Fair Work Ombudsman v ACN 146 435 118 Pty Ltd

[2013] FCCA 803

FEDERAL CIRCUIT COURT OF AUSTRALIA

FAIR WORK OMBUDSMAN v ACN 146 435 118 PTY LTD & ANOR [2013] FCCA 803

Catchwords:
INDUSTRIAL LAW – Alleged contravention of Act and Award – liability – default judgment.

PRACTICE AND PROCEDURE – Default judgment – default in compliance with requirements to file and serve response and defence.

Legislation:

Cleaning Services Award 2010
Fair Work Act 2009 (Cth), ss.44(1), 45, 90(2), 323(1), 324(1), 535(1), 536, 545(1) and (2), 546(1) and (3), 547(2), 550, 712(3)
Fair Work Regulations 2009 (Cth), regs.3.32(c) and(d), 3.33(1)(a) and (3)(d), 3.34(a), 3.36(1), 3.37, 3.40, 3.44(1)
Federal Circuit Court Rules 2001 (Cth), ss.1.03(2) and (4), 13.03A(2)(b)(ii), 13.03B(2)(c)
Federal Magistrates Court Rules 2001 (Cth), rr.4.03(2), 9.04

Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175; [2009] HCA 27

Applicant: FAIR WORK OMBUDSMAN

First Respondent: ACN 146 435 118 PTY LTD

Second Respondent: CATHERINE PAINO-POVEY

File Number: PEG 6 of 2013

Judgment of: Judge Lucev

Hearing date: 12 July 2013

Date of Last Submission: 12 July 2013

Delivered at: Perth

Delivered on: 12 July 2013

REPRESENTATION

Counsel for the Applicant: Ms E Raper

Solicitors for the Applicant: The Office of the Fair Work Ombudsman

Counsel for the Respondents: Mr D Love

Solicitors for the Respondents: Dean Love & Associates

DECLARATIONS AND ORDERS

THE COURT DECLARES THAT:

1. The First Respondent contravened:

   (a)section 45 of the Fair Work Act 2009 (Cth) (“FW Act”) by failing to pay:

   (i)Ling Chai (Chai);

   (ii)Fleur McMillan (McMillan);

   (iii)Jai Vainu (Vainu);

   (iv)Susan McDermott (McDermott);

   (v)Yuan-Miao Wen (Wen); and

   (vi)Shuk Pui Yau (Yau);

   (collectively the Employees)

   the minimum rates of pay for all hours worked in accordance with clause 16.1 of the Cleaning Services Award 2010 (MA000022) (the Modern Award);

   (b)section 45 of the FW Act by failing to pay each of the Employees at least fortnightly in accordance with clause 20 of the Modern Award;

   (c)section 45 of the FW Act by failing to pay each of the Employees the applicable overtime rates for overtime hours worked in accordance with clause 28.1 of the Modern Award;

   (d)section 324(1) of the FW Act in that it unlawfully deducted amounts payable to Vainu, McDermott, Yau, Wen, Chai and McMillan in relation to work performed in the initial weeks of their periods of employment;

   (e)section 323(1) of the FW Act in that it failed to pay Yau’s wages in full, resulting in an underpayment to Yau;

   (f)section 323(1) of the FW Act by failing to pay each of the Employees in full the amounts payable to them in relation to the performance of work;

   (g)sections 44(1) and 45 of the FW Act by failing to pay the Employees in respect of their accrued unpaid annual leave and annual leave loading on termination of employment, in accordance with s.90(2) of the FW Act and clauses 29.1 and 29.7 of the Modern Award;

   (h)section 45 of the FW Act by failing to provide access to rosters that showed the Employees’ start and finish times in accordance with clause 25 of the Modern Award;

   (i)section 45 of the FW Act by failing to provide McMillan, Vainu, McDermott and Yau with unpaid meal breaks when they worked for periods in excess of 4 hours and 30 minutes in accordance with clause 26.2 of the Modern Award;

   (j)section 712(3) of the FW Act by failing to comply with five Notices to Produce Records or Documents served on 3 October 2011, 1 February 2012 and 22 February 2012;

   (k)section 535(1) of the FW Act by failing to make and keep records in relation to employees of the kind prescribed in regulations 3.32(c), 3.32(d), 3.33(1)(a), 3.33(3)(d), 3.34(a), 3.36(1), 3.37 and 3.40 of the Fair Work Regulations 2009 (Cth) (“FW Regulations”);

   (l)section 536(1) and (2) of the FW Act by failing to issue payslips to each of the Employees that included the information required by the FW Regulations within one working day of paying amounts to them in relation to the performance of work;

   (m)regulation 3.44(1) of the FW Regulations by making payslips which contained information which was false or misleading, in that the payslips stated that McMillan and Vainu had worked 7.6 hours per day, when they had actually worked 9 hours per day; and

   (n)section 45 of the FW Act by failing to pay the Employees for time spent travelling from one place of work to another at the appropriate rate, in accordance with clause 17.10 of the Modern Award;

2. The Second Respondent was involved in each of the contraventions of the First Respondent as set out in declaration (1) above and pursuant to s.550 of the FW Act is thereby taken to have contravened the provisions herself.

THE COURT ORDERS THAT:

1. Judgment against the First and Second Respondents be entered for the Applicant pursuant to Rule 13.03B(2) of the Federal Circuit Court Rules 2001 (Cth).

2. Pursuant to s.545(2)(b) of the Fair Work Act 2009 (Cth) (“FW Act”), the First Respondent pay compensation to the Employees for loss that they have suffered because of the above declared contraventions in the following amounts, being the total underpayments owing to the Employees:

   (a)McDermott: $4,392.67;

   (b)Chai: $4,489.68;

   (c)Yau: $2,937.45;

   (d)McMillan: $4554.65;

   (e)Vainu: $4,220.79; and

   (f)Wen: $1,915.38

   (collectively, the Underpayment Amounts).

3. Pursuant to s.547(2) of the FW Act the First Respondent pay interest pursuant to legislation on the Underpayment Amounts referred to in Order 4 above.

4. Pursuant to s.545(1) of the FW Act the First Respondent make contributions on behalf of each of the Employees to the Employees’ nominated superannuation funds in respect of the ordinary time earnings component of the payments made pursuant to Order 4 above at the superannuation guarantee charge rate prescribed by applicable superannuation legislation as at the date these orders are made.

5. The Underpayment Amounts, interest and superannuation referred to in Orders 4, 5 and 6 above be paid within 30 days.

6. The liability hearing listed for 6, 7 and 8 August 2013 be vacated.

7. This matter is adjourned to 10.15am on 6 August 2013 for further hearing with respect to the Applicant’s claim for penalties to be imposed on the Respondents.

8. The Applicant is to file and serve any submissions and evidence on which it relies in relation to penalty by 26 July 2013.

9. The Respondents are to file and serve any submissions and evidence on which they rely in relation to penalty by noon on 5 August 2013.

10. The parties have leave to apply.

FEDERAL CIRCUIT COURT OF AUSTRALIA

AT PERTH

PEG 6 of 2013

FAIR WORK OMBUDSMAN

Applicant

And

ACN 146 435 118 PTY LTD

First Respondent

CATHERINE PAINO-POVEY

Second Respondent

REASONS FOR JUDGMENT

(Edited ex tempore reasons)

Originating Application

1. The Originating Application sought orders as set out in the Statement of Claim filed with the Originating Application on 11 January 2013, by the Fair Work Ombudsman (“FW Ombudsman”) against the first respondent ACN 146 435 118 Pty Ltd (“the Corporation”) and the second respondent Catherine Paino-Povey (“Ms Paino-Povey”).

Application in a Case

1. The FW Ombudsman has now made an Application in a Case, filed on 9 July 2013, for default judgment against the Corporation and Ms Paino-Povey, who is a director of the Corporation.

2. Based on the affidavits of Ann Lucey filed on 8 and 12 July 2013, and the affidavit of Phoebe Nicholas filed on 12 July 2013, the Court finds that the Corporation and Ms Paino-Povey, and their lawyers, Dean Love & Associates, have been made aware of the default judgment hearing, and served with the relevant papers. Indeed, Mr Love appeared as Counsel at the hearing of the Application in a Case, but was unable to assist the Court as he had no instructions with respect to the matter.

3. The FW Ombudsman’s Application in a Case, as filed, seeks declarations and orders in the following terms:

   THE COURT DECLARES:

   1that the First Respondent contravened:

   a)section 45 of the Fair Work Act 2009 (Cth) (FW Act) by failing to pay:

   i.      Ling Chai (Chai);

   ii.     Fleur McMillan (McMillan);

   iii.     Jai Vainu (Vainu);

   iv.     Susan McDermott (McDermott);

   v.      Yuan-Miao Wen (Wen); and

   vi.     Shuk Pui Yau (Yau);

   (collectively the Employees)

   the minimum rates of pay for all hours worked in accordance with clause 16.1 of the Cleaning Services Award 2010 (MA000022) (the Modern Award);

   b)section 45 of the FW Act by failing to pay each of the Employees at least fortnightly in accordance with clause 20 of the Modern Award;

   c)section 45 of the FW Act by failing to pay each of the Employees the applicable overtime rates for overtime hours worked in accordance with clause 28.1 of the Modern Award;

   d)section 324(1) of the FW Act in that it unlawfully deducted amounts payable to Vainu, McDermott, Yau, Wen, Chai and McMillan in relation to work performed in the initial weeks of their periods of employment;

   e)section 324(1) of the FW Act in that it unlawfully deducted an amount from an amount payable to Yau at the time of the termination of her employment;

   f)in the alternative to the declaration at 1(f) [(e)] above, section 323(1) of the FW Act in that it failed to pay Yau’s wages in full, resulting in an underpayment to Yau;

   g)section 323(1) of the FW Act by failing to pay each of the Employees in full the amounts payable to them in relation to the performance of work;

   h)sections 44(1) and 45 of the FW Act by failing to pay the Employees in respect of their accrued unpaid annual leave and annual leave loading on termination of employment, in accordance with section 90(2) of the FW Act and clauses 29.1 and 29.7 of the Modern Award;

   i)section 45 of the FW Act by failing to provide access to rosters that showed the Employees’ start and finish times in accordance with clause 25 of the Modern Award;

   j)section 45 of the FW Act by failing to provide McMillan, Vainu, McDermott and Yau with unpaid meal breaks when they worked for periods in excess of 4 hours and 30 minutes in accordance with clause 26.2 of the Modern Award;

   k)section 712(3) of the FW Act by failing to comply with five Notices to Produce Records or Documents served on 3 October 2011, 1 February 2012 and 22 February 2012;

   l)section 535(1) of the FW Act by failing to make and keep records in relation to employees of the kind prescribed in regulations 3.32(c), 3.32(d), 3.33(1)(a), 3.33(3)(d), 3.34(a), 3.36(1), 3.37 and 3.40 of the Fair Work Regulations 2009 (Cth) (FW Regulations);

   m)section 536(1) and section 536(2) of the FW Act by failing to issue payslips to each of the Employees tht included the information required by the FW Regulations within one working day of paying amounts to them in relation to the performance of work;

   n)regulation 3.44(1) of the FW Regulations by making pay slips which contained information which was false or misleading, in that the payslips stated that McMillan and Vainu had worked 7.6 hours per day, when they had actually worked 9 hours per day; and

   o)section 45 of the FW Act by failing to pay the Employees for time spent travelling from one place of work to another at the appropriate rate, in accordance with clause 17.10 of the Modern Award;

   2that the Second Respondent was involved in each of the contraventions of the First Respondent as set out in declaration (1) above and pursuant to section 550 of the FW Act is thereby taken to have contravened the provisions herself.

   THE COURT ORDERS:

   1that judgment against the Respondent be entered for the Applicant pursuant to Rule 13.03B(2) of the Federal Court Rules 2011;

   2that pursuant to section 545(2)(b) of the Fair Work Act 2009 (Cth) (FW Act), the First Respondent pay compensation to the Employees for loss that they have suffered because of the above declared contraventions in the following amounts, being the total underpayments owing to the Employees:

   (a)McDermott: $4,392.67;

   (b)Chai: $4,489.68;

   (c)Yau: $2,937.45;

   (d)McMillan: $4554.65;

   (e)Vainu: $4,220.79; and

   (f)Wen: $1,915.38

   (collectively, the Underpayment Amounts);

   3that pursuant to section 547(2) of the FW Act the Respondent pay interest pursuant to legislation on the Underpayment Amounts referred to in Order 2 above;

   4that pursuant to section 545(1) of the FW Act the First Respondent make contributions on behalf of each of the Employees to the Employees’ nominated superannuation funds in respect of the ordinary time earnings component of the payments made pursuant to Order 2 above at the superannuation guarantee charge rate prescribed by applicable superannuation legislation as at the date these orders are made;

   5that the Underpayment Amounts, interest and superannuation referred to in Orders 2, 3 and 4 above be paid within 30 days;

   6that the liability hearing listed for 6, 7 and 8 August 2013 be vacated;

   7that this matter is adjourned to [date] at [time] for further hearing with respect to the Applicant’s claim for penalties to be imposed on the Respondents;

   8the Applicant is to file and serve any submissions and evidence on which it relies in relation to penalty by [date].

   9the Respondent’s are to file and serve any submissions and evidence on which it relies in relation to penalty by [date].

   10the parties have leave to apply;

   11such further or other orders as the Court considers appropriate.

Factual background

1. In the absence of any evidence from the Corporation and Ms Paino-Povey, the Court accepts that the relevant factual background is primarily as set out in the affidavit of Keelyann Thomson affirmed 5 July 2013 and filed on behalf of the FW Ombudsman on 9 July 2013. That relevant factual background is as follows:

   a)on 11 January 2013 the FW Ombudsman filed the Statement of Claim;

   b)on 14 February 2013 the Court made orders requiring the respondents to file and serve a Defence by 13 March 2013;

   c)on 13 March 2013 Mr Mark Povey, in his capacity as a director of the Corporation, and Ms Paino-Povey, filed and served a Response, annexing a Statement of Defence, which was a reproduction of the Statement of Claim, with handwritten annotations against each paragraph of the Statement of Claim, and the Particulars in the Statement of Claim, to the effect of “Agreed”, “Don’t Agree” or “Somewhat Agreed”;

   d)on 2 April 2013 the FW Ombudsman sent a letter to Mr Povey by email noting that the Corporation was not legally represented as required by r.9.04 of the then Federal Magistrates Court Rules 2001 (Cth) (“FMC Rules”), and that the form of the Response and Statement of Defence, made it difficult for the FW Ombudsman to determine the matters in dispute;

   e)on 16 April 2013 the FW Ombudsman sent a further letter to Mr Povey, again noting difficulties with the Response and Statement of Defence and made enquiries as to whether an Amended Defence would be filed, and that if an Amended Defence was not filed that the FW Ombudsman would not be in a position to file its evidence as required by the Court’s order of 14 February 2013. The FW Ombudsman also foreshadowed that if the Corporation and Ms Paino-Povey failed to file an Amended Defence that the FW Ombudsman would make an application to strike out the Response and Statement of Defence;

   f)Mr Povey responded on 16 April 2013 advising the FW Ombudsman, by email, that it was intended to file an Amended Defence by 30 April 2013;

   g)no Amended Defence was filed or served by the Corporation or Ms Paino-Povey by 30 April 2013;

   h)on 2 May 2013 the FW Ombudsman sent a letter to Mr Povey noting that the FW Ombudsman had not received an Amended Defence from the Corporation or Ms Paino-Povey, and advised that the FW Ombudsman was prepared to give until 7 May 2013 to file an Amended Defence, and again foreshadowed an intention to make an application to strike out the Response and Statement of Defence if the Corporation and Ms Paino-Povey failed to file an Amended Defence;

   i)no Amended Defence was filed or served by the Corporation or Ms Paino-Povey by 7 May 2013;

   j)on 15 May 2013 Mr Love, a lawyer representing the Corporation and Ms Paino-Povey, undertook to file Notices of Appearance in the matter and the parties agreed that further consent orders should be entered into providing for the Corporation and Ms Paino-Povey to file an Amended Defence by 5 June 2013;

   k)on 16 May 2013 Mr Love signed a minute of proposed consent orders on behalf of the Corporation and Ms Paino-Povey, and provided it to the FW Ombudsman by email;

   l)as a consequence of Mr Love failing to file Notices of Appearance the Court did not process the proposed consent orders, and as a consequence of enquiries made to the Court by the FW Ombudsman as to why the proposed consent orders had not been processed, the Court sent an email on 30 May 2013 advising that in order for the proposed consent orders to be accepted by the Court Mr Love must either go on the record (that is, file Notices of Appearance) or have the Corporation and Ms Paino-Povey sign the proposed consent orders in person;

   m)on 30 May 2013 Ms Thompson, from the Office of the FW Ombudsman, called Mr Love’s office and asked to speak to Mr Love but was advised that Mr Love did not speak to people over the telephone and that Ms Thompson should email him;

   n)later on 30 May 2013 the FW Ombudsman sent an email to Mr Love enquiring when he would be entering Notices of Appearance, and noted that it was necessary for the timetabling in the proposed orders to be maintained to ensure that the hearing (listed for three days on 6, 7 and 8 August 2013) proceed as scheduled;

   o)on 2 June 2013 Mr Love sent the FW Ombudsman an email advising that he had requested instructions to act from Mr and Mrs Povey, and that in the event that he did not receive further instructions, a new minute of consent order would need to be prepared to be signed by them;

   p)no Amended Defence was filed or served by the Corporation or Ms Paino-Povey by 5 June 2013;

   q)on 13 June 2013 the FW Ombudsman sent an email to Mr Love in reply to his email dated 2 June 2013, providing a copy of the proposed consent orders in a format allowing for the Corporation and Ms Paino-Povey to sign, and informing Mr Love that the FW Ombudsman would consent to orders with respect to the filing of an Amended Defence being extended to 14 June 2013;

   r)on 14 June 2013 the FW Ombudsman received an email from Mr Love advising that he had been preparing a Defence, but no Amended Defence was filed by the Corporation or Ms Paino-Povey by 14 June 2013;

   s)on 17 June 2013 the FW Ombudsman received an email from Mr Love advising that he had filed Notices of Appearance and that a Statement of Defence for the Corporation and Ms Paino-Povey was nearly complete;

   t)on 19 June 2013 the Court ordered by consent that the Corporation and Ms Paino-Povey file and serve an Amended Defence by 28 June 2013;

   u)no Amended Defence was filed by the Corporation or by Ms Paino-Povey by 28 June 2013;

   v)on 1 July 2013 Ms Thomson rang Mr Love’s office, and left a message for him to call her back, but it would appear that there was no response to that message;

   w)on 1 July 2013 the FW Ombudsman sent Mr Love a letter by email in relation to the Court’s orders requiring an Amended Defence to be filed by 28 June 2013, and enquired when the Amended Defence would be filed and served;

   x)Mr Love did not respond to the FW Ombudsman’s letter of 1 July 2013;

   y)on 3 July 2013 the FW Ombudsman sent a second letter to Mr Love in relation to the Court’s orders requiring an Amended Defence to be filed by 28 June 2013, and advised that should the Corporation and Ms Paino-Povey not file and serve an Amended Defence by 5 July 2013 that the FW Ombudsman reserved its right to take interlocutory action without further notice;

   z)on 4 July 2013 Ms Thomson called Mr Love’s office, and left a message that she was calling to discuss the Amended Defence that was supposed to be filed by 28 June 2013 and which was not filed. Ms Thomson was told that the message would be emailed to Mr Love and that he would see it even though he was then with a client. Mr Love did not return Ms Thomson’s call;

   aa)on 4 July 2013 the FW Ombudsman sent an email to Mr Love referring to the correspondence of 1 and 3 July 2013 and the attempts made by Ms Thomson to speak with Mr Love on the phone. Mr Love was informed that in the event that the Corporation and Ms Paino-Povey had failed to file an Amended Defence by close of business by 5 July 2013 that the FW Ombudsman intended to apply for default judgment;

   bb)on 5 July 2013 the FW Ombudsman received an email from Mr Love in which he indicated that the Corporation and Ms Paino-Povey were aware of the date by which the Amended Defence was required to be filed and that they were aware of the possible consequences of default in the timetable; and

   cc)by the time of the affirmation of Ms Thomson’s Affidavit on 5 July 2013 no Amended Defence had been filed or served, and the amounts allegedly underpaid to employees as claimed in the Statement of Claim had not been rectified by the Corporation or Ms Paino-Povey.

1. The Court also notes that, according to the Listing Reports, Mr Love appeared at a mediation before a Registrar of this Court on behalf of the Corporation and Ms Paino-Povey on 15 May 2013, more than four weeks before filing Notices of Appearance for the Corporation and Ms Paino-Povey on 13 June 2013, and that Mr Love again appeared in mediation for the Corporation and Ms Paino-Povey before a Registrar of this Court on 18 June 2013. Mr Love has therefore been intimately involved in the matter for almost two months.

Consideration

1. In the absence of any affidavit, or other evidence, from the Corporation or Ms Paino-Povey, the facts relevant to the default judgment are as found and set out in paragraphs 5 and 6 above.

2. Those facts demonstrate that:

   a)pursuant to r.4.03(2) of the then FMC Rules the Corporation and Ms Paino-Povey ought to have filed a Response and Defence by 12 February 2013, but did not do so;

   b)the Statement of Defence filed by the Corporation and Ms Paino-Povey, together with the Response on 13 March 2013, and, at least as to time, in accordance with the Court’s orders of 14 February 2013, was not a proper or adequate Statement of Defence, particularly in relation to those matters in which the Statement of Defence pleaded was to “Somewhat Agree”;

   c)the Corporation and Ms Paino-Povey did not comply with the Court’s consent order of 19 June 2013 requiring the filing and service of an Amended Defence by 28 June 2013;

   d)the consent order of 19 June 2013 came after significant efforts were made by the FW Ombudsman to facilitate the filing and service of an Amended Defence by the Corporation and Ms Paino-Povey in correspondence and telephone attendances upon Mr Love or Mr Love’s office;

   e)Mr Love, acting on behalf of the Corporation and Ms Paino-Povey failed, on multiple occasions, to fulfil commitments made, and thereby to act in a manner which would indicate any intention on the part of the Corporation and Ms Paino-Povey to file and serve an Amended Defence, either in accordance with the various requests from the FW Ombudsman, or the consent orders of this Court, or otherwise;

   f)the Corporation and Ms Paino-Povey have had more than six months to prepare a proper Defence, and have failed to do so, notwithstanding multiple opportunities afforded to them to do so; and

   g)the failure to file and serve an Amended Defence in accordance with the Court’s orders of 19 June 2013:

   i)represents the last of an ongoing series of failures by the Corporation and Ms Paino-Povey to file and serve an Amended Defence, or any proper Defence, in this matter;

   ii)constitutes a default, and an ongoing default, for the purposes of r.13.03A(2)(b)(ii) of the Federal Circuit Court Rules 2001 (Cth) (“FCC Rules”); and

   iii)enlivens the discretion invested in this Court under r.13.03B(2)(c) of the FCC Rules to give default judgment against the Corporation and Ms Paino-Povey.

3. In all of the circumstances set out above, and bearing in mind that:

   a)nothing has been put before the Court which would otherwise explain the default of the Corporation or Ms Paino-Povey; and

   b)the Court must consider case management considerations, including accessibility for litigants awaiting hearing dates in a busy first instance federal trial Court, and the efficient use of the Court’s resources: FCC Rules, r.1.03(2) and (4); Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175 at 190-191 per French CJ; [2009] HCA 27 at para.27 per French CJ,

   the Court is satisfied that it is appropriate to issue default judgment against the Corporation and Ms Paino-Povey, and that it has the power to grant the relief now sought in the Application in a Case. There will therefore be declarations and orders largely as sought by the FW Ombudsman in the Application in a Case.

I certify that the preceding nine (9) paragraphs are a true copy of the reasons for judgment of Judge Lucev.

Associate: 

Date:  16 July 2013