Walsh v Angels Care (Australia) Pty Ltd
[2023] FedCFamC2G 798
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Walsh v Angels Care (Australia) Pty Ltd [2023] FedCFamC2G 798
File number: MLG 3966 of 2020 Judgment of: JUDGE FORBES Date of judgment: 5 September 2023 Catchwords: INDUSTRIAL LAW – FAIR WORK – application for unpaid statutory and contractual entitlements – alleged unpaid wages, unpaid annual leave, home office allowance and bonus – whether applicant is employee or independent contractor – effect of admissions made by respondent – determining terms of contract to date of termination – determining hourly rate for purposes of determining entitlements – applicant partially successful – declarations and orders made Legislation: Fair Work Act 2009 (Cth), s 14, 20, 44, 86, 87, 90, 96, 323, 545, 546, 570
Federal Circuit and Family Court of Australia (Division 2)(General Federal Law) Rules 2021, r 13.04, 13.05, 13.13
Cases cited: Construction, Forestry, Mining and Energy Union v Personnel Contracting [2022] HCA 1
Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd [2003] HCA 10
Division: Division 2 General Federal Law Number of paragraphs: 159 Date of hearing: 28 – 29 June 2022 Place: Melbourne Counsel for the Applicant: Mr Tierney Solicitor for the Applicant: Gordon Legal The Respondent: Mr Harrison ORDERS
MLG 3966 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: KERRYN WALSH
Applicant
AND: ANGELS CARE (AUSTRALIA) PTY LTD
Respondent
ORDER MADE BY:
JUDGE FORBES
DATE OF ORDER:
5 SEPTEMBER 2023
THE COURT ORDERS THAT:
1.Pursuant to section 545 of the Fair Work Act 2009 (Cth) (‘the FW Act’) the Respondent pay to the Applicant, within 28 days of the date of this Order, compensation in the amount of:
(a)$17,999.38 for unpaid wages; and
(b)$19,799.32 for accrued but unused annual leave.
2.Pursuant to section 547(2) of the FW Act the Respondent pay pre-judgment interest to the Applicant on the amounts owed pursuant to Order 1 above within 28 days of the date of this Order, with the interest to be calculated in accordance with the applicable pre-judgment interest rate prescribed by the Federal Court of Australia.
THE COURT DECLARES THAT:
3.The Respondent contravened section 90 of the FW Act and thereby breached section 44 of the FW Act by failing to pay the Applicant’s annual leave entitlement.
4.The Respondent breached section 323 of the FW Act by failing to pay the Applicant the annual leave entitlement and the unpaid wages entitlement.
AND THE COURT FURTHER ORDERS THAT:
5.Any application for costs be made by way of application in a proceeding within 14 days of the date of these orders.
6.The proceeding be listed for further hearing on the question of penalties and costs (if any), on 31 January 2024 at 10.15am.
7.By no later than 4.00pm on 24 November 2023, the Applicant shall file and serve evidence and an outline of submissions relating to her claim for penalty and costs (if any).
8.By no later than 4.00pm on 22 December 2023, the Respondent shall file and serve evidence and an outline of submissions relating to penalty and costs (if any).
9.By no later than 4.00pm on 18 January 2024, the Applicant shall file and serve any evidence and an outline of submissions in reply.
10.The parties have liberty to apply on seven days’ notice.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE FORBES
INTRODUCTION
In this matter, the applicant (Ms Walsh) seeks compensation and other remedies in respect of unpaid wages, accrued leave and other statutory and contractual entitlements arising from her employment with the respondent Angels Care (Australia) Pty Ltd (Angels Care).
Ms Walsh seeks that Angels Care pay the following amounts[1] to her as compensation pursuant to section 545 of the Fair Work Act 2009 (Cth) (the FW Act) or as contractual damages:
(a)$19,799.32 in respect of accrued but unpaid annual leave;
(b)$17,999.38 in respect of unpaid wages;
(c)$6,240.00 in respect of home office expenses; and
(d)$33,859.00 in respect of a profit-related bonus.
[1] As per the Applicant’s Further Amended Calculation Summary dated 6 July 2022
Ms Walsh also seeks declarations that Angels Care contravened two civil remedy provisions of the FW Act, being:
(a)section 44 of the Act for failing to pay the applicant annual leave entitlements in breach of section 90 of the Act; and
(b)section 323 of the Act by failing to pay the Applicant:
(i)annual leave entitlements;
(ii)unpaid wage entitlements;
(iii)a bonus claim; and
(iv)home office expenses.
Pursuant to section 546 of the Act, the applicant seeks the imposition of pecuniary penalties against the Respondent for each of the declared contraventions of the Act.
For the reasons set out in this judgment I have decided that Ms Walsh is entitled to relief only in relation to her claims in respect of accrued but unpaid annual leave and unpaid wages. Declarations and orders for compensation will be made in relation to those claims.
The proceedings will be listed for further hearing in relation to penalties for those contraventions on a date to be fixed.
BACKGROUND
The facts in this matter are substantially agreed. Based on the pleadings, the affidavits read in the proceeding and the evidence heard at trial, the following matters are uncontroversial or uncontested, unless stated otherwise.
The applicant, Ms Kerryn Walsh, is a Registered Nurse Division 1. Ms Walsh has worked as a nurse for approximately 46 years. She has had extensive experience in operating room nursing as well as teaching acute care and anaesthetic care nursing for more than 20 years[2].
[2] Affidavit of Kerryn Walsh dated 27 January 2022 (‘Walsh affidavit’), Court Book (‘CB’) 27
The respondent, Angels Care, is engaged in the business of providing home aged care and disability support services. These services include high and low-level care for people with disabilities, respite and home care services. Angels Care has admitted that it is a ‘national system employer’ within the meaning of section 14 of the FW Act.
Mr Geoffrey Harrison has been the managing director of Angels Care at all material times since 2016. Mr Harrison is substantially based in Malaysia, although he regularly travels to Australia and internationally with the Angels Care business. Mr Harrison does not contest that he has overall authority to manage the business, is the controlling mind of the company and has the power to make financial decisions on behalf of the business in conjunction with his business partner, a Malaysian doctor.
In or around October 2015, Ms Walsh was first contacted by Mr Harrison. At this time, Angels Care operated an aged-care in-home nursing business in Singapore and Malaysia. Mr Harrison offered Ms Walsh an opportunity to assist Angels Care in educating and upskilling its existing staff in Johor Bahru, Malaysia. Ms Walsh agreed to this proposal and went to Johor Bahru in March 2016. Ms Walsh was paid for her time in Malaysia and was reimbursed for her expenses which included a mobile phone and laptop.
Angels Care in Australia
In or around late 2016, Mr Harrison told Ms Walsh that he was interested in starting an aged care business for Angels Care in Australia[3].
[3] Walsh affidavit, CB 28
Mr Harrison and Ms Walsh met a few times at a café in Pearcedale to discuss this opportunity. At one of these meetings in December 2016 Ms Walsh says that Mr Harrison invited her to join Angels Care and told her to start looking to establish an aged care business in Australia. Ms Walsh suggested that she could commence by working from home, but said she needed some structure. Ms Walsh claims that during a conversation at the café, which was also attended by two other board members, Mr Harrison told her that Angels Care would pay for stationary, home office equipment and money for expenses[4]. When cross-examined about this meeting Mr Harrison agreed that he had told Ms Walsh that he would “pay for everything”.
[4] Walsh affidavit, CB 28
The meeting referred to in the preceding paragraph is central to the applicant’s claim in respect of unpaid home office expenses. This issue and other relevant evidence is discussed later in these reasons.
On or around 29 January 2017 Ms Walsh received an unsigned letter from the Chairman of Angels Care appointing her to the position of Director of Clinical Services, to commence on 1 February 2017 (First Employment Contract)[5]. It is common ground that the engagement pursuant to that contract was casual.
[5] Walsh affidavit, annexure KW-1
Pursuant to the terms of the First Employment Contract it was agreed that Ms Walsh would report to Mr Harrison and that she would be remunerated at the rate of $55 per hour worked. Ms Walsh’s initial work involved setting up Angels Care as an aged care business within Australia. Her tasks included preparation of documentation including policies and procedures, recruiting and assessing staff, attending to clients, training staff and being available on-call (at an additional rate). Relevantly, the contract did not contain any express term regarding the reimbursement of home office expenses.
In March 2017, Angels Care began servicing clients in Australia, the first client being a disability client. Angels Care obtained Aged Care Provider status and the business grew rapidly. During the first few months of her engagement Ms Walsh provided spreadsheets to Mr Harrison detailing her hours worked and claims for various expenses incurred in running the business. She was paid and reimbursed in accordance with this information.
Ms Walsh gave evidence that as she gradually built up the Angels Care business she continued working at Beleura Private Hospital, but reduced her hours there.
On 30 June 2017 or shortly thereafter, Ms Walsh prepared an End of Financial Year report for the board[6] of Angels Care which reported on “the Client/Staff processes and the Home Care Model that has been developed over the last 4 months”. In that report Ms Walsh raised a number of concerns about business operations including, inter alia:
(a)that she had had been operating the business out of her home for a number of months and incurring costs for power, gas, internet, computer, printer, mobile phone, water, tea, coffee, milk and food and drink for staff orientation and training. Ms Walsh said that she had not put in a charge for any of those items.
(b)that “moving forward” Ms Walsh considered the current arrangement to be unsustainable and that the costs would need to be met by the business. She said that rent would be charged at $250 per week and $50 for incidentals as described above; and
(c)that her wage required some consideration.
[6] Walsh affidavit, annexure KW-2
On or around 10 July 2017, Mr Harrison responded to a number of these matters by marking up the board report with comments in green text. Responding to Ms Walsh’s concerns about the costs incurred in running the business from her home, Mr Harrison stated ‘Please send me an estimate for these”.
On 11 July 2017, by a further letter from the company’s chairman,
Ms Walsh was offered the position of Director of Clinical Services of Angels Care (Second Employment Contract)[7]. The letter and its attachment stated that it would form Ms Walsh’s contract of employment. This agreement prescribed a rate of pay of $5,000 per month plus a bonus of 10% of the monthly revenue (pre-tax) for clients personally managed by Ms Walsh on a day to day basis. Ms Walsh deposes that she continued to work for Beleura Private Hospital from time to time while she continued to provide services to Angels Care on a casual basis.
[7] Walsh affidavit, annexure KW-5
In March 2018, Ms Walsh was appointed to the position of Manager of Clinical Services[8] (Third Employment Contract), commencing from 1 April 2018. This appointment was confirmed in a letter from the company’s chairman dated 9 March 2018 which annexed a job description and various terms and conditions. Ms Walsh gave evidence that she can recall signing each page of this document and providing a complete signature on page 3.
[8] Walsh affidavit, annexure KW-6
The letter of appointment expressly states that it will form a contract of employment and that it “supercedes (sic) any previous offers or agreements, which are all currently null and void”. However, the rate and composition of the remuneration for the role remained unchanged from the previous employment contract. That is
(a)$5,000 per month; and
(b)10% of the monthly revenue (before tax) for clients that she personally managed on a day-to-day basis (bonus payment).
Ms Walsh contends that by this Third Employment Contract she was appointed to work on a full-time basis and that her employment became permanent from 1 April 2018. This was admitted by the respondent in its response.
Shortly after the commencement of this contract Ms Walsh resigned from Beleura Private Hospital allowing her to concentrate her efforts on the Angels Care business.
On 1 October 2018 Angels Care increased Ms Walsh’s salary under the 9 March 2018 contract by 50% from $5,000 a month to $7,500 a month. In his evidence in chief, Mr Harrison indicated that this increase was evidenced in an email to Ms Walsh[9].
[9] Transcript of 28 June 2022, page 68
On 30 June 2019, by way of a signed letter from the company’s chairman dated that day, Ms Walsh was appointed to the full time position of National Director of Clinical Services. In that position, which was to commence on 1 July 2019, Ms Walsh was to be paid a “complete package” made up as follows:
(a)a total gross income of $15,000 per month;
(b)a 10% bonus of the profit received on a cash received basis from all Mornington office-based clients under her management plus a 2% bonus of the profit received on a cash received basis for all other office-based clients including New Zealand; and
(c)the use of a fully-maintained company car to the value of $40,000.
The contract provided that the package would be reviewed not less than bi-annually and, curiously, that “The above rates will include all necessary taxes and Government requirements to be handled by you”.
There was a further term of this employment contract that it could be terminated at any time by the Company giving one month’s notice of its intention to terminate.
Ms Walsh did not countersign the letter to confirm her acceptance of the position. Ms Walsh contends however that she did accept the position by her conduct and notes that from the commencement date she was paid in accordance with the new regime. The issue of whether this contract created binding obligations is discussed later in these reasons.
By June 2019 the business had grown substantially and it had around 110 employees based in Mornington. Angels Care was also providing services in the Gold Coast, Sunshine Coast, Adelaide, Darwin and in New Zealand.
Ms Walsh gave evidence that staff wages were normally paid on Tuesdays. On 16 July 2019, Ms Walsh received complaints that wages had not been paid and that direct debits had defaulted.
On 17 July 2019 Ms Walsh attended a meeting on the Gold Coast with Mr Harrison and some other members of the Angels Care staff. At that meeting Ms Walsh voiced her concerns that the company was experiencing financial difficulty and asked Mr Harrison why staff had not been paid their wages[10]. Ms Walsh also asked Mr Harrison why despite the company’s revenue there was not enough money in the bank to pay wages. Mr Harrison accepts that he responded by saying “I can do whatever I like”. In the course of that discussion Ms Walsh told Mr Harrison that she had had enough.
[10] CB 31 [36-43]
A few days later, on 21 July 2019, Ms Walsh wrote to Mr Harrison raising concerns about non‑payment of wages to staff[11] and other matters pertaining to the financial performance of the company. In that letter Ms Walsh said that she had not previously had any visibility of the financial situation at Mornington and that she had believed the business was profitable. She claimed that she had been working 7 days a week, 12-14 hours a day to get the business going. Ms Walsh also claimed that staff were not receiving superannuation contributions, that their life insurance had been cancelled and that money had not been put away to meet tax obligations, among other complaints.
[11] Walsh affidavit, annexure KW-8, CB 31 [45]
Notwithstanding her complaints of mismanagement by Mr Harrison, Ms Walsh offered to use $41,000 of her own money to ensure staff were paid wages. She gave evidence that she drew down against her home loan and deposited money into a company bank account. It was paid back the following week when funds became available.
On 30 July 2019, Ms Walsh received a pay slip for the period ending 25 July 2019. This was the last pay slip she was to receive. She was paid an amount calculated by reference to the June 2019 contract (i.e. at the rate of $15,000 per month).
On 8 August 2019 Mr Harrison offered Ms Walsh a revised employment contract. Ms Walsh rejected the offer.
That day, Mr Harrison called a meeting of the Mornington staff, told them there was to be a new structure and announced that Ms Walsh was no longer the National Manager of Angels Care. Mr Harrison told those present that Ms Walsh would now be the manager of Mornington. Mr Harrison also concedes that he told Ms Walsh words to the effect “if you’re happy, you can stay. If you’re not, you can leave”.
The following day, 9 August 2019, Ms Walsh attended work but left due to anxiety. A number of staff resigned. Ms Walsh provided a medical certificate that day which stated that she would be unfit for work until 16 August 2019.
In the following week Ms Walsh wrote to Mr Harrison to explain her absence and to reiterate her rejection of the terms and conditions of the new agreement which had been offered on 8 August 2019. She stated that she did not see a future at Angels Care and asked that she be paid for accrued annual leave, outstanding bonuses and for expenses incurred in starting up the business. Ms Walsh also requested that she be able to return to the office to collect items that she had brought into the business. She also noted that she had seen her doctor again and had been given another week sick leave.
On 18 August 2019 Mr Harrison responded to Ms Walsh’s email. He informed her that it would be inconvenient for her to attend the office and that she should make arrangements for an independent courier to pick up her items. He stated that “Your latest signed contract (National Manager) is not null and void and all conditions still apply including non-compete conditions”. Mr Harrison also requested Ms Walsh to provide a formal resignation.
On 23 August 2019, Ms Walsh provided a letter of resignation[12] and gave 2 weeks’ notice from that date. Ms Walsh’s final day of employment was on 6 September 2019. It is common ground that she was not paid any wages after 26 July 2019 and that she has not been paid any annual leave or bonus payments.
[12] Walsh affidavit, annexure KW12, CB 99
Litigation background and procedural history
Prior to this matter being heard, it followed a rather complicated and tortuous procedural path. At times Angels Care was legally represented and at other times it was not. It is not necessary to rehearse all the various pleading and discovery issues and the various applications which preceded the trial, but it is appropriate to acknowledge the respondent’s cross-claim which I dismissed on the first day of trial.
On 10 November 2020, the applicant initiated these proceedings by way of an originating application and statement of claim. On 24 February 2021 the respondent filed its response and denied the relief now sought.
On 15 July 2021, Angels Care filed a cross-claim which alleged that the company owed Ms Walsh unpaid leave entitlements of $10,048.85 and unpaid superannuation of $10,353.25, but claimed that there had been an overpayment to her of $56,311.74. The cross-claim alleged that Ms Walsh owed the business $35,909.64.
The respondent’s cross claim also sought damages against Ms Walsh for alleged breaches of contractual restraint provisions, by reason of Ms Walsh:
(a)setting up a business in competition with Angels Care;
(b)approaching customers of Angels Care;
(c)approaching staff and former staff of Angels Care; and
(d)using Angels Care’s business systems and processes.
Over the course of 2021 and into 2022 various orders and directions were made to bring these matters to trial. These orders were necessitated by disputes regarding discovery, allegations of non-compliance of court orders, a successful application by the applicant for some of the cross‑claim to be struck out and leave being granted for an amendment to the cross-claim.
Relevantly, in January 2022 orders were made by consent whereby the parties agreed to exchange a list of documents as specified in an agreed schedule. The documents to be discovered by the respondent had been made known to the respondent in the previous December.
The matter was listed for hearing on 30 March 2022. However, that trial did not commence after Angels Care’s legal representative withdrew and it became apparent that the respondent had not complied with Court orders, including as to discovery.
On 30 March 2022 I made orders adjourning the hearing until 28 June 2022, to enable Mr Harrison to obtain legal representation. I refused an application by the respondent to amend its cross-claim but I did extend time for the respondent to file and serve any affidavits in relation to the application or cross-claim. Importantly, I directed the respondent to make discovery of documents in accordance with the January consent orders by no later than 6 May 2022 and I ordered that in the event of the respondent’s non-compliance the cross-claim would be dismissed.
Trial and dismissal of the counter-claim
The final hearing commenced on 28 June 2022. The applicant was represented by Mr Tierney of counsel and the respondent was represented by Mr Harrison.
As a preliminary matter, the applicants sought that the respondent’s cross-claim be dismissed pursuant to rule 13.13 of the Federal Circuit and Family Court of Australia (Division 2)(General Federal Law) Rules 2021, on the basis that it had no real prospects of success. The applicant submitted the cross-claim should be dismissed due to the respondent’s non‑compliance with Order 7 of the March orders, as the respondent’s default should trigger the self-executing order.
Mr Harrison opposed the application on the basis that he claimed not to fully understand the discovery requirements imposed by the Court orders. Mr Harrison also submitted that the hearing should be adjourned once again to enable him to comply.
For reasons given ex tempore that day I dismissed the respondent’s cross-claim after being satisfied that the respondent’s failure to comply with its discovery obligations constituted an event of default pursuant to rule 13.04 of the Federal Circuit and Family Court of Australia (Division 2)(General Federal Law) Rules 2021, thereby triggering the self-executing order. I was satisfied that the respondent was on notice as to the consequences of its non-compliance. I was also satisfied that the respondent’s failure to comply with its discovery obligations was a sufficient basis for the Court to exercise its discretion to dismiss the cross-claim pursuant to rule 13.05 of the Court’s rules.
Once the cross-claim was dismissed, the matter proceeded to the substantive claim.
Issues for the Court to decide
The dismissal of the respondent’s cross claim narrowed the scope of issues to be determined by the Court, falling predominantly within the scope of the applicant’s claim for entitlements. The outstanding issues to be determined by the Court include:
(1)Whether Ms Walsh was employed by Angels Care or engaged by Angels Care as an independent contractor[13];
(2)Ms Walsh’s rate of pay during the period of her employment and whether there have been any underpayments;
(3)Whether Ms Walsh has outstanding unpaid annual leave entitlements;
(4)Whether Ms Walsh is entitled an estimated value of $300 per week for a period of 6 months in circumstances where there is no written agreement; and
(5)Whether Ms Walsh has a contractual entitlement to a bonus which has not been paid by Angels Care.
[13] This was not an issue which was enlivened on the pleadings, but the respondent raised it in the course of the hearing and pressed the issue in final submissions
The matter proceeded on the basis that the Court would determine liability first and that the issue of penalties would be the subject of a separate hearing if liability was established.
Evidence
Each of Ms Walsh and Mr Harrison (on behalf of the respondent) filed a number of affidavits prior to the hearing. Those affidavits annexed a significant number of documents.
Ms Walsh read the following affidavits into evidence:
(a)affidavit dated 27 January 2022[14];
(b)affidavit dated 21 February 2022[15]; and
(c)affidavit dated 23 March 2022[16].
[14] Exhibit A1, CB 26
[15] Exhibit A2, CB 154
[16] Exhibit A3, CB 161
After various evidentiary objections, Mr Harrison sought to rely on the following material:
(a)his affidavit of 17 March 2021[17];
(b)the first two sentences of paragraph 8 of his affidavit dated 6 May 2022[18]; and
(c)a payslip for Ms Walsh for the period 6 April to 20 April 2018 annexed as exhibit GH1(a) to his affidavit of 27 June 2022[19].
[17] Exhibit R1
[18] Exhibit R2
[19] Exhibit R3
Both Ms Walsh and Mr Harrison adopted their affidavits as their evidence in chief and they were each cross-examined. Having regard to the relatively narrow issues to which the substantive hearing was confined, and the fact that many of the background facts are agreed, I have discussed the evidence only as necessary to determine those issues.
Was Ms Walsh an employee or a contractor?
By its pleaded response filed on 24 February 2021, the respondent admitted the following allegations or asserted the following contentions:
(a)The respondent is a national system employer within the meaning of s 14 of the FW Act[20];
[20] Response, para 2(c)
(b)Ms Walsh commenced employment on a casual basis with Angels Care (although it contends that no terms were ever confirmed by the respondent in writing)[21];
[21] Response, para 3
(c)that Ms Walsh was entitled to be paid $55 per hour under the casual agreement[22];
[22] Response, para 4(a)
(d)that Ms Walsh was employed by Angels care on an intermittent, casual basis from February 2017 until March 2018[23];
[23] Response para 5
(e)that Ms Walsh was employed on a full-time basis between 1 April 2018 until around mid-August 2019[24];
[24] Response para 6
(f)that Ms Walsh commenced full-time employment pursuant to the first contract of employment on 1 April 2018[25];
[25] Response, para 7, note: the first employment contract pleaded by the respondent corresponds to the Third Employment Contract pleaded by the applicant in the Statement of Claim
(g)that under the first contract of employment Ms Walsh was entitled to $5000 per month and 10% of the monthly profit derived from clients personally managed by Ms Walsh[26];
(h)that on 30 June 2019, Ms Walsh was appointed National Director of Clinical Services under a new contract of employment (second employment contract )[27];
(i)that under the second employment contract Ms Walsh was entitled to $15,000 per month, 10% bonus of the profit received for all Mornington based clients and 2% of the profit received for all other office-based clients and use of a fully maintained company car[28];
(j)Ms Walsh was offered a new contract of employment on 8 August 2019 (but only as Mornington manager and not National Director of Clinical Services)[29];
(k)that Walsh refused the third employment contract offer[30];
(l)that Walsh’s final day of employment was 4 September 2019[31];
(m)that Walsh was entitled to four weeks of paid annual leave per year during the Permanent Employment Period, pursuant to ss 86 and 87 of the FW Act[32];
(n)upon termination, Walsh was entitled to be paid the amount that would have been paid to her if she had taken annual leave, pursuant to s 90 of the FW Act[33];
(o)that Walsh’s last payment of wages from Angels Care was for the period from 12 July 2019 to 25 July 2019[34]; and
(p)that Walsh was entitled to bonuses pursuant to the terms of the first employment contract and the second employment contract[35].
[26] Response, para 8
[27] Response, para 11, note: the second employment contract pleaded by the respondent corresponds to the Fourth Employment Contract pleaded by the applicant in the Statement of Claim
[28] Response, para 12
[29] Response, para 14
[30] Response, para 16
[31] Response, para 18
[32] Response, para 19
[33] Response, para 20
[34] Response, para 24
[35] Response, paras 30 and 31
At the time the respondent filed its response on 24 February 2020, the respondent was legally represented and it can be inferred that the pleading was prepared on instructions and with the benefit of legal advice. When cross-examined, Mr Harrison conceded that the response filed on behalf of Angels Care had been read by him, was approved by him and that it contained admissions including that Ms Walsh was an employee and entitled to annual leave.
At all material times, the respondent has pleaded that the relationship between Ms Walsh and Angels Care was that of employee and employer. If not palpably plain on the face of the response having regard to the language used, the admission of employment can be readily inferred from the respondent’s submission that it is a national system employer for the purposes of the FW Act and that relevant provisions of the FW Act (e.g. annual leave) apply to the parties’ relationship.
At no time during the course of these proceedings has the respondent sought leave to withdraw any of those admissions.
Furthermore, the evidence at trial comfortably supports the conclusion that at all material times Ms Walsh was an employee of Angels Care. For an initial period between February 2017 and March 2018 Ms Walsh was employed on an intermittent casual basis as conceded by the respondent. After 9 March 2018 until August or September 2019, Ms Walsh was a full-time employee of Angels Care. These matters were freely conceded by Mr Harrison when cross‑examined.
When Ms Walsh was being cross-examined by Mr Harrison, he put to her that the 9 March 2018 contract was “a contract, not an employment”. Counsel for Ms Walsh, Mr Tierney, objected to this line of questioning on the basis that Mr Harrison was seeking to introduce an argument that Ms Walsh was a contractor whereas the matter had proceeded for more than a year on the basis that the respondent had admitted employment. When the Court sought an indication from Mr Harrison as to where he was going with his questioning, he said he was not contesting that the contract was one of employment, rather that the payment to Ms Walsh was inclusive of all government imposts.
In final written and oral submissions the respondent dramatically shifted its case.
The respondent submitted that the applicant was at all material times not an employee, but an independent contractor of the respondent. Mr Harrison’s principal submission was that from the time Ms Walsh signed the contract in March 2018, she was engaged to provide services for which she was remunerated on an all-inclusive rate which included annual leave, superannuation and other entitlements that would normally be paid to an employee.
Mr Harrison submitted that Ms Walsh had in fact admitted in her evidence that she was a contractor, because she relied upon contracts which stated that her remuneration would be “$5000 per month including all government requirements”. He submitted that the agreed monthly remuneration made no provision for superannuation or annual leave and that those were matters left to Ms Walsh.
Mr Harrison also submitted that the 9 March 2018 contract[36] which commenced on 1 April 2018 was the only agreement made between the parties. He submitted that it was a contract for services although, curiously, he said that it continued until “the termination of her employment”.
[36] Walsh affidavit, annexure KW-1, CB 38
To say that this submission was startling in light of the evidence and pleaded case is something of an understatement and it received a hostile reception from the applicant’s counsel. Mr Tierney submitted that the case advanced in closing was not consistent with the respondent’s pleading, nor was it consistent with the objective evidence nor was it consistent with the proper construction of the contract which is expressed to be an offer of employment.
In terms of the legal characterisation of the parties’ relationship, Mr Tierney submitted that primacy is to be given to the terms of the written contract between the parties and he relied upon the recent High Court decision in Construction, Forestry, Mining and Energy Union v Personnel Contracting [2022] HCA 1 as authority to the proposition. Counsel also submitted that there was no evidence that Ms Walsh was operating an independent business or that she worked for any other person or that she had control over her labour as one would expect if the contract was one for services. It was submitted that the overwhelming evidence was that Ms Walsh devoted all of her working hours to the business of Angels Care as its National Director in Australia and that she principally worked for and reported to Mr Harrison.
In light of the admissions made by the respondent and having regard to all the evidence, I am satisfied that Ms Walsh was at all material times an employee of Angels Care. Even if the respondent had sought and was granted leave to withdraw its admissions and amend its pleading, the case advanced by Mr Harrison would fail.
The objective evidence paints a very clear picture of Ms Walsh being an employee of Angels Care, initially on a casual basis and from March 2018 on a full-time permanent basis.
The relevant employment contract and rate of pay
Ms Walsh contends that the relevant contract of employment for the purpose of calculating outstanding entitlements was the contract for the position of National Director of Clinical Services commencing 1 July 2019. Pursuant to that contract, Ms Walsh was to be paid $15,000 per month.
After hearing all the evidence I granted leave to the applicant to file a further submission to clarify the hourly rate of pay relevant to the calculation of her claims in respect of unpaid wages and accrued annual leave. The applicant’s position in relation to these matters was set out in a Further Amended Calculation Summary dated 6 July 2022.
According to her payslip for the period ending 25 July 2019, Ms Walsh was paid $91.09 per hour[37]. The applicant says that this rate is correct and can be reconciled to the following calculation:
$15,000 x 12 = $180,000 per annum
38 hours per week x 52 weeks = 1,976 hours per year
$180,000 per annum/1,976 hours per year = $91.09 per hour.
[37] Walsh affidavit, annexure KW-14, CB 104 (22 July 2019)
Again, notwithstanding admissions in its response, the respondent submits that the parties were only ever subject to one enforceable agreement. Mr Harrison submitted that the only agreement made between the applicant and the respondent was the contract of 9 March 2018, which commenced operation on 1 April 2018. Mr Harrison submitted that the contract of June 2019 was never signed and that it was in effect rejected by Ms Walsh, with the legal consequence that the 2018 contract prevailed until her resignation.
The respondent submits that any increases in monthly payments from $5000 per month up to $15,000 per month should be regarded as variations to the 2018 agreement.
In my view, the relevant contract in force at the end of Ms Walsh’s employment was the National Director contract effective from 30 June 2019. In its pleaded response the respondent admitted that she was employed under that contract from 30 June 2019 and actually pleads the full terms of that contract in relation to the restraint upon which the cross-claim was advanced. Furthermore, the respondent referred to the applicant as holding that title and announced to staff that it would be removed from her on about 8 August 2019.
The evidence reveals that from that time Ms Walsh was in fact paid at the rate of $15,000 per month, albeit for a short period prior to the end of her employment. The last payslip received by the applicant stands as evidence that she was paid at the rate of $91.09 per hour for an ordinary 38 hour week.
I accept the hourly rate calculation contended for by the applicant. As stated above, I am satisfied that at the time of termination the applicant was entitled to the benefits of the National Director of Clinical Services contract. That contract remained on foot until one or other of the parties terminated it in accordance with its terms.
In my view, the conduct of the respondent in announcing the restructure and subsequently telling Ms Walsh that if she didn’t like it she could leave, repudiated the 30 June 2019 contract. While she went on sick leave as a result of the severe anxiety reaction occasioned by the respondent’s conduct, there is nothing in the evidence to demonstrate that Ms Walsh accepted the repudiation. Ms Walsh properly regarded herself as being bound to that contract, allowed the contract to continue while she was on sick leave and then gave notice to bring it to an end. Nothing in her conduct indicates acceptance or acquiescence to any alternative contract or position.
Accordingly, the applicant’s final rate of pay for the purposes of calculating any entitlements due to her on termination is $91.09 per hour.
Unpaid wages
Claim
It is not disputed that the final payment received by Ms Walsh from Angels Care covered the period 12 July 2019 to 25 July 2019[38]. She was not paid in respect of her employment beyond that date.
[38] Walsh affidavit, annexure KW-14
Ms Walsh contends that she worked for 11 days from 26 July to 9 August 2019, following which she took 15 days of accrued paid personal/carer’s leave from 10 August 2019 until 29 August 2019 – a total period of 26 days in respect of which she says she was entitled to be paid pursuant to her contract of employment.
Ms Walsh says that after she exhausted her entitlement to paid leave, she then took six days of unpaid personal/carer’s leave from 30 August to 6 September 2019, at which time her contract terminated.
Accordingly, Ms Walsh contends that Angels Care did not pay her $17,999.38 for the 26 days of work she performed after 25 July 2019[39], reconciled as follows:
26 days x 7.6 hours per day x $91.09 per hour = $17,999.38
[39] Affidavit of Kerryn Walsh dated 21 February 2022, CB 155-6, paras 4-5
Angels Care opposes the claim, although the basis for doing so was not entirely clear. During cross-examination, Mr Harrison put to Ms Walsh that she had not provided timesheets which recorded all of her hours of work and he questioned Ms Walsh about how she could prove that she was entitled to be paid to 76 hours per fortnight. Explaining the relevance of this in cross‑examination, Mr Harrison said that “the whole core of our argument, your Honour, is the fact that Ms Walsh claimed the same hours every fortnight”[40].
[40] Transcript of 28 June 2022, p 32
Mr Harrison informed the Court that he queried whether Ms Walsh actually worked 38 hours every week and said he wanted proof of it. He said the company had no record whatsoever of how many hours Ms Walsh was in the office, but he knew she was often not in the office. Mr Harrison said that Ms Walsh was supposed to submit timesheets and sign them and give them to the company bookkeeper, but she did not do this.
Ms Walsh gave evidence that she did provide timesheets which recorded her hours when she was a casual employee. However, she said that later on, when she moved onto full-time permanent employment, she did not complete timesheets recording her hours of work, although she did complete timesheets for client visits. She said she always understood that as a full-time employee she would be paid 38 hours per week or 76 hours per fortnight in accordance with her senior position. Ms Walsh gave evidence that the company’s bookkeeper, On Balance, prepared payslips every week which were then approved by Mr Harrison.
Mr Harrison appeared somewhat fixated with the notion that Ms Walsh was required to provide proof that she had worked full-time hours in order to establish her entitlement to any pay. Responding during cross-examination, Ms Walsh was incensed by the suggestion that she had not worked in accordance with her contract as illustrated by the following exchange:
Mr Harrison: So if we have no proof of how many hours you worked..?
Ms Walsh: Well, I guess you could get CCTV vision of me coming to work at maybe 7 and leaving at 7 at night. I don’t know if it would still be available, but I certainly have messages from you that are in discovery that which are WhatsApp messages late at night, early in the morning, and I have emails from you that were in discovery to say that I need to hire more people, that I’m working too longer hours. There was always reference to that and you, you know – with respect, you did know that I was working well over the normal eight hour day for a very long period of time.
Mr Harrison: We know that you worked for long hours, yes, we know that we suggested you get more people, but we had a manpower staff of quite a lot for a while. My point is we have no records of what you did work?
Ms Walsh: Well, I’m afraid if you were overseas as the CEO, Mr Harrison, and you’re not there to watch my hours, who is? How am I to prove that I worked the hours when I built you a business that grew, that you were extremely happy with. You increased my wage on the 1st of – or 30 June to almost $200,000. If you weren’t happy with the hours I was working, then perhaps that may have been the time to – I don’t know. I changed the work and I did my work and I worked well over the hours that are 36 hours a week. I worked at least 60, 70 hours a week. That’s my word. That’s – that is part of being in the role that I was in, that there’s an element of trust that you do come to work. I could not come to work on some days, but I didn’t. I came to work and on weekends, so I don’t…
The cross examination often degenerated into what appeared to be an interrogation of a former employee as to what was going on in the business. Mr Harrison constantly asked questions about who was responsible for what, who was authorising payments, how accounts and invoices were made up, how the business operated, how NDIS clients were charged, how time and expenses were recorded and so on. It seemed to me that Mr Harrison was or had become very disengaged with the business of which he was CEO and that he had little insight to properly target his cross-examination.
Discussion
In its filed response Angels Care admitted that Ms Walsh was employed on a full-time permanent basis from 1 April 2018. It was admitted that she was subsequently appointed to more senior positions on a full-time permanent basis. It is also admitted that the monthly salary for each of these positions increased over time and that under the 30 June 2019 contract Ms Walsh was to be paid $15,000 per month.
The respondent has also admitted that it is a national system employer for the purposes of the FW Act and I am satisfied that at all material times after April 2018 Ms Walsh performed services as a full-time employee of Angels Care.
The National Director of Clinical Services contract described the position as a full-time position. Among other things it required Ms Walsh to be on-call for attendance of staff and managers 24 hours, 7 days per week as and when required. The contract does not otherwise prescribe the hours of work for this senior position.
Section 20 of the FW Act provides that the “ordinary hours of work” of an award/award free employee are the hours agreed by the employee in his or her national system employer as the employee’s ordinary hours of work. However, pursuant to s 20(2) if there is no agreement about ordinary hours of work, the ordinary hours of work of a full-time employee will be 38 hours per week.
Ms Walsh was entitled to be paid on the basis of 38 ordinary hours at her ordinary rate of pay until the termination of her employment on 6 September 2019, subject to her performing work or being entitled to any authorised leave.
The parties agree that Ms Walsh was not paid for any period after 25 July 2019. Ms Walsh was not challenged on her assertion that she had worked from 25 July to 9 August 2019 and in cross-examination Mr Harrison accepted that she did.
I accept that from 9 August until 29 August 2019 Ms Walsh was lawfully absent from work due to illness, substantiated by a medical certificate. I accept that she took 15 days of accrued paid personal carers leave during that period to which she was entitled pursuant to s 96 of the FW Act[41]. Ms Walsh submits and I accept that her entitlement to carers leave should be calculated on the period of her service as a full-time permanent employee and that there is no evidence that she had taken such leave previously.
[41] Section 96 of the FW Act provides that for each year of service an employee is entitled to 10 days of paid personal carers leave and an employee's entitlement to paid personal carers leave accrues progressively during the year of service according to the employee's ordinary hours of work and accumulates from year to year
I also accept that after her entitlement to paid personal carers leave was exhausted, Ms Walsh took unpaid leave until her employment terminated on 6 September 2019.
Having regard to the terms of the contract of employment made on 30 June 2019 and all of the evidence as to the applicant’s performance of work, I am satisfied that Ms Walsh has made out her claim for unpaid wages. In accordance with the calculations provided to the Court by the applicant, the respondent will be ordered to pay $17,998.38 in respect of the underpayment.
Annual leave
Claim
In respect of her accrued but untaken annual leave Ms Walsh submits that upon termination, she was entitled to be paid by Angels Care the amount that would have been paid to her had she taken that annual leave, pursuant to s 90 of the FW Act. Accordingly, she submits that any accrued but untaken annual leave should be paid to her at the rate which was relevant at the date of termination.
Ms Walsh claims that she accrued 5.72 weeks (or 217.36 hours) of annual leave during her period of permanent employment from 1 April 2018 until the date of her termination on 6 September 2019[42].
[42] Walsh affidavit, annexure KW-14, CB 104 (22 July 2019). The pay slips record an annual leave balance of 128.62 hours. However, annual leave entitlements are not recorded on earlier pay slips (Annexure KW-14, 22 July 2019), CB 121-127
As to the calculation of the accrual, Ms Walsh relies upon payslips at Exhibit KW-14[43], which record an annual leave balance of 128.62 hours. However, she submits that annual leave entitlements are not recorded on earlier pay slips[44].
[43] Walsh affidavit, annexure KW-14, CB 104 (22 July 2019)
[44] Walsh affidavit, annexure KW-14, CB 121-127
In the Further Amended Calculation Summary Ms Walsh claims an accrued but unpaid annual leave entitlement of $19,799.32, calculated as follows:
period of permanent employment = one year, 5 months and 6 days = 1.43 years
1.43 years x 4 weeks annual leave per annum = 5.72 weeks
5.72 weeks x 38 hours per week = 217.36 hours
217.36 hours x $91.09 per hour = $19,799.32
Angels Care opposes this claim and says that it is not indebted to Ms Walsh as alleged.
During cross-examination Mr Harrison agreed that Ms Walsh was a full-time permanent employee of Angels Care from 1 April 2018. However, when it was put to Mr Harrison that as a full-time permanent employee of Angels Care Ms Walsh was entitled to paid annual leave, Mr Harrison said “I’m not sure about that”. When it was put to him by counsel that permanent employees are entitled to be paid annual leave on termination, Mr Harrison said “But it’s open to legal interpretation that this clause about all government payments are to be handled by you…”.
In his final written submission, Mr Harrison addressed the annual leave claim as follows:
“Since Ms Walsh is a contractor and pursuant to her contract [the 9 March 2018 contract, Exhibit GH-8] page 2 her monthly pay includes all necessary Government requirements and there is no mention of annual leave then, it follows, that she is not entitled to any annual leave is that forms part of her monthly contract amount and she is not entitled to anything above that amount. Therefore her claim for Unpaid Annual Leave fail.”
Discussion
The respondent’s opposition to this claim appears based on the flawed premise that Ms Walsh was at all material times a contractor. As discussed above, I am satisfied that from 1 April 2018 Ms Walsh performed work for Angels Care as a permanent full-time employee. The respondent had made this admission and did not resile from it prior to trial.
Pursuant to section 90 of the FW Act Ms Walsh was entitled to 4 weeks annual leave per year of service. I am satisfied on the evidence that Ms Walsh was employed on a full-time basis from 1 April 2018 until 6 September 2019, a period of 1.43 years. In the absence of any evidence that Ms Walsh took leave during the period of her permanent employment, I accept that she accrued an entitlement to 5.72 weeks annual leave at the date of her termination.
In circumstances where an employee has accrued but untaken annual leave at the date of termination, the termination of employment crystallises an entitlement for the employee to be paid the amount that would have been paid if that leave had been taken.
Angels Care did not pay Ms Walsh her accrued annual leave entitlement, a fact which is not contested. Indeed, in its amended cross-claim (which I dismissed for reasons explained earlier) the respondent acknowledged an obligation to pay an amount of $10,048.85 in unpaid leave.
By failing to pay the annual leave entitlement, Angels Care contravened s 90 of the FW Act. Ms Walsh has established her claim, I accept her calculations and the respondent will be ordered to pay $19,799.32 in respect of annual leave.
Home office expenses
Claim
Ms Walsh contends that it was a term of the initial casual Employment Agreement that she was entitled to a payment of $300 per week for “home office expenses” for the period from 1 January 2017 to 30 June 2017[45].
[45]Statement of Claim, para 4(b), CB 8; Walsh Affidavit, [11], CB 28; Annexure KW-3, CB 58
Ms Walsh submits that Angels Care has not discharged that obligation. She contends that this gives rise to an unpaid entitlement of $6420 calculated as follows:
1 February 2017 to 30 June 2017 = 21.4 weeks
21.4 weeks x $300 = $6420
The respondent conceded that the applicant was entitled to $300 per week in home office expenses after the company agreed to pay that amount following the complaints raised by Ms Walsh in the 2017 end of year financial report to the board of Angels Care. The evidence establishes that she was paid from that time forward.
The claim here relates to the period between the commencement of Ms Walsh’s casual employment and the date the $300 per week allowance commenced. This aspect of the applicant’s claim depends on her establishing the existence of a term in the initial casual arrangement which gave rise to the entitlement. The applicant submits that the Court should find that an agreement with some contractual status was made when the parties established their (casual) employment relationship. This issue was the subject of affidavit evidence and cross-examination. There is no documentary evidence.
In her affidavit, Ms Walsh deposes that she had a few meetings with Mr Harrison at a café in Pearcedale in the latter part of 2016. She says that she met with him twice in December, once alone and once with two other directors. Ms Walsh deposes that at one of those meetings Mr Harrison asked her to start looking at starting an aged care business for Angels Care in Australia. When she indicated that she needed stationery, home office equipment and money for expenses, she alleges that Mr Harrison said that Angels Care “would pay for everything”. She alleges that he said that on a few occasions[46].
[46] Walsh affidavit at [10]-[13], CB 28
Ms Walsh said that the agreement to pay $300 per month was made “at the beginning”, meaning from when the business started in February 2017. She conceded that while she was reassured that her expenses would be paid from the outset, it was not until later that a firm figure was put on that. She conceded that the amount of $300 per week was only first mentioned in the proposal she put to the board in the end of year financial report in June 2017.
In cross-examination, it was put to Ms Walsh that prior to her proposal to the board there was no agreement, other than that the Company would reimburse expenses claimed by her each month. She denied this and said that she had been incurring expenses, including associated with the home, for six months to help start up the business and that she had been reassured that those costs would be met.
When questioned, Mr Harrison conceded that in a discussion with Ms Walsh in December 2016 he told her that Angels Care would pay home office expenses. He said that the nature of the discussion was that the company would meet utility bills and phone bills and other miscellaneous expenses necessary to get the business off the ground. He said that those expenses were in fact paid when Ms Walsh submitted invoices and claims during the first few months. Mr Harrison gave evidence that Angels Care met claimed expenses and that there had been discussions between them about, for example, the size of utility bills .
Mr Harrison gave evidence that it was only in the end of year financial report that Ms Walsh said, in effect, that she had given the company the first six months free to get the business up, but that she could no longer sustain it and going forward needed $300 a week, being $250 for rent and $50 for incidentals. Mr Harrison gave evidence that the applicant’s complaint to the board was the catalyst for Angels Care to agree to pay her $300 per week, which it did thereafter.
Discussion
I have carefully considered the evidence and I find that the applicant has not made out this aspect of her claim.
While there is evidence of a vague and uncertain agreement at the commencement of the parties’ relationship to the effect that Angels Care “will pay for everything”, the terms of that agreement are uncertain. That is not surprising given that this nascent enterprise was in its conceptual stage.
I am more inclined to accept Mr Harrison’s evidence on this contentious issue. That evidence is consistent with the narrative painted by the documents.
The June 2017 end of financial year report to the board reveals a level of dissatisfaction on the part of Ms Walsh that she is not prepared to bear the costs associated with the growing business any further. The language used by Ms Walsh, namely “Moving forward, this is no longer sustainable and the cost needs to be met by the business. Rent will be charged at 250 per week and 50 for incidentals as noted above. Total cost of $300 per week” (underlining added) is not consistent with a demand for an unmet past obligation. Rather, the import of her words is that Ms Walsh was seeking financial recognition into the future for costs which she would continue to bear after that point in time.
I also accept Mr Harrison’s evidence that in the period up until the company agreed to the $300 per week arrangement, Ms Walsh had claimed incidental expenses from time to time in addition to her hourly remuneration to casual work. Such an arrangement does not sit comfortably with her claim that an agreement had been reached in December 2016 for a regular payment of $300 per week.
In my view, there is insufficient evidence to satisfy the Court to the requisite level that Ms Walsh had a contractual entitlement which has not been satisfied by the respondent. Even if there was an agreement in December 2016 to meet the applicant’s costs of setting up the new business, I do not accept on the evidence that the respondent has failed to do so to the extent of $300 per week.
Bonus
Claim
Ms Walsh submits that under the Third and Fourth Employment Contracts she was entitled to a bonus of “10% of the profit received on a “cash received” basis for all Mornington office‑based clients under Walsh’s management”[47].
[47] Walsh affidavit, annexures KW-6 and 7, CB 72-79
It is common ground that in June 2019 Ms Walsh was paid a bonus of $20,017 which appears to have been calculated on a 10% net profit for April ($94,358/10 = $9435) and a 10% net profit for May 2019 ($105,810/10 = $10,581). She was not subsequently paid any further bonus, but claims that Angels Care’s business continued to grow and was profitable during the period from June to September 2019.
Ms Walsh submits that the Court should infer ongoing profitability and assess a further bonus entitlement for June, July, August and September 2019 as being no less than $10,581 per month (prorated for September 2019). The applicant claims to be entitled to a bonus payment of not less than $33,859.
The relevant bonus term is admitted in the respondent’s response to be an express term of the employment contract. Accordingly, it is not necessary for the applicant to establish the term. Rather the issue is whether the financial performance of the respondent engaged bonus provision in the June –September period and whether Angels Care is indebted to Ms Walsh.
The premise of the applicant’s claim is that for the months of June, July, August and September 2019 Angels Care was profitable on a cash received basis for all Mornington-based clients under the applicant’s care. The onus to make good that premise rests with the applicant.
In terms of discharging the evidentiary onus of establishing the profitability of the Mornington office, Ms Walsh says that the conduct of the respondent has made it next to impossible to prove the financial health of the company. The applicant submits that despite her best efforts the respondent has failed to disclose profit and loss information and other financial records from which the applicant might be able to derive the profit or loss of the company. Ms Walsh submits that Angels Care has failed to discover relevant documents, including financial records which were subject to directions made by the Court.
While Ms Walsh concedes that she is not in a position to specifically identify the net profits of the business during the relevant period (if any), she submits that inferences should be drawn against Angels Care as its actions have made that determination problematic. In this case, she invites the Court to find that the business was profitable based on its earlier performance, evidence of its steady growth trajectory and the fact that she had been paid bonus in the recent past.
Ms Walsh says that there is objective evidence which points to profitability. For example, between May and September 2019 the business volume at Angels Care was increasing. She gave evidence that in January 2019 the company had around 100 clients on the Mornington Peninsula. The evidence is that by May 2019 there were about 120 and by July 2019 Angels Care serviced around 150 clients on the Mornington Peninsula. Mr Harrison accepted that evidence.
Ms Walsh also relied upon a profit and loss statement for the period 30 June 2018 to 31 May 2019[48] which had been prepared by the company’s previous bookkeeper and which she says indicates that the Company was travelling well at the end of the financial year. Ms Walsh says she was paid a bonus for the April and May performance, with May being greater than April. Ms Walsh also makes the point that these bonuses were approved by Mr Harrison based on the financial information supplied to and approved by him.
[48] Walsh affidavit, annexure KW-13
Based on this evidence the applicant submits that it is open to the Court to infer that similar profits would have been generated by the business in subsequent months giving rise to an entitlement to similar bonus payments.
Angels Care opposes the claim and says that the premise of profitability is false.
Mr Harrison said that the financial figures produced by the former bookkeeper for the period 30 June 2018 to 31 May 2019 were not accurate and that the bonuses paid to Ms Walsh in June 2019 were paid in error. Mr Harrison submitted that the financial records of the company had been reviewed by an external third party accountant and had produced completely different figures, which indicated that the business had not been travelling well for some time. These submissions were not, however, supported by objective evidence.
Separately, Mr Harrison referred to the discussions on the Gold Coast with Ms Walsh and other managers where it would have been apparent to the applicant that the business was in trouble and suffering cash flow problems. He reminded the Court that Ms Walsh had given evidence that the business had been unable to meet its wages bill and that she had used some of her own funds to help in an emergency situation.
Mr Harrison conceded that he had signed off and paid Ms Walsh a bonus based on information provided by the company bookkeeper, but reiterated that he had done so on the belief that the profit and loss figures produced at the time were accurate. He said that he has not received any profit report since May 2019 nor has he received any request from the bookkeeper to provision for a bonus to be paid to Ms Walsh, as had been the case in April and May 2019.
Discussion
Ms Walsh submits that relevant authorities recognise the need to lessen the degree of proof required in cases such as the present where there is a paucity of available evidence caused by the conduct of one of the parties. It is submitted that the precision with which damages are to be proved is proportionate to the proofs reasonably available. The relationship between the degree of precision required and the availability of evidence was explained by Hayne J in Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd[49] as follows:
“It may be that, in at least some cases, it is necessary or desirable to distinguish between a case where a plaintiff cannot adduce precise evidence of what has been lost and a case where, although apparently able to do so, the plaintiff has not adduced such evidence. In the former kind of case it may be that estimation, if not guesswork, may be necessary in assessing the damages to be allowed. References to mere difficulty in estimating damages not relieving a court from the responsibility of estimating them as best it can may find their most apt application in cases of the former rather than the latter kind…”
[49] [2003] HCA 10
I accept the proposition that Ms Walsh cannot accurately prove the financial performance of the company without access to documents which only lie in the hands of the respondent. I have taken that difficulty into account in assessing the weight to be given to other evidence.
Nonetheless, even allowing for the inexcusable nondisclosure by the respondent, which undermined the applicant’s ability to effectively prosecute this aspect of her claim, I cannot infer a profit for the relevant period just because a profit had been made before. Based on all the evidence, there is a very real doubt in my mind about the profitability of the business, and I am not persuaded that I should allow this aspect of the applicant’s claim.
Ms Walsh’s evidence of her belief that profits would have remained steady is of some but only limited weight. It is evidence which sits uncomfortably with other evidence which is suggested that the company was anything but healthy. Even if I accept the applicant’s submission that she was a witness of truth and that her evidence should be preferred over Mr Harrison’s evidence or that I should draw an adverse inference in relation to the company’s failure to discover relevant financial records, that does not elevate her speculation and belief about profitability to the level of proof required to make out this element of her claim.
While I am satisfied that Ms Walsh had a contractual right to a profit share in accordance with her contract of employment, I am not satisfied on the evidence, even giving the applicant the benefit of the doubt after allowing for the respondent’s delinquency in discovery, that there was a profit to be shared in June, July or August 2019.
For the reasons set out above, I reject the applicant’s bonus claim.
Set-off
In his closing address Mr Harrison contended that the applicant had been overpaid wages and that Angels Care was entitled to set off the company’s overpayment against any amount awarded to Ms Walsh. In summary, Mr Harrison submitted that the overpayments amounted to $126,793.41, made up of overpaid on-call payments of $22,280.60, wage overpayments of $52,592.31 and bonus overpayments of $51,920.50.
The alleged overpayments have not been particularised. The allegations do not form part of the response filed on behalf of Angels Care. None of the matters alleged by Mr Harrison were the subject of evidence, including the on-call overpayments, the rates adjustment wage overpayments and the bonus overpayments. There is nothing on which the Court can rely to determine these allegations. The alleged overpayments were not put to Ms Walsh in cross‑examination. For those reasons, the alleged overpayments should be disregarded by the Court.
Further, and in any event, no legal basis has been advanced as to why the respondent is entitled to set off these amounts. During cross-examination by the applicant’s counsel, Mr Harrison conceded that he never put any claim of overpayment to Ms Walsh during her employment, no investigation was ever undertaken about alleged overpayments and there was never any demand made or any attempt to recover monies from Ms Walsh.
I do not accept the basis for Mr Harrison’s claim and no order for set-off will be made.
Disposition
For the reasons set out above, I will order pursuant to section 545 of the FW Act that the respondent pay the following amounts to the applicant within 28 days:
(a)$17,999.38 in respect of 26 days unpaid wages;
(b)$19,799.32 in respect of 217.36 hours of accrued but unused annual leave; and
(c)interest on the above sums at the applicable pre-judgment interest rate pursuant to section 547 of the FW Act.
Having regard to the reasons and my findings, the Court will also make the following declarations:
(a)That by failing to pay Ms Walsh’s annual leave entitlement in contravention of s 90 of the FW Act, Angels Care (Australia) Pty Ltd thereby breached section 44 of the FW Act; and
(b)That by failing to pay Ms Walsh the annual leave entitlement and the unpaid wages entitlement, Angels Care breached section 323 of the FW Act.
I will list the matter for further hearing to hear evidence and submissions in relation to the applicant’s application for pecuniary penalties pursuant to section 546 of the FW Act.
The Court will issue directions for the filing of evidence and written submissions by each of the parties. The Court will also grant liberty to apply to vary those procedural orders by consent.
Any application for costs under section 570(2) of the FW Act is to be made by filing an application in a proceeding within 14 days of the date of this judgement. Unless ordered otherwise, any such application will be listed to be heard on the day fixed for the penalty hearing.
I certify that the preceding one hundred and fifty-nine (159) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Forbes. Associate:
Dated: 5 September 2023
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