FEDERAL COURT OF AUSTRALIA Johnson v Celik Investments Pty Ltd [2007] FCA 846 ANITA JOHNSON v CELIK INVESTMENTS PTY LTD T/AS CAFE REMA VID 1536 OF 2007 GORDON J 11 MAY 2007 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VID 1536 OF 2007 BETWEEN: ANITA JOHNSON Applicant AND: CELIK INVESTMENTS PTY LTD T/AS CAFE REMA Respondent JUDGE: GORDON J DATE OF ORDER: 11 MAY 2007 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. A penalty of $1,000 be imposed on the respondent. 2. The $1,000 penalty be paid to the applicant. 3. The respondent pay the applicant compensation in the sum of $8,878.80. 4. The respondent pay the penalty and the compensation to the applicant within 28 days of this order. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VID 1536 OF 2007 BETWEEN: ANITA JOHNSON Applicant AND: CELIK INVESTMENTS PTY LTD T/AS CAFE REMA Respondent JUDGE: GORDON J DATE: 11 MAY 2007 PLACE: MELBOURNE EX TEMPORE REASONS FOR JUDGMENT 1 Anita Johnson, the applicant, was employed at the Café Rema from about May 2004 until 15 September 2005 when the applicant's employment was terminated. The circumstances in which her employment was terminated were described by her in the following terms: "2. I was employed at the Café Rema from about May 2004 until the date my employment was terminated on 15 September 2005. … 5. …The business was a small city restaurant that employed about 6 or 7 people mainly casuals. … 7. On or about 30 August 2005 I informed Anna [a director of the respondent] that I was pregnant. Anna replied "I thought so. You should have told me earlier." 8. Because of Anna's remark, I felt it necessary to disclose to her that I had had a miscarriage with my last pregnancy, and that this time I had wanted to see how the pregnancy developed for a while before telling people about it. 9. Anna said, "Ok, sorry, but you still should have told me because if you injured yourself you could sue us." I said that I was healthy and that I would continue working until Christmas, then less hours after that, if possible. 10. Anna replied, "We'll see." 11. On Thursday, 15 September 2005, I was ill with gastroenteritis. I rang work and spoke to another employee, Chelsea, who had answered the phone. I left a message with her to say that I had gastroenteritis and would not be able to attend work that day. 12. Chelsea subsequently called me from work, and told me I had to speak to Ali [another director of the respondent]. I then rang Ali. 13. Ali was very aggressive about the fact that they were short staffed, and that I had spoken to Chelsea and not to him. I said I knew they were busy, but there was nothing I could do. He told me I had to come in to work, and I said I couldn't because of my health. We argued back and forth. I became emotionally upset, possibly due to the pregnancy and the gastroenteritis, and I didn't want to risk another miscarriage. 14. Ali terminated my employment. He said "Come in today, or don't come back." I said "I can't, I'm just not well enough." 15. Early the next week I tried to get my job back. On the Monday I rang work. I had a doctor's certificate for two days off (15 and 16 September 2005). I arranged to come and see Ali on the Tuesday. 16. When I arrived on Tuesday Ali was sweeping the floor. I said "Can we talk about this out the back?" He kept sweeping. I gave him the medical certificate. I tried to reason with him, but he would not give me my job back. I said "You can't sack me for that – it's illegal." Ali responded by saying, "I don't care." He refused to give me even one week's notice." 2 In its defence, the respondent has admitted that it was the owner of the café at the time the applicant's employment was terminated and that, during the course of her employment, she worked approximately 28 hours per week. 3 The applicant asserts that the termination of her employment on 15 September 2005 was in contravention of s 170CK(2)(a) and (2)(f) of the Workplace Relations Act 1996 (Cth) (the "Act"), as it was on 25 November 2005, being the date of the application to this Court under s 170CP of the Act. 4 Before turning to the facts in this matter, it is necessary to set out the provisions of the Act which are relevant to the Court's consideration of the application. RELEVANT LEGISLATIVE PROVISIONS 5 First, the unlawful termination provisions in Subdivision C of the Act, including s 170CK, applied to all employees: s 170CB(3) read with the definition of 'employee' in s 4. 6 Secondly, an employee may make application to this Court in relation to an alleged contravention of s 170CK: s 170CP(1) read with the definition of 'Court' in s 4. However, under s 170CP(5)(a), such an application may not be made to the Court unless the applicant has received a certificate from the Australian Industrial Relations Commission (the "Commission") under s 170CF(2) regarding conciliation of an application made wholly or partly on the ground of the alleged contravention. A certificate was issued by the Commission on 7 November 2005. 7 Having obtained the certificate from the Commission, it was open to the applicant to elect to begin proceedings in the Court for an order under s 170CR in respect of the alleged contravention: s 170CFA(4)(a). A notice of election must be lodged in writing with the Commission within 7 days of the issue of the s 170CF(2) certificate: 170CFA(6). The Applicant lodged her notice of election in the Commission to begin court proceedings under s 170CFA(5) on 11 November 2005, less than 7 days after the issue of the certificate by the Commission in satisfaction of s 170CFA(6). 8 Application to the Court must then be made within 14 days after lodgement of the election or within such period as the Court allows on application made during or after those 14 days: s 170CP(6). The Applicant made an application to the Court on 25 November 2005 within the time limit prescribed by s 170CP(6). SUBSTANCE OF THE CLAIM UNDER S 170CK(2)(a) AND (f) 9 Under s 170CK(2), an employer must not terminate an employee's employment for any one or more of the following reasons, or for reasons including any one or more of the following reasons: (a) temporary absence from work because of illness or injury within the meaning of the regulations; … (f) race, colour, sex, sexual preference, age, physical or mental disability, marital status, family responsibilities, pregnancy, religion, political opinion, national extraction or social origin;" 10 'Termination or termination of employment' is defined as termination of employment at the initiative of the employer: s 170CD(1). In any proceedings under s 170CP relating to termination of employment in contravention of s 170CK(2), it is not necessary for the employee to prove that the termination was for a proscribed reason. It is for the employer to disprove that termination was not based on one of the proscribed reasons: s 170CQ(a). So much was made clear in Laz v Downer Group Ltd (2000) 108 IR 244. 11 However, it is a defence in proceedings under s 170CK, if the employer proves that, inter alia: (1) the termination was for a reason or reasons that do not include proscribed reasons: s 170CQ(b); (2) the reason for termination of employment which would otherwise contravene s 170CK(2)(f) was based on an inherent requirement of the particular position concerned: s 170CK(3). CONDUCT OF THE RESPONDENT 12 The Respondent failed to appear at the hearing of the application. On 4 May 2007, the Respondent's solicitor (MW Law) filed a notice that the solicitor had ceased to act and filed an affidavit which, in part, stated: "In my discussion on 3 May 2007 with Mr and Mrs Celik [the directors of the respondent] I was also instructed that they were not able to attend the court hearing on 11 May 2007 or any future date because of their work commitments in running a small business, comprising a chicken shop at which they work 6 days per week." 13 When the matter was called, there was no appearance for or on behalf of the respondent. I am satisfied that the respondent has been served with notice of the hearing date and the materials upon which I rely in these reasons including the outline of the applicant's evidence which the applicant swore to during the course of the hearing and which was tendered. ANALYSIS AND RELIEF 14 In circumstances where, as here, the respondent has failed to mount a defence to the application, the Court is not required to make an assessment of whether Ms Johnson's employment was terminated for reasons proscribed in section 170CK(2)(a) and (f): Vickery v Assetta [2004] FCA 555 at [13] (per Finkelstein J). As s 170CQ(a) provides, the employee need not prove the termination of the employment was for a proscribed reason. The onus is on the employer to prove that the termination was for a reason which did not include a proscribed reason. The respondent has not discharged or even attempted to discharge its onus. 15 The orders the Court may make are set out in s 170CR. Section 170CR provides that: (1) If the Court is satisfied that an employer has contravened section 170CK or 170CN in relation to the termination of employment of an employee, the Court may make one or more of the following orders: (a) an order imposing on the employer a penalty of not more than $10,000; (b) an order requiring the employer to reinstate the employee; (c) subject to subsection (2), an order requiring the employer to pay to the employee compensation of such amount as the Court thinks appropriate; (d) any other order that the Court thinks necessary to remedy the effect of such a termination; (e) any other consequential orders. (2) Subsections 170CH(8), (9) and (10) apply in relation to an order mentioned in paragraph (1)(c) of this section as if a reference to the Commission in those subsections were a reference to the Court. 16 The applicant seeks compensation under s 170CR(1)(c) and a penalty under s 170CR(1)(a). I will deal with each in turn. COMPENSATION 17 In Vickery at [14]-[15], Finkelstein J described the approach to be adopted in calculating an amount of compensation in the following terms: "The factors that I must consider in calculating the amount of compensation payable to a person whose employment is terminated in breach of s 170CK(2) are set out in ss 170CH (7) and (8): see 170CR(2). Relevantly those subsections provide: 170CH(7) Subject to subsection (8), in determining an amount … the [Court] must have regard to all the circumstances of the case including: (a) the effect of the order on the viability of the employer's undertaking, establishment or service; and (b) the length of the employee's service with the employer; and (c) the remuneration that the employee would have received, or would have been likely to receive, if the employee's employment had not been terminated; and (d) the efforts of the employee (if any) to mitigate the loss suffered by the employee as a result of the termination; and (e) any other matter that the [Court] considers relevant. 170CH(8) In fixing an amount … for an employee who was employed under award conditions immediately before the termination, the [Court] must not fix an amount that exceeds the total of the following amounts: (a) the total amount of remuneration: (i) received by the employee; or (ii) to which the employee was entitled; (whichever is higher) for any period of employment with the employer during the period of 6 months immediately before the termination (other than any period of leave without full pay) … (b) … I am required to consider and give effect to each of the factors listed in s 170CH(7): GH Operations Pty Ltd t/as The Grant Hyatt Melbourne v V Smith (14 May 2001, AIRC, Giudice P, O'Callaghan SDP and Smith C, Print PR904136) at 10. After assessing the appropriate compensation independently of the statutory limit, I must then determine whether the assessment is over that limit. If it is the statutory limit is applied: Cox v South Australian Meat Corporation (1995) 60 IR 293, 302. 18 In determining the amount of compensation payable to the applicant, and consistent with the approach adopted by Finkelstein J, each subsection of s 170CH(7) must be addressed. 19 For the purposes of s 170CH(7)(a), the onus is on the employer to bring evidence of the effect of the award of compensation on the business: see D A Moore v Highpace Pty Ltd (18 May 1998, AIRC, Boulton J, Watson SDP and Whelan C, Print Q0871), cited in Vickery at [16]. The respondent has not submitted any evidence. However, the Court has been told by the respondent's former solicitor that the directors of the respondent has informed him that the respondent is not trading and the respondent does not have sufficient funds to continue to engage legal representation to defend this matter. 20 For the purposes of s 170CH(7)(b), it was common ground between the parties that the applicant was employed by the respondent and/or its predecessor in title for approximately 16½ months from about May 2004 to 15 September 2005 and that she normally worked about 28 hours per week. 21 For the purposes of s 170CH(7)(c), the principles involved in an assessment under this subsection were described by Gray and Mansfield JJ in Re Lewin; Ex parte He (2004) 137 FCR 226 at [58] in the following terms: "In each case, it is necessary for the Commission [or Court] to address itself to the question whether, if the actual termination had not occurred, the employment would have been likely to continue, or would have been terminated at some time by another means. It is necessary for the Commission [or Court] to make a finding of fact as to the likelihood of a further termination, in order to be able to assess the amount of remuneration the employee would have received, or would have been likely to receive, if there had not been the actual termination." 22 Ms Johnson's employment was terminated on 15 September 2005. She gave birth to her child on 21 February 2006. Ms Johnson provided sworn evidence that she "would continue to work until Christmas, then less hours after that, if possible". Ms Johnson also claimed that she was informed by her employer around May 2005 that her employment at the café was on a permanent basis. Given the lack of evidence to the contrary, largely resulting from what appears to have been the failure of the respondent to provide employees with proper payslips and records of employment, these facts should be accepted. For the period from 15 September 2005 until 20 February 2006 (a period of employment of 22 weeks and 2 days or 112 working week days), Ms Johnson would have been entitled to receive $8,780.80 gross. This amount was arrived at by dividing the weekly wage of $392 by 5 working days and then multiplying the daily rate by the 112 days that could have been worked. However, it is unclear whether Ms Johnson would have continued to work at the café following the birth of her child. Ms Johnson has sworn that she "would probably have sought to continue working with perhaps reduced hours." Ms Johnson has also claimed that the following conversation took place between her and Anna, one of her employers, after she informed her that she was pregnant: "I said that I was healthy and that I would continue working until Christmas, then less hours after that, if possible. Anna replied, "We'll see." 23 On any view, there was uncertainty in the minds of both Ms Johnson and her employer as to the opportunity for further work after the birth of her child. An assessment of Ms Johnson's employment at the café beyond the birth of her child simply involves too much speculation: Vickery at [16]. In the circumstances, the amount owing to Ms Johnson for lost wages should be set at $8,780.80 gross. 24 For the purposes of s 170CH(7)(d), it is necessary to consider the efforts made by the applicant (if any) to mitigate the loss suffered by her as a result of the termination. The applicant provided sworn evidence that since her termination she had applied for work, without success, at about 30 different establishments. In light of this evidence, it would be inappropriate to make any deduction from the amount of compensation on the basis that the applicant had not attempted to mitigate her loss. 25 The last factor, s 170CH(7)(e), requires the court to consider any other relevant matter. In this context, two principles must be noted. First, an order for compensation under s 170CK(1)(c) is not strictly confined to one for economic loss: see Vickery at [18] – [20]. Secondly, as noted by Finkelstein J in Vickery at [16]: "… I can include in the measure of compensation "a sum sufficient to compensate an employee for mental distress or injured feelings caused by harsh, unjust or unreasonable termination of employment": Aitken v Construction, Mining, Energy, Timberyards, Sawmills and Woodworkers Union of Australia – Western Australian Branch(1995) 63 IR 1, 9 per Lee J. I am able to award compensation under this head provided the evidence discloses that the employee has suffered such injury: Leemon v Treasure Books Aust Pty Ltd t/a Merchant Sampler Advertising(1997) 75 IR 138, 147 per Ross VP, Watson DP and Gay C). 26 Ms Johnson's sworn evidence was that she suffered from post-natal depression after the birth of her child. She believes that her unlawful termination was a contributing factor towards this depression. No expert medical or psychiatric evidence was tendered to support the claim. In the circumstances, I have allowed no additional amount of compensation under this subsection. Conclusion as to amount of compensation 27 Given the analysis set out above, I have assessed the applicant's compensation at $8,780.80 gross for lost wages. It is then necessary to examine whether this amount exceeds the statutory limit. The statutory limit is calculated at the equivalent of 6 months remuneration: s 170CH(8). Ms Johnson submits that her gross weekly wage was $392.00. Given the lack of evidence to the contrary, it is appropriate to assume that her period of employment six month prior to termination was continuous (thus not enlivening s 170CH(8)(b)) and that her rate of pay was consistent with award requirements. The statutory limit (assessed to be $10,192 gross) is greater than the amount of compensation independently calculated above. Accordingly, there is no adjustment to the amount of compensation to be awarded to the applicant. PENALTY 28 The applicant seeks a penalty of $5,000 payable to her personally under s 170CR(1)(a). Such an order is discretionary. In Laz v Downer Group Ltd (2000) 108 IR 244 Moore J stated at [44]: "…the mere fact that there has been a termination in contravention of the Act does not, without more, give rise to a situation where a penalty should (rather than might) also be imposed." 29 When assessing whether a penalty was appropriate, French J in Fox v St Barbara Mines Ltd [1998] FCA 621 cited with approval by Moore J in Laz at [45] said: "…[penalties] are punitive in character and must be assessed having regard, inter alia, to the gravity of the conduct complained of, the existence of mitigating circumstances and the need to deter the repetition of the conduct whether by the employer in question or generally." 30 In all the circumstances of this case, I consider that a penalty should be imposed in addition to the order awarding compensation. The conduct of the respondent in its dealings with the applicant was such as to merit condemnation by imposing a penalty of $1,000. Section 356(b) provides that a penalty can be paid "to a particular ... person". The penalty can be paid to the applicant: see Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union v DMG Industries Pty Ltd (1999) 89 IR 360 and Stewart v Nickles [1999] FCA 888 at [78]. COSTS 31 The general rule under s 170CS of the Act is that no costs orders are made, except where the proceeding was instituted "vexatiously or without reasonable cause", or where a party has caused costs to be incurred by another party as a result of some "unreasonable act or omission…in connection with the conduct of the proceeding". 32 Mr McHugh, the applicant's solicitor, submitted that the respondent ought to pay the applicant's costs on a party and party basis from 12 September 2006, being the date on which the applicant made an offer to settle the proceedings. Put simply, the applicant submits that it was an unreasonable act by the respondent not to accept that settlement offer. The applicant referred to the decision of Marshall J in Sallehpour v Frontier Software Pty Ltd [2005] FCA 663. The facts of that case were very different. I do not consider that the respondent's failure to accept the settlement offer did fall within s 170CS(1) of the Act. Moreover, as Finkelstein J said in Zhang v The Royal Australian Chemical Institute Inc (No 2) [2004] FCA 1626 at [7]: "… even if a case falls within one of the limbs of s 170CS(1), there is still a discretion whether or not to award costs against a party." 33 In the circumstances of this case, the parties should each bear their own costs. ORDER 34 In the circumstances, I propose to make orders in the following terms: 1. A penalty of $1,000 be imposed on the respondent. 2. The $1,000 penalty be paid to the applicant. 3. The respondent pay the applicant compensation in the sum of $8,878.80. 4. The respondent pay the penalty and the compensation to the applicant within 28 days of this order. I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon. Associate: Dated: 11 May 2007 Solicitor for the Applicant: Terry McHugh , Max Legal Solicitor for the Respondent: There was no appearance for the respondent Date of Hearing: 11 May 2007 Date of Judgment: 11 May 2007