Stanley v Father Michael Court (No.2)

[2014] FCCA 736

FEDERAL CIRCUIT COURT OF AUSTRALIA

STANLEY v FATHER MICHAEL COURT (No.2) [2014] FCCA 736

Catchwords:
INDUSTRIAL LAW – Penalty hearing for found breaches of ss.340(1)(a)(iii) and 340(1)(b) Fair Work Act 2009 (Cth) – where respondent is an individual although indemnified by a corporate organisation – consideration of factors for penalty – application of totality principle – some remarks concerning the identity of the Respondent and the effect of him being an individual.

Legislation:

Fair Work Act 2009, ss.539, 546, 570

Stanley v Father Michael Court [2014] FCCA 156
Trustees of the Roman Catholic Church v Ellis (2007) 70 NSWLR 565
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560
Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543

Applicant: JENNIFER STANLEY

Respondent: FATHER MICHAEL COURT

File Number: SYG 445 of 2013

Judgment of: Judge Raphael

Hearing date: 21 March 2014

Date of Last Submission: 21 March 2014

Delivered at: Sydney

Delivered on: 14 April 2014

REPRESENTATION

Solicitors for the Applicant: Mr D Mendelssohn

Counsel for the Respondent: Mr J Darams

Solicitors for the Respondent: Corrs Chambers Westgarth

ORDERS

1. The Respondent pay a penalty of $5,100.00 (30 penalty units) for his breach of the Applicant’s workplace rights under s.340(1)(b) of the Fair Work Act 2009 (Cth).

2. The Respondent pay a penalty of $5,100.00 for his breach of the Applicant’s workplace rights under s.340(1)(a)(iii) of the Fair Work Act 2009 (Cth).

3. The penalties shall be paid to the Applicant pursuant to s.546(3)(c) of the Fair Work Act 2009 (Cth) within 28 days.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 445 of 2013

JENNIFER STANLEY

Applicant

And

FATHER MICHAEL COURT

Respondent

REASONS FOR JUDGMENT

Introduction

1. On 14 February 2014 the Court made two declarations and issued certain orders in favour of Ms Stanley against Father Michael Court.  The declarations were:

   “1.The Respondent contravened the Applicant’s workplace rights under s.340(1)(b) of the Fair Work Act 2009 (Cth) by preventing the Applicant from exercising her right to dispute resolution as defined under Clause 36.1 of the Catholic Archdiocese of Sydney Aged Care and NSWNA/ANF Enterprise Agreement 2011 to 2013 (the “Enterprise Agreement”)

   2.The Respondent contravened the Applicant’s workplace rights under s.340(1)(a)(iii) of the Fair Work Act 2009 (Cth) by terminating the Applicant’s employment for serious and gross misconduct for proposing to exercise her workplace rights under s.40.1 of the Enterprise Agreement.”

2. The orders provided for a separate penalty hearing to take place and for the parties to file submissions in relation to penalty prior thereto.  This was done.  The hearing took place on 21 March 2014.

3. Whilst the full facts which led to the declarations and orders can be found in the judgment Stanley v Father Michael Court [2014] FCCA 156 they can be paraphrased in this way. Ms Stanley was the Deputy Director of Nursing at the John Paul Village Heathcote in New South Wales. She had worked there for nearly eight years. John Paul Village is an aged care establishment associated with the Catholic Church. In that name it was party to an enterprise agreement known as Catholic Archdiocese of Sydney Aged Care and the NSWNA/ANF Enterprise Agreement 2011 to 2013. This Enterprise Agreement governed the terms under which Ms Stanley was employed. During the course of 2012 the management of the home became concerned about the level of funding and employed consultants who reported on ways in which the running of the home could be improved. This found expression in a new management plan that was put to senior staff including Ms Stanley at what was described as a “future directions” meeting on 17 October 2012. The plan proposed changes to the roles of the Deputy Director of Nursing and Assistant Directors of Nursing who would be classed as Care Managers. The moving force behind these proposals was Mr Renouf, the Chief Executive of John Paul Village and Ms Fortuin the HR Manager. There was a meeting on 13 December 2012 at which the proposal was revealed. Ms Stanley did not attend that meeting but she was advised of its content by the two other Assistant Directors of Nursing.

4. On 14 December 2012 a group meeting was held between the three and Ms Fortuin and Mr Renouf and a letter was provided to Ms Stanley offering her the position of Care Manager and referring to a further meeting to be held on 17 December where she would be provided with a letter of appointment, position of description and key performance indicators[1]. 

   [1] “KPIs”

5. The three senior Nurse Managers discussed what was happening and were not entirely happy with what was being proposed.  Although generally supportive of the scheme they were particularly unhappy with the idea of KPIs which were not in their current agreement.  They were concerned about having to have individual interviews with senior members of management and felt that a group interview should be conducted at which the KPIs situation and any other serious concerns could be discussed.  This was put to senior management through Ms Fortuin who indicated that it was not something that would be well received.  Ms Stanley then sought advice from the New South Wales Nurses and Midwives Association.  One of her colleagues spoke to her brother-in-law who had industrial experience.  They both advised that the proposal that was being put to the nurses was one to which Clause 40.1 of the Workplace Agreement applied.  That clause is in the following form:

   “40.1   Consultation & Introduction of Change

   (a)      Employer’s Duty to Notify –

   (i)      Where the employer has made a definite decision to introduce major changes in production, programme, organisation, structure or technology that are likely to have significant effects on employees, the employer must notify the employees who may be affected by the proposed changes and or their workplace representatives, which may include the Union.

   (ii)     “Significant effects” include termination of employment, major change in the composition, operation or size of the employer’s workforce or in the skills required, the elimination or diminution of job opportunities, promotion opportunities or job tenure, the alteration of hours of work, the need for retraining or transfer of employees to other work or locations and the restructuring of jobs.

   (b)      Employer’s Duty to Discuss Change –

   (i)      The employer must discuss with the employees affected and their workplace representatives, inter alia, the introduction of the changes referred to in sub-clause 40.1(a)(i) of this clause, the effects the changes are likely to have on employees and measures to avert or mitigate the adverse effects of such changes on employees, and must give prompt consideration to matters raised by the employees and/or their workplace representatives, which may include the Union, in relation to the changes.

   (ii)     The discussion shall commence as early as practicable after a definite decision has been made by the employer to make the changes referred to in the said sub-clause 40.1(a)(i).

   (iii)    For the purpose of such discussion, the employer must provide in writing to the employees concerned and their representatives, including the Union, all relevant information about the changes including the nature of the changes proposed, the expected effects of the changes on employees and any other matters likely to affect employees, provide that any employer shall not be required to disclose confidential information the disclosure of which would adversely affected the Employer.”

6. The nurses informed Mr Renouf of the advice they had received and told him that they did not wish to meet him individually.  Following that meeting Ms Franzen, one of the Assistant Directors of Nursing, sent an email to Mr Renouf advising him that the group did not agree with his interpretation of Clause 40.1 and indicating that they would appoint a representative to attend any meetings with them.  Following this email Ms Stanley was handed a letter requiring her to attend an individual meeting which had originally been arranged for 10.00a.m. that day.  The letter required Ms Stanley to attend an individual meeting that afternoon and in a copy of the letter extracted at [15] of the original decision the word “not” appears in the third line instead of the word “now”.

7. When this letter was handed to Ms Stanley by Mr Renouf in the presence of Ms Fortuin a conversation took place:

   “[52]In the afternoon of 20 December 2012, Mr Renouf and I went to Ms Stanley’s office.  Mr Renouf handed Ms Stanley a letter requesting her to attend an individual meeting that afternoon.  A copy of the letter is annexed to Ms Stanley’s affidavit of 17 May 2013 and marked Annexure F.  Mr Renouf  and Ms Stanley had a conversation to the following effect:

   Mr Renouf:“You are required to attend an individual meeting this afternoon.  You do not need to sign anything, we just want your feedback.”

   Ms Stanley:    “Has anything changed since this morning?”

   Mr Renouf:    “No.  Are you refusing to attend the meeting?

   Ms Stanley:    Yes, I am refusing to attend.”

   [53]Following this, Mr Renouf handed Ms Stanley a second letter, terminating her employing and said words to the effect of:

   “Your employment is terminated for failing to follow a lawful and reasonable instruction.”

8. In the evidence before the Court there were some minor variations of the words spoken at this meeting but the essential point was that Mr Renouf had prepared a letter dismissing Ms Stanley before the meeting was held because he expected that she would refuse to go to the meeting alone.  The letter of dismissal stated:

   “Dear Jennifer

   Re:    Termination of employment

   This is to advise your employment is being terminated with immediate effect.  The reason for your employment being terminated is your failure to comply with reasonable and lawful instructions by The Chief Executive Officer of John Paul Village on two occasions.  The reasonable and lawful instruction was to attend an individual consultation meeting with members of the Executive Management Team regarding the nursing restructure.  This is considered serious and gross misconduct.  As a result, you are not entitled to any pay in lieu of notice.

   Cooperation by members of the nursing management team is essential for successful implementation of the restructure and consultation is an integral part of this process.  As you will understand, resident care delivery is the highest priority for John Paul Village.”

9. After Ms Stanley’s dismissal she was provided with her statutory entitlements and a separation notice was sent to Centrelink informing that organisation that she had been dismissed for “unsatisfactory work performance”.

10. As is clear from the declarations the Court found that the employer had acted unlawfully in the manner in which Ms Stanley was dismissed, that her interpretation of Clause 40.1 was correct and that she was entitled to have representation at any meeting about the work changes. The Court also found that the employer had prevented her from exercising her right to dispute resolution as defined in the Workplace Agreement at Clause 36.1.

11. The Court is sensible of the fact that a lay person reading the preceding paragraphs and the original judgment might query why, although the signatory to the Workplace Agreement was the Archdiocese the respondent to the matter is Father Michael Court, the local Parish Priest.  As noted in the original judgment this was something that was taken up by Ms Stanley at an early stage but after representations from the respondent’s solicitors, including references to the now infamous case of Trustees of the Roman Catholic Church v Ellis (2007) 70 NSWLR 565, Ms Stanley accepted that her employer was Father Michael Court albeit some unnamed organisation would stand behind him and indemnify him against any awards of damages and penalties arising out of actions for which he accepted vicarious liability.  These concessions have a serious effect.  Penalties under the Fair Work Act 2009 (Cth)[2] are imposed at different levels for individuals and corporations.  The level for a corporation is five times that of the level for an individual.  Father Michael Court is an individual.  The Archdiocese of Sydney, if that is who is standing behind him, might well be considered a corporation.  But this is the situation that pertains and it is the situation that the Court is obliged to work with.

    [2] The ‘Act’.

12. The applicable principles when considering penalties in matters of this nature were described in the outline of respondent’s submissions and accepted by the applicant in the following way:

    “7.A non-exhaustive list of factors which are potentially relevant to the imposition of a penalty were summarised by Mowbray FM in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 and adopted by Tracey J in Kelly v Fitzpatrick [2007] 166 IR 14 at [14] as follows:

    (a)the nature and extent of the conduct which led to the contraventions;

    (b)the circumstances in which the conduct took place;

    (c)the nature and extent of any loss or damage sustained as a result of the contravening conduct;

    (d)whether there had been similar previous conduct by the Respondents;

    (e)whether the contraventions were properly distinct or arose out of the one course of conduct;

    (f)the size of the business enterprise involved;

    (g)whether or not the contravening conduct was deliberate;

    (h)whether senior management was involved in the contravening conduct;

    (i)whether the party committing the contravening conduct had exhibited contrition;

    (j)whether the party committing the contravening conduct had taken corrective action;

    (k)whether the party committing the contravening conduct had cooperated with the enforcement authorities;

    (l)the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and

    (m)the need for specific and general deterrence.”

    The submissions continue:

    “8.That said, the decision on an appropriate penalty is an exercise of the Court’s discretion and the above list of matters do not prescribe or restrict the matters which hthe Court can take in to account (Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550 at [11]; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at [91]; Rojas v Esselte Australia Pty Limited (No 2) (2008) 177 IR 306 at [65]). The task is one of the “instinctive synthesis” (Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at [27] per Gray J and [55] per Graham J). The Court is to take account of all relevant factors and arrive at a single result which takes due account of them all (Wong v R (2001) 207 CLR 584 at [74]-[76]). This may require the balancing of different and sometimes conflicting features (Fair Work Ombudsman v AJR Nominees Pty Ltd (No 2) [2014] FCA 128 at [8]).”

13. At [10] of the submissions the respondents make reference to the totality principle discussed by Buchanan J in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560. The Court agrees that in this regard its duty is to impose a penalty appropriate for each contravention and then as a check at the end of the process consider whether the aggregate is appropriate for the total contravening conduct involved.

14. Dealing with the relevant issues in the non-exhaustive checklist.

The nature and extent of the conduct and the circumstances in which the conduct took place

In the introduction to these reasons the Court has endeavoured to adumbrate these matters.  It made clear in the original Judgment and repeats that it regarded the actions of Mr Renouf as highly unsatisfactory not so much because he knew he was acting unlawfully, the Court has accepted that his interpretation of Clause 40.1 of the Agreement was honestly held if flawed, but because he evinced a clear intentions to dismiss Ms Stanley and engineered the opportunity to do so.  The Court believes that he and Ms Fortuin were remiss in not giving proper consideration to Clause 36 of the Agreement and in particular the “status quo” sub paragraph contained therein.  The respondent suggests that the circumstances of the contravention sound in a penalty at the lower end of the scale but the Court does not agree.  In the Court’s view the conduct warrants a penalty at the higher end of the mid-range.

The nature and extent of any loss or damage sustained as a result of the contravening conduct

1. The respondent’s submissions in respect of this are put shortly:

   “20.The court has awarded the Applicant the sum of $10,000 by way of general damages for hurt and humiliation arising from the termination of her employment (Primary Decision at [62]).  However, the Court expressly found that the Applicant had failed to establish any further loss and damage (Primary Decision at [59]), although the Applicant claimed an amount of $196,000.  In the Respondent's submission, the circumstances would not justify any penalty other than a nominal penalty.”

2. The Court cannot accept these representations as fact.  What it found in relation to Ms Stanley’s loss of wages was that she had not properly proved her case.  That does not mean that the Court did not have every sympathy with her claim that she would not obtain another position of that seniority having been dismissed without a reference and with only the damning remarks made in the separation certificate sent to Centrelink.  It is the Court’s view that the failure to provide Ms Stanley with any form of reference again represents unsatisfactory conduct on the part of the respondent.  She had given over seven years of excellent service, had been commended and had not previously had any complaint about her conduct or performance made to her.  At the very least she was deserving of some form of reference that noted these matters.  The respondent’s failure to provide one added to the loss and damage sustained as a result of the infringing conduct.  These matters indicate to the Court that an appropriate penalty would be found in the upper end of the mid-range.

Size of the business enterprise involved and whether there had been similar previous conduct by the respondent

1. The respondent submits that John Paul Village employed approximately 260 staff as at 19 August 2013 and had never had other proceedings brought against it by an employee.  The Court accepts these submissions noting that the Village has been in operation for twenty-eight years.  This is undoubtedly a good record and warrants consideration of a penalty in the lower range.

Whether the contraventions were properly distinct or arose from the one course of conduct 

1. The Court accepts that both infringements arose out of one course of conduct and would be looking towards the totality principle when fixing a final level and amount of penalty.

Whether or not the contravening conduct was deliberate

1. The respondent rightly draws a distinction between the dismissal of Ms Stanley and the infringing conduct which was in regard to Clause 40.1 the refusal to allow her representation.  However, there is also the infringing conduct of not applying the status quo under Clause 36.1 preventing her from exercising her right to dispute resolution.  The Court has found at [41] of the original decision that:

   “Once the email chain and the discussions with the three nurses commenced it was clear that there was a dispute between the employer and the employees as to whether the provisions of clause 41.1 were invoked by the proposed changes.”

   …

   The Court is of the view that the clause mandates a procedure that has to be carried out by both parties.  It is not something which necessarily needs to be “invoked”.  The employer has just as much responsibility for attempting to resolve the matter as the employee.  In this case the employer made no attempt whatsoever to resolve the dispute in question, namely the applicability of clause 40.1.  He simply dismissed Ms Stanley because she failed to comply with what was in law not a lawful instruction.  By dismissing Ms Stanley the respondent acted in contravention of clause 36.1(i) which, in the Court’s view, comes into place the moment a dispute is notified.”

1. In the Court’s view the respondent either ignored or deliberately avoided the provisions of Clause 36.1 and to that extent there was some deliberateness in the first contravention.  Utilising the totality principle and bearing in mind the Court’s views about the second contravention it believes that an appropriate penalty would be in the lower end of the mid-range.

Whether senior management was involved in the contravening conduct and the contrition, corrective action and assistance with the enforcement authorities

1. The respondent accepts that senior management of John Paul Village was involved in the conduct that gave rise to the contraventions.  It appears that Mr Renouf is no longer employed at John Paul Village.  It was he who was the decision maker.  In mitigation the respondent has placed on affidavit evidence that a review has commenced that will provide direct access to the advisory committee for the HR Manager over and above the CEO in respect of any matters where it is felt there might be a potential breach of the Act.  This is indeed good news although it does little to assist Ms Stanley.  The Court’s view of the respondent’s conduct warrants a penalty in the mid-range.

The need for specific and general deterrence

1. The respondent’s submissions are:

   “30.There is no evidence that the Respondent wilfully or deliberately breaches workplace laws.  He has no previous recorded contraventions of the laws.  The person who he had entrusted to operate JPV is no longer employed at the facility.  Accordingly, there is no need for any specific deterrence.

   31.The Court has no found, and the Respondent submits that it was not, a wilful or deliberate breach.  Accordingly, any element of general deterrence in the penalties imposed should be at the lower end.”

2. The Court is not as sanguine as the respondent in regard to the deliberateness of the conduct in respect of the first infringement and whilst it accepts what else is said in [30] it believes that there is always some need for specific deterrence to prevent a reoccurrence.  The Court also believes there is always a place for general deterrence in these matters.  Workplace Agreements of the type entered into here are formulated after a lengthy negotiation.  They are comprehensive and they are intended to be binding.  It is always important to deter parties from acting in a way that breaches those agreements.  In regard to this aspect the Court believes that an appropriate penalty will be found in the mid-range.

3. In Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543 Lander J at [93] identified three purposes of sentencing:

   “(a)punishment, which must be proportionate to the offence and in accordance with prevailing standards;

   (b)deterrence, both personal (assessing the risk of re-offending) and general (a deterrent to others who might be likely to offend); and

   (c)rehabilitation.”

   In the Court’s view the penalty imposed upon the respondent should reflect the fact of his being punished for these breaches.

4. It will be seen that in the Court’s view the imposition of a penalty falls firmly within the mid-range for both infringements. The applicant has argued for a penalty at the top of the high range. This cannot be appropriate where the respondent has an unblemished record or when consideration is given to the infringements rather than the dismissal conduct. The maximum penalty is 60 penalty units or $10,200.00 for each contravention: s.539 of the Act. The Court is of the view that taking into account the totality principle and the matters raised in these reasons the appropriate penalty is $5,100.00 (30 penalty units) for each contravention.

5. Proceedings under the Fair Work Act do not attract a decision on costs except in the exceptional circumstances described in s.570 of the Act. No such application has been made. There will be no order as to costs. The Applicant brought this action, she was not assisted by the Fair Work Ombudsman or a Union. The penalties should be paid to her pursuant to s.546(3)(c) the Act within 28 days.

I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of Judge Raphael

Associate: 

Date:  14 April 2014