Construction, Forestry, Maritime, Mining and Energy Union v Asbestos Removalist Pty Ltd & Anor
[2019] FCCA 529
•8 March 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CONSTRUCTION, FORESTRY, MARITIME, MINING AND ENERGY UNION v ASBESTOS REMOVALIST PTY LTD & ANOR | [2019] FCCA 529 |
| Catchwords: INDUSTRIAL LAW – Fair work – alleged breaches of enterprise agreements – contraventions of the Fair Work Act 2009 (Cth) – Second Respondent accessory liability in respect of First Respondent company’s contravention – where Second Respondent made no case submission – Second Respondent actual knowledge – liability findings – declarations – proceeding to penalty. |
| Legislation: Fair Work Act 2009 (Cth), ss.50, 550, 536, 545, 546, 547 |
| Cases cited: Australian Building and Construction Commissioner v Parker [2017] FCA 564 EZY Accounting 123 Pty Ltd v Fair Work Ombudsman (2018) 360 ALR 261 Fair Work Ombudsman v Blue Impression Pty Ltd [2017] FCCA 810 Fair Work Ombudsman v Devine Marine Group Pty Ltd [2014] FCA 1365 Fair Work Ombudsman v Grouped Property Services Pty Ltd [2016] FCA 1034 Fair Work Ombudsman v Hu (No. 2) [2018] FCA 1034 Fair Work Ombudsman v Offshore Marine Services (No 2) [2013] FCA 943 Veeraragoo v Goldbreak Holdings Pty Ltd (No 2) [2018] FCA 1148 |
| Applicant: | CONSTRUCTION, FORESTRY, MARITIME, MINING AND ENERGY UNION |
| First Respondent: | ASBESTOS REMOVALIST PTY LTD |
| Second Respondent: | TIZIANO BETTINSOLI |
| File Number: | MLG 1056 of 2017 |
| Judgment of: | Judge Hartnett |
| Hearing date: | 19, 20 November 2019 |
| Delivered at: | Melbourne |
| Delivered on: | 8 March 2019 |
REPRESENTATION
| Counsel for the Applicant: | Mr Campbell |
| Solicitors for the Applicant: | Construction, Forestry, Maritime, Mining And Energy Union |
| Counsel for the Respondents: | Mr Tracey |
| Solicitors for the Respondents: | Rothwell Lawyers Pty Ltd |
DECLARATIONS
The Second Respondent was involved in each of the following contraventions, in relation to Mr Cesar Torres, Mr James Jopling and Mr Jimmy Alexis Castillo Soto, pursuant to s.550 of the Fair Work Act 2009 (Cth):-
(a)breach of Clause 25.1.12 — Asbestos eradication of the National Building and Construction Industry Award 2000 (‘the Award’) which was incorporated into the Asbestos Removalist Pty Ltd and the CFMEU Building and Construction Industry Enterprise Agreement 2008 - 2011 (‘the 2008-2011 Agreement’);
(b)breach of Appendix B — Pay Rates of the 2008-2011 Agreement;
(c)breach of Clause 22 — Fares and Travelling Allowance of the 2008-2011 Agreement;
(d)breach of Clause 29 — Superannuation of the 2008-2011 Agreement;
(e)breach of Clause 2 of Appendix K — Wages and Conditions of Employment for Workers engaged in asbestos eradication of the Asbestos Removalist Pty Ltd and the CFMEU Asbestos Removal Enterprise Agreement 2011-2015 (‘the 2011-2015 Agreement’);
(f)breach of Appendix B — Pay Rates of the 2011-2015 Agreement;
(g)breach of Clause 24— Fares and Travelling Allowance of the 2011-2015 Agreement;
(h)breach of Clause 31 — Superannuation of the 2011-2015 Agreement
ORDERS
The proceedings be adjourned for a penalty hearing on a date to be fixed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 1056 of 2017
| CONSTRUCTION, FORESTRY, MARITIME, MINING AND ENERGY UNION |
Applicant
And
| ASBESTOS REMOVALIST PTY LTD |
First Respondent
| TIZIANO BETTINSOLI |
Second Respondent
REASONS FOR JUDGMENT
The Applicant is a registered industrial organisation whose members include the three employees named in the amended application filed by the Applicant on 7 September 2018, and in the statement of claim. The Applicant commenced the proceeding against the First Respondent, who was the employer of Mr Torres, Mr Jopling and Mr Castillo (‘the employees’) for alleged contraventions of two Enterprise Agreements and a number of provisions of the Fair Work Act 2009 (Cth) (‘the Fair Work Act’). The Second Respondent was included as a party to the proceeding as an alleged accessory to each of the alleged contraventions. The First Respondent admitted the alleged contraventions save, for the superannuation claims, which were later conceded in the running of the matter. The Second Respondent denied any liability.
On 31 May 2018, the First Respondent was placed into liquidation. The Applicant seeks no orders against the First Respondent at this time.
The relevant Enterprise Agreements, in evidence before the Court, are the Asbestos Removalist Pty Ltd and CFMEU Building and Construction Industry Enterprise Agreement 2008-2011 (‘the 2008-2011 Agreement’) and the Asbestos Removalist Pty Ltd and CFMEU Asbestos Removal Enterprise Agreement 2011-2015 (‘the 2011-2015 Agreement’) (‘the Enterprise Agreements’). It is noted that the operative date of the 2011-2015 Agreement was 1 May 2012 and it continued in operation after the nominal expiry date of 31 March 2012 until replaced or terminated. Also in evidence before the Court is the National Building and Construction Industry Award 2000.
The three employees each had different periods of employment with the First Respondent. Mr Castillo was employed in the period from June 2010 to November 2015. Mr Torres was employed in the period from July 2011 to November 2015, although I note his affidavit material to describe this period as being from 2010 to 2015. Mr Jopling was employed in the period from November 2014 to July 2015. All were employed in asbestos eradication work. Two of the employees, Mr Torres and Mr Castillo, were employed pursuant to the Enterprise Agreements. Mr Jopling was employed only under the 2011-2015 Agreement.
The Applicant claims, that in contravention of the 2008-2011 Agreement and/or the 2011-2015 Agreement, the employees were underpaid by the First Respondent:-
a)an asbestos eradication allowance pursuant to the 2008-2011 Agreement (cl.25 of the National Building and Construction Industry Award 2000 (‘the Award’) was incorporated into the 2008-2011 Agreement by the operation of cl.6 and Appendix G of the 2008-2011 Agreement);
b)an asbestos eradication allowance and a consolidated disability allowance in the 2011-2015 Agreement (cl.2 of Appendix K);
c)hourly rates under each of the Enterprise Agreements (Appendix B of the 2008-2011 Agreement and Appendix B of the 2011-2015 Agreement);
d)fares and travel allowances under each of the Enterprise Agreements (cl.22 of the 2008-2011 Agreement and cl.24 of the 2011-2015 Agreement); and
e)superannuation entitlements under each of the Enterprise Agreements (cl.29 of the 2008-2011 Agreement and cl.31 of the 2011-2015 Agreement).
The statement of claim contains detailed calculations of each of the underpayments for each of the employees arising from the alleged contraventions of the clauses of the Enterprise Agreements. The numerical calculations are contained in the schedules to the statement of claim. At the hearing some amendments were made, without objection, to the statement of claim and accompanying schedules. Of particular note was the amendment to the superannuation amount claimed to be owing to Mr Torres. It is in a sum of $9,446.81. An explanation of the numerical calculations in the schedules are contained in particulars to the material facts alleged in the statement of claim. At the hearing of the matter on 20 November 2018, it was noted by the Applicant that the amounts claimed as underpayments of the employees in respect of their superannuation claims, all derive from the 2011-2015 Agreement. In each calculation, the periods worked and the amounts actually paid to the employees for those hours are taken from the payslips exhibited to the employees’ affidavits, those affidavits being referred to in paragraph 10 hereafter. The claim does not include periods when the employees were unable to provide the Applicant with payslips.
A detailed description of each type of underpayment was provided as Attachment B to the Applicant’s closing submissions and that Attachment B is annexed to these reasons. The Court accepts those calculations as accurate. Any claim made by the Applicant in respect of payments made prior to 23 May 2011 is statute barred. The Applicant’s claims that fall into that category, total (it is submitted) the sum of approximately $101. The Court notes that all such calculations are not altered by any impermissible set-off payments as claimed. Indeed, Counsel for the Second Respondent conceded that the Second Respondent had not made out the case for any alleged set off.
The Applicant claims the First Respondent also breached various other clauses of the Enterprise Agreements and the payslip provisions of the Fair Work Regulations 2009 (Cth) (‘the Fair Work Regulations’). The Applicant is not seeking orders against the Second Respondent for breaches of s.536 (content of payslips) of the Fair Work Act.
The Applicant seeks orders against the Second Respondent. The Applicant seeks orders that:-
a)the Second Respondent compensate the employees for each breach of the 2008-2011 Agreement and/or the 2011-2015 Agreement pursuant to s.545 of the Fair Work Act;
b)pecuniary penalties be imposed on the Second Respondent for each contravention of the Enterprise Agreements, the Fair Work Regulations and the Fair Work Act pursuant to s.546 of the Act;
c)interest be paid pursuant to s.547 of the Fair Work Act; and
d)any penalties imposed on the Second Respondent be paid to the Applicant pursuant to s.546(3) of the Fair Work Act.
The Applicant relies upon the following:-
a)affidavit of Mr Jimmy Alexis Castillo Soto affirmed 15 November 2018;
b)affidavit of Mr James Jopling affirmed 6 August 2018;
c)affidavit of Mr Cesar Torres affirmed 13 August 2018;
d)affidavit of Mr Peter Clark affirmed 14 August 2018; and
e)affidavit of Ms Linda Elliot affirmed 21 September 2018;
f)outline of submissions filed 22 October 2018; and
g)outline of closing submissions in reply filed 20 November 2018.
The only evidence challenged by the Second Respondent was that of Mr Torres. He was cross-examined by the Second Respondent as to his evidence. His evidence was not disturbed by that cross-examination and the Court accepts Mr Torres’ evidence. Otherwise the Applicant’s affidavits of evidence were all tendered by agreement between the parties.
The Second Respondent has before the Court submissions of 5 November 2018 and 19 November 2018.
The Applicant alleges that the Second Respondent is an accessory to the contraventions of the First Respondent and therefore pursuant to s.550 of the Fair Work Act, the Second Respondent is taken to have himself contravened the relevant sections of the Fair Work Act.
Sections 50 and 550 of the Fair Work Act
These two provisions of the Fair Work Act are relevant to these proceedings.
Breaching the terms of an enterprise agreement is a contravention of s.50 of the Fair Work Act, a civil remedy provision. Section 50 of the Fair Work Act provides as follows (notes omitted):-
“Contravening an enterprise agreement
A person must not contravene a term of an enterprise agreement.”
Section 550 of the Fair Work Act provides as follows (note omitted):-
“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.
…
(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.”
The relevant principles as to the application of s.550 of the Fair Work Act are set out in EZY Accounting 123 Pty Ltd v Fair Work Ombudsman (2018) 360 ALR 261 (‘EZY Accounting 123’), Fair Work Ombudsman v Hu (No. 2) [2018] FCA 1034 at [156], [161]-[170], Australian Building and Construction Commissioner v Parker [2017] FCA 564 at [121]-[128], Fair Work Ombudsman v Grouped Property Services Pty Ltd [2016] FCA 1034 at [948]-[949], [959], [1018]-[1020] and Fair Work Ombudsman v Devine Marine Group Pty Ltd [2014] FCA 1365 at [174] – [194].
In EZY Accounting 123, at paragraph 11, the Full Court of the Federal Court (Flick, Bromberg and O’Callaghan JJ) stated, relevantly, as follows:-
“Sections 550(2)(a) and 550(2)(c), it has been said, have a “different emphasis”: Fair Work Ombudsman v Devine Marine Group Pty Ltd [2014] FCA 1365 (“Divine Marine”). White J there reviewed some of the authorities and summarised their effect as follows:
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. …
[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 …
[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.
His Honour then considered the decisions of Cowdroy J in Potter v Fair Work Ombudsman [2014] FCA 187 (“Potter”); Besanko J in Fair Work Ombudsman v Al Hilfi [2012] FCA 1166 and Greenwood J in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v John Holland Pty Ltd [2009] FCA 274, (2009) 180 IR 350 and concluded:
[187] In my opinion, Potter cannot be distinguished on this basis. The FWO submission does not give effect to the requirement that the accessory’s involvement be intentional. That is the real issue to which Cowdroy J’s reasoning was directed. Without knowledge that an Award is applicable, it is difficult to see how a finding could be made that the accessory had intentionally participated in the contravention: see Yorke v Lucas at 670.
[188] As the respondents were not represented, the Court did not have the benefit of full argument on these issues. Nevertheless, I consider that the claims of accessorial liability in this case should be determined in accordance with the principles stated in Potter and Al Hilfi. That is because knowledge that there is an award which is applicable which prescribes minimum rates or entitlements is a factual element necessary for the establishment of the accessory’s intention.”
Thereafter, in paragraph 14 of EZY Accounting 123 the Full Court said further:-
“In reliance upon Devine Marine, and with reference to the liability of an accessory for a contravention of s 50 of the Fair Work Act, in Australian Building and Construction Commissioner v Parker [2017] FCA 564, (2017) 266 IR 340 at 382 to 383 (“Parker”) a potential divergence in the authorities was noted as follows:
[126] For a person to be “knowingly concerned in or a party to the contravention” for the purposes of s 550(2)(c), the person must have been an intentional participant with knowledge at the time of the contravention of the essential elements constituting the contravention: cf. Yorke v Lucas at 670. Actual knowledge is required — mere constructive or imputed knowledge is not sufficient. But actual knowledge may be inferred from “exposure to the obvious”: [Giorgianni v The Queen (1985) 156 CLR 473 at 507 to 508].
[127] Where the contravention in question is a contravention of a term of an enterprise agreement, there is some divergence in the authorities as to those matters of which an accessory must have knowledge. One line of authority tends to suggest that an accessory must have knowledge that the enterprise agreement applies: cf. Potter v Fair Work Ombudsman [2014] FCA 187 at [80]-[81] per Cowdroy J. Perhaps with an insistence upon a greater degree of knowledge, in Fair Work Ombudsman v Al Hilfi [2012] FCA 1166 at [44] Besanko J observed on the facts of that case that there was a good deal of force in the argument that it was necessary to establish that the accessory had knowledge that an award applied to particular employees, that the work being performed gave rise to those entitlements and that the employees were not paid those entitlements. The other line of authority tends to suggest that the approach in Potter sets the bar too high: Fair Work Ombudsman v Grouped Property Services Pty Ltd (2016) 152 ALD 209 at [1019]. Katzmann J there expressed an obiter view that where “the contravention is a failure to pay award rates, an accessory must know what rates are being paid but need not know that the rates which were paid were below the rates prescribed by the applicable award”.
[128] Either approach, with respect, exposes a difficulty. Where the contravention in question is a contravention of s 50, that section does not require the person contravening a term of an enterprise agreement to have any knowledge of the existence of an enterprise agreement and does not require knowledge of the term being contravened or the fact that the act of contravention is in fact contravening conduct. If the “elements” of s 50 do not encompass those matters, it is — with respect — difficult to see why an accessory need have any greater knowledge. For a person to contravene s 50, it is sufficient to prove that conduct took place which was in fact a contravention of a term of an enterprise agreement. For the purposes of accessorial liability, all that need be proved is that the accessory had knowledge of the conduct.”
In summary, as was said by Judge O’Sullivan in Fair Work Ombudsman v Blue Impression Pty Ltd & Ors [2017] FCCA 810:-
“The authorities establish that, in order for a person to have accessorial liability, he or she must be a knowing participant or, in other words:
a) have knowledge of the essential facts constituting the contravention;
b) must be knowingly concerned in the contravention;
c) must be an intentional participant in the contravention based on actual not constructive knowledge of the essential facts constituting the contravention – although constructive knowledge may be sufficient under s.550(2)(c) of the FW Act in cases of wilful blindness; and
d) need not know that the matters in question constituted a contravention.”
It is noted these proceedings do not involve any allegation of wilful blindness.
I agreed with the Applicant’s submissions that although the authorities divert to an extent on the principles, the authorities do not support the level of detailed knowledge in the Second Respondent’s no case submissions.
No Case
Upon the closing of the Applicant’s case, the Second Respondent submitted that he had no case to answer and that, accordingly, the proceeding should be dismissed. The Second Respondent relied on an outline of no case submissions filed 20 November 2018. In the exercise of the Court’s discretion, the Second Respondent was put to his election and elected not to call any evidence as to liability in support of his case. Evidence can be lead as to penalty. The Second Respondent argued the Applicant had failed to establish that the Second Respondent was liable as an accessory to the contravening conduct of the First Respondent. Essentially, the Second Respondent argued the Court could not find that the Second Respondent was liable because the Applicant had neither pleaded, nor proven on the evidence, that the Second Respondent had knowledge of the essential facts of each of the contraventions of the First Respondent.
The principles which guide the Court in determining a no case submission have been summarised by Gilmour J in Fair Work Ombudsman v Offshore Marine Services (No 2) [2013] FCA 943 at [120], relevantly, as follows:-
“In Australian Securities and Investments Commission v Healey (2011) 196 FCR 291 at [535], Middleton J approved the principles concerning a no case submission identified by Kaye J in Oakley and Anor v Insurance Manufacturers of Australia Pty Ltd [2008] VSC 68 at [3] as follows:-
…
2. The test which is applicable, where a judge is sitting without a jury, is less stringent. In such a case the judge may uphold a no case submission, notwithstanding that the evidence, on the view most favourable to the respondent party, could support a judgment in favour of the respondent party.
3. In such a case the judge may perform an assessment of the quality of the evidence which has been called on behalf of the respondent party. In some cases, such an assessment may involve the judge evaluating the credit of witnesses from whom such evidence has been called.
4. In determining a no case submission, the judge is entitled to draw inferences from the evidence.
5. On a no case submission, the judge cannot draw an inference against the party making the submission (“the moving party”) based upon the absence of evidence from that party.
6. Although the judge, sitting alone, may assess the quality of the evidence in determining a no case submission, nonetheless the test which is to be applied by the judge, at that stage, is different to the test which the judge would apply in determining the ultimate outcome of the case, at the conclusion of a trial. Notwithstanding that the judge, in determining the no case submission, may assess the quality of the evidence, nonetheless the test remains whether, on the evidence so assessed, the judge “could” (not would) find for the respondent party on the evidence so far led. In such a case, the judge would only find against the respondent party if the evidence, so far adduced, is so unsatisfactory or inherently unreliable or equivocal that he were to conclude that he could not be reasonably satisfied of the case made by the respondent party on the evidence thus far adduced.”
The evidence and pleadings
A strict liability attached to the contraventions of s.50 of the Fair Work Act by the First Respondent. Counsel for the Second Respondent indicated to the Court that there was no objection to the Court making findings to that effect. Counsel for the Second Respondent submitted as to each of the five contraventions alleged – the asbestos eradication allowance; the consolidated disability allowance; the hourly rates; the fares and travelling allowance; and the superannuation contribution payments - that the Court could find, on the material before it, that the First Respondent has contravened those parts of the Enterprise Agreements. The Court concurs in that view. However, in the case of accessorial liability of the Second Respondent, the necessary mental element is required to be satisfied.
The evidence of the three employees provides proof of some part of that necessary mental element. The other parts are the pleading admissions made by the Second Respondent, the Enterprises Agreements tendered in evidence and the remaining unchallenged affidavit evidence.
The Second Respondent admits a number of matters which go to establishing the participation element of the accessory requirements. Those admissions include:-
a)the Second Respondent was a director, shareholder, secretary and manager of the First Respondent. The Second Respondent was responsible for managing the employment of employees on behalf of the First Respondent;
b)the Second Respondent was responsible for making payment of wages to the employees of the First Respondent;
c)the Second Respondent was responsible for approving and processing employees’ pays on behalf of the First Respondent; and
d)the Second Respondent was responsible for managing employment relations between the First Respondent and its employees on behalf of the First Respondent and ensuring that the Second Respondent and the First Respondent were aware of, and complied with, all relevant laws including the Fair Work Act.
The First and Second Respondent’s defence, filed 9 August 2017, was supplemented by ‘Further and Better Particulars to the Second Respondent’s Defence’ dated and filed 10 October 2018. Those pleadings admit that the First Respondent was a party to and bound by the 2008-2011 Agreement and the 2011-2015 Agreement. The defence admits that each of the employees was employed by the First Respondent for the periods alleged, and was employed in the trades classification “CW3” as described in each of the Enterprise Agreements. The defence admits that each of the employees undertook asbestos eradication work.
In relation to the claimed contraventions of the Enterprise Agreements clauses relating to asbestos eradication allowance, consolidated disability allowance, wage rates, fares and travelling allowances, the defence admits the terms of the clauses as alleged in the statement of claim, formally denies breaches of the clauses but admits underpayments to each of the employees in relation to each relevant clause of the Enterprise Agreement. The admitted amounts are less than the amounts alleged by the Applicant.
The admissions made by the First and Second Respondent in the defence are admissions to the elements required to prove that the First Respondent contravened the relevant clauses as pleaded and therefore s.50 of the Fair Work Act.[1]
[1] EZY Accounting 123 Pty Ltd v Fair Work Ombudsman (2018) 360 ALR 261, 30.
In relation to the superannuation contraventions, the defence admits the relevant clauses as alleged and that the employees were entitled to the payment of superannuation payments into their Construction and Building Unions’ Superannuation Scheme (‘Cbus’) superannuation accounts. The defence denies any breaches in relation to the employees and denies any amounts were underpaid for superannuation. On the hearing of the matter the superannuation contravention by the First Respondent was conceded.
The ‘Further and Better Particulars to the Second Respondent’s Defence’ set out in paragraph 3 the following:-
“a. The Second Respondent was not knowingly or deliberately concerned in any breaches of the Agreements and such underpayments that did occur were inadvertent;
b. There were occasions of overpayments as well as underpayments to the employees, which were also inadvertent;
c. The Second Respondent accepts that he struggled with administration, but asserts that he made best efforts to ensure that the First Respondent complied with the Agreements, the FW Act and The Regulations. Due to his advancing age, his lack of resources and administrative support within the Second Respondent's small business, and his lack of English as a first language, he accepts that inadvertent errors were made in the understanding and implementation of the employees' entitlements;
d. On being advised by Mr Castillo in 2016 of a shortfall in his Superannuation entitlements, the Second Respondent investigated on behalf of the First Respondent, and effected a remedial payment from the First Respondent to Mr Castillo;
e. The Second Respondent took action to remedy the defective payslip distribution procedure, upon being made aware by employees that some employees had not received pay slips.
f. The Respondents appointed a Payroll Officer in 2014, in the knowledge that the Respondents were struggling with payroll administration;
g. The Second Respondent ceased to manage the First Respondent business in June 2015, and retired from business at that time. The First Respondent had no significant work from 2015 onwards, and ceased to trade on 30 June 2017.”
The Court is satisfied that the Second Respondent had the necessary actual knowledge as to the First Respondent’s conduct both on the pleadings, the allegations being clearly made, and on the evidence before the Court.
As to the pleadings, the relationship between the First and Second Respondent is pleaded. Each of the elements of each breach are pleaded. At paragraphs 49 and 50 of the statement of claim the necessary knowledge of the Second Respondent is pleaded as to each breach as stated in the statement of claim. There is a logical setting out of the matter. In response, the Second Respondent pleaded a lack of knowledge. No objection was taken to the Applicant’s pleadings.
As to the evidence, firstly, it is clear that the Second Respondent had actual knowledge with respect to the 2011–2015 Agreement. He was signatory to such Agreement. He knew of its existence, application and terms. Likewise, he agreed to the terms of the 2008-2011 Agreement. He had knowledge of the minimum rates and entitlements due to the employees under the Enterprise Agreements. He knew that the rates paid by the First Respondent were often below the hourly rates of pay as provided for in the Enterprise Agreements. Mr Jopling was only employed under the 2011-2015 Enterprise Agreement. On the evidence of Mr Torres, and as conceded by the Second Respondent, the Second Respondent was on notice from 2014 onwards that the First Respondent was not paying the Applicant’s correct rate of payment in respect of the asbestos eradication allowance, at the least.
Secondly, as to the evidence, the Court agrees with the submissions of the Applicant that there is “a very large amount of evidence whereby the inference arises of a high level of knowledge of the Second Respondent”.
The evidence of the employees confirms the involvement of the Second Respondent, and the Second Respondent’s actual knowledge and active participation in failing to pay the employees pursuant to the Enterprise Agreements; breaches in relation to payslips; and other obligations in the Enterprise Agreements, which breaches were ongoing.
On the admissions made by the Second Respondent and the evidence before the Court it is clear that the Second Respondent acted, as submitted by the Applicant, as “the mind and the hands” of the First Respondent. He had the necessary “practical connection”.
The inference to be drawn from the evidence of the employees is that the Second Respondent knew the correct hourly rates and allowances under the relevant Enterprise Agreements, but was seeking to avoid payment in accordance with the Enterprise Agreements.
The evidence of Mr Torres, relevantly, was as follows:-
“3. In the period from 2010 to 2015, I was employed by the First Respondent as a labourer undertaking asbestos removalist work. I was engaged by the Second Respondent to work for the First Respondent. When the Second Respondent offered me the job, I said to him words to the effect of how much does he pay. The Second Respondent said to me words to the effect that he pays $28 per hour. I said to the Second Respondent words to the effect that he has to pay me at least $32 per hour because I have a union ticket. The Second Respondent said to me words to the effect of OK, but don't tell the other boys.
…
6. About a month after I first commenced work with the First Respondent, I had not received any payslips. I said to the Second Respondent words to the effect of am I going to receive my payslips. Within a few days, the Second Respondent handed me four payslips. I said to the Second Respondent words to the effect of what's going on with my superannuation, Incolink and CoINVEST, why have you not paid any. I said this to the Second Respondent as my payslips did not list these items.
7. In response, the Second Respondent said to me words to the effect that I would have to work for six months to start getting paid superannuation, CoINVEST and Incolink.
8. In approximately 2014, I was doing a job for the First Respondent at a site in Swanston Street. There was a meeting with the union shop steward on site. The shop steward said to me and the other workers employed by the First Respondent, words to the effect that we were not being paid the correct asbestos allowance.
9. Shortly afterwards, I spoke to the Second Respondent. I said to the Second Respondent words to the effect that he was not paying us correctly, as he was not paying us the right rate of asbestos allowance and still no money had been paid into my superannuation, CoINVEST or Incolink.
10. The Second Respondent said to me words to the effect that he would fix it up, he would fix it up.
11. Many times after that I spoke to the Second Respondent about this matter. I would say to the Second Respondent words to the effect of when is he going to fix up my pay. The Second Respondent would reply with words to the effect that his son was calculating everything and the Second Respondent would pay me everything at the end of the year. I never received the promised payments.
12. I would see the Second Respondent on just about every job I undertook for the First Respondent. The Second Respondent would be on the job directing the supervisors and would also do hands-on work himself.
13. The Second Respondent would hand out payslips usually in a bundle at one time. I would often receive a month or more of payslips at one time. It was difficult for me to keep track of what I was being paid, as I was not receiving payslips at about the time the pay was put into my bank account.”
The Court notes that the assertion of the Second Respondent in paragraph 7 above was not supported by the evidence.
Likewise Mr Jopling’s unchallenged evidence was, relevantly, as follows:-
“5. When I first received a payslip from the First Respondent, the payslip did not look correct. It did not include details of superannuation payments and other payments I knew had to be paid, such as Incolink. I also noticed that the allowances appeared to be paid at random and did not relate to the work that required allowances to be paid.
6. I said to other workers and supervisors words to the effect of what is going on with the payslips. Generally, they would say to me words to the effect that they did not know why the payslips did not show the correct information.
7. Early in my employment I said to the boss, Tiziano Bettini, words to the effect of what is going on with the payslips, why is there no Incolink or super shown. Tiziano Bettini said to me words to the effect that a computer program needed to do the pays properly costs $10,000 and he was not going to pay $10,000 for a computer program.”
Mr Castillo’s unchallenged evidence, commencing at paragraph 6 provides, relevantly, as follows:-
“6. A few months after I first commenced work with First Respondent, I had seen a copy of a wage rate sheet from the union which had the allowances and pay rates on it. I said to the Second Respondent words to the effect why was I not being paid the same rate of pay as other employees and why was I not receiving extra for being a casual. I also asked the Second Respondent words to effect what is going on with my superannuation and Incolink. I said this to the Second Respondent because my payslips did not have the correct allowances and rate of pay on them compared with the wage rate sheet from the union.
7. The Second Respondent said to me words to the effect that there is not enough jobs for everyone and that he could not contract everyone full time. The Second Respondent did not respond to my questions about being paid correctly, superannuation and Incolink.
8. The Second Respondent went to most jobs I did for the First Respondent. The Second Respondent would supervise and would do some asbestos removal work on site. The Second Respondent was the main person running the business and dealing with workers.
9. I received payslips irregularly from the First Respondent. The Second Respondent would hand me a bundle of payslips. It was difficult for me to work out if I was being paid correctly as I was not receiving payslips at the time my pay went into my bank account.
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13. I now live in Canada. Before leaving Australia I said to the Second Respondent words to the effect I have been working here for about 6 years and there is a low amount of money in my superannuation, where is the rest of my money?
14. In response, the Second Respondent said words to the effect that he would pay me an amount of $3,400 in lieu of the remaining superannuation owed to me. I received $3,400 in my bank account shortly after I left Australia.”
The evidence does not support any “genuine mistake” claim pleaded to by the Second Respondent. Rather the evidence suggests a deliberate strategy, of which the Second Respondent had actual knowledge, to underpay or not pay employees their rates and entitlements as provided for in the Enterprise Agreements. Payment of superannuation contributions were either non-existent or sporadic and an underpayment. Payment of rates and allowances were sometimes correctly paid by reference to the Enterprise Agreements and invariably underpaid. The clear inference is that the Second Respondent knew of the terms of the Enterprise Agreements and the employees’ entitlements under them. This is highlighted in the evidence of Mr Torres when his demand for a pay rate of $32 an hour was met by the Second Respondent. Both parties knew, it can be inferred, that the amount represented something approximating Mr Torres’ entitlement under the Enterprise Agreements.
The employees’ complaints about the inadequacy of their payslips in the failure to include entitlements put the Second Respondent on notice as to the non-payment of those entitlements. The requirement for the First Respondent to include payments for CoINVEST, Incolink and superannuation payable into the Cbus Superannuation fund is contained in the evidence before the Court as set out in the Agreements.
The unchallenged evidence of Mr Clarke is that the Second Respondent was notified of the underpayments by letters from the Union. Thereafter, the continuing nature of the breaches related to the payment of wages and allowances, and the failure of the Second Respondent to take action to correct these breaches, provided the requisite knowledge elements for the accessorial finding from the time the Second Respondent was notified by letter of the underpayments (see for example Fair Work Ombudsman v Grouped Property Services Pty Ltd [2016] FCA 1034 at [959]).
The Court has power to make orders for compensation against an accessory.[2] This is a discretionary exercise of power. The Court determines that the Second Respondent should pay compensation to the Applicant.
[2] Fair Work Act 2009 (Cth) s 545.
In Veeraragoo v Goldbreak Holdings Pty Ltd (No 2) [2018] FCA 1148, Colvin J said, as to an order going to compensation, relevantly, as follows:-
“44. …Whereas penalty orders are to be imposed upon contraveners, s 545 requires the court to have formed the view that the particular order (relevantly a compensation order) is appropriate before it may be made. In any particular case, a view as to the appropriateness of ordering that a person involved in a contravention should pay compensation is to be formed having regard to the purposes of the Fair Work Act.
…
47. …In my view, having regard to the purposes of the Fair Work Act, the meaning of s 545 is that where the court has determined that there has been a contravention then before any person (including a person involved in the contravention) may be ordered to pay compensation, the court must have formed the view that such an order is appropriate in the particular circumstances.”
The Second Respondent was the manager of the business of the First Respondent and personally involved in the contravening conduct. He had actual knowledge of the conduct. He was a director of the First Respondent, and the decision-maker of the business. There is a causative nexus between the Second Respondent’s involvement in the contraventions and the loss suffered by the employees. There is little prospect of the employees receiving any compensation from the First Respondent.
For the reasons given, the Court is satisfied on the evidence and material before it that there should be declarations that the Second Respondent was accessorily liable for the contraventions of the First Respondent. The parties shall have an opportunity to quantify by agreement the amount of compensation payable by the Second Respondent to the Applicant as suggested by Counsel on the liability hearing, together with any interest component. That aspect of the matter can be brought back before the Court on application of the parties’ within the next fourteen days.
I certify that the preceding forty-seven (47) paragraphs are a true copy of the reasons for judgment of Judge Hartnett
Date: 8 March 2019
SCHEDULE - ASJBESTOS ERADICATION ALLOWANCE FOR MR CASTILLO
Period One
From 18 June 2010 to 21 December 2011, the First Respondent paid no asbestos allowance to Castillo. The required rate during this period was $1.81 per hour.
Period Two
In the period from 28 March 2012 to 26 April 2012, the applicable rate of asbestos eradication allowance was $1.81. The First Respondent paid Mr Castillo at the rate of $1.80 per hour and thereby unpaid him by one cent per hour. The First Respondent did not pay Mr Castillo any asbestos eradication allowance on his overtime hours worked.
Period Three
In the period 26 July 2012 to 27 February 2013, the rate of asbestos eradication allowance payable was $2.30 per hour.. The First Respondent paid Mr Castillo at the rate of $1.80 per hour. This was underpayment of 50 cents per hour worked in ordinary time. The First Respondent did not pay any asbestos eradication allowance for overtime hours and did not pay the allowance on some of the ordinary hours worked.
Period Four
From 6 March 2013 to 24 December 2013, the rate of asbestos eradication allowance payable was $2.45 per hour. The First Respondent did not pay any asbestos eradication allowance on overtime hours worked. Within this period from 6 March 2013 to 18 April 2013, the First Respondent paid asbestos eradication allowance at the rate of $1.80 per hour, being an under payment of 65 cents per hour. In the period from 25 April 2013 to 24 December 2013, the First Respondent paid the asbestos eradication allowance at the rate of $2.00 per hour being an underpayment of 45 cents per hour when the allowance was paid.
Period Five
In the period 7 April 2014 to 22 February 2015, the required rate of asbestos eradication allowance was $2.55 per hour. From 7 April 2014 to 7 December 2014, the First Respondent was paying Mr Castillo $2.00 per hour in asbestos eradication allowance, being a 55 cent underpayment per hour. Further, the First Respondent was not paying the asbestos eradication allowance on any overtime hours worked and on some of the ordinary hours worked. The asbestos eradication allowance was also not paid on RDOs as required by the agreement.
In the period 15 December 2014 to 22 February 2015, the correct hourly rate of asbestos eradication allowance was $2.55 per hour. The First Respondent paid the asbestos eradication allowance at the correct rate during this period, but did not pay the allowance on overtime hours or RDOs and failed to pay it on some of the ordinary hours worked.
Period Six
In the period 2 March 2015 to 1 November 2015, the required rate of asbestos eradication allowance was $2.70 per hour. The First Respondent was paying the asbestos eradication allowance at $2.55 per hour. This was an underpayment of 15 cents per hour. Further, the First Respondent was not paying any asbestos eradication allowance on overtime or RDOs and was not paying the allowance on some of the ordinary hours.
SCHEDULE B - CONSOLIDATED DISABILITY ALLOWANCE FOR MR CASTILLO
The consolidated disability allowance only arises under the 2011-2015 agreement.
Period One
In the period from 26 July 2012 to 27 February 2013, the required rate of consolidated disability allowance was $5.70 per hour. The First Respondent paid the consolidated disability allowance at the rate of $5.00 per hour then reducing to $4.00 per hour. This being an underpayment of 70 cents per hour, which increased to an underpayment of $1.70 per hour. The allowance was not paid on any overtime worked and was not paid on some of the ordinary hours worked.
Period Three
In the period from 6 March 2013 to 24 December 2013, the required rate of consolidated disability allowance was $5.95 per hour. The First Respondent paid the allowance at S5.00 and $4.00 per hour. This was an underpayment of 95 cents per hour and $1.95 per hour. The consolidated disability allowance was not paid on any overtime hours worked and some weeks of ordinary time it was not paid at all.
Period Three
In the period 7 April 2014 to 22 February 2015, the required rate of consolidated disability allowance was $6.25 per hour. In the period from 7 April 2014 to 7 December 2014, the First Respondent was paying the consolidated disability allowance at $5.00 per hour, being an underpayment of $1.25 per hour, save for the period 17 November 2014 to 23 November 2014, when it was paid at $6.25 per hour. During this period, the consolidated disability allowance was not paid on overtime, RDOs and on some ordinary hours.
In the period 15 December 2014 to 22 February 2015, the First Respondent paid the correct hourly rate of consolidated disability allowance but did not pay the allowance on overtime or RDOs and some ordinary hours of work.
Period Four
In the period 2 March 2015 to 1 November 2015, the required minimum rate of consolidated disability allowance was $6.55. The First Respondent paid at the rate of $6.80 per hour. The First Respondent did not pay the consolidated disability allowance on overtime or RDOs and for some ordinary hours of work.
The calculation included in the statement of claim has mistakenly allowed for the 25 cents per hour paid as an overall payment on ordinary hours in this period to be set off against the underpayment for unpaid amounts for overtime hours and rostered days off.
SCHEDULE M - WAGES FOR MR TORRES
Mr Torres' wages schedule has been chosen as it is a better example because it covers a longer period.
Period One
In the period 23 July 2011 to 8 March 2012, the required minimum hourly rate was $32.34. The First Respondent paid Mr Torres at the hourly rates of $32 and $30.39. He was therefore underpaid for his ordinary hours of work. The First Respondent also paid a flat hourly rate for overtime hours during this period failing to pay the overtime rates of pay as required by the agreement.
Period Two
In the period from 6 February 2013 to 27 February 2013, the required minimum hourly rate was $33.96 per hour. The First Respondent paid Mr Torres at the rates of $33.50 and $33.80 per hour during this period. The First Respondent also failed to pay overtime rates of pay during this period. It should be noted that the 2011-2015 agreement, which commenced operation on 1 May 2012, provided for all overtime to be worked at double time rates.
Period Three
In the period from 6 March 2013 to 2 March 2014; the required minimum hourly rate was $35.66. The First Respondent underpaid the ordinary hourly rate by paying Mr Torres $33.50 and $34.60 per hour. The First Respondent also underpaid the overtime hours during this period but commenced to apply an overtime penalty rate.
Period Four
In the period from 3 March 2014 to 24 August 2014, the required minimum hourly rate was $37.44. The First Respondent paid Mr Torres at the rate of $34.60 until 28 April 2014 when the First Respondent paid Mr Torres at the rate of $35.89 until 24 August 2014. Mr Torres was also underpaid for his overtime hours during this period.
No underpayment has been identified for underpayment of wages after 24 August 2014 from Mr Torres.
FARES AND TRAVELLING ALLOWANCE - SCHEDULE N FOR MR TORRES
Period One
In the period from 23 July 2011 to 30 November 2011, the required daily rate of fares and travelling allowance was $32.35 per day. During this period, the First Respondent paid Mr Torres no fares and travelling allowances whatsoever.
Period Two
In the period 2 February 2012 to 8 March 2012, the required daily rate of fares and travelling allowance was $32.35 per day. No underpayment has been identified during this period.
In the period 6 February 2013 to 22 February 2013, the required daily rate of fares and travelling allowance was $33.95 per day. No underpayment of this entitlement has been identified for this period.
Period Three
In the week of 27 February 2013, the required daily rate of fares and travelling allowance was $33.95 per day. For that week, the First Respondent only paid Mr Torres $28.29 per day and therefore underpaid him this allowance.
Period Five
In the period 3 March 2013 to 2 March 2014, the required daily rate of fares and travelling allowance was $35.65 per day. The First Respondent paid the fares and travelling allowance at the rate of $33.95 per day and $35.30 per day. Mr Torres was therefore underpaid. Further, the First Respondent did not pay Mr Torres for all days he was entitled to the fares and travelling allowance.
Period Six
For the period 3 March 2014 to 22 February 2015, the required daily rate of fares and travelling allowance was $37.45 per day. The First Respondent paid Mr Torres the fares and travelling allowance at the rate of $35.30 per day in this period until 24 August 2014. Mr Torres was therefore underpaid the fares and travelling allowance in this period.
Period Seven
In the period 23 March 2015 to 8 November 2015, the minimum required daily fares and travelling allowance was $39.30 per day. The First Respondent paid the correct daily rate. The First Respondent failed to pay Mr Torres the fares and travelling allowances for each day that he was entitled to receive it, including rostered days off.
SCHEDULE O - SUPERANNUATION FOR MR TORRES
Period One
In the period 1 July 2013 to 30 June 2014, the 2011-2015 agreement required that Mr Torres be paid $165 per week as a minimum in superannuation. 52 weeks multiplied by $165 equals $8,580.
At Court Book 411, the First Respondent's contribution for this financial year is stated to be $2,518.19. The First Respondent therefore underpaid Mr Torres an amount of $6,061.81 for superannuation under clause 13 of the 2011-2015 agreement for the 2013/2014 financial year.
Period Two
In the period 1 July 2014 to 30 June 2015, clause 31 of the 2011-2015 agreement required that the First Respondent pay Mr Torres a contribution of $175 a week for superannuation. 52 weeks multiplied by $175 equals $9,100.
At Court Book 409, it’s noted that the First Respondent’s contribution for this financial year was $6,075. At Court Book 644, it’s noted that the First Respondent made a further contribution for that financial year of $525. The First Respondent therefore made a superannuation contribution for Mr Torres in the 2014/2015 financial year of $6,600. The First Respondent therefore underpaid Mr Torres his superannuation entitlement for the 2014/2015 financial year of $2,500.
Period Three
In the period 1 July 2015 to 30 November 2015, clause 31 of the 2011-2015 agreement required that the First Respondent make contributions for the benefit of Mr Torres to his superannuation fund of$185 per week. There are 19.8 weeks in this period, multiplied by $185 equals a contribution amount of $3,663.
At Court Book 644, it is stated that the First Respondent made a contribution to Mr Torres' superannuation for the 2015/2016 financial year of $2,775. The First Respondent therefore underpaid Mr Torres’s superannuation for the period 1 July 2015 to 30 November 2015 of $888.
In total, Mr Torres has been underpaid $9,446.81 for the period 1 July 2013 to 30 November 2015 in superannuation.
SCHEDULE J - SUPERANNUATION FOR MR JOPLING
In the period 3 November 2014 to 1 July 2015, the First Respondent was required to contribute $175 per week to Mr Jopling’s superannuation fund pursuant to clause 31 of the 2011-2015 agreement. 35 weeks multiplied by $175 equals an amount to be paid of $6,125. At Court Book 666, an amount of $3,500 is noted as contributed by the First Respondent. At Court Book 670, a further amount of $1,050 is noted as a contribution for the 2014/2015 financial year from the First Respondent.
For one week in early July 2015, the Respondent was obliged to contribute $185 to Mr Jopling’s superannuation fund. No amount was paid to Mr Jopling’s superannuation fund from the First Respondent for that financial year.
SCHEDULE E -- SUPERANNUATION FOR MR CASTILLO
In the period 1 July 2014 to 1 July 2015, clause 31 of the 2011-2015 agreement obliged the First Respondent to pay $175 a week into Mr Castillo's superannuation fund for his benefit. 52 weeks multiplied by $175 per week equals $9,100 contribution for the year. At Court Book 551-552, a total contribution of $5,740 is noted from the First Respondent paid in this financial year. The amount of $3,300 is noted as being a contribution for a period of the previous financial year. Therefore $5,740 less $330 equals an amount paid for the financial year of $5,409.93. The First Respondent therefore underpaid Mr Castillo $3,690.07 for superannuation for the 2014/2015 financial year.
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