Beer v Lim - [2012] FMCA 494

FEDERAL MAGISTRATES COURT OF AUSTRALIA

BEER v LIM & ANOR

[2012] FMCA 494

INDUSTRIAL LAW – Small claims jurisdiction – application for monies owing – second respondent employer – deregistered – no provision for orders against first respondent – application dismissed.

Fair Work Act 2009 (Cth), ss.548, 550
Corporations Act 2001 (Cth), ss.601AD(1), (2), 601AB
Federal Magistrates Court Rules 2001 (Cth)
Federal Magistrates Act 1999 (Cth)

Fair Work Ombudsman v Proplas Industries Pty Ltd & Anor
Fair Work Ombudsman v Blacklight Investments Pty Ltd & Anor [2011] FMCA 50

Applicant:

DESMOND LEO BEER

First Respondent:

SIN KEAN LIM

Second Respondent:

NETWORK INTERNATIONAL STUDENT RECRUITMENT AUSTRALIA PTY LTD

File Number:

MLG 656 of 2011

Judgment of:

O’Sullivan FM

Hearing date:

18 May 2012

Date of Last Submission:

18 May 2012

Delivered at:

Melbourne

Delivered on:

18 May 2012

REPRESENTATION

The Applicant:

No appearance

The Respondent:

No appearance

ORDERS

The application filed 11 May 2011 be dismissed.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT MELBOURNE

MLG 656 of 2011

DESMOND LEO BEER

Applicant

And

SIN KEAN LIM

First Respondent

NETWORK INTERNATIONAL STUDENT RECRUITMENT AUSTRALIA PTY LTD

Second Respondent

REASONS FOR JUDGMENT

(Revised from transcript)

Before the Court today, Friday, 18 May 2012, is an application filed by Mr Desmond Leo Beer (“the applicant”). The respondents to that application are Mr Sin Kean Lim (“the first respondent”) and Network International Student Recruitment Australia Pty Ltd (“the second respondent”).
The application was filed on 11 May 2011 in the Fair Work Division of the Federal Magistrates Court. The application was endorsed with the applicant electing for the proceedings to be dealt with under the small claims process. The application was accompanied by a Form 5 which set out the background details of the applicant and the application. The applicant is 67 years of age and was employed by the second respondent, Network International Student Recruitment Australia Pty Ltd from 1 July 2009 to 3 March 2010 as the CEO.
The applicant set out in the Form 5 the hours he worked and detailed the contravention(s) he alleged had occurred of the Fair Work Act 2009 (Cth) (“the FW Act”) during his employment. The applicant identified the remedies he sought by way of wages owing, annual leave and superannuation which he quantified in the amount of $12,291.00. Attached to the Form 5 were two spreadsheets which appear to record the applicant’s calculation of, firstly, what annual leave he alleged he was owed as a result of his employment with the second respondent, as well as what wages were owed and or set out the basis for those calculations.
The application was given a first return date of 11 November 2011. On that occasion, there was an application by a solicitor to appear on behalf of the applicant (which was refused for reasons given ex tempore on the day). There was no appearance by or on behalf of either the first or second respondents. The Court made the following orders:
“1.Pursuant to Rule 6.14 of the Federal Magistrates Court Rules 2001 the application, form 5 and these orders be served on Sin Kean Lim care of Stratum Communications Pty Ltd, Level 1, 527 Riversdale Road, Camberwell Vic 3124.
2.The matter be adjourned to the Small Claims list on 8 March 2012 at 10.00am at the Federal Magistrates Court of Australia at Melbourne.
3.The First Respondent file and serve a response and affidavit 21 days prior to the ajdourned date.
4.The Applicant serve the Respondents pursuant to order 2 within 21 days.
AND THE COURT NOTES:
On the adjourned date the Court will consider removing Network International Student Recruitment Australia Pty Ltd as a party to these proceedings.”
On 8 March 2012, the applicant again appeared in person and requested that the matter be adjourned. On 8 March 2012, for reasons given ex tempore, the Court made the following orders:
“1.The proceedings be adjourned for a directions hearing on 4 May 2012 at the Federal Magistrates Court of Australia at Melbourne commencing at 10.00 am.
2.The Applicant shall serve the First and Second Respondents with a copy of these orders within 14 days herein.
3.The First and Second Respondents shall file and serve a response and affidavit within 14 days thereafter.
AND THE COURT NOTES THAT:
A.In the event of non compliance by any party with the orders, directions, Rules (in particular Rules 13.03A and 13.03B of the Federal Magistrates Court Rules 2001) or Regulations of this Court relating to:
i.the filing of documents;
ii.the payment of any applicable filing, setting down, mediation or enforcement fee or fees; and/or
iii.any other procedural issues,
the application may be struck out, the proceedings may be directed to proceed undefended or the trial date may be vacated and the Court may direct that a further date not be fixed until all parties have complied with the said orders, directions, Rules and Regulations.
B.To the extent that it is or may be practicable to do so, a compliance check is to be carried out by an Associate or Deputy Associate of the trial Federal Magistrate, or by another appropriate court officer, shortly prior to the final hearing date.”
The matter was adjourned to 4 May 2012. By then there had been affidavit material filed, albeit only on behalf of the first respondent and only a affidavit. Mr Sin Kean Lim has filed an affidavit on 13 April 2012 and another affidavit on 1 May 2012 but no response.
On 4 May 2012 the applicant and the first respondent both appeared in person. The Court made the following orders:
“1.The matter be adjourned to 18 May 2012 at 10.00 a.m. for hearing at the Federal Magistrates Court of Australia at Melbourne.
2.The Respondents shall make, file and serve a response and any further material upon which they seeks to rely by not later than 4.00 pm on 14 May 2012.
3.The Applicant shall make file and serve any further material upon which he seeks to rely by not later than 4.00 pm on 16 May 2012.”
Since then, the first respondent has filed another affidavit which purports to be a response to the application but is not in proper form. However relevantly for present purposes, it exhibits what is said to be an extract from the ASIC register of companies. That extract details that the second respondent in these proceedings, Network International Student Recruitment Australia Pty Ltd, was registered with ASIC on 24 March 2009. Its status, according to that extract is it was deregistered on 14 August 2011.
Since these proceedings have been commenced, it is clear that the applicant has been receiving assistance from a solicitor who not only filed the original application and Form 5, but also filed a affidavit on behalf of the applicant which was instrumental in obtaining from the Court the order for substituted service.
This morning, this matter has been called outside of Court. There has been no appearance by or on behalf of the applicant and there has been no appearance by or on behalf of the first or second respondents. In relation to the applicant, that may be explicable as my Associate received a phone call this morning at approximately 9.15 am from someone who identified themselves as the applicant and indicated that they were unable to come to Court today because their sister was in intensive care on life support and in the circumstances they were simply unable to get to Court.
In relation to the absence of the first respondent, there has been a letter sent to the Court dated 17 May 2012 which states:
“I regret to advise that I’m unable to attend due to some unforeseen commitments associated with my employment.
I would appreciate if the court would permit Mr Russell Baird to appear on my behalf.
Mr Baird is not a legal practitioner; however, he is familiar with the background in this matter. As a minimum, I have requested Mr Baird to attend as a courtesy to the court in view of my inability to attend.”
The Mr Baird referred to in that letter is in Court today and has been, it appears from the court file, somebody who has been assisting the first respondent in this matter. Whilst this matter is being dealt with in the Court’s Fair Work Division and in accordance with the small claims process it’s unacceptable for the first respondent, who was at Court on the last occasion, to seek an indulgence from the Court by way of letter and there is no satisfactory explanation for his absence.
This is an application made in the Court’s small claims jurisdiction under Section 548 of the FW Act. Section 548 of the FW Act sets out:
“(1)Proceedings are to be dealt with as small claims proceedings under this section if:
(a)a person applies for an order (other than a pecuniary penalty order) under Division 2 from a magistrates court or the Federal Magistrates Court; and
(b)the order relates to an amount referred to in subsection (1A); and
(c)the person indicates, in a manner prescribed by the regulations or by the rules of the court, that he or she wants the small claims procedure to apply to the proceedings.
(1A) The amounts are as follows:
(a)an amount that an employer was required to pay to, or on behalf of, an employee:
(i)      under this Act or a fair work instrument; or
(ii)     because of a safety net contractual entitlement; or
(iii)   because of an entitlement of the employee arising under subsection 542(1);
(b)an amount that an outworker entity was required to pay to, or on behalf of, an outworker under a modern award.
Limits on award
(2)In small claims proceedings, the court may not award more than:
(a)$20,000; or
(b)if a higher amount is prescribed by the regulations--that higher amount.
The role and mode of operation of this Court are also relevant. They are as set out in the Federal Magistrates Act 1999 (Cth) and the Federal Magistrates Court Rules 2001 (Cth) and provide for the Court to operate in a manner:
a)     as informal as possible in the exercise of judicial power;
b)     which is not protracted in its proceedings;
c)which resolves proceedings justly, efficiently and economically;
d)     which uses streamlined procedures; and
e)     that avoids undue delay, expense and technicality.
These proceedings have been protracted by virtue of, on the applicant’s part, a failure to either properly identify the correct jurisdiction of the Court and, on the first respondent’s part, a failure to participate in the proceedings.
The jurisdiction of the Court invoked by the application filed on 11 May 2011 was under section 548 of the FW Act. As section 548 of the FW Act makes clear, the procedure that is adopted for those sorts of matters is commensurate with the nature of the proceedings that can be dealt with under those provisions. That is, it is concerned with proceedings where a person applies for an order to do with an amount that an employer is required to pay on behalf of an employee under the FW Act or Fair Work instrument, or because of a safety net contractual entitlement, or because of an entitlement arising under section 542 of the FW Act.
The provisions of the FW Act just referred to also puts limits on the types of awards that the Court can make and set out a procedure by which the Court is to conduct proceedings of this sort. It makes clear that legal representation is the exception, not the rule. Despite all of this these proceedings have not been a simple matter for the parties.
The uncontroversial background appears to be, that it was the second respondent, Network International Student Recruitment Australia Pty Ltd, that was the applicant’s employer. The Form 5 makes clear, the applicant says that the first respondent, Sin Kean Lim was the managing director of the second respondent.
The affidavit material that has been filed by the applicant, as limited as it is, seems in large part to rehearse the applicant’s dissatisfaction with how his employment came to an end. In his affidavit filed on 7 March 2012, the applicant deposes to the background to the creation of the second respondent and his understanding of those involved in it as directors.
The applicant notes he was appointed as CEO, and he records in the balance of the affidavit his position in relation to what he apprehended would be the claims or allegations made against him by either the first or second respondents. The applicant makes clear that he had sought assistance from the Fair Work Ombudsman in relation to his claim against the first or second respondents. The applicant’s affidavit material, including the affidavit just referred to, makes clear that with the assistance of the solicitor who filed the current application on his behalf, he has been involved in ongoing negotiations with those who had or still have an interest in the affairs of the second respondent including the first respondent.
However those matters are all largely, of academic interest. 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. It is the position of the applicant that whilst the first respondent was an officer of the second respondent, it was the second respondent that was his employer. The affidavit of Sin Kean Lim filed on 14 May 2012 makes clear, Network International Student Recruitment Australia Pty Ltd, (the second respondent to these proceedings), was according to the ASIC extract at exhibit A to that affidavit deregistered on 14 August 2011.
The effect of deregistration is set out in s.601AD of the Corporations Act 2001 (Cth). Pursuant to subsection (1) the company ceases to exist on deregistration. Pursuant to subsection (2) its property vests in ASIC.
In Fair Work Ombudsman v Proplas Industries Pty Ltd & Anor and Fair Work Ombudsman v Blacklight Investments Pty Ltd & Anor [2011] FMCA 506, Lucev FM dealt with the effect of the deregistration of a corporate respondent at paragraphs [22 ] to [26 ] and said:

“22.In Amcus Pty Ltd v Hurst Rentals Pty Ltd & Ors (No.2)[1] the New South Wales Supreme Court dealt with the issue of whether proceedings ought to be continued, or otherwise dealt with, in circumstances where a defendant had been deregistered under s.601AD(1) of the Corporations Act 2001 (Cth).[2]
[1] (2010) 77 ACSR 550; [2010] NSWSC 239 (“Amcus”).
[2] “Corporations Act”.
23.Section 601AD(1) of the Corporations Act provides as follows:
(1) A company ceases to exist on deregistration.
Note: Despite the deregistration, officers of the company may still be liable for things done before the company was deregistered.
24In Amcus the New South Wales Supreme Court observed that:
a)proceedings by a plaintiff company abate, in that they are extinguished or annulled, upon dissolution of the company;[3]
b)the abatement principle extends to proceedings in which a dissolved corporation is a defendant;[4] and
c)the proper approach to the abatement proceedings involving a dissolved company is that a court must do nothing except restrain from proceeding any further.[5]

25In Amcus there was some discussion of circumstances where it might be appropriate for an order of dismissal to issue, such as where pleadings were defective or there was a sufficiently active pursuit of the case pleaded on behalf of the dissolved company so that the conduct could be characterised as an abuse of process and the pleading struck out on that ground.[6] Neither of those factors was present in Amcus. Nor are they present in this case where Blacklight Investments has not filed a response prior to deregistration, and has not appeared before the Court prior to deregistration.
Therefore, insofar as Blacklight Investments is concerned the proceedings are a nullity, and there is no necessity for the Court to make any further order concerning Blacklight Investments.[7] The Blacklight Investments Matter can therefore only be approached on the basis that there is one remaining respondent, that is Mr Leppard,[8] and “as the note to s.601AD[(1) of the Corporations Act] makes plain, company officers may still be liable for anything done prior to the deregistration of their company.”[9]
[3] Amcus ACSR at 553 per Slattery J; NSWSC at para.14 per Slattery J.
[4] Amcus ACSR at 553-554 per Slattery J; NSWSC at para.15 per Slattery J, citing Re Morton; Ex parte Mitchell Products Pty Ltd (1996) 21 ACSR 497 at 515 per Sackville J.
[5] Amcus ACSR at 554 per Slattery J; NSWSC at paras.16-17 per Slattery J.
[6] Amcus ACSR at 554 per Slattery J; NSWSC at para.19 per Slattery J.
[7] Amcus ACSR at 555 per Slattery J; NSWSC at para.22 per Slattery J. In Turner v Inspire Camps and Recreation Australia Pty Ltd [2011] FMCA 400 (“Inspire Camps”) this Court did order the dismissal of a matter in similar circumstances to those presently before the Court, but in Inspire Camps there was no consideration of Amcus, which whilst not binding on this Court is nevertheless highly persuasive, and which ought to be applied unless plainly wrong, which it is not.
[8] A similar approach was taken in Mossimo Systems International Pty Ltd v Deputy Commissioner of Taxation [2010] NSWSC 1409 at paras.7-8 per Barrett J (“Mossimo Systems”), where having cited Amcus and United Service Insurance v Lang (1935) 35 SR(NSW) 487, the New South Wales Supreme Court proceeded against seven remaining plaintiffs, but not two plaintiffs where those two plaintiff companies no longer existed as a consequence of deregistration: see Mossimo Systems at paras.6-9 per Barrett J.
[9] McPhersons Law of Company Liquidation (Thomson Reuters – Legal Online), para.16.520.

It follows, in my view, that notwithstanding that I have a great deal of sympathy for the applicant in terms of the position in which he finds himself, his position in this matter has been that Network International Student Recruitment Australia Pty Ltd was his employer. 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.
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.
The reality is that this matter as against the second respondent given its deregistration cannot proceed and should be dismissed. Put simply, the applicant’s case has been overtaken by events. The second respondent no longer exists. It would be cruel to the applicant to permit the continuation of litigation in these circumstances, even in the event that the applicant were here, which, of course, as these reasons have noted, he is not.

I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of O’Sullivan FM

Date: 18 May 2012