Budathoki v Consult Security Pty Ltd
[2020] FCCA 1872
•16 July 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BUDATHOKI v CONSULT SECURITY PTY LTD & ORS | [2020] FCCA 1872 |
| Catchwords: INDUSTRIAL LAW – Application arising from alleged employment – whether applicant was an employee or independent contractor – whether applicant was full-time or casual – employer not paid loadings for shift work, weekend work or public holidays – other infractions of award and Fair Work Act established – all issues against first respondent company established – third respondent fully liable pursuant to section 550 of the Fair Work Act – second respondent liable for the contraventions until she ceased material involvement with the affairs of the first respondent. |
| Legislation: Fair Work Act 2009 (Cth), s.550. |
| Cases cited: Australian Building and Construction Commissioner v Parker [2017] FCA 564; (2017) 266 IR 340 Hollis v Vabu [2001] HCA 44 Ross v Paea Trading as Bombora Café [2020] FCA 766 |
| Applicant: | YADU BUDATHOKI |
| First Respondent: | CONSULT SECURITY PTY LTD |
| Second Respondent: | CONNIE PRIVITELLI |
| Third Respondent: | JEZ PRIVITELLI |
| File Number: | MLG 2213 of 2019 |
| Judgment of: | Judge Burchardt |
| Hearing date: | 26 June 2020 |
| Date of Last Submission: | 26 June 2020 |
| Delivered at: | Dandenong |
| Delivered on: | 16 July 2020 |
REPRESENTATION
| Counsel for the Applicant: | Mr Latham |
| Solicitors for the Applicant: | Fitzroy Legal Service |
| Counsel for the First Respondent: | No appearance |
| Solicitors for the First Respondent: | Not applicable |
| Counsel for the Second Respondent: | Self-represented |
| Solicitors for the Second Respondent: | Not applicable |
| Counsel for the Third Respondent: | No appearance |
| Solicitors for the Third Respondent: | Not applicable |
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 2213 of 2019
| YADU BUDATHOKI |
Applicant
And
| CONSULT SECURITY PTY LTD |
First Respondent
| CONNIE PRIVITELLI |
Second Respondent
| JEZ PRIVITELLI |
Third Respondent
REASONS FOR JUDGMENT
Introductory
By an amended statement of claim filed effectively at the commencement of the hearing of the trial, but without opposition from the second respondent, the applicant seeks relief arising out of the period of employment that subsisted between 6 February 2018 and 23 September 2018. The employment is asserted to have been with the first respondent, Consult Security Pty Ltd (“Consult Security”). The applicant says that his employment was bound by the Security Services Industry Award 2010 (“the Award”) and that he should be properly classified as a security officer level 2. He claims numerous breaches of the Award and, as a result of the Fair Work Act 2009 (Cth) (“the Act”), in relation to alleged non-payment of appropriate rates of pay for work on weekends and public holidays, underpayments in respect of his shifts, and irregularity of payment. He also complains of the non-provision of payslips, the failure of the employer to pay superannuation required by the Award and complains of the non-provision to him of a copy of the Award itself. He seeks payment of $23,184.62 under the Award and seeks declarations as to contraventions by all three respondents and the imposition of penalties as a result.
As things have transpired, only the second respondent has meaningfully participated in the proceeding, and she has not in any material way put in issue the matters the applicant asserts as to the various contraventions asserted against the first respondent. Rather, and this is where the case was effectively fought out, she says that she is not responsible for any of the contraventions whether as a sole director and shareholder of the first respondent at the relevant time and/or within the meaning of section 550 of the Act.
The question of service upon the respondents
The applicant has deposed to having no knowledge of the addresses of the various respondents and the question of service has been a vexed one from the start. Following the lodging of the application and statement of claim in July 2019, Morgan Che Nyland, solicitor for the applicant, filed an affidavit affirmed 7 November 2019. He deposed that service on the second and third respondents had proved impossible. The first respondent had been served by registered post on 9 August 2019. Mr Nyland’s affidavit deposed that company records showed that the second respondent was the sole director of the first respondent.
Mr Nyland deposed that on 6 September 2019 he emailed the third respondent with a copy of the application and statement of claim. He deposed to a reply from Mr Privitelli dated 6 September 2019 which relevantly said:
Consult Security hasnt operated for almost 12 months and I am not a director or employee.
This has nothing to do with me.
Regards,
Jez Privitelli.
It is clear from that email that Mr Privitelli has had notice of the claim since September 2019. I note that the company records annexed to Mr Nyland’s affidavit suggest that the first respondent was recorded as being “Strike-Off Action in Progress”.
On 8 November 2019, Ten Hong Yap’s affidavit was filed on behalf of the applicant. He is another solicitor acting for the applicant. He deposed that he had spoken to the second respondent on 21 August 2019. The second respondent indicated that she had received what appeared to be the statement of claim and that:
The Second Respondent also informed me that she and the Third Respondent had separated two years ago and are living apart.
The second respondent gave the third respondent’s address, being 12/139 Woodland Street, Essendon.
On 11 November 2019, in response to the applicant’s application in a case, I made orders for substituted service. Pursuant to those orders Mr Nyland served the third respondent at his email address. Further steps were taken to serve the second respondent. It should be noted that in the meantime numerous attempts had been made to personally serve the third respondent, but with no success.
On 10 January 2020, I directed that the applicant serve a sealed copy of the orders setting the matter down for hearing on 5 March 2020 to him by post to 12/139 Woodland Street, Essendon.
On 9 January 2020, Mr Nyland had filed a further affidavit deposing to the difficulties of service. I note that in December he had served orders made by the Court upon the third respondent’s email address and received a response on 7 January 2020 (annexure “MN-7”), which relevantly said:
Hello Mr Nyland,
I have come across several emails that you have sent Jez Privitelli.
As far as I know he is in the UK until February and Consult hasn’t been in businesss for a long time but I have access to emails as I have taken over some of the old customes. I just thought I should let ypu know.
Best wishes
Marius
That email was sent from a header Consult Security Operations <[email protected]>. Ms Privitelli in evidence identified Mr Privitelli as operating with various aliases including one Marcus, very similar to Marius. She also gave evidence that he continues to run the business. I accept that evidence.
In these circumstances, I have no difficulty in finding that the third respondent has been served with a copy of the application and statement of claim and is aware of the proceedings, but has elected to take no part in them.
The evidence before the Court
Only two affidavits have been filed. The first is that of Mr Budathoki himself. Mr Budathoki deposes that he began working for the first respondent on 6 February 2018 as a security officer. He worked there exclusively until he was dismissed on 23 September 2018. At paragraph 3 of his affidavit he asserts:
3. The Third Respondent (Jez) texted me that I was being dismissed after I requested payment from my employer. Jez’ message stated ‘Let’s stop all your shifts until this is sorted out mate because it’s no good for me and no good for you’. I never received my backpay and I was not offered any more shifts. My dismissal took effect that day and I was not given any notice.
The affidavit went on to assert that Mr Budathoki saw a job advertisement online in January 2018 and applied. He received a reply to his application from someone describing themselves as Marcus Chamberlain, duty supervisor of Consult Security. He deposed then at paragraph 5:
5. Afterwards I received a call from Jez, who asked me attend an interview. I met Jez at the coffee shop. He said he was happy to give me a job. Jez told me that I could work with a tax file number or get an ABN. I told him that I wanted to use my tax file number and be paid superannuation. He agreed to this and told me that I would be paid $22 per hour after-tax.
Mr Budathoki went on to depose to the work he performed as a security officer, being essentially patrol routes at Essendon Fields Airport and surrounding areas. He deposed that on the first day of work Jez gave him four hours of training and showed him the route he would travel on foot and by car and gave him a copy of the operating procedures of the first respondent. He was also emailed a copy of the operating procedures by the second respondent, which he signed and returned. Annexure “YB-2” is a copy of those procedures.
Mr Budathoki said he usually worked 40 hours himself and was not permitted to delegate his work duties. Jez had told him during training that this was the case. At paragraph 9, Mr Budathoki deposed:
9. If I ever had questions about the work that I was required to do, such as if I found anything unusual or if there was a problem, I would call Jez and he would tell me what to do.
Mr Budathoki described the work done in more detail and noted at paragraph 10 that he was required to wear a shirt which had the Consult Security name and logo on it.
Mr Budathoki then went on to depose to the hours that he worked, including work on weekdays, Saturdays, Sundays and public holidays. He also deposed that he was not paid at all for the hours he worked between 11 July 2018 and 23 September 2018.
At paragraph 16 Mr Budathoki deposed that when he first started work he gave his tax file number to the second respondent (Connie) and at paragraph 16 to 17 stated:
16. I told her that Jez had said I would be paid $24.90 per hour before tax, and $22 per hour after tax. She agreed to pay me these rates but said it would be easier if I got an ABN. She told me that all of her other security guards used ABNs. She asked me to look into getting an ABN and told me that it would only cost $35. I was paid a flat rate of $24.90 per hour for each hour of work between 6 February and 1 April 2018.
17. Prior to 1 April 2018 I asked both Connie and Jez to give me pay slips on several occasions. I would say that I asked them about once a week by phone call or text. Yet they never did. When I started receiving payments I found out that they had not been paying tax on my behalf. I asked Connie and Jez why they had not been paying tax, and Jez told me that Connie was working on that, while Connie told me that would take time because other workers were on an ABN. Throughout February and March CS continued to not pay tax on my behalf. When I asked Connie about this, she said I should shift to an ABN. In early April, Connie told me that I must now use an ABN. I felt pressured to do as I was asked and felt that I may lose my job and not receive my backpay if I did not. She told me that I would be paid $27.50 and would need to pay tax on my pay at a rate of 10%. I was paid a flat rate of $27.50 per hour for each hour of work between 4 April and 24 July 2018.
Mr Budathoki went on to depose that payments were often late and that after the pay increase only one of the invoices he sent to Ms Privitelli was paid. It is not entirely clear from the affidavit but it seems the increase referred to is that in April 2018. He was never paid, despite repeated promises from Jez, for the work that he performed between 25 July and 23 September 2018.
Mr Budathoki deposed that he asked both Connie and Jez for his group certificate in about mid-2018, but was never given one. He deposed that he was never given a copy of the Award, nor had a copy made available to him.
Mr Budathoki deposed that during the time that he was working for Consult Security Connie was its sole director and shareholder, but he was unaware whether he was employed by Consult Security in its own capacity or in its capacity as the trustee of the Three Seas Family Trust. At paragraphs 24 to 25 he deposed:
24. When I first met Jez, he told me that CS had an accountant called Connie and that she would sort out my pay. While working for CS, I did not know that Jez and Connie were or had been married. I am now aware that they were in fact married during the time I worked for CS. When I first met Jez at the café, he only told me that Connie was the accountant and that she would take care of payments and similar matters.
25. I never met Connie in person. The first time I had contact with her was when she sent me my roster in February 2019 (corrected at trial to 2018). After that, Connie would text me rosters each week. In about mid-April, Connie told me by phone that she would not be sending me rosters anymore because I worked the same shifts and hours each week.
The affidavit went on to depose that he had asked Connie for a payslip but had been told that CS did not have a system to do so because he was the only guard that worked with a tax file number rather than an ABN. I note that Connie emailed him the documents to complete, including an employment form and a copy of the standard operating procedure. I note that at paragraph 27 Mr Budathoki deposed that:
27. Up until 1 April 2010, I kept asking Connie for payslips and tax information by phone and text. Connie continued to say that she would provide me with the payslips and pay tax, but that she had still not set up a system.
I note that on 15 February 2018 Connie had sent him an email asking for his ABN and a copy of his security and driver’s licence. I note that on 13 April 2018 Connie sent the applicant a sample of an invoice to show him how to fill out future invoices. A number of text messages passing between the applicant and Connie between 16 February 2018 and 23 September 2018 are annexure “YB-18”, to which I shall return.
At paragraphs 34 to 37 the affidavit deposes to the third respondent. At paragraph 34 it was deposed:
34. It was Jez who initially hired me to work for CS. He would put run sheet forms in the CS car that I used for my work.
At paragraph 35 the affidavit deposed:
35. Two or three times, Jez personally directed me to attend an additional or longer shift if somebody else was unavailable.
The affidavit also annexes as “YB-19” text messages between the applicant and Jez between 2 February 2018 and 26 September 2018.
The text messages between the applicant and Connie
I note that annexure “YB-16” is an email from Connie to Mr Budathoki dated 15 February 2018, which relevantly asserts:
I am trying to do your wages, could you please just for now email me your hours worked up to the 12/2/18.
Then, I will ask you to invoice me every fortnight.
Annexure “YB-17” is the email to Mr Budathoki from Connie dated 13 April 2018, which relevantly says:
Please find attached an invoice that you can model off when you do your next fortnight.
Exhibit A1 is an enlarged and far more readable version of the invoices that Mr Budathoki sent. The first one is dated 17 April 2018 and includes an ABN. It suggests a total amount due of $2,200. This is made up of a number of units of 8 hours of patrol priced at $200 plus $20 GST. That would, of course, equate to an hourly rate of $25. All invoices right through to the final one addressed on 23 September 2018 repeat the total of $220 for eight hours, plus $20 GST.
The text messages that constitute annexures “YB-18” and “YB-19” are not easy to read and, in many instances, the dates are hard to make out. I note that at page 81 of the affidavit, there was an exchange on 26 February, which relevantly asserts:
This time did you pay my tax
I mean, it’s on TFN
And a response from Connie:
Yes. But I think it would be easier if you went and got an ABN. It only costs $35. Then you can be like all the other guards. It would make it easier for me. I would really appreciate it. Thanks
Mr Budathoki replied that he had talked with Jez on the Monday and said the rate was $24.90 before tax plus super and that:
He want me to report same way to Centrelink and I already reported to Centrelink as well.
To which Connie replied:
Ok. But I would appreciate it if you could look into it, like all the other guards. Please. It just makes it easier for me. Thanks
At a subsequent exchange, which is not, as far as I can see, denoted as to date but appears to be before April 2018 (affidavit page 82), Mr Budathoki texted Connie relevantly requesting “proper payslips from beginning” to which Connie replied:
Unfortunately, all other staff have an ABN number, which makes it easier for all. We are not set up for TFN, we are in the middle of setting it up with the accountant at a further cost to us. You need to be patient as we are trying to set it up for you. Thanks for your patience. Connie
On 3 April 2018, Mr Budathoki again requested payslips and asked how much he would be paid on ABN to which Connie replied $24 per hour, with tax to be added on top (presumably GST). In a further exchange in response to a message from Mr Budathoki asserting (affidavit page 83):
24 per hour flat rate, isn’t it
Connie replied:
When you have an ABN you add your 10% on top of your invoice. Say you earn $2000 you put your GST on and your invoice will total $2200. Then at the end of the year you take all your invoices to the accountant.
In a subsequent message Connie confirmed, on affidavit page 83:
We don’t do super. You can do your own super on an ABN.
She then confirmed on page 84:
Okay. I have spoken to Jez. $25 an hour on ABN.
I have a full-time job also. I work at a hospital during the day. I can’t always talk during the day.
On the same page, page 84, Mr Budathoki having confirmed the $25 ABN pay rate and its commencement on 1 April 2018, Connie said:
Like I said, I need to talk to our accountant because you are the ONLY guard we have this problem with. So you will have to be patient.
On the same page, which by now appears to be 5 August 2018, Connie relevantly asserted:
On Monday, please call Jez and tell him to talk to your accountant. I don’t have time. He will work it out for you.
On page 85, Connie relevantly on 27 July wrote:
I worked out that we paid you more GST than we owe you tax. So you can write invoices and back date them before you were on ABN. We have paid you more GST than we owe you tax. So we can call it even. All you have to do is write invoices for the beginning when you worked and backdate. Your accountant suggested that. Only because we are not set up for TFN and you are not set up for GST.
…
You have been charging us GST and we paid GST $1800. We haven’t paid your tax in the beginning of $1600 approx. So really you owe us $200. We don’t won’t the money from you.
Yes write invoices for the beginning when you worked and use that for your accountant to do your tax.
The text exchanges with Jez are annexure “YB-19”. I note that at page 87 of the affidavit Jez says:
You have also been paid all hours. Pay is $22 per hour after tax.
I note at page 90 of the affidavit on 16 June 2018 Jez texts:
Of course mate I’ll do my best. Connie works for a payroll and roster company that I use. I just called her and left a message.
I’ll sort it out don’t stress mate.
At page 92, in response to a query from Mr Budathoki about Connie, Jez texts:
Absolutely nothing wrong mate. She’s working for other companies as well as Consult. I keep onto her I promise because I am also owed money.
At page 94 of the affidavit Jez texts to Mr Budathoki:
I am meeting the payroll company tomorrow to discuss wages. I may have to use a different provider if they can’t pay on time. Thank you for your patience and support. I also haven’t been paid so I need to work it out.
Page after page of annexure “YB-19” shows an understandably increasingly concerned Mr Budathoki desperately trying to get paid for the work he is doing. If ever the phrase “the cheque’s in the mail” had any currency the responses from Jez are utterly consistent with this and numerous variants of it. I note that at page 98 Mr Budathoki asks for payslips, to which Jez replies:
I have to get all that off Connie it wasn’t all of it but I know it was a lot.
I’m not certain but I think it was about 3500.
Taking into account what you are paid on Fri how much is left?
All the way through until 17 August, Mr Privitelli is assuring Mr Budathoki, so to speak, that the cheque is in the mail or will be cleared shortly and the like, including what are plainly untrue assertions that, in fact, Mr Budathoki had actually been paid. At page 110 on 23 September 2018 Jez’s patience runs out and he says:
Yadu let’s setup this mate. You do the seem to be understanding what I’m saying.
Let’s stop all your shifts until this is sorted out mate because it’s no good for me and no good for you.
I will work out exactly to the day when you will be paid in full. Until then can we stop your shifts mate.
Do you want your final night to be tonight.
Eventually, at page 111, Mr Budathoki, entirely understandably in my view, responds:
Yes jez you are just treating me as idiot, I have been requesting you but you keep on saying this and that.
There is limit for everything.
There is no point of working without pay.
To which Jez replies:
Ok mate. Think what you like.
No need to work tonight. Again I will give you details of when to accept payment urgently.
Jez continues to notify Mr Budathoki that he will not be rostered any more. Further correspondence shows the parties preparing to take the matter further.
Annexure “YB-20” is a draft affidavit forwarded by Ms Privitelli to the applicant’s solicitors. It makes a number of criticisms of Mr Budathoki, including assertions that he had been fraudulently dealing with the question of goods and services tax. This was somewhat amended when Ms Privitelli attended Court with her revised affidavit.
The burden of the revised affidavit is to the effect that the applicant contacted Mr Privitelli and that the contract was entered into between them. The affidavit repeats concerns of alleged fraudulent dealing in relation to goods and services tax by the applicant. The affidavit relevantly asserts under the heading The Employment Contract:
There was never an employment contract entered into or agreed to by the first respondent and second respondents. It was the third respondents directive that the applicant was hired as a sub-contractor as were all others.
The first and second respondents confirm that, they were unaware of any agreements or discussion between the applicant and the third respondent and confirm that their records do not support any such agreement being made and approved.
The second respondent asked the applicant on multiple times to provide an ABN, the second respondent even spoke to the applicant’s accountant over the phone to discuss these issues, as there was a language barrier.
The applicant was engaged to supply services to the first respondent and it was agreed between the parties that the verbal quote of $220.00 to attend to visiting a number of sites within an 8 hour period was agreed to and the applicant was directed to forward invoices for the services performed.
The affidavit asserts that the second respondent was not a director, secretary or shareholder of the first respondent, but just the ex-partner of the third respondent. The affidavit continues:
The second respondent confirms that after a marital separation that the third respondent has continued the business solely.
It goes on to assert:
The third respondent has been blacklisted from the industry and any agreement between the applicant and the third respondent is not recognised by the first and second respondents.
The Court has also been provided with correspondence from solicitors acting on behalf of Ms Privitelli in matrimonial proceedings.
It is clear that on 13 November 2018 Judge Hartnett, as Her Honour then was, made orders by consent that, relevantly, transferred Consult Security, including the Three Seas Family Trust, to the husband, including, but not limited to, the wife being removed as director, secretary and/or shareholder thereof.
It would appear that that order has not yet been effected.
The submissions made and evidence given in Court
What follows is taken from my notes.
Counsel for the applicant opened the case. He detailed the periods of employment. It was submitted that from 6 February to 1 April 2018 the applicant was paid $24.90 per hour, but the first respondent withheld tax from that amount. It was submitted from 4 April 2018 until 23 September 2018 the applicant was paid $27.50 per hour. He was asked to and did use an ABN. He was not paid at all after 25 July 2018. There was an underpayment of ordinary hours because he was not paid penalty rates for Saturdays, Sundays and public holidays. There was a failure to pay superannuation, annual leave and loading.
The applicant was not given notice or pay in lieu. The second respondent was a director of the first respondent and the third respondent was a manager. It was submitted that both the second and third respondents set paying arranged hours. There were contraventions as to the regularity of payment and the award was not made available, nor was the applicant given payslips. The amount owed depends upon whether the applicant was an employee and depended on whether he was full-time or casual. The claim as a full-time employee was some $23,000. If he was a casual it was some $26,369. In any event, even if these were wrong in the alternative in the accrued jurisdiction there was a claim for non-payment of wages between July and September in the sum of $10,160.
Counsel submitted that the applicant was an employee. There was an issue as to whether the award applied and, if so, whether the applicant was categorised at level 2. The question was whether he was full-time or casual. There was an issue as to whether or not the second and third respondents were involved in any contraventions pursuant to section 550 of the Act.
The applicant was called and corrected some typographical errors in his affidavit. Ms Privitelli elected not to put any questions to him.
The submissions and evidence of Ms Privitelli
Ms Privitelli, who represented herself, made an opening. She said she understood that the applicant had been hired as a subcontractor, like all the other guards. This was what her husband had told her. There were discussions in early 2018. They only took contractors with ABNs. She had even spoken to the applicant’s accountant. The accountant assured her that the applicant was set up to provide an ABN.
The third respondent gave all instructions. He is still running the business with the same clients. She only got the documents that she appended to her affidavit by chance. He is still using the Consult Security name. (Materials appended to the affidavit of Ms Privitelli appear to me to support this proposition.) In early 2018 her solicitor told her to disassociate from the business. She was told it would take eight months. She was of the understanding that the applicant was a sub-contractor.
Ms Privitelli was sworn and confirmed that her opening from the bar table and her affidavit (which had no details of jurat) were true. She confirmed that her maiden name was DiGiacomo (the name on some of the messages). When it was put to her that the company had been operating since 2011 Ms Privitelli was not 100 per cent sure. She had been a director since the start. The third respondent, her husband, and the accountant set the company up. It was done without her knowledge. Consult Security provides security services. She has never worked as a guard. She had no idea how many people were employed in 2018. She paid invoices for them. A lot were subcontractors.
When pressed as to how many she said, “Maybe three or four.” They sent invoices fortnightly. The third respondent paid invoices as well. She could not say how many people were working at one time. She said, “There would be heaps over time.” She never dealt with them. The third respondent used Hillside Security, who could have up to 10 employees. She was not aware of the Award, although she knew it existed. She knew it would have minimum rates. She does not know Marcus Chamberlain. He was not a duty officer. The third respondent put different names on email accounts. Chamberlain is the third respondent.
When taken to page 9 of the applicant’s affidavit, which showed the application made ostensibly to Marcus Chamberlain, Ms Privitelli said this was the first time she had seen it. She said that it appeared that the applicant applied. When taken to page 87 of the affidavit, Ms Privitelli said that she was aware that the third respondent was hiring a few guards. She had separated from the third respondent in 2017 and they were not living together. They had not spoken. There was only very minimal contact for quite a while. She would have been in contact with the third respondent in 2018.
They were running Consult Security together. He ran the whole company. She mainly paid invoices and sent invoices out. She had to keep going until she went to Court. It was not a pleasant time. The third respondent was trained and trained the applicant. She believed that the applicant started on 2 February 2018. She conceded sending the applicant the employment sheet and standard operating procedure. She had been told by the third respondent what he had agreed with the applicant. She asked him numerous times for an ABN. She had not withheld tax until April 2018. She does not understand tax.
They agreed to pay a particular rate. He was told from the beginning he needed an ABN. There was none provided until April 2018. She did not pressure the applicant, but just continuously asked for an ABN. She conceded sending the text messages on pages 81 and 82 of the affidavit. She tried to look into it, but it was too complicated. Her undertaking was very limited. She was trying to get out of the company, not complicate it more. She conceded sending the texts at page 84 of the affidavit. She said to counsel that, “You do not understand.” She was going through separation. She was working full-time and had the care of two children. They invoiced the company and you paid the invoice. She had no understanding of the legal issues. There was no need to deduct tax or superannuation. She would not know how to do that. She was not pressuring the applicant. He was told from the beginning.
She conceded that the vehicle the applicant drove was owned by Consult Security. She thought until she got the applicant’s affidavit that he did two runs. She thought he had his own car. They only had the one car. When it was put to her that if the applicant used his own car Consult Security would pay him for petrol, Ms Privitelli said that sounded right. She was not sure what discussions the applicant had with the third respondent about who did the work, but agreed the applicant was paid by the third respondent. She believed that the applicant had a run sheet.
She did not know if he had a zone brief book as she did not know what it was. The standard operating procedure was brought by the third respondent from his previous employment. She accepted what the standard operating procedure said. She accepted that the document at page 24 of the affidavit was given to the applicant by the third respondent. She had not written it. The third respondent had not written it either. It came from the third respondent’s previous employer, SIS International.
This document was specific to Essendon Fields and the third respondent wrote it. She did not know that the applicant was required to wear a uniform. She never met him. She was under the impression that the third respondent got a uniform for himself. She was aware of the hours that the applicant worked up until about mid-2018. After mid-2018 she did not have a lot to do with the company. She was locked out of the emails.
She agreed that the applicant worked 40 hours per week from Wednesday night shift 10:00pm till 6:00am. She calculated the wages from his invoices. She paid when she was instructed to. It was intended to pay within 14 days, but it was often late. When money was not available she conceded that four to five weeks late was about right. She sent the applicant rosters by text. She stopped the rosters because the rosters and the shifts were the same and assumed that they would continue. She set the wages in consultation with the third respondent.
She had believed her draft affidavit was true, but she had not received the applicant’s documents and had to amend it. When cross-examined about her draft affidavit at page 117 of the applicant’s affidavit Ms Privitelli said that the questions were the ones usually asked. She can only say what the third respondent said. She conceded that the reference to $2,200 was incorrect. The discussions of wages were held between the third respondent and not her. She had spoken with a friend, Mr Theopolou. What was in the affidavit was what he thought. The applicant had told her that he was confused about GST and offered to repay GST. She told him not to worry about it.
Ms Privitelli roundly denied trying to pressure the applicant and likewise that she had been caught out being dishonest in the preparation of the affidavit. In essence, she attributed the terms of the draft affidavit to the friend who had helped her write it. She conceded that her assertion at page 118 of the applicant’s affidavit was not correct after she had seen the texts.
Ms Privitelli said the applicant was never paid super or penalty rates and the like. She said she had no knowledge whatsoever of the fact that the applicant had not been paid from 11 July to 23 September 2018. In mid-2018 she stepped away because she was told to by her solicitor. When asked if the applicant had asked why he was not being paid she said she did not believe so. She did not recall him asking. If he did he would have been directed to the third respondent. The third respondent did not discuss the applicant with her. When asked if the applicant was entitled to be paid if he worked she said, “Absolutely.” She said the third respondent did not pay anybody, including her.
When asked if the applicant was dismissed on 23 September because the respondents could not pay his wages Ms Privitelli said she had no idea why he was dismissed. She can only go on the texts. She thought the first and third respondents agreed. That’s how she read the texts. She could not comment about notice. The applicant was not paid annual leave. She always thought he was a sub-contractor. The applicant asked her for payslips, but they were not set up in that way and he knew that. She conceded she had never provided any Award to the applicant.
Final submissions by counsel for the applicant
Counsel said the central issue is whether the applicant was an employee or contractor. He referred to Hollis v Vabu [2001] HCA 44 at [48]-[57] and submitted that it was a multi-factoral test. It was submitted that the most important issue was the extent to which the applicant was conducting his own business. The issue of control suggested that he was an employee. He was only a security officer. The first respondent was a security company. He had had detailed procedures. There was a start and finish time. The applicant had to wear a uniform. The car was provided by the first respondent or, alternatively, the first respondent paid for the applicant’s petrol. He was prohibited from delegation of duties and was trained by the third respondent. The first respondent could dismiss him and had, indeed, done so. He was paid an hourly rate periodically. He had no capacity to generate good will. He worked for clients of the first respondent, not his own clients.
It was submitted that, accordingly, the applicant was an employee.
The next question was whether the applicant was casual or full-time. It was submitted that with casuals there was no firm advance commitment. Here the applicant worked 40 hours per week on a roster and the rosters were no longer provided to him because they were certain in any event.
The Award applied (copy was tendered as exhibit A2) and counsel took the Court to the provisions for leave and the classification of the applicant. It was submitted that the applicant, in patrolling Essendon Fields and surrounding areas, was plainly a level 2 employee. Counsel submitted the second and third respondent were accessorily liable pursuant to section 550 of the Act. The applicant needs to show actual knowledge of the facts and intentional participation. Counsel referred to authority in this regard, most particularly Flick J in the case of Australian Building and Construction Commissioner v Parker [2017] FCA 564; (2017) 266 IR 340, applied by Rangiah J in Fair Work Ombudsman v Hu (No.2) [2018] FCA 1034 at [166] where it was held that it was not necessary for the employer to know of the Award or its contents.
It was submitted there was no need for knowledge of the Award or for the fact that there was a contravention. If there was an underpayment then the applicant only needed to show that the second and third respondent knew there was an underpayment. It did not require knowledge of the Award, nor require knowledge that the applicant was an employee. The second and third respondents knew the applicant’s hours and knew the rate of pay. The third respondent was clear. He knew the applicant was not being paid.
The applicant says he notified the second respondent he was not being paid. It was submitted that the second respondent was not a witness of credit and her draft affidavit showed this. Then she saw the texts. The second respondent accepted that she knew of the Award and it should be inferred that the third respondent knew of the Award also. The applicant was not paid for three to four months at all. The second and third respondents knew the factors that would demonstrate that the applicant was an employee.
The standard operating procedure was applied. The uniform was provided. There were no payslips and no payments within 14 days as required by the Award or one month as required by the Act. The Award was not made available. No superannuation was paid. There had been no steps to correct underpayment. Counsel submitted that this case was differentiable as regards to superannuation from the decision of Perram J in Ross v Paea Trading as Bombora Café [2020] FCA 766. As in this case, the award itself provided for superannuation payments.
The closing submissions of Ms Privitelli
Ms Privitelli indicated that she accepted that on paper she was a director. But what took place was without her involvement. The third respondent ran the business. She sincerely thought the applicant was a sub-contractor. She apologised for her inconsistency in her affidavit, but it was written by someone else. Then she received information from the applicant. She was not trying to be deceitful. She was trying to tie up loose ends. She did not know of the applicant’s outstanding invoices. She had no idea.
In the final orders made following separation she wanted nothing to do with Consult Security. She wanted to walk away. The first and third respondents are still in business with the same clients. She walked away with nothing. She could not pay the applicant if she wanted to. She lives pay cheque to pay cheque. The third respondent runs the company under multiple names. On his child support assessment on paper here he earns nothing.
The credit of Ms Privitelli
Contrary to the submissions made by counsel for the applicant, I have to say that I thought Ms Privitelli was a palpably honest and sincere witness. Notwithstanding that the case was heard over Microsoft Teams, her answers were, in really every instance, in my view, given directly and sincerely to the questions put. She did not seem to me to try and fudge anything. While it might be said that faced with the various texts she has little alternative but to concede their purport, the clear picture I got was that Ms Privitelli was, as she herself said, facing the music, something for which, in my view, she deserves some measure of credit.
Findings about the facts
It is quite clear from the materials filed and from the evidence of the applicant himself that he responded to a job advert himself to somebody called Marcus Chamberlain who I accept is the third respondent operating under an alias. It is equally clear that the email exchanges that led to the first meeting between Mr Privitelli and the applicant were not known to Ms Privitelli whom I accept only saw them in the currency of these proceedings.
The applicant says he insisted on being appointed on a tax file number with superannuation. There is no evidence to contradict this, and I must accept that it is true, although I note that the materials filed by Ms Privitelli suggests that contrary to what he apparently asserted to her, the applicant may have had an ABN at that time.
In any event, it is clear that the applicant was trained by Mr Privitelli, and allotted his work by Mr Privitelli in the first instance. Mr Privitelli told the second respondent of the applicant’s commencement at work, and she processed him or sought to process him in any event as an independent contractor, which is what Mr Privitelli, as I find, told her the applicant would be.
There are a number of reasons for this conclusion. The first is that that is what Ms Privitelli said in her evidence and she was a witness I believe. Furthermore, it is consistent with the tenor of the text messages passing between her and Mr Budathoki. She is saying to him in response to his various requests words to the effect that their system was not set up for TFN, but rather everybody else was on an ABN. It is true that there might be thought to be some equivocation at various points in this position on Mr Privitelli’s part, but looked at fairly as a whole as I think is appropriate in the circumstances, she thought that the applicant was an independent contractor and was responding to his requests in effect, was seeking that he regularise himself as one.
Although he says he was pressured to do so, the fact is that the applicant did indeed move onto an ABN by April 2018 and thereafter forwarded invoices to the first respondent consistent with that position. I refer to the particular circumstances of Ms Privitelli at the time. She was working fulltime and supporting two children. She was in the midst of separation. It is quite clear from Ms Privitelli’s evidence, and indeed, the texts sent by Mr Privitelli, that he ran the business.
I have no hesitation in coming to the regrettable conclusion that Mr Privitelli is what is sometimes described as a bad hat. His dishonest assertions as to Ms Privitelli’s status as an alleged independent accountant speak for themselves. Furthermore, the disingenuous and repeated assertions to Mr Budathoki that Mr Budathoki either, was going to be paid, or indeed had been paid when he had not, speak for themselves. When Mr Budathoki very understandably dug his heels in, Mr Privitelli ceased his employment.
I have no doubt that the third respondent has known about these proceedings from an early stage and has simply determined to play no part in them. I accept Ms Privitelli’s evidence that he has run the business under various aliases including Marcus Chamberlain. He clearly knew that the applicant was not being paid between July and September of 2018 and lied on a number of occasions with prevaricatory responses to the effect that the applicant would be or indeed had been paid.
This brings us to the question of what Ms Privitelli really knew. I accept that she thought at all times that the applicant was employed as a sub-contractor. It was, to her knowledge, the business model of the third respondent, and the various text messages show her seeking to bring the applicant within this business model and express her incapacity to function on what was described as the tax file number style. I also accept that by the middle of the year, she had disengaged from the company as she said.
There are only a tiny number of messages between her and the applicant after about July 2018 and they all essentially show Ms Privitelli being unable to respond. What is also clear is that from around about July onwards, multiple messages were passing between the applicant and Mr Privitelli with whom he was primarily dealing. It is of course clear that Ms Privitelli received at least a number of the invoices from the applicant and it is clear that the applicant was paid late owing to shortage of funds on at least a number of occasions.
Was Mr Budathoki an Employee or Independent Contractor?
There is no doubt that Mr Budathoki was an employee and not a sub-contractor. That is his evidence as to how he was engaged by the third respondent. Although the third respondent was not a direct shareholder of the first respondent, he clearly was the person who ran the business. He had the actual authority to enter into agreements on its behalf and did so with Mr Budathoki.
Not only was this the term of the oral agreement, but all the indicia to which counsel referred point irrevocably to his having been an employee. He had no control over his hours. He had to wear a company uniform and drive a company car. He could not delegate or subcontract his work to anyone else. Although the arrangements as to his tax appear to me to be uniformly murky, there is no doubt taking the various indicia as a whole, he was an employee.
It is equally apparent that he was a fulltime employee and not a casual. His roster was so predetermined and well known that after only a short time, Ms Privitelli ceased even sending it to him. It is not necessary to say more than that.
There is no doubt that Mr Budathoki was subject to the Award which plainly, according to his terms, governed the work that the applicant did. I furthermore accept that he should have been classified at level 2. It follows from these matters that the various claims he makes under the Award are made out. I accept that he worked the hours that he says he did, and it is common cause that he was never paid any of the relevant loadings for shiftwork, weekend work or public holidays. No copy of the Award was ever made available to him. No payslips were ever made available to him. He was never paid any superannuation (which in this instance was prescribed by the express terms of the Award). He was not paid on time. He was not paid annual leave or given notice or pay in lieu.
In these circumstances, it is all too readily apparent that the claims against the first respondent are made out.
Are the Second and Third Respondents Liable Pursuant to the Legislation?
It is pleaded that throughout the employment period, relevantly, the third respondent knew of the duties performed by the applicant, knew of the hours worked by the applicant, knew of the amounts paid by the first respondent to the applicant, knew when the amounts were paid by the first respondent to the applicant, and “was aware of, and had responsibility for, the day to day management, direction and control of the business and operations of the first respondent.”
It is also pleaded that the third respondent was responsible for directing the payment of wages and other work entitlements to the applicant on behalf of the first respondent, was responsible for setting wage rates and all other terms and conditions of employment for the applicant and knew that the respondent was bound in respect of the applicant by the Act and the regulations, knew that the first respondent was covered by at least one or more awards and required to pay award entitlements.
It is pleaded that throughout the employment period, any conduct engaged in by the third respondent within the scope of his actual or apparent authority is taken to have been engaged in by the first respondent under section 793(1) of the Act (clause 5 of the pleading) by reason of the matters to which I have just referred. The third respondent was responsible in a practical sense for ensuring that the first respondent complied with its legal obligations for employees under the Act.
What is described as the accessorial liability of the second and third respondents is dealt with at paragraphs 91 and 92 of the statement of claim. It is appropriate to set these out in full.
91. By reason of the matters pleaded in paragraphs 3, 4, 5 and 6, the Second Respondent and Third Respondent:
a. had actual knowledge of the factual matters which comprise the contraventions alleged against the First Respondent; and
b. were intentional participants in the factual matters which comprise the contraventions alleged against the First Respondent.
92. By reason of the matters pleaded in paragraph 91, the Second and Third Respondents:
c. aided, abetted, counselled or procured; and/or
d. have been, by their acts and omissions, directly or indirectly, knowingly concerned in or a party to the contraventions alleged against the First Respondent.
93. By reason of the matters pleaded in paragraphs 91 and 92 and pursuant to subsection 550(1) of the Act, the Second Respondent and the Third Respondent were involved in and are therefore treated as having themselves personally contravened each of the provisions the First Respondent is herein alleged to have contravened.
Section 550 of the Act relevantly provides:
(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; or
(b)has induced the contravention, whether by threats or promises or otherwise; or
(c)has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d)has conspired with others to effect the contravention.
It is apparent from the terms of the pleading that the involvement pleaded here is pursuant to subsections (2)(a) and (2)(c) of section 550 of the Act.
There is abundant authority governing the operation of section 550, but for present purposes, it is, in my respectful view, sufficient to set out the relatively lengthy extract from the judgment of Flick J in Australian Rail, Tram and Bus Industry Union v Railtrain Pty Ltd [2019] FCA 1740 at [10] to [15]:
10 Section 550 of the Fair Work Act provides as follows:
550 Involvement in contravention treated in 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.
Note: If a person (the involved person) is taken under this subsection to have contravened a civil remedy provision, the involved person’s contravention may be a serious contravention (see subsection 557A(5A)). Serious contraventions attract higher maximum penalties (see subsection 539(2)).
(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; or
(b) has induced the contravention, whether by threats or promises or otherwise; or
(c) has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d) has conspired with others to effect the contravention.
Section 550(2)(a) and (c) have a “different emphasis”: Fair Work Ombudsman v Devine Marine Group Pty Ltd [2014] FCA 1365 (“Devine Marine Group”).
In summarising the relevant principles, White J there observed:
Relevant principles
[176] Although the general principles relating to accessorial liability are settled, their application in a case such as the present is not without difficulty. In order to aid, abet, counsel or procure the relevant contravention, the person must intentionally participate in the contravention with the requisite intention: Yorke v Lucas (1984) 158 CLR 661 at 667. In order to have the requisite intention, the person must have knowledge of “the essential matters” which go to make up the events, whether or not the person knows that those matters amount to a crime: Yorke v Lucas at 667. Although it is necessary for the person to be an intentional participant and to have knowledge of the matters or things constituting the contravention, it is not necessary for the person to know those matters or things do constitute a contravention: Rural Press Ltd v Australian Competition and Consumer Commission [2002] FCAFC 213; (2002) 118 FCR 236 at [159]-[160]. That is to say, it is not necessary that the accessory should appreciate that the conduct in question is unlawful. The Full Court in Rafferty v Madgwicks [2012] FCAFC 37; (2012) 287 ALR 437 summarised the position in this respect at [254]:
[W]hile the identification of the elements of a contravention requires careful legal analysis, “[i]n order to know the essential facts, and thus satisfy s 75B(1) … and like provisions, it is not necessary to know those facts are capable of characterisation in the language of the statute” … This is another aspect of the longstanding principle that it is not necessary for a person to “recognise” the contravention as such, or explicitly to think about the relevant legislation that their actions may contravene …
[177] Actual, rather than imputed, knowledge is required. So much was made clear in Giorgianni v The Queen (1985) 156 CLR 473 at 506-7 by Wilson, Deane and Dawson JJ:
… [Offences of aiding and abetting and counselling and procuring] require intentional participation in a crime by lending assistance or encouragement. They do not, of course, require knowledge of the law and it is necessary to distinguish between knowledge of or belief in the existence of facts which constitute a criminal offence and knowledge or belief that those facts are made a criminal offence under the law. The necessary intent is absent if the person alleged to be a secondary participant does not know or believe that what he is assisting or encouraging is something which goes to make up the facts which constitute the commission of the relevant criminal offence. He need not recognize the criminal offence as such, but his participation must be intentionally aimed at the commission of the acts which constitute it. It is not sufficient if his knowledge or belief extends only to the possibility or even probability that the acts which he is assisting or encouraging are such, whether he realizes it or not, as to constitute the factual ingredients of a crime. If that were sufficient, a person might be guilty of aiding, abetting, counselling or procuring the commission of an offence which formed no part of his design. Intent is required and it is an intent which must be based upon knowledge or belief of the necessary facts. …
[178] The notion of being “knowingly concerned” in a contravention has a different emphasis from that of aiding, abetting, counselling or procuring” a contravention. To be knowingly concerned in a contravention, the person must have engaged in some act or conduct which “implicates or involves him or her” in the contravention so that there be a “practical connection between” the person and the contravention: Construction, Forestry, Mining and Energy Union v Clarke [2007] FCAFC 87; (2007) 164 IR 299 at [26]; Qantas Airways Ltd v Transport Workers’ Union of Australia [2011] FCA 470; (2011) 280 ALR 503 at [324]-[325].
[179] As indicated, these principles are not in doubt. The more difficult question arises from their application to the circumstances of this case and, in the identification of the essential facts about which an accessory must have actual knowledge.
These principles were endorsed by the Full Court in EZY Accounting 123 Pty Ltd v Fair Work Ombudsman [2018] FCAFC 134 at [11], (2018) 360 ALR 261 at 263-264 per Flick, Bromberg and O’Callaghan JJ.
11 As White J made clear in Devine Marine Group, it has long been settled that an allegation that a person has “aided, abetted, counselled or procured” a contravention requires a party to prove that a person has “knowledge of the essential matters which go to make up the offence”: e.g. Tytel Pty Ltd v Australian Telecommunications Commission (1988) 11 IPR 223 at 231. When considering the comparable provision formerly found in s 75B(a) of the Trade Practices Act 1974 (Cth), Sheppard J relevantly concluded in that case (at 231 to 232):
…Section 82 thereof provides that a person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Pt IV (relevantly s 46) or Pt V (relevantly ss 52 and 53) may recover the amount of the loss or damage by action against that other person “or against any person involved in the contravention”. Section 75B provides that a reference to a person involved in the contravention of a provision of Pt IV or Pt V shall be read as a reference, inter alia, to a person who has aided, abetted, counselled or procured the contravention, or has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention. These provisions were in part the subject of consideration by the High Court in Yorke v Lucas (1985) 158 CLR 661; 61 ALR 307 where the High Court held that the provisions of para (a) — the aiding and abetting provisions — imported the requirements of the criminal law. Amongst other things, Mason ACJ and Wilson, Deane and Dawson JJ said (at 669) that notwithstanding that s 75B operated as an adjunct to the imposition of civil liability, its derivation was to be found in the criminal law and there was nothing to support the view that the concepts which it introduced should be given a new or a special meaning. Earlier they had said (at 667) that under the criminal law a person, in order to form the requisite intent, must have knowledge of the essential matters which go to make up the offence whether or not he knows that those matters amount to a crime. The High Court was not concerned with para 75B(c) of the Act (being knowingly concerned in or party to a contravention), but the word “knowingly” imports into the provision similar considerations to those which apply to an allegation of aiding and abetting a contravention.
It follows that, for the applicants to succeed against STC on the grounds that it aided and abetted Telecom or was knowingly concerned in or party to Telecom’s contravention, it must plead and prove facts and circumstances which will enable the court to conclude that STC had the requisite knowledge and intent. That matter is at the heart of the submissions made by counsel for STC in the present case.
Similar language to that formerly found in s 75B is now found in (for example) ss 213, 224 and 232 of The Australian Consumer Law (being sch 2 to the Competition and Consumer Act 2010 (Cth)).
12 An allegation that a person is “knowingly concerned” in a contravention, such as for the purposes of s 550(2)(c) of the Fair Work Act, has been said to be a serious one, akin to a pleading of dishonesty: cf. Stefanovski v Digital Central Australia (Assets) Pty Ltd [2018] FCAFC 31, (2018) 368 ALR 607 at 627 (“Stefanovski”). McKerracher, Robertson and Derrington JJ there observed:
[70] In this case, where much of the liability of the appellants is founded upon them being “knowingly concerned” in TK Signs’ statutory contraventions, there are no pleaded allegations of the knowledge which is a necessary prerequisite to such a claim. It is well established that accessorial liability rests upon the intentional participation by a party in the contravention and such knowledge must be expressly pleaded against the party from whom relief is sought. The allegation that a person was “knowingly involved” in a contravention is a serious one and is akin to dishonesty. A party against whom such a claim is made is entitled to have the allegation clearly pleaded such that they might defend it. In Wyzenbeek v Australasian Marine Imports Pty Ltd [2017] FCA 1460 Derrington J referred to the relevant principles in the following discussion:
[96] In relation to the second matter, there is substantial weight in the submissions of the respondents that the pleading in paragraph 56 does not plead a reasonable cause of action against Mr Gay based on him being “knowingly concerned” in the alleged breaches of the TPA and ACL. An essential requirement of any plea of this nature is that the person against whom the claim is made knew of the matters which make up the essential elements constituting the contravention in question. Such allegations are necessary to establish that the person intentionally participated in that contravention. Where accessorial liability is alleged in relation to misleading or deceptive conduct, the party alleging the same must assert that at least the respondent knew of the making of the representation, that it was made in trade or commerce and that it was misleading or deceptive (see Yorke v Lucas (1985) 158 CLR 661 at 667). In Australian Competition and Consumer Commission v Online Dealz Pty Ltd [2016] FCA 732 Markovic J identified the now well accepted positon which flows from Yorke v Lucas. Her Honour said:
[163] It is necessary to show an intentional participation in and actual knowledge of the essential elements of the contravention. However, it is not necessary to show that the person appreciated that the conduct constituted a contravention. In Rural Press Limited v Australian Competition and Consumer Commission (2003) 216 CLR 53 at [48] a majority of the High Court confirmed that the trial judge had rightly held that it was necessary to find that the relevant individuals participated in, or assented to, the companies’ contraventions with “actual knowledge of the essential elements constituting the contraventions” and that in order to “know the essential facts, and thus satisfy s 75B(1) of the Act and like provisions, it is not necessary to know that those facts are capable of characterisation in the language of the statute”.
[164] In Australian Competition & Consumer Commission v IMB Group Pty Ltd [2003] FCAFC 17 a Full Court of this Court held at [133] that for a person to be involved in a contravention pursuant to s 75B(1)(c) of the Trade Practices Act, the person must be an “intentional participant in the contravention, the necessary intent being based upon knowledge of the essential elements of the contravention” relying on Yorke v Lucas. The Court went on to say that while it was not necessary to establish that the individual respondents had “knowledge that there was such a contravention … of the Act, it is necessary to demonstrate that each individual respondent had knowledge of each of the essential elements of the contravention”. …
In Stefanovski, their Honours went on to conclude that the pleading as against Mr Stefanovski was deficient, there being “no pleading that Mr Stefanovski …[was] knowingly concerned in the conduct of TK Signs which amounted to a breach of its obligation of good faith towards DCA”: [2018] FCAFC 31 at [72], (2018) 368 ALR at 628.
13 Similarly, in Fair Work Ombudsman v South Jin Pty Ltd [2015] FCA 1456 (“South Jin”) White J has also concluded that in order for a person to be “knowingly concerned in a statutory contravention, that person must have been an intentional participant, with knowledge of the essential elements constituting the contravention”. In this context, his Honour summarised the general principles in relevant part as follows:
Accessory liability – principles
[227] In order to be knowingly concerned in, or party to, a contravention, a person must have engaged in some conduct which “implicates or involves” him or her in the contravention, so that there is a “practical connection” between the person and the contravention: …
…
[229] In order for a person to have been knowingly concerned in a statutory contravention, that person must have been an intentional participant, with knowledge of the essential elements constituting the contravention: Yorke v Lucas (1985) 158 CLR 661 at 670. However, it is not necessary that a person with knowledge of the essential elements making up the contravention also know that those elements do amount to a contravention: … An accessory does not have to appreciate that the conduct involved is unlawful: …
[230] Actual knowledge of the essential elements constituting the contravention is required. Imputed or constructive knowledge is insufficient: …
[231] Proof that a person had actual knowledge of each of the essential elements making up a contravention may be derived from direct evidence but more commonly will be a matter of inference from all the circumstances found to be proved. In some cases, actual knowledge can be inferred from the combination of a respondent’s knowledge of suspicious circumstances and the decision by the respondent not to make enquiries to remove those suspicions. Nevertheless it is actual knowledge which is required. In this respect, Wilson, Deane and Dawson JJ in Giorgianni v The Queen (1985) 156 CLR 473 at 505 said:
[A]lthough it may be a proper inference from the fact that a person has deliberately abstained from making an inquiry about some matter that he knew of it and, perhaps, that he refrained from inquiry so that he could deny knowledge, it is nevertheless actual knowledge which must be proved and not knowledge which is imputed or presumed.
And later (at 507-8):
The fact of exposure to the obvious may warrant the inference of knowledge. The shutting of one’s eyes to the obvious is not, however, an alternative to the actual knowledge which is required as the basis of intent to aid, abet, counsel or procure.
[232] The conclusion that a person has actual knowledge of the elements of a contravention by reason of that person’s knowledge of suspicious circumstances coupled with a deliberate failure to make enquiries which may have confirmed those suspicions requires consideration of the person’s knowledge of the matters giving rise to the suspicion, the circumstances in which the person did not make the obvious enquiry and the person’s reasons, to the extent that they are known, for not having made the enquiry. It is not every deliberate failure to make enquiry which will support the inference of actual knowledge. …
…
[234] The requisite actual knowledge must be present at the time of the contravention. A later acquisition of knowledge of the essential matters is not sufficient.
(citations omitted)
See also: Ravbar [2018] FCA 1196 at [94] per Reeves J; BlueScope Steel Limited v Australian Workers’ Union [2018] FCA 1574 at [21] per Wigney J; Patrick Stevedores Holdings Pty Limited v Construction, Forestry, Maritime, Mining and Energy Union [2019] FCA 451 at [100] per Lee J.
14 Citing Stefanovski, and in concluding a pleading as to a person being “knowingly involved” in a contravention of the Fair Work Act was deficient, Thawley J in Whitby v ZG Operations Australia Pty Ltd (No 2) [2019] FCA 201 (“Whitby”) observed:
[28] Knowledge that the applicants performed their work in a particular way and were not paid as employees, whilst clearly relevant to the question, does not equate to knowledge that the applicants were, in truth, employees. Mr Dixon may have thought that the applicants were independent contractors, being what the applicants were ultimately determined to be.
[29] A pleading that a person is “knowingly concerned” in a contravention is a serious one, akin to a pleading of dishonesty – see: Stefanovski v Digital Central Australia (Assets) Pty Ltd [2018] FCAFC 31 at [70]. A pleading that a person was knowingly concerned in a contravention, exposing them to personal liability and seeking the imposition of civil penalties, should be drafted with some considerable care. It should plead the material facts said to establish that the person was knowingly concerned in the contravention. This includes an express identification of the elements of the contravention and an express pleading that the person had knowledge of each of the essential elements constituting the contravention. It should identify the material facts said to establish knowledge or from which such knowledge is to be inferred. The pleading should generally also identify the material facts said to constitute the relevant acts or omissions of the person which are relied upon as establishing any practical connection with or link to the contraventions (Whitby at [234], [235]) which are contended to establish the person was “knowingly concerned” within the meaning of s 550(2)(c).
[30] In its application to the present circumstances, if the applicants’ case when instituted was based on the notion that Mr Dixon knew that the applicants were employees, that allegation should have been made expressly in the pleading together with the material facts relied upon as establishing that Mr Dixon had that knowledge or from which such knowledge should have been inferred. If that had occurred, attention would necessarily have been directed to whether the claim was a reasonable one to make and whether the material or evidence available or likely to be available (assessed in accordance with s 140 of the Evidence Act 1995 (Cth) and Briginshaw v Briginshaw (1938) 60 CLR 336) permitted the pleading of the relevant material facts and provided reasonable cause to institute the proceedings.
[31] If the claim of knowledge that the applicants were in truth employees rested largely or entirely on the fact that Mr Dixon knew what the applicants did in the course of their work, the question would naturally have arisen whether that provided reasonable cause, in the circumstances of the case, to plead that he was “knowingly concerned” in contraventions of the FW Act.
[32] It is one thing to assert a person had actual knowledge that an arrangement constituted an employment arrangement if, for example, armed with knowledge of the relevant facts, the person had sought and received advice from another person with expertise in the field, or if they themselves had sufficient experience in the field. It is another to assert that a person knew that arrangements constituted employment arrangements simply because they knew what the parties did in the performance of their work. Clearly there are cases where the circumstances of the parties of themselves so obviously give rise to the conclusion that the relationship is one of employment that it could be inferred that a person familiar with the arrangements knew an employment relationship existed. The present case is not an example of that situation. Even if it were such a case, it would have been desirable, if not necessary, for the applicants to plead that Mr Dixon’s knowledge that the applicants were, in truth, employees was to be inferred on the basis that such a conclusion was obvious from identified facts known to Mr Dixon and in light of his experience. Such a pleading would have directed attention to whether there was reasonable cause to institute proceedings on that basis.
15 Although these cases repeat much of that which has long been-established and repeat principles established in Yorke v Lucas (1985) 158 CLR 661, the repetition of these principles serve as a continuing requirement of that which must be pleaded and that which must be proved if a person is to be found to have “aided, abetted, counselled or procured” a contravention by another. Both Stefanovski and South Jin serve as useful examples of the degree of care with which pleadings must be drafted.
The pleadings against each of the respondents are essentially identical. I would, however, come to different conclusions in respect of the involvement of the second and third respondents.
As I have found, the third respondent really ran the first respondent even though he was not the director or shareholder of it. The third respondent has been involved in the industry for many years. He had been involved in it since 2011 with the first respondent, and I accept the second respondent’s evidence that he was involved in a prior period of employment in any event.
Given that long involvement, it would appear both as an employee and as what is in effect an employer, I think it is more probable than otherwise that he would have been well aware of the existence of an Award. Indeed, I note that the second respondent was aware of the existence of an Award, even though not of its terms. It is also reasonable to infer that whatever knowledge they may have had in any detail, both respondents were aware of the existence of the Fair Work Act. It is an Act which is the subject of the most widespread discussion in public life.
The critical difference in positions of the two parties is that the first respondent knew that the applicant was an employee, because that is what he agreed with him. The second respondent however did not know that the applicant was an employee because that was not what the third respondent told her. I have already canvassed in some detail the reasons why I think that the second respondent had this view.
In these circumstances, I have no difficulty with the proposition that the third respondent knew that only a flat rate of pay was being paid in circumstances where he also knew that the applicant was an employee. It follows that he had knowledge of the essential facts which gave rise to the various award contraventions and resultant contraventions of the Act. It is also all the more plain that he well knew that the applicant was not being paid from July to September 2018. I have no hesitation in finding that he was, by act or commission, directly and knowingly concerned in the contraventions that occurred. My view of the matter has been sufficiently clearly pleaded to properly ground what is, after all, a serious finding.
In my view, however, the converse applies to the second respondent at least in part. It is clear that by mid-2018 she was getting out of the business as part of the overall resolution of her matrimonial difficulties. I found her evidence in this regard compelling. It is noteworthy that it is from the period of 11 July to 23 September that the applicant was not paid at all. As I find this is commensurate with the time at which Ms Privitelli effectively ceased her involvement with the company. Her later email exchanges with Mr Budathoki are in my view consistent with this also.
Where Ms Privitelli is in real difficulty however is in the period up until July 2018. She knew of the Award as she herself conceded albeit not its exact terms. She knew that while she thought Mr Budathoki had been engaged as an independent contractor, Mr Budathoki himself was asserting to her in plain terms that he was employed on a tax file number with superannuation. She knew quite obviously that he was not being paid any Award penalties or the like and indeed she knew that he wanted payslips but did not provide them.
In these circumstances, in my view, Ms Privitelli was in the period of February to July 2018 both aiding and abetting the contraventions (section 550(2)(a)) and was by act or omission directly or indirectly knowingly concerned or party to the contravention (section 550(2)(c)).
As the judgment of Justice White in Devine Marine Group quoted above makes plain at [176], in order to “aid, abet, counsel or procure the relevant contravention, the person must intentionally participate in the contravention with the requisite intention … In order to have the requisite intention, the person must have knowledge of “the essential matters” which go to make up the events, whether or not the person knows that those matters amount to a crime”.
It is clear that Ms Privitelli had knowledge of the essential matters which went to make up the contravention even if she did not know it was a contravention itself. She plainly participated intentionally. This is plain from the email exchanges with Mr Budathoki set out at paragraphs 31-39.
Likewise, and bearing in mind Justice White’s observations in Devine Marine Group at [178], Ms Privitelli engaged in act or conduct which involved her in the contravention in a fashion such that there was clearly a practical connection between the person and the contravention.
In these circumstances, in my view, Ms Privitelli was accessorily liable pursuant to section 550 of the Act, for the period of February 2018 when the employment commenced until July 2018 when it seems to me notwithstanding a late flurry of exchanges about GST, her involvement in the company ceased.
In these circumstances, and noting moreover that the end result of the financial settlement between the respondents was that the third respondent remained wholly seized of the business of the first respondent, it is in my view not possible to find that the second respondent was accessorily liable after 10 July 2018. She did not even know the applicant was not paid thereafter.
Conclusion
This has been a confusing and difficult case, not assisted by the nonparticipation of the third respondent and the difficulties arising out of the self-representation of the second respondent. Nonetheless, I am satisfied that the applicant should succeed in full against the first respondent and that the third respondent should be made accessorily liable pursuant to section 550 of the Act. As indicated, the second respondent is accessorily liable from 6 February 2018 until 10 July 2018. I will hear from counsel further as to the form of orders and declarations to be made and as to any questions of penalty to be imposed.
I certify that the preceding one-hundred and twenty-one (121) paragraphs are a true copy of the reasons for judgment of Judge Burchardt
Associate:
Date: 16 July 2020
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