Bevan v Souter
[2020] FCCA 577
•18 March 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BEVAN v SOUTER | [2020] FCCA 577 |
| Catchwords: INDUSTRIAL LAW – Application for breach of terms of modern award and national employment standards arising under the Fair Work Act 2009 – termination of employment – failure to pay employee’s accrued leave entitlements – principles to be applied to undefended proceedings – accessorial liability – matters to be considered. |
| Legislation: Fair Work Act 2009 (Cth), ss.45, 90, 117, 323, 545, 550 |
| Cases cited: Buckingham v KSN Engineering Pty Ltd [2008] FMCA 546 |
| Applicant: | GEORGIA BEVAN |
| Respondent: | WAYNE SOUTER |
| File Number: | ADG 298 of 2019 |
| Judgment of: | Judge Brown |
| Hearing date: | 14 February 2020 |
| Date of Last Submission: | 14 February 2020 |
| Delivered at: | Adelaide |
| Delivered on: | 18 March 2020 |
REPRESENTATION
| Counsel for the Applicant: | In person |
| Counsel for the Respondent: | No appearance |
| Solicitors for the Respondent: | No appearance |
ORDERS
The Court notes that:
A.There was no appearance by or on behalf of the Respondent at the hearing.
B.The Court is satisfied that service was effected on 15 October 2019.
C.These Orders are made in the absence of the Respondent and they are at liberty to make such an application as they may be advised pursuant to Rule 16.05 of the Federal Circuit Court Rules 2001.
The Court declares that:
The Respondent, pursuant to section 550 of the Fair Work Act 2009 (Cth) (“the Act”), contravened the following:
(a)Section 90(2) of the Act, by failing to pay the Applicant annual leave, accrued in the amount of $4,885.00;
(b)Section 117(2)(b) of the Act by failing to pay the Applicant in lieu of notice of termination, in the amount of $3,840.00;
(c)Section 323(1) of the Act by failing to pay the Applicant wages, overtime and allowances in the amount of $6,291.89; and
(d)Section 45 of the Act, by contravening Clause 22.2 of the Health Professionals and Support Services Award 2010 by failing to pay the Applicant superannuation in the amount of $3,284.36.
The Court orders that:
Pursuant to Rule 1.06 of the Federal Circuit Court Rules 2001, the Court dispenses with compliance with these Rules.
In accordance with section 545(2) of the Fair Work Act 2009 (Cth), the Respondent pay to the Applicant the sum of $18,301.25, being the amounts as calculated in Order 1 above, within 28 days of the date of this Order.
The Applicant is to notify the Respondent at his last known address of the Orders made today within 7 days.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ADELAIDE |
ADG 298 of 2019
| GEORGIA BEVAN |
Applicant
And
| WAYNE SOUTER |
Respondent
REASONS FOR JUDGMENT
Introduction
These proceedings arise pursuant to the provisions of the Fair Work Act 2009 (Cth).[1] They also include a claim for breach of a Modern Award, specifically the Health Professionals and Support Services Award 2010.[2] The applicant in these proceedings is Georgia Bevan. The respondent is Wayne Souter as a director of CBI Employment Pty Ltd.
[1] Hereinafter referred to as “the FWA” or “the Act”
[2] Hereinafter referred to as “the Award”
For reasons that will become clear, there is an issue arising in these proceedings as to whether Mr Souter was the director of CBI Employment Pty Ltd and also, whether he bears accessorial liability for the breaches alleged by the applicant, in particular that she was not paid certain wages and leave entitlements.
In addition, Mr Souter has chosen not to take part in these proceedings. In these circumstances, the court must consider the legal principles applicable to undefended proceedings.
Background
Ms Bevan was previously employed by Corporate Bodies International as a part time dietitian for a period of 2 years. In mid-2018, the company was taken over by Mr Cameron Fancourt and re-established as Sunset Place Pty Ltd trading as CBI Wellness.
Ms Bevan was made redundant on 7 November 2018 and she ceased working for the company on 30 November 2018. She went on to perform contract work for the company in December 2018, during which time she was receiving redundancy pay from her previous contract.
In early February 2019, Ms Bevan met with the manager of CBI Wellness, Kelly Hekkenburg, where she was offered a position as a senior dietitian and manager in the wake of the company’s restructure in which all permanent employees were made redundant. Ms Bevan received her employment contract on 7 February and sent a signed copy to Ms Hekkenburg on 11 February 2019. It was agreed that Ms Bevan would be paid her redundancy and annual leave payments from her previous position as part of her new contract.
The contract was between Ms Bevan and CBI Employment Pty Ltd, a related company of CBI Wellness. Under this contract, Ms Bevan worked for CBI Wellness for a period of approximately six months, in a part time/full time capacity ranging from 3 days a week to 5 days a week.
On 2 July 2019, Mr Souter sent an email to all employees of CBI Wellness notifying them that Mr Fancourt had stepped away and that Mr Souter was now the director and owner of the business. Ms Bevan indicated to Mr Souter that she was willing to assist him in understanding the business; this was the first contact she had with Mr Souter.
Mr Souter then contacted Ms Bevan via phone on 10 July 2019 to tell her of her retrenchment and followed this up, pursuant to Ms Bevan’s request, with a formal notification on 11 July 2019 via email. This email was signed off by Mr Souter and his wife, Nopera Souter, under the banners of CBI Employment and CBI Wellness.
By return email, Ms Bevan asked when she would be paid her wages owed from work she performed for the company in June and July, in addition to her outstanding leave entitlements. Mr Souter replied and indicated that he would action the owed amounts to Ms Bevan in the August pay run.
Ms Bevan followed up this correspondence with an email on 19 July 2019 requesting details from Mr Souter on how to organise the payments. This was followed up yet again with an email on 1 August 2019, requesting the owed amounts from Mr Souter and notifying him that Ms Bevan would take legal action if the amounts were not paid to her. There was no reply from Mr Souter to either of these emails.
Ms Bevan calculates her owed amounts as follows:
Type of pay
Rate of pay
Amount of hours worked
Total amount owed
Annual leave
$40 per hour
122 hours accrued
$4,885
Wages
$40 per hour
$9,680
Overtime
$50 per hour (incl. 25% loading)
2.5
$125
Allowances
N/A
N/A
$326.89
Superannuation
N/A
N/A
$3,284.36
The principles applicable to default judgment
The applicant commenced these proceedings, by way of an application filed on 16 August 2019, which was supported by a statement of claim. The application was personally served on Mr Souter, on 15 October 2019, at an address in Maroochydore, Queensland.
On the first mention of the matter, which occurred on 25 October 2019, Mr Souter contacted the court via email. He indicated that he was not going to take part in these proceedings as he lives in Queensland and did not have the financial means to defend himself.
Mr Souter also expressed his view that Ms Bevan was pursuing her claim against the wrong company; that he is not and was never a director of CBI Employment Pty Ltd, the company that actually employed Ms Bevan, and was in fact an employee of the company himself.
In these circumstances, orders were made requiring the respondent to file and serve a response and affidavit within 28 days and the matter was adjourned to 9 December 2019. The respondent failed to file any documents and so, on 9 December 2019, the matter was set down for undefended hearing on 14 February 2020.
Mr Souter did not appear on the hearing date. In all the circumstances, I have no doubt that Mr Souter was aware of the proceedings themselves. I am satisfied that the applicant has taken all reasonable steps to notify Mr Souter of these proceedings and what is required from him to take part in them.
It is a significant thing for proceedings to be determined in the absence of one of the parties, particularly proceedings which potentially include the imposition of a pecuniary penalty on the absent party. The court has an obligation to ensure that the parties to proceedings before it have an opportunity to participate in those proceedings. Before a person can be adversely affected by judicial order, he or she must be afforded an adequate opportunity to be heard.[3]
[3] See Taylor v Taylor [1979] HCA 38; (1970) 143 CLR 1
The court cannot compel a respondent to engage in litigation. It is however obliged to give a respondent the opportunity to put evidence before the court and, if he or she wishes to do so, contest any evidence relied upon by the applicant. In this particular case, Mr Souter has chosen not to participate in the proceedings in any meaningful way. I have no documents from him before me.
A respondent, whether by intransigence, disinterest or manipulation cannot succeed in denying an applicant a just resolution, according to law, of his or her application, by choosing not to take part in a proceeding. In these circumstances, the court has mechanisms to resolve applications in the absence of a party, if it is satisfied it is appropriate to do so.
In this particular case, I am satisfied that Mr Souter is aware of the nature of the applicant’s application, particularly in respect of the central issue arising in it, which concerns the underpayment of the applicant concerned. Prior to the institution of proceedings, Ms Bevan provided him with several formal requests for her pay and leave entitlements to be paid to her. Mr Souter has elected not to formally put his position in respect of these issues.
On the other hand, Ms Bevan has exhaustively put her position in respect of the matter. In addition, she gave sworn evidence to the court, particularly in respect of the circumstances surrounding the non-payment of her wage and leave entitlements and the events that occurred after her retrenchment.
In her oral evidence, I formed the view that Ms Bevan was an honest and decent person. Although she was not subject to the rigours of any cross examination, I have no reason to think anything other than she is a person of credit.
Rule 13.03A(2) of the Federal Circuit Court Rules 2001[4] sets out the circumstances in which a respondent is taken to be in default. It includes the following:
·the respondent has not satisfied the applicant’s claim;
·has not complied with an order in the proceedings;
·has not produced a document;
·has not defended the proceedings with due diligence.
[4] Hereinafter referred to as “the Rules”
The powers of the court, when a respondent is found to be in default, are set out in Rule 13.03B(2) as follows:
“(2) If a respondent is in default, the Court may:
(a)order that a step in the proceeding be taken within the time limited in the order; or
(b)if the claim against the respondent is for a debt or liquidated damages—grant leave to the applicant to enter judgment against the respondent for:
(i) the debt or liquidated damages; and
(ii) if appropriate—costs; or
(c)if the proceeding was commenced by an application supported by a statement of claim or the Court has ordered that the proceeding continue on pleadings—give judgment against the respondent for the relief that:
(i) the applicant appears entitled to on the statement of claim; and
(ii) the Court is satisfied it has power to grant; or
(d)give judgment or make any other order against the respondent; or
(e)make an order mentioned in paragraph (b), (c) or (d) to take effect if the respondent does not take a step ordered by the Court in the proceeding in the time limited in the order.”
In Speedo Holdings BV v Evans (No.2)[5] Flick J identified some principles, which are to be applied by the court, when considering whether to enter a judgment against a defaulting respondent. They can be summarised as follows: the power is discretionary; and it must necessarily be utilised cautiously.
[5] Speedo Holdings BV v Evans (No.2) [2011] FCA 1227 at [20] – [21]
In all the circumstances of this case, I am satisfied that Mr Souter has failed to defend the proceedings with due diligence. In particular, he has failed to file a defence to the action as ordered. He has not attended at court for the hearing, nor has he filed any affidavit evidence in respect of the matter.
Therefore, I am satisfied that it is appropriate to proceed to determining the applicant’s application on the basis of the pleadings contained in her statement of claim, which are un-contradicted. The more difficult aspect of the case concerns how any penalties and compensation, due to Ms Bevan, are to be allocated to the respondent concerned.
This will require an analysis of the case pleaded by Ms Bevan, in her statement of claim filed on 16 August 2019, which has been provided to the respondent. Its pleadings set out the amounts owed to Ms Bevan and are directed against ‘CBI Employment, Wayne Souter’.
As mentioned, some difficulty arises because Mr Souter claims he was not actually a director of CBI Employment Pty Ltd as Ms Bevan assumed; rather, the correspondence between Mr Souter and Ms Bevan, as well as the ASIC search conducted by Ms Bevan, indicates that he was actually the director of Branch Solutions Pty Ltd trading as CBI Wellness.
These issues are to be resolved by reference to sections 545 and 550 of the Act, particularly whether an order for compensation may be made against a person who is found to have accessorial liability for breaching a civil remedy provision arising under the Act and what causal connection the specific ground of such breach has to the actual compensation sought.
Accessorial Responsibility
Section 550(2) provides the circumstances in which a person is taken to have been involved in a contravention of a civil remedy provision. The circumstances can be summarised as follows:
·the person has aided, abetted, counselled or procured the contravention;
·has induced the contravention;
·has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
·has conspired to bring the contravention about.
In Buckingham v KSN Engineering[6] Lucev FM (as His Honour then was) summarised the legal test for sheeting liability to a potential accessory in the following terms; before such a person could be considered an accessory under the Act, could it be established that:
·did he or she have knowledge of the essential facts constituting the contravention;
·was he or she knowingly concerned in the contraventions;
·was he or she an intentional participant in the contravention based on actual or constructive knowledge of the essential facts constituting the contravention – although constructive knowledge may be sufficient in cases of wilful blindness; and
·however, such an individual did not need to know that the matters in question constituted a contravention.
[6] Buckingham v KSN Engineering Pty Ltd [2008] FMCA 546 at [40]
In this case, I am satisfied that Mr Souter had knowledge of the essential facts constituting the contravention. Ms Bevan contacted Mr Souter via email on 11 July 2019 outlining that she was owed redundancy payments, her June and July wages and reimbursements, and superannuation that had not been paid into her account for a number of months. Mr Souter, while indicating that he was either not aware of certain of Ms Bevan’s entitlements or believed it was not related to him in his role as director of CBI Wellness, did indicate that he would look into these issues for Ms Bevan.[7]
[7] See Ms Bevan’s affidavit filed 30 January 2020 Exhibit G
As such, he was therefore involved in the breach in question as he had knowledge of the fact that Ms Bevan was owed various sums for work performed for CBI Wellness, or at least was on notice that Ms Bevan believed that she was. Despite being on notice and indicating that he would look into these issues and impliedly attempt to resolve them, Mr Souter sent no further correspondence to Ms Bevan and failed to respond to any correspondence sent by Ms Bevan.
Therefore, I am satisfied Mr Souter had at least constructive knowledge of the essential facts constituting the contravention, that being the failure to make the owed payments to Ms Bevan. His failure to follow up these issues with Ms Bevan together with the fact that Mr Souter made no indication, in his correspondence with Ms Bevan, that he was not able to follow up these issues due to him not being the director of her employer, CBI Employment, indicates that Mr Souter was, by omission, knowingly concerned in the contravention.
Conclusion
Ms Bevan seeks that the owed amounts are paid to her by Mr Souter. I will make an order, pursuant to section 545(2) of the Act, which allows the court to make an order awarding compensation to an applicant for the loss they have suffered, that the respondent pay the applicant the sum of $18,301.25. This amount reflects the total of the amounts owed to Ms Bevan.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for judgment of Judge Brown
Associate:
Date: 18 March 2020
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