Australian Law Week

ISSUE 927 MARCH 2019

IN THIS ISSUE:

Employment .............................................1

Family ........................................................4

Property ................................................... 5

Litigation and court practice .............. 5

Employment

Drunken behaviourleads to dismissal

By Ben Motro (Special Counsel) and Gemma Twemlow (Senior Associate)of Piper Alderman.

In the appeal of Urso v QF Cabin Crew Australia Pty Limited t/as QCCA[2019] FWCFB 1322, the Full Bench of the Fair Work Commission hasconfirmed that employees bear the responsibility of ensuring that theirconduct remains appropriate and compliant with company policy, and thateven unintentional misconduct can form the basis of disciplinary action.

In July 2018 the Fair Work Commission held that a flight attendant wasnot unfairly dismissed for his conduct outside of work hours after he failedto attend to work following a night out in New York.

The member of cabin crew, Mr Urso, appealed that finding. On 7 March2019, the Commission handed down its decision in relation to that appeal,upholding the finding that he was not unfairly dismissed.

BackgroundMr Urso was employed as an international flight attendant with QF Cabin

Crew Australia Pty Ltd (QCCA), a subsidiary of Qantas Airways Limited. On 20July 2017 Mr Urso commenced a 7 day Brisbane – Los Angeles – New York –Los Angeles – Brisbane flight schedule.

Whilst on the layover in New York, Mr Urso and a colleague attendeda local bar. Mr Urso’s colleague found him collapsed on the floor of thetoilets with a blood alcohol reading of 0.205%. Upon being discharged fromhospital the following morning, Mr Urso advised his manager that he wasunwell and unable to attend work for the return flight to Los Angeles thatafternoon.

QCCA paid $20,000 in relation to Mr Urso’s hospitalisation costs and MrUrso flew home on a commercial flight two days later. Upon returning toBrisbane, an investigation into the incident took place resulting in Mr Ursobeing dismissed for misconduct in circumstances where he had consumedin excess of five standard drinks resulting in the following breaches ofQCCA’s policies and procedures:

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1. Failing to ensure he was adequately rested whilst off duty and able to perform his next operational duty;

2. Failing to be ready, willing and able to perform operational duties the next day;

3. Failing to abstain from activity that would increase the risk of illness which would prevent performance of his duties atwork; and

4. Consumption of excessive alcohol whilst “on slip”.

The appealMr Urso commenced an appeal on one fundamental issue – that he did not intend to consume excessive amounts of

alcohol and become intoxicated. In considering the appeal, the Commission found that Mr Urso’s ‘’ innocent explanation’’,namely that he had only consumed 5 drinks, was unsupported and ‘’inherently implausible and unbelievable’’, particularly incircumstances where Mr Urso’s accounts of the incident were ambiguous.

Whilst Mr Urso may not have positively intended to become intoxicated to the degree that he could not attend forwork the following day, the Commission ”did “not accept that intention is a necessary element of misconduct which mightconstitute a valid reasons for dismissal’’. The Commission held that other forms of misconduct, such as breaches of safetypolicies and procedures, ‘’may be the result of recklessness, negligence or misjudgement’’. In these circumstances, Mr Ursofailed in his responsibility to limit his consumption of alcohol to a degree which would have enabled him to attend for workthe following day.

The Full Bench therefore found that Mr Urso’s failure to attend for his scheduled flight was as a result of excessive alcoholconsumption, and consequently held that this was sufficiently serious to constitute a valid reason for dismissal.

This decision reinforces the notion that employees can be validly dismissed where their conduct is inconsistent with workpolicies that concern their ability to properly conduct themselves at work, particularly those employees where safety is acritical component of their employment. Additionally, this decision makes it clear that depending on the misconduct that anemployee is said to have engaged in, whether they intended to engage in some form of misconduct may be irrelevant.

This article was originally published on the Piper Alderman website and has been reproduced with permission.

Recent case a reminder that managers can be personally liable for workplace breachesBy Ashleigh Mills (Associate) of Holding Redlich.Managers who are aware of breaches of workplace laws in their business may be personally liable for those

contraventions, even if they did all they reasonably could to try to fix the breach, according to a recent decision of theFederal Circuit Court of Australia.

In the decision of Fair Work Ombudsman v Priority Matters Pty Ltd & Ors (No 4) [2019] FCCA 56, the Court found that twodirectors were liable for breaches of the Fair Work Act 2009 (Cth) (FW Act) by being “involved” in underpaying 43 employeesmore than $1 million between the months of February 2013 and December 2013.

The finding of liability was made despite the Court acknowledging that the directors were ‘hardworking and honest peoplecaught up in adverse events beyond their control’ and that the directors had taken all ‘reasonable steps’ to try to makepayment of the employee entitlements. In this article we detail, by reference to relevant legal principles, why the Court madethis finding and the lessons this provides for managers.

The factsHistory of the caseThe case centred upon the fact that – for varying periods of time – multiple employees of five respondent entities did not

receive any wages or entitlements despite being at work. Civil proceedings were brought against each of those entities, aswell as two of their directors, by the Fair Work Ombudsman (FWO) in 2016, and at first instance Judge Street held that:• the five employer entities had indeed contravened the FW Act as a consequence of their non-payment to employees, but

• the two directors were not ‘knowingly involved’ in those contraventions and, as such, were not liable in their personalcapacity for the same.That decision, as it related to the personal liability of the directors, was appealed by the FWO in 2017 and the case was

remitted to Judge Driver in order to determine that question on appeal.Applicable legal principlesJudge Driver considered the key legal principles as they relate to accessorial liability and section 550 of the FW Act. Those

key legal principles are summarised below:• a person will only be held to be accessorily liable for a contravention of the FW Act if they are ‘ involved in a contravention’

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• a person will only be ‘ involved in a contravention’ if they have intentionally participated in the contravention

• intentional participation requires actual, not constructive knowledge of the essential matters that make up thecontravention – and that knowledge must exist as at the time of the contravention.Separately – and importantly – it is unnecessary to prove that a person knew that their conduct was a breach of the FW

Act in order for them to be involved in any particular breach, or for them to have knowledge of every individual incident ofthat breach or contravention. Rather it will be enough that – in the face of suspicious circumstances – a person fails to makesufficient enquiries and/or was aware of an over-arching ‘system’ of non-compliance.

Application of the law to the factsIn this case, multiple employees were simply not paid their wages or entitlements for a period of time due to the fact that

the respondent companies had run out of money to pay their staff.At all relevant times, the directors believed that they could (in part) pay the staff entitlements out of their own pockets,

and that otherwise funds would be imminently received from other sources in particular the Australian Tax Office. Indeed,one of the directors, Mr Silverbrook, was at pains to stress that he did ‘everything humanely possible under the mostextenuating of circumstances to ensure all employees received their lawful entitlements’.

In making his findings – and while expressly accepting that the directors had taken ‘all reasonable steps’ to try and effectpayment of the employee’s entitlements during the relevant period – Judge Driver held that this fact was not relevant to thequestion of whether or not the directors were liable for the purposes of section 550 of the FW Act. Instead, and in applyingthe legal principles set out above, Judge Driver held that the directors were knowingly involved in the contraventions as theywere demonstrably aware of the essential matters that made up the contraventions being that:• wages and entitlements were payable to the employees

• the employees, for varying periods, did not receive any such wages or entitlements.

On that basis, it did not matter that there may have been a plausible reason for the non-payment, nor that the directorswere honest about discussing those facts with their employees. It was also not held to be relevant, for example, that:• the employees had previously received payments well in excess of their entitlements

• the employees were ultimately repaid all monies they otherwise would have been entitled to receive

• a reason for the non-payment of monies was an unforeseeable ‘hold up’ of monies payable to the companies from theAustralian Tax Office.Rather, what mattered was the fact of the non-payment, and the director’s knowledge of and participation in that conduct.While the above matters were not relevant to the question of liability, they are relevant mitigating matters for the

assessment of a penalty. The matter of penalty is now to be separately determined.The lessonsIn light of what is set out above, and noting that the number of accessorial liability proceedings pursued by the FWO

continues to increase, managers in an organisation should be aware that:• Scope of ‘Persons’ – A director is not the only person who can be ‘relevantly involved’ in a contravention of the FW Act.

‘Persons’ for the purposes of s550 of the FW Act can include (without limitation) accountants, HR Managers, payroll officersand other managers

• Good intentions are not relevant – While it may impact upon the penalty ultimately imposed by a Court, the fact that aperson may genuinely and reasonably be taking steps to rectify the contravention and/or that the person has rectifiedthe contravention, will not affect an assessment of liability – that is, whether the person is ‘knowingly involved’ in thatcontravention

• Ignorance of the law is no excuse – It is no excuse for a person to say that they were not aware that particular conductor actions breached the FW Act. As such, all managers must ensure that they are aware of and keep up to date withemployment law obligations.A copy of the decision referred to in this article can be accessed here.Holding Redlich disclaimerThe information in this publication is of a general nature and is not intended to address the circumstances of any

particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee thatthe information in this publication is accurate at the date it is received or that it will continue to be accurate in the future.We are not responsible for the information of any source to which a link is provided or reference is made and exclude allliability in connection with use of these sources.

This article was originally published on the Holding Redlich website and has been reproduced with permission.

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FamilyFamily Law — Full Court declares that an order for the husband’s imprisonment was anaffront to justice

In Stradford & Stradford (2019) FLC 93-888, the Full Court considered an appeal from a declaration of contempt and anorder imprisoning a self-represented litigant for 12 months.

The trial judge declared that the husband failed to comply with an order for full and frank disclosure. According to thehusband, the remaining documents were not in his possession, power or control or did not exist. No evidence contradictedhim, only the wife’s assertions. Despite this, the trial judge ordered that he be imprisoned for a year for contempt. After sixdays in a maximum-security facility, the husband had the order stayed.

The husband appealed on the basis that the order was beyond power and had no factual foundation. The wife supportedhis appeal. During the hearing, she implored the trial judge not to make the order for the sake of her two children. Thetrial judge’s response was to assure her that she would not be responsible for her husband’s imprisonment. Otherwise, heropposition appears not to have impacted his Honour.

At the call-over, another judge heard arguments about whether the husband had complied with the order for disclosurebut made no attempt to adjudicate. Despite this, the trial judge commenced the final hearing by declaring that the mentionjudge had found the husband in contempt. The Full Court considered this a sign of clear pre-judgment.

The Full Court allowed the appeal. Their Honours agreed that there was no basis for the order and found it marred bysignificant breaches of natural justice. They forcefully summarised their views [at 9]:

“We are driven to conclude that the processes employed by the primary judge were so devoid of procedural fairness to thehusband, and the reasons for judgment so lacking in engagement with the issues of fact and law to be applied that to permitthe declaration and order for imprisonment to stand would be an affront to justice”.

Family Law — More judicial appointments to the Family Court and Federal Circuit Courts ofAustralia

Judge Christine Mead and Judge Norah Hartnett, previously judges of the Federal Circuit Court of Australia, have beenappointed to the Family Court of Australia. The Honourable Justice Peter Tree of the Family Court of Australia has beenappointed to the Appeal Division of the Family Court of Australia and Mr Guy Andrew and Ms Penelope Kari have beenappointed to the Federal Circuit Court of Australia.

Judge Mead will be located in the Adelaide registry of the Family Court of Australia commencing on 25 March 2019. JudgeMead graduated with a Bachelor of Laws from the University of Adelaide in 1977 and was admitted as a Solicitor in theSupreme Court of South Australia in 1978. Judge Mead practised as a sole practitioner for much of her career as a solicitor,and was called to the Bar in 1991. Throughout her career, including at the Bar, she practised almost exclusively in family law.Judge Mead was appointed to the bench of the Federal Circuit Court on 13 June 2000, where she heard matters in the familylaw jurisdiction on a full-time basis.

Judge Hartnett will be located in the Melbourne registry of the Family Court of Australia commencing on 25 March 2019.Judge Hartnett graduated from Monash University with a Bachelor of Arts and Bachelor of Laws in 1979, and later went on tocomplete a Master of Business Administration in 1987, a Master of Laws in 1989 and received accreditation as a Mediator withBond University in 1996. Judge Hartnett was admitted to practice in the Supreme Court of Victoria in 1980, following whichshe worked as a solicitor until being called to the Bar in 1984. At the Bar, Judge Hartnett specialised in family law and on 19June 2000 she was appointed as a judge of the Federal Circuit Court. At the bench, she has predominately heard matters inthe family law jurisdiction of the Federal Circuit Court.

The Honourable Justice Peter Tree has been appointed to the Appeal Division of the Family Court of Australia. Justice Treewas appointed as a judge of the Family Court in 2013. Justice Tree holds a Bachelor of Laws (Hons) from the University ofQueensland and was admitted as a Barrister of the Supreme Court of Queensland in 1989. He was appointed silk in 2004.Prior to his appointment to the Bench, Justice Tree practised in a wide range of litigation and mediation, including withsignificant experience in family law.

Mr Andrew will be located in the Townsville registry and Ms Kari to the Adelaide registry, both commencing on 25 March2019. Mr Andrew graduated with a Bachelor of Laws from the Queensland University of Technology (then known as theQueensland Institute of Technology) in 1986 and was admitted to the Supreme Court of Queensland in 1989. Following hisadmission, Mr Andrew completed his articles at Steindl Robertson McPherson before practising as a solicitor at O’ShaeCorser & Wadley. Mr Andrew has practised extensively with Legal Aid Queensland, including as Acting Counsel after he wascalled to the Bar in 1998. In 2001, Mr Andrew joined the private bar, where his practice focussed on criminal and family law.

Ms Kari graduated with a Bachelor of Arts and Bachelor of Laws from the University of Adelaide in 2000 and was admittedto the Supreme Court of South Australia in 2001. Ms Kari spent the majority of her early career as a solicitor with DavidBurrell & Co in Adelaide, specialising in family law and spent a two-year period with the London Borough of Hammersmith &Fulham.

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Ms Kari was called to the South Australian Bar in 2011. At the Bar, she has continued to develop expertise in family law,which she has shared as the Coach and Family Law Unit Coordinator for the South Australian Bar Association Bar ReadersCourse since 2014.

Source: Media Release of the Hon. Christian Porter MP, Attorney-General of Australia dated 22 March 2019.

PropertyNSW retail leasing: Recent decision on demolition clauses

The decision of Wynne Avenue Property Pty Ltd v MJHQ Pty Ltd [2019] NSWCATAP 41 from NCAT’s appeal panel wasconcerned with whether a lessor could use a demolition clause to terminate a retail lease so that it could enter into anagreement with a more commercially advantageous tenant.

FactsThe lessor owned Burwood Plaza in NSW. The lessee leased retail premises in the Plaza.The lessor purported to terminate the lease by issuing the lessee with a demolition notice pursuant to cl 33 of the lease

and s 35 of the Retail Leases Act 1994.The lessor intended to demolish and amalgamate three shops (including the lessee’s shop) and perform renovations to

attract a mini major tenant. Prior to issuing the demolition notice to the lessee, it had been in negotiations with TK Maxx tolease the newly reconfigured leasing space and had signed a heads of agreement with them. However due to delays, TK Maxxwithdrew their interest.

The lessee argued that the demolition notice was invalid as it did not indicate “a genuine proposal for demolition within areasonably practicable time after the lease is to be terminated” as required by s 35(1)(a) of the Act. The lessee asserted thatthe motive for the lease termination was to allow the lessor to amalgamate the lessee’s shop into larger premises, and leasethe area to a more commercially advantageous tenant.

The Tribunal determined that the notice was invalid (see MJHQ Pty Limited v Wynne Ave Pty Ltd [2018] NSWCATCD 61). TheTribunal noted that the lessor had entered into the heads of agreement with TK Maxx (ie a more commercially advantageoustenant) prior to issuing the demolition notice to the lessee. This demonstrated to the Tribunal that the lessor’s motivationfor terminating the lease was to grant a new lease to TK Maxx and not merely to convert the premises to attract a minimajor tenant. Consequently, the lessor did not act in good faith and as such, did not have a genuine proposal to undertakerefurbishment works.

The lessor appealed against this decision.DecisionThe Appeal Panel overturned the decision to find that the demolition notice was valid. In reaching this decision, the

Appeal Panel noted that it was bound by the judgement of Bryson J in Blackler v Felpure Pty Ltd [1999] NSWSC 958. InBlackler, the court determined that the motivation of a lessor is irrelevant in determining whether the lessor’s demolitionplan was a genuine proposal (unless, arguably, it demonstrates that there is no genuine proposal to demolish). It does notmatter that the purpose of the demolition is to advance the commercial interests of the lessor.

Litigation and court practiceCourts — Recent cases on Evidence and Procedure

The Australian Uniform Evidence Law Commentary has been updated as follows:Proof of contents of documents, s 48 Evidence Act 1995R v Warwick (No 48) [2019] NSWSC 206 — the court admitted a single photocopy document which collated three notebook

pages noting that a copy document which differs from the original can still accurately reproduce the contents of the originaldocument. Section 48 provides a broad approach to the issue of proof of the contents of an original document. See [28]-[33].

The Australian High Court and Federal Court Practice Commentary has been updated as follows:Dismissing an application by a vexatious litigant for leave to commence proceedings, s 37AS Federal Court of Australia Act

1976Croker, in the matter of Croker [2019] FCA 359 — under s 37AS, the court may dismiss an application to commence

proceedings made by a person to whom a vexatious proceedings order applies if the required affidavit does not“substantially comply” with s 37AR(3). Section 37AR(3) requires the vexatious litigant to file an affidavit providing a completelist of all applications made under the section; all proceedings the individual has commenced in an Australian court ortribunal and all relevant facts about the current application. In this case, the court dismissed an application for non-compliance with s 37AR making the following points:

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• The court may dismiss an application without an oral hearing making the importance of compliance with disclosurerequirements vital ([4]). Compliance is not a technical point and it is not for the court to undertake this process ([8]-[10]).

• A minor or non-substantive error in the list of all proceedings commenced can still amount to substantial compliance([5]).

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