SBP Employment Solutions Pty Ltd v Smith

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FEDERAL COURT OF AUSTRALIA

SBP Employment Solutions Pty Ltd v Smith [2021] FCA 601  

Appeal from:

Smith v SBP Employment Solutions Pty Ltd & Ors (No 2) [2019] FCCA 3318

Smith v SBP Employment Solutions Pty Ltd & Ors (No 3) [2019] FCCA 3516

Smith v SBP Employment Solutions Pty Ltd & Ors (No 4) [2020] FCCA 61
File number: QUD 775 of 2019
QUD 45 of 2020
Judgment of: RANGIAH J
Date of judgment: 8 June 2021
Catchwords:

INDUSTRIAL LAW – appeal against decision of Federal Circuit Court of Australia – Fair Work Act 2009 (Cth) – where employer found to have taken adverse action under s 340 – where employer’s four directors and related company found accessorily liable – whether employee made “complaints or inquiries” under s 341(1)(c)(ii) – whether “complaints or inquiries” a substantial and operative reason for dismissal – where two of four directors gave evidence – challenge to adverse credibility finding based on misapplication of Jones v Dunkel inference – no substantial miscarriage of justice – no retrial – whether penalties manifestly excessive – reduction in penalties against employer and two directors – penalties against related company and two directors set aside – grounds of appeal upheld in part

INDUSTRIAL LAW – penalties – where declarations made that employer failed to pay out annual leave entitlements within a reasonable time under ss 44 and 90(2) – where related company and four directors found accessorily liable – whether penalties manifestly excessive – reduction in penalties against employer and one director – penalties against related company and three directors set aside – grounds of appeal upheld in part

COMPENSATION – quantum – reduction in economic loss to account for vicissitudes – grounds of appeal upheld in part

COSTS – application for extension of time – extension granted – application for leave to appeal against costs orders under s 570 – leave granted – costs orders set aside – no costs – ground of appeal upheld
Legislation:

Fair Work Act 2009 (Cth) ss 3, 44, 90, 130, 340, 341, 342, 343, 346, 351, 360, 361, 550, 570

Evidence Act 1995 (Cth) s 140

Federal Court of Australia Act 1976 (Cth) s 28(1)

Federal Court Rules 2011 (Cth) r 25.01(1)

Work Health and Safety Act 2011 (Qld) s 19

Workers Compensation and Rehabilitation Act 2003 (Qld) s 119A

Cases cited:

ASIC v Hellicar (2012) 247 CLR 345

BHP Coal Pty Ltd vConstruction, Forestry, Mining and Energy Union (2013) 219 FCR 245

Blatch v Archer (1774) 1 Cowp 64 at 65, 98 ER 969

Board of Bendigo Regional Institute of Technical and Further Education v Barclay (2012) 248 CLR 500

Briginshaw v Briginshaw (1938) 60 CLR 336

Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd [2017] FCAFC 50

Construction, Forestry, Mining and Energy Union v Clermont Coal Pty Ltd (2015) 253 IR 166; [2015] FCA 1014

Conway v The Queen (2002) 209 CLR 203

Cummins South Pacific Pty Ltd v Keenan (2020) 302 IR…

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Details
Case
[2021] FCA 601
Decision Date

CaseChat Overview and Summary

In the Federal Circuit Court, Mr Smith alleged that Employment Solutions Pty Ltd (the employer) terminated his employment in contravention of the Fair Work Act 2009 (Cth) (FWA) and that it had failed to pay his annual leave entitlements. Mr Smith alleged that the employer’s directors and another related company were accessorily liable for the contraventions. The primary judge found in favour of Mr Smith, ordering declarations that the employer had contravened the FWA and imposing penalties upon the employer and the directors. The primary judge also ordered that the employer pay Mr Smith compensation for loss of earnings and superannuation. The employer and the directors appealed to the Full Court of the Federal Court, challenging the contraventions and the quantum of penalties and compensation. The employer and the directors also sought an extension of time and leave to appeal against costs orders. The appeal concerned whether the employer had contravened the FWA, the quantum of penalties and compensation, and the costs orders. The employer and the directors argued that the primary judge erred in finding that Mr Smith had made "complaints or inquiries" within s 341(1)(c)(ii) of the FWA, and that such complaints or inquiries were a substantial and operative reason for his dismissal. They also argued that the penalties were manifestly excessive, and that the employer and two directors should not have been ordered to pay costs. The Full Court found that the employer had contravened the FWA, but that there was no substantial miscarriage of justice in the primary judge’s finding that Mr Smith had made complaints or inquiries. The Full Court reduced the penalties against the employer and two directors, but set aside the penalties against the related company and two directors. The Full Court also reduced the compensation ordered by the primary judge, and set aside the costs orders. The Full Court allowed the appeals in part.

Orders

Orders of the court

1. The parties agree upon and provide to the Court draft orders reflecting the reasons for judgment by 4.30 pm on 15 June 2021.

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

Background

Background to the litigation

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Evidence

Evidence Before The Court

Mr Smith also alleged contraventions of ss 343 and 351 of the FWA. Those allegations were rejected by the primary judge. The primary judge found that Employment Solutions breached the contract of employment, but decided not to award damages. These findings are not the subject of the appeals.The Evidence On 1 June 2015, Mr Smith commenced his employment with Employment Solutions in the role of engineering and operations manager for SBP Australia. In 2016, Mr Smith’s position was changed so that he also became responsible for the day-to-day management of the food-equipment business operated by Food Facility Services. Material Handling took over the operation of the food-equipment business in about late 2016. Mr Smith’s new position involved substantially greater responsibilities and workload, a matter about which he later began to complain to the Directors. He performed work for both SBP Australia and Food Facility Services (and later Material Handling). It appears that the former paid 60% of his salary and the latter paid 40%, although some evidence suggests that it may have been the other way around. On 21 October 2016, Mr Smith was involved in a car accident and suffered a whiplash-type injury and a head injury. He initially made a workers’ compensation claim, but decided not to proceed with the claim, apparently because he felt pressured by the Directors not to proceed and because he thought he could manage his symptoms. However, his symptoms gradually worsened. In around late November or early December 2016, the Directors offered Mr Smith a directorship of Material Handling. Mr Smith deposed that he frequently asked Mr Aisthorpe about the progress of arrangements for the directorship, but the directorship did not eventuate. Mr Smith’s evidence at trial was that he had accepted the offer, but the primary judge rejected that evidence. He deposed that he was frequently complimented about his performance by the Directors. In January 2017, Mr Smith decided to reopen his workers’ compensation claim. In June 2017, Mr Smith’s doctor provided him with a medical certificate stating that he was only fit to work from Monday to Friday and from 9 am to 3 pm. On 5 June 2017, Mr Smith met with Mr Aisthorpe, gave him a copy of the medical certificate and informed him of his doctor’s advice to restrict his hours of work. Mr Aisthorpe deposed that at the meeting on 5 June 2017, he asked Mr Smith to provide timesheets to demonstrate compliance with the medical certificate, and made repeated requests for the timesheets up until the time when Mr Smith’s employment was terminated. The timesheets were never provided. Mr Smith subsequently raised a number of issues of concern to him in the course of meetings with Mr Burns, or Mr Aisthorpe, or both. In his Amended Statement of Claim, Mr Smith alleged that he made “complaints or inquiries” within s 341(1)(c) (ii) of the FWA on 8 June, 12 June, 10 July, 14 September (or 19 September), 17 October, 17 November and 20 November 2017. Mr Smith alleged that Employment Solutions terminated his employment because he made such complaints or inquiries. Subject to some limited admissions, these allegations were generally denied in the Defence.

Decision

Reasons for decision

The appellants appeal against judgments of the Federal Circuit Court of Australia in Smith v SBP Employment Solutions Pty Ltd (No 2) [2019] FCCA 3318 (the Liability and Penalty Decision) and Smith v SBP Employment Solutions Pty Ltd (No 3) [2019] FCCA 3516 (the Compensation Decision). The appellants also seek an extension of time and leave to appeal against the judgment in Smith v SBP Employment Solutions Pty Ltd (No 4) [2020] FCCA 61 (the Costs Decision). The proceeding before the Federal Circuit Court was concerned with the termination of the employment of the present respondent, Nicholas Smith, and non-payment of his annual leave entitlements. In the Liability and Penalty Decision, the primary judge found in favour of Mr Smith, making declaratory orders that the appellants had contravened ss 44 and 340 of the Fair Work Act 2009 (Cth) (the FWA). His Honour imposed pecuniary penalties upon each of the appellants. In the appeal, the appellants challenge the findings of contravention and also challenge the quantum of the penalties. In the Compensation Decision, the primary judge ordered that the appellants pay Mr Smith the sum of $589,439.43 as compensation for loss of earnings and superannuation, and $13,925.16 for interest upon that loss. The appellants challenge the quantum of the compensation ordered. In the Costs Decision, the primary judge ordered that the appellants pay 60% of Mr Smith’s costs. The appellants contend that there should have been no order as to costs. I will commence by describing the roles of the various parties, the evidence, the reasons of the primary judge and the relevant legislation, before considering the grounds of appeal. The Parties Mr Smith was employed by the first respondent, SBP Employment Solutions Pty Ltd (Employment Solutions) from 1 June 2015 until his employment was terminated on 20 November 2017. Employment Solutions employs the employees who work in the businesses of SBP Australia Pty Ltd (SBP Australia) and other related companies (collectively, the SBP Group). SBP Australia operates a design and construction business. Mr Smith was responsible for the day-to-day management of a business operated by SBP Food Facility Services Pty Ltd (Food Facility Services), which designed and manufactured machinery for making food (the food-equipment business). In about late 2016, the food-equipment business was taken over by SBP Material Handling Pty Ltd (Material Handling). The third to sixth appellants, respectively Max Burns, Tony Aisthorpe, Dan Mahony and Neville Hombsch (collectively “the Directors”), are directors of Employment Solutions, SBP Australia and Material Handling. Mr Smith alleged that Employment Solutions terminated his employment in contravention of s 340 of the FWA because he had exercised his workplace right to make complaints or inquiries in relation to his employment. He alleged that SBP Australia and the Directors were each accessorily liable for Employment Solutions’ contraventions. The primary judge’s findings of such contraventions and the quantum of penalties and compensation are the principal focus of the appeal.

Ratio Decidendi

Legal Principle Established

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