Webb v Stratton Finance Pty Ltd
[2014] FCCA 924
•9 May 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| WEBB v STRATTON FINANCE PTY LTD | [2014] FCCA 924 |
| Catchwords: INDUSTRIAL LAW – Penalty hearing for breaches of the Fair Work Act2009 (Cth) and the Workplace Relations Act 2006 (Cth) – whether multiple contraventions to be treated as single contravention – application of totality principle – consideration of factors for penalty – whether penalties should be paid to Commonwealth or applicant – whether to award costs pursuant to s.570 of the FWA. |
| Legislation: Fair Work Act 2009 (Cth), ss.546(3), 557(1), 570(1), (2)(b) Workplace Relations Act 2006, ss.247, 719(7), 720, 824 |
| Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7 Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550 |
| Applicant: | JOHN WEBB |
| Respondent: | STRATTON FINANCE PTY LTD |
| File Number: | SYG 940 of 2013 |
| Judgment of: | Judge Raphael |
| Hearing date: | 2 April 2014 |
| Date of Last Submission: | 2 April 2014 |
| Delivered at: | Sydney |
| Delivered on: | 9 May 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr C Cassimatis |
| Solicitors for the Applicant: | Attwood Marshall Lawyers |
| Solicitors for the Respondent: | Yates Beaggi Lawyers |
ORDERS
The Respondent pay the penalties set out in the table found at [24] of these reasons, a total sum of $123,760.00, for the breaches of the Workplace Relations Act 2006 and Fair Work Act 2009 therein referred to within 56 days.
The Respondent pay the said penalties to the Applicant pursuant to s.546(3)(c) of the Fair Work Act 2009.
The Respondent pay the Applicant’s costs on an indemnity basis.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 940 of 2013
| JOHN WEBB |
Applicant
And
| STRATTON FINANCE PTY LTD |
Respondent
REASONS FOR JUDGMENT
On 20 December 2013, after a hearing of two days on 4 and 5 December, the Court gave Judgment in this matter that had been brought in the Fair Work Division of the Court. The application claimed breaches of the Fair Work Act 2009 (Cth)[1] for non payment to the applicant of certain statutory entitlements during the continuation and upon the termination of his employment. The application also included, under the Court’s accrued jurisdiction, a claim for breach of the contract of employment between the parties as a result of the respondent making certain deductions from the commission only based pay that the applicant received. Shortly before the hearing began the respondent accepted that it had contravened various sections of the Act and in respect of an earlier period breaches of s.247 of the Workplace Relations Act 2006 (Cth)[2] and ss.719(7) and 720 of the WRA.
[1] “FWA”
[2] “WRA”
These concessions found their way into the declarations made by the Court on 2 April 2014:
“1.The respondent contravened sections 323(1) of the Fair Work Act 2009 (Cth) (FWA) and 247 of the Workplace Relations Act 1996 (Cth) (WRA) by failing to pay the applicant for sick leave taken.
2.The respondent contravened sections 323(1) and 116 of the FWA and section 612 of the WRA for failing to pay the applicant wages on public holidays.
3.The respondent contravened section 323(1) of the FWA and section 235 of the WRA for failing to pay the applicant $2,148.69 on annual leave days taken.
4.The respondent contravened section 323(1) of the FWA for failing to pay the applicant $12,418.56 accrued but untaken annual leave on termination of the employment.
5.The respondent contravened section 45 of the FWA for failing to pay the applicant $1,133.35 in leave loading in accordance with clause 31.2 of the modern award.
6.The respondent contravened section 45 of the FWA in breach of clause 21 of the modern award and breached section 719(7) of the WRA in failing to pay the applicant the proper amount of superannuation.
7.The respondent contravened section 535(1) of the FWA by failing to keep employee records of the applicant in accordance with Sub Regulation, Chapter 3, Part 3-6, Division 3, regulations 3.32(d)-(e), 3.33(1) & (3), 3.36(1) and 3.37 of the Fair Work Regulations.
8.The respondent contravened section 536(1) of the FWA by failing to issue pay slips on more than 6 occasions.”
In December 2013 the Court had asked the parties to bring in Short Minutes of Order to give effect to its reasons for judgment which found that in addition to the agreed underpayments there had also been a substantial underpayment of commission. The parties were able to negotiate an agreed figure for this in the sum of $146,291.64. The matter then came back to the Court for a decision on penalties and to hear submissions in relation to costs. The submissions on penalties included submissions as to the correct party to whom any penalties should be paid.
The parties provided the Court with written submissions. The respondent referred to s.719(2) of the WRA and s.557(1) of the FWA which provide that where the same person committed two or more breaches of an applicable provision and the breaches arose out of a course of conduct by that person the breaches constitute a single breach. The respondent submitted:
“[8]Stratton submits each of the contraventions 1 to 6 ought to be treated as a single course of conduct. Mr Wardle was the senior bookkeeper of Stratton and was involved in the remuneration and entitlements of Mr Webb since Mr Webb commenced employment. The payslips and commission statements reveal that the same interpretation of the Employment Agreement applied to Mr Webb from the start to the finish of his employment. The remuneration system was administered through Quickbooks and hence after the interpretation of the Employment Agreement that led to the contravention was made at the start and reflected in Quickbooks, the contraventions became part of a course of conduct.”
The applicant on the other hand sets out the relevant principles and consideration with regarding to grouping of contraventions in the following way:
“B Relevant Principles
[8] The following relevant principles apply:
(a)Firstly, the Court is required to identify the separate contraventions. Each breach of each separate obligation under the FWA, is a separate contravention;
(b)Secondly, the Court should consider whether the breach is arising in the foregoing step, constitute a single course of conduct;
(c)Thirdly, to the extent that two or more contraventions have common elements, this should be taken into account and considering what is an appropriate penalty in all the circumstances for each contravention. The respondent should not be penalised more than once for the same conduct and the penalty ought match the conduct;
(d)Fourthly, the Court ought consider the appropriate penalty for the single breaches and, if relevant, each group of contraventions taking into account all of the relevant circumstances; and
(e)Finally, the Court ought consider whether it is appropriate by applying an “instinctive synthesis” in making the assessment.
“C Grouping of Contraventions – Course of Conduct and Common Elements
[9]In the context of the forgoing, the respondent has committed the following 7 contraventions, in that it contravened the:
(a)annual leave provisions of the WRA and the FWA;
(b)Annual leave loading provision in the Award (see 24.3(b)(i) of the Award);
(c)sick leave provisions of the WRA and the FWA;
(d)public holidays provision of the WRA and the FWA;
(e)superannuation provisions in the Award (see clause 21 of the Award);
(f)pay slip and record provisions of the FWA;
(g)safety net contractual entitlement to commission (being an incentive based payment pursuant to section 139(1)(a)(ii) of the FWA).
[10]Having regard to the nature of the contraventions and the onus on the respondent, it is submitted that if the Court was minded to group any of them, such grouping should be limited to the forgoing categories pursuant to section 557.”
It seems to the Court that the vice in the respondent’s argument is that it makes reference to the interpretation of the agreement by Mr Wardell when the breaches are not agreement based but statutorily based. There was always an obligation to pay those statutory benefits to Mr Webb and the respondent provided no satisfactory explanation to the Court as to why it was not done. Indeed the respondent conceded that those payments should have been made immediately prior to the commencement of the hearing. The Court does not consider that they reflect a single course of conduct for which only one penalty should be extracted but it does accept that in assigning penalties the totality principle should apply.
The parties accepted that in coming to a decision upon the quantum of penalty that should be applied the Court should take into account the relevant matters first outlined in Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7 at [26 – 59] noting that the Court’s power is not restricted to the matters it may wish to take into account; Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550 at [11]. The Court will deal with these matters as follows:
The nature and extent of the conduct which led to the breaches
The respondent argues again that the contraventions arose out of a specific interpretation of the employment agreement which it said was rare and not widely used by Stratton. It thought that the commission paid to Mr Webb was a higher commission paid in exchange for no base salary or entitlements. The respondent claims that the failure to properly make superannuation contributions arose out of an interpretation of the employment agreement. The applicant says simply that:
“The offending conduct arose out of the respondent’s disregard for its obligations to pay entitlements such that the applicant was underpaid $27,865.19 (in addition to the non payment of superannuation on commission and the underpayment of commission (or part thereof).”
The Court is of the view that an employment agreement that effectively negates any statutory entitlements for an employer is such a rarity that the employer is obliged to make it clear in any agreement that this is the case and indicate how those entitlements are being taken into account in the pay offered. That is the only way in which such an arrangement could work without breaching the relevant statutes. One only needs to say this to realise how impossible the task must be. With respect to those involved, the Court regards the “interpretation” of the contract by the respondent to be naïve and unacceptable. The Court would regard the nature and extent of the conduct as requiring a penalty in the upper part of the mid range.
The circumstances in which the conduct took place
It is the case that Mr Webb did not really make very much of a fuss about the manner in which he was paid until after his contract was terminated. A party cannot acquiesce in a breach of statute but something of that nature was put against him. Some account must also be taken of the fact that although there was an investigation by the Fair Work Ombudsman[3], who told the company that those entitlements should be paid, the company did not concede their responsibility to pay them until shortly before the commencement of the proceedings. For reasons which the Court has difficulty in understanding, the FWO declined to assist this applicant or to enforce its findings because there were, at the time, some proceedings between the parties in the Local Court of New South Wales. Thus whilst there is an argument that the result of these proceedings might have constituted a set-off in favour of the respondents there is equally one that the applicant was entitled to receive his entitlements without deduction: s.326 FWA. Whatever the situation, the action of the respondents in not conceding the applicant’s entitlement to these moneys until the very last moment militates against them and would suggest that a penalty in the higher part of the mid range is appropriate.
[3] “FWO”
Limitations of under payment
The applicant argues that higher penalties should be imposed in respect of the contravention of the obligation to keep records and provide pay slips because of the flow on effect which was the immense difficulty that the parties had in calculating the true position in respect of underpayments. The work which was done was done in relation to the contract claim rather than the FWA claims but until it was possible to work out the full extent of the contractual underpayment it was not possible to work out the full extent of the statutory non payment of superannuation. For a business to only issue five pay slips over a period of nearly six years is a serious matter and warrants, in the Court’s view, a penalty in the lower part of the higher range.
The nature and extent of any loss or damage sustained as result of the breach
The loss or damage eventually calculated for breaches of the Acts in the sum of $27,000.00 is a significant sum. It is the sum payable to one individual and it should have been paid at least by the time the FWO identified the breaches. The Court believes that the respondent’s conduct in this regard warrants a penalty in the upper part of the mid range.
Whether there has been similar previous conduct by the respondent
No previous similar conduct has been reported. This would have a mitigating effect upon the penalty.
Whether the breaches were properly distinct or arose out of one course of conduct
The Court is of the view that they were properly distinct.
The size of the business enterprise involved
There are apparently one hundred employees in this firm. Whilst it is true that no other employee has complained, a firm of that size should have sufficiently well trained staff to recognise what obligations it has under the relevant statutes. That it did not would indicate to the Court that a penalty in the mid part of the mid range is appropriate.
Whether or not the breaches were deliberate
The Court has already expressed the view that the failure to pay Mr Webb his entitlements, particularly those relating to sick leave, public holiday leave and annual leave, are not really capable of being based upon a misinterpretation of the contract. The non payment of these moneys suggests almost a wilful blindness to reality on the part of the company which is exacerbated when after a FWO investigation and recommendation for payment, no payment was made. The Court believes that these matters indicate the appropriateness of a penalty in the lower part of the higher range.
Whether senior management was involved in the breaches
The two witnesses from the respondents were at the very least senior members of the middle management of this company. The concessions which were made by the company would have been authorised by senior management and the Court can assume that the failure to pay the money after the recommendation of the FWO was also a decision of senior management. Certainly, no other explanation has been put forward suggesting that some junior employee was acting on a frolic of his own. The Court believes that the conduct of the management of the company would indicate a penalty in the upper part of the mid range.
Whether the party committing the breach had exhibited contrition
There is no evidence of contrition in this case. The very late concession of the statutory obligations found by the FWO some considerable time before would not constitute this. The case was fought hard under all circumstances by a single employee against a medium sized corporation. The Court believes that this warrants a penalty in the lower part of a higher range.
Whether the party committing the breaches has taken corrective action
There was no suggestion in this case that contracts of the type signed by Mr Webb were common in this company. In fact, quite to the contrary. Mr Webb did not produce any evidence that other members of staff had not receive pay slips and so in the circumstances the Court cannot come to any conclusion but that except in the case of Mr Webb no corrective action was needed. This would constitute a mitigating factor in favour of the respondents.
Whether the party committing the breach had cooperated with the enforcement authorities
The applicant concedes that there is evidence to suggest that the respondent provided a moderate degree of cooperation up to November 2012 but then stultified the process of enforcement by contending that the respondent was not obliged to comply with the FWA by reason of alleged conduct said to have been engaged by the applicant that did not give rise to the termination of his employment nor abrogate the requirements under the WRA, FWA or award to pay entitlements. The respondent notes that the FWO found that approximately $17,000.00 odd was owing for entitlements whereas in the end the respondent conceded a sum in excess of $25,000.00 but this was only after the applicant had subpoenaed and trawled through a considerable quantity of documentation in order to find out the exact amount of moneys that were properly to be paid to Mr Webb. The Court is of the view that there is no case for mitigation on this ground.
The need to ensure compliance of minimum standards by provision of an effective means of investigation in enforcement of employment entitlements
The Court accepts that this is an important matter to take into account when considering a penalty. It does not believe that it is a matter that should, in this case, add to or detract from a penalty calculated on the other bases contained in these reasons.
The need for specific and general deterrence
The Court believes that it is important that similar organisations be deterred from entering into the type of contract that Mr Webb worked under where no provision for the payment of statutory entitlements was made. It is also the Court’s view that the conduct of the respondent was such that it should be specifically deterred from providing this type of contract to any other employee and from placing the type of pressure that was placed on Mr Webb to continue these proceedings to a stage when eventually a concession was obtained. In the court’s view this warrants a penalty in the upper part of the mid range.
Totality
The Court believes that there is a requirement for the totality principle to be invoked in this case.
The applicant has provided the Court with an annexure setting out the contraventions and power to impose penalties to which the Court has added a dollar figure for the penalty unit maximum and an additional column with the penalty it proposes taking into account the matters previously referred to including the totality principle.
Contraventions of the FWA
Provisions contravened
Description of contravention
Maximum penalty units and amount
Reference for maximum penalty
Power to impose penalty
Penalty units imposed and amount
ss.323(1), 542, 139(1)(a)(ii) FWA
Underpayment of commission (being a contractual entitlement under s 542 of the FWA)
60 x 5=300
$51,000.00
Item 10
s.546 FWA
100 units
$17,000.00
ss.323(1) FWA s.247 WRA
Non-payment – sick leave taken
60 x 5=300
$51,000.00
Item 10
s.546 FWA
100 units
$17,000.00
ss.323(1),
116 FWAs.612 WRA
Non-payment – public holiday leave
60 x 5=300
$51,000.00
Item 10
s.546 FWA
100 units
$17,000.00
ss.323(1), FWA s.235 WRA
Non-payment – annual leave taken
60 x 5=300
$51,000.00
Item 10
s.546 FWA
100 units
$17,000.00
ss.323(1) FWA
Non-payment – annual leave accrued on termination
60 x 5=300
$51,000.00
Item 10
s.546 FWA
100 units
$17,000.00
s.45 FWA
Cl 24.3 AwardNon-payment of leave loading
60 x 5=300
$51,000.00
Item 2
s.546 FWA
100 units
$17,000.00
s.45 FWA and Cl.21 Award
Non-payment of superannuation on:
(a) Entitlements conceded
(b) commission
60 x 5=300
$51,000.00
Item 2
s.546 FWA
100 units
$17,000.00
s.535(1) FWA
Failure to keep employee records in accordance with sub-regulation Chapter 3, Part 3-6, Division 3, regulations 3.32(d)-(e), 3.33(1) & (3), 3.36(1) and 3.37 of the FW Regulations
30
$5,100.00
Item 29
s.546 FWA
18 units
$3,060.00
s.536(1) FWA
Failure to issue pay slips
30
$5,100.00
Item 29
s.546 FWA
10 units
$1,700.00
The next matter debated by the parties was to whom these penalties should be payable. There is provision in the Act for payment to be made either to the Commonwealth of Australia or to the applicant (the proceedings not having been brought by an employee organisation). The respondent suggested that making the penalties payable to the applicant would provide him with a windfall gain in that he was now at long last being paid what he was entitled to and that was all he should receive. The Court does not accept this view of windfall. The applicant was forced to bring these proceedings in order to obtain the payment which, under normal circumstances, would have been made to him over the period of his employment. He entered into an obligation for payment of fees and was required to do a considerable amount of work upon records that ought to have been given to him during the course of his employment that were not and which were still lacking even after the case had ended. In the Court’s view this is an appropriate case in which payment of the penalties should be made to the applicant within twenty-eight days pursuant to s.546(3) of the FWA.
Costs
The applicant seeks his costs on a number of bases. First he says that insofar as costs were expended in pursuing his claim for breach of the contract of employment as opposed to costs expended on pursuing the claims for breaches of the FWA and the WRA costs should follow the event and should be awarded to him. Second he says that in regard to the costs of the proceedings under those Acts the actions of the respondent fell within the purview of s.570(1) and (2)(b) of the FWA and s.824 of the WRA. He argues that the actions of the respondent constitute an unreasonable act or omission which caused him to incur costs. In regard to the unreasonable act or omissions he refers first to the respondent’s non-acceptance of an offer claimed to be a Calderbank offer made on 8 April 2013 and second to the respondents not conceding the statutory underpayments found by the FWO (although later increased) until one working day prior to the commencement of the proceedings. The respondent argues that it was reasonable for it to allow the Calderbank offer of April 2013 to lapse, that the cost of the breach of contract proceedings were integral to the other costs involved in defending the statutory breaches and that its conduct does not justify a special order for costs. It also argues that the applicant was wrong to reject an offer made on 18 November 2013.
The letter of 8 April 2013 is as follows:
“By email: christopher @yatesbeaggi.com.au and [email protected]
Yates Beaggi Lawyers
Level 10
31 Market Street
SYDNEY NSW 2000Attention: Brenton Yates and Christopher Farah
Without Prejudice Save as to Costs
Dear Brenton and Christopher
WEBB V STRATTON FINANCE PTY LIMITED
Federal Magistrates Court Proceedings No:We refer to the without prejudice meeting held at your office at 11am on Friday 5 April 2013.
Our client has instructed us to attempt to resolve his claim for employee entitlements, on a commercial basis.
Without admission and in an effort to avoid the cost and inconvenience of protracted litigation, we are instructed to make the following offer to settle Mr Webb’s claims:
1.Stratton Finance Pty Limited pay our client $60,000 (less any tax required to be deducted).
2. The parties enter into a comprehensive deed of release.
3. Each party agrees not to make an adverse comment about the other.
4. Each party to bear their own costs of these proceedings.
This offer is made in accordance with the principles in Calderbank v Calderbank [1975] 3 All ER 333.
This offer will be open for acceptance until 5pm on Friday, 12 April 2013 at which time it will lapse.
If the offer is not accepted, our client has instructed us to proceed with his claim in the Federal Magistrates Court for the full sum set out in the draft application served on you on 8 February 2013. If that becomes necessary, and our client obtains a judgment equal to or better than the terms of this offer, our client will tender this letter and seek an order that your client pay our clients costs on an indemnity basis.
We believe there are significant impediments to your client defending these claims. Our client makes this offer having formed the view that he is making a significant and genuine compromise in order to settle the proceedings as justly, quickly and cheaply as possible.
We enclose a table setting out the calculations as to how the sums were ascertained with respect to our client’s claim for employee entitlements.
Yours faithfully
ATTWOOD MARSHALL LAWYERS”
It was made before proceedings had commenced and therefore before the respondent had seen the applicant’s evidence. On the other hand it was made after the FWO had already found underpayments of statutory entitlements. It was made before the applicant was required to issue subpoenas and do some very considerable work in quantifying his contractual loss. In its written submissions the respondent argues:
“10.…The 570(2)(b) exception overlaps with the test for costs under a Calderbank offer whereby the party seeking costs must demonstrate the party’s refusal of the offer was unreasonable [9] CGU Insurance Limited v Corrections Corporation of Australia Staff Superannuation Pty Ltd [2008] FCAFC 173 at [75] and the cases cited therein
11.Hence to come within the exception, Mr Webb must prove that Stratton not accepting the offer was unreasonable, taking into account the circumstances facing Stratton at the time the offer was made. [10] CGU Insurance Limited (supra) at [75]. Mr Webb’s submissions do not explain why it was unreasonable. It is not enough for Mr Webb to merely establish the offer itself was reasonable, [11] Dais Studio Pty Ltd v Bullet Creative Pty Ltd [2008] FCA 42 at [11] though in any event Stratton submits it was not.
12.It was not unreasonable for Stratton got reject the Calderbank for the following reasons:
a.Where the offeree has no realistic opportunity to consider the strength or otherwise of the other party’s position before the offer expired it will not usually be unreasonable to reject it. [12] Fyna Foods Australia Pty Ltd v Cobannah Holdings Pty Ltd (No 2) [2004] FCA 1212 at [9]. In this situation Stratton had 4 days to assess the strength or otherwise without any evidence from Mr Webb and before proceedings had been commenced with a draft application that (as noted below) was flawed. There is no explanation for such a short time frame where proceedings had not even commenced.
b.Mr Webb’s paraphrase of the offer[13] Para [7] Webb Submissions neglects to mention the mutual release. At the time the offer was made, Stratton had a hearing pending on 24 July 2013 against Mr Webb in the Local Court for serious and wilful misconduct caused by dishonestly witnessing a signature on a loan application. The offer was conditional upon a comprehensive deed of release (condition 2 of the offer). This required Stratton to decide within 4 days whether to give up its claim against Mr Webb in the Local Court and bear its costs in relation to those proceedings. This was no compromise. Inviting a party to abandon their claim (in this case the Local Court claim) and bear their own costs is not a compromise, but a proposal for capitulation. [14] Singh v Singh (No 2) [2004] NSWSC 225 at [10] to [15]. It has been found previously that it was not unreasonable to reject an offer open for 5 days and conditional upon a release in unrelated proceedings. [15] Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd [2006] NSWSC 385 at [73]. By parity of reasoning the same ought to apply here on a more restricted time frame.
c.The offer was not reasonable in the first place. The draft application attached to the offer seeks damages totalling about $74,000 under the FWA. This compromise is significantly smaller when viewed against the draft application at the time rather than the $285,000 sought at final hearing. Moreover, the offer required Stratton to give up the costs already expended and its claim against Mr Webb in the Local Court (as noted above). So the combined effect of paying Mr Webb $60,000 and giving up a judgment and costs liability that has since been valued at about $70,000 means there was no compromise at all.”
There are a number of reasons why the court believes that it was unreasonable for the respondent to reject the offer made in the letter of 8 April. Firstly, the FWO had made a finding that the respondent was in breach of its statutory obligations and owed the applicant $17,276.68 on 5 November 2012. The applicant had made it clear thereafter that he intended to pursue his rights. At all times the ability to calculate how much Mr Webb had been unpaid was in the hands of his employer and was most certainly not in the hands of Mr Webb who only received five payslips in the whole time he was employed. There was adequate time for the respondent to undertake a proper enquiry as to the amount owing to Mr Webb pursuant to all of his claims between that date and the without prejudice meeting on 5 April. It would then have been able to assess the strength or weakness of its claims concerning its ability to make the deductions and clawbacks that were found to have occurred and found by the Court to be in breach of the contract. Although the period given of four days appears at first sight to be very short it was given in the context of what might have occurred at the without prejudice meeting that took place three days before the letter and the long running dispute between the parties.
Second, there is no mention in the letter of the Local Court proceedings. It is the respondent’s interpretation that finalisation of these proceedings was included in the letter. As the applicant says if that was a concern why was it not raised rather than just allowing the offer to lapse.
Third, the offer was made prior to the commencement of proceedings. It is in the interests of justice that parties should be encouraged to make such offers as this time. It was one of the respondent’s complaints that the application was amended from the draft that was submitted. That would not be unexpected. The most significant amendments were made only after documentation had been provided by the respondent that it should have provided to the applicant many years before allowing the applicant to calculate accurately the amount to which he believed he was entitled.
Fourthly, it was not unreasonable for the applicant to reject the offer made on 18 November 2013 which is in the following form:
“Attwood Marshall Lawyers
P O Box 334
COOLANGATTA QLD 4225Also by email: [email protected]
Attention: Ms. Lauren Hicks
“Without Prejudice, Save as to costs”
Dear Madam
STRATTON FINANCE PTY LIMITED ACN 070 636 903 -ATS –JOHN WEBB
FEDERAL CIRCUIT COURT OF AUSTRALIA/PROCEEDINGS NO. SYG940/2013We refer to the abovementioned proceedings.
Arising from the mediation, our client has considered the expected costs to both parties should these proceedings continue to final hearing. Our client has also considered the Local Court Decision, and the costs incurred in respect of same.
In doing so, our client has determined that there is a final opportunity to settle these proceedings and save both parties expending further unnecessary legal costs. Our client proposes a final offer to your client.
Our client offers to pay your client an amount of $40,000.00 by way of full and final settlement of these proceedings and the Local Court judgment debt and costs. In order to assist your client assess the offer, we break down the offer as follows:
1.$25,000.00 for your client’s Wages Claim, Untaken Annual Leave Claim, Unpaid Annual Leave Claim and Leave Loading Claim;
2.$45,000.00 for your clients Unpaid Commissions Claim;
3.$40,000.00 representing your client’s fixed costs of all proceedings with our client;
4.From the amount of $110,000.00 described in items 1 – 3 above, an amount of $70,000.00 is to be offset in favour of our client, which amount our client says is payable to it arising out of the Local Court proceedings. This amount includes the relevant judgment debt, interest and costs;
5.The terms to be formalised in a Deed of Settlement and Release.
This offer shall remain open until 5pm on 25 November 2013.
Should your client not accept this offer, the our client may tender and rely on this letter in relation to any application for costs payable on an indemnity basis from the date of this offer. This offer is made pursuant to the principles enunciated in the case of Calderbank v Calderbank [1976] Fam 93.
We invite you to contact the writer should you wish to discuss.
Yours faithfully,
YATES BEAGGI LAWYERS”However, even if it was unreasonable, the Court does not believe this is a relevant factor to take into account because one has to look at the refusal to accept the Calderbank offer at the time it was made and not some seven months thereafter. By the time the applicant came to consider the letter of 18 November 2013 he was quite well aware that his total claim would be considerably greater than the $45,000.00 offered for unpaid commissions. This has proved to be the case.
The Court is of the view that the respondent’s failure to accept the Calderbank offer was a factor which caused the applicant to incur significant costs, indeed, the whole costs of the proceedings as the letter had been written before those proceedings had commenced. Thus, the requirements of s.570(2) have been satisfied.
In the opinion of the Court the respondent should pay the applicant’s costs of the whole proceedings on an indemnity basis.
I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of Judge Raphael
Associate:
Date: 9 May 2014
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