Alvarez Nino v Kuksal
[2022] FedCFamC2G 401
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Alvarez Nino v Kuksal [2022] FedCFamC2G 401
File number(s): MLG 806 of 2021
MLG 807 of 2021
MLG 808 of 2021
MLG 809 of 2021
MLG 810 of 2021
MLG 811 of 2021
MLG 812 of 2021
MLG 813 of 2021Judgment of: JUDGE FORBES Date of judgment: 27 May 2022 Catchwords: INDUSTRIAL LAW – Accessorial liability – Small claims procedure under s 548 Fair Work Act 2009 (Cth) – Whether Courts have jurisdiction to make compensatory order against accessory in small claim – Where primary contravenor is deregistered company – Determination of threshold question in substantive proceeding – Proper construction of Part 4-1 of Fair Work Act 2009 (Cth) – Explanatory Memorandum inconsistent with plain text and proper meaning – Power to grant relief exists – Court not bound to follow earlier authority – Application for stay of proceedings dismissed Legislation: Acts Interpretation Act 1901 (Cth) s 15AB
Fair Work Act 2009 (Cth) s 537, 539, 540, 544, 545, 546, 548, 550, 566
Human Rights and Equal Opportunity Act 1986 (Cth) Pt II
Workplace Relations Act 1996 (Cth) s 719, 720)
Cases cited: Australian Competition and Consumer Commission v Black on White Pty Ltd & ors (2001) 110 FCR 1
Australian Licensed Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd (2011) 193 FCR 526
Beer v Lim & Anor [2012] FMCA 524
Black v Young Republic & Anor [2012] FMCA 729
Bognar v Skilled Offshore Pty Ltd [2016] FCCA 2962
Briginshaw v Briginshaw [1938] HCA 34
Construction, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied services Union of Australia v Thiess Pty Ltd [2011] FCA 1020
Devonshire v Magellan Powertronics Pty Ltd [2013] FMCA 207
Electrolux Home Products Pty Ltd v Australian Workers’ Union [2004] HCA 40
Gapes v The Commercial Bank of Australia (1979) 11 FLR 27
McDonald v Il Migliore Pty Ltd & Anor [2013] FCCA 1540
Mitchell v G & M Childcare Centres Pty Ltd [2015] FCCA 718
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589
Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355
RailPro Services Pty Ltd v Flavel [2015] FCA 504
Scotto v Scala Bros Pty Ltd [2014] FCCA 2375
Veerargaroo v Goldbreak Holdings Pty Ltd (No 2) [2018] FCA 1448
Division: Division 2 General Federal Law Number of paragraphs: 109 Date of last submission/s: 15 March 2022 Date of hearing: 15 March 2022 Counsel for the First, Second, Third, Fourth, Fifth, Sixth, Seventh and Eighth Applicants: Mr Irving QC with Mr S Bunce Solicitor for the First, Second, Third, Fourth, Fifth, Sixth, Seventh and Eighth Applicants: JobWatch Inc. Counsel for the Respondent: Litigant in person Solicitor for the Respondent: Erudite Legal ORDERS
MLG 806 of 2021
MLG 807 of 2021
MLG 808 of 2021
MLG 809 of 2021
MLG 810 of 2021
MLG 811 of 2021
MLG 812 of 2021
MLG 813 of 2021FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: WILMER JAHIR ALVAREZ NINO
First Applicant
ANA MELISA GARCIA CALVO
Second Applicant
JUAN CAMILO RIOS LONDONO (and others named in the Schedule)
Third Applicant
AND: SHIVESH KUKSAL
Respondent
ORDER MADE BY:
JUDGE FORBES
DATE OF ORDER:
27 MAY 2022
THE COURT ORDERS THAT:
1.Matter remain listed for Final Hearing on 4-5 July 2022 in accordance with extant orders of the Court.
2.Any outstanding objections in relation to subpoenas issued by any party in these proceedings shall be heard and determined by a Registrar of the Court on a date to be advised.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE FORBES:
These reasons primarily concern a matter of statutory construction relating to the civil remedy provisions in Part 4-1 of the Fair Work Act 2009 (Cth) (“the FW Act”).
The question which has arisen is whether in a proceeding which is dealt with in the small claim procedure under section 548 of the FW Act the Court has jurisdiction to make a compensatory order against a person who was involved in a contravention of a civil remedy provision within the meaning of s 550?
Specifically, in this case the question is whether, under the small claims procedure, the Court has jurisdiction to find that an officer of a deregistered company was involved in a contravention of the FW Act by the company and, if so, whether the Court has jurisdiction to make a compensatory order against the officer in respect of his accessorial liability.
For the reasons set out below, I have determined that the Court does have jurisdiction.
BACKGROUND
In April 2021, eight applicants instituted proceedings under the FW Act in the then Federal Circuit Court of Australia against the respondent Mr Shivesh Kuksal.
The applicants were mainly international students. Each of the applicants claims to have been employed by Mr Kuksal directly or by one of two entities owned and controlled by him. The applicants allege that they performed cleaning, housekeeping and related duties in relation to guest accommodation. The applicants variously performed work between 2 July 2017 and 27 January 2018.
At the relevant time, Mr Kuksal was the sole director, company secretary and shareholder of the two entities, Kornucopia Pty Ltd and Avante-Gard Pty Ltd. These companies have subsequently been deregistered.
Five of the applicant’s claim they were not paid for any work performed during the period of their employment[1], whilst the remaining three applicants claim to be owed wages for work they performed during employment. The applicants contend that their employment was covered by the Hospitality Industry (General) Award 2010 and they allege contraventions of that industrial instrument. They also claim that no contributions were made to their nominated superannuation funds. The amounts claimed range from $675.94 to $7,256.82. Across the eight applications the amounts claimed total to about $22,000.
[1] Matter nos. MLG806/2021 – MLG810/2021
In all eight applications Mr Kuksal is named as the sole respondent and orders are sought against him. The applicants seek compensatory orders against Mr Kuksal in respect of the alleged underpayments. The applicants do not seek pecuniary penalty orders against Mr Kuksal.
In their initiating applications each applicant expressly elected for the proceedings be dealt with under the small claims procedure as outlined in section 548 of the FW Act. This election was effected by each applicant placing a cross in the box marked “yes” on the Court application form.
Each of the applications was accompanied by a Form 5 - Small Claim under the Fair Work Act 2009[2] which sets out the background circumstances giving rise to their specific claim and details of the relief sought.
[2] Federal Circuit Court Rules 2001 r 45.12(b)
In five of the eight applications[3], the applicants contend that they were a direct employee of the respondent, Mr Kuksal. In two of the eight applications[4] the applicants contend that they were employed by Kornucopia Pty Ltd but allege that as the sole director, shareholder and secretary of that company, Mr Kuksal was involved in any contravention by the corporate employer and is liable as an accessory pursuant to section 550 of the FW Act. The remaining applicant[5] contends that he was employed by Avant-Garde Ventures Pty Ltd, but similarly alleges that as Mr Kuksal was the sole director, shareholder and secretary of that company, he was involved in the employer’s contravention and is liable as an accessory.
[3] MLG806/2021 – MLG809/2021 and MLG813/2021
[4] MLG811/2021 and MLG812/2021
[5] MLG810/2021
Each applicant alleges that Mr Kuksal or a company owned and controlled by him misrepresented that the contract of employment under which they were employed was a contract for services under which the applicant would perform work as an independent contractor. Some applicants say that they were verbally informed by Mr Kuksal or a company that they were independent contractors. However, in all cases, the applicants allege they were required to apply for an ABN and submit invoices in order to be paid.
As mentioned, the two relevant entities in this matter, Kornucopia Pty Ltd and Avant-Garde Ventures Pty Ltd, have both been deregistered. The applicants do not claim relief from either entity, and only seek orders against Mr Kuksal on the grounds that he was either:
(a)in truth, the direct employer; or
(b)liable as an accessory to any contravention of the FW Act by the corporate employer, by reason of his involvement in the corporations’ contraventions.
The respondent filed a response to each of the applications on 9 August 2021. In his response, Mr Kuksal contends that the applicants were never at any material time employed by him nor was he at any material time the employer of the applicants. Instead, Mr Kuksal contends that the applicants were at all material times independent contractors of Kornucopia Pty Ltd or Avant-Garde Ventures Pty Ltd. Mr Kuksal denies alleged contraventions of the FW Act and opposes the making of any orders against him.
Since 21 June 2021, a number of procedural orders have been made in relation to these applications to ensure that they could be heard and determined in a timely manner. Those orders included that all eight applications would be listed and heard together and that evidence in one application may be relied upon in any other applications. Orders have also been made for the filing of affidavits, lists of factual and legal issues to be determined, outlines of submissions and various subpoenas have been issued.
The applications have been listed for final hearing on three occasions, first on 20 October 2021, then on 7 February 2022 and again on 15 March 2022. It is unnecessary to traverse the entire history of these applications, but they have been beset with numerous procedural complications and various rulings have been made by the Court in relation to applications made by the parties. Suffice to say, none of the substantive applications have yet been heard and no findings of fact or law have been made by the Court.
Relevantly, of the various interlocutory applications made in these proceedings, six of the applicants sought leave in early February 2022 to amend their claims. These amendments were sought after senior counsel was retained to represent all applicants. The proposed amendments sought to ensure that Mr Kuksal was put on notice that in those cases where he is alleged to be the direct employer, but is found not to be, the applicants intend to argue, in the alternative, that Mr Kuksal is liable an accessory to any contravention of the FW Act by the corporate employer. This alternative argument had already been asserted in three of the eight applications, and the proposed amendment was intended to regularise the applications so that the respondent was on notice that the accessorial liability argument would be pressed in all 8 cases. Being satisfied that the amendments did not give rise to any new factual issues, I granted leave for the applicants to amend at the aborted final hearing on 7 February 2021.
FORMATION OF THE THRESHOLD QUESTION
This background contextualises the subject of this decision. All eight applications seek compensatory orders against Mr Kuksal. All eight applicants now allege that if they are found to have been employed by a company owned and controlled by Mr Kuksal (rather than by Mr Kuksal personally) the Court should find that Mr Kuksal was “involved in” the contraventions of the employing entity within the meaning of section 550 of the FW Act, and is therefore, liable as an accessory. The applicants seek compensatory orders against Mr Kuksal in respect of that accessorial liability.
Relevantly, section 550 states as follows (headings included):
550Involvement in contravention treated in the same way as actual contravention
(1) A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.
(2) A person is involved in a contravention of a civil remedy provision if, and only if, the person:
(a) has aided abetted, counselled or procured the contravention;
(b) has induced the contravention whether by threats or promises or otherwise;
(c) has been in any way, by act or mission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d) has conspired with others to effect the contravention.
Throughout the course of these proceedings, Mr Kuksal has contended that the Court does not have jurisdiction, in a case being heard in the small claims procedures under section 548 of the FW Act, to make findings of accessorial liability or to make the orders of the type sought by the applicants.
As discussed in more detail later in these reasons, pursuant to section 548 of the FW Act, certain applications to the Court in respect of contraventions of the FW Act may be dealt with as small claims proceedings. It is necessary for those applications to meet certain criteria to be dealt with in that manner. But where a matter is dealt with under that procedure, the Court may not award more than $20,000 or such higher amount as may be prescribed by the Fair Work Regulations[6]. The Court is not bound by any rules of evidence and procedure and may act in an informal manner and without regard to legal forms and technicalities[7]. At any stage of the proceedings, the Court may amend the papers commencing the proceedings subject to sufficient notice being given to any party affected by the amendment[8] and the right to legal representation requires leave of the Court[9], which may be granted subject to conditions[10].
[6] Fair Work Act 2009 (Cth) s 548(2)
[7] Ibid s 548(3)
[8] Ibid s 548(4)
[9] Ibid s 548(5)
[10] Ibid s 548(6)
In objecting to the Court’s jurisdiction, Mr Kuksal places significant reliance on Beer v Lim & Anor [2012] FMCA 524[11] (“Beer v Lim”), an earlier ruling of this Court which held the Court did not have power to make an order against an accessory in a small claim proceeding.
[11] see also Beer v Lim & Anor [2012] FMCA 494
In Beer v Lim, O’Sullivan FM held that an order against an accessory was unavailable in proceedings under the small claims procedure established by section 548. The Court observed that “In this jurisdiction and in the context of the application filed by the applicant, this Court can only make an order against the applicant’s employer” (at [21]). The Court reasoned (at [24]-[25]):
[24] … The applicant has invoked the jurisdiction of the Court under section 548 of the FW Act in his application. Nowhere in section 548 of the FW Act does it provide for the Court to be able to make an order as against an officer of a corporate respondent such as the first respondent for breaches of the FW Act.
[25] There are provisions in the FW Act that enable the Court to make findings and, if necessary, impose penalties by virtue of the accessorial liability provisions of the FW Act, as against officers of corporate respondents involved in or knowingly concerned in breaches of the FW Act. However, in the context of an application in the small claims jurisdiction under section 548 of the FW Act, no such provision exists.’
At the hearing on 7 February 2022, Mr Kuksal made an oral application for all the applications to be summarily dismissed on various grounds including that, by reason of Beer v Lim, the Court did not have jurisdiction to make orders in relation to the accessorial liability claims. On that occasion I noted Mr Kuksal’s reliance on Beer v Lim, but I ruled against his application because I did not see a sufficient basis on the filed material, including the affidavit material and authorities filed that morning, to conclude that the accessorial liability allegations were so without merit that they did not enjoy any reasonable prospect of success[12]. Furthermore, in respect of those applications which allege Mr Kuksal was the direct employer, Beer v Lim could not dispose of the claims against him.
[12] Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 r 13.13
Subsequently, pursuant to an order of the Court, Mr Kuksal filed and served a list of legal and factual issues which he contends arise from the applications. Of the list of 34 issues Mr Kuksal says need to be determined in these proceedings, several directly or indirectly question the Court’s power to make compensatory orders against an accessory in a small claim proceeding, including whether the Court is bound to follow Beer v Lim.
At the hearing on 15 March 2022, Mr Kuksal made an application for an order that the proceedings be stayed. There were several limbs to his submission which need not be explored here. Relevantly, however, Mr Kuksal submitted that the proceedings should be stayed because the Court had not determined whether it has jurisdiction to hear the proceedings in relation to the applicants’ claim for orders against him based on accessorial liability.[13] Mr Kuksal submitted that the Court does not have the jurisdiction to hear and determine accessorial liability claims in a small claims proceeding[14] and that the Court is bound by authority which requires any such application to be dismissed on the basis that it has no prospect of success[15]. He contended that it would be improper for the Court to hold him to a proceeding that it did not have jurisdiction to hear[16].
[13] Transcript 15 March 2022, p.25 line 10-16
[14] Ibid p.26 line 5-10
[15] Ibid p.26 line 20-35, p. 29 line 10-15
[16] Ibid p.30 line 25-30
After much debate about procedural issues during the course of the morning on 15 March 2022, Mr Kuksal submitted that the issue of jurisdiction in relation to accessorial liability should be determined as a threshold matter[17] Senior counsel for the applicants agreed that it would be an “excellent idea”[18] and the parties agreed that the jurisdictional issue was a matter which could be determined without evidence[19]. It was common ground that the question of whether the Court has power in a section 548 procedure to make a compensatory order against an accessory is purely a question of statutory construction.
[17] Ibid p.50 line 15
[18] Ibid p.50 line 25
[19] Ibid p.50 line 25-40
Based on submissions from the parties, I ruled that the legal question of the Court’s power to hear and determine claims for compensatory orders against accessories in a small claims procedure should be determined as a threshold issue. Determination of the threshold issue necessarily requires consideration of Beer v Lim and whether this Court is bound to follow it.
Consideration of the threshold issue before the Court does not extend to determining other live questions such as whether the applicants were employees or independent contractors, the identity of the applicants’ employer if they were employees, whether the facts of any application establishes a contravention of a relevant industrial instrument or whether Mr Kuksal was or was not involved in a contravention by a putative employer. The Court has not heard any evidence in the substantive proceedings, it has not made any findings of fact or liability and the Court accepts that the applicants’ allegations and claims are vigorously contested by Mr Kuksal.
Respondent’s submissions
Mr Kuksal sought to rely on a written submission filed on 15 March 2022. He also made oral submissions. Both have been considered.
Mr Kuksal contends that as a matter of proper construction the small claims procedure in section 548 does not confer jurisdiction on the Court to entertain applications which seek orders against accessories. Mr Kuksal also submits that the Court in Beer v Lim correctly construed the meaning and effect of section 548 and that the Court as presently constituted is bound to follow it. His submission is that if the Court proceeds to hear the applications it will exceed its jurisdiction.
Mr Kuksal submits that a finding of accessorial liability requires proof to the criminal standard of “beyond reasonable doubt” because of the serious and quasi-criminal implications such a finding may have for the person concerned. He submits that the informalities of the small claims procedure under section 548 does not permit the Court to make a finding consistent with the standard of proof that is required for accessorial liability. He submits that because the Court is not bound by the rules of evidence in hearing applications made under section 548, any proceeding in the nature of a small claim is not amenable to the making of factual findings to the level of onus required[20].
[20] Ibid p.59 line 15-35, p.61 line 20
Furthermore, Mr Kuksal submits that section 548 should not be construed in a manner which removes or curtails his fundamental common law rights and freedoms, unless parliament’s intention to do so is manifested by unmistakable and unambiguous language[21]. Contending that proof of accessorial liability must be to the criminal standard, Mr Kuksal submits that the informal small claim procedure in section 548 cannot have been intended to apply to allegations of that kind.
[21] (see Electrolux Home Products Pty Ltd v Australian Workers’ Union [2004] HCA 40 at [40])
To emphasise this point, in reply Mr Kuksal reiterated his submission that no Court has ever found accessorial liability by a standard which requires a civil standard of proof. Mr Kuksal contends that it is universally accepted that the determination of accessorial liability can only be made if proven to the criminal standard.
Mr Kuksal relies on section 15AB of the Acts Interpretation Act 1901 (Cth) to call in aid the Explanatory Memorandum to the Fair Work Bill 2008 in relation to the proper construction of section 548. He submits that it is plain from the Explanatory Memorandum relating to section 550 that pecuniary penalty orders are the only orders a Court can make in respect of accessorial liability[22].
[22] Explanatory Memorandum, Fair Work Bill 2008 (Cth) 332 at [2176]-[2177]
Paragraphs 2175-2177 of the Explanatory Memorandum dealt with proposed section 550 of the FW Act. Paragraph 2176 and 2177 were as follows:
2176. The clause means that a pecuniary penalty for a contravention of a civil remedy provision can also be imposed on a person involved in a contravention. For example, where a company contravenes a civil remedy provision, a pecuniary penalty can also be imposed on a director, manager, employee or agent of the company.
2177. However, while a penalty may be imposed on a person involved in a contravention, the clause does not result in a person involved in a contravention being personally liable to remedy the effects of the contravention. For example, where a company has failed to pay, or has underpaid, an employee wages under a fair work instrument, the director is not personally liable to pay that amount to the employee.
Mr Kuksal contends that because section 548 specifically excludes the power to make pecuniary penalties orders, the section should thus be construed as not conferring jurisdiction on the Court to make orders against an accessory. He submits that the words of section 548 are ambiguous and that the Explanatory Memorandum clarifies that it is not open to the Court to make a compensatory order against an accessory. He submits that the proper construction of the section 548 should be consistent with the Explanatory Memorandum.[23]
[23] Transcript 15 March 2022, p.73 line 8-14
Mr Kuksal also submits that even if penalties are not being sought against him, it is improper for an applicant to use the small claims procedure to hold a party to account and to brand them as people who have committed the same sort of offence that warrants the imposition of serious pecuniary penalties[24].
[24] Ibid, p.61 line 0-5
Mr Kuksal also contends that section 548 only permits the Court to make orders against employers, not accessories.[25] In support of this submission, the Respondent relies on Beer v Lim, where it was held that section 548 empowered the Court to make an order against the applicant’s employer[26] but not against an officer of a corporate respondent.[27] The Respondent also cited Lucev FM in Fair Work Ombudsman v Blacklight Investments Pt Ltd [2011] FMCA 506 at [21-26], which stated that under the small claims procedures, orders may only be made against an employer because the procedure does not concern pecuniary penalty order or civil penalty proceedings.
[25] The Respondent’s Outline of Submission at [37]
[26] Beer v Lim & Anor [2012] FMCA 524 at [21]
[27] Ibid at [24]
Mr Kuksal also submits that the Court should not be permitted to make a finding of accessorial liability under the informal small claims procedure because that judicial finding of involvement in a contravention will give rise to an issue estoppel, which leaves the accessory open to the imposition of penalties in a higher Court without the requirement for further proof. The submission seems to be that it would be incongruous to construe section 548 as permitting a finding under a procedure which is not bound by the rules of evidence, which could then lead to the imposition of penalties by another Court where the rules of evidence would have applied if liability had been determined there.
Relatedly, Mr Kuksal also raised what he calls the “human rights point”, that being that every person should be equal before the Courts and must be tried to the same standard. He relies upon article 14 of the International Covenant on Civil and Political Rights, which is a schedule to the Human Rights and Equal Opportunity Act 1986 (Cth). The essence of this submission is that it would be fundamentally unjust for the allegations against him to be tried in a manner which deprives him of the protections which would be available if the matter was prosecuted in the Federal Court where the rules of evidence do apply. Again, the gravamen of the submission is that the legislature surely would not have intended that the informal small claims procedure would be used to prosecute allegations of accessorial liability.
Mr Kuksal also submits that section 545 of the FW Act should not be “imposed” in the proceedings.[28] The Respondent contends that the applicants did not seek an order pursuant to section 545 FW Act in their original application or amended application.[29] Further, Mr Kuksal submits that the Court did not inform him of the applicant’s imposition of section 545. The substance of this submission seems to be that because the applicants have elected to bring their claims under the small claims procedure under section 548, they cannot seek an order for compensation under s 545.
[28] The Respondent’s Outline of Submission at [44]
[29] Ibid.
Applicants’ submissions
The applicants contend that the Court has jurisdiction to hear and determine the claims and to make the orders sought.
Mr Irving QC relied upon a written submission prepared with his junior Mr Bunce dated
11 March 2022. He supplemented and developed those submissions orally.
The applicants submit that there is nothing in section 548 which precludes the Court from exercising power to make compensatory orders in relation to a contravention of a civil remedy provision, including as against a person who by reason of s 550 was involved in the contravention, if the Court considers it appropriate[30] to do so.
[30] Fair Work Act 2009 (Cth) s 545(1)
The central thrust of the applicants’ submission is that section 548 is procedural, not jurisdictional. The applicants contend that Mr Kuksal’s construction of section 548 is misconceived, because it fails to appreciate that the source of the Court’s power to make orders (other than pecuniary penalties) in relation to contraventions resides in s 545 of the FW Act, not s 548. Moreover, as section 550 is not a civil remedy provision, it is submitted that s 545 is the source of the Court’s power to make an order against a contravenor, which necessarily includes a person who by reason of s 550 is deemed to have engaged in the contravention.
Senior counsel for the applicants acknowledged that this is the first case to his knowledge that squarely considers the jurisdictional issue raised in Beer v Lim. While there have been other cases conducted through the small claims procedure where orders have been made against an accessory[31], none of those decisions considered Beer v Lim.
[31] Black v Young Republic & Anor [2012] FMCA 729 per Nicholls FM; McDonald v Il Migliore Pty Ltd & Anor [2013] FCCA 1540 per Whelan J
The applicants submit that the Court in Beerv Lim incorrectly construed section 548 and that if the same matter was heard today, in light of more recent authority, it would be decided differently.
The applicants submit that the Court in Beer v Lim misunderstood the nature of section 548. The applicants submit that section 548 of the FW Act concerns procedure that may be adopted by the Court in dealing with certain matters, but it does not confer jurisdiction over the Court. The jurisdiction of the Court is conferred in section 566 of the FW Act and the power to make orders (other than pecuniary penalty orders) in relation to contraventions is found in s 545.
The applicants also point to a number of shortcomings in Beer v Lim which they say warrant reconsideration of its construction of section 548. Beer v Lim was a case in which the parties were unrepresented and the applicant did not appear on the day. The applicants contend that the decision was made per incuriam, as the Court did not have the benefit of argument or any submissions about sections 545, 548 or 550 or the relationship between those provisions. The decision was ex tempore. While the Court was correct to observe that nowhere in section 548 will one find jurisdiction for the Court to make an order against an accessory, the Court was not directed to and would appear not to have considered s 545.
Furthermore and crucially, the applicants contend that the Court in Beer v Lim proceeded on an understanding of the law, informed by the paragraphs 2177 of the Explanatory Memorandum to the Fair Work Bill 2008, to the effect that the power of the Court to make orders against an accessory to an employer’s contravention was limited to the imposition of pecuniary penalties and did not extend to the making of compensatory orders. However, that understanding of the law has now been superseded by the Federal Court in Veerargaroo v Goldbreak Holdings Pty Ltd (No 2) [2018] FCA 1448 and a series of subsequent cases. It is now well-established that the Court does have power under section 545 to make compensatory orders against an accessory if it considers it appropriate to do so and that the plain words of the FW Act prevail over any inconsistent expression of intent as might be found in the Explanatory Memorandum.
The applicants also submit that the Court in Beer v Lim overlooked or failed to consider section 548(1)(b) FW Act which enables the Court to make orders that relate to an amount that an employer was required to pay to or on behalf of an employee. The applicants contend that a proper construction of 548(1)(b) and s 548(1A)(a)(i) FW Act would not limit the Court to make orders only as against the employer.[32] Rather, the applicants argue that the Court may make an order that relates to an amount owed by an employer. This would permit the making of an order against an accessory if a sufficient nexus exists between the orders sought and the amount that the employer was required to pay in respect of the employment period.[33] In that respect the applicants contend that although words must be interpreted in their relevant context, the words ‘relate to’ were of “wide import”.[34] Whether a sufficient connection exists depends on the relevant facts of the case, as this is “a matter for judgment”.[35]
[32] Ibid
[33] Ibid at [47]
[34] CEPU v Thiess Pty Ltd [2011] FCA 1020, Tracey J observed at [49] - [50]
[35] Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355 at [387]
The applicants contend that a central premise of Mr Kuksal’s submissions, namely that accessorial liability under the FW Act must be proven to the criminal standard “beyond reasonable doubt”, is simply incorrect and must be rejected. Senior counsel submitted that since the seminal decision of the Full Federal Court in Gapes v The Commercial Bank of Australia (1979) 11 FLR 27, it is well settled that contraventions of civil remedy provisions under the FW Act must be established to the civil standard of proof.
The applicants accept, however, that when applying the balance of probabilities, the Court must have regard to the nature of the allegations made and the seriousness of the consequences which might follow[36]. In a section 548 small claim, the onus to be applied to the evidence is still something that shifts according to the seriousness of the allegations made. Any relaxation of the rules of evidence and procedure does not dispose of the requirement for natural justice. Briginshaw v Briginshaw [1938] HCA 34, still demands the application of common sense and logical reasoning in drawing inferences and reaching conclusions.
[36] Briginshaw v Briginshaw [1938] HCA 34 at [31] per Dixon J
Relatedly, senior counsel for the applicants submits that the moral opprobrium which
Mr Kuksal says attaches to a finding of accessorial liability simply does not arise in a small claims proceeding. As there is no power for the Court to order pecuniary penalties, it is submitted that it is not apt to describe civil contraventions dealt with under the small claims procedure as being quasi-criminal in nature. Small claims under section 548 are essentially money claims for recovery of civil and statutory debts, such as unpaid or underpaid wages.
The applicants reject as untenable Mr Kuksal’s submission that a finding of accessorial liability in a small claims proceeding under section 548 would leave the accessory open to the imposition of pecuniary penalties elsewhere. The applicants submit that any determination by the Court between the parties will bind the parties, and will creates an issue estoppel between them. By virtue of an Anshun[37] estoppel, and by virtue of merger of cause of action, the applicants could not turn around the next day and sue for the same thing or for a different remedy from the same events.
[37] Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at [602]
As to Mr Kuksal’s argument regarding the relevance of article 14 of the International Covenant on Civil and Political Rights to the proper construction of section 548, the applicants say that the words of s 548 are clear and that the informal process and relaxation of the strict rules of evidence are design features of the small claims procedure. It is the very procedure which parliament contemplated should apply to applications which meet the criteria for being dealt with in that manner. The applicants submit that purpose of section 548 is pellucidly clear and that the procedure is invoked by an applicant making an election.
CONSIDERATION
The threshold question which falls to be determined by the Court is whether in a proceeding being dealt with as a small claim procedure under section 548 of the FW Act the Court has jurisdiction to make a compensatory order against a person involved in a contravention of a civil remedy provision?
A related question is whether Beer v Lim was correctly decided and whether this Court is bound to follow it.
In my opinion a careful analysis of the scheme and content of Part 4-1 of the FW Act reveals the answers to both these questions.
Overview
Certain provisions of the FW Act impose obligations on certain persons and are designated as civil remedy provisions[38]. Those civil remedy provisions are identified in column 1 of the table set out in section 539(2) of the FW Act.
[38] Fair Work Act 2009 (Cth) s 539(1)
Pursuant to section 539(2), certain persons, identified in column 2 of the table, may make an application to a relevant Court, identified in column 3 of the table, for an order in relation to a contravention or proposed contravention of a civil remedy provision.
The class of persons who may make application for an order in relation to a contravention of a civil remedy provision in most cases include employees. For the purposes of Part 4-1 of the Act (Civil Remedies) the expression “employee” is to be given its ordinary meaning[39].
[39] Ibid s 538
The right of an employee to make application for such an order is found in s 539(2). For an employee to make an application for an order in relation to the contravention of a civil remedy provision, in most cases it is necessary that the employee is affected by the contravention[40] and the application for the order must be made within 6 years of the day on which the contravention occurred[41].
[40] Ibid s 540(1)
[41] Ibid s 544
The Court’s power to make an order in relation to the contravention of a civil remedy provision is found in section 545. Section 545(1) confers on the Federal Court and this Court the power to “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.”
The power of this Court to make an order in respect of contraventions of civil remedy provisions is very broad and includes, but is not limited to, the making of orders awarding compensation for any loss that a person has suffered because of the contravention[42].The power to award “compensation for loss” can be exercised to compensate a person not only for financial loss but also non-economic loss including hurt and humiliation[43].
[42] Ibid s 545(2)(b)
[43] Australian Licensed Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd (2011) 193 FCR 526; RailPro Services Pty Ltd v Flavel [2015] FCA 504 at [176]
The Court may make such an order on its own initiative during proceedings before the Court or, relevantly, on application by a person affected by the contravention[44]. In harmony with the time limits in s 544, the Court must not make an order in relation to an underpayment that relates to a period that is more than 6 years before the proceedings concerned commenced[45].
[44] Fair Work Act 2009 (Cth) s 545(4)
[45] Ibid s 545(5)
A distinct power of the Court to make pecuniary penalty orders in relation to contraventions of civil remedy provisions resides in section 546 of the FW Act[46]. That power may be exercised on application and pecuniary penalties may be ordered up to the maximum amounts specified in column 4 of the table set out in ss 539(2).
[46] see also Note 1 to s 545(2) Fair Work Act 2009 (Cth)
Division 3 of Part 4-1 is titled “Small Claims Procedure”. It contains only one section, section 548, which is headed “Plaintiffs may choose small claims procedure”.
Sub-section 548(1) provides that proceedings are to be dealt with as small claims proceedings under s 548 if three criteria are met, namely:
(a)a person applies for an order (other than a pecuniary penalty order) under Division 2 from a Magistrate’s Court or this Court;
(b)the order sought relates to an amount that an employer was required to pay to or on behalf of an employee under the Act or a fair work instrument or because of a safety net contractual entitlement[47]; and
(c)the person indicates, in a manner prescribed by the Fair Work Regulations or the rules of the Court, that he or she wants the small claims procedure to apply to the proceedings.
[47] Ibid (Cth) s 548(1A)
As stated earlier, where a proceeding is dealt with as a small claim proceeding the Court may not award more than $20,000 or such higher amount as may be prescribed by the Fair Work Regulations[48]. In dealing with a small claim proceeding the Court is not bound by any rules of evidence and procedure and may act in an informal manner and without regard to legal forms and technicalities[49]. At any stage of the proceedings the Court may amend the papers commencing the proceedings subject to sufficient notice being given to any party affected by the amendment[50] and the right to legal representation requires leave of the Court[51], which may be granted subject to conditions[52].
[48] Ibid s 548(2)
[49] Ibid s 548(3)
[50] Ibid s 548(4)
[51] Ibid s 548(5)
[52] Ibid s 548(6)
Division 4 of Part 4-1 contains a number of sections which are of general application in relation to civil remedies. At the risk of repetition, section 550 states as follows (headings included, but omitting notes):
Involvement in contravention treated in the same way as actual contravention
(1)A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.
(2)A person is involved in a contravention of a civil remedy provision is, and only if, the person:
(a) has aided abetted, counselled or procured the contravention;
(b) has induced the contravention whether by threats or promises or otherwise;
(c) has been in any way, by act or mission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d) has conspired with others to effect the contravention.
Section 550 has the effect of deeming a person involved in a contravention (often referred to as an accessory) to be a contravenor. That is, where a person has been “involved in” the contravention in the requisite sense, that person is taken to have contravened the civil remedy provision him or herself.
Section 550 is not a civil contravention provision itself and it does not establish a separate contravention. Rather, it deems an accessory to a contravention to be a contravenor and operates to enable that person’s involvement in the contravention to be “treated in the same way as actual contravention”[53]
[53] see Heading to s 550; see also Devonshire v Magellan Powertronics Pty Ltd [2013] FMCA 207 at [81], [84]
Analysis
Section 537 of the FW Act provides a Guide to Part 4-1 (Civil Remedies) and is instructive as to the scheme of this part of the FW Act and its legislative purpose.
Relevantly, it provides that:
Sub-division A of Division 2 (ie ss 539-544) deals with applications for orders in relation to contraventions of civil remedy provisions;
Sub-division B of Division 2 (ie ss 545-547) sets out the orders that can be made by various courts, including this court, in relation to a contravention of a civil remedy provision;
Division 3 (ie s 548) sets out when proceedings relating to a contravention of a civil remedy provision may be dealt with as small claims proceedings;
Division 4 (ie ss 550-558) deals with general provisions relating to civil remedies including rules about evidence and procedure.
The avenue for the making of an application to a Court for an order in relation to a contravention of a civil remedy provision is to be found in sub-division A of Division 2 in Part 4-1, in particular in section 539. Pursuant to section 539(2) an employee may make an application for an order in relation to a contravention or proposed contravention.
Plainly an employee or a person who claims to have been an employee may make an application to the Court for an order against a person who has contravened the civil remedy provision.
It is equally clear that the avenue under s 539 extends to the making of an application for an order against a person who was involved in the contravention.
First, s 550 deems a person involved in a contravention to be a contravenor themselves and mandates that involvement in a contravention is to be treated in the same way as actual contravention. Accordingly, if by reason of his or her involvement in a contravention a person is deemed to be a contravenor, it follows logically that an application for an order against an accessory can be made as if the accessory was the primary contravenor. Secondly, an application for an order against an accessory is, at the very least, an application for an order “in relation to a contravention” of a civil penalty provision. The phrase “in relation to” is an expression of wide and general import[54] and is apt to pick up issues beyond the primary contravention. Thirdly, the power of the Court to make orders under section 545 extends to the making of any orders where the Court is satisfied that a person has contravened a civil remedy provision, a power which must encompass the making of orders against persons who are deemed contravenors under s 550.
[54] Construction, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied services Union of Australia v Thiess Pty Ltd [2011] FCA 1020 at [50] per Tracey J
The Court’s power to make orders against those who contravene civil remedy provisions resides in section 545 and the power to make pecuniary penalty orders resides in s 546.
Division 3 of Part 4-1 sets out a mechanism by which certain applications for orders may, at the election of the applicant, be channelled through a process which relaxes some of the evidentiary and procedural rules and which limits the amount the Court can award in relation to the contravention. Importantly, section 548 does not provide a separate and distinct avenue for the making of an application for orders against a contravenor (or deemed contravenor). Rather, the plain text of the provision presumes the existence of a “proceeding” which has arisen by reason of a person having made an application for an order (other than a pecuniary penalty order) under Division 2[55]. Subject to that proceeding being one where the application seeks an order which relates to an amount an employer was required to pay[56], the employee may elect for the “small claims procedure to apply to the proceedings”[57].
[55] Fair Work Act 2009 (Cth) s 548(1)(a)
[56] Ibid ss 548(1)(b) and (1A)
[57] Ibid s 548(1)(c)
As submitted by the applicants, section 548 is procedural. It is not a source of jurisdiction. There is no mechanism under Division 3/section 548 for a person to apply to a Court for an order in relation to a civil remedy. Any application seeking to engage the jurisdiction of the Court is made under section 539.
The Court’s power to make orders in relation to an application which is dealt with as a small claim resides in section 545 of the FW Act. Section 548(2) constrains the exercise of the Court’s power to make a compensatory order to a maximum of $20,000, but it is not a jurisdictional constraint which prohibits the Court’s power in any other respect.
Furthermore, there is no sound basis for the Respondent’s submission that the Court’s power to make a compensatory order in a small claim is limited to making such an order only against an employer. Section 548 does not expressly prescribe against whom the Court may make orders under the small claim procedure. Although it is necessary that the order sought by the employee must be one which “relates to an amount” that an employer was requires to pay[58], it does not follow that the Court is constrained to make an order only as against an employer.
[58] Ibid ss 548(1)(b), (1A)
The Court’s power to make orders under section 545 is not limited to making orders against employers and there is no reason why such an order cannot be made against a person who has been involved in an employer’s contravention if the Court considers it appropriate to do so. An application for an order against an accessory who was involved in an employer’s underpayment is on any view an application for an order in relation to a contravention for the purposes of s 539(2) and which relates to an amount the employer was required to pay for the purposes of s 548(1)(b).
Liability of an accessory is separate from and not conditional upon a finding being made against the “primary” contravenor. An applicant may proceed against a person involved in a contravention even if a claim against the principal contravenor is not pursued[59]. An action may continue against an accessory even when discontinued against the principal contravenor[60] and an accessory may also be liable where, as here, a company has been deregistered[61].
[59] Australian Competition and Consumer Commission v Black on White Pty Ltd & ors (2001) 110 FCR 1 at [14] per Spender J; Devonshire v Magellan Powertronics Pty Ltd [2013] FMCA 207 at [85]; Bognar v Skilled Offshore Pty Ltd [2016] FCCA 2962 at [42]
[60] Devonshire v Magellan Powertronics Pty Ltd [2013] FMCA 207 at [85] citing Torpia v Empire Printing (Australia) Pty Ltd (2009) 188 IR 306 at [319] per Barnes FM
[61] Fair Work Ombudsman v Blacklight Investments & Anor [2011] FMCA 506 at [21]-[26] per Lucev FM
In Scotto v Scala Bros Pty Ltd [2014] FCCA 2375 (“Scotto”), Judge Cameron held that the Court’s power to make orders under section 545 of the FW Act 2009 (Cth) was materially different to predecessor provisions in the Workplace Relations Act 1996 (Cth)[62] which did “not accommodate the idea that anybody other than the employer in question will be liable for underpayments”.
[62] Workplace Relations Act 1996 (Cth) ss 719-720
Subsequent to Scotto the nature and extent of the Court’s power to order an accessory to pay compensation has been considered in a number of decisions[63], including the issue of whether paragraphs 2176-2177 of the Explanatory Memorandum to the Fair Work Bill 2008 (Cth) expressed a legislative intention to constrain the Court’s power to make compensatory orders against accessories.
[63] see Veeraragoo v Goldbreak Holdings Pty Ltd (No 2) [2018] FCA 1448 at [45]
The proper meaning of section 545 was considered in Veeraragoo v Goldbreak Holdings Pty Ltd (No 2) [2018] FCA 1448, where at [47] Colvin J observed that the task of statutory construction begins with a consideration of the text and extrinsic materials cannot be relied upon to displace the clear meaning of the text. In terms of statutory construction, his Honour held that section 545, 546 and 550 of the FW Act are to be construed, not the terms of the Explanatory Memorandum. His Honour held that, “having regard to the purposes of the Fair Work Act, the meaning of s 545 is that where a court has determined that there has been a contravention then before any person (including a person involved in a contravention) may be ordered to pay compensation, the court must have formed the view that such an order is appropriate in the particular circumstances”[64].
[64] Ibid at [47]
I am satisfied that pursuant to section 545 the Court has power to make any order it considers appropriate, including a compensatory order in respect of unpaid wages, if it is satisfied that a person has contravened a civil remedy provision, including by reason of that person being a deemed contravenor[65].
[65] Ibid at [44]-[53]
I am satisfied that the applications which are before the Court are proceedings initiated pursuant to section 539. The applications seek orders in relations to alleged contraventions of civil remedy provisions for the purposes of section 539(2) which relates to an amount the employer was required to pay for the purposes of s 548(1)(b). The applicants have each elected for the proceedings to be dealt with under the small claims procedure in section 548 and because they satisfy the relevant criteria in s 548(1) the applications must be dealt with in that manner. In the event the applicants establish contraventions, including as against a person who was involved pursuant to section 550, the Court has power in a small claim proceeding to make any order it considers appropriate, other than an order for pecuniary penalties[66] or an order for payment of greater than $20,000[67].
[66] Fair Work Act 2009 (Cth) s 546 and s 548(1)(a)
[67] Ibid s 548(2)
For the reasons set out in the foregoing paragraphs, I do not accept Mr Kuksal’s submission that the Court does not have jurisdiction to hear these applications or to make compensatory orders against an accessory. I have considered each of his submissions (including written submissions) and they do not persuade me that section 548 should be construed other than in accordance with its text.
Mr Kuksal’s submissions are based on several flawed and intersecting premises. He submits repeatedly that the applicants are seeking the imposition of civil penalties against him. They are not. He submits that because of the serious implications of civil penalties, any finding of accessorial liability requires proof of involvement to the criminal standard, beyond reasonable doubt. That is not correct.
Mr Kuksal submits that in a small claims proceeding he will be denied the benefit of the rules of evidence which would normally be applied in a proceeding against an accessory. This is based on the flawed premise that the Court will not properly evaluate evidence and require persuasion appropriate to the gravity of the allegations made. In a small claims proceeding, the Court may not be bound by any rules of evidence or procedure and may act in an informal manner without regard to legal forms and technicalities, but it does not follow that a respondent will not be afforded natural justice or fair process commensurate with the allegations against him. Relaxation of rules and procedures does not mean that the standard of proof is diminished.
Mr Kuksal relied on Mitchell v G & M Childcare Centres Pty Ltd [2015] FCCA 718 in support of his submission that the small claims procedure cannot be adopted as a vehicle for an application for pecuniary penalties. His reliance on this case is misplaced. In Mitchell the Court was dealing with a claim for the imposition of civil penalties. The court held at [103] that If a party is to be exposed to the imposition of penalties, the party is entitled to have its liability for such penalties determined following a hearing which has observed the rules of evidence and which has not proceeded in an informal manner. In this matter, the applicants do not seek the imposition of civil penalties.
Mr Kuksal’s reliance on the Federal Court decision in Jensen v Cultural Fusion (International) Pty Ltd [2020] FCA 358 (“Jensen”) is similarly misplaced. The discussion in Jensen about the standard of proof to be met before there can be any finding adverse to the respondent was again in the context of an application where civil penalties were being sought against the respondent. No pecuniary penalties are sought here – and such orders plainly cannot be sought in the context of the small claim proceeding.
The “human rights point” raised by Mr Kuksal does not warrant reading section 548 other than in accordance with its text. It may well be that a proceeding commenced against an accessory in the Federal Court will travel a different procedural path and the hearing may be subject to the rules of evidence and other formalities which may not feature in a proceeding which is dealt with as a small claim. But that would appear to be the design intended by the legislature in respect of those proceedings which qualify to be dealt with under the small claims procedure. Notably, a proceeding which seeks a pecuniary penalty order will not qualify to be dealt with in that manner.
I agree with the applicants that there is no substance to Mr Kuksal’s submission that section 548 should be read to preclude findings of accessorial liability because of the risk that the finality of such a finding would expose the accessory to penalties in another Court.
Finally, I reject Mr Kuksal’s submission that construction of section 548 of the FW Act should be informed by the Explanatory Memorandum to the Fair Work Bill. His submissions, respectfully, are out of step with the approach to construction adopted by Colvin J in Vereragaroo. The Explanatory Memorandum cannot prevail over the text and it is now well established that the Court has power to make compensatory orders against accessories
Beer v Lim
Having regard to the above, it must follow that Beer v Lim was not correctly decided and that I should not consider myself bound to follow it.
First, in Beer v Lim the Court held that the jurisdiction of the Court invoked by the application was under section 548[68]. In my respectful opinion the learned judge incorrectly held that section 548 was the source of the Court’s jurisdiction, rather than holding that s 545 was the source of the Court’s power and that s 548 was procedural.
[68] Beer v Lim & Anor [2012] FMCA 524 at [16], [24]
Secondly, the Court also incorrectly found that in the context of the application filed by the applicant, the Court only had jurisdiction to make an order against the applicant’s employer[69]. That conclusion was understandable and correct at the time the decision was made. At that time, pre-Veraragoo, there was a view, consistent with the 2008 Explanatory Memorandum, that compensatory orders in respect of underpayment of wages could not be made against accessories and, as pecuniary penalties are not available to the Court under the small claims procedure in section 548, there was no jurisdiction to make any compensatory order against an employer[70]. That view, however, has now been superseded.
[69] Ibid at [21]
[70] Ibid at [24]-[25], see also Devonshire v Magellan Powertronics Pty Ltd [2013] FMCA 207 at [85] per Lucev FM
Conclusion
Pursuant to section 539 an employee may make an application to the Court for an order in relation to a contravention of a civil remedy provision. An application for an order against a person who is deemed a contravenor by reason of section 550 is a species of application which an employee can make pursuant to section 539. Such an application engages the Court’s power under section 545 to make any order (other than imposition of a pecuniary penalty) the Court considers appropriate if it is satisfied that a person has contravened a civil remedy provision.
An application for a compensatory order against an accessory which has been initiated pursuant to section 539, can at the applicants’ election be dealt with as a small claim proceeding under s 548. The Court has jurisdiction to deal with the application as a small claims proceeding and may exercise power pursuant to s 545 to make any order it considers appropriate if satisfied the accessory has contravened a civil remedy provision, subject to any limitation on the exercise of its power prescribed within section 548.
In a proceeding being dealt with as a small claim procedure under s 548 of the FW Act the Court has jurisdiction to make a compensatory order against a person involved in a contravention of a civil remedy provision.
The Respondent’s application that the proceedings be stayed for want of jurisdiction is dismissed.
The applications shall remain listed for final hearing on 4-5 July 2022 in accordance with extant orders of the Court.
I certify that the preceding one hundred and nine (109) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Forbes. Associate: Madeleine Lodge
Dated: 27 May 2022
SCHEDULE OF PARTIES
MLG 806 of 2021
MLG 807 of 2021
MLG 808 of 2021
MLG 809 of 2021
MLG 810 of 2021
MLG 811 of 2021
MLG 812 of 2021
MLG 813 of 2021Applicants
Fourth Applicant:
JUAN CAMILO PINEROS TORRES
Fifth Applicant:
LEONARDO FABIO HERNANDEZ ALARCON
Sixth Applicant:
GERALDINE TORRES AMEZQUITA
Seventh Applicant:
CAROLINA CORRALES RHENALS
Eighth Applicant:
NICOLAS MORENO RIVERO
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