Darafsheh v Candoo Australia Pty Ltd
[2020] FCCA 2686
•25 September 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| DARAFSHEH v CANDOO AUSTRALIA PTY LTD & ANOR | [2020] FCCA 2686 |
| Catchwords: PRACTICE AND PROCEDURE – Stay of proceedings – application of section 15(a) of the Federal Circuit Court of Australia Act 1999 (Cth) – whether civil proceeding should be stayed pending determination of criminal proceedings relating to the same subject matter – whether the interests of justice require the civil proceedings to be stayed – stay granted. INDUSTRIAL LAW – Stay of proceedings – application of section 553 of the Fair Work Act 2009 (Cth) – where proceedings for a pecuniary penalty order relate to conduct that is substantially the same as conduct which is the subject of criminal proceedings – stay granted. |
| Legislation: Fair Work Act 2009 (Cth), s.553 Federal Circuit Court of Australia Act 1999 (Cth), s.15(a) Criminal Code Act 1995 (Cth), ss.270.6; 270.6A Federal Circuit Court Rules 2001 (Cth), r.13.10 |
| Cases cited: Australian Securities and Investments Commission v Australia and New Zealand Banking Group Ltd [2019] FCA 964 Sea Culture International Pty Ltd v Scoles and Ors [1991] FCA 677 Websyte Corporation Pty Ltd v Alexander (No 2) [2012] FCA 562 |
| Applicant: | HOSSEIN DARAFSHEH |
| First Respondent: | CANDOO AUSTRALIA PTY LTD |
| Second Respondent: | SEYYED ALI ABDOLZADEH FARSHCHI |
| File Number: | MLG 3536 of 2019 |
| Judgment of: | Judge Mercuri |
| Hearing date: | 7 February 2020 |
| Date of Last Submission: | 7 February 2020 |
| Delivered at: | Melbourne |
| Delivered on: | 25 September 2020 |
REPRESENTATION
| Counsel for the applicant: | Mr Minucci |
| Solicitors for the applicant: | Clayton Utz |
| Counsel for the respondents: | Ms Walsh |
| Solicitors for the respondents: | Kingston Reid |
ORDERS
Pursuant to section 15(a) of the Federal Circuit Court of Australia Act 1999 (Cth), this proceeding be stayed until the final hearing and determination of the criminal proceeding currently pending against the second respondent under sections 270.6A(1) and (2) of the Criminal Code Act 1995 (Cth) (“the Criminal Proceedings”), or further order.
The court notes that the proceeding as against the second respondent is stayed by operation of section 553 of the Fair Work Act 2009 (Cth) until the final hearing and determination of the Criminal Proceedings, or further order.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 3536 of 2019
| HOSSEIN DARAFSHEH |
Applicant
and
| CANDOO AUSTRALIA PTY LTD |
First Respondent
| SEYYED ALI ABDOLZADEH FARSHCHI |
Second Respondent
REASONS FOR JUDGMENT
Introduction and background
Before the court is an application in a case for a stay of the substantive proceedings in this matter, pending the determination of criminal proceedings issued against the second respondent.
For ease of reference in these reasons, I will simply refer to the parties by their names.
By originating application[1] and statement of claim[2] filed in the Federal Court, Mr Darafsheh seeks:
a)a declaration that Candoo Australia Pty Ltd (“Candoo”) has contravened various provisions in the Fair Work Act 2009 (Cth) (“FW Act”);
b)a declaration that Mr Farshchi has been involved in those contraventions; and
c)compensation, interest and the imposition of penalties on Candoo and Mr Farshchi in respect of those contraventions;
(collectively, “the Fair Work Proceedings”).
[1] Applicant’s originating application filed 3 October 2019.
[2] Applicant’s statement of claim filed 3 October 2019.
By order of Anderson J made on 11 October 2019, the Fair Work Proceedings were transferred to the Federal Circuit Court.
In the Fair Work Proceedings, Mr Darafsheh alleges that he was an employee of Candoo and that the alleged contraventions arose in the context of that employment.
In 2018, Mr Farshchi was charged with offences under the Criminal Code Act 1995 (Cth) (“the Criminal Code”). The charge sheet contains the following charges:
Between July 2015 and March 2017 at Melbourne in the State of Victoria, Seyyed A Abdolzadeh FARSHCHI born 25 March 1973 did engage in conduct that caused Reza ABBASY, born 31 December 1974, to enter into/remain in forced labour contrary to subsection 270.6A(1) of the Criminal Code (Cth).[3] (“charge 1”)
Between July 2015 and March 2017 at Melbourne in the State of Victoria, Seyyed Ali ABDOLZADEH FARSHCHI conducted a business involving forced labour, contrary to subsection 207.6A(2) of the Criminal Code (Cth).[4] (“charge 2”)
(collectively, “the Criminal Proceedings”).
[3] Affidavit of Steven Amendola sworn 4 December 2019 and filed 5 December 2019 at annexure SA-1.
[4] Affidavit of Steven Amendola sworn 4 December 2019 and filed 5 December 2019 at annexure SA-1.
It is submitted for Candoo and Mr Farshchi that there is a substantial overlap between the Fair Work Proceedings and the Criminal Proceedings.[5]
[5] Respondents’ outline of submissions filed 14 January 2020 at paragraph 4.
In particular, it is submitted that the charge laid against Mr Farshchi under section 270.6A(2) of the Criminal Code relates to his conduct in conducting a business, and that such matters including:
a)taking part in the management of the business;
b)exercising control or direction over the business; and
c)providing finance for the business;
are all matters which have been pleaded by Mr Darafsheh in the Fair Work Proceedings.[6] Moreover, it is submitted that Mr Darafsheh’s claim turns on him proving these matters.[7]
[6] Respondents’ outline of submissions filed 14 January 2020 at paragraph 5.
[7] Respondents’ outline of submissions filed 14 January 2020 at paragraph 6.
It is further submitted that the Criminal Proceedings and the Fair Work Proceedings overlap in a more general sense, having regard to the way in which Candoo’s business was conducted and the relationships between various parties connected with Candoo’s business.[8]
[8] Respondents’ outline of submissions filed 14 January 2020 at paragraph 7.
A committal hearing in relation to the criminal charges was held in September 2019. Mr Farshchi entered a ‘not guilty’ plea and did not otherwise give evidence. He has been committed to stand trial. At the time of the hearing before me the parties indicated that a trial date had not yet been set but the expectation was that it was to occur in 2020.
It is against this background that Candoo and Mr Farshchi seek:[9]
a)the dismissal of the applicant’s application pursuant to rule 13.10 of the Federal Circuit Court Rules 2001 (Cth), on the basis that the application is an abuse of process and because the applicant has no reasonable prospects of success; or
b)in the alternative, a stay pursuant to section 15(a) of the Federal Circuit Court of Australia Act 1999 (Cth), until the final hearing and determination of the Criminal Proceedings.
[9] Respondents’ amended application in a case filed 4 January 2020 page 3.
Candoo and Mr Farshchi also seek an order that the proceedings as against Mr Farshchi be stayed by operation of section 553 of the FW Act until the final hearing and determination of the Criminal Proceedings or further order.[10]
[10] Respondents’ amended application in a case filed 4 January 2020 page 3.
In support of their amended application in a case, Candoo and Mr Farshchi rely upon the following affidavits filed in these proceedings:
a)the affidavit of Steven Amendola sworn 4 December 2019 and filed on 5 December 2019;
b)the affidavit of Steven Amendola sworn and filed on 24 December 2019; and
c)the affidavit of Steven Amendola sworn and filed on 5 February 2020.
Mr Darafsheh opposes any stay or dismissal and seeks an order that the application in a case be dismissed with costs.[11] He relies upon the affidavit of James Daff affirmed and filed on 28 January 2020.
[11] Applicant’s outline of submissions filed 28 January 2020 at paragraph 3.
Abuse of process
In essence, the abuse of process argument rests on evidence given by Mr Darafsheh and other members of his family about his relationship with Candoo and Mr Farshchi in the Criminal Proceedings. It is submitted by Candoo and Mr Farshchi that the evidence given by Mr Darafsheh in the Criminal Proceedings in this regard is fundamentally inconsistent with his claim in the Fair Work Proceedings that he is an employee.[12]
[12] Respondents’ outline of submissions filed 14 January 2020 at paragraphs 13 and 14.
It is submitted for Candoo and Mr Farshchi that in two statements made to the Australian Federal Police (“AFP”) and in evidence at the committal hearing, Mr Darafsheh, his wife and son all gave evidence that:
a)Mr Darafsheh considered himself to be in partnership with Mr Farshchi;
b)they had behaved as partners; and
c)they had a falling out over the partnership.
It is submitted that at no point in giving those statements or that evidence did Mr Darafsheh, or his son or wife refer to him being an employee of either Candoo or Mr Farshchi. In those circumstances, it is submitted that there is a fundamental inconsistency in the allegations made by Mr Darafsheh in both sets of proceedings.
It is further submitted that the inconsistency here is between evidence already given on oath on more than one occasion by Mr Darafsheh in the Criminal Proceedings and the claims made in the Fair Work Proceedings, and that inconsistency cannot be remedied by any further evidence given in the Fair Work Proceedings.[13]
[13] Respondents’ outline of submissions filed 14 January 2020 at paragraph 17.
The statement that Mr Darafsheh made to the AFP on 3 April 2018 appears at annexure SA-2 to the affidavit of Steven Amendola sworn 4 December 2019 and filed 5 December 2019.
In his statement to the AFP on 3 April 2018, Mr Darafsheh gives evidence:
a)regarding his discussions about entering into a business agreement with Mr Farshchi for the Candoo business in which he believed they were to ‘split the business shares, ownership and profits 50/50’;[14]
b)about the opening of the shop at Box Hill;[15]
c)regarding the work he performed and the money he received for that work;[16]
d)that his wife and son also worked in the business, but that they were not paid specifically for the hours worked;[17]
e)about the opening of another shop in Lalor and the work he performed there;[18]
f)regarding the increasing tension between himself and Mr Farshchi and that notwithstanding this dispute, he continued working at the Box Hill shop;[19]
g)about the dispute which led to his relationship with Mr Farshchi coming to an end;[20]
h)that he sought assistance within the Iranian community to retrieve his equipment and to get his ‘share of the business’;[21] and
i)that Mr Farshchi did not return his equipment or pay him any money for it.[22]
[14] Affidavit of Steven Amendola sworn 4 December 2019 and filed 5 December 2019 annexure SA-2 at paragraph 5.
[15] Affidavit of Steven Amendola sworn 4 December 2019 and filed 5 December 2019 annexure SA-2 at paragraphs 6 and 7.
[16] Affidavit of Steven Amendola sworn 4 December 2019 and filed 5 December 2019 annexure SA-2 at paragraphs 8 to 11.
[17] Affidavit of Steven Amendola sworn 4 December 2019 and filed 5 December 2019 annexure SA-2 at paragraphs 8 and 10.
[18] Affidavit of Steven Amendola sworn 4 December 2019 and filed 5 December 2019 annexure SA-2 at paragraph 13.
[19] Affidavit of Steven Amendola sworn 4 December 2019 and filed 5 December 2019 annexure SA-2 at paragraph 32.
[20] Affidavit of Steven Amendola sworn 4 December 2019 and filed 5 December 2019 annexure SA-2.
[21] Affidavit of Steven Amendola sworn 4 December 2019 and filed 5 December 2019 annexure SA-2 at paragraph 51.
[22] Affidavit of Steven Amendola sworn 4 December 2019 and filed 5 December 2019 annexure SA-2 at paragraph 54.
It appears when one reads Mr Darafsheh’s statement that he believed that he had entered into an agreement pursuant to which he owned half the Candoo business in which he worked. It also appears from his statement that on his account, Mr Farshchi disputed that they were in partnership.
The evidence given by Mr Darafsheh at the committal hearing was consistent with his statements outlined above. Relevantly in relation to his work at Candoo, he gave evidence about the work he did and the payments he received.[23] He also gave evidence about the dispute he had with Mr Farshchi and in particular the fact that there was a dispute about whether he owned a share in the Candoo business.[24]
[23] Affidavit of Steven Amendola sworn and filed on 24 December 2019 annexure SA-2.
[24] Affidavit of Steven Amendola sworn and filed on 24 December 2019 annexure SA-2.
It is submitted that this evidence is fundamentally inconsistent with the claim now made by Mr Darafsheh in the Fair Work Proceedings that he was an employee of Candoo and that he has been underpaid for work performed in that capacity.
In response, it is submitted for Mr Darafsheh that this submission cannot be sustained when one considers the evidence given by Mr Darafsheh in the Criminal Proceedings.[25] For the reasons which follow I agree.
[25] Applicant’s outline of submissions filed on 28 January 2020 at paragraph 16.
In his statement to the AFP, Mr Darafsheh gave evidence that he signed two documents which evidenced his relationship with Mr Farschi, an informal one in Farsi and a legal document in English. However, neither document has been produced by Candoo or Mr Farshchi.
Whilst the evidence of Mr Darafsheh is that it was his intention and understanding that he was entering into a partnership with Mr Farshchi, that is not determinative of the question as to whether he is in fact an employee of Candoo. Whether the applicant is an employee, or whether the work he performed was performed under a different contractual arrangement is not determined by reference only to the terms of any agreement entered into by the parties.
The issue of whether work performed is performed under an employment contract is determined by the court after considering a range of factors, the parties’ intentions being but one of them. For example, it is not uncommon for a person to sign an independent contractor agreement and then later be found to be an employee.
I am not satisfied that the nature of the evidence given by Mr Darafsheh in the Criminal Proceedings is such that it would be an abuse of process for:
a)his claim in the Fair Work Proceedings to proceed; and
b)the question of the nature of his employment to be determined after all the evidence is led and tested in this jurisdiction.
Candoo and Mr Farshchi assert that to allow Mr Darafsheh to press a claim in the Fair Work Proceedings which is inconsistent with the claims made in the Criminal Proceedings would be an abuse of process in that it will ‘undermine the confidence and respect for authority of both this Court and the Magistrates’ Court of Victoria.’[26] In support of this submission, reliance is placed on the decision in Sea Culture International Pty Ltd v Scoles and Ors [1991] FCA 677 (“Sea Culture”).
[26] Respondents’ outline of submissions filed 14 January 2020 at paragraph 16.
In Sea Culture, French J noted that the Federal Court has the power to dismiss a proceeding where it appears to be an abuse of its process. Relevantly, French J went on to say that ‘it is a power which ought be exercised very sparingly and only in exceptional cases’.[27]
[27] Sea Culture International Pty Ltd v Scoles and Ors [1991] FCA 677 at [13].
French J went on to explain the basis of the court’s power in this way:
Underlying the power that courts have assumed to stay or dismiss proceedings for abuse of process, is a policy of preventing waste of judicial resources and their use for purposes unrelated to the determination of genuine disputes. There is, in my opinion, another element to be considered and that is the necessity to maintain confidence in and respect for the authority of the courts. If a party in litigation in this Court makes a formal and public allegation by way of its pleading which is inconsistent with a formal and public allegation in another forum, then such an issue may arise. No doubt most questions of statements made by a party out of court inconsistent with its plea in court are to be resolved as matters of evidence going to credit and not upon an application for summary disposition. In such cases there will, in any event, be room for debate about the precise extent and significance of the alleged inconsistency which can only be resolved by a consideration of all the evidence and the circumstances surrounding the alleged inconsistent statement.[28]
[28] Sea Culture International Pty Ltd v Scoles and Ors [1991] FCA 677 at [14].
Relevantly, in Sea Culture, notwithstanding the inconsistencies in the claims made in the two different jurisdictions, French J ultimately concluded that was not a case which warranted taking the extraordinary step of dismissing the claim as an abuse of process.[29]
[29] Sea Culture International Pty Ltd v Scoles and Ors [1991] FCA 677 at [15].
As noted by French J, the dismissal of a claim at a preliminary stage is a significant step as it would deny an applicant the ability to pursue a claim at a preliminary stage and prior to the evidence being fully led and tested. It ought only be exercised in exceptional cases.
For the following reasons, this is not such a case.
a)in this case, Mr Darafsheh is a witness in the Criminal Proceedings; he has not initiated proceedings himself in another jurisdiction in which he has made claims inconsistent with those in this court;
b)in his evidence in the Criminal Proceedings, Mr Darafsheh has given an account of his relationship with Mr Farshchi, the nature of the work he performed, the manner of payment and his understanding of the legal basis of their relationship;
c)it appears from his evidence that he did not obtain legal advice prior to entering into his working relationship with Mr Farshchi; the only reference to a lawyer was his assertion that Mr Farshchi had organised a lawyer to draw up a partnership agreement between them;
d)no such partnership agreement has been produced;
e)in any event, even if there was a partnership agreement entered into, that would not be determinative of the nature of the relationship between Mr Darafsheh and Mr Farshchi for the reasons set out above; and
f)to the extent that there is an inconsistency between the evidence given by Mr Darafsheh in the Criminal Proceedings and in these proceedings, that is a matter which can be the subject of cross examination and submissions at the appropriate time.
On balance therefore, having regard to all of these issues, I am not satisfied that the court ought to exercise its discretion to dismiss the proceedings as an abuse of process at this early stage.
The application by Candoo and Mr Farshchi to dismiss Mr Darafsheh’s application as an abuse of process is therefore dismissed.
Stay of proceedings pursuant to section 15(a) of the Federal Circuit Court of Australia Act 1999 (Cth)
In the alternative, Candoo and Mr Farshchi seek a stay under section 15(a) of the FCCA Act.
Section 15(a) of the FCCA Act relevantly provides:
The Federal Circuit Court of Australia has power, in relation to matters in which it has jurisdiction to:
(a)make orders of such kinds, including interlocutory orders, as the Federal Circuit Court of Australia thinks appropriate; and
(b)…
In support of this submission, Candoo and Mr Farshchi rely upon the principles enunciated by Moshinsky J in Australian Securities and Investments Commission v Australia and New Zealand Banking Group Ltd [2019] FCA 964 (“ASIC v ANZ”) which outlined the principles which apply to the consideration of whether a stay of civil proceedings ought to be granted pending the determination of criminal proceedings.
After reviewing the relevant authorities, Moshinsky J set out the following principles:
a)courts have the power to control their proceedings and to order a stay where it is in the interests of justice to do so;[30]
b)a plaintiff is entitled to have his or her civil action tried ‘in the ordinary course’ and therefore, there needs to be proper grounds to justify a stay;[31]
c)the party seeking the stay has the burden of establishing those grounds;[32]
d)a court ought not grant a stay merely because related charges have been brought against an accused and criminal proceedings are pending; there must be a real risk of prejudice to the accused, including for example, prejudice to the accused’s right to silence or privilege against self-incrimination, or a possibility of publicity reaching and influencing jurors;[33]
e)protective orders may not be ‘an adequate protection against the risk of prejudice to the accused’;[34]
f)prejudice to an accused who is not involved in the civil proceedings may also be a relevant consideration;[35]
g)the risk of prejudice to the accused in the criminal proceedings must be weighed against the prejudice to the applicant in the civil proceedings resulting from a stay;[36]
h)the relevant principles that apply in considering a stay of proceedings are the same in proceedings brought by a regulator and proceedings brought by a private plaintiff;[37] and
i)each case must be determined ‘on its own merits’: the authorities do not prescribe a rigid or exhaustive list of considerations or the weight to be attached to them.[38]
[30] Australian Securities and Investments Commission v Australia and New Zealand Banking Group Ltd [2019] FCA 964 at [53].
[31] Australian Securities and Investments Commission v Australia and New Zealand Banking Group Ltd [2019] FCA 964 at [54].
[32] Australian Securities and Investments Commission v Australia and New Zealand Banking Group Ltd [2019] FCA 964 at [54].
[33] Australian Securities and Investments Commission v Australia and New Zealand Banking Group Ltd [2019] FCA 964 at [55].
[34] Australian Securities and Investments Commission v Australia and New Zealand Banking Group Ltd [2019] FCA 964 at [57].
[35] Australian Securities and Investments Commission v Australia and New Zealand Banking Group Ltd [2019] FCA 964 at [58] and [59].
[36] Australian Securities and Investments Commission v Australia and New Zealand Banking Group Ltd [2019] FCA 964 at [61].
[37] Australian Securities and Investments Commission v Australia and New Zealand Banking Group Ltd [2019] FCA 964 at [62].
[38] Australian Securities and Investments Commission v Australia and New Zealand Banking Group Ltd [2019] FCA 964 at [63].
In this case, it is argued for Candoo and Mr Farshchi that one of the elements relevant to the charge laid against Mr Farshchi under section 270.6A(2) is that he conducted a business. The court was referred to where these matters are pleaded at paragraphs [2], [3] and [65] to [68] of the applicant’s statement of claim filed on 3 October 2019.[39]
[39] Respondents’ outline of submissions filed 14 January 2020 at paragraphs 5 and 6.
It is further argued that there is a more general overlap between the Criminal Proceedings and the Fair Work Proceedings in so far as they both require an investigation of the nature of the relationships between persons associated with Candoo.[40]
[40] Respondents’ outline of submissions filed 14 January 2020 at paragraph 7.
It is submitted for Candoo and Mr Farshchi that if Mr Farshchi defended or or gave evidence in the Fair Work Proceedings, he would be required to address questions pleaded against him and also give evidence about the broader context in which Mr Farshchi and Candoo operated, matters which relate to and overlap with the Criminal Proceedings.
I agree with this submission.
As noted above, there are two charges laid against Mr Farschi. Whilst it is the case that charge 1 relates to Mr Farschi’s alleged conduct with regard to Mr Abbasy, (who is not a plaintiff in these proceedings), charge 2 relates more broadly to Mr Farshchi conducting a business which involved forced labour contrary to the Criminal Code.
Mr Darafsheh has given a statement to the AFP and gave evidence against Mr Farshchi at the committal hearing. Mr Amendola has given evidence (which I accept) that he has been informed and believes that Mr Darafsheh will also be called as a witness for the prosecution in the criminal trial.[41]
[41] Affidavit of Steven Amendola sworn 4 December 2019 and filed 5 December 2019 at paragraph 8.
It is further submitted that the proceedings against Mr Farshchi should be stayed as he has pleaded not guilty to the charges, is awaiting trial and has a right to silence and privilege against self-incrimination.[42]
[42] Respondents’ outline of submissions filed 14 January 2020 at paragraph 24.
Moreover, Mr Amendola has given evidence (which I accept) that if the Fair Work Proceeding is not stayed, Candoo and Mr Farshchi will be required to file a defence, and that the likely progress of that proceeding would see the parties exchanging witness statements and submissions and possibly exchange relevant documents.[43]
[43] Affidavit of Steven Amendola sworn 4 December 2019 and filed 5 December 2019 at paragraph 13.
It is submitted that this would prejudice Mr Farshchi’s right to silence and his ability to rely on the privilege against self-incrimination in the Criminal proceedings.[44] Moreover, this process in the Fair Work Proceedings is likely to disclose evidence that Mr Farshchi might seek to rely upon in the Criminal Proceedings and the nature of his defence in those proceedings.[45]
[44] Respondents’ outline of submissions filed 14 January 2020 at paragraph 27.
[45] Affidavit of Steven Amendola sworn and filed 24 December 2019 at paragraphs 7 and 8.
It is in that context that it is submitted that Mr Farshchi faces the choice of either defending the Fair Work Proceedings without proper evidence, or prejudicing himself in the Criminal Proceedings in a substantial way.[46]
[46] Respondents’ outline of submissions filed 14 January 2020 at paragraph 26; Affidavit of Steven Amendola sworn and filed 24 December 2019 at paragraphs 7 and 8.
With regard to Candoo, it is submitted that it can only properly defend the Fair Work Proceedings with Mr Farshchi’s assistance, both with respect to the specific allegations regarding Mr Darafseh and more generally to provide context for the facts in issue.[47] Mr Amendola has given evidence (which I accept) that Mr Farshchi:
a)is the sole director and shareholder of the Candoo;
b)is not currently willing to give instructions and evidence to assist Candoo in its defence in the Fair Work Proceedings; and
c)will be willing to assist Candoo in the Fair Work Proceedings once the Criminal Proceedings are determined.[48]
[47] Respondents’ outline of submissions filed 14 January 2020 at paragraph 25.
[48] Affidavit of Steven Amendola sworn 4 December 2019 and filed 5 December 2019 at paragraph 20.
Consequently, it is submitted for Candoo that it will suffer prejudice in that it must either seek to defend the Fair Work Proceedings without the assistance of Mr Farshchi or seek to compel Mr Farshchi to give evidence and thereby prejudice his rights in a substantial manner in the Criminal Proceedings.[49]
[49] Affidavit of Steven Amendola sworn and filed 24 December 2019 at paragraph 21.
Candoo and Mr Farshchi also rely upon the decision of the Full Court of the Supreme Court of Queensland in R v Pulini [2019] QCA 258 for guidance on the elements of the crime of causing a person to enter into or remain in forced labour. This case is relied upon as a case at appellate level which has considered this relatively new offence and the types of matters to which a court would have regard in establishing whether the offence has been made out.[50]
[50] Transcript page 8 at lines 34 to 42.
In particular, it is submitted that in considering whether the charge was made out the court had regard to ‘behaviour that occurs outside the jurisdiction and outside of the period charged and concerning matters that are not charged.’[51] It is submitted that by analogy, when one considers the applicant’s statement of claim filed in the Fair Work Proceedings, it asserts that Mr Farshchi was involved in behaviour which will be used in to prove the criminal case against him.
[51] Transcript page 9 at lines 9 to 11.
In response it is submitted for Mr Darafsheh that:[52]
a)firstly, there is no sufficient overlap in the two proceedings;
b)secondly, even if there was a sufficient overlap, neither Candoo nor Mr Farshchi have established sufficient prejudice to warrant a stay in the interests of justice.
[52] Applicant’s outline of submissions filed 28 January 2020 at paragraphs 25 and 26.
It is further submitted that:[53]
a)at this point, all that Candoo and Mr Farshchi are required to do is to file a defence;
b)there is no evidence as to what that defence might include; and
c)the court is therefore being invited to speculate at this stage in concluding that there would be prejudice suffered.
[53] Applicant’s outline of submissions filed 28 January 2020 at paragraph 27.
I do not agree with this submission. The proceedings in this court raise questions about the nature of the relationship between Mr Darafsheh and Candoo. The applicant’s statement of claim asserts that Mr Farshchi was involved in the day-to-day operations of the business carried out by Candoo and was responsible for recruiting employees, paying them and managing Candoo’s records and finances.[54]
[54] Applicant’s statement of claim filed 3 October 2019 at paragraph 3.
Moreover, Mr Darafsheh pleads that Mr Farshchi:[55]
a)was a person responsible for the management of Candoo;
b)had knowledge of Mr Darafsheh’s working hours and that he was not being paid for work performed;
c)was responsible for ensuring that Candoo complied with its legal obligations; and
d)therefore, aided, abetted, counselled or procured and was directly or indirectly, knowingly concerned in, or party to the alleged contraventions.
[55] Applicant’s statement of claim filed 3 October 2019 at paragraphs 65 to 69.
There is a real risk that in responding to these allegations, Mr Farschi would be required to give information which could well prejudice his defence to the charges in the Criminal Proceedings, particularly in relation to charge 2.
Moreover, there are real questions about how Candoo could properly defend the Fair Work Proceedings without Mr Farshchi’s co-operation. Given the nature of the allegations in the Fair Work Proceedings, Mr Farshchi’s evidence is likely to be very important, if not critical to Candoo’s defence. If Mr Farshchi is not prepared to give evidence or assist with Candoo’s defence that will significantly prejudice Candoo’s ability to defend these proceedings.
To compel Candoo to defend the Fair Work Proceedings before the Criminal Proceedings are determined would leave it exposed to having to do so without the assistance and evidence of a critical witness.
In response to the submission for Mr Darafsheh, that Candoo is a separate legal entity to Mr Farshchi and that as a corporation, it is not entitled to claim a privilege against self-incrimination, I accept that this submission is correct in so far as it goes. However, as noted in ASIC v ANZ,[56] whilst a corporation ‘cannot claim the privilege against self-incrimination, it nevertheless has rights arising from the accusatorial process’.[57]
[56] Australian Securities and Investments Commission v Australia and New Zealand Banking Group Ltd [2019] FCA 964.
[57] Australian Securities and Investments Commission v Australia and New Zealand Banking Group Ltd [2019] FCA 964 at [76].
Although it is not determinative, I also note that in circumstances where Mr Farshchi is the sole director and secretary of Candoo, if he chooses not to provide instructions in the Fair Work Proceedings because of concerns that it may prejudice the Criminal Proceedings he faces, it is difficult to see how Candoo could provide any instructions itself in order to defend the Fair Work Proceedings. There is no evidence before the court that there is another person authorised to provide instructions to Candoo’s legal representatives on behalf of Candoo.
In oral submissions, it was put by counsel for Mr Darafsheh that charge 1 is the primary charge and charge 2 is simply a secondary charge, in the event that the prosecution fails to make out charge 1. It was submitted that this is how the Crown case is likely to be put, and is consistent with the summary attached to Mr Amendola’s affidavit and with the manner in which the Crown conducted the committal.[58] Counsel for Mr Darafsheh said:
The distinction, however, I say in terms of the specific versus the generalised aspect of the charges going from one to two in important because in the first charge … the Crown, identify a victim. They identify an individual who has been subjected to, … forced labour…[59]
The then laying of the second charge talks about conducting a business. So it requires less in terms of the prosecution actually satisfying a jury as to what is required to convict on that count, because it’s at the broad level.[60]
[58] Transcript page 17 at lines 34 to 47 and page 18 at lines 1 to 3.
[59] Transcript page 23 at lines 7 to 10.
[60] Transcript page 23 at lines 18 to 21.
Counsel for Mr Darafsheh however, did concede that, Mr Farshchi does face charge 2 as well as charge 1. He also conceded that charge 2 carries the same penalty as charge 1 and that as things stand, Mr Farshchi is required to defend both charges.
Whilst there may be a strategic reason for the charges having been laid in the manner in which they have, the fact is that Mr Farshchi faces two charges. Both charges carry the same penalty. Charge 2 relates to the carrying on of a business involving forced labour.
As such, I am satisfied that any defence to the Fair Work Proceedings, as well as any evidence he may lead in those proceedings are likely to address matters relevant to the defence of charge 2, and possibly even in a broad sense to charge 1.
For these reasons, I am satisfied that requiring the Fair Work Proceedings to go ahead before the Criminal Proceedings are concluded will result in prejudice to Mr Farshchi’s capacity to defend himself in the criminal proceedings.
I am also satisfied on the evidence before me that Mr Farshchi is not prepared to provide instructions for Candoo or give evidence for Candoo in the Fair Work Proceedings until the Criminal Proceedings are completed, and consequently, Candoo is limited in its capacity to properly defend the Fair Work Proceedings.
Candoo and Mr Farshchi also point to the added prejudice to them in ways not addressed in ASIC v ANZ.[61] First it is submitted that there is prejudice arising from having to defend two sets of proceedings at the same time.[62]
[61] Australian Securities and Investments Commission v Australia and New Zealand Banking Group Ltd [2019] FCA 964.
[62] Transcript page 13 at lines 28 to 47.
In response to this submission, evidence has been led by Mr Darafsheh about assets which both Candoo and Mr Farschi has at their disposal to meet the costs of the legal proceedings.[63]
[63] Affidavit of James Daff affirmed and filed 28 January 2020.
In response to that evidence, Mr Amendola filed a further affidavit on 5 February 2020, in which he sets out his instructions from Mr Farshchi about the loans owed by him, his wife and Candoo, some of which are secured against the specified real assets. This information discloses liabilities of just under $5,000,000.[64]
[64] Affidavit of Steven Amendola sworn and filed 5 February 2020 at paragraph 7.
What Mr Amendola’s affidavit does not disclose however, is the value of each of the real assets and the equity available to Mr Farshchi to meet his legal expenses. I also note that Mr Amendola describes Mr Farshchi’s income as ‘modest’.[65] The amount of his income is not disclosed, nor has he annexed any tax returns or other independent documents which might have provided some clarity about this issue.
[65] Affidavit of Steven Amendola sworn and filed 5 February 2020 at paragraph 6(n).
Mr Farshchi also refers to disciplinary proceedings against him that are before the Medical Board which have placed limitations on his ability to practice. This, it is said, has had a direct impact on his earning capacity.
Neither Candoo nor Mr Farshchi have established that the costs of defending two sets of proceedings (or three, in the case of the disciplinary proceedings Mr Farshchi faces before the Medical Board) is a factor relevant to my determination of whether or not to grant a stay.
Secondly, it is submitted that there is an added prejudice in having to focus on defending two sets of proceedings at the same time.[66] I give some, albeit limited weight to this factor. The evidence before the court is that Mr Farshchi and Candoo have competent representation in both the civil and criminal proceedings, who would be able to provide appropriate representation.
[66] Websyte Corporation Pty Ltd v Alexander (No 2) [2012] FCA 562 at paragraphs [122] to [125].
Finally, it is submitted that as a result of the bail conditions imposed on Mr Farshchi, he is precluded from contacting any prosecution witness.[67] As Mr Darafsheh is a prosecution witness, it is submitted that this would inhibit his capacity to participate in any mediation which might be ordered or other discussions in the context of the Fair Work Proceedings where Mr Darafsheh is present. Again, I give some, albeit limited weight to this factor.
[67] Transcript page 14 at lines 31 to 33.
As stated, in determining whether to grant a stay of proceedings, the court must not only identify prejudice to the respondent but must weigh that prejudice that Mr Darafsheh will face in not being able to pursue his claim in the ordinary course. His claim is for a substantial sum of $627,925 in unpaid wages over a three and a half year period.[68]
[68] Applicant’s statement of claim filed 3 October 2019 at paragraph C.
I accept that a further delay to the determination of the Fair Work Proceeding will cause him added financial and emotional stress.
For completeness, it was submitted that the publicity which the Fair Work Proceedings would attract would undermine Mr Farschi’s capacity to have a fair trial in the Criminal Proceedings, and that this prejudice ought to be taken into account in determining this application.[69] I have given this some, albeit limited weight in determining this matter. It would be possible for protective orders to be made limiting the identification of Mr Farschi and Candoo in the Fair Work Proceedings to mitigate against this risk.
[69] Transcript page 11 at lines 38 to 40.
On balance, for the reasons set out above, I consider that the prejudice to Candoo and to Mr Farshchi in allowing the Fair Work Proceedings to continue before the Criminal Proceedings outweighs the prejudice to Mr Darafsheh.
Stay of proceedings pursuant to section 553 of the Fair Work Act
Having come to the conclusions I have in relation to section 15(a) of the FCCA Act, it is not necessary for me to consider the alternative argument pressed in relation to section 553 of the FW Act. However, given that the parties made detailed submissions in relation to this aspect of the proceeding, I will set out my reasons.
Section 553 of the FW Act relevantly provides:
(1)Proceedings for a pecuniary penalty order against a person for a contravention of a civil remedy provision are stayed if:
(a)criminal proceedings are commenced or have already commenced against the person for an offence; and
(b)the offence is constituted by conduct that is substantially the same as the conduct in relation to which the order would be made.
(2)The proceedings for the order may be resumed if the person is not convicted of the offence. Otherwise, the proceedings for the order are dismissed.
In support of this aspect of the respondents’ application in a case, it is submitted that the offence with which Mr Farshchi is charged under section 270.6A(2) of the Criminal Code is that he conducted a business which involved forced labour. Moreover, it is submitted that the essence of the Fair Work Proceedings is that Mr Farshchi was knowingly involved in the contraventions alleged against Candoo. It is submitted that the facts underpinning both the charges and the alleged breaches of the FW Act overlap, namely Mr Farshchi’s involvement in the management and control of Candoo.[70]
[70] Respondents’ outline of submissions filed 14 January 2020 at paragraphs 35 and 36.
Mr Farshchi’s counsel relied upon the decision of Mortimer J in Director of Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (2015) 323 ALR 294 as summarising the approach to be taken in applying section 553 of the FW Act. At paragraph [31] of her decision, Mortimer J relevantly said:
The terms of s 553(1)(b) require an offence to be identified. Then, as Jessup J observed in General Manager of the Fair work Commission v Thomson [2013] FCA 380, the conduct constituting that offence must be compared with the conduct in respect of which a civil penalty order would be made.[71]
[71] Director of Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (2015) 323 ALR 294 at [31].
Mortimer J also noted that ‘the purpose of s 553 is to avoid double jeopardy.[72]Her Honour then went on to say:
The focus on double jeopardy … is… present in the text of s 553 through the operation of s 553(2). If a person is convicted of an “offence” in a criminal proceeding, then the allegations of contravention are dismissed against that person by operation of s 553(2). The dismissal (as opposed to the stay) by operation of law finally precludes the possibility of any double jeopardy arising. Conversely, the provision’s intention is that a civil penalty proceeding stayed under s 553(1) can be revived if a person is not convicted of an “offence” – the possibility of double jeopardy having thus been removed.[73]
[72] Director of Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (2015) 323 ALR 294 at [45].
[73] Director of Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (2015) 323 ALR 294 at [46].
After considering the concept of double jeopardy and the High Court’s decision in Pearce v The Queen (1988) 194 CLR 610, Mortimer J went on to say:
I have dealt with Pearce at some length because in my opinion it demonstrates the unanimous view of the judges in that case that, whatever the circumstance in which the concept of double jeopardy is raised, the appropriate analysis is to examine the elements of the offences concerned and, through the elements, what the accused is alleged to have done. … That approach requires a comparison of the elements of each of the offence(s) in the criminal proceeding and the civil penalty provision, in order to ascertain what, in each proceeding, it is sought to punish the offender for. In this task, the facts underlying each element will need to be considered, otherwise the comparison would be hypothetical. The emphasis, however, is on what a person is alleged to have done by reference to the elements of each offence, and the elements of the civil penalty provision.[74]
[74] Director of Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (2015) 323 ALR 294 at [56].
It is submitted for Mr Darafsheh, that on the face of it, both charges relate to the forced labour of Mr Abbasy, and consequently, it is not possible to say that the factual underpinnings of the Criminal Proceedings are the same as the Fair Work Proceedings.[75]
[75] Applicant’s outline of submissions filed 28 January 2020 at paragraph 36.
The difficulty with this submission, is that whilst it might hold true for charge 1, it does not hold true for charge 2.
The essence of the Fair Work Proceedings in so far as they relate to Mr Farshchi allege that over a number of years from 2013 to 2017, Mr Farshchi was responsible for the management of Candoo, a business in which Mr Darafsheh performed work and in respect of which he now claims not to have been paid his entitlements. Moreover, it is alleged that during that period, Candoo failed to comply with various record keeping obligations, failed to provide and Information Statement and failed to make superannuation payments and that Mr Farshchi was involved in each of these contraventions.
As stated, charge 1 alleges that during the period from July 2015 to March 2017, Mr Farshchi engaged in conduct which caused Mr Abbasy to enter into or remain in forced labour. I would concede that it is difficult to see how there could be a factual overlap between the elements of the contraventions alleged in the Fair Work Proceedings and charge 1 given that it relates solely to a different employee.
However, charge 2 claims that Mr Farshchi conducted a business involving forced labour. Section 270.6A(2) of the Criminal Code relevantly provides:
A person commits an offence if:
(a)the person conducts any business; and
(b)the business involves the forced labour of another person (or persons).
Forced labour is defined in section 270.6, which relevantly provides:
(1)For the purposes of this Division, forced labour is the condition of a person (the victim) who provides labour or services if, because of the use of coercion, threat or deception, a reasonable person in the position of the victim would not consider himself or herself to be free:
(a) to cease providing the labour or services; or
(b)to leave the place or area where the victim provides the labour or services.
The elements of forced labour include:
a)the provision of labour or services;
b)in circumstances where a person reasonably feels unable to cease providing that labour or services; and
c)that is generated by the use of coercion, threat or deception.
The elements of the alleged FW Act contraventions essentially are that Candoo failed to provide Mr Darafsheh with his entitlements, both financial and non-financial. As stated, the claims against Mr Farschi in the Fair Work Proceedings are that he was knowingly involved in the contraventions by Candoo.
Whilst there are clearly differences in the language used in the Criminal Code compared to the FW Act, there is a substantial overlap between the conduct required to make out the elements of the offence under the Criminal Code and the elements of the civil penalty provisions. This is particularly so, if regard is had to the definition of ‘forced labour’ in section 270.6 of the Criminal Code.
They both require the establishment that:
a)Mr Farshchi was involved in the conduct of a business;
b)labour was provided to that business; and
c)persons who provided that labour were the subject of exploitation, including by failing to provide them with their minimum statutory entitlements.
For each of these reasons, I am satisfied, that section 533 of the FW Act applies to stay the Fair Work Proceedings against Mr Farshchi.
Conclusion
I therefore make orders that:
a)pursuant to section 15(a) of the FCCA Act, this proceeding be stayed until the final hearing and determination of the Criminal Proceedings, or further order; and
b)the court notes that the proceeding as against the second respondent is stayed by operation of section 553 of the FW Act until the final hearing and determination of the Criminal Proceedings, or further order.
The application is otherwise dismissed.
I certify that the preceding one hundred (100) paragraphs are a true copy of the reasons for judgment of Judge Mercuri
Associate:
Date: 25 September 2020
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