Fair Work Ombudsman and Chia Tung Development Corp Ltd and Anor
[2016] FCCA 2777
•19 September 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN & CHIA TUNG DEVELOPMENT CORP LTD & ANOR | [2016] FCCA 2777 |
| Catchwords: INDUSTRIAL LAW – Default judgment against first and second respondents based on contraventions of the FWA through failure to comply with Compliance Notices – where the respondents are based on Taiwan – where the workers live in the Philippines but worked in Australia pursuant to subclass 400 visas – where the employment was found to be sufficiently connected to Australia – where accessorial liability of the second respondent established – where it is appropriate to make orders on default judgment which vary from orders sought in Statement of Claim. |
| Legislation: Acts Interpretation Act 1901 (Cth),ss.14, 21. Fair Work Act 2009, ss.13, 14, 40, 47, 48, 539, 545, 550, 559, 701, 715, 716, 717 Federal Circuit Court Act 1999 (Cth), s.16 |
| Cases cited: Arthur v Vaupotic Investments Pty Ltd [2005] FCA 433 Fair Work Ombudsman v Step Ahead Security Services Pty Ltd [2016] FCCA 1482 Fair Work Ombudsman v Valuair Limited (No 2) [2014] FCA 759 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | CHIA TUNG DEVELOPMENT CORP LTD |
| Second Respondent: | MICHAEL CHEN-FA LIN |
| File Number: | SYG 562 of 2016 |
| Judgment of: | Judge Altobelli |
| Hearing date: | 19 September 2016 |
| Date of Last Submission: | 19 September 2016 |
| Delivered at: | Sydney |
| Delivered on: | 19 September 2016 |
REPRESENTATION
| Solicitors for the Applicant: | Mr O’Brien |
| With there being no appearance by or on behalf of the Respondents. |
ORDERS
THE COURT DECLARES THAT:
Based on the admissions which the First Respondent is deemed to have made, by reason of its default, pursuant to sub-rule 13.03A(2) of the Federal Circuit Court Rules 2011 (Rules), the First Respondent contravened subsection 716(5) of Fair Work Act 2009 (Cth) (FW Act) by failing to comply with a compliance notice dated 8 January 2016 (Compliance Notice) which required the First Respondent to pay Mr Arlan Segura the amount of $26,445.29 (gross) and Mr Jeofrey Valmeo the amount of $35,465.05 (gross) by 22 January 2016 and provide evidence of the same to the Applicant by 29 January 2016.
Based on the admissions which the Second Respondent is deemed to have made, by reason of his default, pursuant to sub-rule 13.03A(2) of the Rules, the Second Respondent was involved in the First Respondent’s contraventions identified in paragraph 1 above within the meaning of subsection 550(2) of the FW Act and is thereby, pursuant to subsection 550(1) of the FW Act, taken to have himself committed that contravention.
THE COURT ORDERS THAT:
Default judgment be entered for the Applicant against the First Respondent and the Second Respondent pursuant to Rule 13.03B(2)(c) of the Rules.
Pursuant to section 545 and section 550 of the FW Act, the First and Second Respondent, jointly and severally, are to comply with the terms of the Compliance Notice, by paying compensation of $61,910.34 to the Applicant within 30 days, with the Applicant to:
(a)within 14 days of receipt of the compensation, pay Mr Arlan Segura and Mr Jeofrey Valmeo (the Employees) the amounts set out in the Compliance Notice; and
(b)in the event that the Applicant cannot locate one or both of the Employees, pay the applicable amount due to each Employee that cannot be located to the Consolidated Revenue Fund of the Commonwealth pursuant to section 559 of the FW Act within a further 7 days.
The matter is to be adjourned to 2 December 2016 at 2.00pm for a further hearing to determine the Applicant’s claim for penalties to be imposed on the First and Second Respondents.
The Applicant is to file any evidence and submissions in relation to penalty within 28 days of this order.
The Respondents are to file any evidence and submissions in relation to penalty within a further 28 days.
The Applicant has liberty to apply.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 562 of 2016
| FAIR WORK OMBUDSMAN |
Applicant
And
| CHIA TUNG DEVELOPMENT CORP LTD |
First Respondent
| MICHAEL CHEN-FA LIN |
Second Respondent
REASONS FOR JUDGMENT
INTRODUCTION
This case is, in effect, about the workplace entitlements under the Fair Work Act 2009 (Cth) of two Metal Fabricators, both born in the Philippines, whose first language is Tagalog, and who struggle with the English language.
Both workers were employed by the First Respondent, a company based in Taiwan, to perform work initially in the Philippines, then in Angola, and finally in Australia They were engaged as welders assisting in the installation of animal feedlots at a mill in Manildra, New South Wales. Each entered Australia under separate subclass 400 visas. They worked long hours, at least 6 days weekly, and were paid a flat rate. What they were paid was substantially less than their entitlements under Australian law.
By way of an Application in a Case dated 23 August 2016 the Applicant seeks default judgment and orders against the First and Second Respondents in this matter (Default Judgment Application).
The Applicant seeks:
(a)declarations of contravention and orders on default, pursuant to rules 13.03B and 13.03C of the Federal Circuit Court Rules 2001 (Rules), in terms of the minute of order reproduced in the first schedule to these reasons;
(b)orders under section 545 of the Fair Work Act 2009 (Cth) (FW Act), for payment of the amounts required in a compliance notice issued under section 716 of the FW Act on 8 January 2016 (Compliance Notice); and
(c)that the matter be listed for a penalty hearing on a date to be fixed.
The Default Judgment Application is supported by the
(a)Statement of Claim dated and filed on 14 March 2016 (SOC);
(b)Applicant’s Submissions on Service dated 6 May 2016 and filed on 6 May 2016 (Service Submissions);
(c)Affidavit of Shay Minster affirmed on 5 May 2016 and filed on 6 May 2016 (Minster Affidavit);
(d)Affidavit of Ying Zheng affirmed on 6 May 2016 and filed on 6 May 2016 (First Zheng Affidavit);
(e)Affidavit of Kerry Patrick O’Brien affirmed on 5 July 2016 and filed on 5 July 2016 (First O’Brien Affidavit);
(f)Affidavit of Arlan Bacaron Segura affirmed on 29 July 2016 and filed 23 August 2016 (Segura Affidavit);
(g)Affidavit of Ying Zheng affirmed on 18 August 2016 and filed 23 August 2016 (Second Zheng Affidavit);
(h)Affidavit of John Kwong Hong Tang sworn on 18 August 2016 and filed 23 August 2016 (Translator Affidavit);
(i)Affidavit of Jeofrey Balitian Valmeo affirmed on 19 August 2016 and filed 23 August 2016 (Valmeo Affidavit); and
(j)Affidavit of Kerry Patrick O’Brien affirmed on 23 August 2016 and filed 23 August 2016 (Second O’Brien Affidavit).
(k)Affidavit of Kerry Patrick O’Brien affirmed and filed 8 September 2016 as to service.
These reasons for judgment are substantially based on the Applicant’s Submissions on Default Judgment. The Orders were made when the matter was heard on 19 September 2016, and reasons were published later.
These proceedings concern an alleged contravention of section 716(5) of the FW Act, being the First Respondent’s failure to comply with the Compliance Notice by Fair Work Inspector Ying Zheng (Inspector Zheng). The Compliance Notice required the First Respondent to, among other things, pay by 22 January 2016:
(a)Mr Arlan Segura (Mr Segura) the amount of $26,445.29 (gross); and
(b)Mr Jeofrey Valmeo (Mr Valmeo) the amount of $35,465.05 (gross),
(together, the Employees).
The employees were engaged by the Respondents to install and commission a feedlot at a mill in Manildra, New South Wales.
The Applicant also alleges that the Second Respondent was involved, within the meaning of subsection 550(2) of the FW Act, in the contraventions of the First Respondent and, by operation of subsection 550(1) of the FW Act, is taken to have contravened subsection 716(5) of the FW Act himself.
The Respondents have failed to make any payments as required by the Compliance Notice (First Zheng Affidavit, [16] and [17]; Valmeo Affidavit, [61], Second O’Brien Affidavit, [25]).
THE APPLICANT’S CLAIM
In the Applicant’s SOC, the Applicant has sought:
(a)declarations that the First Respondent contravened subsection 716(5) of the FW Act and that the Second Respondent was involved in, pursuant to section 550 of the FW Act, the First Respondent’s contravention of subsection 716(5) the FW Act;
(b)orders directing the First Respondent to comply with the terms of the Compliance Notice, by paying compensation of $61,910.34 to the Applicant, with the Applicant to subsequently pay the Employees, the respective amounts owed to them (or in the event that the Applicant cannot locate one or both of the Employees, to pay that money to the Consolidated Revenue Fund of the Commonwealth);
(c)orders that, should any of the compensation owed to the Applicant remain outstanding for 30 days, the Second Respondent pay the remaining sum to the Applicant; and
(d)orders that the First Respondent and Second Respondent pay penalties to the Consolidated Revenue Fund of the Commonwealth in respect of the contraventions.
As a result of this Court’s recent decision in Fair Work Ombudsman v Step Ahead Security Services Pty Ltd [2016] FCCA 1482 (Step Ahead), the Applicant is seeking orders in a different form in the Default Judgment Application to those sought in the SOC. This is dealt with below.
In the event that the Court orders default judgment against the Respondents in this matter, the Applicant also seeks that the matter be listed for a penalty hearing at a later date.
PRINCIPLES REGARDING DEFAULT JUDGMENT
Subrule 13.03B(2)(c) of the Rules enables the Court to give judgment against a respondent in a proceeding which was commenced by an application supported by a statement of claim for the relief that:
(a)the applicant appears entitled to on the statement of claim; and
(b)the Court is satisfied it has the power to grant.
An order for default judgment under subrule 13.03B(2)(c) can be made where there is a basis for the relief sought by the applicant on the face of the statement of claim.
There is no requirement for proof by way of evidence of the applicant’s claim (Arthur v Vaupotic Investments Pty Ltd [2005] FCA 433 at [3], cited in Luna Park v Bose [2006] FCA 94 at [20] and more recently in Tyco(Australia) Pty Ltd t/as ADT Security v Signature Security Group. Pty Ltd (No 7) [2011] FCA 615 at [5] and Australian Competition and Consumer Commission v Yellow Page Marketing BV (No 2) [2011] FCA 352 (ACCC v Yellow Page (No. 2)) at [14]), and generally, an application under subrule 13.03B(2)(c) is determined on the face of the facts pleaded in the statement of claim alone. However, where discretionary relief is claimed, the Court may receive evidence relevant to the exercise of its discretion (ACCC v Yellow Page (No. 2) at [61] to [63], citing Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd (2006) 236 ALR 665 (ACCC v Dataline) at [48] to [51]. These decisions were decided in respect of order 35A of the now repealed Federal Court Rules 1979 (Cth). Rule 13.03B(2)(c) of the Rules is in identical terms to order 35A and is in similar terms to rule 5.23(2)(c) of the current Federal Court Rules 2011 (Cth)).
RELEVANT PROVISIONS
Subrule 13.03A(2) of the Rules provides that a respondent will be in default for the purposes of rule 13.03B if a 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 service has expired;
(ii) file a response before the time for the respondent to file a response has expired (The requirement under the Rules to file a response was found by Justice Rangiah to be a choice, however, if a respondent wished to defend the proceeding, then a response must be filed. This is relevant to any application for default judgment pursuant to subrule 13.03A(2)(b)(ii): Hartnett Legal Services Pty Ltd v Ballantyne [2015] FCA 744, [49]).
(iii) comply with an order of the Court in the proceeding;
(iv) file and serve a document required under the Rules;
(v) produce a document as required by Part 14 of the Rules;
(vi) do any act required to be done by the Rules; or
(vii) defend the proceedings with due diligence.
Subrule 13.03C(2) of the Rules provides that if a party to a proceeding is absent from a hearing, the Court may make an order of the kind mentioned in subrule 13.03B(2)(c), referred to above.
For the purposes of the Default Judgment Application, the Applicant relied on the following provisions of the Rules:
(a)rule 4.03, which requires any response filed by a respondent to be filed and served within 14 days of the application to which it relates;
(b)rule 6.01, which requires a party to a proceeding to file a notice of address for service;
(c)rule 9.04, which provides that, except with leave of the Court, a corporation must not carry on a proceeding unless they are represented by a lawyer; and
(d)subrule 13.03A(2)(b)(vii), which provides that a respondent will be in default if they fail to defend the proceedings with due diligence.
HISTORY OF THE PROCEEDING
On 14 March 2016, the Applicant filed an Application and the SOC commencing these proceedings. Pursuant to orders sought in the Application, a first directions hearing seeking leave of the Court to serve the Respondents, who were both located overseas, was listed on 16 May 2016.
On 16 May 2016, the Court granted leave to serve the Respondents, in Taiwan, by international registered post.
On or before 1 June 2016, the Application and SOC were served at the registered office of the First Respondent and the personal address of the Second Respondent. Together with the originating documents, letters addressed to the Respondents and copies of the originating documents translated into Traditional Chinese were also delivered to the Respondents’ respective addresses (First O’Brien Affidavit, [9]).
On 18 July 2016, the matter was listed for further directions before the Court. The Court made orders as proposed by the Applicant requiring the Respondents to file a response and a defence by 8 August 2016 or, if these were not filed, to grant leave to the Applicant to file its Default Judgment Application with the Court by 22 August 2016. Nothing was filed by the First or Second Respondent by 8 August 2016 or at all, although the Second Respondent has provided the Applicant with an outline of the Respondents’ position (Second O’Brien Affidavit, [15] and [23] and Annexures KO-4 and KO-6 to the Second O’Brien Affidavit).
On 22 August 2016, the Applicant filed its Default Judgment Application with the Court.
DEFAULT
First Respondent
The Court finds that the First Respondent has not:
(a)filed a notice of address for service in accordance with rule 9.01 of the Rules;
(b)filed a response and any defence in accordance with rules 4.03 and 4.04 of the Rules;
(c)obtained legal representation or sought leave of the Court to have a person other than a lawyer represent the First Respondent pursuant to rule 9.04 of the Rules;
(d)complied with the Orders of this Court made on 18 July 2016; or
(e)defended the proceedings with due diligence in accordance with subrule 13.03A(2)(b)(vii).
On the basis of the matters set out above, the First Respondent is in default as defined by subrule 13.03A(2) in that it:
(a)has not satisfied the Applicant’s claim;
(b)has not filed a notice of address for service in accordance with rule 9.01 of the Rules;
(c)has not filed a response within 14 days of being served with the proceedings in accordance with rule 4.03 of the Rules, and has not filed a response in accordance with the Rules at all; and
(d)has not contacted either the Applicant or the Court to propose how the matter may proceed, to seek additional time to take any steps, or to seek advice or legal representation and in doing so, has failed to defend the proceedings with due diligence.
Second Respondent
The Court finds that the Second Respondent has not:
(a)directed the First Respondent to comply with the Orders of this Court made on 18 July 2016;
(b)complied with the Orders of this Court made on 18 July 2016;
(c)filed a notice of address for service in accordance with rule 9.01 of the Rules;
(d)filed a response within 14 days of being served with the proceedings in accordance with rule 4.03 of the Rules, and has not filed a response in accordance with the Rules at all; and
(e)defended the proceedings with due diligence, by failing to contact either the Applicant or the Court to propose how the matter may proceed, to seek additional time to take any steps, or to seek advice or legal representation.
On 14 and 15 July 2016, the Applicant successfully made contact with the Second Respondent, who undertook to respond to the previous communications sent to both Respondents. However, there was no response (Second O’Brien Affidavit, [7]; the Second O’Brien Affidavit deposes that, after 15 July 2016, no contact was made with the Second Respondent until 10 August 2016, when the Applicant contacted the First Respondent by telephone) .
On 19 July 2016, the Applicant provided the Second Respondent with a copy of the Orders made on 18 July 2016 (Annexure KO-1 to the Second O’Brien Affidavit).
After further attempts to engage with the Second Respondent, the Applicant received an email from the Second Respondent on 12 August 2016 which attached a summary spreadsheet of time worked and amounts paid to the Employees, as well as a document in Mandarin that requested this Court dismiss the Applicant’s claim on the basis that the Employees:
(a)entered Australia on subclass 400 visas on 3 or 4 occasions for short trips and, as the Employees were originally from the Philippines (Segura Affidavit, [2]; Valmeo Affidavit, [3]), agreed to be, and were, paid locally in the Philippines; and
(b)the Employees also agreed to sign “agreement letters” to withdraw their complaints.
(The original document appears at Annexure KO-X to the Second O’Brien Affidavit, whilst a certified translation appears at Annexure KO-X to the Second O’Brien Affidavit. The Translator Affidavit sets out the translation of the original document).
The Court finds that the Second Respondent’s document does not constitute a response or defence under the Rules. Nonetheless, the point raised in paragraph 27(a) above is discussed below. The point raised in paragraph 27(b) above has been dealt with in previous cases. Only the Applicant, who is empowered by statute to enforce workplace rights, can withdraw the “complaint”( See Tomlinson v Ramsey Food Processing Pty Limited [2015] HCA 28 at [44] and Fair Work Ombudsman and Ors v Atkins Freight Services Pty Ltd [2015] SAIRC 22 at [44] to [48]. Further, item 33 in the table under subsection 539(2) of the FW Act provides only an inspector standing to bring proceedings in relation to failure to comply with a compliance notice).
Despite several attempts by the Applicant to engage the Second Respondent, but for the communications set out above, the Court finds that he has failed himself, and has failed to direct the First Respondent, to actively participate in these proceedings (Second O’Brien Affidavit, [3] to [23]). In fact, the Second Respondent has indicated that he no longer wishes to participate in these proceedings at all (Second O’Brien Affidavit, [23]).
ENTITLEMENT TO RELIEF
The factual background to the alleged contraventions of the FW Act is set out in the SOC. In summary the Court finds:
(a)at all material times, the First Respondent was a national system employer within the meaning of section 14 of the FW Act (SOC, [3(g)]);
(b)at all material times, the First Respondent was required to comply with the FW Act (SOC, [3(h)]);
(c)the First Respondent was the employer of the Employees (SOC, [3(f)]);
(d)Inspector Zheng formed a reasonable belief that the First Respondent underpaid, or did not pay, the Employees numerous entitlements under the Building and Construction General On-Site Award 2010 (Building and Construction Award) and the National Employment Standards (NES) (SOC,[5]);
(e)Inspector Zheng issued the Compliance Notice on 8 January 2016 (SOC, [6]); and
(f)the Compliance Notice was not complied with by 22 January 2016 or at any time (SOC, [8]).
The Court finds that the facts summarised demonstrate that, pursuant to section 716 of the FW Act:
(a)Inspector Zheng held a reasonable belief that the First Respondent has contravened, amongst other things, a provision of the NES and a term of a modern award (First Zheng Affidavit, [5]. It is required by subsection 716(1) of the FW Act that an inspector reasonably believes that a person has contravened, amongst other things, the NES, a term of a modern award in order to issue a compliance notice);
(b)Inspector Zheng issued the Compliance Notice, which required the First Respondent to take specific action;
(c)the Compliance Notice set out the matters required in subsection 716(3) of the FW Act (A copy of the Compliance Notice appears at Annexure YZ-2 to the First Zheng Affidavit);
(d)the Compliance Notice did not relate to or overlap with any contravention subject to an enforceable undertaking entered into pursuant to section 715 of the FW Act (First Zheng Affidavit, [21] to [22]); and
(e)the Compliance Notice was not complied with and no review application under section 717 of the FW Act was, or has been, made (First Zheng Affidavit, [16] to [17]).
The facts summarised thus give rise to a contravention of subsection 716(5) of the FW Act.
Paragraphs 11 and 12 of the SOC alleged that the Second Respondent was involved in that contravention. In summary:
(a)the Second Respondent was aware that the Applicant had served the Compliance Notice on the First Respondent; and
(b)the Second Respondent was the person who made a decision on behalf of the First Respondent to not comply with the Compliance Notice.
The Court finds that the facts summarised demonstrate that the Second Respondent was an intentional participant in the First Respondent’s failure to comply with the Compliance Notice and is thus taken to be “involved” in a contravention of subsection 716(5) of the FW Act within the meaning of subsection 550(2) of the FW Act.
Subsection 716(5) of the FW Act is a civil remedy provision for the purpose of subsection 539(1) of the FW Act. Section 539 enables an inspector to apply to the Court for orders in relation to contraventions of a civil remedy provision. The Applicant is an inspector for the purposes of the FW Act, by reason of section 701 of the FW Act, and has standing to bring this proceeding (SOC, [1]).
On that basis, the Court finds that the Applicant has an entitlement to the relief sought (ACCC v Dataline, [53]) in its Default Judgment Application as it has made out a case for relief on the facts of the SOC, as summarised above. There is no discretionary reason not to grant the relief sought.
Whether employment was sufficiently connected to Australia
Whilst the Applicant submits that it is entitled to the relief sought by reason of both the First and Second Respondents’ default in these proceedings, it noted that, at the hearing of the leave application on 16 May 2016, the Court mentioned an issue raised in an email sent by the Second Respondent to Inspector Zheng on 4 February 2016 (Annexure YZ-8 to the First Zheng Affidavit) which gave rise to the question of whether the relevant employees are (or were at the relevant time) covered by Australian workplace laws (a similar point to that set out in paragraph 27(a) above).
As a preliminary matter, the question of whether the Employees were covered by Australian workplace laws is, the Applicant submitted, properly a matter that would be the subject of a review application by the Respondents under section 717 of the FW Act to review the issue of the compliance notice. The Respondents have not filed any such application (SOC, [9]; First Zheng Affidavit, [18]; Second O’Brien Affidavit, [26]). Absent a review application, the belief of the Fair Work Inspector and the demand made in the Compliance Notice must stand; indeed, in circumstances of review, the person issued with the compliance notice is the party that bears the onus of proof of the facts and circumstances necessary to establish the ground that it relies upon when seeking that the court cancel or vary the notice: Hindu Society Of Victoria (Australia) Inc v Fair Work Ombudsman [2016] FCCA 221 at [34]. Inspector Zheng informed the Second Respondent of this avenue in her response on 5 February 2016 (Annexure YZ-9 to the First Zheng Affidavit).
It could be argued that the Second Respondent’s contention amounts to a “reasonable excuse”, as contemplated by subsection 716(6) of the FW Act. The Court accepts however, in the statutory context of section 716 and 717 of the FW Act, that a “reasonable excuse” is more likely directed to practical or other reasons which would prevent the Respondents from complying (See Controlled Consultants Proprietary Ltd v Commissioner for Corporate Affairs (1985) 156 CLR 385 at 392; Corporate Affairs Commission (NSW) v Yuill (1991) CLR 319 at 336). The suggestion of the Second Respondent, taken at its highest, questions whether the First Respondent committed the contraventions set out in the Compliance Notice at all. This is beyond the legitimate parameters of a “reasonable excuse” for not complying.
How does the FW Act and Award apply in this case?
But even if the Court considers that, in the exercise of its discretion, it should still consider whether the Employees were covered by Australian workplace laws, the steps outlined in Fair Work Ombudsman v Valuair Limited (No 2) [2014] FCA 759 (Valuair) apply in these proceedings; those steps to consider being whether:
(a)the Employees employed by the First Respondent are “national system employees”, within the meaning of section 13 of the FW Act;
(b)the First Respondent is a “national system employer”, within the meaning of section 14 the FW Act; and
(c)the Building and Construction Award applies and covers particular employment relationships under which the work is performed, within the meaning of subsections 47(3) and 48(5) of the FW Act.
Section 13 of the FW Act provides:
“A national system employee is an individual so far as he or she is employed, or usually employed, as described in the definition of national system employer in section 14, by a national system employer, except on a vocational placement.” (emphasis in original)
Section 14 of the FW Act relevantly provides:
“(1) A national system employer is:
(a) a constitutional corporation, so far as it employs, or usually employs, an individual; or …” (emphasis in original)
A constitutional corporation is a corporation to which paragraph 51(xx) of the Constitution applies, including foreign corporations. Within that meaning, the First Respondent is a constitutional corporation (SOC, [3(c)]).
However, as Justice Buchanan observed in Valuair, subsection 14(1)(a) must be read in conjunction with subsection 21(1)(b) of the Acts Interpretation Act 1901 (Cth) (Interpretation Act) (the Interpretation Act applies as it was when in force on 25 June 2009 by reason of section 40A of the FW Act), which provides that:
(1) In any Act, unless the contrary intention appears:
(b) references to localities jurisdictions and other matters and things shall be construed as references to such localities jurisdictions and other matters and things in and of the Commonwealth.
Some sufficient connection must be made with Australia, either so far as the constitutional corporation is concerned, or so far as its employees are concerned (Valuair, [68]). This sufficient connection must be made with the employment relationship in question, and not simply with particular work (Valuair, [75]). In summary:
(a)the FW Act depends, in the first instance, upon a relationship of employment arising from a contract of employment. It is upon that legal circumstance, not just the performance of work, that the FW Act and modern awards operate (Buchanan J, from [75] to [81], set out that contracts must first exist for award entitlements, including rates of pay, to be imported into them: Valuair at [78] to [80], citing Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 420, 462);
(b)awards apply to and supplement a contract of employment in a comprehensive way, and not in some partial or fragmented way (Valuair, [82] and [83]); and
(c)the structure of the FW Act makes it clear that the FW Act applies to and covers “employment” or “particular employment” in relation to the NES and modern awards, respectively (Subsection 61(1) of the FW Act provides that the NES “apply to the employment of employees”; Subsections 47(3) and 48(5) of the FW Act provide that modern awards cover an “employee in relation to particular employment.) These provisions do not operate “at large” in relation to foreign employers and foreign employees, as the relevant provisions must be read in accordance with subsection 21(1)(b) of the Interpretation Act (Valuair, [86] to [90]).
In Valuair, Justice Buchanan considered whether two Singapore- and Thailand-based airlines and their cabin crew employees, who performed part of their duties in Australia, were “in and of Australia” and found, at [84], that:
(a)the employer was a foreign corporation;
(b)the employees were not resident in Australia;
(c)the contracts of employment were made outside Australia (The Applicant did not make any submission as to the proper law of the contracts set out in paragraphs [11] to [16] of the Segura Affidavit and paragraphs [17] to [28] of the Valmeo Affidavit);
(d)payment of wages and taxes (and other liabilities not presently relevant to these proceedings) were made outside Australia;
(e)the employees performed “tours of duty” which commenced and finished outside Australia; and
(f)the workers’ time on duty in Australia represented only a small proportion of overall working time, and was transient (or “some work (a minority) within the territorial limits of Australia”, as described at [111] in respect of the application of the modern award relevant to that case).
In Valuair, it was determined that there was an insufficient connection with Australia. His Honour also found that the relevant award did not apply to the employment of the cabin crew saying, at [94], that there was:
“no basis upon which the Award should be construed to apply to contracts of employment made by foreign corporations and their foreign national employees, based overseas, who enter Australia on special purpose visas for short periods of time, only because some of their work (for which they are paid in their own country) is carried out within the territorial limits of Australia before they return home.” (emphasis added)
Valuair was recently applied in Holmes v Balance Water Inc & Ors (No 2) [2015] FCCA 1093 (Holmes) where Judge Driver found, at [132] to [134], that an employee’s employment with a company registered in the United States of America (USA) was found not to be “in and of Australia” in circumstances where the applicant:
(a)was employed in the USA;
(b)physically present in the USA at all relevant times;
(c)paid in USA dollars; and
(d)not required by her employer to perform work in Australia.
Judge Driver said that he did not consider the place where work was to be performed to be critical, as there was no contractual obligation as to where work was to be performed, and, at [133], placed greater weight on facts which weigh “in favour of a contractual connection” outside of Australia, including the employee’s deliberate decisions to be paid in US currency, to have her employment address in the US and to pay US taxes. Although these considerations overlap with relevant factors in Valuair, including place of payment, employment liabilities such as tax and where an employee is resident, Judge Driver instead emphasised, at [134], the employees’ “deliberate choice to link her employment relationship to the USA and not to Australia”.
Holmes, at [131], applied Valuair and said that the proper test is to link the employment relationship sufficiently with Australia, not just the employee or the employer to Australia.
The Applicant contended, in light of those decisions, that the employment relationships underlying the Compliance Notice to be “in and of Australia” for several reasons.
Time spent in Australia
Firstly, the Employees’ relevant employment took place in Australia. Buchanan J, in concluding that the employment relationships in Valuair did not have a sufficient connection with Australia, noted that the employees were “based overseas”, would perform “some of their work…within the territorial limits of Australia before they return home” (Valuair,[94]) and that their “time on duty in Australia…represents only a small proportion of overall working time, and is transient.” (Valuair, [84]).
Those facts can be distinguished from the evidence before the Court in this matter. The periods of work covered by the Compliance Notice:
(a)commenced and concluded in Australia in three or four distinct periods where work was performed pursuant to subclass 400 visas, as follows:
Mr Valmeo Date entered Australia Date commenced work for Chia Tung Date finished work for Chia Tung Date departed from Australia 23 December 2013 24 December 2013 31 January 2014 2 February 2014 24 February 2014 25 February 2014 3 April 2014 4 April 2014 22 April 2014 23 April 2014 5 June 2014 6 June 2014 18 June 2014 19 June 2014 25 July 2014 27 July 2014 Mr Segura Date entered Australia Date commenced work for Chia Tung Date finished work for Chia Tung Date departed from Australia 23 December 2013 23 December 2013 31 January 2014 2 February 2014 24 February 2014 25 February 2014 1 April 2014 3 April 2014 22 April 2014 23 April 2014 6 June 2014 8 June 2014
(Segura Affidavit, [18]; Valmeo Affidavit, [30]; see also Annexure KO-4 to the Second O’Brien Affidavit, at page 32, where the Second Respondent sets out substantially identical dates under which work was performed by the Employees).
(b)the Employees were resident in Australia for the entire periods of work set out above (Valmeo Affidavit, [34]; Segura Affidavit [22]);
(c)the periods of time that cannot be accurately described as “transient”, extending from 42 to 49 days, within which daily shifts were worked by the Employees (In Valuair, at [8], the cabin crew commenced their shifts outside Australia or, in some circumstances, completed a shift in Australia but transited from Australia after one overnight stay); and
(d)the Employees did not work in between these periods for either the First Respondent or anybody else, emphasising that the employment period covered by the Compliance Notice represented the entire employment relationship between the First Respondent and the Employees (The Compliance Notice concerned a period from 16 December 2013 to 27 July 2014, inclusive of both employees; see Annexure YZ-8 to the First Zheng Affidavit).
Nature of the underlying relationship
Secondly, any consideration of these facts must consider the overall employment relationship and the contractual arrangement which underpinned it. During the period covered by the Compliance Notice, the Employees were performing work connected to Australia and nowhere else (Valmeo Affidavit, [39]; Segura Affidavit [28]). The work performed by the Employees across the trips covered by the subclass 400 visas were identical, and at the same location (Valmeo Affidavit, [33]; Segura Affidavit [21]).
The Employees returned to the Philippines only by reason of their immigration status and the restrictions contained in the visa that the First Respondent arranged for them (Valmeo Affidavit, [32]; Segura Affidavit [20]). Although Judge Driver did not place great weight on this in Holmes, it is relevant in these proceedings that the contracts underpinning each trip to Australia by the Employees subject to subclass 400 visas, stipulated Australia as the place of work (The employment contracts set out that the type of work to be performed “in the territory of Australia”, and; the employment certificates set out the First Respondent “is assigning and dispatching [the Employee] for the installation and commissioning of a Feedmill in Manildra NSW Australia” and note Australian addresses under the heading “Details of this project are:” see Annexures JV-5, JV-6, JV-7, JV-8 to the Valmeo Affidavit and Annexures AS 2, AS-3, AS-4, AS-5, AS-6 and AS-7 to the Segura Affidavit. The Employment Contract and Employment Certificates dated 6 February 2014 state that the address is in Narrabri (see Annexure JV-6 to the Valmeo Affidavit and Annexures AS-4 and AS-5 to the Segura Affidavit), however the Employees actually performed work in Manildra during that period (see Valmeo Affidavit, [33]; Segura Affidavit, [21])).
Although the Employees had a history of performing work with the First Respondent in their home country, this is not a conclusive reason why the Employees’ employment under subclass 400 visas could not be “in and of Australia”. There is also evidence before the Court that the work performed under the subclass 400 visas did not involve a mere transfer of location from the Philippines to Australia, as each of the Employees:
(a)had ceased performing work relating to the First Respondent in the Philippines some time before they travelled to Australia, from the beginning of 2012 in relation to Mr Segura and from June 2012 in relation to Mr Valmeo (Segura Affidavit, [6]; Valmeo Affidavit, [7], although that Mr Valmeo’s evidence is that he performed work in the Philippines from October 2012 to January 2013 for the First Respondent);
(b)held a belief that the entity that originally employed them in the Philippines was not the First Respondent, but an associated entity of the First Respondent that was operated in part by the Second Respondent (Valmeo Affidavit, [3]; Segura Affidavit, [3]); and
(c)then undertook work in Angola before the commencement of the first subclass 400 visa in December 2013 (Valmeo Affidavit, [44] and Annexure JV-2 to Valmeo Affidavit; Segura Affidavit [30] and Annexure AS-1 to the Segura Affidavit).
Mr Valmeo also performed work in Angola for the First Respondent on a project in November and December 2014 (Valmeo Affidavit, [4]). The Employees were later employed by the First Respondent on a subclass 457 (Sponsored Work) visa (Valmeo Affidavit, [44]; Segura Affidavit [30]). Since that time, the Employees have both continued to work in Australia (Valmeo Affidavit, [59]; Segura Affidavit [35]), making an inference available to the Court that the Employees were not truly “based overseas” at any time since December 2013.
Documents obtained by the Employees indicate that their time in Australia under the subclass 400 visas was described as the “MSM Project” and the “Australia Project” (Valmeo Affidavit, [40]; Segura Affidavit, [30] and Annexure AS-9 to the Segura Affidavit. Note however that as part of the documentation obtained by the Applicant and set out at Annexure YZ-1 to the Second Zheng Affidavit, at page 33, a document titled “Sales Contract” indicates that the contract under which the First Respondent negotiated work in Australia is stipulated as being governed by the laws of Australia, which is the same contract that appears at Annexure YZ-3 and to the Second Zheng Affidavit).
The Applicant contended that the facts of the underlying contractual relationship between the Employees and the First Respondent indicate project based work that did not carry over from location to location. It appears from the timeline of work performed, beginning with the first trip in December 2013 and including the later work performed pursuant to subclass 457 visas, that there was a continuing and meaningful connection between the particular employment relationship that had formed from December 2013 between the Employees and the First Respondent to carry out their work in Australia.
Visa status is not itself a factor
Thirdly, as raised informally by the Second Respondent (See Annexure YZ-8 to the First Zheng Affidavit; Second O’Brien Affidavit, [15] and [23] and Annexure KO-4 to the Second O’Brien Affidavit), the fact that the Employees performed work under subclass 400 visas during the period covered by the Compliance Notice should not affect the conclusion that the Employees’ employment relationships held a sufficient connection with Australia.
The Applicant acknowledged that subclass 400 visas are intended to apply to “work that is highly specialised and non-ongoing” (Explanatory Statement to the Migration Amendment Regulation 2013 (No.1), as in force from 14 March 2013).
There was no practical difference between the work undertaken by the Employees pursuant to the subclass 400 visas and pursuant to the subclass 457 visas (to which the Respondents have previously accepted the FW Act applies) (Annexure YZ-11 to the First Zheng Affidavit, annexes an Enforceable Undertaking (EU) between the Applicant and the First Respondent pursuant to section 715 of the FW Act, which was signed by the Second Respondent on behalf of the First Respondent on 24 March 2015. At paragraph 3, 5(c) and 7 of the EU, the Respondents have acknowledged that the FW Act and the Building and Construction Award apply to workers employed in Australia under subclass 400 visas. Further, Attachment A to the EU, at page 49 of the First Zheng Affidavit, reproduces a public notice that also acknowledges that workers employed in Australia under subclass 400 visas were underpaid entitlements arising from the FW Act and the Building and Construction Award. The Second Respondent also requested that the Employees sign “agreement letters” withdrawing their complaints to the Applicant: see Valmeo Affidavit, [46] to [53]; Segura Affidavit at [31] to [34]; Second O’Brien Affidavit, [15] and [23] and Annexure KO-4 to the Second O’Brien Affidavit. Note that the visa documents contained in Annexures YZ-1, YZ-2 YZ-3 YZ-4 YZ-5, YZ-8, YZ-7 provide a declaration that the primary applicant “must abide by Australian employment conditions and awards”, for example, at page 17; the First Respondent was responsible for the Employees’ visa applications: Valmeo Affidavit, [32]; Segura Affidavit at [20]). It cannot be said that the nature of and conditions placed upon a subclass 400 visa are comparable to the visa referred to by justice Buchanan in Valuair (For completeness, Buchanan J was referring to a class of visa, a Special Purpose visa, created as part of Australia’s transit without visa arrangement to include, amongst other classes of persons, transit passengers who arrive by aircraft, as set out in the Explanatory Statement to the legislative instrument IMMI09/064 dated 4 February 2010 made pursuant to regulation 2.40(1)(n) of the Migration Regulations 1994 (Cth)).
Payment of wages and tax
Fourthly, the evidence indicates that, although the majority of the Employees’ wages were paid into bank accounts in the Philippines, no tax or other employment related liabilities were paid anywhere on behalf of the Employees by the First Respondent in Australia, in the Philippines or anywhere (Valmeo Affidavit, [35], [36]; Segura Affidavit [23]). There is also evidence that non-payment of tax to the Employees was openly contemplated by the First Respondent (Valmeo Affidavit, [39] and [43]).
Although the payment of wages by the First Respondent was made to bank accounts in the Philippines, there is evidence that the Employees could seek cash advances in Australia and that there was ready access to their wages in Australia (Valmeo Affidavit, [44]; Segura Affidavit [23]).
Summary
The Court finds that a sufficient connection between Australia and the particular employment relationships has been established in this matter. The Court finds that, in light of the relevant facts in Valuair and Holmes, the following relevant facts in these proceedings indicate that the particular employment of the Employees by the First Respondent in the period covered by the Compliance Notice was “in and of Australia”:
(a)the contracts of employment, which were made outside of Australia, stipulate that the place of work would be, and in fact was, always within Australia;
(b)the work performed by the Employees was the same across each trip under a subclass 400 visas, as well as later trips under the subclass 457 visas;
(c)the Employees were resident in Australia for significant periods of time, and were not from December 2013 “based overseas”, and performed all of their work in the period covered by the Compliance Notice within the territorial limits of Australia;
(d)the Employees were able to access wages in Australia, both from a representative of the First Respondent and from their Filipino bank account;
(e)no tax was paid in the Philippines, or Australia, or in fact anywhere else; and
(f)the Respondents have acknowledged that employment relationships between the First Respondent and other employees working in Australia under subclass 400 visas were capable of being subject to the FW Act and the Building and Construction Award (See [60] and footnote 61).
Application of the Building and Construction Award
Finally, and further to paragraphs 7, 23 and 24 of the Service Submissions, the Applicant contended that the Compliance Notice was validly issued as the Building and Construction Award properly applied to and covered the First Respondent and the Employees. It follows from the Applicant’s submissions referred to above that the First Respondent was covered by the Building and Construction Award as, in relation to Mr Segura and Mr Valmeo, it was an employer that employed employees throughout Australia (Building and Construction Award, clause 3.1).
On balance, the Court exercises its discretion to make the orders and declarations sought, on the basis of the answers to the questions posed above.
THE COURT’S POWER TO MAKE THE ORDERS SOUGHT
Court’s Powers
The Court has the power to make the declarations set out at paragraph 13 of the SOC pursuant to section 16 of the Federal Circuit Court of Australia Act 1999 (Cth).
The Court has the power to make the orders set out at paragraphs 15 and 16 of the SOC pursuant to subsection 545(1) of the FW Act. However, as set out from paragraph 68 below, the Applicant sought these orders to be made in a different form, which is set out in the Default Judgment Application.
Compensation from accessories under the FW Act
The Applicant has sought orders, at paragraphs 15 and 16 of the SOC, which would exhaust the First Respondent’s liability for compensation in the event that 30 days had passed. The question of whether compensation ordered under section 545 of the FW Act can be made payable by an accessory (such as the Second Respondent) was recently considered by Judge Jarrett in Step Ahead (at [45] to [80]). In that matter, his Honour concluded:
(a)there was no reason to read down the text of the broad power of this Court set out in subsection 545(1) if the FW Act, such that orders awarding compensation for failing to pay an amount due under the FW Act could only be made against the employer (at [45] to [66]);
(b)it is not necessary for an application to establish that it was the act of the accessory that caused the relevant loss or contravention (at [67] to [68]). However, the Applicant submits and the Court in this case finds that the accessory in this matter, the Second Respondent, was directly responsible for the contravention: SOC, [11(b)], First Zheng Affidavit, [14].
(a)the Court’s discretion to exercise the power conferred under subsection 545(1) of the FW Act must be exercised judicially, and the following non-exhaustive matters will be relevant considerations in most cases (at [69] to [70]):
(i) whether such an order is unnecessary given the capacity of the employer to make the compensation payments;
(ii) the nature and extent of the accessory’s involvement in the contravention;
(iii) any relevant public policy reasons; and
(iv) the nature of the order sought, concluding that joint and several liability to be the only appropriate form that such an order should take.
This Court follows the decision of Judge Jarret in Step Ahead. When the principles set out in Step Ahead are applied to the facts of this matter, the Court finds that it should make the orders set out in the Default Judgment Application, rather than in the form of the orders proposed at paragraphs 15 and 16 in the SOC. The effect of this change is that the First and Second Respondent would, if the proposed orders in the Default Judgment Application are made, be jointly and severally liable; the orders proposed at paragraphs 15 and 16 in the SOC sought to make the Second Respondent solely liable for the amount sought by the Compliance Notice in the event that the First Respondent did not pay that amount within 30 days. The Applicant now contends, and the Court agrees, that the nature of the orders sought in the Default Judgment Application is consistent with those made in Step Ahead. Reasons for this change, and the appropriateness of this order, are set out below.
Real risk that order will not be satisfied
Given that the First Respondent is a foreign corporation based in Taiwan (Minster Affidavit, [4] and [11]; Service Submissions at [2]), there are limited incentive or enforcement opportunities for the Applicant to ensure the Court’s order for compensation is complied with in the event that the First Respondent is solely liable. Although the Applicant does not submit that proceedings concerning foreign corporations would automatically create a real risk that orders made against them would not be satisfied, in this case the Court accepts that the evidence in this matter indicates that the First Respondent would be unlikely to comply (Second O’Brien Affidavit, [23]).
Nature and extent of the involvement
The Second Respondent was closely and clearly involved in the failure of the First Respondent to comply with the Compliance Notice for which the Applicant seeks to make both Respondents jointly and severally liable (SOC, [4] and [11]; First Zheng Affidavit, [14]). Although it is not necessary to establish that it was the act of the accessory that caused the relevant loss or contravention, in these proceedings, the Second Respondent was the director and the controlling mind of the First Respondent and was the only person who could have directed the First Respondent to comply with the Compliance Notice (SOC, [11(b)]).
Public policy considerations
In Step Ahead, Judge Jarrett accepted the FWO’s submission that the public policy reasons underpinning the imposition of compensation orders on accessories included the deterrence of conduct that undermined the required standard and prevention of people retaining a benefit resulting from their misconduct. His Honour did so in the context of discouraging a person from operating the same business through different corporate entities. However, the Applicant submits and the Court accepts that the public policy considerations above are equally relevant in this matter.
Nature of the order
The proposed order is that the First and Second Respondents be jointly and severally liable for the amount in the Compliance Notice. In its SOC, the Applicant originally sought:
“15. An order pursuant to section 545 of the FW Act directing the first respondent to comply with the terms of the Compliance Notice, by paying compensation of $61,910.34 to the applicant, with the applicant to:
(a) within 14 days of receipt of the compensation, pay the Employees the amounts set out in the Compliance Notice; and
(b) in the event that the applicant cannot locate one or both of the Employees, pay the applicable amount due to each Employee that cannot be located to the Consolidated Revenue Fund of the Commonwealth within a further 7 days.
16. Further to the order above, to the extent that any of the compensation owed to the applicant remains outstanding within 30 days, an order under subsection 545(2)(b) of the FW Act that the second respondent pay the remaining sum to the applicant.”
The Applicant contends and the Court accepts, that the order proposed in the Default Judgment Application is appropriate in light of the recent decision in Step Ahead, at [80], where Judge Jarrett expressed his view that joint and several liability orders were appropriate. The Court accepts that this is also appropriate in these proceedings in the form of the orders made in Step Ahead.
ORDERS SOUGHT
The Court makes the orders set out in the Default Judgment Application.
I certify that the preceding seventy-five (75) paragraphs are a true copy of the reasons for judgment of Judge Altobelli
Date: 14 November 2016
Schedule 1
Applicant’s Minute of Proposed Order
THE COURT DECLARES THAT:
Based on the admissions which the First Respondent is deemed to have made, by reason of its default, pursuant to sub-rule 13.03A(2) of the Federal Circuit Court Rules 2011 (Rules), the First Respondent contravened subsection 716(5) of Fair Work Act 2009 (Cth) (FW Act) by failing to comply with a compliance notice dated 8 January 2016 (Compliance Notice) which required the First Respondent to pay Mr Arlan Segura the amount of $26,445.29 (gross) and Mr Jeofrey Valmeo the amount of $35,465.05 (gross) by 22 January 2016 and provide evidence of the same to the Applicant by 29 January 2016.
Based on the admissions which the Second Respondent is deemed to have made, by reason of his default, pursuant to sub-rule 13.03A(2) of the Rules, the Second Respondent was involved in the First Respondent’s contraventions identified in paragraph 1 above within the meaning of subsection 550(2) of the FW Act and is thereby, pursuant to subsection 550(1) of the FW Act, taken to have himself committed that contravention.
THE COURT ORDERS THAT:
Default judgment be entered for the Applicant against the First Respondent and the Second Respondent pursuant to Rule 13.03B(2)(c) of the Rules.
Pursuant to section 545 and section 550 of the FW Act, the First and Second Respondent, jointly and severally, are to comply with the terms of the Compliance Notice, by paying compensation of $61,910.34 to the Applicant within 30 days, with the Applicant to:
a. within 14 days of receipt of the compensation, pay Mr Arlan Segura and Mr Jeofrey Valmeo (the Employees) the amounts set out in the Compliance Notice; and
b. in the event that the Applicant cannot locate one or both of the Employees, pay the applicable amount due to each Employee that cannot be located to the Consolidated Revenue Fund of the Commonwealth pursuant to section 559 of the FW Act within a further 7 days.
The matter is to be adjourned to a date to be fixed for a further hearing to determine the Applicant’s claim for penalties to be imposed on the First and Second Respondents.
The Applicant is to file any evidence and submissions in relation to penalty within 28 days of this order.
The Respondents are to file any evidence and submissions in relation to penalty within a further 28 days.
The Applicant has liberty to apply.
Such further or other orders as the Court deems fit.
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