Engel v Essential Magnesium Australia Pty Ltd
[2021] FedCFamC2G 356
•14 December 2021
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Engel v Essential Magnesium Australia Pty Ltd [2021] FedCFamC2G 356
File number: PEG 62 of 2021 Judgment of: JUDGE LADHAMS Date of judgment: 14 December 2021 Catchwords: PRACTICE AND PROCEDURE – Industrial Law – application for default judgment – whether respondent in default – whether respondent on notice of application – whether default judgment should be awarded – whether relief sought is reasonably supported by materials before the Court – default judgment ordered Legislation: Fair Work Act 2009 (Cth), ss 90(2), 117, 323, 340(1)(a)(ii), 342(1), 536(1), 539, 545, 547(2), 546, 570(2)(b)
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth), rr 13.04(2), 13.05(2)
Federal Circuit Court Rules 2001 (Cth), Div 6.2 r 6.08
Superannuation Guarantee (Administration) Act 1992 (Cth)
Cases cited: BJ International Limited v Ashgar (No 2) [2013] FCA 580
Budathoki v Consult Security Pty Ltd [2020] FCCA 1872
Dafallah v Fair Work Commission (2014) 225 FCR 559; [2014] FCA 328
Fair Work Ombudsman v HW Carpentry Solutions Pty Ltd [2016] FCCA 3283
Fair Work Ombudsman v Koojedda Carpentry Pty Ltd as Trustee for the Gumley Trust (No 2) [2017] FCCA 2577
Haines v Bendall (1991) 172 CLR 60; [1991] HCA 15
Hall v City Country Hotel Management No.2 Pty Ltd (No 2) [2016] FCCA 1543
Murphy v Innovior Pty Ltd (No 2) [2021] FCCA 258
Paillas v Astra Chauffeur Limousines (Aust) Pty Ltd [2017] FCCA 836
Patrick Stevedores Holdings Pty Ltd v Construction, Forestry, Maritime, Mining and Energy Union (No 3) [2021] FCA 348
Sayed v Construction, Forestry, Mining and Energy Union [2015] FCA 27
Speedo Holdings BV v Evans (No 2) [2011] FCA 1227
Veeraragoo v Goldbreak Holdings Pty Ltd (No 2) [2018] FCA 1448
Division: Division 2 General Federal Law Number of paragraphs: 51 Dates of hearing: 22 October 2021 and 1 December 2021 Place: Perth Counsel for the Applicant: Mr A McDonald (22 October 2021)
Mr J Hooper (1 December 2021)Solicitor for the Applicant: McDonald Murholme Solicitors Respondent No appearance for the respondent ORDERS
PEG 62 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: ADRIAN ENGEL
Applicant
AND: ESSENTIAL MAGNESIUM AUSTRALIA PTY LTD
ACN 620 106 934Respondent
ORDER MADE BY:
JUDGE LADHAMS
DATE OF ORDER:
14 DECEMBER 2021
THE COURT ORDERS THAT:
1.Default judgment is entered for the applicant against the respondent pursuant to r 13.05(2)(d) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
THE COURT DECLARES THAT:
A.The respondent contravened s 340(1)(a)(ii) of the Fair Work Act 2009 (Cth) (Fair Work Act) by terminating the applicant’s employment because the applicant exercised a workplace right.
B.The respondent contravened s 323 of the Fair Work Act by failing to pay the applicant amounts payable to him in relation to the performance of work by him during the period from 2 September 2020 to 31 January 2021.
C.The respondent contravened s 117(2) of the Fair Work Act by terminating the applicant’s employment without giving the applicant the minimum period of notice required by s 117(3) of the Fair Work Act, or payment in lieu of that notice.
D.The respondent contravened s 90(2) of the Fair Work Act by failing to pay to the applicant, upon the termination of his employment, the amount that would have been payable to the applicant had he taken his accrued annual leave during the course of his employment.
E.The respondent contravened s 536(1) of the Fair Work Act by failing to provide the applicant with payslips.
F.The respondent failed to pay to the applicant superannuation in accordance with his contract of employment and the Superannuation Guarantee (Administration) Act 1992 (Cth).
THE COURT FURTHER ORDERS THAT:
2.Pursuant to s 545(2) of the Fair Work Act, the respondent is to pay to the applicant:
(a)the amount of $69,846.14 compensation for economic loss as a result of the contraventions of the Fair Work Act referred to in declarations A to D above, comprising:
(i)$47,519.23 in unpaid wages for the period from 2 September 2020 to 31 January 2021;
(ii)$2,596.15 being one week’s payment in lieu of notice of termination;
(iii)$4,153.84 being an amount for accrued annual leave entitlements that were not taken by the applicant during the course of his employment; and
(iv)$15,576.92 being an amount for lost income in the six week period following the termination of the applicant’s employment;
(b)the amount of $5,179.32 as compensation for unpaid superannuation entitlements; and
(c)the amount of $4,000 as compensation for non-economic loss, being general damages for pain and suffering.
3.Pursuant to s 547(2) of the Fair Work Act, the respondent is to pay to the applicant pre-judgment interest on the amounts awarded at subparagraphs (a)(i), (ii) and (iii) of order 2 of this Order at the rates of:
(a)4.25% in respect of wages earned between 2 September 2020 and 31 December 2020;
(b)4.10% in respect of wages earned between 1 January 2021 and 31 January 2021; and
(c)4.10% in respect of his claim relating to accrued but untaken annual leave and payment in lieu of notice.
4.There be no order as to costs.
5.The matter be listed for a penalty hearing on 13 April 2022 at 12.00pm AWST / 2.00pm AEST.
6.The applicant is to file and serve any evidence and submissions in relation to penalty by 16 March 2022.
7.The respondent is to file and serve any evidence and submissions in relation to penalty by 30 March 2022.
8.The applicant is to serve a copy of this Order and the judgment delivered in this matter on 14 December 2021 on the respondent by ordinary service by 5 January 2022.
9.The applicant is to file an affidavit of service to evidence service of the documents referred to in orders 6 and 8 of this Order by 6 April 2022.
10.There be liberty to apply.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE LADHAMS:
INTRODUCTION
Before the Court is an application for default judgment brought by the applicant against the respondent in an application under the Fair Work Act 2009 (Fair Work Act). The applicant seeks orders under r 13.05(2) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (GFL Rules).
The applicant claims that the respondent took adverse action against him by dismissing him from his employment because he had exercised various workplace rights, in contravention of s 340(1)(a)(ii) of the Fair Work Act. In his originating application and Form 2 filed on
9 April 2021, the applicant claims, in summary, that:
(a)He commenced employment with the respondent on 2 September 2020 in the role of Brand Manager, pursuant to a written contract of employment, at a salary of $135,000 per annum.
(b)He was never paid any wages or superannuation in relation to the work he performed.
(c)He made a number of inquiries and complaints in relation to the respondent’s failure to pay wages and issue payslips, and indicated to the respondent the difficulties he was facing as a result of the non-payment of wages.
(d)In two transactions, the Managing Director paid to the applicant, from the Managing Director’s personal superannuation funds, an amount totalling $7,000.
(e)On 31 January 2021, the applicant received a text message from the Managing Director of the respondent advising that the Perth office of the respondent would not be opening and the applicant’s employment was terminated, effective immediately (dismissal).
(f)The dismissal was adverse action within the meaning of s 342(1) of the Fair Work Act.
(g)The dismissal was for reasons of, or for reasons including, the various complaints and inquiries made by the applicant.
The applicant claims that the respondent has contravened the Fair Work Act in the following ways:
(a)By dismissing the applicant, which amounts to adverse action, for exercising a workplace right, in contravention of s 340(1)(a)(ii);
(b)By failing to pay the applicant wages in the course of his period of employment, in contravention of s 323;
(c)By failing to pay the applicant a payment in lieu of notice of his dismissal, in contravention of s 117(2);
(d)By failing to pay the applicant his accrued annual leave entitlements at the time of termination, in contravention of s 90(2);
(e)By failing to provide the applicant with payslips, in contravention of s 536(1).
The applicant further claims that the respondent failed to pay him superannuation, as it was required to do under the written contract of employment and the Superannuation Guarantee (Administration) Act 1992 (Cth).
The relief sought by the applicant in his originating application includes his unpaid remuneration, one week’s pay in lieu of notice pursuant to s 117(2) of the Fair Work Act, an amount for his accrued and untaken annual leave entitlements, superannuation, compensation for future loss of earnings, damages for pain and suffering, and maximum penalties for the breaches of the Fair Work Act.
PROCEDURAL HISTORY AND APPLICATION FOR DEFAULT JUDGMENT
The applicant commenced proceedings in the Federal Circuit Court on 9 April 2021 by way of an application accompanied by a Form 2. The first Court date recorded on the application was 11 May 2021. The matter ultimately came before the Court for the first directions hearing on 15 June 2021.
At the directions hearing on 15 June 2021 before Judge Kendall, the applicant appeared by his lawyer and there was no appearance for or by the respondent. Judge Kendall made orders listing the matter for further directions on 22 July 2021, requiring the applicant to serve a copy of the application and the Order of 15 June 2021 on the respondent in accordance with Division 6.2 of the Federal Circuit Court Rules 2001 (Cth) (FCC Rules) and requiring that an affidavit of service be filed. The Order of 15 June 2021 also required the respondent to appear or cause an appearance to be made at the directions hearing on 22 July 2021, and the Court noted that in the event that there was no appearance by or for the respondent, the Court may consider making default judgment orders.
On 22 July 2021 the matter again came before Judge Kendall for directions. Again, the applicant was represented by his lawyer and there was no appearance by or for the respondent. Judge Kendall made orders listing the matter for further directions on 9 September 2021, and requiring the application, Form 2 and Orders made by the Court to be served by hand on the registered office of the corporation as outlined in r 6.08 of the FCC Rules, or if service by hand could not be effected, to serve the documents by registered post and email, with service to be evidenced by way of an affidavit of service. The orders again required the respondent to appear or cause an appearance to be made at the next directions hearing, being the directions hearing on 9 September 2021 and the Court again noted that it may consider making orders for default judgment in the event that the respondent did not appear.
The matter came before Judge Kendall again on 9 September 2021, with the applicant again represented by his lawyer and there being no appearance by or for the respondent. On that occasion, Judge Kendall made orders requiring any default judgment application to be filed by 30 September 2021 and made further orders requiring service of documents on the respondent, to be verified by way of an affidavit of service.
The applicant filed an application in a case seeking default judgment on 30 September 2021. That application was supported by an affidavit affirmed by the applicant’s lawyer.
The applicant in that application in a case sought the following relief:
1. Judgment against the Respondent, pursuant to Rule 13.03B(c)(i) and/or Rule 13.03B(2)(d) Federal Circuit Court Rules 2001, for the following sums:
(a) $81,459.73 as lost income;
(b) $8,551.02 as superannuation
(c) $20,000 as pain and suffering damages;
(d) Interest;
(e) Costs.
2. An Order that the matter be listed for a hearing to determine the penalty pursuant to section 546 of the Fair Work Act 2009 (Cth).
The application in a case came before me for hearing on 22 October 2021. The applicant was represented at that hearing by Mr Alan McDonald. At the hearing, I indicated to Mr McDonald that I had a number of concerns with the application and would need to receive submissions addressing a number of different issues. I gave Mr McDonald the option of addressing me in oral submissions, or filing written submissions, and he chose to file written submissions. I outlined the matters in relation to which I wished to be addressed. These matters largely concerned my need to understand the basis on which the proposed relief was calculated, noting that it was different in various aspects to that claimed in the Form 2, and the need to understand the basis in the materials before the Court for some of the relief claimed. I also required the applicant to file an Australian Securities and Investments Commission (ASIC) extract or some other documentary record to confirm the address of the registered office of the respondent.
On 12 November 2021 the applicant filed a further application in a case and an outline of submissions. In the application in a case filed on 12 November 2021, the applicant sought the following relief:
1.Judgment in the amount of $78,473.50 for lost income
2.Judgment in the amount of $5,319.90 for superannuation
3.Judgment in the amount of $20,000 as damages for pain and suffering
4.Interest
5.Judgment in the amount of $10,854 for costs.
I treat this second application in a case as providing clarification of the relief sought by the applicant if default judgment is ordered.
On 15 November 2021 the applicant filed an affidavit affirmed by him on 12 November 2021 deposing that he instructed his solicitor to prepare a submission in support of his application for default judgment, and that the facts and circumstances contained in the submission and in the application are true and correct in every particular. A copy of the submission filed on
12 November 2021 was annexed to the affidavit.
The application for default judgment came before me again on 1 December 2021. On this occasion, the applicant was represented by Mr James Hooper of counsel.
IS THE RESPONDENT IN DEFAULT?
Rule 13.04(2) of the GFL Rules provides that a respondent is in default if the respondent:
(a) has not satisfied the applicant’s claim; and
(b) fails to:
(i)give an address for service before the time for the respondent to give an address for services has expired; or
(ii)file a response before the time for the respondent to file a response has expired; or
(iii)comply with an order of the Court in the proceeding; or
(iv)file and serve a document required under these Rules; or
(v)produce a document as required by Part 14; or
(vi)do any act required to be done by these Rules; or
(vii)defend the proceeding with due diligence.
The applicant submits that the respondent’s default is pursuant to one or more of r 13.04(2)(b)(ii), (iii) and (vii) of the GFL Rules.
I am satisfied that the respondent is in default. The respondent has not satisfied the claim. Further, the respondent has not at any stage given any address for service to the Court or filed a response, appeared at any of the listings or taken any steps to defend the proceeding. On at least two occasions express orders were made requiring the respondent to appear at the next directions hearing.
I am also satisfied that the respondent has been notified of the proceeding, and of each of the listings before the Court. This satisfaction is based on the following evidence:
(a)Affidavit of service affirmed by Elizabeth D’Lima on 11 June 2021, deposing that the application was served on the respondent by ordinary pre-paid post sent to the registered office of the respondent on 15 April 2021;
(b)Affidavit of service sworn by Sarah Tully on 6 July 2021, deposing that the application, Form 2 and Order made on 15 June 2021 were served on the respondent by ordinary pre-paid post sent to the registered office of the respondent on 16 June 2021;
(c)Affidavit of service sworn by Glen David Hunter on 27 July 2021, deposing that the application, Form 2, Order made on 15 June 2021 and Order made on 22 July 2021 were served on the respondent by delivering them to the registered office of the respondent at 3.45pm on 26 July 2021;
(d)Affidavit of service sworn by Glen David Hunter on 5 October 2021, deposing that the application, Form 2, Order of 15 June 2021, Order of 22 July 2021, Order of 9 September 2021, previously filed affidavits of service, application in a case filed on 30 September 2021 and affidavit of Alan McDonald in support of the application in a case were served on the respondent by delivering them to the respondent’s registered office at 3.10pm on 4 October 2021; and
(e)Affidavit of service affirmed by Stephanie Anne Brigitta Nortje on 1 December 2021, deposing that the application in a proceeding, submissions filed on 12 November 2021 and affidavit of the applicant filed on 15 November 2021 were served by posting the documents to the respondent’s registered office on 15 November 2021.
THE DISCRETION TO GIVE DEFAULT JUDGMENT
The discretion to enter default judgment should be exercised with caution: Speedo Holdings BV v Evans(No 2) [2011] FCA 1227 at [20]. It is appropriate, when deciding whether to exercise the discretion, to have regard to ‘the nature of the default itself, any explanation provided for the default, the manner in which the party in default has conducted the proceeding to-date and whether the Court could have any confidence that a proceeding would henceforth be conducted in an orderly and proper manner’: BJ International Limited v Ashgar (No 2) [2013] FCA 580 at [13].
I consider that it is appropriate to order default judgment in this matter. The respondent has taken no steps at all to file a notice of address for service or response, or to attend the Court on the five occasions where the matter has come before the Court for directions or interlocutory hearing. There is nothing before the Court to indicate that the respondent proposes to take any steps to defend this matter.
Rule 13.05(2) of the GFL Rules sets out the types of orders that the Court may make where a respondent is in default. The applicant in his submissions indicated that he seeks default judgment pursuant to r 13.05(2)(b) or r 13.05(2)(d) of the GFL Rules. These paragraphs allows the Court to:
(b)if the claim against the respondent is for a debt or liquidated damages—grant leave to the applicant to enter judgment against the respondent for:
(i) the debt or liquidated damages; and
(ii) if appropriate—costs; or
…
(d) give judgment or make any other order against the respondent…
While parts of the claim may be for a liquidated amount, it is primarily a claim for unliquidated damages. In these circumstances, it is appropriate that the orders I make in relation to the default judgment application be made under r 13.05(2)(d) of the GFL Rules. This approach is consistent with that taken by Judge Manousaridis in Hall v City Country Hotel Management No.2 Pty Ltd (No 2) [2016] FCCA 1543.
Although I consider it appropriate to award default judgment, I cannot simply award the applicant what he seeks by way of default judgment. I must be satisfied that the orders I make are reasonably supported by the materials before the Court. The materials before the Court that are most relevant to determining whether the orders that the applicant seeks are reasonably supported by the materials are the application and Form 2, and the affidavit of the applicant filed on 15 November 2021.
In considering the appropriate amount of compensation to order, I have had regard to the principles summarised by Mortimer J in Dafallah v Fair Work Commission (2014) 225 FCR 559; [2014] FCA 328 at [148]-[161].
Lost income
The applicant seeks $78,473.50 in lost income. In his written submissions, the applicant indicated that this amount is comprised of the following amounts:
(a)$54,519.23 in unpaid remuneration for the period from 2 September 2020 to 31 January 2021, based on an annual salary of $135,000;
(b)$2,596.15 being one week’s payment in lieu of notice;
(c)$4,153.84 for accrued annual leave which was not taken; and
(d)$15,576.92 in lost income for the 6 week period between the dismissal on 31 January 2021 and the applicant’s commencement of new employment on 14 March 2021.
I note that the total of the amounts set out at (a) to (d) above is $76,846.14, rather than the amount set out in the application. For the purpose of this application, I treat the amounts in the submissions as the amounts claimed, because the basis for these calculations is clearly demonstrated.
In relation to (a), I am satisfied that the materials before the Court reasonably support compensation in the amount of $47,519.23. This is $7,000 less than the amount claimed in the Form 2 application and the submissions in relation to the default judgment application. The deduction of $7,000 takes into account the two payments that the Managing Director of the respondent paid to the applicant, from his own personal superannuation account. These payments were a payment of $2,000 made on 2 December 2020 and a payment of $5,000 made on 18 December 2020. The materials before the Court suggest that these payments were made following complaints and inquiries made by the applicant in relation to the respondent’s failure to pay him, and I infer that the payments were made to the applicant in connection with his employment.
I am satisfied that the materials before the Court reasonably support making orders requiring the respondent to pay to the applicant the amounts set out in paragraphs (b), (c) and (d) above, and that the amounts claimed by way of default judgment are not higher than the amounts set out in the originating application and Form 2.
Taking into account the adjustment to the amount in paragraph (a), I find that there is a reasonable basis in the materials to order that the respondent pay to the applicant $69,846.14 in relation to economic loss.
Superannuation
The applicant seeks $5,179.32 in superannuation, calculated on the amount of his unpaid wages at a rate of 9.5%. I am satisfied that the materials before the Court reasonably support an order that the respondent pay to the applicant $5,179.32 in unpaid superannuation.
Damages for pain and suffering
The applicant seeks $20,000 in general damages for pain and suffering. I am not satisfied that the materials before the Court provide a reasonable basis for making an order for general damages in this amount.
The explanation advanced by the applicant for seeking $20,000 in damages for pain and suffering is set out at paragraph 12 of the applicant’s submissions filed on 12 November 2021, which the applicant has deposed is true and correct in his affidavit filed on 15 November 2021. That explanation is as follows:
The Applicant’s claim for pain and suffering damages pleaded at paragraph 4(c) is based on the fact that;
(a)the Applicant was not paid his wages for 21 weeks causing significant emotional hardship on the Applicant, and his family;
(b)the Applicant was not paid his wages for 21 weeks causing financial hardship on the Applicant by reason of the Respondent’s actions;
(c)the Applicant was without income for a further 6 weeks following his dismissal thereby causing further emotional and financial hardship on the Applicant;
(d)the Applicant had increased stress and anxiety levels resulting in increased blood pressure requiring him to take medication to reduce his blood pressure;
(e)the Applicant sought treatment from his general practitioner by reason of the increased stress, anxiety;
(f)the stress and anxiety from the situation greatly impacted the Applicant’s sleep and overall health and wellbeing;
(g)the stress and anxiety of the situation resulted in an impact on the Applicant’s relationships with his extended and immediate family;
(h)the Applicant lost weight by reason of the stress, anxiety, and fatigue from the situation.
Section 545(1) of the Fair Work Act allows the Court to make any order the Court considers appropriate if the Court is satisfied that a person has contravened a civil remedy provision. Subsection 545(2)(b) provides, by way of example, that the Court may make ‘an order awarding compensation for loss that a person has suffered because of the contravention’.
There must be a causal connection between the contravention of a penalty provision in the Fair Work Act and the loss claimed. As the Federal Court said in Patrick Stevedores Holdings Pty Ltd v Construction, Forestry, Maritime, Mining and Energy Union (No 3) [2021] FCA 348 at [28]:
It is paramount that for compensation to be awarded under s 545, the Court must be satisfied that there exists the appropriate causal connection between the contravention and the loss claimed: Australian Licenced Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd [2011] FCA 333; (2011) 193 FCR 526 (at [423] 592 per Barker J). The appropriate compensation to be awarded under s 545 is limited to the loss caused by the contravention and the burden is on the claimant to prove its loss.
It is apparent from the explanation provided by the applicant that the main contravention that is alleged to have caused the applicant’s pain and suffering is the failure to pay the applicant wages in the course of his employment. This is a contravention of s 323 of the Fair Work Act, which requires an employer to pay to an employee amounts payable in relation the performance of work at least monthly. Section 323 is a civil penalty provision: s 539 of the Fair Work Act.
The nature of the pain and suffering alleged by the applicant is emotional and financial hardship and stress and anxiety which has contributed to high blood pressure, difficulties sleeping and fatigue. It is claimed that these issues have, in turn, impacted the applicant’s relationship with his family. I accept that the applicant may have experienced some emotional and financial hardship, stress and anxiety as a result of the respondent’s failure to pay wages. However, there is no evidence or other material before the Court to demonstrate the extent of the hardship faced by the applicant, or that he was ever diagnosed with any medical condition[1] that was attributable to a contravention of the Fair Work Act. Nor is there any representation as to the duration of the period of suffering, although I accept that the conduct of not paying the applicant extended for the entirety of the applicant’s contract of employment, being some four months, so it would be open to infer that the potential period of the pain and suffering was around four months.
[1] In this regard, I have inferred that the reference to ‘anxiety’ in the submissions is intended in the sense that a lay person would understand anxiety, rather than a suggestion that the applicant was diagnosed by an appropriately qualified professional with a recognised mental health disorder under, for example, American Psychiatric Association, Diagnostic and Statistical Manual of Mental Disorders (DSM-V) (2013, 5th ed).
I consider that an appropriate quantum of damages for pain and suffering in this case is $4,000. This takes into account that the purpose of damages is compensatory rather than punitive. That is, the purpose of damages is to place the applicant in the position he would have been had the employer not contravened the Fair Work Act: Haines v Bendall (1991) 172 CLR 60; [1991] HCA 15 at [1]. It further takes into account the limited nature of the evidence and materials before the Court as discussed in the preceding paragraph. Damages in the quantum of $4,000 is also closer to the range of damages for pain and suffering in other cases, such as Veeraragoo v Goldbreak Holdings Pty Ltd (No 2) [2018] FCA 1448 and Sayed v Construction, Forestry, Mining and Energy Union [2015] FCA 27, where the basis of the claim for damages for pain and suffering was stress or distress of some sort and there was limited evidence before the Court.
Interest
The applicant seeks pre-judgment interest pursuant to s 547(2) of the Fair Work Act in relation to his unpaid wages, payment in lieu of notice and payment in relation to his accrued annual leave entitlements.
The rate of interest claimed is:
(a)4.25% in respect of wages earned between 2 September 2020 and 31 December 2020;
(b)4.10% in respect of wages earned between 1 January 2021 and 31 January 2021; and
(c)4.10% in respect of his claim relating to accrued but untaken annual leave and payment in lieu of notice.
I am satisfied that the rates of interest claimed are consistent with the Federal Court of Australia Interest on Judgments Practice Note (GPN-INT), in particular paragraph 2.2 of that Practice Note.
Costs
The applicant seeks costs pursuant to s 570(2)(b) of the Fair Work Act in the amount of $10,854. This amount is calculated based on the amounts in the scale in the GFL Rules for appearances at two directions hearing and two interlocutory hearings.
Ordinarily, the jurisdiction in relation to matters arising under the Fair Work Act is a no costs jurisdiction. Section 570(2)(b) does, however, allow the Court to order that a party pay costs if the Court is satisfied that the party’s unreasonable act or omission caused the other party to incur the costs.
The applicant claims that the respondent should be required to pay the applicant’s costs in this matter because the respondent acted unreasonably in failing to attend the directions hearings and interlocutory hearings before the Court, and because the respondent has declined to participate in the Court process and in turn has denied the applicant an opportunity to have all matters determined.
I do not consider that it is appropriate to order the respondent to pay the applicant’s costs in this matter. In reaching this view, I have had regard to the principles summarised by Judge Baird in Murphy v Innovior Pty Ltd (No 2) [2021] FCCA 258 at [18]-[27].
I do not know the respondent’s reasons for failing to appear at the directions hearings or otherwise failing to participate in these proceedings. However, as discussed below, the respondent is the subject of a strike-off action, according to information from ASIC. In these circumstances, I am not prepared to accept that the respondent’s failure to appear was unreasonable, as there may be reasons for the respondent’s non-appearance related to its current status as recorded by ASIC.
Further, even if I were to accept that the statutory precondition in s 570(2) of the Fair Work Act was enlivened, I would not exercise my discretion to award costs in this matter in circumstances where there is a strike-off action in progress in relation to the respondent.
PENALTY HEARING
The applicant has requested that a separate hearing be listed in relation to penalty. I list the matter for further hearing in relation to penalty on 13 April 2022 and the Order made with this judgment includes directions to progress the matter to penalty hearing.
CURRENT STATUS OF RESPONDENT COMPANY
The ASIC current and historical extract in relation to the respondent, annexed to the affidavit of Alan McDonald filed on 26 October 2021, records the status of the respondent company as ‘strike-off action in progress’. I consider it appropriate to make default judgment orders against the respondent notwithstanding that there is strike-off action in progress. This is consistent with the approach taken in a number of other cases, where orders have been made against a company while there is a strike-off action in progress, including Paillas v Astra Chauffeur Limousines (Aust) Pty Ltd [2017] FCCA 836, Budathoki v Consult Security Pty Ltd [2020] FCCA 1872, Fair Work Ombudsman v HW Carpentry Solutions Pty Ltd [2016] FCCA 3283 and Fair Work Ombusdman v Koojedda Carpentry Pty Ltd as Trustee for the Gumley Trust (No 2) [2017] FCCA 2577.
CONCLUSION
For the reasons set out above, I have allowed the application for default judgment, albeit with some adjustments to the amounts claimed as relief.
I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Ladhams. Associate:
Dated: 14 December 2021
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