to complain or commence proceedings. The example envisages that an entitlement to make a complaint arises from the allegation of underpayment, as well as the ACCC’s function of investigating possible breaches of relevant statutory provisions.
Section 341(1)(c)(ii) also extends to contracts of employment. The distinction between a contract of employment, on the one hand, and, a workplace instrument or workplace law on the other, must be borne in mind. The provisions of the latter will rarely be implied terms of the former: see Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 421–422, 452–453. Section 341(1)(c)(ii) must at least apply where a contract of employment confers a right upon an employee to raise a grievance or otherwise complain about his or her employment. However, the broad language used does not purport to confine the right to complain to one arising under a contract of employment, and, in our opinion, extends to a right to complain arising under the general law.
Under the general law, an employee has a right to sue his or her employer for an alleged breach of the contract of employment. A suit may be regarded as the ultimate form of complaint. Accordingly, in our opinion, an employee is “able to make a complaint” about his or her employer’s alleged breach of the contract of employment. That ability is “underpinned by” (to use Dodds-Streeton J’s expression in Shea) the right to sue, and extends to making a verbal or written complaint to the employer about an alleged breach of the contract.
Further, an employee who alleges that his or her employer has contravened a statutory provision relating to the employment is “able to make a complaint” within s 341(1)(c)(ii) of the FW Act. That right or entitlement derives from the statutory provision alleged to have been contravened. The ability encompasses making a complaint to the employer or an appropriate authority about the alleged contravention, whether or not the statute directly provides a right to sue or make a complaint.
These conclusions are supported not only by the broad language of s 341(1)(c)(ii) of the FW Act, but also by the statutory context.
Firstly, s 340(1) is protective of persons, including employees, who may be subjected to adverse action. That protective purpose suggests that an unduly narrow or restrictive view of the broadly-worded definition of “workplace right” in s 341(1)(c)(ii) should not be adopted.
Secondly, the Explanatory Memorandum for the Fair Work Bill suggests that s 341(1)(c)(ii) is intended to have a broad operation. It provides:
Subparagraph 341(1)(c)(ii) specifically protects an employee who makes any inquiry or complaint in relation to his or her employment. Unlike existing paragraph 659(2)(e) of the WR Act, it is not a pre–requisite for the protection to apply that the employee has ‘recourse to a competent administrative authority’. It would include situations where an employee makes an inquiry or complaint to his or her employer.
(Emphasis added.)
This passage, it must be recognised, overstates the width of the protection provided by s 341(1)(c)(ii), since the provision does not in fact protect an employee who makes “any… complaint”. However, the passage suggests that the legislative intent should not be understood as requiring a narrow interpretation of the provision.
Thirdly, the contrary construction would produce incongruous results that are inconsistent with the legislative purpose. There will be some conditions of employment that are both terms of an employment contract and prescribed under legislation or an industrial instrument, and some that are one but not the other. Section 340(1) of the FW Act, taken with s 341(1)(a), (b) and (c)(i), protects an employee who complains about a breach of conditions prescribed under legislation, an award or enterprise agreement. However, under the view taken by Snaden J, s 340(1) would only protect an employee who complained about the employer’s breach of a purely contractual term if the contract itself provided an entitlement to make a complaint or inquiry (perhaps subject to ss 542 and 543). That would leave the many employees whose employment contracts do not contain such an entitlement vulnerable to dismissal or other adverse action upon complaining about employers’ alleged breaches of the employment contract. The incongruity arises from employees being protected from adverse action upon complaining of an employer’s breach of some conditions of employment but not others. Having regard to the broad language of s 341(1)(c)(ii), it seems unlikely that the legislative intention is to protect only some complaints of breaches of conditions of employment, and to leave others unprotected.
Finally, a construction of s 341(1)(c)(ii) of the FW Act as encompassing an employee’s ability to complain under the general law of an employer’s breach of the contract of employment is consistent with the judgment of the Full Court in Whelan v Cigarette & Gift Warehouse Pty Ltd (2017) 275 IR 285. In that case, an employee was dismissed because he complained of the employer’s alleged breaches of the employment contract. In the course of holding that the employer had contravened s 340(1) of the FW Act, Collier J at first instance held at [34]:
As a general proposition, a complaint or inquiry to the employer by an employee in relation to his or her entitlement to an incentive bonus, or the failure of the employer to prepare an incentive bonus plan, where the terms of employment of that employee make provision for payment of such bonuses or the preparation of such plans, would fall within the scope of [s 341(1)(c)(ii)] of the FW Act.
On appeal, the Full Court at [28] described this passage as “unremarkable and correct”. The Full Court accepted that an employee’s complaint or inquiry to an employer about an alleged failure to comply with the contract of employment falls within s 341(1)(c)(ii) of the FW Act. The Full Court should be understood as reasoning that the source of an employee’s ability to complain is the general law of contract.
An employee is “able to complain” to his or her employer within s 341(1)(c)(ii) of the FW Act concerning the employer’s alleged breach of the contract of employment. The source of that ability is the general law governing contracts of employment. Further, an employee is “able to complain” to the employer or to a relevant authority of their employer’s alleged contravention of a statutory provision relating to the employment. That ability derives from at least the statutory provision alleged to have been contravened. The statute need not expressly or directly confer a right to bring proceedings or to complain to an authority. As Dodds-Streeton J held in Shea at [29], the complaint must be made genuinely, in good faith and for a proper purpose.
The variety of circumstances arising in employment law cases is notoriously wide. Nothing we have said is intended to foreclose argument as to other circumstances that may give rise to an ability to make a complaint. Nor is it intended to foreclose argument about any limitation as to whom a complaint may be made for the purposes of s 341(1)(c)(ii) of the FW Act.
Mr King’s contract of employment with PIAMS commenced on 3 October 2016. Clause 6.1 provided that the initial term of the Employment Contract was five years. Under cl 6.2, Mr King’s remuneration was to be $300,000 per annum.
The trial judge found that, on 3 April 2017, Mr Wang indicated that PIAMS was going to terminate the Employment Contract on four months’ notice, but there was no actual termination at that point. Mr King’s response was to write his email of 4 April 2017 to Mr Wang and, in the absence of a reply, to have his solicitors write a letter of demand on 12 April 2017. As the trial judge found, and Snaden J’s reasoning has confirmed, each communication raised complaints in relation to Mr King’s employment, and those complaints were genuinely advanced.
Mr King’s complaints included that PIAMS, through Mr Wang, had foreshadowed breaching the Employment Contract by terminating it prior to the fixed five–year period and refusing to pay his salary for the balance of the five years. He reserved his right to commence legal proceedings. There was at least a reasonable argument available that PIAMS had renounced or rescinded the Employment Contract, in that it had evinced an intention not to be bound: see Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115 at [44]; Romero v Farstad Shipping (Indian Pacific) Pty Ltd (No 3) [2017] FCAFC 102 at [71]. At that point, Mr King was entitled to sue for the alleged breach of contract. He exercised his workplace right to complain to PIAMS of the alleged breach.
Further, Mr King’s solicitors’ letter complained that PIAMS had contravened s 31 of the ACL, which provides that a person must not, in relation to employment that is offered, engage in conduct that is liable to mislead persons seeking employment. Although it is not necessary that Mr King have a right to commence proceedings, it may be noted that he had that right under ss 237, 238 and 239 of the ACL, and had the right to make his written complaint to PIAMS. There is no suggestion that his complaint was not genuinely made. Mr King exercised his workplace right to complain of the alleged breach.
As Mr King had made genuine complaints to PIAMS in relation to his employment that he was “able to make”, the trial judge was correct to hold that Mr King had exercised a “workplace right” within s 341(1)(c)(ii) of the FW Act.
The letter of 21 April 2017 written by PIAMS’ solicitors, stated that:
In failing to comply with the terms of his employment, and being absent since 11 April 2017 coupled with the making of demands which Mr King makes through your letter, it is clear that Mr King has no intention to comply with the tenor of the terms of his employment and has repudiated the EA.
(Emphasis added.)
The trial judge held that, “the letter itself establishes that one of the two reasons given for the termination was the fact that Mr King had made claims in respect of his employment”. The claims his Honour referred to were the allegations that PIAMS had breached the Employment Contract and engaged in misleading conduct contrary to s 31 of the ACL. Section 360 of the FW Act provides that, “a person takes action for a particular reason if the reasons for the action include that reason.” Accordingly, the trial judge held that PIAMS breached s 340(1) by dismissing Mr King from his employment because he had exercised a workplace right.
In the appeal, PIAMS challenges the trial judge’s finding that a reason for the dismissal was the making of complaints, arguing that the only reason for the dismissal was Mr King’s repudiation of the Employment Contract. In our opinion, that argument is contrary to the language of the solicitors’ letter of 21 April 2017 which demonstrates that one of the reasons was Mr King’s demands. Those demands were based upon Mr King’s complaints of breach of contract and s 31 of the ACL. We would uphold the trial judge’s finding.
While we agree with Snaden J’s conclusion that PIAMS did not discharge its onus of proof, we respectfully disagree with his Honour’s view that the letter of 21 April 2017 was not evidence of why PIAMS terminated the Employment Contract since it contained nothing more than an assertion by the appellant’s lawyers of what those reasons were. The letter purported to set out PIAMS’ reasons. Once the letter was admitted into evidence, it was capable of allowing an inference to be drawn that PIAMS’ only reasons were those set out in the letter. Whether the trial judge was willing to draw such an inference in the absence of evidence from Mr Wang as to his reasons was a different matter. As it happened, the trial judge accepted that the letter itself provided evidence that one of the reasons given for the termination was that Mr King had made complaints in relation to his employment. In light of the terms of the letter and Mr Wang’s failure to give evidence that the reasons for the termination did not include Mr King’s complaints, PIAMS failed to discharge its onus of proof.
We consider that no error has been demonstrated in the trial judge’s conclusion that PIAMS contravened s 340(1) of the FW Act. It follows that there was no error in his Honour’s conclusion that Mr Wang contravened s 340(1) as an accessory to PIAMS’ contravention.
Compensation
The trial judge awarded Mr King $100,000 for PIAMS’ breach of s 340(1) of the FW Act. That sum was awarded by way of compensation under s 545(2)(b) of the FW Act.
Both sides challenge that determination. Mr King submits that it was wrongly premised upon a finding that PIAMS was entitled to terminate the Employment Contract and that his loss arising from the contravention was the value of the remainder of the contract. PIAMS submits that Mr King did not suffer any loss. That is said to be so because, at the time that the dismissal was effected (21 April 2017), PIAMS was entitled to terminate the Employment Contract as a result of Mr King having absented himself from work for more than two days without consent or valid reason.
The trial judge’s reasoning upon the assessment of compensation was as follows:
151.…By 21 April 2017 [Mr King] had failed to attend work without any reasonable excuse or permission and had thereby triggered the right of PMS to terminate his employment summarily. If Mr Wang was going to exercise his right to terminate in any event, that is, regardless of his reliance on the “claims” made by Mr King, then it is strongly arguable that Mr King suffered no loss at all because of the contravention of the FW Act. However, I am not satisfied that that is the case. Rather, I find that Mr Wang would have at least honoured the offer made by him on 3 April 2017 to pay Mr King an amount of $100,000, being the equivalent of 4 months’ salary.
152.While Mr King’s absence from work was part of the reason given for the termination in the letter of 21 April 2017 the underlying cause of that letter was the fact that Mr King had made the claims both in his email of 4 April 2017 and his lawyer’s letter of 12 April 2017. Rather than promoting an agreed compromise between the parties, the allegations of fraud and deception in those letters flamed a dispute that brought the negotiations to an abrupt end. For that reason, I assess the real loss caused by the contravention of the FW Act to be the amount of Mr Wang’s offer, namely, $100,000.
Section 545 of the FW Act provides:
545 Orders that can be made by particular courts
Federal Court and Federal Circuit Court
(1)The Federal Court or the Federal Circuit Court may make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision.
…
(2)Without limiting subsection (1), orders the Federal Court or Federal Circuit Court may make include the following:
(a)an order granting an injunction, or interim injunction, to prevent, stop or remedy the effects of a contravention;
(b)an order awarding compensation for loss that a person has suffered because of the contravention;
(c)an order for reinstatement of a person.
…
In Maritime Union of Australia v Fair Work Ombudsman [2015] FCAFC 120, the Full Court considered the principles relevant to the determination of compensation for a contravention which resulted in the loss of a valuable opportunity. The trial judge had found that the Workplace Relations Act1996 (Cth) and the FW Act were contravened when an employer, having been persuaded by a union not to employ non-members, refused to engage two applicants for employment. The trial judge awarded compensation. On appeal, the union submitted that the job applicants would have been casual employees and could only demonstrate loss if they proved, on the balance of probabilities, that they had lost particular jobs. The Full Court rejected that submission, holding that they were entitled to compensation for their loss of opportunity to be considered for casual employment.
The Full Court held:
28 The task of the trial judge, having found the relevant contraventions, was to assess the compensation, if any, that was causally related to those contraventions. That involved not an examination of what did happen, but an assessment of what would or might have occurred, but which could no longer occur (because of the contraventions). Subject to any statutory requirement to the contrary, questions of the future or hypothetical effects of a wrong in determining compensation or damages are not to be decided on the balance of probability that they would or would not have happened. Rather, the assessment is by way of the degree of probability of the effects – the probabilities and the possibilities: Malec v JC Hutton Pty Ltd [1990] HCA 20; 169 CLR 625 at 642–643; Sellars v Adelaide Petroleum NL [1994] HCA 4; 179 CLR 332 at 352–356. The above proposition must be qualified by the recognition that, where the fact of injury or loss is part of the cause of action or wrong, it must be proved on the balance of probability. Compensation is generally awarded for loss or damage actually caused or incurred, not potential or likely damage: Tabet v Gett [2010] HCA 12; 240 CLR 537; Sellars at 348; Wardley Australia Ltd v Western Australia [1992] HCA 55; 175 CLR 514 at 526; that is equally so here under ss 807(1)(b) and 545(2)(b).
29Difficulties sometimes arise in relation to the distinction between these two principles: see Sydney South West Area Health Service v Stamoulis [2009] NSWCA 153, discussed in Evans v Queanbeyan City Council [2011] NSWCA 230 at [54] per Allsop P, [59]–[61] per Hodgson JA, and [100]–[103] per Basten JA. Here, the statutes provide for an order requiring the defendant to pay an amount “as compensation for damage suffered by the other person as a result of the contravention”: s 807(1)(b) of the WR Act; and an order “awarding compensation for loss that a person has suffered because of the contravention”: s 545(2)(b) of the FW Act (emphasis added). Thus, there must be proved, on the balance of probability, to have been some “damage suffered…as a result of the contravention” and some “loss…suffered because of the contravention.” The wording is not dissimilar to the wording and structure of s 82(1) of the Trade Practices Act 1974 (Cth), which was dealt with by the High Court in Sellars: “A person who suffers loss or damage by conduct of another person that was done in contravention of a provision…may recover the amount of the loss or damage.”
30What such damage or loss is (in the present context) that must be proved on the balance of probability will be governed by an understanding of the statute. Given the evident protective purpose of provisions such as s 792 of the WR Act and s 346 of the FW Act, there would be no sensible statutory purpose in denying a proposition that the damage or loss in relation to prospective employment can be constituted by the loss of an opportunity or chance to be considered for employment as a result of, or because of, the contravention (which then has to be given a value to inform the order for compensation); and there would be no sensible statutory purpose in limiting the compensation to damage or loss proved by reference to the proof of events that would, on the balance of probability, have or have not occurred. Thus, if the relevant contravention by a party has prejudiced a person in prospective employment, it would conform entirely with the statutory purpose to identify the damage or loss by reference to, indeed as, that prejudice. Depending on the circumstances, such prejudice may best be seen as the loss of the chance or opportunity of particular employment. That certainly was the relevant prejudice here, and it can be seen to have been proved on the balance of probability – indeed, to the point of demonstration.
…
32 What the contraventions by the MUA caused to the [two persons] was the denial of the opportunity, from 2009 and continuing, to be considered for employment as casual stewards. That was the clearest prejudice to their prospects of employment; it was the clearest damage to their capacity to obtain work. There could be no doubt that, in commercial terms, this was the denial of a valuable opportunity. No different conclusion should be reached in the context of these statutes; indeed, the evident purpose of the statutes conforms with such a conclusion: the protection of freedoms of workers in the workplace from the exercise of power or influence in proscribed manners by both employers and industrial organisations.
In this case, it was necessary for the trial judge to consider whether Mr King had proved on the balance of probabilities that he had suffered loss because of the contravention of s 340(1) of the FW Act and to assess the extent of any such loss. That required his Honour to consider what was likely to have occurred had Mr King’s employment not been terminated in breach of s 340(1) of the FW Act.
The trial judge correctly identified and embarked upon that task. His Honour concluded at [151] that Mr Wang (on behalf of PIAMS), “would have at least honoured the offer made by him on 3 April 2017 to pay Mr King an amount of $100,000 being the equivalent of 4 months’ salary”. Although his Honour directed himself to the correct inquiry, the expression of his conclusion arguably demonstrates error. The evidence made clear that the offer that Mr Wang made on 3 April 2017 to retain Mr King in his employment for a period of four months was rejected by Mr King. There is nothing in the evidence that suggests that Mr Wang would have “honoured” what Mr King had unequivocally refused. However, in the context of [151] and [152] as a whole, his Honour’s statement that Mr Wang would have at least have “honoured” the rejected offer should be understood as a loose way of expressing a finding that, in the absence of the dismissal in contravention of s 340(1), the likely outcome would have been that Mr Wang would have re–opened the offer and it would have been accepted by Mr King.
There was evidence supporting the view that, but for the accusations and demands made in Mr King’s email of 4 April 2017 and his solicitors’ letter, Mr Wang and Mr King would have negotiated a mutually acceptable way for Mr King to exit the PIA Group. That was what Mr King invited by his email. Mr Wang gave evidence that the offer that he made on 3 April 2017 to pay Mr King $100,000.00 upon termination of his employment was not one that he thought would be the “final decision”. On the contrary, it appears that Mr Wang also expected that the parties would embark upon a process of negotiation as to the terms upon which Mr King would depart from the business. The trial judge observed that “the allegations of fraud and deception in those letters flamed a dispute that brought the negotiations to an abrupt end”. We construe the loss identified by the trial judge as Mr King’s loss of the opportunity to negotiate a mutually acceptable settlement. That was a loss within the scope of s 545(2)(b) of the FW Act.
The proposed negotiations were derailed by Mr Wang's reaction to the inflammatory complaints and demands made by Mr King. Whether PIAMS would have terminated Mr King’s employment in the absence of those complaints was a matter peculiarly within the knowledge of Mr Wang. As the Full Court observed in Maritime Union of Australia v Fair Work Ombudsman at [35], all evidence is weighted according to the proof which it is in the power of one side to have produced and in the power of the other side to have contradicted. Mr Wang gave no evidence as to what PIAMS would have done in the absence of the complaints. The trial judge made no finding that PIAMS would have terminated Mr King’s employment in the absence of the complaints. What would have occurred if Mr King had simply been absent, and had not complained, is far from certain on the available evidence. However, his bargaining position had weakened as a result of his breach of the Employment Contract. That breach was known to PIAMS at the time that the negotiations would have proceeded. It had sought legal advice about it and had correctly identified it as a basis for summary dismissal. In these circumstances, it can be accepted that PIAMS was in a strong negotiating position.
We agree with Snaden J that PIAMS was entitled to terminate the Employment Contract for Mr King’s breach. However, it must be borne in mind that an assessment of what would or might have occurred in the absence of the contraventions of s 340(1), must be judged upon the state of understanding and knowledge of the parties at the time the events occurred, and not with the certainty produced through hindsight by the findings of the trial judge and this Court. While PIAMS was alleging that Mr King had breached the contract by his absence from work, for his part, Mr King and his solicitors were asserting that PIAMS had repudiated the contract and had contravened s 31 of the ACL by misleading him into accepting the employment and that he was entitled to damages. It was in this context that the trial judge assessed compensation at $100,000.
In Maritime Union of Australia v Fair Work Ombudsman, the Full Court observed at [34]:
The assessment of the value of the loss of an opportunity may involve an evaluative judgment that calls for restraint in appellate review. It may also involve factual analysis and findings of a non–evaluative character, and it will almost necessarily involve a degree of speculation. Thus, how (that is, by what methodology), and with what ultimate result, an evaluation is made may involve questions of choice, and judgments about which reasonable minds may differ.
As PIAMS was entitled to terminate the Employment Contract for Mr King’s breach arising from his unauthorised absence from work, he has not demonstrated an entitlement to compensation equivalent to anything like his salary for the remainder of the five-year term of the Employment Contract. It is appropriate to take into account that an employer would be entitled to terminate in the manner most beneficial to the employer: see Dafallah v Fair Work Commission (2014) 225 FCR 559 at [161]; Veeraragoo v Goldbreak Holdings Pty Ltd (No 2) [2018] FCA 1448 at [41].
Mr King had previously rejected PIAMS’ offer of $100,000. However, his bargaining position had weakened as a result of his own alleged breach of the Employment Contract. In these circumstances, the trial judge’s assessment of compensation, on the basis that in the course of negotiations the offer is likely to have been reopened and been accepted, has not been shown to be in error.
Penalties for contravention of s 340(1) of the FW Act
The trial judge held that PIAMS contravened both s 90(2) and s 340(1) of the FW Act. A different Federal Circuit Court judge, Judge Street (the sentencing judge), considered the question of pecuniary penalties for the contraventions. His Honour made an order dismissing the application for penalties for the contraventions of s 340(1). That order is the subject of the cross–appeal, Mr King contending that his Honour erred by holding that no penalties should be imposed upon PIAMS and Mr Wang for that contravention.
The sentencing judge’s reasons for declining to impose any penalties were brief. His Honour found, without explanation, that the contravention was “on its face a technical contravention” and that the nature of the conduct did not involve “a flagrant breach”. His Honour then observed that this was not a case where Mr King had been observing a workplace right prior to notification of the intention to terminate and that the negotiations in respect of the termination effectively took place between lawyers. His Honour found that the breaches were “deliberate breaches”. His Honour referred to the need for specific and general deterrence. His Honour did not explain why these circumstances led to the conclusion that no penalty should be imposed on PIAMS or Mr Wang.
Under s 546(1) of the FW Act, the Court has discretion both as to whether to order a contravener to pay a pecuniary penalty and as to the amount of any penalty. We consider that the sentencing judge erred in finding that the contraventions of s 340(1) of the FW Act were “technical contraventions”. In so finding, his Honour seems to have considered that they were contraventions only upon a technical, or strict, interpretation of the provisions and that the conduct was too trivial to warrant the imposition of penalties. We respectfully disagree. PIAMS and Mr Wang contravened s 340(1) of the FW Act for reasons including that he had complained of PIAMS’ alleged breaches of the contract of employment and s 31 of the ACL. It is irrelevant that under a narrower or stricter interpretation of the provision, a different result would have ensued. What is relevant is that the provision was contravened.
There are cases which have held that specific and general deterrence does not necessarily require the imposition of a pecuniary penalty where the breach of a provision is not deliberate, but results from an arguable but erroneous misconstruction of an industrial instrument: see Australian & International Pilots Association v Qantas Airways Limited [2009] FCA 500 at [9]–[10]; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Telstra Corporation Ltd [2007] FCA 1607 at [18]. This case is not one approaching that category of cases. The sentencing judge found that the breaches were “deliberate breaches”. They had serious consequences, as they contributed to the dismissal of Mr King from his employment. The breaches cannot be regarded as trivial. The sentencing judge erred in regarding the breaches as “technical contraventions” that did not warrant the imposition of penalties. The error requires that PIAMS and Mr Wang be resentenced.
In Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 at [55]–[59], the High Court emphasised that the primary purpose of civil penalties is to secure protection through deterrence, and that deterrence is the primary purpose of imposing a penalty. In view of the deliberateness of the contravening conduct of PIAMS and Mr Wang, the need for general and specific deterrence requires that penalties be imposed.
There are well-established principles which guide the exercise of the Court’s discretion to determine the appropriate penalty. Although the authorities warn against applying a rigid check-list of matters, the factors recognised as being potentially relevant to the determination of the appropriate penalty include the following:
(1)the nature and importance of the project where the conduct was undertaken (in a building case);
(2) the nature and extent of the conduct which led to the breaches;
(3) the circumstances in which the conduct took place;
(4)the nature and extent of any loss or damage sustained as a result of the breaches;
(5) whether there had been similar previous conduct by the respondents;
(6)whether the breaches were properly distinct or arose out of one course of conduct;
(7) the size of the business enterprise involved;
(8) whether or not the breaches were deliberate;
(9) whether senior management was involved in the breaches;
(10) whether the party committing the breach exhibited contrition;
(11) whether the party committing the breach has taken corrective action;
(12)whether the party committing the breach cooperated with the enforcement authorities;
(13) the need for specific and general deterrence.
(see, for example, Plancor Pty Ltd v Liquor Hospitality and Miscellaneous Union (2008) 171 FCR 357 at [57]–[58]; Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 at [14], [28]–[30]; Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (No 2) (2015) 234 FCR 451; [2015] FCA 407 at [90]).
We will consider the factors which are of particular significance to the present case.
As we have said, the contravening conduct was deliberate and contributed to Mr King’s dismissal, a matter of substantial importance to Mr King. The contraventions are serious in their nature.
The conduct was carried out by PIAMS’ sole director, Mr Wang. There is inadequate evidence to determine the size of the enterprise involved. There is no evidence of contrition. There is no evidence of any previous contraventions of the FW Act.
In these circumstances, we consider that the appropriate penalties to reflect the need for specific and general deterrence are $8,100 for PIAMS and $1,620 for Mr Wang. These figures are 15% of the maximum penalties available for a corporation and individual respectively.
We agree with Snaden J that the appropriate penalty for PIAMS’ contravention of s 90(2) of the FW Act is $8,100. There is some connection between the contraventions, but we do not consider that the overall quantum of the penalties for PIAMS is excessive upon consideration of the totality principle.
We would impose a penalty of $8,100 upon PIAMS and $1,620 upon Mr Wang for their contraventions of s 340(1) of the FW Act. In accordance with the usual practice, the penalties should be paid to Mr King.
Summary
The ground of appeal challenging the pecuniary penalty for PIAMS’ contravention of s 90(2) of the FW Act should be upheld. The ground of the cross-appeal challenging the failure to impose pecuniary penalties for the contraventions of s 340(1) should also be upheld. The remaining grounds of the appeal and cross-appeal should be rejected.
In view of the potential complications pointed to by Snaden J, including whether part of the pecuniary penalty ordered by the Federal Circuit Court may have to be repaid, we would order that the parties confer and provide a draft minute of orders to the Court within seven days.
I certify that the preceding sixty-five (65) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Rangiah and Charlesworth. Associate:
Dated: 24 February 2020
REASONS FOR JUDGMENT
SNADEN J:
1. INTRODUCTION
At the times relevant to this appeal, the first appellant (hereafter, “PIAMS”) operated a mortgage broking business. It formed part of, or was otherwise aligned with, a group known as the “Property Investors Alliance” (hereafter, the “PIA Group”). The second appellant, Mr Wang, was its sole director and shareholder.
Mr King is PIAMS’s former chief executive officer. The present appeal and cross-appeal—and the judgments from which each is brought—relate to the circumstances in which his employment in that position was terminated.
By a proceeding commenced in the Federal Circuit Court of Australia, Mr King alleged, amongst other things, that:
(1)PIAMS had terminated his employment in contravention of s 340(1) of the Fair Work Act 2009 (Cth) (hereafter, the “FW Act”);
(2)Mr Wang was an accessory to that contravention; and
(3)by having failed to pay to him at the point of that termination an amount equivalent to the value of untaken annual leave entitlements that he had accrued over the course of his employment, PIAMS had contravened s 90(2) of the FW Act.
The trial judge agreed and awarded Mr King statutory compensation in the sum of $100,000.00: King v PIA Mortgage Services Pty Ltd & Ors [2018] FCCA 3426 (Judge Smith; hereafter, the “Liability Judgment”). Further claims for damages for breach of contract and for misleading and deceptive conduct under the Australian Consumer Law were unsuccessful.
Mr King sought the imposition of pecuniary penalties against the appellants in respect of their contraventions of the FW Act. By a later judgment, the court resolved not to impose upon the appellants pecuniary penalties in respect of their breaches of s 340(1) of the FW Act but, in respect of its contravention of s 90(2), imposed upon PIAMS a penalty of $43,200.00: King v PIA Mortgage Services Pty Ltd & Ors (No 2) [2019] FCCA 1460 (Judge Street; hereafter, the “Penalty Judgment”).
PIAMS and Mr Wang appeal from both judgements. In summary form, they maintain that Mr King was not dismissed in contravention of s 340(1) of the FW Act, that Mr King did not in any event suffer any loss as a consequence of such a contravention if there was one, and that the penalty imposed against PIAMS for its breach of s 90(2) of the FW Act was manifestly excessive.
Mr King cross-appeals against both judgments. He maintains that the compensation that he was awarded was insufficient, that he ought to have been awarded damages for breach of contract and that the court below ought to have imposed a penalty upon the appellants in respect of their contraventions of s 340(1) of the FW Act.
For the reasons that follow, I would allow the appeal in part, dismiss the cross-appeal, set aside the bulk of the orders that are the subject of both the Liability Judgment and the Penalty Judgment, and, in their place, order that PIAMS pay to Mr King a pecuniary penalty in the sum of $8,100.00.
2. BACKGROUND
Prior to his commencement as chief executive officer of PIAMS, Mr King was employed by Vow Financial Pty Ltd (hereafter, “Vow”). Vow was the proprietor of a mortgage aggregator business. Perhaps amongst other ways, it operated through “corporate authorised representatives”. Prior to March 2017, Zenik Finance Solution Pty Ltd (hereafter, “Zenik”) was one such representative.
Zenik operated a mortgage broking business and was also part of (or otherwise aligned with) the PIA Group. Mr Wang was Zenik’s sole director and shareholder. The precise mechanics of the relationship between Zenik and Vow are not controversial: in summary terms, Zenik brokered the provision of mortgage funds for its clients (including those referred to it via the PIA Group), and did so under the auspices of Vow’s Australian Credit Licence (or “ACL”). Through his employment with Vow, Mr King had a relationship with Mr Wang; indeed, it was Mr King who, in August 2013, secured Zenik as one of Vow’s corporate authorised representatives.
Zenik’s relationship with Vow was not always trouble-free. Over the course of their association, Zenik was identified—including by banks that provided the mortgage finance that it brokered for its clients—as the source of some questionable finance applications. Again, the specifics are not material but, in short, Vow had occasion between 2013 and 2016 to suspend individual Zenik brokers from providing mortgage broking services under the auspices of its ACL. Although he was not involved in the day-to-day management of the relationship between Vow and Zenik, Mr King was broadly aware of the trouble that arose from time to time over that period.
In early 2016, several large banks raised with Vow some concerns that they had with Zenik’s broking practices. Again, Zenik faced the prospect of various suspensions, the ultimate effect of which was (or would have been) to jeopardise its capacity to broker mortgage finance, either at all through Vow (upon whose ACL it relied) or from one or more of the banks from which the concerns originated. It appears that at least some of the banks that raised concerns about Zenik followed through on them with the imposition of broking suspensions.
Mr King, on behalf of Vow, was brought in to address the concerns that had been raised about Zenik. What he did is not material to the present matter; but it suffices to state that, by March of 2016, Zenik was again operating suspension-free.
Not long thereafter, Mr Wang and Mr King had a preliminary discussion about how to grow Zenik’s mortgage broking business. Those discussions matured over a period of weeks until approximately August 2016, when Mr Wang and Mr King discussed the possibility of Mr King’s coming to work for the PIA Group. Specifically, they discussed Mr King taking over responsibility for managing Zenik and the creation of a new mortgage broking business that they both believed could, over time, be moulded into something large and profitable.
On or about 25 August 2016, Mr King resigned from his employment with Vow. On 30 August 2016, he signed a contract (hereafter, the “Employment Contract”) with PIAMS, by which he agreed to serve as its chief executive officer for a fixed term of five years, commencing on 3 October 2016. His annual remuneration was set at $300,000.00.
Clause 14.2 of the Employment Contract assumes some significance to the present proceedings. It relevantly provided as follows (errors original):
Termination of Leighton’s Employment by PIA Mortgage Services
14.2PIA Mortgage Services has the absolute and fundamental right to terminate your employment summarily where:
…
(e)You are absent from duty without valid reason or permission for two or more days;
…
(g)It becomes evident to the MD that Business Objective under your guidance cannot be achieved even after notice of two months have been given to you of the concern.
The “Business Objective” to which cl 14.2(g) of the Employment Contract referred was defined by cl 3.2, which relevantly stated as follows:
3.2 The Business Objective has the following components and time frame -
(a) within the first month of employment –
(i)completion of review and implementation of necessary actions to have PIA Mortgage Services appointed by an aggregator as their [authorised credit representatives];
(ii)vetting and obtain appointment of sales consultants approved by MD as [authorised sub-brokers] to PIA Mortgage Services;
(b) within the first year of the employment – PIA Mortgage Services to achieve gross profit before tax of not less than $500,000.00;
(c) within the second year of the employment – PIA Mortgage Services to achieve profit before tax of not less than $1,000,000.00;
(d) within the third year of the employment – PIA Mortgage Services to achieve Sub-Aggregator status and achieve gross profit before tax of not less than $1,200,000.00; and
(e) within the fourth year of the employment – PIA Mortgage Services to achieve gross profit before tax of not less than $1,500,000.00
(f) within 5 years of the employment – PIA Mortgage Services to achieve Aggregator status and achieve gross profit before tax of not less than $3,000,000.00.
Almost immediately after signing the Employment Contract—indeed, before his commencement as PIAMS’s chief executive officer—Mr King began to field complaints regarding Zenik’s broking practices. They led, in September 2016, to Vow’s suspension of Zenik’s capacity to provide broking services under its ACL.
Mr King, as PIAMS’s newly-installed chief executive with responsibility for the Zenik business, set about stemming the damage. The practices that were at the heart of the concerns upon which Vow justified its suspension largely involved the submission of finance applications that were (or were alleged to be) either deceitful or comprised of information from finance applicants that was not sufficiently verified. Those practices appeared to Mr King to be more widespread than he had appreciated before he left Vow. Some seemed, at least anecdotally, to originate from Mr Wang himself.
Nonetheless, Mr King sought to address them as best as he could, including by dismissing some of the Zenik brokers that he identified as having engaged in fraudulent (or otherwise sharp) practices. Ultimately, it was to no avail: in March 2017, Vow terminated its agreement with Zenik. That left Zenik without an ACL through which to continue providing its mortgage broking services. It also left the PIA Group without a mortgage broker to secure finance for its clients.
In the immediate aftermath of Vow’s decision, Mr Wang examined the possibility of linking Zenik (or a new entity—“Intuit Mortgage Solutions”—which Mr Wang and Mr King had set about establishing) to another aggregator. That seems not to have come to much, apparently because the banks (or a sufficient subsection of them) were no longer willing to receive mortgage applications that originated from within the PIA Group or its associated enterprises.
On Monday, 3 April 2017, Mr Wang told Mr King that the PIA Group’s mortgage broking concern would be “park[ed]”. Mr Wang offered to terminate Mr King’s employment upon payment of four months’ salary. Mr King did not accept that offer.
On Tuesday, 4 April 2017, Mr King commenced a pre-approved period of annual leave. He was due to return to work on Wednesday, 12 April 2017. As events transpired, he did not ever return.
On his first day of leave (Tuesday, 4 April 2017), he sent an email to Mr Wang in the following terms (errors original):
Just confirming our conversation yesterday in your office , where you said to me :
1. That PIA Mortgage Solutions , Intuit Finance Solutions and Zenik Mortgage solutions had no future because no aggregator will do business with any companies linked to the PIA group.
2. You were terminating my contract and
3. You would do so by paying me 100k which equates to 4 months salary
I am disappointed with the outcome ,given that the problems that have given rise to this existed well before I arrived.
I left another senior executive position with an ASX listed company because of a promise of a 5 year contract and 10% equity in a profitable business.
Now you have made a decision to terminate the contract due to reasons completely beyond my control.
At all times I followed instructions delivered by you and made very effort to create a profitable business as ageeed between us in 8/16
It was only after I arrived that I came to understand the breadth of the unlawful practices.
At no point in our discussions leading up to you employing me did you advise of the pattern of unlawfulness.
In fact you said to me we are going to build a large “profitable business” at no time was I made aware of the significant issues that existed within the business that lead to all banks and aggregators refusing to deal with the PIA group.
I was mislead
If you want to terminate a 5 year contract because those wide spread unlawful practices irreparable damaged the reputation of PIA entities with the banks then I invite you to put a more meaningful offer to properly compensate me for foregoing the next 4.5 years of my contract.
Obviously, as part of any such settlement of my claim, I would sign a deed of settlement and release including a confidentiality clause.
I require a written response by close of business Wednesday 5th April 2017
Mr Wang did not respond to Mr King’s 4 April 2017 email (hereafter, the “4 April Email”). That silence appears to have prompted Mr King to seek legal advice. On Wednesday, 12 April 2017, his lawyers sent to Mr Wang a letter of demand (hereafter, the “12 April Letter”), within which they articulated two potential causes of action that Mr King was said to possess. The first was for breach of the Employment Contract: Mr King was said to be entitled to “…the balance of his contract term of 5 years…being [$300,000] per annum until 30 August 2021”. The second was for a contravention of the Australian Consumer Law: it was put that Mr King had been misled into accepting employment with PIAMS and had suffered loss as a consequence. The 12 April Letter demanded that PIAMS pay Mr King a sum of $900,000.00.
The appellants, via their lawyers, responded to the 12 April Letter on Friday, 21 April 2017. By that letter (hereafter, the “21 April Letter”), PIAMS rejected the offer contained within the 12 April Letter and purported to summarily terminate Mr King’s employment as PIAMS’s chief executive officer. The Liability Judgment contains the following uncontroversial observations about the 21 April Letter (references omitted, emphasis original):
109Mr Wang himself sought legal advice in respect of this [12 April L]etter. His lawyers responded to it in a lengthy letter dated 21 April 2017. After addressing a number of other matters, Mr Wang’s lawyer wrote that P[IA]MS had a number of claims against Mr King for breach of contract including being absent from duty without a valid reason or permission for two or more days. He continued:
…
24.In failing to comply with the terms of his employment, and being absent since 11 April 2017 coupled with the making of the demands which Mr King makes through your letter, it is clear that Mr King has no intention to comply with the tenor of the terms of his employment and has repudiated the [Employment Contract].
25.By this letter, P[IA]MS terminates the [Employment Contract] with Mr King with immediate effect on two grounds –
(1)accepts Mr King’s repudiation of the [Employment Contract] and terminates the [Employment Contract]; and
(2)absolute and fundamental right under clause 14.2(e) of the [Employment Contract] to terminate as Mr King has been absent without valid reason or permission for two or more days since 11 April 2017.
That response prompted the litigation that is the subject of these appeals.
3. THE STATUTORY FRAMEWORK
Before turning to the nature of the proceeding in the court below, it is convenient to set out the statutory provisions relevant to it and to the present appeals.
Part 2-2 of the FW Act is entitled “the national employment standards”. It provides for a number of minimum employment conditions to which all “national system employees” are entitled. Mr King, when employed by PIAMS, was one such employee. Amongst others, the National Employment Standards provide for employee entitlements regarding annual leave. Section 90(2) of the FW Act provides, to that end, that employees whose employment is terminated must be paid an amount equivalent to the value of the untaken annual leave entitlements that accrued in their favour over the course of their employment.
Section 44(1) provides that an “…employer must not contravene a provision of the National Employment Standards”.
Part 3-1 of the FW Act is entitled “general protections”. Amongst other things, it provides for a suite of protections designed to safeguard the exercise of “workplace rights”. One of those protections is provided for by s 340(1) of the FW Act, which provides (and, at all relevant times, provided) as follows:
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.
Note: This subsection is a civil remedy provision (see Part 4-1).
“[A]dverse action” is defined in s 342(1) of the FW Act. It relevantly includes dismissal from employment. Section 341(1) identifies the circumstances in which a person might be understood to possess a “workplace right”. It relevantly provides as follows:
341 Meaning of workplace right
(1) A person has a workplace right if the person:
…
(c) is able to make a complaint or inquiry:
…
(ii) if the person is an employee—in relation to his or her employment.
Section 360 of the FW Act recognises that some adverse action might be taken for a variety of reasons, including some unrelated to reasons that Pt 3-1 of the FW Act proscribes. In order to be actionable under Pt 3-1 of the FW Act, it is sufficient that relevant adverse action is taken for reasons that include such proscribed reasons.
Section 361 provides for a reverse onus of proof. If, in an action alleging that conduct was engaged in in contravention of Pt 3-1 of the FW Act, a person is accused of having done something for a particular reason, and the doing of that thing for that reason would constitute a contravention of that part, it is presumed that the conduct was engaged in for that reason, unless or until the person who engaged in it proves otherwise.
Section 539(1) of the FW Act is entitled “applications for orders in relation to contraventions of civil remedy provisions”. Amongst other things, it identifies the provisions of the FW Act that qualify as “civil remedy provision[s]”. Sections 44(1) and 340(1) are amongst them. Section 539(2) of the FW Act confers jurisdiction upon this court and the court below to hear applications for relief relating to contraventions of those sections. Both courts have the power to grant relief in the nature of declarations, compensation and penalties: FW Act, ss 545(1), 545(2)(b), 546(1). In the case of alleged contraventions of ss 44(1) and 340(1), the maximum penalty that may be imposed against a body corporate such as PIAMS is 300 penalty units. The equivalent maximum for a natural person is 60 penalty units. In April 2017, a penalty unit was $180.00: Crimes Act 1914 (Cth), s 4AA(1).
Section 550 of the FW Act provides for accessorial liability. It establishes that a person is taken to have contravened a civil remedy provision if he or she is “involved in” another person’s contravention. A person is “involved in” another’s contravention of a civil remedy provision if (amongst other possibilities) he or she “…has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to…” the other person’s contravention.
Section 793 of the FW Act is entitled “liability of bodies corporate”. By s 793(1), conduct that is engaged in by an officer, employee or agent of a body corporate is taken, for the purposes of the FW Act, to also be engaged in by the body corporate. Section 793(2) concerns the attribution to bodies corporate of certain states of mind: where it is necessary under the FW Act to establish the state of mind of a body corporate in relation to particular conduct engaged in on its behalf by an officer, employee or agent, it is sufficient to establish the state of mind of that officer, employee or agent in relation to that conduct.
4. THE LIABILITY JUDGMENT
As is outlined above, Mr King’s application before the court below was multi-faceted. Two components of it arise for consideration in the present appeals: the first concerns the claims that Mr King advanced about the lawfulness of his dismissal; the second concerns his claim that the appellants failed to pay him out on dismissal the value of his untaken annual leave accrual.
4.1 The unlawful dismissal claims
By his application to the court below, Mr King alleged that PIAMS had terminated his employment because, or for reasons that included that, he had made a complaint or inquiry in relation to his employment. That being so, he alleged, the termination was effected in breach of s 340(1) of the FW Act. He contended that Mr Wang, as the human agent through which the dismissal was effected, was liable as an accessory to that contravention.
Mr King identified two relevant complaints or inquiries that he made, each of which he claimed was at least a reason for which his employment was summarily terminated. The first was that he was entitled under his Employment Contract to be retained for five years and that, by the discussion that he had with Mr Wang on Monday, 3 April 2017, it was apparent that Mr Wang intended neither to honour that entitlement nor to pay Mr King a sum in lieu thereof (that complaint is referred to, hereafter, as the “Termination Complaint”). The second was that he had been misled about the potential that existed to grow the PIA Group’s mortgage broking concern; in other words, that, due to the widespread prevalence of sharp practice within the group (and within Zenik, in particular) and the associated reluctance of other financial institutions (including banks and mortgage aggregators) to transact with it for the provision of mortgage finance, the prospects for growth were substantially less than what he had been led to believe when he ceased his employment with Vow (that complaint is referred to, hereafter, as the “Misleading Conduct Complaint”). As is clear from the factual recitation above, the Termination Complaint and the Misleading Conduct Complaint each found expression in the 4 April Email and the 12 April Letter.
Mr King’s application also contained a claim for damages for breach of contract. He maintained that PIAMS was not entitled to summarily terminate his employment (as its 21 April Letter purported to).
In both cases—that is, the claim alleging a breach of s 340(1) of the FW Act and the claim alleging breach of contract—Mr King claimed to be entitled to the value of the balance of the Employment Contract, less amounts received (or to be received) in mitigation. It is common ground in the present proceedings that that sum totalled $668,974.00.
The trial judge accepted that, by terminating his employment, PIAMS had subjected Mr King to adverse action (within the meaning attributed to that phrase by s 342(1) of the FW Act) and that it had done so because, or for reasons that included that, Mr King had made the Termination Complaint.
The Liability Judgment seems also to reflect an acceptance by the court below that the dismissal was actuated by Mr King’s having made the Misleading Conduct Complaint. That judgment contains some analysis as to whether that complaint was, in truth, a complaint that Mr King genuinely prosecuted: Liability Judgment, [131] (Judge Smith). Whether it was also held to be a reason for which PIAMS dismissed Mr King is unclear. The Liability Judgment does not record in terms a finding to that effect, although it does seem to presume one at various points (see, for example: Liability Judgment, [152] (Judge Smith)). I proceed upon the basis that that was also accepted (although, for the purposes of the present appeals—and for reasons to which I shall shortly come—it doesn’t much matter).
The trial judge accepted that, by making each of the Termination Complaint and the Misleading Conduct Complaint, Mr King had exercised a workplace right (within the meaning attributed to that phrase by s 341(1)(c)(ii) of the FW Act). Insofar as it was provoked by his having done so (in either or both instances), his Honour accepted that the dismissal was effected in contravention of s 340(1) of the FW Act and granted declaratory relief reflective of that conclusion.
As the human agent who effected Mr King’s dismissal, Mr Wang was found to have been knowingly concerned in or party to PIAMS’s contravention of s 340(1) of the FW Act and, therefore, to have himself contravened that section as an accessory. Again, his Honour granted declaratory relief consistent with that finding.
The court below did not, however, accept that Mr King’s loss was equivalent to the monetary value of the remainder of his Employment Contract. His Honour instead accepted the submission advanced by the appellants that, by 21 April 2017, Mr King had been absent from work without valid reason or permission for two or more days, such that PIAMS was entitled to summarily terminate his employment pursuant to cl 14.2(e) of the Employment Contract. Having so found, the trial judge dismissed Mr King’s claim in contract.
That finding served also to constrain the statutory compensation that his Honour saw fit to award Mr King in consequence of the appellants’ contraventions of s 340(1) of the FW Act. Having found that PIAMS was entitled to summarily terminate the Employment Contract when it did, his Honour turned his mind to what, if any, loss Mr King had suffered as a result of having been dismissed for the reasons that he was. That required consideration of what was likely to have occurred had Mr King’s dismissal for those reasons not transpired. He concluded that Mr Wang (on behalf of PIAMS) “…would have at least honoured the offer made by him on 3 April 2017 to pay Mr King an amount of $100,000, being the equivalent of 4 months’ salary”: Liability Judgment, [151] (Judge Smith). His Honour thus awarded Mr King compensation in that amount.
4.2 The annual leave claims
By his application, Mr King also claimed that PIAMS had contravened s 90(2) of the FW Act by not paying to him upon his dismissal a sum equivalent to the value of his untaken annual leave accrual. Again, he submitted that Mr Wang, as the human agent through which PIAMS relevantly acted, was liable by reason of s 550(1) of the FW Act as an accessory to that contravention.
The trial judge accepted that PIAMS had contravened s 90(2) of the FW Act. He did not, however, accept that Mr Wang was an accessory to that contravention.
5. THE PENALTY JUDGMENT
Following Judge Smith’s retirement from the court below, the matter was allocated to Judge Street to determine what penalty or penalties ought to be imposed upon the appellants for the statutory contraventions that were the subject of findings in the Liability Judgment.
As is outlined above, his Honour determined that no penalties should be imposed in respect of the appellants’ contraventions of s 340(1) of the FW Act; and that a penalty of $43,200.00 should be imposed upon PIAMS in respect of its contravention of s 90(2) of the FW Act.
6. THE APPEAL
The appellants charge the court below with having erred in four discrete respects.
First, they allege that it erred insofar as it found that PIAMS terminated Mr King’s employment in contravention of s 340(1) of the FW Act. That challenge is given voice by appeal grounds 1 and 2, which read as follows:
1. The Court erred in holding (at J 132) that the first appellant contravened section 340(1) of the Fair Work Act 2009 (Cth) (FW Act) by dismissing the respondent “because he had exercised a workplace right” within the meaning of that section of the FW Act.
2. The Court should have found that:
a. the first appellant dismissed the respondent by letter dated 21 April 2017 on the two grounds recited in that letter (and at [Liability Judgment, [109]]), namely, the first appellant:
(1) accepted the respondent’s repudiation of his contract of employment (Ground 1); and
(2) exercised the right under clause 14.2(e) of the respondent’s contract of employment to terminate by reason of the fact that the respondent had been absent without valid reason or permission for two or more days since 11 April 2017 (Ground 2),
not because the respondent had exercised a workplace right to make a complaint about his employment.
b. upon the proper construction of section 340(1)(a) of the FW Act, an employee does not have a “workplace right” to:
(1)repudiate his or her contract of employment; or
(2) to be absent from his or her employment without valid reason or permission; or
(3) each of the above.
c. in the premises, the conduct of the first appellant in dismissing the respondent, was not adverse action in relation to a “workplace right” within the meaning of section 340(1)(a) of the FW Act and no contravention of that section of the FW Act occurred.
By their submissions in support of those grounds, the appellants maintain that:
(1)Mr King did not make complaints or inquiries in relation to his employment;
(2)any complaints or inquiries that he did make in relation to his employment were not complaints or inquiries of the sort to which s 341(1)(c)(ii) of the FW Act refers; and
(3)Mr King was not, in any event, dismissed because, or for reasons that included that, he had made any complaints or inquiries in relation to his employment (including any such complaints or inquiries of the sort to which s 341(1)(c)(ii) of the FW Act refers).
Mr King joins issue on each of the grounds upon which this first species of challenge proceeds. Additionally, by notice of contention, he urges the court to find that:
…the Court’s conclusion at [Liability Judgment, [132]] can be affirmed on the additional basis that the Appellants failed to satisfy the onus cast on them by s361 of the FW Act, in circumstances where the decision maker, Mr Wang, chose not to give evidence as to the reason(s) for the dismissal ([Liability Judgment, [125]-[127]]).
Second—and assuming that the first species of challenge fails—the appellants challenge the court’s assessment of the loss for which Mr King was awarded statutory compensation of $100,000.00. Again in summary form, they contend that the evidence was clear that Mr King rejected Mr Wang’s offer to terminate his employment with four months’ pay; and that there was no basis upon which the court could properly find that Mr Wang would reanimate (or otherwise “honour”) what had been unambiguously rejected. In circumstances where PIAMS’s entitlement to summarily terminate the Employment Contract had arisen, it was put that there was no reason to doubt that it would have been exercised. Those challenges are expressed in grounds 3 and 4 of the appellants’ amended notice of appeal filed 20 August 2019, which it is not necessary here to replicate.
Third, the appellants challenge the finding that Mr Wang was an accessory to PIAMS’s contravention of s 340(1) of the FW Act. There is no independent basis for that challenge: it is dependent upon (and would be a natural consequence of) success on the first species of challenge. Again, this challenge finds voice in two appeal grounds—grounds 5 and 6—and, again, it is unnecessary to replicate those grounds here.
Fourth, the appellants challenge the penalty that was imposed upon PIAMS for its contravention of s 90(2) of the FW Act. It is said that the penalty imposed was manifestly excessive. Again, two grounds—grounds 9 and 10 of the amended notice of appeal—give expression to that challenge and, again, it is unnecessary to replicate them here.
The remaining grounds—grounds 7 and 8 of the amended notice of appeal—were abandoned.
By additional notice of contention, Mr King submits that the penalty that the court below imposed should “…be affirmed on the additional basis that Mr King was both prosecutor and individual principally burdened with the consequences of the contravention, given no enforcement authority was involved ([Penalty Judgment, [31]]).”
7. THE CROSS-APPEAL
Mr King’s cross-appeal has three discrete elements to it. Each is constituted by multiple grounds, which it is not necessary here to set out.
The first concerns the court’s conclusion that PIAMS did not, by dismissing Mr King as it did, act in breach of the Employment Contract. Mr King maintains that, as at 21 April 2017, PIAMS was not entitled to summarily terminate the Employment Contract. He maintains that his absence from work was impliedly authorised or was otherwise premised upon a valid reason, such that (in either case), the right of summary termination for which cl 14.2(e) of the Employment Contract provided was not enlivened. As a result of that error, he maintains (by grounds 1 and 4 of the cross-appeal) that the court ought to have awarded him damages for breach of contract, which he maintains should have been assessed in the amount of $668,974.00 (being the value of the balance of the Employment Contract, less amounts received (or to be received) in mitigation (see above, [107]).
In Shea, Dodds-Streeton J held (at [625]) that:
…the requirement that the complaint be one that the employee “is able to make” in relation to his or her employment suggests that there are complaints which the employee is not able to make in relation to his or her employment. The ability to make a complaint does not arise simply because the complainant is an employee of the employer. Rather, it must be underpinned by an entitlement or right. The source of such entitlement would include, even if it is not limited to, an instrument, such as a contract of employment, award or legislation.
Her Honour’s observations were applied in Whelan v Cigarette & Gift Warehouse Pty Ltd (2017) 275 IR 285, [33] (Collier J). There, Collier J, referring to Shea (and, in particular, to the passage cited above), held (at [33]) that:
…a complaint that an employee is able to make in relation to his or her employment is not at large, but must be founded on a source of entitlement, whether instrumental or otherwise.
On appeal, that observation was described as “unremarkable and correct”: Cigarette & Gift Warehouse Pty Ltd v Whelan (2019) 285 IR 290, 300-301 [28] (Greenwood, Logan and Derrington JJ).
For reasons to which I shall shortly come, I consider that Whelan, both at first instance and on appeal—and notwithstanding its endorsement of Shea—involved to one small extent a deviation from what Dodds-Streeton J concluded. Regardless, Dodds-Streeton’s J observation at [625] of Shea (above, [162]) is, in my view, a correct statement of principle. Recent first instance authorities tend to substantiate that view—see, for example: The Environmental Group Pty Ltd v Bowd [2019] FCA 951, [128] (Steward J); Morton v Commonwealth Scientific and Industrial Research Organisation (No 2) [2019] FCA 1754, [35] (Rangiah J).
In order that he might characterise his making of each of the Termination Complaint and the Misleading Conduct Complaint as an exercise of a workplace right, Mr King must first demonstrate that it was a complaint or inquiry that he was “able to make”. To do that, he must, in each case, identify the source of an entitlement or right to complain or inquire as he did. Examples of such sources are readily imagined: they might include a clause in an employment contract that regulates the manner in which disputes are to be resolved, an award or other statutory instrument that makes provision for the airing of employment-related grievances, a statutory procedure for the prosecution of alleged safety (or other employment-related) infractions, or an applicable workplace policy or procedure document that stipulates how an employee might procure certain information from his or her employer (for example, tax or superannuation information, or information about pay and other conditions of employment).
Insofar as concerns the Misleading Conduct Complaint, no such source was identified. It is apparent that that complaint was founded upon nothing more than that Mr King perceived that he was the victim of actionable conduct. He was, of course, at liberty to prosecute that grievance, including by means of his 4 April Email and the 12 April Letter. But to observe as much is not to identify a right or entitlement, founded instrumentally or otherwise, to complain or inquire as he did. Mr King was “able to make” his complaint in the sense that he was possessed of the means to articulate it: he could compose and send an email, and instruct his lawyers to send a letter. He was “able to” threaten to access a universally available justice system through which he could seek to vindicate his legal rights (actual or perceived) in court. But his complaint was not one that he was “able to make” in the sense identified in Shea. He did not possess any identifiable “entitlement or right” to complain or inquire as he did.
The Termination Complaint is in a slightly different category. By it, Mr King protested against what he perceived was Mr Wang’s indication (conveyed during the meeting that the two had on Monday, 3 April 2017) that PIAMS would not honour obligations that it owed him under the Employment Contract. Mr King maintains that that was a complaint about his employment that he was able to make pursuant to an entitlement or right conferred to that end by the Employment Contract.
The majority accepts that contention but I regret that I am unable to. I accept, of course, that the rights that Mr King sought to vindicate by making the Termination Complaint were rights that found expression in the Employment Contract. He sought to hold PIAMS to what he considered was the bargain that he had struck with it. But, just as with the Misleading Conduct Complaint (above, [166]), to acknowledge that reality is not to identify a right or entitlement, conferred instrumentally or otherwise, pursuant to which the grievance at the heart of the Termination Complaint was “able to” be advanced. Mr King undoubtedly felt that he had a reason to complain as he did; but that is not the same as possessing an ability to do so. A person is not endowed with an ability to complain about something merely because he or she has something to complain about. What must be shown is some right or entitlement to complain or inquire: some conveyed ability that distinguishes a complaint or inquiry that qualifies as the exercise of a workplace right from a complaint or inquiry made merely as an incident of the complainant’s ability to communicate.
That reasoning is consistent with what Dodds-Streeton J concluded in Shea and, at least at the level of principle, with the court’s endorsement of that conclusion in Whelan (both at first instance and on appeal). It recognises, as her Honour and their Honours did (and as the majority here does), that a distinction must be drawn between complaints that employees are able to make for the purposes of s 341(1)(c)(ii) of the FW Act and complaints that employees are not able to make for the purposes of s 341(1)(c)(ii) of the FW Act. With respect to those who think otherwise, complaints that are aired in aid of asserting rights allegedly conferred by statute or the general law are the latter. There is nothing inherent in an ability to vindicate rights under the law that confers a related ability to complain about their trespass beforehand. Absent some instrumental right to do so, a person who complains that their legal rights have been (or are being) interfered with does so not by dint of an ability conferred by the statute or law that establishes those rights; but, rather and more simply, by exercising nothing more than his or her freedom to communicate.
Having said that, it must be acknowledged that the endorsement in Whelan of what Dodds-Streeton J said in Shea doesn’t marry perfectly with the outcome of the later case. There, Mr Whelan alleged that he had been dismissed because of (amongst other things) inquiries that he had directed to his employer concerning his entitlement to receive bonus payments or to have a bonus plan formulated. His employment contract made provision for the payment of certain bonuses. The parallels with the present case are readily apparent.
At first instance, Collier J accepted that those inquiries were employment-related inquiries that Mr Whelan was “able to make”, such that his making of them amounted to the exercise of a workplace right. Her Honour observed (at [34]):
As a general proposition, a complaint or inquiry to the employer by an employee in relation to his or her entitlement to an incentive bonus, or the failure of the employer to prepare an incentive bonus plan, where the terms of employment of that employee make provision for payment of such bonuses or the preparation of such plans, would fall within the scope of s 341[(1)](c)([ii]) of the FW Act.
That observation—which the full court, on appeal, also described as “unremarkable and correct”—followed immediately from her Honour’s adoption of what Dodds-Streeton J held in Shea (above, [162]-[163]). It is in that sense, with respect, that I think her Honour’s conclusion (and the full court’s endorsement of it on appeal) deviates slightly from what Dodds-Streeton J concluded in Shea. In Shea, Dodds-Streeton J did not conclude that a complaint would qualify as one that an employee was “able to make” if it was founded upon a source of entitlement, instrumental or otherwise. Her Honour’s conclusion was that it was the ability to complain that required that foundation, not the subject matter of the complaint itself. With respect to those who think otherwise, I discern no ambiguity in that conclusion. It was, and remains, consistent with the language of s 341(1)(c) of the FW Act (which, of course, speaks of complaints or inquiries that a person is “able to make”).
Again with respect, neither Collier’s J observation at [34] of Whelan nor the full court’s endorsement of it on appeal grapples with whether—and, if so, why or how—Mr Whelan possessed (and later exercised) an ability to complain or inquire in respect of his bonuses. In my view, it cannot be said that such an ability exists merely because the subject about which a grievance is aired or an inquiry is advanced is one for which a prevailing employment contract makes provision. That circumstance will undoubtedly qualify as a reason why an employee might see fit to prosecute a complaint or inquiry; but it does not confer a relevant ability to do so.
A person does not possess—and, therefore, cannot exercise—an ability to complain or inquire of the kind to which s 341(1)(c)(ii) of the FW Act refers merely because he or she may have legal rights that are or might imminently be adversely affected by another person’s conduct, or that otherwise might potentially be the subject of some later vindication in court (whether under the general law of contract or otherwise). To the extent that Whelan (at first instance and on appeal) holds as authority otherwise, it represents what appears to be an unintended deviation from Shea, which, at the risk of repetition, holds in any event as a correct statement of the law.
It follows that neither of the Termination Complaint and the Misleading Conduct Complaint was a complaint or inquiry that Mr King was “able to make” for the purposes of s 341(1)(c)(ii) of the FW Act. He did not, by making either of them, exercise a workplace right. Even assuming, as I do, that he was dismissed because, or for reasons that included that, he made either or both of those complaints, that dismissal was not effected in contravention of s 340(1) of the FW Act.
Conclusion regarding s 340(1)
I would uphold ground 1 of the amended notice of appeal.
Ground 2 is related to ground 1, in that it identifies what it is that the court below ought to have found in respect of Mr King’s action under s 340(1) of the FW Act. Three such findings (or categories of finding) are identified (above, [119]). The first (ground 2(a)) I have already addressed (above, [144]-[156])—there was no error in the court below finding that Mr King’s dismissal was effected because, or for reasons that included that, he made either or both of the Termination Complaint and the Misleading Conduct Complaint.
The third (ground 2(c)) is little more than a restatement of ground 1, which I would uphold.
It is unnecessary to delve too deeply into the nature of the second category of conclusions that the appellants say the court below ought to have drawn (ground 2(b)). I should state only this: whether Mr King had workplace rights to repudiate his Employment Contract or to be absent from work without valid reason were never questions that fell for determination in the proceeding below (or in this appeal). The court below cannot be criticised for failing to find that Mr King did not possess or exercise rights that he did not allege had been possessed or exercised.
8.2 Loss: was King entitled to compensation in the sum of $100,000?
As is outlined above, the court below determined to award Mr King $100,000.00 in respect of what was found to be the appellants’ breach of s 340(1) of the FW Act. That sum was awarded by way of compensation under s 545(2)(b) of the FW Act.
Both sides challenge that determination. Mr King says that it was wrongly premised upon a finding that PIAMS was entitled to summarily terminate the Employment Contract; and that, in truth, his loss arising from the contravention of s 340(1) of the FW Act was equal to the value of the remainder of his Employment Contract. The appellants say that, even if his dismissal was effected in contravention of s 340(1) of the FW Act, Mr King did not, in any event, suffer any loss. That is said to be so because, at the time that the dismissal was effected (21 April 2017), PIAMS was entitled to summarily terminate Mr King’s Employment Contract (or otherwise to accept his repudiation of it). That (in each case) was said to be a function of his having absented himself from work for more than two days without consent or valid reason.
Those contentions of the appellants’ are, of course, put as alternatives to grounds 1 and 2 of the amended notice of appeal. In upholding ground 1, I have already concluded that there was no contravention of s 340(1) of the FW Act. In the absence of such a contravention, the court below ought not to (and, clearly, would not) have awarded Mr King any amount by way of statutory compensation. It is, then, not necessary that I should embark upon any analysis of whether the trial judge erred by finding that Mr King’s loss was the equivalent of four months’ pay (being the amount that he would have earned during the period that was the subject of what Mr Wang offered on 3 April 2017—see above, [87]—which the trial judge held would, but for the contraventions of s 340(1) of the FW Act, have been “honoured” in lieu of the summary termination of the Employment Contract). It is sufficient, in consequence of what I would hold to be the appellants’ success on ground 1, that I would set aside the order by which the court below awarded Mr King the statutory compensation that it did.
8.3 Accessorial liability
As is set out above, the court below determined that Mr Wang was “involved in”—in the sense for which s 550 of the FW Act provides—PIAMS’s contravention of s 340(1) of the FW Act. By appeal grounds 5 and 6, the appellants challenge that conclusion. They do so only on the basis that the court below was wrong to conclude that there was any contravention of s 340(1) in which Mr Wang might relevantly have been involved.
In light of my conclusion on ground 1 of the appeal, that challenge must succeed. If PIAMS did not contravene s 340(1) by terminating the Employment Contract, then there was no contravention of that provision to which Mr Wang might properly be considered to have been an accessory.
I would uphold ground 5 of the appeal. Ground 6 of the appeal (which articulates the conclusions that it is suggested that the court below should have drawn had it not committed the error that is the subject of ground 5) has multiple dimensions to it. One is that the court below ought to have held that Mr Wang did not contravene s 340(1) of the FW Act. Plainly, I would uphold ground 6 to that extent. The ground appears also to charge the court below with having erred by not finding that Mr Wang’s conduct did not, in any event, visit any loss upon Mr King. That is a more difficult proposition. In light of my conclusion that Mr Wang did not contravene s 340(1) of the FW Act, it is one about which I need not say anything. I would partly uphold ground 6 of the appeal.
8.4 Penalty: was $43,200.00 too much?
By the Penalty Judgment, the court below imposed upon PIAMS a penalty of $43,200.00 in respect of its contravention of s 90(2) of the FW Act. PIAMS maintains (by appeal grounds 9 and 10) that that amount was manifestly excessive and that a penalty ought, instead, to have been imposed somewhere within the range of $3,000.00 and $5,000.00.
The penalty that was imposed upon PIAMS was imposed pursuant to s 546(1) of the FW Act. That section authorised the court to impose in respect of contraventions of civil remedy provisions (including s 340(1) of the FW Act) a penalty that it considered appropriate (up to a maximum amount that, at the time, was set at $54,000.00). There was no apparent dispute between the parties—and, in any event, it is well settled—that a penalty set at a level that is manifestly excessive having regard to the nature of the conduct in respect of which it is imposed is one that involves a miscarriage of the court’s discretion: Tak Fat Wong v The Queen (2001) 207 CLR 584, 605-606 [58] (Gaudron, Gummow and Hayne JJ); Construction, Forestry, Mining and Energy Union v Cahill (2010) 269 ALR 1, 14-15 [51] (Middleton and Gordon JJ, Moore J dissenting on a different point); R v Abbott (2007) 170 A Crim R 306, 309 [13]-[14] (Maxwell P, with whom Eames JA and Habersberger AJA agreed in the result). The question on appeal is whether the penalty that was imposed—set, as it was, at 80 per cent of the maximum that was available—was one that might properly be described as manifestly excessive.
In my view, it was.
Recently, I had occasion to consider the factors that inform a court’s discretion to award pecuniary penalties under s 546(1) of the FW Act: Australian Building and Construction Commissioner v Pattinson [2019] FCA 1654 (hereafter, “Pattinson”). I do not here repeat the general observations that are there recorded (none of which are controversial in the present context). In the circumstances that present in this case, I consider that a penalty set at 80 per cent of the maximum available was one that might fairly—and, I think, readily—be impugned as manifestly excessive; that is to say, as one that was “wholly outside the range of sentencing options available”. The conduct in respect of which it was levelled simply did not warrant a penalty of that magnitude. As much is particularly so given that:
(1)the amount of the underpayment by which the contravention of s 90(2) of the FW Act was constituted ($10,384.48) was relatively modest (although still, no doubt, a not insignificant sum for Mr King);
(2)it was accepted that PIAMS had not previously contravened that statutory requirement—this was, in other words, its “first offence” and, on any view, was isolated to the dispute that had arisen between Mr King and Mr Wang; and
(3)the sum that PIAMS withheld from Mr King was withheld upon a genuine belief that it was entitled to set that amount (or most of it) off against other amounts that Mr King had been overpaid.
Having regard to the circumstances that led to the contravention—and, in particular, to the circumstances enumerated in the preceding paragraph—I cannot accept that the penalty that was imposed was necessary in order to realise the deterrent effect that the court below was charged with achieving. On the facts that presented, the requirements of deterrence did not loom nearly as large as the magnitude of what was imposed might suggest. The penalty imposed—as high as it was and at nearly four times the amount of the underpayment in respect of which it was levelled—was well above the permissible range within which a valid exercise of the court’s discretion would have landed.
Similarly, I do not consider that the penalty that was awarded might be upheld on the basis that Mr King advances by his notice of contention: namely, that he was “…both prosecutor and individual principally burdened with the consequences of the contravention…” Those circumstances, assuming that they are relevant at all, do not alter my conclusion that the penalty imposed was grossly disproportionate to what was necessary to deter repetition of the conduct that occurred. A court that, in respect of a statutory contravention, imposes a civil penalty that is greater than what is necessary to achieve the deterrent effect to which its imposition is directed does so in error: NW Frozen Foods v Australian Competition and Consumer Commission (1996) 71 FCR 285, 293 (Burchett and Kiefel JJ, with whom on this issue, Carr J agreed).
It follows that I would uphold ground 9 of the appeal. Faced with the choice of remitting the matter to the court below for further consideration or simply re-exercising the sentencing discretion myself, I would consider the latter eminently more efficient. The material before the court on appeal is sufficient to enable me to determine for myself the question of what penalty ought to be substituted for the one that was imposed. I turn to consider that question.
Again, insofar as concerns the matters that should inform the discretion that I intend now to exercise, I do not here repeat the observations that I made in Pattinson, nor those made by countless other judges of this court (and others) in countless other authorities. Having regard to
(1)the quantum of the underpayment that constitutes the relevant contravention;
(2)the circumstances in which that underpayment arose (and, in particular, the fact that PIAMS sought to set the amount off against overpayments that were made in Mr King’s favour);
(3)the isolated nature of the contravention; and
(4)PIAMS’s apparently otherwise unblemished history of compliance with the FW Act,
I consider that a penalty set at 15 per cent of the maximum (or $8,100.00) will achieve the desired deterrent effect, both specifically and generally.
8.5 Conclusions on the appeal
I would uphold grounds 1, 5 and 9 of the appeal, and partially uphold ground 6. The remaining grounds I would dismiss. The declaratory relief that is the subject of the Liability Judgment should, so far as it records contraventions of s 340(1) of the FW Act, be set aside, as should be order 1 thereof and order 1 of the Penalty Judgment. In lieu of the latter, I would order that PIAMS pay Mr King a penalty in the sum of $8,100.00.
The remaining declaratory relief in the Liability Judgment (which does no more than record that PIAMS contravened s 90(2) of the FW Act) is defective in at least two respects. First, it does nothing more than record the court’s conclusion that PIAMS contravened s 90(2) of the FW Act. Second, it does so without identifying the conduct by which that contravention was constituted. In both respects, it ought to have been the subject of attack in the appeal (and/or resistance before the court below). Moreover, s 90(2) of the FW Act is not a provision whose contravention attracts the application of the FW Act’s enforcement mechanisms. The contravention in respect of which PIAMS should be (and was) penalised was its contravention of the obligation conferred by s 44(1) of the FW Act, which requires compliance with the National Employment Standards (of which s 90 forms part).
That stated, there is no warrant to interfere with the declaratory orders with which this court, on appeal, was not asked to interfere. I would not propose to do so.
9. CONSIDERATION: THE CROSS-APPEAL
As is outlined above, the cross-appeal proceeds upon three broad bases, namely that the court below erred by:
(1)finding that PIAMS was, as at 21 April 2017, entitled to summarily terminate the Employment Contract;
(2)assessing Mr King’s statutory compensation at $100,000.00; and
(3)failing to impose upon the appellants pecuniary penalties in respect of their contraventions of s 340(1) of the FW Act.
I consider each in turn.
9.1 The case in contract: was PIAMS entitled to summarily terminate?
The learned trial judge’s conclusion that PIAMS was entitled, as at 21 April 2017, to summarily terminate the Employment Contract was a product of the fact that Mr King did not return to work after 11 April 2017, when his period of approved leave expired. His Honour concluded that, from 12 April 2017 until the termination of his employment on 21 April 2017, Mr King was absent from work without permission or valid reason. Clause 14.2(e) of the Employment Contract (above, [81]) conferred in that circumstance a right upon PIAMS to summarily terminate Mr King’s employment.
Mr King accepts the reality that he was absent from work over the period 12 to 21 April 2017. By ground 1 of the cross-appeal, he contends that that absence was authorised, either impliedly by Mr Wang or otherwise by means of a valid reason (namely, that he was awaiting a response from Mr Wang to his 4 April Email and his 12 April Letter).
Numerous difficulties present for Mr King in respect of those submissions. The first—and probably most pronounced—is that they did not form part of his case at trial. In the court below, Mr King maintained that, during the meeting that they had on 3 April 2017, he and Mr Wang agreed that he would cease his work immediately, save that he would continue to attend on Fridays to deliver some pre-arranged training. That evidence was rejected and, on appeal, Mr King does not challenge that rejection. That observation should not be mistaken for criticism—the trial judge’s finding was one with which this court, on appeal, would very likely not interfere: Robinson Helicopter Company Inc v McDermott (2016) 331 ALR 550, 558-559 [43] (French CJ, Bell, Keane, Nettle and Gordon JJ). Mr King’s decision not to challenge it no doubt reflects that reality. Regardless, it is difficult to accept that the trial judge might have erred by not making a finding or not accepting a contention that he wasn’t urged to make or accept.
The second difficulty is more general in nature and concerns the implied consent or valid reason that Mr King needs to establish in order to avoid the engagement of cl 14.2(e) of the Employment Contract. Mr King’s submission was that Mr Wang impliedly consented to his absence from work after 11 April 2017. That was said to be so because, in circumstances where the termination of Mr King’s employment had been discussed (and was apparently imminent), Mr Wang did not say or do anything in response to Mr King’s 4 April Email or 12 April Letter, including indicate that Mr King should continue attending for work. By that submission, Mr King effectively suggests that Mr Wang condoned or waived what would otherwise have likely amounted to misconduct under (if not breach of) the Employment Contract.
The legal principles governing condonation and waiver of contractual breach in an employment setting are well-settled. It is, perhaps, more apt to speak of circumstances in which an employer elects, in the face of misconduct or contractual breach, to retain, rather than dismiss, the offending employee: Commonwealth v Verwayen (1990) 170 CLR 394, 406-407 (Mason CJ); Agricultural & Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570, 588 [56] (Gummow, Hayne and Kiefel JJ); Irving M, The Contract of Employment (LexisNexis Butterworths, 2012) p 676 [10.101]. Regardless, an employer condones or waives (or otherwise elects not to act upon) misconduct or breach that might warrant an employee’s dismissal when, fixed with full knowledge of it, it decides to retain the employee in its service: Rankin v Marine Power International Pty Ltd (2001) 107 IR 117, 154 [352] (Gillard J). The onus of establishing condonation or waiver rests upon the party asserting it: Carter v Dennis Family Corporation [2010] VSC 406, [124] (Habersberger J).
In Rankin v Marine Power International Pty Ltd (2001) 107 IR 117 (Gillard J), the Supreme Court of Victoria summarised the test (at 155 [357]-[358]) as follows:
… [t]he plaintiff, who relies upon condonation in the present proceeding, would have to prove:
(i)that the employer had full knowledge of the employee’s misconduct;
(ii)that with that knowledge, the employer retains the employee in his service; [and]
(iii)that having made the election, he deliberately abandons his right to summarily dismiss the employee.
These are questions of fact.
That final observation underlines the significance of the first difficulty discussed at [201] above: there was no finding as to when it was that Mr Wang first became aware of Mr King’s absence from work, nor as to any “intentional and unequivocal” conduct in which he engaged by way of election not to dismiss Mr King on account of it: Sargent v ASL Developments Ltd (1974) 131 CLR 634, 648-649 (Stephen J, with whom McTiernan ACJ agreed); Commonwealth v Verwayen (1990) 170 CLR 394, 406-407 (Mason CJ). Putting that to one side momentarily, the evidence in any event falls short of establishing that Mr Wang, at any point during the brief period between 12 and 21 April 2017, deliberately abandoned any right that Mr King’s absence from work presented. The delay between the point at which a right of summary dismissal under cl 14.2(e) of the Employment Contract arose and the point at which it was exercised (by means of the 21 April Letter) was not substantial. Much less was it reflective of an election by Mr Wang, manifest in intentional and unequivocal conduct, not to act upon Mr King’s absence. PIAMS was entitled to seek advice on the circumstances that Mr King’s 12 April Letter presented, as well as on his subsequent absence from work. I do not accept that Mr Wang’s silence or failure to insist that Mr King should return to work prevailed for so long or in such circumstances that it could only be regarded as indicative of an election in Mr King’s favour (or otherwise as a statement of Mr Wang’s consent).
For much the same reasons, I would not accept that Mr King had a valid reason for being absent from work between 12 and 21 April 2017. It is, of course, the case that indications were made at the meeting of 3 April 2017 that his employment would terminate and that, by his 4 April Email and 12 April Letter, he advanced claims as to the conditions upon which it might do so; but those were not circumstances that justified Mr King’s unilaterally absenting himself from work. Mr King remained in PIAMS’s employ. His obligation to attend for work was no more severed than his entitlement to be paid for doing so. It is regrettable that neither he nor Mr Wang made any express statements after their 3 April 2017 meeting as to whether or not Mr King should continue to attend for work. It is, of course, possible that they might have agreed that he should not. In the absence of such agreement, however, it cannot here be said that Mr King possessed a valid reason justifying his non-attendance at work.
Clause 14.2(e) of the Employment Contract identifies some circumstances that enlivened PIAMS’s right of summary dismissal. Those circumstances existed as at 21 April 2017 and PIAMS was entitled to exercise that right by means of the 21 April Letter. Its termination of Mr King’s employment was not effected in breach of the Employment Contract. Respectfully, the learned trial judge was correct to so decide and ground 1 of the cross-appeal should be dismissed.
Ground 4 of the cross-appeal is related. It charges the court below with error insofar as it dismissed Mr King’s claim for damages for breach of contract. Success on that ground required success on ground 1. As I would dismiss ground 1 of the cross-appeal, so too would I dismiss ground 4.
9.2 Was there an error in the assessment of statutory compensation?
Grounds 2 and 3 of the cross-appeal allege that the court below erred by assessing the compensation to be paid to Mr King in consequence of the appellants’ contraventions of s 340(1) of the FW Act at $100,000.00. By ground 2, Mr King maintains that PIAMS was not entitled, as at 21 April 2017, to summarily terminate his employment; and that the court, therefore, ought to have assessed the loss that he suffered in light of the statutory contraventions as equivalent to the value of the remainder of the Employment Contract’s five-year term. By ground 3, Mr King maintains that, even if PIAMS was entitled to summarily dismiss him as it purported to, the loss that he sustained on account of the contraventions of s 340(1) of the FW Act ought, in any event, to have been assessed as much higher than $100,000.00.
Both grounds proceed on the basis that the appellants contravened s 340(1) of the FW Act by effecting Mr King’s dismissal. For the reasons already stated above, I do not consider that they did. In the absence of any such contravention, grounds 2 and 3 of the cross-appeal cannot succeed and should be dismissed.
Ground 2 of the cross-appeal fails on the additional basis that it presupposes success on ground 1. Again for reasons already stated, the primary judge did not err by finding that PIAMS was entitled to summarily terminate the Employment Contract when it did. Ground 2 of the cross-appeal should also be dismissed on that basis.
I would dismiss grounds 2 and 3 of the cross-appeal.
9.3 Penalties: should the court below have imposed penalties for breach of s 340(1)?
The remaining grounds advanced by the cross-appeal concern the decision of the court below not to impose any penalties upon the appellants in respect of their contravention of s 340(1) of the FW Act. In light of my conclusion that there were no such contraventions, none of those grounds can succeed and I would dismiss them all.
I wish, however, to say something about the learned trial judge’s conclusions on this front. But for my conclusion that there were no contraventions of s 340(1) of the FW Act in this case, I would have upheld Mr King’s challenge to the decision of the court below not to impose penalties. Respectfully, by describing the contraventions that were found to have occurred as “technical” and the conduct by which they had been held to have been constituted as “not involv[ing] a flagrant breach of s 340[(1)] of the [FW Act]”, the court below erred in the discharge of its sentencing discretion. Having found that contraventions occurred and that compensation in the sum of $100,000.00 should be paid in respect of them, it was not reasonably open as a valid exercise of that discretion to not impose any pecuniary penalty.
Conclusions on the cross-appeal
I would dismiss the cross-appeal in its entirety.
CONCLUSION
The appeal should be upheld in part. The declaratory relief that is the subject of the Liability Judgment should be set aside (save insofar as it relates to PIAMS’s contravention of s 90(2) of the FW Act), as should order 1 thereof and order 1 of the Penalty Judgment. In lieu of the latter, there should be an order that PIAMS pay to Mr King a pecuniary penalty in the sum of $8,100.00.
The cross-appeal should be dismissed.
Orders in these terms will, presumably, require that Mr King repay certain sums to the appellants. The parties should determine by themselves how that should occur but, out of an abundance of caution, I would grant them liberty to apply for such further orders as might be necessary.
In light of s 570(1) of the FW Act, it is difficult (albeit not impossible) to see how the court might make any order as to costs. Nonetheless, given that there was no argument before us and that both sides, by their written submissions, foreshadowed the making of orders on that score, I would invite from the parties written submissions totalling no more than five pages each as to what, if any, costs orders should be made. Those submissions should be provided within seven days. Subject to the expression therein of any contrary view, I would propose to determine the question of costs without further oral hearing.
I certify that the preceding one hundred and fifty-four (154) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Snaden. Associate:
Dated: 24 February 2020
SCHEDULE OF PARTIES
NSD 51 of 2019 Cross-Respondents
Second Cross-Respondent
YUE (‘JUSTIN’) WANG
PIA Mortgage Services Pty Ltd v King [2020] FCAFC 15
Entyce Food Ingredients Pty Ltd v CGU Insurance Limited [2020] VSC 757
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