CHANG SHI v Zheng MIN-SENG - [2011] FMCA 224

FEDERAL MAGISTRATES COURT OF AUSTRALIA

SHI v MIN-SENG & ANOR

[2011] FMCA 224

INDUSTRIAL LAW – Allegations of contraventions of Workplace Relations Act – unpaid wages.

Fair Work (Transitional Provisions and Consequential Amendments) Act 2009, Sch.2, Part 3, cl.11; Sch.3 Part 2 cl.2, 3; Sch.17 Part 5 cl.25
Workplace Relations Act 1996, ss.720, 722
Workplace Relations Regulations 2006, r.19.23

Alec Finlayson Pty Ltd v Armidale City Council (Burchett J, 6 March 1998, unreported)
Australian Education Union v Council of the Western Melbourne Institute of TAFE [1998] FCA 816
EMCL Pty Ltd v Esanda Finance Corporation Ltd (No.2) (1998) 160 ALR 382
Kettle Chip Company Pty Ltd v Apand Pty Ltd (No.2) (1998) 83 FCR 466
Johnson Tiles Pty Ltd v Esso Australia Pty Ltd(No.3) [2003] VSC 244
McCormick v Riverwood International (Australia) Pty Ltd [2000] FCA 32
Nagy v Masters Dairy Ltd (1997) 150 ALR 273
Namol Pty Limited v AW Baulderstone Pty Limited (No.2) [1993] FCA 606; (1993) 47 FCR 388
Textile, Clothing and Footwear Union of Australia v Givoni Pty Ltd [2002] FCA 1406

Applicant:

CHANG SHI

First Respondent:

ZHENG MIN-SENG (T/AS CAMY SHANGHAI DUMPLING & NOODLE RESTAURANT)

Second Respondent:

FU RUI ZHI (T/AS CAMY SHANGHAI DUMPLING & NOODLE RESTAURANT)

File Number:

MLG 563 of 2010

Judgment of:

Riethmuller FM

Hearing dates:

17 & 18 February 2011

Date of Last Submission:

18 February 2011

Delivered at:

Melbourne

Delivered on:

6 April 2011

REPRESENTATION

Counsel for the Applicant:

The Applicant appearing in person

Counsel for the Respondents

Ms Daly

Solicitors for the Respondents

Lewenberg & Lewenberg Solicitors

ORDERS

The respondents pay the applicant the sum of $172,677.38, being unpaid overtime and penalty rates amounting to $126,308.37 (net after tax), together with interest of $46,369.01, within 28 days.
The respondents pay to the applicant’s nominated superannuation fund the sum of $24,777.44, being of $18,123.96 (superannuation guarantee payments), together with interest of $6,653.48 within 28 days.
There be no order as to costs.

NOTATION

(A)It is noted that the respondents are obliged to remit $75,069 as PAYG tax, withheld in respect of the underpayment in this case.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT MELBOURNE

MLG 563 of 2010

CHANG SHI

Applicant

And

ZHENG MIN-SENG (T/AS CAMY SHANGHAI DUMPLING & NOODLE RESTAURANT)

First Respondent

FU RUI ZHI (T/AS CAMY SHANGHAI DUMPLING &
NOODLE RESTAURANT)

Second Respondent

REASONS FOR JUDGMENT

Background

The applicant was an employee of the respondents from 28 December 2004 to 26 January 2008. The applicant came to Australia as a section 457 visa-holder (Temporary Business (Long Stay) – Standard Business Sponsorship) to work as a chef in the respondents’ restaurant, Camy Shanghai Dumplings.
The relevant industrial awards were set out in the summary of the Fair Work Ombudsman investigation, which was attached to the applicant’s affidavit filed on 11 August 2010. From 28 December 2004 the applicant was covered under the Accommodation, Cafes and Restaurants Industry Sector – Minimum Wage Order – Victoria 1997. From 1 January 2005 the applicant was covered under the Liquor and Accommodation Industry – Restaurants – Victoria Award 1998. From March 2006 the relevant award was the transitional Liquor and Accommodation Industry – Restaurants – Victoria Award 1998. Counsel for the respondents did not challenge the applicability of these awards.
The applicant claims that his working hours were from 9.30am to 10.30pm, without break, save for brief periods in which he was able to have a cigarette. However, he claims that he was not paid overtime or penalty rates as required under the relevant award.
The matter first went to the Fair Work Ombudsman (‘FWO’).

The FWO determined that the applicant had not been paid annual leave in excess of $14,000, which was subsequently paid by the respondents. Nor was the applicant paid superannuation for the latter period of his employment, which was also subsequently paid by the respondents.
The applicant compiled a calculation of his alleged underpayment, which was filed on the day the proceedings were issued in this Court, 20 April 2010. The applicant’s calculations were not disputed at the hearing. On his calculations, the applicant was underpaid $201,377.37, from which tax would be payable at approximately $75,069, leaving a net income owing of $126,308.37.
The respondents’ case was to the effect that the applicant had been underpaid on each Saturday that he had been recorded as working during his period of employment. Therefore, on the respondents’ case the applicant was only entitled to a further $9,369.20, together with interest at the rates agreed by the parties, resulting in interest of $3,436.53. The respondents’ calculations were based upon entries in a wages record book upon which they relied at the trial.
It was agreed at trial that the interest rates and calculation method put forward by the respondents would be applicable to the applicant’s claim and that the applicant would also be entitled to superannuation at 9 per cent of any gross underpayment amount (together with interest) payable into his superannuation fund.
The only issue that was ultimately in dispute was whether or not the applicant in fact worked the hours that he claimed.

The applicant’s case

The applicant gave evidence and called two witnesses who were his friends and had worked at the same restaurant.

The applicant’s evidence

The applicant gave evidence that he had worked from 9.30am until 10.30pm. The applicant took three weeks off work during the early part of his employment, as he had burnt his hand, but he resumed work after this brief period of leave. He worked under the supervision of a Mr Xu in a kitchen where there were seven or eight people working. The restaurant was busy every day and the applicant did not get breaks other than brief periods of around five minutes. He agreed that he was able to take meals at the restaurant, but explained he did not receive a break for any significant period. His smoke breaks had to be approved by Mr Xu. Mr Zheng allegedly told the applicant that these working conditions were the same all over Chinatown. This left the applicant in an invidious position: if he lost his job his visa would be cancelled unless he found alternative employment within 28 days.
The applicant spoke little English. At trial, the applicant, his witnesses and the respondent Mr Zheng, required Mandarin interpreters. The two witnesses called by the applicant were people he met at the workplace. They are a husband and wife, Ms Li and Mr Song. Ms Li left Camy Shanghai Dumplings in 2005, well before the applicant left his job, and she was on a work roster where she finished an hour before him, but otherwise shared similar working conditions.
The applicant explained that he was given a key to open the restaurant and that he was the last to leave and had to lock up in the evening. He worked for six days per week, with Tuesdays off, and his only holiday was Christmas Day. The applicant’s initial conditions were that he received $100 per day. He produced plastic coin bags containing small tags. This was how the applicant initially received his pay. Subsequently, he received his pay in a blank white envelope marked with his name in Chinese characters. Most weeks the applicant did not receive anything remotely resembling a pay slip as required by r.19.23 of the Workplace Relations Regulations 2006. Whilst the applicant was not able to produce to the Court a white envelope of the type he received, Mr Song was able to produce one of those envelopes as an example.
The applicant was cross-examined at some length about whether or not he had signed a contract of employment. It appears that his cousin, Mr Fang, had made the arrangements with the respondent Mr Zheng, with the assistance of a migration agent, Ms Cheng (who was later called as a witness). The applicant maintained that he had not signed the employment contract. No original signed copy of the employment contract was able to be produced to the Court. Counsel for the respondents later conceded that given the arrangement and the timelines involved it seemed unlikely that the applicant would have actually signed the employment contract; it is more likely that an agent of the applicant (such as his cousin, Mr Fang) would have signed the contract. Effectively Mr Fang and Mr Zheng arranged the documents needed for the Department of Immigration and Citizenship and Ms Cheng as a migration agent put forward the application. It is not surprising that the applicant had little knowledge of this process, given that he did not speak English, and that his education in China was to a high school level (roughly the equivalent to year 10) before he went to technical college to become a chef: the applicant’s skills lie in the food industry, not in the legal arena.
The applicant explained that the restaurant was open seven days, ten hours per day. Mr Zheng later gave evidence that the restaurant was open from 11.30am (at 12pm on Saturdays and Sundays) until around 3.30pm and that it reopened from 5pm until 10pm on Tuesday through Saturday, and 5pm until 9pm on Mondays and Sundays. Photographs produced of the restaurant show it was particularly modest premises.

It is clear that the patrons attended for the quality of the Shanghai dumpling-style cooking rather than the ambience of the premises.

It also seems clear that the patrons would leave soon after finishing the meal, and therefore the kitchen would have been open most, if not all of the time that the restaurant was open.
When cross-examined, the applicant explained that his cousin, Mr Fang, who was working at Legal Aid in 2004, arranged for his employment with Mr Zheng. The applicant sent certificates and documents to Mr Fang, who appeared to handle all of the arrangements. The applicant pointed out that he had a very good job in China, and appeared to take considerable pride in his capacity as a chef. It was put to him that
Mr Fang had signed his name on the contract, however he was unaware of who had done that. This makes sense as the applicant was in China at the relevant time.
In response to the question of why he had not raised a complaint earlier, the applicant explained that it was only after an immigration complaint that he came to know of his employment rights. The applicant then proceeded to make his claims after he had obtained permanent residence; whilst on a work visa he had to be employed or he would have lost his visa. This placed him in a very vulnerable position, and more than adequately explains the delay. Similarly, the applicant was only aware of his rights under the WorkCover scheme much later and therefore made a WorkCover claim in 2008 after he had left the restaurant. When cross-examined about the WorkCover issue, he said that the kitchen manager, Mr Xu, knew of the injury and told him:
“The boss doesn’t care about this type of thing, and will never call to ask about this type of thing.
The applicant explained that he went to the doctor, who told him he could not work for a period. The applicant advised Mr Xu accordingly.
The applicant was asked why he did not complain to his cousin, to which he explained that he was an adult and felt he could not go to his cousin to complain. I note that in his evidence he had explained he was not aware of his employment rights and entitlements until some time later.
It is clear on the face of the photocopied extracts of the wages record book that the applicant never signed in the column provided for the employee’s signature. Similarly, the record book extract did not provide start and finish times, simply a total of number of hours worked per day. It was pointed out that whilst the hourly rate was said to be $19.85, the applicant’s first group certificate was for a sum that did not divide evenly by $19.85. Ms Cheng, who prepared the certificate (as the accountant for the respondents as well a migration agent), was able to explain that she was simply provided with pieces of papers with figures on them from which she prepared the returns.
The applicant was cross-examined at great length about his relationship with Ms Li and Mr Song. It is clear that they were friends from the restaurant and had continued to be in touch after their employment. Li and Song had allowed the applicant to use their home, and it seems that at one stage he stayed there for a brief period and certainly left some of his things there, as his residence was somewhat itinerant during the period.
When the applicant was cross-examined about why he needed to be at the restaurant early he explained that one has to arrive early to prepare the vegetables and meats and cook the noodles. It was put to the applicant that lower-grade cooks in the kitchen would do this, but he explained that one has to do everything if he is on a section 457 visa. The applicant stated that everyone said that if you are on a section 457 visa this is what you have to do.
It was put to the applicant that he was only left with the keys once and that this ceased when Mr Zheng found out that he went to the casino. It was difficult to understand why the applicant would have been left with the keys on any occasion if his working hours were those alleged by the respondent. The applicant denied the casino allegation and maintained that he had the keys for a significant period.
The applicant also explained that he was not paid during the period when the restaurant was closed by the city council under the health regulations until renovations were undertaken. It was put to him that he worked on the renovations, which he denied, explaining that he is a chef not a tradesman who can undertake tiling or the like.
In re-examination the applicant produced a series of photographs that he took in 2007 which show the inside of the restaurant, without anyone present, and a clock on the wall indicating that it was between 8 and 9 o’clock. This must have been in the morning, as the restaurant would have been full of patrons in the evening. The purpose of these photographs was to prove that he did have a key and was able to enter the restaurant at an early hour before others were present.

The applicant also tendered in re-examination a photograph of the cash register, proudly displaying the sign “cash only”, to explain that all transactions within the restaurant appeared to be by cash.

Ms Li’s evidence

Ms Li gave evidence that she had been a dumpling maker at the restaurant from 2003 to 2005, working from 9.30am to 9.30pm. She explained that the starting time was necessary as they had to be prepared for customers from 11am, and that the applicant was always there at 9.30am. Ms Li confirmed that the applicant had only five-minute breaks and explained that she only received a half-hour break at 4pm for a meal. She also said that she was present when the applicant was injured.
Ms Li denied that she and her husband had shared residence with the applicant, but agreed that he had used it as a mailing address. She also agreed that they had become workmates at the restaurant and maintained their associations thereafter. As with the applicant, Ms Li was asked whether she had discussed the case over court adjournments and, as with the applicant, stated that she had not: their discussions were confined to enquiring about the duration of the break. I note that as a result of the speed at which the trial unfolded, Ms Li and Mr Song were required to wait for very lengthy periods over two days before they were able to give their evidence.
It was put to Ms Li that the staff at Camy Shanghai Dumplings were rostered for the hours that are most needed. She explained that sometimes kitchen hands were allowed to go in the afternoons, and the cooks were required to do their work, such as the applicant. Ms Li stated that even when the restaurant was not particularly busy she had to continue to make dumplings so they were available to be sold later. Ms Li agreed that her husband had later worked in the restaurant for two days a week until he was fired, and that he was unhappy about it as at the time she had suffered an injury and they had a child at school. They had been to China to seek medical treatment for her injury.
Ms Li was also cross-examined in some detail as to the applicant’s workplace injury. She explained the injury occurred as a result of

Mr Zheng tipping a large number of dumplings into a pan of hot oil that applicant was working at, causing the oil to boil up and burn his hand. It was put to her that she had effectively conspired with the applicant to create the claim, which she denied.

Mr Song’s evidence

Ms Li’s husband, Mr Song, also gave evidence, setting out that he worked from 9.30am to 9.30pm Saturday and Sunday each week during his employment at the restaurant. Mr Song stated that he would get 10 to 15 minutes break at around 12 or 12.30pm for a meal as he was operating a dumpling making machine. He was not aware of the applicant’s finishing time as the applicant always continued to work when he left. He was aware that the applicant had a key. Counsel for the respondents attempted to cross-examine him about the restaurant’s closure, but he explained that he was not working there at the relevant time.
By the third day of the trial, the respondents’ lawyers had obtained a copy of the complete statement that the applicant provided to the investigator as part of his WorkCover claim. The applicant was further cross-examined on material contained in the statement, to establish that he had used Ms Li’s address as he did not have a stable address at that time. The statement is in English, but was read to him by an interpreter (who was not called). It is difficult to know what assumptions the WorkCover investigator made from the precise form of the interpretation of the nuances of the relevant passages.

Conclusions

On the whole I found the applicant and his witnesses impressive.

It was very difficult to assess their credibility as they gave evidence through a Mandarin interpreter, and they were clearly not accustomed to giving evidence in a courtroom. However, there appeared to be a ring of truth to their reactions and responses. To the extent that there were inconsistencies as to what they said about the extent of their relationships, it was relatively minor and does not significantly reduce the weight that I place upon their testimony. I generally accept the evidence of the applicant and his witnesses.

The Respondents’ case

The first respondent gave evidence and the respondents called the migration agent who is also the tax accountant from the business. Neither the second respondent nor the relevant kitchen manager were called to give evidence.

Mr Zheng’s evidence

The respondents called two witnesses, the first respondent, Mr Zheng, and the migration agent, Ms Cheng.
Mr Zheng gave evidence that he was the owner of the restaurant in partnership with his wife, who was presently in China. Neither

Mr Zheng nor his wife conducts any of the restaurant’s bookwork, stating, at first, “that a ‘special’ person does it”.
Mr Zheng explained that a signature on one of the contracts for the Department of Immigration and Citizenship may have belonged to his wife, as she signs documents in his absence. Mr Zheng recalled the injury of the applicant, but stated that it had only resulted in him being off work for two to three days.
Mr Zheng explained that there were dishwashers, dumpling makers, deep-fry cooks and stir-fry cooks in the restaurant and that the kitchen often had six to eight people working. He said all of them work the same number of hours but some started early while others started later. Mr Zheng stated that those who needed to conduct the preparation work had to arrive earlier, giving the example of those who needed to boil the water. The role of the cooks was to arrive at the kitchen, prepare and cook the food. Mr Zheng stated there are one to two, sometimes more, cooks and that he needed two cooks on weekends and at nights. He said that at 11am the cooks had to first eat breakfast and they would open at 11.30am, although sometimes people would arrive earlier. He said the chefs, such as the applicant, rest or eat at around 2.30pm when the lunch trade slackens, before commencing work again at around 5pm.

Mr Zheng agreed that the applicant was a high-skilled chef and stated that chefs normally finish around 9 to 9.30pm. Mr Zheng was not aware if the applicant took smoke breaks, but said he objected to anyone smoking inside the kitchen. He said everyone ate in the restaurant together when staff had meals.
Mr Zheng denied he was ever abusive to the applicant given that the applicant was a cousin of his friend. On his case, the applicant did not have to stay after the cooking finished in order to clean as this was the duty of the waiters. However, Mr Zheng then said the applicant did clear his bench and hose it down after he had finished cooking, but that this occurred around 9pm. This seems unusual given that the restaurant closed at 10, even on his case. Mr Zheng explained that there was no specific time for last orders and that the restaurant simply closed when there were no more customers.
Mr Zheng admitted that the applicant did have the keys, and at first said that this was “very seldom”. He stated the manager, Mr Xu, normally had the keys. Mr Zheng explained that he was not at ease providing the key to the applicant because he alleges the applicant went to Crown Casino at an early stage in his employment. No more details of this allegation were provided.
Mr Zheng was asked how the restaurant records the wages and working hours of its employees. He simply stated that “we have someone to do it”. When questioned about the person’s identity, he explained it was “someone whose English is better”. When pressed by his own counsel, he said that it was “Emily” who does it once per week in a book.
Mr Zheng failed to explain the absence of the original wages book other than to say that it had been given to the Equal Opportunity Commission (‘EOC’) two to three years ago. However, counsel for the respondents had stated early in the trial that the book was with the solicitor and it would be produced at lunchtime on the first day. No evidence was given of any request for the EOC to provide the book for the purposes of the trial. This is surprising given that the photocopy of an extract from the book turned out to be the only record that the respondents were able to produce with respect to the hours of work.
Mr Zheng explained that the reason the wages book entries ended on
30 September, even though the applicant completed his job in late January 2008, was because the wages records were compiled each quarter when the Business Activity Statements (‘BAS’) had to be produced. It is clear from his evidence that the book was not a contemporaneous record of the actual working hours. Counsel for the respondents tendered what was said to be a true copy of the book. However, there are two copies that have been put into evidence, exhibit 6 and exhibit 7. The exhibits appear to be from the same extract of the book, although one has a notation at the end “26 January 2008 left job”. If both exhibits are true copies they were certainly taken at different times.
Mr Zheng’s evidence as to the applicant’s departure was interesting. Mr Zheng became aware that the applicant had not attended work for a few days because people were looking for him and could not find him. It seems that he was unaware the applicant had stopped coming to the restaurant, at least for a couple of days.
Mr Zheng agreed that the photographs tendered by the applicant were those of the restaurant and that they were taken after the renovations occurred. He confirmed that the clocks on the wall work but could not explain how the applicant could have gained entry to take the photographs between 8 and 9 o’clock (this must have been in the morning as there were no people in the rest of the photographs).
Mr Zheng also failed to explain why in the hours of the wages record book the applicant’s description changed from “chef” to “cook” after the first page. In his evidence Mr Zheng did not seem to maintain that the applicant was required to work in the renovations as had been put to the applicant in cross-examination. When asked as to how the applicant would have received his wages if he was not attending during renovations, Mr Zheng did not provide a responsive answer.
In substance, Mr Zheng’s evidence was that the running of the kitchen was left to Mr Xu. It is apparent from his evidence that he was not present in the kitchen most of the time and that he relied upon Mr Xu to manage the kitchen. Mr Xu has been his manager for many years and continues to run the kitchen. Surprisingly, Mr Xu was not called to give evidence in this matter nor was his absence explained.
I find the first respondent, Mr Zheng, a less than impressive witness.
He was unable to provide explanations for significant matters such as the photographs of the restaurant, the staffing arrangements and the like.
At no stage were rosters, sign-on or sign-off sheets, appropriate pay slips, nor even contemporaneous records of work arrangements produced to the Court. Mr Xu is the relevant kitchen manager, a long-term employee of the respondents, and continues to work for the restaurant. However, he was not called as a witness despite the fact that he had the direct knowledge and in fact he did the direct management work that was relevant in this case. The wages amount on the tax form, did not match the hourly rate said to be paid to the applicant.
The wages book was clearly compiled only quarterly. No original of the book was ever produced and whilst an explanation of sorts was provided, it rings hollow without evidence that a request was made for the book to be returned by the EOC for the purposes of the trial, given that the trial was set down for many months. The wages book copies that were provided were missing the last quarter, were unsigned and were inconsistent as to the designation of the applicant’s position throughout his period of employment.
There is no dispute that there had been a failure to pay the applicant his appropriate wages and entitlements, even on the working hours alleged by the respondents. The respondents failed to pay proper holiday pay, superannuation entitlements, and Saturday overtime, which would be payable even on the wages records produced by the respondents.
Mr Zheng admitted that the applicant held a key to the restaurant at least on some occasions. The photographs produced by the applicant add weight to his evidence that he held a key for a significant period. Indeed, at one point Mr Zheng could not say whether or not Mr Xu may have given him the keys to open and close the restaurant. Mr Zheng was not even aware of the applicant leaving his job for a couple of days.

Ms Cheng’s evidence

The migration agent Ms Cheng gave evidence that she provided the pro forma contract and lists of the necessary documents so as to submit the most favourable visa application. Ms Cheng completed the task and the application was successful. She was also the accountant for the restaurant, completing the tax returns from pieces of paper with figures written on them that were given to her. The witness could not explain why the applicant’s 2006/2007 taxable income was a figure that did not neatly divide by his hourly rate, but clearly she was not privy to the detail of this part of the business.
I found Ms Cheng’s evidence to be genuine. It is clear that she acted as an adviser and had little knowledge of the day-to-day detail that was relevant in this case.

Conclusions

I found Mr Zheng’s evidence less than impressive. The absence of documents that would ordinarily be available did not aid his case. Whilst I accept Ms Cheng as an honest witness she had no direct knowledge of any of the central facts relevant to their case.

Findings

The evidence of the applicant and his two witnesses remained consistent with respect to the hours that he worked. The work hours that he alleges do not appear to be inconsistent with the needs of a restaurant of this type. The attack on their credibility on the basis that they were friends and may have shared a residence for a period does not lead me to reject their evidence.
In the circumstances, I accept the evidence of the applicant and his witnesses in preference to the evidence presented by the respondents as to his hours of work.
It was not in issue that if I accepted the applicant’s evidence on his hours of work, the underpayment would be $126,308.37 of net wages and superannuation on the gross wages of $201,377.37 at 9%.

The Court’s power

The Workplace Relations Act 1996 (‘WRA’) was repealed on 1 July 2009. However, the court’s power to make orders with respect to the applicant’s underpayment is found in cl.25, Part 5 of Schedule 17 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (‘Transitional Act’). An ‘award’ is a workplace relations (‘WR’) instrument: cl.2 of Part 2 of Schedule 3 of the Transitional Act. This WR instrument became a ‘transitional instrument’ on the day the WRA was repealed because it was still in operation immediately before that day: cl.2(3) Part 2 of Schedule 3 Transitional Act. Clause 3(2)(a) Part 2 Schedule 3 provides:
(2) A transitional instrument applies to the same employees, employers and any other persons the instrument covers as would, if the WR Act had continued in operation, have been:
(a) required by the WR Act to comply with terms of the instrument; or
(b) entitled under the WR Act to enforce terms of the instrument.
It is important to note that the WRA continues to apply to conduct that occurred before the WRA was repealed: cl.11(1) Part 3 of Schedule 2 of the Transitional Act. Jurisdiction is conferred on the this Court in relation to any matter arising under the WRA as that Act continues to apply because of the Transitional Act: cl.25 Part 5 of Schedule 17 of the Transitional Act.
I also note that the applicant can sue for the amount of payment, that is an amount the employer was required to pay to the employee by the applicable provision which includes a term of an award: s.720 of the Workplace Relations Act.
As a result I have power to give judgment for the applicant for the sum of his underpayment and superannuation.

Interest

Section 722 of the Workplace Relations Act1996 (‘the Act’) provides as follows:
722 [Interest up to judgment]
(1) In exercising its powers under subsection 719(5) or (6) or in a proceeding under section 720 or 721, the eligible court must, upon application, unless good cause is shown to the contrary, either:
(a) order that there be included in the sum for which an order is made or judgment given, interest at such rate as the eligible court thinks fit on the whole or any part of the money for the whole or any part of the period between the date when the cause of action arose and the date on which the order is made or judgment entered; or
(b) without proceeding to calculate interest in accordance with paragraph (a), order that there be included in the sum for which an order is made or judgment given, a lump sum instead of any such interest. (emphasis added)
In Australian Education Union v Council of the Western Melbourne Institute of TAFE [1998] FCA 816 the interest calculated on the applicant’s underpayment up to when judgment was at the rate prescribed by Order 35 Rule 8 of the Federal Court Rules.
In Textile, Clothing and Footwear Union of Australia v Givoni Pty Ltd [2002] FCA 1406 at paragraph [90] Goldberg J likened the power to charge interest in the Workplace Relations Act to section 51A(1) of the Federal Court of Australia Act 1976 (Cth). Section 51(A)(1) essentially provides the court or judge, with the same options as found in the Workplace Relations Act with respect to ordering interest up to judgment. Goldberg J pointed out that there have been a number of Federal Court authorities in which the relevant State penalty interest rate has been applied: Namol Pty Limited v AW Baulderstone Pty Limited (No 2) [1993] FCA 606; (1993) 47 FCR 388; Nagy v Masters Dairy Ltd (1997) 150 ALR 273; Alec Finlayson Pty Ltd v Armidale City Council (Burchett J, 6 March 1998, unreported); Kettle Chip Company Pty Ltd v Apand Pty Ltd (No 2) (1998) 83 FCR 466; EMCL Pty Ltd v Esanda Finance Corporation Ltd (No 2) (1998) 160 ALR 382; McCormick v Riverwood International (Australia) Pty Ltd [2000] FCA 32. Accordingly, I accept the agreement of the parties that the state penalty interest rate is appropriate. The interest rate prescribed under the Penalty Interest Rates Act 1983 (Vic) was submitted by counsel for the respondents as appropriate.
The respondents tendered a schedule of the Victorian penalty rates, which was not disputed by the applicant (‘Exhibit A’). The interest rates and methodology was agreed by the applicant. The table is identical to the archived rates from the Department of Justice’s website, however, it does not cover the whole of the period of the underpayment.
For an underpayment of $126,308, the interest calculation method submitted by the respondents results in the following:
Total = [($126,308.37 × Rate) ÷ 365 days] × Days

Start date	End date	Days	Rate	Amount per day	Total
30 September 2007	31 August 2008	337	12%	$41.5260	$13,994.27
1 September 2008	22 February 2009	175	11%	$38.0655	$6,661.47
23 February 2009	31 January 2010	343	10%	$34.6050	$11,869.53
1 February 2010	16 February 2011	381	10.5%	$36.3353	$13,843,74
Total	$46,369.01

It is important to keep in mind the objectives behind an award of interest. Gillard J of the Supreme Court of Victoria in Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (No 3) [2003] VSC stated at paragraphs [60] to [61]:
The interest rate fixed by the Attorney-General of Victoria pursuant to s.2(1) of the Penalty Interest Rates Act 1983 does have a penalty component over and above the compensatory function of the award of interest. As at 29 September 1998, the interest rate was 12.3% and as at today, the interest rate is 11.25% as from 21 June 2003. The rates include a penalty.
There are three main objectives of the award of interest. First, as compensation to the judgment creditor for being out of the funds from the date of commencement of the proceeding until judgment; secondly, to deter judgment debtors from delaying proceedings and thereby having the use of the money for a longer period; and finally, to encourage defendants to make realistic assessments of their liability in a case and to take bona fide steps to compromise the claim. (emphasis added)
In my view it is not appropriate for the respondents to pay interest on the total net income owing, being $126,308.37, during the period of employment as the debt accrued over time on a weekly basis and not all on the first day. However, the agreed interest rates and period adjusts for this by covering only part of the period of employment.

I therefore award interest at $46,369.01.

Superannuation

The figure of $18,123.96 is superannuation amount at nine per cent calculated as agreed by Counsel for the respondents in addresses.
The interest calculation method for superannuation was agreed as being the same as for the wages. This results in the following:

Total = [($18,123.96 × Rate) ÷ 365 days] × Days

Start date	End date	Days	Rate	Amount per day	Total
30 September 2007	31 August 2008	337	12%	$5.96	$2,008.04
1 September 2008	22 February 2009	175	11%	$5.4620	$955.85
23 February 2009	31 January 2010	343	10%	$4.9655	$1,703.16
1 February 2010	16 February 2011	381	11%	$5.2137	$1,986.44
Total	$6,653.48

I therefore award interest on the superannuation at $6,653.48.

Tax

It is the employer’s obligation to remit tax. The relevant amount is agreed at $75,069. This should be paid by the employer to the Australian Tax Office (‘ATO’) as PAYG tax taken from the applicant’s wages. It is a matter between the ATO and the respondents as to whether there should be late payment penalties. The late payment of PAYG tax by the respondents does not disadvantage the applicant and therefore no interest should be awarded in favour of the applicant on this sum. I therefore make no order for payment of this sum to the applicant.

Costs

The applicant has been entirely successful in this matter and would be ordinarily entitled to his costs. As he was unrepresented throughout the proceedings he has no costs that can be the subject of a costs order.

In the circumstances I make no order as to costs, but leave open to the respondents the opportunity to make an application should there be facts or circumstances of which I am not aware that would indicate that it was appropriate to make some different order as to costs.

I certify that the preceding seventy-two (72) paragraphs are a true copy of the reasons for judgment of Riethmuller FM

Date: 6 April 2011