PIA Mortgage Services Pty Ltd v King

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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…

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Details
Case
[2020] FCAFC 15
Decision Date

CaseChat Overview and Summary

PIA Mortgage Services Pty Ltd v King involved an appeal and cross-appeal against two decisions of the Federal Circuit Court of Australia concerning the dismissal of Mr King, the respondent, and subsequent employment law disputes. The primary legal issues revolved around whether Mr King's dismissal contravened section 340(1) of the Fair Work Act 2009 (Cth) and whether the penalties imposed were manifestly excessive. Additionally, the cross-appeal addressed whether the employment contract was breached and whether statutory compensation awarded was adequate.

The court examined whether Mr King's absence from work triggered an entitlement for summary termination under the terms of the employment contract. The court also considered whether Mr King's absence was authorised or condoned by the employer, PIAMS, and whether there was a valid reason for his absence. Furthermore, the court assessed whether the compensation awarded by the Federal Circuit Court was sufficient or excessive. The court held that the appeal was partially upheld, dismissing the cross-appeal and setting aside the penalties imposed. The court ordered that PIAMS pay Mr King a pecuniary penalty of $8,100.00, while affirming the declaratory orders made by the lower court.

The reasoning behind the court's decision was that the lower court's conclusion regarding Mr King's absence and the right to summarily terminate was not erroneous. The court found that Mr King's absence was not justified by implied consent or a valid reason, hence, the summary termination was justified. Regarding compensation, the court deemed the amount awarded as appropriate and dismissed the cross-appeal on this point.

In conclusion, the appeal was allowed in part, and the cross-appeal was dismissed in part. The court ordered that PIAMS pay Mr King a reduced penalty of $8,100.00, affirming the declaratory orders of the lower court.

Orders

Orders of the court

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.

Background

Background to the litigation

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.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

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.

Ratio Decidendi

Legal Principle Established

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.