FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Bezerra v Petra Industries Pty Ltd [2024] FedCFamC2G 994
File number(s): MLG 342 of 2022
MLG 343 of 2022Judgment of: JUDGE FORBES Date of judgment: 14 October 2024 Catchwords: INDUSTRIAL LAW – contract of employment – underpayment of wages and superannuation – alleged contravention of Fair Work Act 2009 (Cth) – whether respondent is legal employer of applicants – where respondent company operates through various subsidiaries - consideration of factors relevant to identifying true employer – legal employer and paying entity contrasted – dispute as to date of termination of employment – whether respondent engaged in misleading and deceptive conduct in relation to employment of applicants – promissory estoppel - whether applicants sustained loss and damage – relief not granted Legislation: Competition and Consumer Act 2010 (Cth) sch 2 (Australian Consumer Law) ss 18, 31
Fair Work Act 2009 (Cth) ss 323, 546, 570
Cases cited: Australian Insurance Employees Union v WP Insurance Services Pty Ltd (1982) 42 ALR 598
Casazza v McGuiness [2022] NSWSC 348
Central Innovation v Garner (No 4) [2020] FCA 1796
Commonwealth of Australia v Director of the FWBII (2015) 258 CLR 482
Fair Work Ombudsman v Grouped Property Services Pty Ltd [2016] FCA 1034
Fair Work Ombudsman v Ramsey Food Processing Pty Ltd (2011) 198 FCR 174
In the matter of Forward Horizons Capital Pty Ltd (12 July 2024) [2024] NSWSC 848
Golden Plains Fodder Australia Pty Ltd v Millard (2007) 99 SASR 461
Gothard v Davey [2010] FCA 1163
Pitcher v Langford (1991) 23 NSWLR 142
McCluskey v Karagiosis [2002] FCA 1137
Re C&T Grinter Transport Services Pty Ltd (in liq) & Grinter Transport Pty Ltd (in liq) (Controller Appointed) [2004] FCA 1148
Resilient Investment Group Pty Ltd v Barnet and Hodgkinson as liquidators of Spitfire Corporation Limited (in liq) [2023] NSWCA 118
Shaw v Bindaree Beef Pty Ltd [2007] NSWCA 125
Textile Footwear and Clothing Union of Australia v Bellechic Pty Ltd [1998] FCA 1465
Division: Division 2 General Federal Law Number of paragraphs: 214 Date of hearing: 26-27 October 2023, 30 November 2023 Place: Melbourne Counsel for the Applicants: Mr Hooper Solicitor for the Applicants: Marshalls+Dent+Wilmoth Lawyers Counsel for the Respondents: Mr Galbraith Solicitor for the Respondents: Mills Oakley ORDERS
MLG 342 of 2022
MLG 343 of 2022FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: HUGO BEZERRA
First Applicant
EURICO BEZERRA
Second Applicant
AND: PETRA INDUSTRIES PTY LTD (ACN 627 297 607)
Respondent
ORDER MADE BY:
JUDGE FORBES
DATE OF ORDER:
14 OCTOBER 2024
THE COURT ORDERS THAT:
1.The applications are dismissed.
2.Any party seeking costs in relation to these applications must do so within 28 days of these orders by filing an application in the proceeding.
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…
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- Case
- [2024] FedCFamC2G 994
- Decision Date
CaseChat Overview and Summary
The final orders of the court were that the applicants' claims against Petra Industries Pty Ltd be dismissed with costs. The court did not grant any relief to the applicants.
Orders
Orders of the court
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Background
Background to the litigation
Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
On 4 March 2022 Kiko and Hugo each lodged an informal proof of debt with the administrators of Dellermay seeking payment of $238,126.88 which references this proceeding. In each case they declared that the company Dellermay Pty Ltd was justly and truly indebted to them for outstanding entitlements.CONSIDERATION AND FINDINGS The applicants claim that they were underpaid salary and superannuation from 5 May 2021 until November 2021, calculated at the rate of $250,000 per annum. The applicants were paid on full salary until 5 May. From 5 May they were paid at the reduced salary of $150,000 pa. After 21 June they were not paid at all. For that claim to succeed, the applicants must establish:(1)that Petra Industries was their employer at all relevant times;(2)that they were entitled under their contracts of employment to remuneration of $250,000 per annum; and(3)that they performed work as employees for which they were not remunerated.Who was the true employer – Petra or Dellermay?Legal principles The question of who the parties to a contract of employment are is essentially a question of fact. When determining which of two possible employers is the correct employer, the Court should consider the totality of the relationship, including post-contractual conduct. In less formal contractual arrangements like employment the parties do not always appreciate and observe legal niceties[40]. As Buchanan J put it in Fair Work Ombudsman v Ramsey Food Processing Pty Ltd (2011) 198 FCR 174 at [57], the answer to the question involves a search “for substance and reality”.[40] Golden Plains Fodder Australia Pty Ltd v Millard (2007) 99 SASR 461 at [95]; Commonwealth of Australia v Director of the FWBII (2015) 258 CLR 482 In seeking to identify the true employer from a range of possibilities, Bromwich J surveyed the relevant principles in Central Innovation v Garner (No 4) [2020] FCA 1796 at paragraphs [51] and [52][41]: [41] Fair Work Ombudsman v Grouped Property Services Pty Ltd [2016] FCA 1034 at [131]-[133]“[51] Both the applicants and Mr Garner refer to the summary of principles by Edmonds J in Gothard v Davey [2010] FCA 1163; 80 ACSR 56:Identifying an employer from two or more possibilities: The relevant principles to be applied[52] Unsurprisingly, the outcome in cases which have been concerned with identifying an employer of a person or group of persons from two or more possibilities, whether from within the same group of companies or otherwise, has turned on their own facts and, in consequence, the case law in this area is of limited assistance. Nevertheless, it is possible to discern certain general principles that the courts have applied in the identification process. The courts have adopted the position that in undertaking this exercise, they are entitled to take a wide view of the putative relationship, beyond the terms of the contractual documentation, to examine how the parties conducted themselves in practice and whether, where there is contractual documentation, the reality of the situation accords with the terms of that documentation or whether it points to another entity being the employer.…[54] In Re C&T Grinter Transport Services Pty Ltd (in liq) & Grinter Transport Pty Ltd (in liq) (controller appointed) [2004] FCA 1148 (C&T Grinter), Finn J at [20] said:[20] The principles to be applied in the identification of the employer of an employee where there are two or more possible employers, are reasonably well settled. For present purposes I would note the following:(1) A contract of service cannot be transferred by one employer to another or novated as between them without the employee’s consent: Nokes v Doncaster Amalgamated Collieries Ltd [1940] AC 1014; [1940] 3 All ER 549; Re Coogi Nominees Pty Ltd (administrators appointed); McCluskey v Karagiosis (2002) 120 IR 147; [2002] FCA 1137. Questions of estoppel apart: Smith v Blandford Gee Cementation Co Ltd [1970] 3 All ER 154; the employee’s consent must be a real one whether express or implied and is “not to be raised by operation of law”; Denham v Midland Employers Mutual Assurance Ltd [1955] 2 QB 437 at 443; [1955] 2 All ER 561 at 564.(2) The totality of the circumstances surrounding the relationships of the various parties including conduct subsequent to the creation of an alleged employment relationship is relevant to the assessment to be made: Romero v Auty (2001) 19 ACLC 206; [2000] VSC 462 at [10] and [42]–[44].(3) Documentation created by one or more of the parties describing or evidencing an apparent employment relationship will be relevant to, but not necessarily determinative of, the true character of that relationship: Pitcher v Langford (1991) 23 NSWLR 142; Marrs Fabrics Pty Ltd & Nathan Wholesale Fabrics Pty Ltd v Whipps (1991) 33 AILR 167. In determining the identity of a disputed employer, the court is entitled to consider “the reality of purported contractual arrangements”: Dalgety Farmers Ltd t/a Grazcos v Bruce (unreported, NSWCA, 3 August 1995). The documentation may have been brought into existence for other purposes, for example, tax minimisation or the reduction of insurance premiums, without reflecting the reality of the [parties’] relationship: ibid; Pitcher v Langford at 149; Sharrment Pty Ltd v Offıcial Trustee in Bankruptcy (1988) 18 FCR 449 at 454; 82 ALR 530 at 537.(4) [Conversations] and conduct at the time of the alleged engagement of the employee [are] of considerable significance: [Romero, at [10]]. The beliefs of the employees as to the identity of their employer [are] admissible and [are] entitled to weight: Pitcher v Langford.(5) In cases of the engagement of new employees to work in a business in which a number of separate corporate entities participate otherwise than as partners:“… it was open to those controlling the business to select which company should be the employer provided that the selection was consistent with the financial and administrative organisation of the business and was not otherwise a sham.”See Textile Footwear and Clothing Union of Australia v Bellechic Pty Ltd(unreported, FCA, Ryan J, 19 November 1998).[55] The majority of the NSW Court of Appeal (Basten JA dissenting) made the following observation in Shaw v Bindaree Beef Pty Ltd [2007] NSWCA 125 at [59] regarding the court’s earlier decision in Pitcher v Langford (1991) 23 NSWLR 142 (Pitcher):The result in Pitcher v Langford turned on its own facts, and on the need for error in point of law. There is no doubt, however, that without going so far as to find a sham the “reality of purported contractual arrangements” (per Handley JA) can be considered, and the case illustrates that it can extend to the identity of a contracting party and that it can be found that a purported contracting party was not in reality party to the contract even where a written contract gives it as the party.[56] The majority further noted (at [61]–[62]) that determination of the entity that entered into a contract is based upon an objective assessment of the state of affairs between the parties.[52] Edmonds J at [60] in Gothard summarised the effect of these authorities, concluding that the behaviours exhibited by an entity most likely to be identified as the true legal employer were that it: (a) had practical and legal control and direction of the employees;(b) made decisions about hiring;(c) made decisions about disciplinary issues;(d) made decisions about the level of remuneration;(e) actually paid remuneration;(f) communicated with employees about leave; [and](g) made decisions about termination of employment.”