General protections and workplace rights

It has become popular for former employees to initiate general protections’ claims based upon the statutory case of action in the Fair Work Act known as adverse action for exercising a workplace right (my description of claims made pursuant to secs 340, 341 and 342). However as the following extract from a recent Federal Court judgement makes clear the cause of action is attended by a number of contextual fetters in the employment context. Not every complaint at work will satisfy the Act.

“In Relation to His or Her Employment

  1. The next issue to decide is whether each of the things I have found to be either a complaint or an inquiry were made “in relation to” Mr. Flageul’s employment as WeDrive’s C.E.O.  In The Environmental Group Ltd v. Bowd  [2019] FCA 951; (2019) 288 I.R. 396, I said the following about the required nexus between a given complaint or inquiry and a person’s employment at 438-439 [124]-[126]:

As an expression of a sufficient nexus, the High Court has observed that the similar phrase “in respect of” has a “chameleon-like quality”.  It takes its meaning from its context: Technical Products Pty Ltd v State Government Insurance Office (1989) 167 CLR 45 at 47; see also Federal Commissioner of Taxation v Scully (2000) 201 CLR 148 at 182-183. In my view, that observation applies equally to the phrase “in relation to”. The statutory context here is the protection of employees who exercise workplace rights. One of those rights is an entitlement to make a complaint about a person’s employment without the fear or risk of retribution.

In Walsh v Greater Metropolitan Cemeteries Trust (No 2) (2014) 243 IR 468, Bromberg J decided that a report made by an employee about a linen supplier providing sub-quality service was a “complaint” in relation to that employee’s employment. His Honour observed that a complaint that raises “potential implications” about a person’s employment was likely to be one that would satisfy the nexus required in s 341(1)(c)(ii). His Honour said at [43]:

In this case, Ms Walsh raised a probity issue in relation to a contract with a supplier who supplied services including to an operation which Ms Walsh managed in the course of her employment.  Whether or not Ms Walsh was under a contractual duty to report the possible misdeed of others (see the discussion in Irving, The Contract of Employment (LexisNexis Butterworths, 2012) at [7.21]), her failure to report suspected wrong-doing had the potential to reflect badly upon her and cause prejudice to her in her employment. By reason of either of those two factors, the Alsco contract complaint made by Ms Walsh raised an issue with potential implications for Ms Walsh’s employment and was “in relation to … her employment” within the meaning of s [341(1)(c)(ii)] of the FW Act.

See also Milardovic v Vemco Services Pty Ltd [2016] FCA 19 at [69] per Mortimer J.

A test of “potential implications” may be too broad a statement of principle.  At least with respect to a person with the functions and responsibilities of a CEO, almost anything communicated by such an officeholder would have “potential implications” for that person’s employment.  In my view, in the case of a CEO, the complaint must be one directed at or concerned with that person’s employment in a substantive way.  In that respect, observing that the required nexus may be direct or indirect, may not greatly assist.  It must, as a matter of substance, be about that CEO’s employment.

  1. I remain of the view that a test of “potential implications” could be problematic when dealing with a C.E.O. with very broad responsibilities.  That observation should be taken as factual in nature and limited to the office of C.E.O.  Nonetheless, I adhere to my view that, for a complaint or inquiry to be “in relation to” the employment of a C.E.O., it must, as a matter of substance, be about the C.E.O.’s employment, as distinct from the person’s course of conduct as the C.E.O. of a company.  If that distinction is not drawn, there is a danger that everything a C.E.O. does whilst working might be taken to be “in relation to” her or his employment.  I doubt whether Parliament intended that the test should apply as broadly as this.  If that had been Parliament’s intention, it might have drafted s. 341(1)(c)(ii) so that it referred to any complaint made at work or any complaint made whilst working; but Parliament did not formulate a test in such terms.
  2. I do not think that the first alleged complaint/inquiry was “in relation to” Mr. Flageul’s employment.  It was about the payments made to Mr. Nicholson.  Assuming that Mr. Flageul’s recollection of this event is to be preferred, I accept that as C.E.O. of WeDrive it was legitimate for him to make this inquiry.  If made in good faith, such an inquiry would fall within his general role or function as C.E.O. of WeDrive.  But it was not about Mr. Flageul’s employment as distinct from his conduct in that role or function.
  3. I have reached the same conclusion for an analogous reason in relation to the second alleged complaint/inquiry.  This was an inquiry made about a payment to Mr. Taylor.  It has not been shown to be “in relation to” Mr. Flageul’s employment.
  4. I have reached the same conclusion, and again for an analogous reason, in relation to the third alleged complaint/inquiry.  The complaints and inquiries made were about Mr. Nicholson and not about Mr. Flageul’s employment.
  5. In my view, the fourth alleged complaint/inquiry was “in relation to” Mr. Flageul’s employment.  He was issued the WeDrive debit card as an attribute of his employment as the C.E.O. of WeDrive.  Its cancellation was in relation to the way Mr. Flageul was employed and was personal to him.
  6. The fifth alleged complaint/inquiry was made “in relation to” Mr. Flageul’s employment.  I accept that his role and responsibilities as C.E.O. gave rise to an expectation on his part that he would have continuing access to the Xero accounting system.  Mr. Flageul’s Executive Services Agreement obliged him to provide “prompt and full information to the Board regarding the conduct of the Business…” On balance, access to the Xero accounting system was an issue sufficiently proximate to Mr. Flageul’s employment as C.E.O. because the inquiry he made about access to that system can be characterised as concerned with compliance with his contract of employment.
  7. I am satisfied that the sixth alleged complaint/inquiry was “in relation to” Mr. Flageul’s employment, although I find that it was also bound up with his role as a director.  That is because this was a heated conversation between WeDrive’s two executive directors.  However, I think that this matters not.  It also matters not whether Mr. Flageul’s description of what took place in his email was, or was not, accurate: Shea at [29(c)]. In my view, the contents of the email made complaints which were personal to Mr. Flageul. I would infer from those contents that the complaints were directed at reacting to Mr. Taylor’s criticisms of Mr. Flageul’s performance both as a director, but also as C.E.O. of WeDrive.
  8. In contrast, I am not satisfied that Mr. Flageul has shown that the seventh alleged complaint/inquiry was in relation to his employment.  Given that I have not accepted that the more specific complaints were ever made, one is left with my general finding that Mr. Flageul complained to Mr. Mace about Mr. Taylor.  That is not sufficient for me to be satisfied that these complaints were in relation to Mr. Flageul’s employment.  They may, for example, have been about Mr. Taylor’s efforts to grow the business in Sydney.
  9. The eighth alleged complaint/inquiry was plainly “in relation to” Mr. Flageul’s employment.  It concerned rumours about who was to occupy his role as C.E.O.
  10. The ninth alleged complaint/inquiry was not “in relation to” Mr. Flageul’s employment.  It was an inquiry made about marketing personnel which took place in the course of Mr. Flageul’s role as C.E.O. of WeDrive.  It was not about his employment.
  11. I was not otherwise satisfied that the tenth alleged complaint/inquiry had ever been made, and did not consider that what comprised the eleventh alleged complaint/inquiry was either a complaint or an inquiry.
  12. It follows that, for the foregoing reasons, the fourth, fifth, sixth and eighth alleged complaints/inquiries were made in relation to Mr. Flageul’s employment.

The Capacity to Make the Complaints or Inquiries

  1. In Maric at 460 [55], after summarising the effect of the decision of the Full Court of this Court in PIA Mortgage Services Pty Ltd v. King (2020) 274 F.C.R. 225, I made the following observation about the required legal capacity to make an inquiry for the purposes of s. 341(1)(c)(ii) of the F.W. Act:

For a person to be “able” to make an inquiry, that capacity must be anchored in a legal entitlement of some kind, whether it be statute, contract law, the common law of Australia, or some other instrument or thing that confers legal rights, in the sense described by Rangiah and Charlesworth JJ. in PIA Mortgage Services.

  1. The same observation applies to the making of complaints.  In PIA Mortgage, Rangiah and Charlesworth JJ. considered Shea and said the following at 230 [14]:

On the understanding that s 341(1)(c)(ii) requires an entitlement or right to make a complaint in relation to the employee’s employment, there must be an identifiable source of that entitlement or right.  In Shea, Dodds-Streeton J did not suggest that the entitlement or right is limited to one arising under an instrument such as legislation, an industrial instrument, or a contract of employment.  In fact, her Honour was careful not to attempt any exhaustive description of the source of the right to make a complaint or inquiry.  Nor did her Honour suggest that the entitlement or right must be conferred expressly or directly by the source.

  1. Flageul grouped his complaints and inquiries concerning the debit card and access to the Xero system as the “Financial Complaints.”  He submitted that the source of his legal right to complain or inquire about these matters came from the following:

(a)          the clauses in the Subscription and Shareholders’ Deed set out above;

(b)          Mr. Flageul’s Executive Services Agreement; and

(c)          the Corporations Act.

  1. It was submitted that the clauses in the Subscription and Shareholders’ Deed conferred upon Mr. Flageul an entitlement to inquire and to complain, about, for example, whether expenditure on consultants was in line with approved budgets and plans.  It was further submitted that Mr. Flageul, as C.E.O., had to report to the board and thus needed access to sufficient financial information.  Mr. Flageul also relied upon s. 290(1) of the Corporations Act, which is as follows:

Personal access

A director of a company, registered scheme or disclosing entity has a right of access to the financial records at all reasonable times.

  1. The term “financial records” is defined in s. 9 of the Corporations Act as follows:

financial records includes:

(a)          invoices, receipts, orders for the payment of money, bills of exchange, cheques, promissory notes and vouchers; and

(b)       documents of prime entry; and

(c)       working papers and other documents needed to explain:

(i)        the methods by which financial statements are made up; and

(ii)       adjustments to be made in preparing financial statements.

  1. It was then submitted that as a director of WeDrive, and as a shareholder, Mr. Flageul had additional rights or duties under the Corporations Act as follows:

(a)       Duty of care and diligence;

(b)      Duty of good faith;

(c)       Duty not to improperly use position;

(d)      Duty to ensure that a company does not trade whilst insolvent;

(e)          Duty to take reasonable steps to ensure that a company complies with its obligations in the Corporations Act related to the keeping of financial records and financial reporting;

(f)          Right as a shareholder to obtain information about a director’s remuneration [pursuant to s. 202B(1) of the Corporations Act]; and

(g)          Right as a shareholder, employee and officeholder of the company to make a protected disclosure as a whistle blower [pursuant to Pt. 9.4AAA of the Corporations Act].

  1. Section 202B(1) of the Corporations Act provides:

Members may obtain information about directors’ remuneration

(1)          A company must disclose the remuneration paid to each director of the company or a subsidiary (if any) by the company or by an entity controlled by the company if the company is directed to disclose the information by:

(a)          members with at least 5% of the votes that may be cast at a general meeting of the company; or

(b)          at least 100 members who are entitled to vote at a general meeting of the company.

The company must disclose all remuneration paid to the director, regardless of whether it is paid to the director in relation to their capacity as director or another capacity.

  1. It is not necessary to set out all of the provisions of Pt. 9.4AAA of the Corporations Act.  Section 1317AA identifies the sort of “whistleblower” disclosure that is “protected” by Pt. 9.4AAA.  It was in the following terms during the relevant period:

Disclosures qualifying for protection under this Part

(1)          A disclosure of information by a person (the discloser) qualifies for protection under this Part if:

(a)       the discloser is:

(i)        an officer of a company; or

(ii)       an employee of a company; or

(iii)        a person who has a contract for the supply of services or goods to a company; or

(iv)         an employee of a person who has a contract for the supply of services or goods to a company; and

(b)       the disclosure is made to:

(i)        ASIC; or

(ii)         the company’s auditor or a member of an audit team conducting an audit of the company; or

(iii)      a director, secretary or senior manager of the company; or

(iv)         a person authorised by the company to receive disclosures of that kind; and

(c)          the discloser informs the person to whom the disclosure is made of the discloser’s name before making the disclosure; and

(d)          the discloser has reasonable grounds to suspect that the information indicates that:

(i)          the company has, or may have, contravened a provision of the Corporations legislation; or

(ii)         an officer or employee of the company has, or may have, contravened a provision of the Corporations legislation; and

(e)       the discloser makes the disclosure in good faith.

Note:       Under section 1405, the reference to a provision of the Corporations legislation includes a reference to a corresponding provision of the old corporations legislation of the States and Territories.

(2)          A reference in subsection (1) to a person contravening a provision of the Corporations legislation includes a reference to a person committing an offence against, or based on, a provision of this Act.

Note:       This subsection causes section 11.6 of the Criminal Code to operate in relation to such references.

  1. Whether cumulatively or respectively, the three sources of legal entitlement identified by Mr. Flageul provided, it was said, a sufficient legal basis to make the fourth and fifth alleged complaints/inquiries.  The respondents objected to the Court considering these contentions.  They had never been pleaded and were raised for the first time in closing.  I have some sympathy for that complaint.  But I need not decide it.  That is because the legal ability to make either alleged complaint/inquiry was not derived from the Corporations Act or the Executive Services Agreement.  Further, while I have found below that the legal ability to make the fifth alleged complaint/inquiry was derived from the Subscription and Shareholders’ Deed, the respondents have demonstrated, for the reasons set out below, that Mr. Flageul was not sacked because he made this fifth alleged complaint/inquiry.
  2. In that respect, I observe that there may be a degree of artificiality at work here.  Mr. Flageul did not make his complaints or inquiries by invoking a legal entitlement to so act; rather, he made his complaints or inquiries as a free citizen and two and a half years later his lawyers, with a degree of considerable ingenuity, researched the laws that apply in this country to find some additional legal ability to do that which Mr. Flageul was always able to do.  That is not intended as a criticism of those lawyers.  Nor do I suggest that to exercise a workplace right one must, relevantly have, actual knowledge of one’s legal rights.  Nonetheless, whether this is how Parliament intended s. 341(1)(c)(ii) to work may be the subject of legitimate doubt.
  3. It will recalled that the fourth alleged complaint/inquiry was a question asked about why Mr. Flageul’s debit card had been cancelled.  With great respect, I can find no clause in the Subscription and Shareholders’ Deed or in Mr. Flageul’s employment agreement that conferred on Mr. Flageul a legal ability to make that inquiry.  Of course, these agreements conferred on Mr. Flageul certain obligations to make reports, and obliged WeDrive to supply information to its directors.  But none conveyed a legal entitlement to make an inquiry about why a third party bank had cancelled Mr. Flageul’s debit card.  Similarly, none of the rights or duties listed by Mr. Flageul and sourced from the Corporations Act conferred such an ability; nor did s. 290 of the Corporations Act confer any such ability; s. 202B conferred a right to obtain information about different subject matter (director’s remuneration); finally, Mr. Flageul was not invoking here what are sometimes called the “whistle-blower” provisions of that Act.  In my view, by making his inquiry about the cancellation of his debit card, Mr. Flageul was simply exercising his pre-existing freedom to ask a question.
  4. I have reached the same conclusion concerning the complaint made that Mr. Flageul had not been given prior notice of the cancellation of his debit card.  Again, this complaint was made as a free citizen of this country.  The three sources of law relied upon by Mr. Flageul conferred no greater or additional lawful ability to make this complaint.
  5. I turn to the fifth alleged complaint/inquiry which sought reasons for the decision to deny Mr. Flageul access to the Xero accounting system.  On one view, by its terms Mr. Flageul was not seeking “management and financial information and reports”, as that term is used in cl. 7.3 of the Subscription and Shareholders’ Deed, but rather was seeking reasons concerning why he was being denied access to some of the financial records of the company.  It may also be doubted whether the Xero accounting system constitutes the type of sufficient “management and financial information” contemplated by cl. 7.3 of the Deed.  The Xero accounting system represents a layer of very great detail which a director of WeDrive would be unlikely to need.  Such detail may exceed what is “sufficient”, to use the language of cl. 7.3 of the Deed, to permit a director to discharge his or her obligations and duties.  However, for the moment, I am prepared to accept that there may be occasions when a director might need to interrogate the Xero accounting system as part of his or her duties.  I am thus also prepared to accept that cl. 7.3 of the Deed confers on such a director a legal right to such information.  On balance, I think that would include a right to reasons, if access were to be refused.  It follows that there existed a legal right to make the fifth alleged complaint/inquiry that may be found in cl. 7.3, even though Mr. Flageul already had the freedom to make that inquiry.  In that respect, I do not think it matters that Mr. Flageul held that right in his capacity as a director rather than as a C.E.O.  It is otherwise unnecessary for me to consider whether an additional legal right to make this inquiry existed elsewhere.
  6. The sixth alleged complaint/inquiry took place when Mr. Flageul complained in an email to Mr. Taylor about what Mr. Taylor had said to him during a telephone conversation that had taken place on 2 October 2017, and about Mr. Taylor’s manner.  On this occasion the legal source of Mr. Flageul’s capacity to make this complaint was said by him to be s. 21 of the Occupational Health and Safety Act 2004 (Vic.) (the “O.H.S.A.”). Section 21(1) of that Act relevantly provides as follows:

Duties of employers to employees

An employer must, so far as is reasonably practicable, provide and maintain for employees of the employer a working environment that is safe and without risks to health.

  1. Section 21(2) imposes on an employer more specific duties, such as providing information or training to enable employees to perform their work in a way that is safe and without risk to health.  Section 25 of the O.H.S.A., also relied upon by Mr. Flageul, provides that an employee must take reasonable care for his or her own health and safety.
  2. Flageul submitted that it would render the obligations imposed by the O.H.S.A. on both employers and employees “meaningless if an employee is unable to report incidents of inappropriate or bullying behaviour at work.”  I respectfully agree with that observation, so far as it goes.  Here, it was said that Mr. Flageul’s complaint was in substance the calling out of bullying behaviour allegedly on the part of Mr. Taylor.  It was then submitted that “[a]ccordingly” Mr. Flageul was able to make his complaint about Mr. Taylor in relation to Mr. Flageul’s employment.  In support of that contention, Mr. Flageul also relied upon what he said was an implied term in his contract of employment which obliged WeDrive to provide a safe place of work.
  3. I respectfully disagree with the foregoing submission.  I do not think that Mr. Flageul’s email can be characterised as a complaint about bullying.  There are a number of reasons for that conclusion.  First, up to the time it was sent, there had only been one very heated conversation between Messrs. Flageul and Taylor and one allegation of yelling.  Secondly, the allegation, if true, took place, not between an employer and employee, but between two fellow executive directors.  Thirdly, as I understood it, the gist of Mr. Flageul’s concern was that his son had overheard what had been said and it was his son who had been “distressed” by it.  Finally, in my view, and once again, Mr. Flageul already enjoyed the freedom to write the content of his email and send it without the need to have conferred upon him some additional legal capacity which permitted this to take place.  With great respect, neither the provisions of the O.H.S.A., nor the implied obligation to provide a safe workplace, conferred upon Mr. Flageul a further or additional legal ability to do what he did.
  4. The eighth alleged complaint/inquiry took place when Mr. Flageul emailed Mr. Mace about the rumour concerning his position as C.E.O. of WeDrive. Mr. Flageul submitted that the instrument underlying this complaint was his Executive Services Agreement. It was said that any “termination by [WeDrive] of [Mr. Flageul’s] role may give rise on [his] part to a cause of action under contract and under the FW Act related to dismissal.” It was then said that even if Mr. Flageul were to have been offered a new role with WeDrive or with the M.S.S. Group, this would have constituted a variation of his contract or a new contract of employment. It was then submitted that Mr. Flageul “has the right to complain or inquire about such a progress [sic] as well as the confidentiality of such a process from his staff and colleagues.”
  5. Flageul agreed that he had not expressly alleged that there had been any breach or variation of his Executive Services Agreement.  In that respect, this case was different from that considered by the Full Court of this Court in PIA Mortgage Services where there had been an express complaint made by an employee that an employer had breached or had threatened to breach an employment contract. In that case, amongst other things, a letter of demand had been sent to an employer alleging a breach of an employment contract. Justices Rangiah and Charlesworth observed at 231 [19]:

Under the general law, an employee has a right to sue his or her employer for an alleged breach of the contract of employment.  A suit may be regarded as the ultimate form of complaint.  Accordingly, in our opinion, an employee is “able to make a complaint” about his or her employer’s alleged breach of the contract of employment.  That ability is “underpinned by” (to use Dodds-Streeton J.’s expression in Shea) the right to sue, and extends to making a verbal or written complaint to the employer about an alleged breach of the contract.

  1. Flageul submitted that it was not necessary for there to be an express or even a conscious allegation of a breach of contract.  What was sufficient, it was said, is if there is a complaint about a matter or matters which, as a matter of fact, constitute a breach of contract or which “could be the subject of proceeding to enforce the particular contract.”  In that respect, Mr. Flageul emphasised his role as C.E.O.  He submitted that many if not all of the complaints/inquiries he had made constituted possible breaches of his Executive Services Agreement which had appointed him to exercise the office and functions of a C.E.O., and which conferred upon him multiple causes of action.
  2. I respectfully disagree with that submission.  Whether a course of conduct constitutes a complaint is largely a question of fact.  If the complaint is a statement that an employer has breached a contract, or threatens to do so, then, as the decision of PIA Mortgage Services shows, that can constitute a complaint for the purposes of s. 341(1)(c)(ii) of the F.W. Act.  And because it is a complaint embedded in rights conferred by the common law, it has a sufficient legal source.  But what Mr. Flageul submits goes well beyond these principles.  Mr. Flageul wants complaints or inquiries which make no allegation of any breach of contract, to be treated, as a necessarily factual proposition, as equivalent to such an allegation.  On the facts of this case, that proposition is unsustainable.  I cannot treat what Mr. Flageul says he did as something other than what I have found each alleged complaint/inquiry to be.
  3. In particular, the sixth alleged complaint/inquiry cannot be characterised as, in substance, a contention that Mr. Flageul’s Executive Services Agreement had been breached.  No term of that contract had ever been identified which was said to have been breached and I reject the proposition that the mere fact of Mr. Flageul’s appointment as C.E.O. of WeDrive converted every complaint he had made in that role as, de facto, a claim of breach of contract.  The appointment of Mr. Flageul as a C.E.O. did not carry with it any necessary legal rights or duties merely by the application of that title to his name.  The Court was not referred to any authorities to suggest otherwise.  Rather, in my view, the function, role and responsibilities of a C.E.O. will vary from company to company.  In Mr. Flageul’s case, it was informed by two aspects. First, by the expression in his contract of employment that his “Specific duties & Authorities” were to be “[a]s directed by the Board from time to time” (Schedule 1).  Secondly, by Mr. Flageul’s own description of those “duties & Authorities” in his report for the 10 November 2017 WeDrive board meeting.  He described his position, it will be recalled, in the following way: “Business development – Innovation”, “Technology – ICT”, and “Sales – Venues – corporates Melbourne.”  Inferentially, these were the responsibilities he was directed to assume by WeDrive’s board.
  4. To take another example, namely the eighth alleged complaint/inquiry, being Mr. Flageul’s email to Mr. Mace concerning the rumour that he was to be replaced as C.E.O.  It commences with Mr. Flageul saying he wants “urgent action” taken.  Mr. Flageul then sets out the rumour and then describes the “action” he wants taken; he wants Mr. Mace to speak to the M.S.S. people and tell them to apply “upmost [sic] professionalism.”  It then finishes with the following: “[t]hanks and feel free to call me to discuss this weekend.”  There is not even a hint of any allegation of a breach of contract.  Nor, looking at Mr. Flageul’s Executive Services Agreement, can a term be found (none was alleged) that had been breached because of the circulation of the rumour and Mr. Flageul’s subsequent request for professionalism.  Nor is there anything about Mr. Flageul’s appointment as the C.E.O. of WeDrive that can justify a conclusion that by this email Mr. Flageul should be taken to have alleged that there had been a breach of contract.  I make the same observations to the extent that this argument was relied upon with respect to the fourth and fifth alleged complaints/inquiries.
  5. In closing submissions in reply, filed after the completion of the trial, Mr. Flageul unearthed yet another legal source for the making of his alleged complaints/inquiries.  This was s. 232 of the Corporations Act (set out above) which addresses acts of oppression.  With respect, this claim should not have been raised so late.  In any event, I am not satisfied that s. 232 conferred on Mr. Flageul any legal capacity to make the alleged complaints/inquiries I have described above.  Rather, s. 232 permits the Court to make orders under s. 233 of the Corporations Act where, amongst other things, the conduct of a company’s affairs has been oppressive to a member or members of the company.  In my view, Mr. Flageul has incorrectly assumed that the availability of a lawful remedy must, in each case, necessarily confer an additional legal ability to make a complaint or inquiry that might subsequently be relevant to the grant of that remedy.  Of course, if Mr. Flageul had complained that he was being oppressed by WeDrive, like the allegation of the breach of contract in PIA Mortgage Services, that complaint might have been an exercise of a workplace right.  But he did not do this, whether expressly or implicitly, or whether directly or indirectly.
  6. It follows that for the foregoing reasons, Mr. Flageul did not exercise any workplace rights in making the alleged complaints/inquiries that he made, save in the case of the fifth alleged complaint/inquiry.

The Reasons for Mr. Flageul’s Dismissal

  1. Because I have found that the fifth alleged complaint/inquiry constituted the exercise of a workplace right for the purposes of s. 341(1)(c)(ii) of the F.W. Act, I turn to consider the reasons for Mr. Flageul’s dismissal.  For that purpose, I will also consider that issue on the assumption that, contrary to my earlier findings, each of the 11 alleged complaints/inquiries constituted the separate exercise of a workplace right.
  2. There was no dispute about the applicable legal principles.  Relevantly, s. 340 of the F.W. Act is breached if it is found that adverse action has been taken against a person “because” that person has exercised a workplace right.  It is not in dispute that the adverse action here was the dismissal of Mr. Flageul as C.E.O. of WeDrive.  In Lamont v. University of Queensland (No 2) [2020] FCA 720, Rangiah J. relevantly observed that a mere causal nexus between the exercise of a workplace right and the taking of adverse action would not sufficiently engage s. 340. His Honour said at [86]:

[A] mere causal nexus between the exercise of a workplace right and the adverse action is not enough.  In Barclay at [104], Gummow and Hayne JJ considered that the word “because” in s 340(1) requires an enquiry as to the “substantial and operative” reason or reasons for the relevant action.  In BHP Coal, Gageler J described the enquiry as being into the “operative and immediate” reason or reasons.  The mere application of a “but for” test is insufficient.  Otherwise, the outcomes in Barclay and BHP Coal would have been different.  The closeness of the connection between the exercise of the workplace right and the adverse action must be examined.  A qualitative judgment must be made as to whether the adverse action was taken because the employee exercised a workplace right.

I very gratefully adopt the foregoing summary of principle.

  1. Because of s. 361 of the F.W. Act, practically speaking it is the respondents who bear the onus of proving on the balance of probabilities the actual “operative and immediate reason” for Mr. Flageul’s dismissal.  In that respect, I find that it was Mr. Mace who terminated Mr. Flageul’s employment.  By reason of the operation of s. 360 of the F.W. Act, the question then becomes: have the respondents proven that Mr. Mace’s actual reasons for Mr. Flageul’s dismissal did not include the exercise by Mr. Flageul of a workplace right that comprises, individually or cumulatively, the alleged complaints/inquiries I have described above, and, in particular, because of the making of the fifth alleged complaint/inquiry?
  2. In their written submissions, the respondents summarised the applicable principles in the following way which did not appear to be disputed by Mr. Flageul:

(a)          The central question to be determined is one of fact.  It is: “Why was the adverse action taken?”

(b)          That question is to be answered having regard to all the facts established in the proceeding.

(c)          The Court is concerned to determine the actual reason or reasons which motivated the decision-maker.  The Court is not required to determine whether some proscribed reason had subconsciously influenced the decision-maker.  Nor should such an enquiry be made.

(d)          It will be “extremely difficult to displace the statutory presumption in s. 361 if no direct testimony is given by the decision-maker acting on behalf of the employer.”

(e)          Even if the decision-maker gives evidence that he or she acted solely for non proscribed reasons other evidence (including contradictory evidence given by the decision-maker) may render such assertions unreliable.

(f)          If, however, the decision-maker’s testimony is accepted as reliable it will be capable of discharging the burden imposed on the employer by s. 361.

  1. With very great respect to Mr. Flageul, I have concluded that Mr. Mace’s evidence concerning his reasons for the dismissal of Mr. Flageul is reliable and I prefer it to Mr. Flageul’s account of what happened, which I do not accept.  It follows that the respondents have thereby displaced the presumption created by s. 361 of the F.W. Act and have shown that Mr. Flageul was not dismissed because of the exercise by him of a workplace right.  There are a number of reasons for reaching this conclusion.
  2. First, there is the objective fact that, just days before his dismissal, Mr. Mace learned about Mr. Flageul’s failure to disclose Contact Point’s ownership of the relevant intellectual property.  Mr. Flageul frankly conceded that he should have revealed this and that it was “madness” that he had not done so.  If I may repeat the following salient answer given by Mr. Flageul during his cross-examination:

But I remember, on 21 December, Mr Mace questioned me on that, and he said, “Did you actually commit a lawyer to read over that agreement that you signed with Contact point?”  And I said, “No.”  And I remember him shaking his head, probably thinking, “What an idiot”, and I would have agreed with that, because I should have.  That probably would have saved me a lot of that trouble.

  1. As already mentioned, Mr. Flageul tried to downplay the significance of this event by contending that the problem was solved just before 21 December 2017 when Contact Point assigned the necessary intellectual property to WeDrive.  I do not think that his attempt succeeded.  That is so for two reasons.  First, there is the answer given by Mr. Taylor during his cross-examination as set out above.  He said the key point was around integrity, trust, and the relationship that Messrs. Mace and Taylor had with Mr. Flageul.  I find in the circumstances here that this relationship was unworkable because Messrs. Mace and Taylor could no longer trust Mr. Flageul.  Whether they felt that Mr. Flageul had lied to them about this issue was less clear; at the very least they felt he had neglected to address a vital issue for them, namely full ownership of the intellectual property.  They had both been misled.  I accept Mr. Taylor’s evidence that this could not be ignored.  The second reason is bound up with the next reason for accepting Mr. Mace’s evidence.
  2. Secondly, I do not accept that the intellectual property ownership issue was the only reason for Mr. Flageul’s dismissal, although it was a substantial reason.  The very poor performance of the WeDrive business, and the failure of the app to perform adequately were, generally speaking, the other reasons for Mr. Flageul’s dismissal.  During Mr. Mace’s cross-examination it was put to him that the letter giving Mr. Flageul notice of his termination only referred to the intellectual property issue.  However, Mr. Mace pointed out that it also referred to the failure to disclose other “issues”, and I observe that the letter also adverts to the undertaking of “investigations”.  In my view, whether rightly or wrongly, Mr. Mace thought that the app that WeDrive had acquired was capable of working in the way in which it was demonstrated to him in May 2017.  He thought it was automated.  Rightly or wrongly, Mr. Mace thought that the app needed little further development.  He also thought, rightly or wrongly, that the business had only been making losses of $8,000 per month that needed to be covered.  Instead, far more cash had been needed to develop the app.  Days before Mr. Flageul’s dismissal, Mr. Mace saw the profit and loss statement for WeDrive.  It disclosed substantial losses.  It disclosed the payment of $101,677 in “IT Expenses”; $39,000 had been paid to “other contractors” and $45,045 had been paid in directors fees.  The return on sales was, in contrast, negative.  It does not matter whether these figures were or were not accurate.  The fact is that this was the picture presented to Mr. Mace at this time concerning the financial performance of WeDrive.  In my view, he was justified in thinking that the business was worthless and would shortly become insolvent.  Its only significant asset was cash at bank.  I accept that Mr. Mace genuinely thought that Mr. Flageul had contributed significantly to WeDrive’s poor performance because the app did not fully work, more money was needed to develop it, and as a result sales were poor.  The catastrophe of the “Paul Gallen” event described above was emblematic of the state of the business in November 2017.  However, I would not lay all of the blame at Mr. Flageul’s feet. It is possible that, for example, Mr. Nicholson contributed to a lack of success in the Sydney market.  Nonetheless, all of these matters contributed to Mr. Mace’s decision to terminate Mr. Flageul’s employment.  They also explain why the assignment of the necessary intellectual property by Contact Point to WeDrive did not “fix” the problems Mr. Mace had with Mr. Flageul.
  3. Thirdly, Mr. Taylor’s evidence corroborates that of Mr. Mace.  He was at the meeting at which Mr. Flageul was dismissed.  I accept the veracity of his evidence.  In addition, Messrs. Russell and Barker gave evidence to corroborate the evidence of Mr. Mace concerning both the condition of the WeDrive business in December 2017 and the discovery that WeDrive did not own all of the necessary intellectual property.  Mr. Russell vividly told Mr. Mace on 18 December 2017 that “this was a disaster.”  I accept that this is what Mr. Russell generally said to Mr. Mace and I otherwise accept his evidence and that of Mr. Barker.
  4. Fourthly, I would have inferred, in any event, that the objective failure of the WeDrive business and Mr. Flageul’s serious mistake in not disclosing Contact Point’s ownership of the relevant intellectual property would have supplied Mr. Mace with obvious and compelling reasons to dismiss Mr. Flageul.  These problems vastly overshadowed each of the alleged complaints/inquiries said by Mr. Flageul to constitute the exercise of workplace rights, whether considered individually or in aggregate.  Some, like the complaint about the debit card, I would have characterised as trivial in nature, when compared to the “disaster” that was WeDrive in December 2017.
  5. Fifthly, the cross-examination of Messrs. Mace, Taylor, Barker and Russell did not, with very great respect, cause me to change my impression of the evidence they all gave.  Strikingly, it was never put to Mr. Mace that the reason for Mr. Flageul’s dismissal was one of the complaints or inquiries as alleged, or all of them in aggregate.  And this was so, notwithstanding that this was a case where credit was so important an issue.  The rule in Browne v. Dunn (1894) 6 R. 67 ordinarily obliges counsel to put to a witness the nature of the case that will be put that contradicts the evidence of that witness. Whilst Mr. Flageul’s statement of claim set out his alleged reasons for his dismissal, I am not confident that Mr. Mace had notice of them; Mr. Mace was not questioned about those alleged reasons during his cross-examination: c.f. Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v. Visy Packaging Pty Ltd (No 3) (2013) 216 F.C.R. 70 at 120 [251]. The failure to observe the rule in Browne v. Dunn goes some way, in the particular circumstances of this case, to support the truthfulness of Mr. Mace’s evidence, although I note that in civil proceedings that may not amount to very much: MWJ v. The Queen [2005] HCA 74; (2005) 80 A.L.J.R. 329 at 339 [40].
  6. Sixthly, I am not persuaded that the failure to plead a reason for Mr. Flageul’s dismissal in the defence filed by the respondents results, in combination with an application of s. 361 of the F.W. Act, in any necessary rejection of Mr. Mace’s evidence or to the inexorable failure of the respondents’ case.  This contention was only raised by Mr. Flageul in his closing submissions.  It is true that the defence contains a “bare denial” to the allegation that Mr. Flageul was sacked because he had exercised a workplace right or rights.  But it also pleaded that on 18 December 2017, Mr. Mace had confronted Mr. Flageul “about misrepresentations [Mr. Flageul] had made about the business and assets of [WeDrive].”  I also find that Mr. Flageul already had substantial notice of the reasons as to why he had been dismissed.  That is because I accept Mr. Mace’s evidence of what he said to Mr. Flageul on 21 December 2017, which is set out in his first affidavit (sworn on 13 March 2019).  It is also because of the contents of the letter giving notice of termination sent to Mr. Flageul on 22 December 2017, and the witness statement of Mr. Mace filed in May 2018 in the Fair Work Commission proceedings, and the affidavits sworn by Mr. Mace in this proceeding, the first of which was served over a year before the trial.  This is not a case where Mr. Flageul was in any way taken by surprise during the trial before me.  He had sufficient prior notice of the reasons for his dismissal.
  7. Seventhly, I do not think that the contention, which had never been pleaded, that Mr. Flageul was in a “quasi-partnership” with Messrs. Mace and Taylor makes any difference to the outcome here.  Whatever that term might mean, it does not bear upon my acceptance of Mr. Mace’s evidence.
  8. Finally, it follows that the respondents have demonstrated that none of the reasons for Mr. Flageul’s dismissal included the making by him of the fifth alleged complaint/inquiry.  If it matters, I am also satisfied that the respondents have shown that the reasons for Mr. Flageul’s dismissal did not include, whether individually or in aggregate, the making of any of the other alleged complaints/inquiries relied upon by Mr. Flageul.
  9. For the foregoing reasons, I would dismiss Mr. Flageul’s adverse action claims.”

 

Flageul v WeDrive Pty Ltd [2020] FCA 1666 delivered 18 November 2020 per Steward J