Walsh v Angels Care (Australia) Pty Ltd (No 2)
[2024] FedCFamC2G 624
•1 August 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Walsh v Angels Care (Australia) Pty Ltd (No 2) [2024] FedCFamC2G 624
File number(s): MLG 3966 of 2020 Judgment of: JUDGE FORBES Date of judgment: 1 August 2024 Catchwords: FAIR WORK – application for imposition of civil penalties – application for costs – where judgment entered in favour of applicant for contraventions of Fair Work Act 2009 (Cth) – where applicant partially successful – where respondent’s cross-claim dismissed – consideration of factors relevant to penalty –conduct of respondent considered – whether rejection of Calderbank offer was reasonable - whether indemnity costs warranted - penalties and costs ordered Legislation: Crimes Act1914 (Cth) s 4AA
Fair Work Act 2009 (Cth) s 44, 90, 323, 340, 539, 546, 545, 570
Federal Circuit and Family Court of Australia Act2021 (Cth) s 190-192
Cases cited: Augusta Ventures Ltd v Mt Arthur Coal Pty Ltd [2020] FCAFC 194
Australian and International Pilots Association v Qantas Airways Ltd (No 3) [2007] FCA 879
Australian Building and Construction Commissioner v Pattinson [2022] HCA 13
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8
Australian Workers Union v Leighton Contractors Pty Ltd(No 2) [2013] FCAFC 23
Calderbank v Calderbank [1975] All ER 33
Celand v Skycity Adelaide Pty Ltd [2017] FCAFC 222
Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225
Commonwealth of Australia v Construction, Forestry, Mining and Energy Union [2003] FCAFC 115
Dorsch v HEAD Oceania Pty Ltd (Penalty) [2024] FCA 484
Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 3) [2017] FCA 810
Health Services Union v Jackson (No 5) [2015] FCA 1467
McHenry v Angels Care (Australia) Pty Ltd [2022] FedCFamC2G 236
Melbourne Stadiums Ltd v Sautner [2015] FCAFC 20
Murdock v Virgin Australia Airlines Pty Ltd (No 3) [2024] FCA 227
Ryan v Primesafe [2015] FCA 8
Saxena v PPF Asset Management Ltd [2011] FCA 395
Seyer v Gatwood Management Pty Ltd (No 3) [2023] FedCFamC2G 511
Tomvald v Toll Transport Pty Ltd [2017] FCA 1208
Trade Practices Commission v CSR Ltd [1990] FCA 521
Trustee for The MTGI Trust v Johnston (No 2) [2016] FCAFC 190
Umoona Tjutagku Health Service Aboriginal Corporation v Walsh [2019] FCAFC 32
Veda Advantage Limited v Malouf Group Enterprises Pty Ltd (No 2) [2016] FCA 470
Walsh v Angels Care (Australia) Pty Ltd [2023] FedCFamC2G 798
Division: Division 2 General Federal Law Number of paragraphs: 72 Date of hearing: 31 January 2024 Place: Melbourne Counsel for the Applicant: Mr Tierney Solicitor for the Applicant: Gordon Legal Respondent: Mr Harrison, in person ORDERS
MLG 3966 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: KERRYN WALSH
Applicant
AND: ANGELS CARE (AUSTRALIA) PTY LTD (ACN 615 605 537)
Respondent
ORDER MADE BY:
JUDGE FORBES
DATE OF ORDER:
1 AUGUST 2024
THE COURT ORDERS THAT:
1.Pursuant to section 546(1) of the Fair Work Act 2009 (Cth) (FW Act) the Respondent pay a pecuniary penalty of $63,000 for its contraventions of sections 44 and 323 of the FW Act.
2.Pursuant to section 546(3)(c) of the FW Act, the pecuniary penalty imposed by Order 1 herein be paid by the Respondent to the Applicant within 28 days.
3.The Respondent pay the Applicant’s costs incurred from 14 January 2022 on a standard basis, such costs to be agreed between the parties or in default of agreement to be taxed in accordance with the scale prescribed in the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) as at the date of hearing.
4.The cross-claim filed by the Respondent on 15 July 2021 be dismissed.
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
This judgment concerns an application by the applicant, Ms Walsh, pursuant to section 546(1) of the Fair Work Act 2009 (Cth) (the FW Act), for the imposition of a pecuniary penalty against the Respondent, Angels Care (Australia) Pty Ltd (Angels Care), for its declared contraventions of s 44 and s 323 of the FW Act.
Ms Walsh also seeks an order pursuant to s 570(2)(b) of the FW Act that Angels Care pay her costs on an indemnity basis, or otherwise on a standard basis, on account of the respondent’s unreasonable refusal to accept an offer of compromise dated 23 December 2021.
The relevant background to these applications is detailed in Walsh v Angels Care (Australia) Pty Ltd [2023] FedCFamC2G 798 (the liability decision) and that judgment should be read in conjunction with these reasons.
Briefly, on 5 September 2023 judgment was entered for Ms Walsh against Angels Care. Ms Walsh was partly successful in her claim. The Court made a declaration that Angels Care had contravened s 90 of the FW Act and thereby breached s 44 of the FW Act by failing to pay Ms Walsh’s accrued annual leave entitlement on the termination of her employment. The Court also made a declaration that Angels Care had breached s 323 of the FW Act by failing to pay the Applicant her annual leave entitlement and an unpaid wages entitlement. Pursuant to s 545 of the FW Act, the Court ordered Angels Care to pay Ms Walsh compensation in the total sum of $37,798.70.
The Court dismissed Ms Walsh’s contractual claims whereby she claimed an entitlement to home office expenses of $6,240 and a profit related bonus of $33,859. These reasons assume a familiarity of the reasons why Ms Walsh was successful in some aspects of her claim and not others.
Regarding penalties and costs, the parties were ordered to file and serve evidence and submissions and the matter was listed before me for oral submissions on 31 January 2024. I have considered the written and oral submissions of the parties.
I have decided that the respondent, Angels Care, should be ordered to pay a total penalty of $63,000 for its contraventions of ss 44 and 323 of the FW Act. The respondent should also pay Ms Walsh’s costs from 14 January 2022 on a standard basis in accordance with the Court scale.
These reasons explain why I have made these orders.
PENALTY AGAINST ANGELS CARE
Ms Walsh seeks penalties against the respondent pursuant to declared contraventions of s 44 and s 323 of the FW Act.
The Court is granted power to order that a person pay a pecuniary penalty where it is satisfied that the person has contravened a civil remedy provision[1]. Pursuant to the table in subsection 539(2) of the FW Act, sections 44 and 323 are civil remedy provisions.
[1] Fair Work Act 2009 (Cth) s 546(1) (FW Act)
At the time this proceeding was initiated, a contravention of s 44 attracted a maximum penalty of 300 penalty units for a corporate entity[2]. A contravention of s 323 also attracted a maximum penalty of 300 penalty units for a corporate entity[3]. The value of a penalty unit was $210[4]. The maximum penalty for each contravention was $63,000.
[2] FW Act s 539, Item 1; s 546
[3] FW Act s 539, Item 10; s 546
[4] FW Act s 12; Crimes Act 1914 (Cth) s 4AA
Ms Walsh seeks that the following penalties be imposed on Angels Care:
(a)75% of the maximum penalty for the breach of s 44, equating to $47,250.
(b)75% of the maximum penalty for the breach of s 323 (failing to pay the unpaid wages), equating to $47,250.
Ms Walsh seeks that the penalties be paid to her pursuant to s 546(3) of the FW Act.
Applicable legal principles
The principles which guide the Court in determining an appropriate penalty amount are well-established. The purpose of the Court’s broad discretion to order penalties under s 546(1) is principally if not wholly deterrence[5]. As was held in Australian Building and Construction Commissioner v Pattinson [2022] HCA 13 (Pattinson) at [40] – [41]:
“The discretion conferred by s 546 is, like any discretionary power conferred by statute on a court, to be exercised judicially, that is, fairly and reasonably having regard to the subject matter, scope and purpose of the legislation […] s 546 requires the court to ensure that the penalty it imposes is “proportionate”, where that term is understood to refer to a penalty that strikes a reasonable balance between deterrence and oppressive severity.”
[5] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13 (Pattinson)
The considerations relevant to the Court’s task in assessing the gravity and seriousness of offending and thus the appropriateness of a penalty include[6]:
[6] Trade Practices Commission v CSR Ltd [1990] FCA 521 at [42]; see also Pattinson at [18]; Kelly v Fitzpatrick [2007] FCA 1080 at [14]
(a)the circumstances in which the conduct took place;
(b)the nature and extent of any loss or damage sustained as a result of the breach;
(c)whether there has been similar previous conduct by the respondent;
(d)whether the breach was properly distinct or arose out of one course of conduct;
(e)the size of the business enterprise involved;
(f)whether or not the breach was deliberate;
(g)the involvement of senior management in the breach;
(h)whether the party committing the breach has shown contrition, taken corrective action or cooperated with enforcement authorities;
(i)the need to ensure compliance with minimum standards of employee entitlements; and
(j)the need for specific and general deterrence.
The above factors are not to be treated by the Court as a “rigid catalogue”[7], but are to be used as a useful guide having regard to all the circumstances of a particular case.
[7] Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 at [91]
For the purposes of determining penalties, Ms Walsh accepts that in failing to pay the annual leave entitlement, Angels Care contravened both ss 44 and 323 of the FW Act. In relation to the annual leave claim, she does not seek separate penalties for the two contraventions.
Submissions
Ms Walsh submits that conduct of Angels Care (being the breaches of the FW Act) was deliberate and known by Angels Care to be a contravention of the FW Act. Ms Walsh points to the following factors as supporting that submission:
(a)in its filed Response, Angels Care admitted that Ms Walsh was a national system employee who was entitled to annual leave;
(b)in its (now dismissed) Cross-Claim, Angels Care admitted that Ms Walsh was owed $10,048.85 in unpaid leave;
(c)the respondent’s managing director, Mr Harrison, accepted in cross-examination that the Response 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;
(d)Angels Care did not contest that Ms Walsh had an accrued annual leave entitlement; and
(e)in respect of the unpaid wages claim, Mr Harrison accepted in cross-examination that Ms Walsh had worked the period from 25 July to 9 August 2019.
The admissions and concessions made above stood in stark contrast with how Angels Care ran its defence at the substantive hearing of the applicant’s case. At trial, Mr Harrison represented the company and argued, inter alia, that Ms Walsh was not an employee and that as an independent contractor the hourly rate paid to her included all statutory entitlements. These arguments were rejected by the Court.
In June 2019 Angels Care had 110 employees at various sites in Australia, which Ms Walsh says constitutes a large enterprise. She says this should be a matter which weighs in favour of a higher penalty and a greater need for deterrence.
Ms Walsh contends that Angels Care has not issued any apologies, exhibited any remorse or taken any steps to pay Ms Walsh the amounts owed. Ms Walsh points out that four years have passed since the money owed to her became due and payable. As of 31 January 2024, Angels Care had not paid any money to Ms Walsh. She deposes that Angels Care’s conduct has caused her significant personal hardship.
Ms Walsh also submits that Angels Care has previously been found to have breached the FW Act in another matter before this Court: McHenry v Angels Care (Australia) Pty Ltd [2022] FedCFamC2G 236 (McHenry).
Regarding deterrence, Ms Walsh submits that there is a need for specific deterrence in this case, given that Angels Care has previously engaged in contravening conduct, and the conduct in this matter should be regarded as callous and ongoing.
Angels Care emphasises that Ms Walsh was only partially successful in her claim against the company. Angels Care submits that any penalty should recognise this fact and be in proportion to the amount awarded, which it says was on the lower end of the scale (being approximately 48% of the total amounts claimed by Ms Walsh).
Further, Angels Care submits that any stress or impacts on physical wellbeing alleged by Ms Walsh are unsupported by evidence. Angels Care contends that there is no medical documentation to support Ms Walsh’s evidence regarding her physical health at paragraphs [8] to [12] of her affidavit.
On the contrary, Angels Care submits that Ms Walsh prospered after she left its employment, by setting up a competitor business (Amity Care Pty Ltd), taking the patients of Angels Care across to the new company and then selling the new business to BUPA. These allegations underpinned a cross claim which was initiated against Ms Walsh until it was dismissed for non-compliance.
In any event, Mr Harrison submits that this conduct by Ms Walsh caused significant financial damage to Angels Care, challenging its viability – a factor which he submits should be taken into account when determining penalty.
Consideration
In Dorsch v HEAD Oceania Pty Ltd (Penalty) [2024] FCA 484 at [14] it was held that “a contravention may be deliberate where it is engaged in with the knowledge of the essential facts giving rise to the contravention”.
Angels Care has not seriously contested, and has in fact admitted, that an amount was owed to the applicant in respect of unpaid leave. Mr Harrison subsequently conceded during cross-examination that Ms Walsh was employed for a period during which she was not paid wages.
I am of the view that Angels Care made a deliberate decision not to pay the amounts owed when they fell due. Angels Care was under a statutory obligation which, under the FW Act, should have been discharged at a particular time. Ms Walsh should have been paid wages for the period she was employed and her accrued but untaken annual leave should have been paid out upon termination of the contract. Angels Care did not discharge its obligations, and deliberately chose not to, due to its belief that the applicant was not deserving of the payments to which she was entitled.
The fact that Angels Care believed it had a meritorious cross-claim is not a proper basis for avoiding statutory obligations. Further and in any event, Angels Care was either unable or unwilling to follow through on its cross-claim, which was dismissed after Angels Care failed to comply with its discovery obligations.
The respondent has not demonstrated any remorse for its contravening conduct. In fact, Angels Care aggravated the losses suffered Ms Walsh by running arguments at trial which were untenable given the admissions and concessions previously made. Ms Walsh was forced to initiate proceedings and incur the unnecessary costs of enforcing statutory entitlements which should never have been contested.
I have considered the applicant’s submission that Angels Care is not a first-time offender, this Court having found that Angels Care contravened s 340 of the FW Act in McHenry. In McHenry the contravening conduct occurred between December 2019 and January 2020. This was some months after Ms Walsh’s employment with Angels Care terminated, placing the contravening conduct in this matter prior to the conduct in McHenry. Therefore, for the purposes of assessing the penalty in this case, I do not consider it appropriate to regard the respondent as having a record of prior offending.
In light of all the available evidence and information, the question for the Court is what needs to be done to deter the respondents from further contravening the relevant legislative scheme. The circumstances of this case call for a meaningful message of deterrence, both general and specific. The penalty should be sufficiently serious to send a clear signal to other like-minded employers that the type of conduct engaged in by Angels Care is unacceptable.
In determining the penalties to be ordered against Angels Care, this Court must have regard to the totality of the contravening conduct to ensure that any penalty ordered is not crushing or oppressive[8].
[8] Pattinson at [110]
The applicant submits that the imposition of a penalty of 75% of the maximum is appropriate. I accept that the deliberateness of the conduct does objectively warrant a penalty in the mid to high range, however I have extended some leniency to the respondent, taking into account that the contraventions should be treated as its first offence. In my view, based on the factors above, a penalty of 50% of the maximum penalty for each contravention is the appropriate sanction.
The total penalty of $63,000 should be paid to the applicant, Ms Walsh, within 28 days of the publication of my orders and reasons.
COSTS
Ms Walsh also seeks an order for costs pursuant to s 570(2)(b) of the FW Act, payable on an indemnity basis, or otherwise on a standard basis, from 14 January 2022, on the basis that it was unreasonable for Angels Care to have refused an offer of compromise dated 23 December 2021.
The Court has been informed that on 23 December 2021 a settlement offer (the Calderbank Offer) was sent to the solicitors for Angels Care in the form of a letter, stating[9]:
[9] Affidavit of Denis O’Callaghan dated 19 September 2023, Exhibit DOC-1
“In an attempt to resolve the Proceeding, we are instructed to make an offer to your client on the following terms:
a. Angels Care (Australia) Pty Ltd (Angels Care) to pay Ms Kerryn Walsh a sum of $20,000 gross (taxed as applicable).
b. Execution of a mutually agreeable Deed of Settlement and Release which incorporates the following provisions:
i.Mutual confidentiality between all the parties
ii.Mutual non-disparagement between all the parties;
iii.Full release by Ms Walsh in connection with any claims relating to her employment with Angels Care;
iv.Full release by Angels Care in connection with any claim relating to Ms Walsh’s employment or post-employment obligations with Angels Care;
v.Withdrawal of the proceedings by both parties from the Federal Circuit Court, with no order as to costs; and
vi.No admission of liability by the parties”
The Offer was open for acceptance by Angels Care until close of business on 13 January 2022. The letter also put Angels Care on notice that if the Offer was not accepted, the letter would be produced on the question of costs pursuant to s 570 of the FW Act, and that failure to accept the Offer may constitute an unreasonable act or omission pursuant to s 570(2)(b).
The Offer was made pursuant to the principles in Calderbank v Calderbank [1975] All ER 333.
Angels Care did not accept the Offer.
By reason of that rejection, the applicant contends that her legal costs incurred from 14 January 2022 should be paid by Angels Care because those costs would not have been incurred had the offer been accepted. The applicant submits that the offer was inherently reasonable, given that she ultimately obtained an award of compensation greater than that for which she was prepared to settle. The applicant submits that her costs should be indemnified.
Applicable legal principles
There is no dispute that the proceeding was one in relation to which the FW Act was engaged. Accordingly, any claim for costs must be considered in the context of the statutory presumption against costs.
Section 570 of the FW Act states:
Costs only if proceedings instituted vexatiously etc.
1.A party to proceedings (including an appeal) in a court (including a court of a State or Territory) in relation to a matter arising under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or section 569 or 569A.
2.The party may be ordered to pay the costs only if:
a. the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or
b. the court is satisfied that the party’s unreasonable act or omission caused the other party to incur the costs; or
c. the court is satisfied of both of the following:
i.the party unreasonably refused to participate in a matter before the FWC;
ii.the matter arose from the same facts as the proceedings.
Ordinarily, costs will not be awarded automatically in proceedings brought under the FW Act. Costs will usually be borne by the party incurring them[10]. The legislative intent underlying s 570 is that potential applicants should not be put off from commencing proceedings due to a fear of costs being incurred if they are unsuccessful[11].
[10] Murdock v Virgin Australia Airlines Pty Ltd (No 3) [2024] FCA 227 at [3] (Burley J); Commonwealth of Australia v Construction, Forestry, Mining and Energy Union [2003] FCAFC 115 at [10] (Black CJ, Tamberlin and Sundberg JJ); Augusta Ventures Ltd v Mt Arthur Coal Pty Ltd [2020] FCAFC 194 at [102] (White J, with whom Middleton J agreed at [89])
[11] Murdock v Virgin Australia Airlines Pty Ltd (No 3) [2024] FCA 227 at [3] (Burley J); Ryan v Primesafe [2015] FCA 8 at [64] (Mortimer J); Trustee for The MTGI Trust v Johnston (No 2) [2016] FCAFC 190 at [8] (Siopis, Collier and Katzmann JJ)
In an otherwise no-costs jurisdiction, the discretion to order costs must be exercised with caution[12]. A clear case for its exercise must be demonstrated. However, despite its relatively rare occurrence, exceptional circumstances do not need to be shown in order to award costs[13].
[12] Murdock v Virgin Australia Airlines Pty Ltd (No 3) [2024] FCA 227 at [3] (Burley J); Saxena v PPF Asset Management Ltd [2011] FCA 395 at [6] (Bromberg J)
[13] Murdock v Virgin Australia Airlines Pty Ltd (No 3) [2024] FCA 227 at [3] (Burley J); Celand v Skycity Adelaide Pty Ltd [2017] FCAFC 222 at [74] (Logan J, Bromberg J agreeing at [161], Charlesworth J in dissent on the question of costs); Australian Workers Union v Leighton Contractors Pty Ltd (No 2) [2013] FCAFC 23 at [7] (Dowsett, McKerracher and Katzmann JJ)
Relevantly, section 570(2)(b) of the FW Act requires proof that:
a.the party against whom costs are sought has by its action(s) or omission(s), behaved unreasonably; and
b.those unreasonable act(s) or omission(s) caused the other party to incur costs[14].
[14] Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 3) [2017] FCA 810 at [25] (Katzmann J)
Determining whether a party acted unreasonably must be determined objectively according to the facts on a case by case basis[15].
[15] Australian and International Pilots Association v Qantas Airways Ltd (No 3) [2007] FCA 879 at 402 [32] (Tracey J)
In determining what constitutes an unreasonable act, the Court may also have regard to statutory context, such as the overarching purpose provisions in ss 190-192 of the Federal Circuit and Family Court of Australia Act 2021 (Cth)[16]. These provisions advance the public interest in the orderly and cost-effective administration of justice[17]. A party’s failure to comply with these provisions should be kept in mind when exercising the Court’s discretion to order costs, by focusing on “the reasonableness of parties’ conduct, the appropriateness of the Court processes undertaken by them, the timeliness of their compliance with Court orders or steps in the proceeding, and the existence of a substantive legal and factual basis for the claims made and arguments put”[18].
[16] Ryan v Primesafe [2015] FCA 8 at [66], referring to equivalent provisions s 37M and s 37N of the Federal Court of Australia Act 1976 (Cth)
[17] Tomvald v Toll Transport Pty Ltd [2017] FCA 1208 at [315]
[18] Ryan v Primesafe [2015] FCA 8 at [66]
Costs may be incurred under s 570 against an otherwise successful claimant for parts of a proceeding that were unreasonably pursued[19].
[19] Tomvald v Toll Transport Pty Ltd [2017] FCA 1208 at [315]
Failure to accept a Calderbank offer
A failure to accept a reasonable offer of compromise (such as a Calderbank offer) may constitute an unreasonable act under s 570(2)(b)[20]. Whether the rejection was unreasonable will be determined in light of the circumstances that existed at the time of the rejection[21]. The following matters should be considered[22]:
(a)the stage of proceeding when the offer was made;
(b)the time afforded to the offeree to consider the offer;
(c)the extent of the compromise involved;
(d)the offeree’s prospects of success, assessed as at the date of the offer;
(e)the clarity with which the terms of the offer were expressed; and
(f)whether the offer foreshadowed an application for indemnity costs in the event of refusal.
[20] Melbourne Stadiums Ltd v Sautner [2015] FCAFC 20; see, for example, McDonald v Parnell Laboratories (Aust) (No 2) (2007) 164 FCR 591 at 598-9 (Buchanan J)
[21] Health Services Union v Jackson (No 5) [2015] FCA 1467 at [46]; Seyer v Gatwood Management Pty Ltd (No 3) [2023] FedCFamC2G 511 (Seyer) at [32]
[22] Veda Advantage Limited v Malouf Group Enterprises Pty Ltd (No 2) [2016] FCA 470; Seyer at [33]
Indemnity costs
Where there is a basis to order costs, the ordinary rule is that costs are to be awarded on a party/party basis. To warrant a departure from the rule, there should be some “special or unusual feature in the case”[23]. Circumstances where indemnity costs may be awarded include where[24]:
(a)the proceedings were commenced or continued for some ulterior motive or in wilful disregard of known facts or clearly established law;
(b)allegations were made which ought never to have been made; or
(c)there was undue prolongation of a case by groundless contentions.
[23] Umoona Tjutagku Health Service Aboriginal Corporation v Walsh [2019] FCAFC 32 at [48]
[24] Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225, 233 at [5]; Trustee for The MTGI Trust v Johnston (No 2) [2016] FCAFC 190 at [17]
Submissions
Ms Walsh submits that the respondent’s refusal to accept the Calderbank Offer was unreasonable for the following reasons:
(a)the Offer was made well after the parties had filed their pleadings;
(b)Angels Care had been in possession of Ms Walsh’s Statement of Claim for more than a year;
(c)Angels Care was given ample time to consider the Offer;
(d)the Offer, and the basis on which Angels Care ought to have accepted it, were expressed clearly; and
(e)Ms Walsh expressly stated that costs would be sought on an indemnity basis if the Offer was not accepted.
Ms Walsh further submits that, at the date of the offer, Angels Care ought to have known that it would not be able to successfully defend the unpaid wages claim or the annual leave claim. Regarding the unpaid wages claim, Ms Walsh refers to the concession made by Mr Harrison at trial where he agreed that Ms Walsh was not paid from 25 July 2019 to 9 August 2019, despite having worked during that period. In those circumstances, Ms Walsh argues that Angels Care must have known that it would be found liable for the claim, and therefore it was unreasonable to not accept the Offer.
Regarding the annual leave claim, Ms Walsh similarly submits that Angels Care ought to have known that it would not be successful in its defence. This is due to the fact that from the outset Angels Care admitted Ms Walsh was a national system employee, admitted that she was entitled to annual leave, offered nothing but a bare denial in its Response and admitted in its dismissed cross-claim that Ms Walsh was owed $10,048.85 in unpaid leave.
Ms Walsh submits that Angels Care’s conduct during the course of the proceedings should also be considered by the Court when exercising its discretion to award costs. Angels Care has been ordered to pay costs on three previous occasions for previous defaults[25], manifesting its unreasonableness.
[25] Order 2 of Judge Forbes’ orders dated 30 March 2022; Order 3 of the orders of Judge Forbes dated 27 January 2022; Order 13 of the Orders of Judge Blake dated 3 September 2021
Ms Walsh submits that costs should be awarded on an indemnity basis because the refusal of the Calderbank Offer was in wilful disregard of the facts known to Angels Care at the time the offer was made.
Angels Care submits that it was reasonable for it to reject the Calderbank Offer as it was made early in the proceedings, at which point it had filed and was pursuing a cross-claim against Ms Walsh. The respondent submits that the Calderbank offer was designed to circumvent the cross-claim by releasing Ms Walsh from all and any proceedings Angels Care might have had against Mrs Walsh. Therefore, it was reasonable for Angels Care to reject the Offer.
The cross claim was subsequently dismissed. The details of the cross-claim and the circumstances of its dismissal are outlined in the liability judgment. Nonetheless the respondent’s submission is that at the time of the offer the cross-claim was on foot, was viable and was a legitimate reason for the offer to have been rejected.
Furthermore, Angels Care submits that the applicant was only successful in the proceeding on two of her four claims, demonstrating that the defences in relation to the home-office expenses and the bonus claims were viable and ultimately vindicated.
Angels Care submits that any penalties or costs should not exceed $5,000 and should be paid into the Court. It submits that Costs should be awarded on the ordinary basis on the appropriate scale.
Consideration
The onus is on the applicant to satisfy the Court that Angels Care acted unreasonably in rejecting the Calderbank offer.
I find that the applicant has successfully demonstrated that Angels Care ought to have known, at the time the offer was made, that it did not have a defensible case in relation to the matters on which the applicant was ultimately successful. Ms Walsh has subsequently had to incur the costs of the proceedings to enforce those entitlements.
Even though Angels Care did succeed on part of its defence, it should have known that the applicant would recover more than the Calderbank offer in respect of the statutory entitlements claims. The Calderbank Offer was made in December 2021, some months after Angels Care had filed the cross-claim, in which it admitted that unpaid wages were owed to Ms Walsh.
I acknowledge the respondent’s submission that the Calderbank offer would have released the applicant from all proceedings which Angels Care might have had against the applicant, including the cross-claim. However, the cross-claim was not actively pursued or prepared for trial and ultimately it was dismissed for non-compliance with court orders. I am not persuaded that maintaining the counter-claim was a proper basis for not accepting what was a modest offer of settlement.
The offer made by Ms Walsh was almost half of what I subsequently ordered the respondent to pay in the substantive judgment. The Calderbank Offer was expressed clearly and foreshadowed that failure to accept the Offer may constitute an unreasonable act or omission pursuant to s 570(2)(b) FW Act. The respondent had adequate time to consider it.
I find that respondent should pay the applicant’s costs of the proceeding from 14 January 2022, but I will not order costs on an indemnity basis. I do not consider that indemnity costs are warranted in circumstances where the respondent was partially successful in its defence.
Costs will be awarded on a standard basis in accordance with the court scale, from the time the Calderbank offer expired, on 13 January 2022, such costs to be agreed or taxed in default of agreement.
Previous costs orders in the course of proceedings
During the course of the proceedings has been ordered to pay costs on three occasions[26]. There is no evidence before the Court that these costs have been paid. Any costs awarded in relation to an event in the period prior to 13 January 2022, should also be calculated in accordance with the Court scale.
[26] Order 2 of Judge Forbes orders dated 30 March 2022; Order 3 of the orders of Judge Forbes dated 27 January 2022; Order 13 of the Orders of Judge Blake dated 3 September 2021
DISPOSITION
For the reasons set out above, I will order that Angels Care pay a pecuniary penalty in the sum of $63,000, being 50% of the maximum penalty for a corporate contravener for breaching s 44 and s 323 of the FW Act. That penalty should be paid to the applicant within 28 days.
The respondent is to pay the applicant’s costs on a standard basis in accordance with the court scale, from the time the Calderbank offer expired, on 13 January 2022, such costs to be agreed or taxed in default of agreement.
I certify that the preceding seventy-two (72) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Forbes. Associate:
Dated: 1 August 2024
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