Federal Court of Australia

BlueScope Steel (AIS) Pty Ltd v Connelly [2021] FCA 683

ORDERS

THE COURT ORDERS THAT:

1.    Leave is granted to amend the Notice of Appeal to include Ground 2A.

2.    The appeal is dismissed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

FLICK J:

1    The present proceeding follows upon a number of earlier decisions of the Federal Circuit Court of Australia.

2    In issue in those earlier proceedings was whether BlueScope Steel (AIS) Pty Ltd (“BlueScope”) had contravened s 323 of the Fair Work Act 2009 (Cth) (the “Fair Work Act”). Two employees, one of whom was Mr Peter Connelly, asserted that there had been a contravention of s 323 and claimed (inter alia) “compensation” for the loss arising.

3    On 13 March 2020, the Federal Circuit Court concluded that BlueScope had prima facie contravened s 323 of the Fair Work Act and reserved for future decision “all issues relating to compensation and quantum”: Benge & Anor v BlueScope Steel (AIS) Pty Ltd (No. 2) [2020] FCCA 515 at [86] (“BlueScope (No. 2)”). On 29 October 2020, the Federal Circuit Court published its reasons in respect to compensation: Connelly v BlueScope Steel (AIS) Pty Ltd (No. 3) [2020] FCCA 2902 (“BlueScope (No. 3)”). Mr Benge, it may be noted in passing, had initially been a party to the proceeding but had later settled his claims against BlueScope. In assessing the claims for compensation made by Mr Connelly, the Federal Circuit Court Judge relevantly made orders on 23 November 2020 recognising (inter alia) that Mr Connelly:

    should be awarded $72,807.83 “as compensation for [the Respondent’s] failure to pay the Applicant in full in respect of 107 fortnightly pay periods between 10 January [2016] and 3 September 2020”; together with

    interest in the amount of $11,085.90.

4    Now before the Court is the question as to whether the Federal Circuit Court Judge erred in his assessment of the “compensation” payable.

5    It is concluded that there is no appellable error and that the appeal should be dismissed.

The Fair Work Act – s 545

6     Section 545 of the Fair Work Act provides in relevant part as follows:

Federal Court …

(1)    The Federal Court … may make any order the court considers appropriate if the court is satisfied that a person has contravened or proposes to contravene, a civil remedy provision.

(2)    Without limiting subsection (1), orders the Federal Court … may make include the following:

          …

         (b)     an order awarding compensation for loss that a person has suffered because of the contravention;

          …

7    The approach to the construction and application of s 545 has been summarised as follows by Mortimer J in Dafallah v Fair Work Commission [2014] FCA 328, (2014) 225 FCR 559 at 594-597 (“Dafallah”):

Compensation

[146]    Pursuant to s 545 of the FW Act, the Court may make any order it considers appropriate if satisfied that a person has contravened a civil remedy provision. By s 545(2)(b), this includes an order for compensation for loss the person has suffered because of the contravention.

…

[148]    The language of s 545 is broad, allowing the Court to provide remedies which meet the circumstances of any given contravention, taking into account the range of parties who may have brought proceedings in relation to the contravention, and the actions which might in any given circumstance be required to remedy the contravention, or to ensure it does not occur again. Awarding compensation for loss is but one example and may not be appropriate, depending on what other action has been taken in respect of any losses. Each case will turn on its facts in that sense.

[149]    Fixing compensation under s 545 is a statutory task, and the Court must not substitute that task with approaches derived from the general law: …; Qantas Airways Ltd v Gama (2008) 167 FCR 537 at [94] per French and Jacobson JJ.

…

[157]    Further, the width of the power conferred by s 545(1) also allows for compensation which may not fully compensate a person for the loss suffered: see [Qantas Airways Ltd v Gama [2008] FCAFC 69, (2008) 167 FCR 537] at [94] per French and Jacobson JJ, where their Honours were considering similar statutory compensation provisions under s 46PO(4) of the Human Rights and Equal Opportunity Commission Act 1986 (Cth). In my opinion, that approach is available under s 545(1) because, as their Honours pointed out in Gama at [94], an award of compensation is discretionary. In s 545(1), the governing consideration is what the Court considers “appropriate”, and this in my opinion leaves room for a Court to find in a given case that less than full compensation might be appropriate.

[158]    While by no means operating as a mandatory approach to a discretion such as that conferred by s 545(1), with respect I adopt the remarks of Lee J in Aitken v Construction, Mining, Energy, Timberyards, Sawmills and Woodworkers Union of Australia (WA Branch) (1995) 63 IR 1, considering factors relevant to an award of compensation under s 170EE of the then Industrial Relations Act 1988 (Cth). His Honour said (at 9), that the Court will:

have regard to what is reasonable in the circumstances and will look at what would have been likely to occur had the Act not been contravened … The Court will consider the detriment occasioned to the employee by the employer’s contravention of the Act, and the extent to which it is reasonable to compensate the employee for such consequences.

[159]    One of the principal tasks, if compensation is to be awarded, is to ensure that there is the appropriate causal connection between the contravention and the loss claimed: …

(some citations omitted)

In subsequently referring to this summary of principles, her Honour has said that “it is important to recall the statutory criterion is what the court considers ‘appropriate’, provided there is a causal connection between the contravention and the compensation awarded”: Sayed v Construction, Forestry, Mining and Energy Union [2015] FCA 27 at [301], (2015) 327 ALR 460 at 518. See also: Veeraragoo v Goldbreak Holdings Pty Ltd (No 2) [2018] FCA 1448 at [54] per Colvin J.

8    In citing at para [149] Qantas Airways Ltd v Gama [2008] FCAFC 69, (2008) 167 FCR 537, Mortimer J was referring to the observations of French and Jacobson JJ in that case as to the need to address attention to the terms of the relevant statutory provision conferring the power to award compensation. In that case, the statutory provision allowed for an award of damages “by way of compensation for any loss or damage suffered because of the conduct of the respondent”. “Ultimately”, according to French and Jacobson JJ, “it is the words of the statute that set the criterion for an award”: [2008] FCAFC 69 at [94], (2008) 167 FCR 537 at 568. “In any case”, their Honours further observed, “the discretionary character of the remedy allows for an award of an amount ‘by way of compensation’ which does not fully compensate for the loss suffered.”

9    An order may be made pursuant to s 545(1) to compensate a person for “hurt and humiliation” and the term “loss” as employed in that subsection, it has been held, is not confined to economic loss: Australian Licenced Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd [2011] FCA 333, (2011) 193 FCR 526 at 594-595 (“Australian Licenced Engineers”). Justice Barker there concluded:

[441]    The question arises, however, whether the Court may order compensation, that is to say the payment of a pecuniary sum on account of hurt and humiliation found to be a direct consequence of contravention of ss 340 and 346 of the FW Act. There is no direct authority under the FW Act concerning this question. However, approaching the question as a matter of first principle, it is plain that s 545(1) is intended to provide the court with a very broad power to make appropriate orders where contravention is established. In this s 545(2) provides confirmation that certain types of orders — for example, an order awarding compensation for the loss a person has suffered because of a contravention — may be made. But s 545(2), in this regard, expressly states that it has effect “without limiting subs (1)”.

[442]    As a matter of principle it is difficult to see why a compensatory financial order cannot be made in respect of hurt and humiliation (or “shock, distress and humiliation” as s 329(4) of the FW Act describes this head of loss) shown to be a direct consequence of a contravention. At common law, courts have been reluctant to provide damages for a breach of a contract which results in hurt and humiliation, unless the parties to the contract can be taken to have contemplated such damages for breach: …

[443]    However, the power of the court under s 545(1) and (2) to make appropriate orders following contravention including an order for compensation is quite divorced from this type of contractual consideration. As a matter broad public policy, the Parliament of Australia has provided that the Court may give appropriate relief where contravention is proved. Relief in these circumstances helps to uphold the policy indicated in the FW Act that, amongst other things, contraventions of the freedom of association provisions should not occur and that appropriate orders should be made to remedy the contravention of such provisions. There is, therefore, in my view, no obvious policy consideration that militates against the making of a compensation order under s 545(1) or a compensation order under s 545(2), for the sorts of reasons that have inhibited the award of damages at common law for a breach of contract which is attended by shock, distress or humiliation.

…

[449]    Additionally, I do not consider that the word “loss” in s 545(2), to the extent this provision must be relied upon for the making of a financial compensation order, limits the loss that may be claimed to economic loss. While the respondent contends that a distinction should be drawn between “loss” and “damage”, and that shock, distress and humiliation should be considered as “damage”, and not as “loss”, I find the distinction elusive and unhelpful. Shock, distress and humiliation may be considered, where it exists, as an injury the person suffers which is apt to be described as non-economic loss or damage.

[450]    In my view, Mr Puspitono is entitled to some measure of compensation for the distress and humiliation I have found he suffered as a direct consequence of the contraventions proved by the evidence. The Union claims a non-economic loss order under this head of $25,000. …

See also: Construction, Forestry, Maritime, Mining and Energy Union v Melbourne Precast Concrete Nominees Pty Ltd (No 3) [2020] FCA 1309 at [5] per O’Callaghan J.

10    Although not called upon to give any detailed attention to the term “appropriate” as employed in s 545(1), it may nevertheless finally be noted that in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3, (2018) 262 CLR 157 at 168-169 Kiefel CJ observed:

[23]    Section 545(1) is not directed to the subject of penalties. By its terms, its sphere of operation is circumscribed. The express terms of s 545(1) permit the Federal Court only to make orders which it considers to be “appropriate” in the circumstance where it is satisfied that a person has contravened or proposes to contravene a civil remedy provision. The Court is therefore restricted to making the kinds of orders which are capable of properly being seen as appropriate to be made by the Court in the exercise of its jurisdiction. …

Similarly, Keane, Nettle and Gordon JJ observed (at 190-191):

[103]    …But the starting point of the process must be the text of s 545(1) read in the context of the Fair Work Act as a whole and, in particular, in light of s 546. So approached, the first and most immediate point of significance is the breadth of the terms in which s 545(1) empowers the court to make any order the court considers appropriate. What is “appropriate” for the purpose of s 545(1) falls to be determined in light of the purpose of the section and is not to be artificially limited. …

(footnote omitted)

These observations as to the term “appropriate” were made, it must be recognised, in a context where the issue being resolved was whether s 545 could be invoked to support the making of an order that a person against whom a penalty had been imposed could not be indemnified.

The contravention – as pleaded

11    The contravention alleged in the Statement of Claim as amended and dated 20 March 2019 was expressed as follows:

By failing to pay each of the Applicants their respective annualised salary in full, in each pay period on and after 10 January 2016, the Respondent has contravened s 323 of the FW Act

It was this contravention that the primary Judge found proved – the primary Judge concluding (inter alia) that “Bluescope … caused a loss and detriment to Mr Connelly and contravened s.323 by not paying him in full his annualised salary after 9 January 2016 and thereby breached a civil remedy provision, which empowers the Court under s.545 to make ‘any order the court considers appropriate’, including under s.545(2)(b) of ‘awarding compensation for loss that a person has suffered because of the contravention’”: [2020] FCCA 2902 at [3].

12    The orders as ultimately made and which were the focus of the present appeal were entered as follows on 23 November 2020:

1.    Pursuant to s.545 of the Fair Work Act 2009 (“FW Act”) the Respondent is ordered to pay the Applicant $72,807.83 as compensation for its failure to pay the Applicant in full in respect of 107 fortnightly pay periods between 10 January and 3 September 2020, in contravention of s.323 of the FW Act.

2.    Pursuant to s.547 of the FW Act the Respondent is ordered pay the Applicant interest on the compensation in Order 1 in the amount of $11,085.90.

13    The Notice of Appeal, as initially filed and as amended, appealed from that part of the judgment of the primary Judge in BlueScope (No. 3) “that determined the compensation due to the Respondent, and orders 1 and 2…”

The Grounds of Appeal & their amendment

14    The Grounds of Appeal sought to be relied upon by BlueScope were set forth in its Amended Notice of Appeal as follows:

Grounds of Appeal

1.    The Primary Judge erred in determining compensation by failing to apply in full the amounts paid by the Appellant to the Respondent for all overtime he had worked over the whole of the relevant period commencing 10 January 2016. In particular the Primary Judge only took into account those fortnights in the period where the amount paid to the Respondent was less than the fortnightly annualised salary rate, and in doing so, failed to take into account as a relevant matter overtime payments made to the Respondent in other fortnights to the extent that they resulted in a payment in excess of the annualised salary rate. Such payments should have been taken into account and applied to the assessment of compensation for reasons including:

a.    such an approach was consistent with the contractual entitlement relied upon by the Respondent, which was to an annualised salary rate, payable in equal fortnightly instalments, which incorporated an amount of pre-paid overtime, pursuant to which the overtime in fact worked, as required by the Appellant, could be more or less than the pre-paid hours in any given fortnight; and

   b.    general principles of compensation;

1A.    The Primary Judge erred in awarding the Respondent an amount of compensation pursuant to s545 of the Fair Work Act 2009 (Cth) in excess of the monetary loss he had suffered, noting the effect of Order 1 will mean the Respondent will have received an income for the relevant period in excess of what he would have received but for the contravention.

2.     The Primary Judge further erred in determining compensation for the Respondent by failing to apply the principle of mitigation, in particular by failing to reduce the compensation to the Respondent by a sum equivalent to the value of the overtime the Respondent declined to work in the period. Such amounts should have been taken into account and applied to reduce the compensation payable to zero given:

a.    the claim of the Respondent for under-payment of the annualised salary was directed to the loss of the component for pre-paid overtime which, under the terms of the contract of employment relied upon, the Respondent could have been required to work;

b.    there was no good reason why the Respondent could not have worked such overtime;

c.    there were good reasons why the Appellant did not after 10 January 2016 compel the Respondent to work the available overtime;

d.    had the Respondent taken up in full the opportunities to work overtime he would have earned more in the relevant period than under the annualised salary he relied upon; and

e.    general principles of compensation and mitigation.

2A.    On the facts of the matter, it was not open to the Primary Judge and an error, to conclude that the Respondent did not fail to mitigate his loss by his actions of not accepting the further overtime offered to him by the Appellant during the relevant period commencing 10 January 2016.

   3.    Such further ground or grounds as the Court determines sufficient.

Appellable error – the grounds of appeal & the amendments?

15    The position adopted by BlueScope during the course of the hearing was that s 545 of the Fair Work Act conferred a discretionary power as to the award of compensation. Albeit directed to Grounds 1 and 2 of the Notice of Appeal, the written Outline of Submissions filed on behalf of BlueScope, and prior to leave to amend being sought, thus contended that the “determination of compensation involved the exercise of discretion by the Primary Judge.”

16    As such, BlueScope contended that an error of the kind identified in House v The King (1936) 55 CLR 499 (“House v The King”) had to be made out. In an oft-repeated statement, Dixon, Evatt and McTiernan JJ there said at 504-505:

… The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred. …

Section 545 unquestionably confers a discretion – the Court “may make any order”. And s 545 was correctly referred to as a discretionary power by Mortimer J in Dafallah [2014] FCA 328 at [157] and [158]. But whether any challenge to the exercise of that discretion could only be approached upon the basis of establishing an error of the kind identified in House v The King may be doubted. An error of law, for example, could possibly emerge from an award of compensation which went beyond any “loss” suffered or could emerge if it were shown that the compensation was not incurred “because of the contravention”.

17    With respect to Ground 1, the written submissions filed on behalf of BlueScope thus contended that “the Primary Judge erred in failing to have regard to a relevant matter, namely failing to have regard to all of the amounts paid by the Appellant to the Respondent for overtime he worked over the relevant period….”

18    Leave to amend Ground 1 was not opposed and leave was granted during the course of the hearing on 1 June 2021.

19    With respect to Ground 2, the written submissions filed on behalf of BlueScope contended that “the Primary Judge erred by misapplying principle” and, in particular, erred in failing “to properly apply the principle of mitigation in determining compensation, by failing to reduce the compensation to the Respondent by a sum equivalent to the value of the overtime the Respondent was offered, but declined to work, in the period.”

20    The question as to whether leave should be granted to amend Ground 2 was reserved at the hearing. In supplementary submissions filed after the hearing, Mr Connelly did not oppose leave to amend being granted to advance the new Ground 2A provided “the further overtime offered” as referred to in Ground 2A was confined to “the overtime offered by the Appellant.” So confined, leave to amend Ground 2A is granted.

21    Notwithstanding an exchange with Counsel for the Appellant during the hearing as to whether the proposed amended Grounds of Appeal in Grounds 1A and 2A went beyond an allegation as to an error of the kind set forth in House v The King, it remained unclear what the source of the error sought to be relied upon was in those two amendments. Further written submissions filed by the Appellant subsequent to the hearing did not seek to advance any error of law as to the construction to be given to the discretionary power conferred by s 545(1) and only sought to respond to factual assertions raised by the Respondent’s supplementary submissions. However construed, Grounds 1A and 2A could nevertheless not be understood as seeking to advance a contention that the totality of the overtime in fact paid and the overtime in fact offered but rejected had necessarily to be taken into account in reducing the “compensation” to be paid. So construed, such a contention would impermissibly strip s 545 of the power to make an order considered to be “appropriate”.

22    The lack of certainty as to the source of the error or errors sought to be relied upon in respect to Grounds 1A and 2A, with respect, is regrettable. Any appellable error that has to bring itself within House v The King may well confront more insurmountable difficulties than (for example) an error of law as to the construction and application of s 545(1). But such written submissions as were filed did not clearly identify any error going beyond an error as to the exercise of the “discretion” conferred by s 545. It was upon that basis that the case was argued and it is upon that basis that the case has been resolved.

23    No Ground of Appeal has been made out.

The calculation of overtime – Grounds 1 & 1A

24    The central question to be resolved in respect to Grounds 1 and 1A is whether or not Mr Connelly should have accepted the overtime offered to him.

25    Any analysis necessarily starts with the terms of Mr Connelly’s contract of employment and whether BlueScope unilaterally repudiated that contract.

26    The contract of employment is found in a letter to him dated 9 November 2011. In relevant part, that letter states as follows:

Your Annualised Salary includes payment for shift allowance, annual leave loading, public holidays for shift workers, weekend penalties and an additional 6. hours overtime paid at penalty rates. You will be required to work these additional hours when requested by the department.

Salary and other payments (where applicable), less income tax instalments and other authorised deductions, will be paid directly into your designated bank account fortnightly. You will receive your payslips electronically via Employee Self Service.

27    In very summary form, the difficulties giving rise to the present litigation emerged in mid-2015 when BlueScope, according to the primary Judge, “was in a dire and perilous financial position and there was a substantial risk of the necessity to close the [Port Kembla Steel Works] and the consequent loss of employment by its employees”: BlueScope (No. 2) [2020] FCCA 515 at [20]. One response of BlueScope was to announce that “all… departmental agreements, involving pre-payment of overtime are abolished”: [2020] FCCA 515 at [35]. Not surprisingly, there was concern expressed by the employees. In respect to wage employees, the Fair Work Commission approved a new enterprise agreement in November 2015: [2020] FCCA 515 at [43]. This new agreement, however, did not extend to employees such as Messrs Benge and Connelly. BlueScope nevertheless wrote to Messrs Benge and Connelly in November and December 2015 advising them that it would “cease the current annualised salary agreement, and in its place implement an aggregate salary arrangement effective as of the pay period commencing on 10 January 2016”: [2020] FCCA 515 at [44] to [48]. This was found by the primary Judge to be a “repudiation of the employment contracts, because the contractual remuneration provided by the employment contracts was a fundamental term”: [2020] FCCA 515 at [67]. Messrs Benge and Connelly continued to be employed by BlueScope after 10 January 2016 but their conduct in doing so was found not to “evince or constitute any consent to the removal of pre-paid overtime from their employment contracts”: [2020] FCCA 515 at [71]. Mr Connelly continued to work some overtime, for which he was paid, and declined to accept offers to work other available overtime.

28    So much was common ground for the purposes of the present appeal. None of these findings or conclusions of the primary Judge were sought to be challenged.

29    Nor was there any challenge on appeal to the conclusion of the primary Judge that BlueScope contravened s 323 of the Fair Work Act: BlueScope (No. 2) [2020] FCCA 515 at [86]; BlueScope (No. 3) [2020] FCCA 2902 at [3].

30    What was put in issue was the manner in which “compensation” was calculated for the purposes of s 545 of the Fair Work Act. Whether this process of calculation was a House v The King error can be left to one side.

31    If attention is confined simply to the amount of money paid to Mr Connelly during the period from 10 January 2016 through to June 2020, the fact is that had Mr Connelly continued to receive his “annualised salary” calculated by reference to a fortnightly payment of $5,596.76 he would have received:

    $643,627.40

But he was in fact paid an “aggregate salary” calculated by reference to a fortnightly payment starting at $4,677.56 and increasing incrementally over the period to $4,990.51, which for the same period totalled:

    $550,169.23

In addition to this “aggregate salary” he also received in total:

    $26,957.68 for overtime worked; and

    $735.96 for shift allowances,

totalling $27,693.64.

It may also be presently noted that for the same period he was offered and rejected overtime which, had he worked the overtime offered, he would have received a further:

    $71,862.22

The primary Judge thus concluded that had Mr Connelly been paid his “annualised salary” he would have received $643,627.40: [2020] FCCA 2902 at [19].

32    If attention is focussed on this sum of $27,693.64, the facts were that for thirteen of the fortnights in the 2016-2020 period, Mr Connelly did receive an amount of money totalling $22,382.98, that amount falling into two categories, namely:

    $11,101.92, being the total amount of overtime paid to Mr Connelly which had the effect of satisfying the required fortnightly payments of $5,596.76 under the annualised salary; and

    $11,281.06, being the total amount for overtime paid which exceeded the required fortnightly payments of $5,596.76.

33    What divided the parties was the extent to which the sum of $27,693.68 (or any part of that sum) should be taken into account when assessing “compensation”.

34    BlueScope’s position was that the entirety of the $27,693.64 should be deducted from the compensation otherwise payable to Mr Connelly. By way of contrast, Mr Connelly accepted that the payments for overtime which “had the effect of satisfying the required fortnightly payments of $5,596.76 under the annualised salary” (together with a further sum of $5,310.66) should reduce the “compensation” payable, but otherwise denied that the excess amount of $11,281.06 should also reduce the amount of “compensation”.

35    When considering what constituted the “contravention” of s 323 the primary Judge in BlueScope (No. 3) noted the competing submissions as to how “compensation” should be calculated and further concluded as follows that each failure to pay the fortnightly “annualised salary” of $5,596.76 constituted a “discrete and separate contravention”:

[24]    On the one hand Bluescope contends, on the basis that the annualised salary was expressed in annual terms, that the assessment of compensation should be on an annualised basis and that this total of $27,693.64 ought to be deducted from any compensation to which Mr Connelly is otherwise entitled. On the other hand Mr Connelly points to the fact that the annualised salary was payable and to be discharged by fortnightly payments and contends that each fortnight that he was underpaid constituted a discrete and separate contravention of s.323 of the FW Act.

[25]    In my view Mr Connelly is entitled to claim compensation based on Bluescope’s failure to make in full the fortnightly payments of $5,596.76 required by his annualised salary. All salaries in Australia are expressed initially by reference to a total annualised figure, but are not paid in one annual amount. Rather they are paid at recurrent intervals by either weekly, fortnightly or monthly instalments. Section 323(1)(c) of the FW Act requires that amounts payable to an employee for the performance of work are to be paid “at least monthly”. In both a practical and legal sense Mr Connelly suffered a loss each fortnight that he was paid less than $5,596.76. In my view each fortnightly underpayment by Bluescope of the annualised salary to which Mr Connelly continued to be entitled was a discrete and separate contravention of s.323. He is entitled to an order awarding compensation under s.545(2)(b) for the loss each fortnight after 9 January 2016 during which he was not paid in accordance with his annualised salary arrangement.

When calculating the quantum of “compensation” the primary Judge concluded as follows that the sum of $11,281.06 should be disregarded:

[31]    …I find that no compensation is to be payable to him for those 13 fortnights when he did accept and perform overtime work and thereby received more than $5,596.76, as recorded in Table 1 of the Agreed Document and particularised at [26] above. This is because in those fortnights he did not suffer any loss due to any contravention. Further, I find that the amount of $5,310.66 for overtime otherwise worked is to reduce any compensation payable to him.

[32]    Second, I am of the view, consistent with [Counsel for Mr Connelly’s] submission, that the amount of $11,281.06 over and above the amounts for overtime necessary to have the effect of paying him his annualised salary of $5,596.76 for the 13 fortnights is to be disregarded. As far as Bluescope was concerned the amount of $11,281.06 was paid under the aggregate salary arrangement to Mr Connelly for overtime work accepted and actually performed by him. The amounts for overtime worked by Mr Connelly totalling $11,281.06 did not have the effect, and should not be regarded as having the effect, of reducing the loss suffered by him for any fortnightly contravention of the amounts payable to him under his annualised salary. In my view it would be neither fair nor appropriate for that amount to be thrown in reduction of any compensation payable to Mr Connelly under s.545 of the FW Act for Bluescope’s failure to pay to him the required fortnightly payments under the annualised salary arrangement.

36    No error, it is respectfully concluded, is disclosed in these conclusions. The method of the primary Judge was simply to approach the task of assessing what “compensation” was “appropriate” by reference to:

    his finding that the failure to pay $5,596.76 in each fortnight constituted a “discrete and separate” contravention;

    the necessity to consider whether for each of those fortnightly contraventions Mr Connelly had suffered any “loss”,

and thereafter concluding that:

    for those 13 fortnights when he in fact received a sum greater than $5,596.76, there was no “loss”.

For those 13 fortnights, Mr Connelly had received $11,281.06 in excess of what he was otherwise entitled to had BlueScope not repudiated its contract with him and adhered to its contractual obligation. On the approach of the primary Judge, that was an amount to be “disregarded”. And it was to be disregarded because those payments were made under the “aggregate salary arrangement” ([2020] FCCA 2902 at [32]).

37    There is no inconsistency in the approach of the primary Judge separately concluding that:

    there was no “loss” suffered by Mr Connelly for those 13 fortnights – even though the fortnightly payments were also being made under the “aggregate salary arrangement”, the monies being paid removing any “loss” which could otherwise have been suffered ([2020] FCCA 2902 at [31]); and

    disregarding the amounts paid in excess of the “annualised salary”, namely the sum of $11,281.06, an amount also paid pursuant to the “aggregate salary arrangement” ([2020] FCCA 2902 at [32]).

The issue being addressed and resolved by the primary Judge was directed to whether for any of those 13 fortnights Mr Connelly had suffered any “loss” by reason of each of the contraventions not to pay the annualised fortnightly payments. Irrespective of the basis upon which monies were paid for any of those fortnights – be it pursuant to the “annualised” contractual entitlement or the “aggregate” basis – no “loss” had been suffered.

38    If Ground 1 to the Notice of Appeal be confined to whether any error of the kind described in House v The King had been established, any such argument – it is respectfully considered – would be doomed to failure. Given the width of the power conferred by s 545(1) (cf. Dafallah, at [146] to [159]; Australian Licenced Engineers at [441] to [450]) and the evaluative judgment called for when making an order considered to be “appropriate”, any challenge to an exercise of that power undoubtedly confronts difficulties. The Appellant has failed, with respect, to prove that the manner in which the primary Judge approached his tasked and exercised that power involved any error of principle or any failure to take into account that which was relevant.

39    Rejected is the submission of BlueScope that the primary Judge had failed “to make a finding in respect of [BlueScope’s] submission that all overtime paid to [Mr Connelly] in the period should be taken into account, including the overtime paid in excess of his annualised salary in the 13 fortnightly periods where there was no contravention of s323 of the FW Act”. That was the very subject matter of the conclusions expressed by the primary Judge at paras [31] and [32] of the reasons for decision. To dismiss the primary Judge’s conclusion at para [32] as merely the expression of a “view” that the reduction of compensation by the amount of the payments was “neither fair nor appropriate” is to strip the Judge’s decision of the very task entrusted to him by s 545(1) and (2). In paragraphs [31] and [32] the primary Judge was expressing the application of those statutory provisions to the facts previously set forth, including the finding (expressed at para [25]) that “Mr Connelly suffered a loss each fortnight that he was paid less than $5,596.76”.

40    Even if the principles set forth in House v The King be placed to one side, it is similarly concluded that the findings made by the primary Judge as to the “appropriate” order to be made were findings made well within the powers conferred by s 545. Albeit not expressed in these terms, if Ground 1A be construed as embracing an error (for example) in the construction of the term “compensation”, or the term “loss”, or the phrase “because of the contravention” as employed in s 545(2)(b) of the Fair Work Act, any such argument would be rejected.

A failure to mitigate – Ground 2

41    Ground 2 is directed to a contention advanced on behalf of BlueScope that Mr Connelly failed to mitigate his loss by reason of not accepting the overtime which he had been offered. If the overtime which had been offered had been accepted, Mr Connelly would have received a sum which exceeded $73,809.15. That amount would have reduced the compensation otherwise payable to nil.

42    The primary Judge rejected a like argument. On appeal, it is respectfully concluded that Ground 2 should be rejected.

43    If the terms of s 545 be presently left to one side, the question as to whether a contracting party has failed to “take all reasonable steps to mitigate” his loss is an objective one and the test is whether a “reasonable person” would have taken such steps: Cubillo v Commonwealth (No 2) [2000] FCA 1084, (2000) 103 FCR 1 at 472 (“Cubillo”). O’Loughlin J there summarised the approach to be taken as follows:

[1522]    The applicants’ duty is to take all reasonable steps to mitigate his or her loss. An applicant will not recover damages for any loss which he or she could have avoided; nor will damages be recoverable if an applicant could have avoided a loss and has failed, through unreasonable action to avoid it. An objective test is to be applied to the personal circumstances of the applicant; that is, due and proper regard must be had to the applicant with all his or her abilities and disabilities when determining whether his or her conduct was reasonable. The appropriate test is whether a reasonable person, in the circumstances as they existed for the applicant, and subject to various factors such as the applicant’s medical history and his or her psychiatric condition would have returned to their families sooner. Whether an applicant has acted reasonably or unreasonably in not taking steps which would operate to decrease his or her loss is a question of fact, not law, depending on the circumstances of their individual cases: …

(citations omitted)

Approached from the perspective of contractual principle alone, the onus does not lie upon Mr Connelly to show that he has fulfilled his “duty”; the onus would be upon BlueScope “to show that he has not, and to show the extent to which he has not done so”: TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 at 158 per Hope JA (Meagher JA agreeing) (“TCN Channel 9”); cf. Trilogy Fund Management Ltd v Sullivan (No 2) [2015] FCA 1452 at [718], (2015) 331 ALR 185 at 331 per Wigney J (“Trilogy Fund Management”). No different approach is called for as to the party upon whom the onus lies for the purposes of s 545(1) of the Fair Work Act.

44    In the present proceeding, the primary Judge cited (inter alia) the summary of principles provided by O’Loughlin J in Cubillo and the observations of Hope JA in TCN Channel 9. He immediately thereafter went on to find that Mr Connelly was “not bound to mitigate his loss be accepting all overtime” and in doing so directed his attention to whether or not it was reasonable for Mr Connelly to have declined the offers of overtime. Albeit not expressed in the language employed by O’Loughlin J in Cubillo, it is readily apparent that the primary Judge proceeded to made findings of fact as to the reasonableness of the conduct of Mr Connelly in accordance with the authorities to which he had referred. In doing so, the primary Judge found as follows:

[40]    In my view, in the circumstances Mr Connelly faced he was not bound to mitigate his loss by accepting all overtime offered by Bluescope after 9 January 2016 for at least the following reasons.

[41]    First, Bluescope’s position was emphatically to the effect that it had terminated Mr Connelly’s annualised salary arrangement and in its place implemented the aggregate salary arrangement and reduced his salary by the significant annual amount of $23,899.76, or approximately 16.4% of his hitherto paid annualised salary: … Prior to the imposition of the aggregate salary, Mr Connelly had moderately but firmly opposed the legality of its foreshadowed imposition. Mr Benge had sought legal advice from Kells Lawyers on the foreshadowed imposition which affected him (and Mr Connelly) and that legal advice was, consistent with my findings in Benge No. 2, correct. In response, Bluescope merely condescended to state that it was “satisfied it is acting lawfully in adjusting the current approach for staff to the identified aggregate salary arrangement”: …

[42]    Accordingly, in the circumstances Mr Connelly was, and was entitled to be, aggrieved by Bluescope’s repudiation of his annualised salary in the circumstances found in Benge No. 2, including the unilateral termination of pre-paid overtime. That personal aggrievement and Mr Connelly’s state of mind are factors which may be taken into account in a case involving a contract of employment for personal services in assessing whether or not it was reasonable to expect him to accept offers of overtime after 9 January 2016: …

[43]    Second, Mr Connelly was objectively faced with the possibility that any acceptance by him of the imposed terms and conditions of the aggregate salary arrangement after 9 January 2016, including the acceptance of offers of overtime, might be asserted by Bluescope to evidence and evince an acceptance by him of the imposition of the aggregate salary arrangements. That is in fact exactly what Bluescope has done in this case, because at [39] of its Amended Defence it pleads in part that Mr Connelly “… did not express interest in redundancy… and continued after the adjustment to pay arrangements on 10 January 2016 to work in their employment … in doing so confirmed their consent to the change.”. In other words, Bluescope pleads in effect at [39] of its Amended Defence that Mr Connelly consented to the removal of pre-paid overtime subsequent to 9 January 2016 by continuing to work at the PKSW.

[44]    Further in this connection, Mr Connelly and Bluescope were in litigation with each other in this proceeding which commenced by the filing of the original Statement of Claim on 12 October 2016, with the original Defence of BlueScope having been filed on 18 November 2016, where at [36] it pleaded Mr Connelly’s consent to the imposition of the aggregate salary by continuing to work after 9 January 2016 in the same terms as [39] of the Amended Defence.

[45]    Third, all the offers to Mr Connelly after 9 January 2016 to work overtime were made by Bluescope under the imposed aggregate salary arrangement, and not under the previous annualised salary arrangement. Bluescope’s position was that the annualised salary arrangement had ended. In a practical sense Mr Connelly was made by Bluescope to work as if he was under the aggregate salary arrangement. It was not in his power to force Bluescope to comply with the six hour standby term of his annualised salary arrangement. There has never been any suggestion that the offers of overtime after 9 January 2016 were made or regarded as having been made under the annualised salary arrangement. In my view it is illegitimate and inappropriate to regard the offers of overtime made to Mr Connelly subsequent to 9 January 2016 as retrospectively referable to the annualised salary arrangement when Bluescope’s position was that the annualised salary arrangement had ended as of that date.

[46]    Fourth, after 9 January 2016 the offers of overtime made by Bluescope to Mr Connelly included no element of compulsion. Under the aggregate salary arrangement the working of overtime was completely voluntary and there is no evidence that it was ever suggested to Mr Connelly by Bluescope that he was bound to work overtime after 9 January 2016, either generally or with reference to the condition of his annualised salary arrangement that he work six hours of pre-paid overtime.

Having provided these four reasons in support of the generally expressed finding at para [40] of the reasons for decision, the primary Judge immediately thereafter directed his attention back to the terms of s 545 and concluded as follows:

[47]    Accordingly, having regard cumulatively to the above matters, Mr Connelly did not fail to mitigate his loss by not always accepting the overtime offered to him by BlueScope after 9 January 2016. It is neither fair nor appropriate that Mr Connelly’s rejection of offers of overtime after 9 January 2016 should reduce any compensation payable to him.

Paragraph [47] assumes importance because it is a recognition on the part of the primary Judge that the resolution of any submission as to whether Mr Connelly had failed to “mitigate his loss” was not to be necessarily answered by the unquestioning application of contractual principles. The task to be undertaken, albeit informed by contractual principles, was ultimately a question dependent upon the application of the terms of s 545 to the facts – and, in particular, whether it was “appropriate” for Mr Connelly to have rejected the overtime offered. In a statutory context, it is the application of the statutory terms which is the relevant inquiry: cf. Trilogy Fund Management [2015] FCA 1452 at [712], (2015) 331 ALR at 330 per Wigney J).

45    It may be noted that the observations in Cubillo and TCN Channel 9 are far from novel. Other authorities thus also state that “[s]o long as [the claimant] can be seen to have acted reasonably in the circumstances, they should not be debarred from recovering the actual loss flowing to them simply because it is asserted that, by taking some other course, the loss might well have been lower”: Metal Fabrications (Vic) Pty Ltd v Kelcey [1986] VR 507 at 513 per Murphy J (Brooking and Nicholson JJ agreeing). See also: Knott Investments Pty Ltd v Fulcher [2013] QCA 067 at [45], [2014] 1 Qd R 21 at 41 per Muir JA (Holmes and Atkinson JJA agreeing).

46    With reference to the conclusions of the primary Judge in the present proceeding, it is respectfully considered that no error of the kind described in House v The King has been demonstrated. Albeit informed by principles as to the mitigation of damages in a contractual dispute, the task being discharged by the primary Judge was to exercise the discretion conferred by s 545 to make such order as was thought to be “appropriate”. In exercising that power, there was no application by the primary Judge of any “wrong principle” nor any failure to “take into account some material consideration”. Nor can it be said that it was “unreasonable or plainly unjust” for the primary Judge to conclude that it was “neither fair nor appropriate” that the rejection of the offers of overtime should reduce the compensation payable to him. It cannot be said that the primary Judge was unaware of, nor said that he did not take into account, the fact that Mr Connelly had worked and received remuneration for overtime worked outside of the period of the thirteen weeks in which he held that there was no “loss”.

47    As with Ground 1A, there was a failure on the part of BlueScope to clearly articulate the source of the error sought to be relied upon in Ground 2A. If an appellable error different from that set forth in House v The King were intended to be relied upon, and an error different from one otherwise embraced by Ground 1A, any different source of error must be found (essentially) in a misconstruction of the term “appropriate”. But no such error is discernible. Nor, given the width of the term “appropriate”, would any such error be readily assumed.

CONCLUSIONS

48    Although it may have initially been tempting to approach the resolution of the present appeal simply upon the basis of a comparison between that which Mr Connelly would have received had BlueScope not wrongfully repudiated his contract of employment, with that amount he in fact received, such an approach was not that required by the Fair Work Act.

49    Grounds 1 and 2 have each been rejected.

50    Leave to amend Ground 1 was not opposed and an order to that effect was made during the course of the hearing. Leave to amend Ground 2 should be granted, on the basis specified.

51    None of the Grounds of Appeal, either as originally formulated, or as amended, have been made out.

52    The appeal should be dismissed.

THE ORDERS OF THE COURT ARE:

1.    Leave is granted to amend the Notice of Appeal to include Ground 2A.

2.    The appeal is dismissed.

Associate:    

Dated:    25 June 2021