Alvarez Nino v Kuksal

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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 2021
Judgment 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 2021

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN:
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Details
Case
[2022] FedCFamC2G 401
Decision Date

CaseChat Overview and Summary

In the case of Alvarez Nino v Kuksal, the applicants, mainly international students, brought proceedings against Mr Shivesh Kuksal in the Federal Circuit Court of Australia under the Fair Work Act (FW Act). The applicants alleged they were employed by Mr Kuksal or entities he controlled, performing cleaning and related duties, and claimed they were not paid for their work or had underpaid wages. They sought compensatory orders against Mr Kuksal, contending their employment was covered by the Hospitality Industry (General) Award 2010 and alleging contraventions of this award and failure to make superannuation contributions. The applicants elected for their claims to be dealt with under the small claims procedure outlined in section 548 of the FW Act.

The legal issues before the Court were primarily whether it had jurisdiction to make a compensatory order against a person involved in a contravention of a civil remedy provision in proceedings handled under the small claims procedure and whether the Court was bound to follow the decision in Beer v Lim. The Court needed to determine if the applicants' claims fell within the scope of the small claims procedure and whether the Court could exercise its power to make appropriate orders under section 545 of the FW Act, despite the absence of a pecuniary penalty provision in section 548.

The Court concluded that it had jurisdiction to make a compensatory order against an accessory in small claims proceedings. It found that the applicants could bring their claims under section 539 of the FW Act, and the Court's power under section 545 allowed it to make any order it deemed appropriate if satisfied of a contravention of a civil remedy provision. The Court held that the small claims procedure, as outlined in section 548, did not limit its power to make compensatory orders against an accessory. The Court rejected the argument that it was bound by Beer v Lim, stating that the scheme and content of Part 4-1 of the FW Act, including the broad power to award compensation for loss under section 545, supported its jurisdiction to make such orders.

The Court dismissed Mr Kuksal's application for the proceedings to be stayed for lack of jurisdiction. It confirmed that the applications would proceed to a final hearing on 4-5 July 2022, as previously ordered. The Court's decision clarified that in small claims proceedings under section 548 of the FW Act, it has the jurisdiction to make compensatory orders against individuals involved in contraventions of civil remedy provisions, provided the applicants meet the criteria for the small claims procedure.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

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

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

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 FMConclusion 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.

Ratio Decidendi

Legal Principle Established

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]