FEDERAL COURT OF AUSTRALIA

Furey v Civil Service Association of WA (Inc) [1999] FCA 1492

INDUSTRIAL LAW – termination of employment – “required amount of compensation instead of notice” - effect of ex gratia payment at time of termination – whether ex gratia payment should be taken into account in calculating required amount of compensation instead of notice – whether superannuation levy payable by employer to be included in calculation of such compensation – quantification of damages.

Workplace Relations Act 1996, ss 170CM, 170CR(4)

Pacific Publications Pty Ltd v Cantlon (1983) 4 IR 415 distinguished

Poletti v Ecob (No 2) (1989) 31 IR 321 distinguished

Black v Brimbank City Council (1998) 152 ALR 491 considered and applied

Comcare v Fyfe [1999] FCA 1368 (Finn J) considered

FRANK GEORGE FUREY v CIVIL SERVICE ASSOCIATION OF WA (INC)

WAG 82 of 1997

CARR J

29 OCTOBER 1999

PERTH

THE COURT ORDERS AND DECLARES THAT:

1.         The orders made by the Judicial Registrar on 19 June 1998 be set aside.

2.         When the respondent terminated the applicant’s employment on 19 May 1997 it contravened s 170CM of the Workplace Relations Act 1996 by failing to make full payment of the required amount of compensation referred to therein.

3.         The applicant is to pay the following portions of the respondent’s costs of the motion filed 10 July 1998:

            (a)        those relating to so much of the proceedings as related to his claim based on s 170CK(e) of the abovementioned Act; and

            (b)        those relating to so much of the proceedings as related to his claims based on s 170CK(d) and (e) (other than those recoverable under paragraph 3(a) above) incurred between 4 October 1999 and the date of service of the applicant’s notice of motion filed on 8 October 1999.

3.         The application be otherwise dismissed.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

Introduction

1                     This is an application under s 18AC(1) of the Federal Court of Australia Act 1976 (Cth) to review the exercise by a judicial registrar of power delegated to him pursuant to s 18AB(1) of that Act and the Federal Court Rules.  The questions to be decided are whether the respondent contravened s 170CM of the Workplace Relations Act 1996 (Cth) (“the Act”) in relation to determination of the applicant’s employment, by failing to pay him the required amount of compensation instead of notice and, if so, the amount of damages payable to the applicant pursuant to s 170CR(4) of the Act.

Factual Background

2                     There is relatively little in the way of factual dispute between the parties.  I shall identify any such dispute when making any finding in relation to it. 

3                     The applicant commenced employment with the respondent on 7 September 1989 as an industrial officer.  At the time when his employment was terminated he was the respondent’s Senior Industrial Officer in its Policy and Research Team.  The respondent is a union which represents professional, administrative, clerical and technical employees in the public sector of the State of Western Australia.  It has about 13,500 members.

4                     On two occasions in January 1997 senior officers of the respondent raised concerns with the applicant about his unauthorised absences from work.  On 7 January 1997 the applicant had failed to attend work, without any authorisation.  On that date the General Secretary of the respondent, Mr David Robinson, sent an e-mail to the applicant remonstrating with him on that subject and stating that there would be a need to review his work pattern and working hours.  A few days later, the Assistant General Secretary of the respondent, Ms Toni Walkington, brought to Mr Robinson’s attention the fact that the applicant, despite requests, had not provided to the respondent’s Human Resources Officer the requisite application for leave which the applicant had taken in November 1996 and January 1997.  On 21 January 1997, Ms Walkington sent a memorandum to the applicant requesting him to complete applications for leave in respect of those absences.  On Monday 10 March 1997 the applicant failed to attend at work and remained absent until Thursday 13 March 1997 without making contact with the respondent during that period.  At Mr Robinson’s request, Ms Walkington arranged a meeting to discuss this further unauthorised leave and certain performance issues which had arisen in the preceding weeks.  That meeting took place on Tuesday 18 March 1997 at the respondent’s office.  Those present were Mr Robinson, Ms Walkington and the applicant.  After two or three issues had been dealt with, the applicant made what may be described as an abusive remark to Mr Robinson, told him that he (the applicant) had been sick and was going back to his doctor.  The applicant then stood up and walked out of the meeting.  Later that day the applicant’s medical practitioner, Dr G Kirkman, telephoned Mr Robinson and said that he expected that the applicant would be off work for the rest of that week.  On 18 March 1997, Mr Robinson wrote to the applicant confirming that he still wished to deal with certain performance related issues upon the applicant’s return to work.  In that letter Mr Robinson told the applicant that he had been contacted by the applicant’s doctor who had advised that the applicant was unfit to resume work until Monday 24 March 1997 due to anxiety-related occurrences.  Mr Robinson said that he would appreciate the applicant keeping either himself or Ms Walkington advised as to the progress of the applicant’s health and that should he not be fit to return to work on the following Monday, he was requested to advise Ms Walkington at the earliest opportunity.  The applicant returned to work on Monday 24 March 1997 and had a meeting with Mr Robinson and Ms Walkington on the afternoon of that day.  At that meeting the applicant apologised for his behaviour at the meeting on 18 March 1997 and said that he needed to go away and think about his future.  Mr Robinson and Ms Walkington agreed to the applicant taking some leave from 25 March 1997 to 7 May 1997 (both dates inclusive).  On 4 April 1997 Ms Walkington wrote to the applicant confirming matters raised at the meetings on 18 and 24 March 1997 and requesting the report which the applicant had undertaken to provide in relation to some of those matters.  In that letter Ms Walkington also confirmed the leave arrangements and the manner in which those leave arrangements were to be recorded.  The arrangements related to various dates before the period which commenced on 25 March 1997 but included that period, i.e. they also related to the period 25 March 1997 to 7 May 1997.  The time away from work was to be treated variously as rostered days off, sick leave, “PS day in lieu”, annual leave and long service leave.  Two of the earlier periods comprising two days and five days respectively were to be treated as sick leave.  None of the days between 25 March 1997 and 7 May 1997 were to be treated as sick leave, but were to be allocated to various other types of leave entitlement which the applicant had accrued.  In her letter of 4 April 1997 Ms Walkington confirmed that the applicant would need to provide medical certificates for the earlier two periods to retain those days as sick leave debits and asked him to forward those medical certificates as soon as possible.  The letter confirmed that it was anticipated that the applicant would return to work on Wednesday 8 May 1997.  The applicant was asked to advise either Mr Robinson or Ms Walkington before 10 April 1997 should he wish to make application for a further period of absence from work following consultation with his medical practitioner.  The applicant was informed that the balance of his sick leave entitlements was 8 full days and 74 half days, the latter being convertible to full days, resulting in an entitlement to 45 days sick leave. 

5                     The applicant’s evidence is that on or about 17 April 1997 he sent three medical certificates in an envelope addressed to Ms Walkington marked “Private and Confidential”, together with a handwritten letter explaining that he wished to exhaust his sick leave before using annual and long service leave in accordance with the normal Western Australian Public Sector Practice and Procedure.  This request, so the applicant deposed, was different to the schedule of leave set out in Ms Walkington’s letter of 4 April 1997 and meant that he would not be required to return to work until 10 June 1997.  The respondent challenges this evidence as not being credible and says that in any event it did not receive any such letter or medical certificates.  I shall return to that matter below.

6                     The respondent’s evidence is that the only subsequent contact made by the applicant with it was as follows:

·          on 11 and 14 April 1997 the applicant had a telephone discussion with a Mr Derek Harris, the respondent’s administration manager on the question of additional sick leave.  There is a dispute between the parties about what the applicant said to Mr Harris.  But it is common ground that either on that occasion or a few days later Mr Harris advised the applicant to discuss the matter with Ms Walkington;

·          on 29 April 1997 when, as previously requested, the applicant returned the respondent’s vehicle (of which he had the use) to its building administrator, Mr Gordon Fitzsimmons.  Mr Robinson had requested Mr Fitzsimmons to ask the applicant to see either him or Ms Walkington when returning that vehicle.  When Mr Fitzsimmons relayed that request, the applicant said that he had another appointment, but would telephone Ms Walkington or Mr Robinson (the respondent’s evidence is that there was no such telephonic contact);

·          on Sunday 4 May 1997 the applicant, by arrangements made on that date with Mr Fitzsimmons, collected and removed some personal items from his office.

7                     The applicant did not return to work on 8 May 1997.  On 13 May 1997 Mr Robinson wrote to the respondent’s solicitors seeking an urgent opinion as to whether the applicant had repudiated his contact of employment and/or abandoned that employment.  On 14 May 1997 the respondent received written advice from its solicitors.  It subsequently received some further oral advice.

8                     On 19 May 1997, Mr Robinson wrote, under the letterhead of the respondent, to the applicant in the following terms:

“Dear Frank

I write to advise you that I hereby terminate your employment with the Civil Service Association of WA Inc effective as of close of business 19 May 1997.

I am obliged to take this action for the following reasons:

i)         You were to return to work on 8 May 1997, but have not done so, nor, have you provided any explanation for your failure to do so;

ii)       Despite repeated requests, both verbally and in writing, to contact either myself or Ms Walkington to discuss employment and/or leave arrangements, you have failed to do so, despite your promises on a number of occasions, to a number of employees, including myself, to do so;

iii)      You have failed to respond to Ms Walkington’s correspondence of 4 April 1997 outlining your response to the performance related matters detailed in the correspondence and previously canvassed at our meeting of 24 March 1997 (at which you also committed yourself to providing a response within a few days);

iv)       On 24 March 1997, you were granted sick leave in advance, on the basis of your promise that sick leave certificates would be provided in support of this leave.  In breach of your promise, these have not been provided to date;

v)        You are a senior officer of the Union with high level responsibilities.  You would be well aware as a result of your experience and employment with the Union that your absence would cause serious disruption to the Union in that (and without being limited to):

            a)      the filling of vacancies and the subsequent performance of vital work duties has been made extremely difficult;

            b)      you were requested to advise me of your intention regarding further leave so that arrangements could be put in place to ensure the work would not be unduly disrupted.  Your failure to do so has resulted in a situation where work has not been able to be progressed and staff have been required to take on additional workloads;

            c)      staff have had to work additional hours to complete the considerable amount of work left by yourself which was long overdue and is now urgent;

            d)      this situation has been further exacerbated due to your failure to comply with your commitment to conduct a hand over of your work and to provide material and advice on key matters.

I note, for the record, that you did make contact with Mr Fitzsimmons on 4 May 1997 in order to attend the union office that Sunday to collect some personal belongings.  I note also that you have not provided us with an address for any future correspondence whilst absent from the workplace.

I have received legal advice that your conduct outlined in i) to v) above, constitutes an abandonment and/or repudiation of your employment contract, which repudiation is accepted.  As stated above, your employment with CSA of WA Inc is terminated.

However, consistent with the practice of being a model employer, I am prepared to make an ex-gratia payment to you, equivalent to four weeks pay.  Please find enclosed a cheque for that amount.  You should also note that despite not providing sick leave certificates, I will not seek to recover payment for this leave from you.

Yours sincerely

DAVE ROBINSON

BRANCH SECRETARY”

9                     It is common ground that there was enclosed in that letter a cheque for $2929.00 and that this amount was equal to four weeks salary at the applicant’s usual rate, less tax.  It is also common ground that the period of notice to which the applicant was entitled under s 170CM of the Act was four weeks. 

10                  The respondent did not pay the applicant any salary in respect of the period 8 May 1997 to 19 May 1997.  It took, and takes, the position that during that period (eight working days) the applicant was absent from work without any leave entitlement.  The respondent’s position is that by 8 May 1997 the applicant had exhausted all leave entitlements, other than the entitlement to sick leave to which I have referred above. 

11                  On 10 June 1997 the applicant wrote to the respondent advising that he had lodged an application with the Australian Industrial Relations Commission seeking reinstatement and compensation for unlawful and unfair dismissal.  In that letter the applicant denied that he had abandoned his employment. 

12                  On 18 June 1997 there was a meeting of the Executive Committee of the respondent.  The relevant portion of the minutes of that meeting read as follows:

“The Branch Secretary referred to the ‘Cessation of Employment’ of Mr Frank Furey.  Mr Furey he advised had not returned to work.  The Union sought legal advice and was advised that he had repudiated his contract.  The Union wrote to Mr Furey saying that he had repudiated his contract and abandoned his employment.  An application in the Federal Industrial Relations Commission has been filed by Mr Furey.  A preliminary hearing will be held on Thursday, 26 June 1997. 

The Branch Secretary also advised that although there was no obligation to make any payment in lieu of notice, the Union had provide (sic) an ex gratia payment.”

13                  On 25 June 1997 there was a meeting of the Council of the respondent.  The relevant item of the minutes of that meeting read:

“EXECUTIVE COMMITTEE REPORT – 18 JUNE 1997

. . .

Acceptance of Report

Moved Colin Best that Council notes and accepts the recommendations of

C.62/97     the Executive Committee Report dated 18 June 1997.

Seconded Bruce Copestake.                                                 CARRIED”

14                  It is common ground between the parties that the “Executive Committee Report dated 18 June 1997” comprised the minutes of the Executive meeting of that date.  In any event, by reference to the immediately preceding item in the Council minutes, I so infer.

The Statutory Framework

15                  Section 170CM of the Act relevantly provides that an employer must not terminate an employee’s employment unless the employee has been given the required period of notice, or the employee has been paid the required amount of compensation instead of notice, or the employee is guilty of serious misconduct.  The respondent does not contend that the applicant was guilty of serious misconduct.  The respondent accepts that it terminated the applicant’s employment and that if the applicant was not paid the required amount of compensation instead of notice, then it was in breach of s 170CM.  It contends that it paid the required amount of compensation. 

16                  Section 170CM(2) defines the “required period of notice” by reference, relevantly, to a table of weeks.  As I have mentioned, the parties agree that the required period of notice in relation to the applicant was four weeks.

17                  Section 170CM(4) and (5) provide as follows:

“(4)     The required amount of compensation instead of notice must equal or exceed the total of all amounts that, if the employee’s employment had continued until the end of the required period of notice, the employer would have become liable to pay to the employee because of the employment continuing during that period.

 (5)      That total must be worked out on the basis of:

               (a)     the employee’s ordinary hours of work (even if they are not standard hours); and

               (b)     the amounts ordinarily payable to the employee in respect of those hours, including (for example) allowances, loading and penalties; and

               (c)     any other amounts payable under the employee’s contract of employment.”

18                  Section 170CP(2) of the Act relevantly provides that an employee may apply either to this Court (or to a court of competent jurisdiction as defined in s 177A), for an order under s 170CR in respect of an alleged contravention of s 170CM by his or her employer.  Until shortly prior to the hearing of this matter, the applicant was also alleging contravention on the respondent’s part of s 170CK of the Act.

19                  Section 170CR(4) relevantly provides that if a court to which an application is made under s 170CP(2) is satisfied that an employer has contravened s 170CM in relation to the termination of the employment of an employee, that court may make an order:

“… requiring the employer to pay to the employee an amount of damages equal to the amount which, if it had been paid by the employer to the employee when the employment was terminated, would have resulted in the employer not contravening that section.”

THE ISSUES TO BE DECIDED

Whether the respondent failed to pay the required amount of compensation

20                  The applicant contends that the respondent contravened s 170CM by failing to pay the required amount of compensation instead of notice.  In summary, he puts this on the following bases:

·          the cheque enclosed in the respondent’s letter of 19 May 1997 was an ex gratia payment and should not be treated as compensation instead of notice;

·          Mr Robinson did not have the authority to terminate his employment and such purported termination only took effect on 25 June 1997 when the Council accepted the Executive Committee’s report;

·          he should have been paid as if he were on sick leave for the eight working days between 8 May 1997 and 19 May 1997 in respect of which he was paid nothing;

·          likewise he should have been paid as if he were on sick leave between 8 May 1997 and 25 June 1997;

·          he should have been paid four weeks salary as part of his compensation instead of notice of four weeks calculated from 25 June 1997; and

·          the respondent should have paid to the trustee of the relevant superannuation fund an amount equal to 12½% of the remuneration which he should have been paid between 8 May 1997 and 23 July 1997 (the latter date being four weeks after 25 June 1997).  [It was common ground that under the terms of the applicant’s employment, the respondent was obliged to contribute 12½% of the applicant’s salary by way of superannuation contributions].

21                  The respondent’s case, in summary, is that:

·          Mr Robinson was duly authorised to terminate the applicant’s employment and did so on 19 May 1997;

·          the cheque for $2929.00 enclosed in the letter of termination constituted payment of “the required amount of compensation instead of notice” within the meaning of s 170CM;

·          any entitlement which the applicant might have for payment in respect of the period 8 May 1997 to 19 May 1997 was not relevant to the computation of that compensation because, inter alia, it was not an amount which it would have become liable to pay to the applicant because of the employment continuing during the required period of notice;

·          in computing the required amount of compensation instead of notice, s 170CM did not require the inclusion of what would have been the respondent’s superannuation contribution because that was not an amount which it would have become liable to pay “to the employee” within the meaning of s 170CM(4) i.e. it was liable to pay that contribution to the trustee of the superannuation fund;

·          if the respondent were found to have contravened s 170CM, in the calculation of any damages payable under s 170CR(4) it should receive credit for the sum of $2929.00 which it paid to the applicant under cover of its letter of termination of 19 May 1997.

The date upon which the respondent terminated the applicant’s employment

22                  The respondent says that it terminated the applicant’s employment on 19 May 1997 when Mr Robinson sent his letter of that date, which I have set out above.  Did he have authority to terminate the applicant’s employment?

23                 The respondent is incorporated under the Associations Incorporation Act 1987 (WA) and employs the equivalent of some 47 full-time staff.  Its rules are in evidence.  The rules contain provisions dealing with matters such as its name, registered office, objects, political and other affiliations, membership, alteration to its constitution, dissolution, subscriptions and levies and generally the manner in which the respondent’s affairs are to be conducted.  Rule 12 vests management of the Association in an elected council (“the Council”).  It would appear from Rule 12 that the Council comprises quite a considerable number of councillors.  The evidence is that there are currently about 58 councillors.  The minutes of its meeting on 25 June 1997 show that some 26 councillors were either present in person or represented by proxy.  Rule 12(l) sets out the various powers of the Council.  The powers appear to include everything that the respondent may wish to do to advance its objects.  The applicant relies upon Rule 12(l)(vi) for his assertion that only the Council had the legal authority to terminate his employment.  Rule 12(l)(vi) provides as follows:

(l)    The Council  shall have power:

       . . .

       (vi)     to appoint any person whose services may be deemed necessary for the carrying out of the purposes of the Association and at any time to suspend or discharge any such person and to fix the remuneration to be paid for that person’s services.

                  Such persons shall be appointed subject to the same conditions and restrictions as an Officer appointed under the Public Service Act.”

24                  Rule 12(l)(xviii) confers a power on the Council to delegate its authority as it may deem necessary. 

25                  Rule 13 provides for the constitution of an Executive Committee of the respondent.  The Executive Committee consists of the President, two Vice-Presidents, the Honorary Treasurer, the General Secretary, the Assistant General Secretary and six elected members.  Rule 13(c) provides that the Executive Committee shall be responsible for the management and proper conduct of the business and the carrying out of the policy of the respondent between meetings of the Council, subject to the resolutions and decisions of the Council and to the Constitution and the Rules.  The Executive Committee is to meet at least once in each month.  There is evidence that the Council meets monthly and the Executive Committee’s monthly meetings are timed to fall approximately half way between each council meeting.  Rule 19 relates to the General Secretary.  Rule 19(a) provides as follows:

“The General Secretary, who shall be a financial member of the Association shall be elected by secret postal ballot of all financial members of the Association for a term of four years and shall be a full time paid officer of the Association subject to the same conditions and restrictions as an Officer appointed under the Public Service Act.  The General Secretary shall be the executive officer of the Association, and subject to the direction of the Council, shall be responsible for the administration of the Association, the management of the Association Office and the direction of the employees of the Association including the Assistant General Secretary.”

26                  Rule 19 relevantly provides that the General Secretary shall have the charge and custody of all monies belonging to the respondent, shall take charge of the books and documents of the respondent, convene meetings, be appointed to the governing bodies of other corporations controlled by the respondent, arrange for the keeping of the records of the respondent, cause the accounts of the respondent to be properly audited and (together with other officers or employees or other persons so appointed) represent the respondent in proceedings before the Industrial Relations Commission. 

27                  Mr Robinson’s uncontradicted evidence was that:

·          he had authority from the Council to expend whatever money was required, provided that it fell within a budget approved by the Council; and

·          he hired such employees as the respondent required i.e. it was his decision and he had never sought the Council’s prior approval when engaging any particular employee;

·          since he had been General Secretary of the respondent he had made about 40 such appointments;

·          he reported the appointments to the Executive Committee who in turn reported them to the Council;

·          until the case of the applicant, he had never had to terminate the employment of any of the respondent’s staff, except where redundancies had occurred; and

·          the Council had never terminated the employment of any of the respondent’s staff.

28                  In my view, Rule 19(a), by providing that the General Secretary shall be responsible for the administration of the Association, confers authority on him to employ such persons as are required for the administration of the respondent and to terminate the employment of such persons whose services are no longer required for that purpose.  He has that responsibility and authority [and the other responsibilities and authorities set out in Rule 19(a)] expressly subject to the direction of the Council.  In cross-examination, Mr Robinson acknowledged that if he had engaged an employee, the Council could countermand such appointment – he said that such a situation would be “a serious problem”.  It is true that Rule 12(l)(vi) confers the power of appointment, suspension or discharge of persons on the Council, but I do not see that as in any way inconsistent with the General Secretary having power to do the same, subject always to the directions of the Council.  On the proper construction of the Rules, it seems to me that the General Secretary can be seen to be either an organic part of the respondent or the agent of the Council or of the respondent itself in employing staff and, when required, terminating such employment in the course of discharging his responsibilities for the administration of the Association.  I think that the expression “administration” is used in the sense of “management of the business” of the respondent – see The New Shorter Oxford English Dictionary at 28.

29                  If I am wrong in that assessment and Mr Robinson, when he terminated the applicant’s employment, did so without express authority then I consider that he had implied authority to do so.  That is because, as agent for the Council or for the respondent itself (or as an organic part of the respondent) he had the implied authority to do everything necessary for, and ordinarily incidental to carrying out his express authority.  Employment and termination of the employment of staff is, in my view, in the context of the respondent and its affairs, necessary and incidental to the management of the respondent and its office.

30                  If I am wrong in both of the above assessments and Mr Robinson acted without express or implied authority, I consider that the evidence shows that the Council ratified his actions in terminating the applicant’s employment.  The ratification took the form of, first, the Executive Committee simply noting what Mr Robinson had done and, secondly, the Council accepting the report of the executive meeting in question.  The Council does not in terms expressly ratify Mr Robinson’s termination of the applicant’s employment, but I think that that is the proper characterisation of its resolution.  In those circumstances, the ratification would date back to the date of Mr Robinson’s action on behalf of the Council i.e. to 19 May 1997.

Whether the respondent paid the required amount of compensation instead of notice

31                  The evidence shows that the respondent paid to the applicant an amount equal to four weeks salary, less tax.  In his letter of 19 May 1997 to the applicant, Mr Robinson did not describe that payment as being the required amount of compensation instead of notice provided for by s 170CM of the Act.  He referred to legal advice that the applicant’s conduct constituted abandonment and/or repudiation of his employment contract, which repudiation was stated as being accepted.  Earlier in his letter Mr Robinson had expressly terminated the applicant’s employment.  I think that it is convenient to set out again the last paragraph of Mr Robinson's letter, which read:

“However, consistent with the practice of being a model employer, I am prepared to make an ex gratia payment to you, equivalent to four weeks pay.  Please find enclosed a cheque for that amount.  You should also note that despite not providing sick leave certificates, I will not seek to recover payment for this leave from you."

32                  The question is whether, despite the fact that the payment was described as being an ex gratia payment, not paid with the intention on the respondent’s part of complying with s 170CM of the Act, it should be treated in law as amounting to (or as amounting to part of) the required amount of compensation instead of notice referred to in the section?  I was not referred to any authority directly in point, although I was referred to authorities relating to whether additional or gratuitous payments should be taken into account where a breach of an award is alleged.  They included Pacific Publications Pty Ltd v Cantlon (1983) 4 IR 415 (a decision of the Industrial Commission of New South Wales in Court Session) and Poletti v Ecob (No 2) (1989) 31 IR 321 (a decision of the Full Court of this Court).  I think that those cases are to be distinguished from the circumstances of this matter.  I have found the decision of Moore J in Black v Brimbank City Council (1998) 152 ALR 491 to be more helpful in resolving this issue.  Black involved the question whether redundancy payments should be brought into account when assessing damages for unlawful dismissal, so it too is not directly in point.  In that case Moore J reviewed a very considerable number of authorities.  At p 505 his Honour noted that the respondent’s liability for damages arose because it was to be assumed for the purposes of that decision, that it had breached the contract of employment, thereby exposing it to damages to compensate for the benefits which Mr Black would have derived had he been employed for the residue of the contractual term.  Moore J noted that the same act which constituted the breach was also the act which founded the entitlement to the payment of severance entitlements.  His Honour said this:

“The payment of severance entitlements arose directly from the act which constituted the breach for which compensatory damages are now sought.  It would, in my opinion, be inconsistent with the purpose for which compensatory damages are awarded to ignore the payment of severance entitlements directly arising from the act which constituted the breach when assessing damages flowing from it.  Putting the matter slightly differently the damages are designed to put the party not in default in the same position as he or she would have been in had the contract been performed [authority cited].”

33                  I propose to take a similar approach in this matter.  The fact is that the respondent paid to the applicant an amount of money when it terminated his employment.  That amount was calculated by reference to a period which coincides precisely with the period of notice stipulated by s 170CM(2) and accepted by the applicant in these proceedings as being his statutory period of notice entitlement.  The occasion of that payment was the respondent’s termination of the applicant’s employment.  Accordingly I think that, as a matter of law, it is to be characterised as being at least part of the required amount of compensation instead of notice which it was the respondent’s obligation to pay to him under s 170CM of the Act.  The applicant pointed to the fact that the respondent, in the separation certificate which it provided to the Department of Social Security in relation to the applicant did not refer to any payment as having been made to him on the occasion of such termination.  I do not think that that fact bears upon the proper characterisation of the payment which, quite clearly, was made on that occasion.

Sick Leave

34                  It was common ground between the parties that the respondent had not paid the applicant in respect of the period between 8 May and 19 May 1997, a period of eight working days.  The undisputed evidence is that, had he been paid for that period, he would have received a sum of $1732.72.  I shall refer to that amount as being “the Sick Leave Amount”.  It is part of the applicant’s case that under s 170CM of the Act the respondent was obliged, on terminating his employment, to include as part of “the required amount of compensation instead of notice” the Sick Leave Amount.  The applicant says that this obligation arose because, on his evidence, on or about 17 April 1999 he sent a handwritten letter to the respondent.  His evidence is that in that letter he enclosed three medical certificates certifying that he was unfit for work for the period 10 March to 17 March 1997, 17 March to 24 March 1997 and 24 March to 28 April 1997.  The applicant’s evidence is that in the handwritten letter (in an envelope addressed to Ms Walkington), he explained that he wished to exhaust his sick leave before using annual and long service leave.  In other words, he sought to substitute sick leave entitlements for the allocations made in Ms Walkington’s letter of 4 April 1997 to him.  The applicant’s evidence was that in those circumstances he would not be required to work until 10 June 1997. 

35                  The respondent’s evidence was that it received no such letter.  That evidence was given by Mr Robinson in his affidavit and by Ms Walkington in her affidavit.  It was also corroborated by the evidence of Ms Patricia Brewer, the respondent’s Human Resources Officer.  The applicant did not seek to cross-examine either Ms Walkington or Ms Brewer.  Nor did he challenge Mr Robinson’s evidence on the matter of the non-receipt of his (the applicant’s) letter of on or about 17 April 1997.

36                  I accept the respondent’s evidence that it did not receive that letter.  In view of the conclusions which I set out below in relation to this aspect of the matter, I do not think that it is strictly necessary for me to find whether the applicant did in fact forward such a letter to the respondent.  In case I am wrong in such assessment, and I am under an obligation to make such a finding in relation to that matter, I shall proceed to do so.  I find that the applicant did not send that letter.  I must immediately make it clear that, in so finding, I have not concluded that the applicant knowingly sought to mislead the Court.  I should also make it clear that there was nothing in the demeanour of the applicant at the hearing or the manner in which he gave his evidence which led me to conclude that he was doing anything other than trying to give truthful evidence to the best of his ability.  I have concluded that in all probability the applicant genuinely believes that he sent such a letter.  But I do not think that he did so.  I think that there is sufficient evidence for me to find, as I do, that it was more likely than not that he did not send that letter.  I shall try to explain my reasons as succinctly as possible. 

37                  First, as I have mentioned, I have accepted the respondent’s evidence that it did not receive the letter.  That means that if the applicant had posted the letter, it must have gone astray in the post.  I think that I am entitled to take judicial notice, and I do so, of the fact that mail does occasionally go astray, but that most mail either finds it way to its destination or is returned to the sender.  I put a low probability on the letter having gone astray in the post. 

38                  One of the factors to which I have given considerable weight on this matter was the applicant’s state of mind during the relevant period.  By the relevant period I mean the first five months of 1997.  The medical and other evidence indicates that during that period the applicant was suffering from depression.  The evidence shows that he was not properly attending to his duties at work.  There was, very sadly, an explanation for this.  The date 20 February 1996 was the first anniversary of the death of the applicant’s infant son after nearly two years of battling cancer.  The applicant also had acute matrimonial difficulties.  He had cause to be depressed.  I think that it was more likely than not that the applicant failed to take the necessary steps to make an application for the leave entitlements which the respondent had granted to him in its letter of 4 April 1997 to be partly converted into sick leave entitlements.  The applicant’s own evidence was that to some extent he was relieved when he received the letter of 19 May 1997 terminating his employment, because the situation had come to a head and the matter had been decided.  Acknowledging, as I do, the effects of the depression then being suffered by the applicant, I think that his admitted reaction was not consistent with that of a person who was determined to maintain his employment i.e. a person who would have sent the letter to extend effectively his leave entitlement.  Had he sent the letter, my assessment is that the applicant would have responded far more immediately to the terms of the termination letter, particularly the complaint, in that letter, that no sick leave certificates had been forwarded.  There is reference, under the date 18 March 1997, in Dr Kirkman’s notes to the matter of sick leave.  The note indicates that the applicant was on sick leave for a week ending 24 March 1997.  I think that the rest of Dr Kirkman’s evidence is neutral on the subject.  His practice was not always to record the issuing of certificates in relation to sick leave.  He said that he might well have issued the medical certificates which the applicant claimed to have obtained from him.  He had, not surprisingly, no independent recollection of doing so. 

39                  But there are other bases upon which the applicant’s claim for the Sick Leave Amount should be rejected, regardless of whether he posted the letter.  First, in my view it is clear that the letter never arrived.  Accordingly, he was on authorised leave of various types until 7 May 1997.  Thereafter, perhaps through no fault of his own, the situation was that he was absent from work without leave of any type and without permission.  He was not entitled to payment for the eight day period in question leading up to his dismissal. 

40                  Furthermore, the case was fought on the basis that the applicant was employed on terms which were similar to the provisions of the Public Service Award, extracts from which constitute Exhibit R7.  From that document it can be seen that an officer’s entitlement (the respondent submitted that there was no “entitlement” but simply the possibility of the exercise of a discretion, however I shall work on the basis of entitlement) to “convert” either annual leave or long service leave to sick leave was contingent on medical evidence that the officer was confined to his or her place of residence or a hospital for either 7 consecutive calendar days or 14 consecutive calendar days respectively. 

41                  The applicant submitted that there was no need for me to find whether or not the respondent had received the three medical certificates.  He submitted that, even if he had not posted the letter requesting sick leave and the medical certificates, he would, on subsequent production of the necessary medical certificates, have been granted sick leave.  In my view, even those circumstances would not cause (as he argued) amounts equal to such sick leave entitlements to fall within s 170CM(4).  The respondent chose to terminate the applicant’s employment.  I have found that that event occurred on 19 May 1997.  The Act determines what consequences, in terms of financial rights and obligations flow from that circumstance.  The only theoretical factor involved is to assume that the employee’s employment continued during the period of notice (in this case it would have been 4 weeks from 19 May 1997) and how much the respondent would have become liable to pay him because of the employment continuing during that period.  If the applicant has an entitlement to be paid for the eight business days prior to 19 May 1997 then that is something which he is at liberty to pursue elsewhere.  But, in my opinion, that has no bearing on whether the respondent contravened s 170CM.

42                  The “required amount of compensation instead of notice” referred to in s 170CM(4) is, in my view, to be computed not by including entitlements which may or may not have accrued prior to termination of the employment but only those for which the employer would have become liable to pay to the employee because of the employment continuing during, in this case, the four week period following 19 May 1997.  That is what the subsection says and in my view that it what Parliament intended i.e. the compensation is to cover any amounts which the employer would have become liable to pay to the employee because of the employment continuing during the period of notice.  The Sick Leave Amount does not fall into that category.

43                  For all of those reasons, I hold that the required amount of compensation payable under s 170CM by the respondent to the applicant on 19 May 1997 did not include any monies to which he may have been entitled for the eight business days prior to that date.

Superannuation

44                  The parties agreed that, under the terms of the applicant’s employment, the respondent was obliged to make a superannuation contribution calculated at 12½% of the applicant’s gross salary.  The applicant’s gross salary for four weeks would have been $4331.84 in respect of which the respondent’s superannuation commitment would have been $541.48.  I shall call that sum “the Superannuation Amount”.  The respondent argued that the Superannuation Amount should not, as a matter of law, be included in the required amount of compensation because it was not an amount which it would have become liable to pay to the employee.  The respondent submitted that it was an amount which it would have become liable to pay, not to the applicant, but to the trustee of the relevant superannuation fund.  No authority was cited to me either for or against this proposition. 

45                  As a matter of construction, I reject the respondent’s submission.  I think that the expression “pay to the employee” in s 170CM(4) should be read as meaning “pay to or on behalf of the employee”.  I think that it is sufficiently clear that such a construction reflects Parliament’s intention.  Section 170CM(5) states how the total of the required amount of compensation must be worked out.  Section 170CM(5)(c) specifically refers to any other amounts payable under the employee’s contract of employment.  In my view the superannuation amount would fall within that subparagraph.

46                  A reasonably analogous constructional point arose in the recent decision of Finn J in Comcare v Fyfe [1999] FCA 1368 in the context of Comcare’s statutory entitlement to recover part of the amount of compensation “… paid to the employee in respect of the injury …”. 

47                  Adopting, with respect, a similar approach to this matter as Finn J adopted in Fyfe i.e. a purposive construction, I think that it is clear that Parliament intended to impose on an employer seeking to pay compensation instead of notice, an obligation to pay either to or for the benefit or on behalf of the employee everything which that employee would have been entitled to have paid had he or she worked out the required period of notice. 

48                  Accordingly, by not paying the superannuation amount, in my view the respondent contravened s 170CM of the Act.  In those circumstances, s 170CR(4) provides that the Court may make an order requiring the respondent to pay to the applicant an amount of damages equal to the amount which, if it had been paid by the respondent when the employment was terminated would have resulted in it not contravening that section.

49                  However, the undisputed evidence is that following the Judicial Registrar’s decision in this matter (on 19 June 1998), the respondent paid to the applicant the sum of $2292.00.  The Judicial Registrar held that the applicant was entitled to be paid the sum of $2929 by the respondent, but the order was wrongly extracted.  A typographical error transposed the figures. 

50                  The result is that the applicant has received from the respondent an amount of $2292 when, on my findings, he was only entitled to $541.48.  This means that he has been overpaid the sum of $1750.52 ($2292 less $541.48).

51                  Accordingly I decline to make an order under s 170CR(4).  The respondent has not made any claim for reimbursement, but has foreshadowed a claim for costs in respect of matters which include the late abandonment by the applicant of claims made under s 170CK of the Act.  I will hear the parties in respect of those matters.

Conclusion

52                  There will be an order setting aside the orders made by the Judicial Registrar, a declaration that the respondent contravened s 170CM, but that otherwise the application be dismissed.

Associate:

Dated:              29 October 1999