Fair Work Ombudsman v AIMG BQ Pty Ltd
[2018] FCCA 1879
•20 July 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v AIMG BQ PTY LTD & ANOR | [2018] FCCA 1879 |
| Catchwords: INDUSTRIAL LAW – Application to set aside Orders imposing civil penalties made on an undefended basis – application dismissed. |
| Legislation: Fair Work Act 2009, ss.550(1), 570 Federal Circuit Court Rules 2001, r.16.05(2)(a) |
| Cases cited: 3D Funtimes Limited v Intellec Development Group Pty Limited (No. 2) [2011] FCA 407 Allesch v Maunz (2003) CLR 172 Clifford & Mountford [2006] 219 FLR 437 Fair Work Ombudsman v AIMG BQ Pty Ltd [2016] FCCA 1024 Wentworth v Woollahra Municipal Council (1982) 149 CLR 672 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | AIMG BQ PTY LTD |
| Second Respondent: | ZHAO QING JIANG |
| File Number: | SYG 1559 of 2015 |
| Judgment of: | Judge Altobelli |
| Hearing date: | 16 April 2018 |
| Date of Last Submission: | 16 April 2018 |
| Delivered at: | Sydney |
| Delivered on: | 20 July 2018 |
REPRESENTATION
| Counsel for the Applicant: | Ms Brigden |
| Solicitors for the Applicant: | Fair Work Ombudsman |
| Counsel for the First and Second Respondents: | Mr Moorehouse |
| Solicitors for the First and Second Respondents: | Harmers Workplace Lawyers |
ORDERS
The Application in a Case filed 30 June 2017 be dismissed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 1559 of 2015
| FAIR WORK OMBUDSMAN |
Applicant
And
| AIMG BQ PTY LTD |
First Respondent
| ZHAO QING JIANG |
Second Respondent
REASONS FOR JUDGMENT
By way of an Application in a Case filed 30 June 2017, the Respondents, AIMG BQ Pty Ltd and Zhao Qing Jiang seeks Orders pursuant to r.16.05(2)(a) of the Federal Circuit Court Rules 2001 (hereafter referred to as ‘the Rules’) that Orders made by myself in the present proceedings on 31 May 2016 be set aside.
The application is opposed by the Fair Work Ombudsman. These reasons for judgment explain why the Court has dismissed the said Application in a Case.
Background
On 31 May 2016 I made Orders and published Reasons for Judgment in what I will describe as the substantive proceedings between the parties. The judgment was published as [2016] FCCA 1024. I found that the First Respondent company had contravened a number of the civil remedy provisions in the Fair Work Act 2009 (hereafter referred to as ‘the Act’). I found that the Second Respondent, Mr Jiang, was involved in the contraventions referred to above, within the meaning of s.550(1) of the Act.
I ordered the First Respondent company to pay pecuniary penalties in the amount of $272,850 in respect of its contraventions. I ordered the Second Respondent to pay pecuniary penalties in the amount of $8,160 in respect of his personal contraventions.
The hearing itself took place on 15 March 2016, and proceeded on an undefended basis. However, when judgment was delivered on 31 May 2016 an appearance was made on behalf of the Respondents. The significance of this will be discussed below.
My Reasons for Judgment require no further explanation. There is one paragraph, however, that bears reproduction because it captures a theme of this case, namely, the failure of the Respondents to meaningfully engage. At paragraph 109 of my Reasons for Judgment I said:
The Court finds that AIMG and Mr Jiang failed to meaningfully engage with the Applicant during the investigation process. This conduct demonstrates a complete disregard for the Applicant in its role as a Regulator and for their obligations under Commonwealth workplace laws.
The evidence before the Court
Whilst the First Respondent company and the Second Respondent Director of the company were, technically, the Applicants in the application to set aside my Orders, they will continue to be described collectively as the Respondents, unless the context requires that a distinction be drawn between them.
The evidence relied on by the Respondents when the matter was heard before me on 16 April 2018 was as follows:
a)Affidavit of Roy Yu, affirmed and filed 30 June 2017;
b)Affidavit of Zhao Qing Jiang, affirmed and filed 25 August 2017; and
c)Affidavit of Dong Ying (Lida) Fan, affirmed and filed 25 August 2017.
The applicants relied on the following evidence:
a)Affidavit of Anica Winterburn, affirmed 21 September 2017 and filed 22 September 2017.
A number of documents were tendered in evidence:
a)Bundle of documents tendered by the Applicant;
b)File note dated 31 July 2014; and
c)Letter from Harmers Workplace Lawyers to the Fair Work Ombudsman dated 19 September 2017.
The Court’s file was material that the Court was entitled to have regard to in determining the present application.
The hearing
The hearing took place on 16 April 2018. Mr Moorehouse of Counsel appeared on behalf of the Respondents. Ms Brigden of Counsel appeared on behalf of the Applicant. The only person who was required to give evidence was the Second Respondent, Mr Jiang. He gave evidence-in-chief and was then cross-examined. Both Counsel then made submissions as to the facts and the law. Specifically, Counsel for the Applicant submitted that Mr Jiang’s evidence was not convincing. The Court will need to adjudicate on this.
The applicable law
There was little dispute about the applicable law. Both Counsel referred to and relied on the decision of Federal Magistrate Jarrett (as he then was) in Clifford & Mountford [2006] 219 FLR 437 at 34. The relevant principle is summarised in Ms Brigden’s Outline of Submissions filed 22 September 2017 at paragraphs 4-7 inclusive:
4. The discretion under rule 16.05 is to be exercised judicially and bearing in mind the public interest in there being an end to litigation: Clifford & Mountford (2006) 219 FLR 437 at [34] (Clifford). The High Court warned of the need to exercise caution in re-opening a judgment in Wentworth v Woollahra Municipal Council (1982) 149 CLR 672 at [3] (per Mason ACJ, Wilson and Brennan JJ):
The public interest in maintaining the finality of litigation necessarily means that the power to reopen to enable a rehearing must be exercised with great caution. Generally speaking, it will not be exercised unless the applicant can show that by accident without fault on his part he has not been heard.
5. It has been said of the equivalent power to rule 16.05 in the Federal Court Rules 2011 at rule 39.05 that it is to be exercised with caution, and ordinarily only in “exceptional circumstances”: Wati v Minister for Immigration and Multicultural Affairs (1997) 78 FCR 543 at 549 – 552 per von Doussa, Moore and Sackville JJ; Australian Securities and Investments Commission v ActiveSuper Pty Ltd (No 4) [2013] FCA 318 at [6] per Gordon J.
6. In Clifford at [34], Jarrett FM (as his Honour then was) set out the principles in respect of applications under rule 16.05(2)(a) as follows:
a) The discretion to be exercised is unfettered, but nonetheless to be exercised judicially and bearing in mind the public interest in there being an end to litigation.
b) There are three criteria, each of which should usually be demonstrated before a judgment or order is set aside under r. 16.05(2)(a), namely:
i. a reasonable explanation for the applicant's absence at the trial or hearing;
ii. material arguments available to the applicant that might reasonably lead to the making of an order different to that sought to be set aside; and
iii. no prejudice to the party with the benefit of the orders sought to be set aside that is not able to be adequately addressed by the Court.
c) Matters relevant to the three criteria set out above will include, but will not necessarily be limited to:
i. Whether a party with notice of proceedings disregarded the opportunity of appearing at and participating in the trial;
ii. Delay, if any, in bringing the application to set aside and whether, if during the period of delay the successful party has acted on the judgment, or third parties have acquired rights by reference to it;
iii. the conduct of the applicant since the judgment or order sought to be set aside was made.
7. The three criteria referred to in Clifford at (b) above have been recognised by the Federal Court in Maxwell-Smith v Donnelly [2012] FCA 154, 3D Funtimes Limited v Intellec Development Group Pty Ltd (No 2) [2011] FCA 407 and MZKAJ v Minister for Immigration and Multicultural and Indigenous Affairs (2005) FCA 1066.
The Court accepts that this is an accurate statement of the relevant principles.
There are, however, other very useful passages in the judgment of Federal Magistrate Jarrett. Paragraph 21 is an example, referring to the observations of Kirby J in Allesch v Maunz (2003) CLR 172 at 188. Paragraph 21 states:
Kirby J suggested that: "the considerations that inform a decision permitting, as here, repair of a "miscarriage of justice" are so many and varied that it is impossible to narrow them down to the "demands" of a single consideration unless it be that connoted by the very phrase used in the statute [conferring to power to set the judgment aside] itself". His Honour went on to point out: "… it is desirable, as it seems to me, to treat the considerations applicable to such decisions conceptually and to classify them as impinging upon the two criteria that have for a very long time been viewed as critical to an affirmative decision to set aside a judicial order made in default of the appearance of a party. These are: (1) that an explanation, reasonable to the circumstances, is provided for the party's absence or other default; and (2) that the party in default has a material argument which, if heard and decided on its merits, might reasonably affect the determination of the rights and duties of the parties in a way different from that in the impugned order". Those remarks, and the passages that follow in his Honour's judgment, suggest that both criteria need to be made out before an applicant could expect a favourable exercise of discretion. (footnotes omitted)
The Court agrees with the observations of Federal Magistrate Jarrett that both criteria need to be made out for an applicant to set aside orders and to expect a favourable exercise of discretion. The Court does not accept any express or implied submission made on behalf of the Respondents that the most significant factor for the Court to consider in these applications is the miscarriage of justice from the Respondents’ perspective.
The three criteria referred to in Clifford & Mountford are all equally important. It is clear that each has to be satisfied to the Court’s satisfaction. Thus, even if the Respondents convince the Court that there are material arguments available to it that might reasonably lead to the making of an order different to the one sought to be set aside, that does not necessarily result in the granting of their application.
Another useful passage is his Honour’s conclusion, at paragraph 62 of his Reasons for Judgment. His Honour states:
In my view it is important to understand the nature of the right that is intended to be protected by the rule in Taylor v Taylor and r.16.05(2)(a) and similar rules. Kirby J explained the nature of that right in the following passage from Allesch v Maunz (above) at 185 – 186:
It is a principle of justice that a decision-maker, at least one exercising public power, must ordinarily afford a person whose interests may be adversely affected by a decision an opportunity to present material information and submissions relevant to such a decision before it is made. The principle lies deep in the common law. It has long been expressed as one of the maxims which the common law observes as "an indispensable requirement of justice". It is a rule of natural justice or "procedural fairness". It will usually be imputed into statutes creating courts and adjudicative tribunals. Indeed, it long preceded the common and statute law. Even the Almighty reportedly afforded Adam such an opportunity before his banishment from Eden.
…
Having regard to the circumstances in which the initial proceedings took place in the absence of Mr Allesch (the appellant), it is worth emphasising that the principle just described does not require that the decision-maker actually hear (or receive the submissions of) the party potentially liable to be adversely affected. Sometimes, through stubbornness, confusion, misunderstanding, fear or other emotions, a party may not take advantage of the opportunity to be heard, although such opportunity is provided. Affording the opportunity is all that the law and principle require.
Decision-makers, including the courts, cannot generally force people to protect their own rights, to adduce evidence or other materials, to present submissions or to act rationally in their own best interests. This consideration may be especially relevant in relation to the Family Court where emotions, often engendered by the highly personal issues involved, can sometimes cloud rational thought.
Nor are courts obliged to delay proceedings indefinitely because one party, although proved to be on notice of the proceedings, refuses or fails to appear in person or to be represented by a lawyer or some other individual permitted to speak for them who can explain the need for an adjournment. The rights of other parties are commonly involved. In the Family Court, the rights of non-parties (especially children) may be affected. Additionally (as this Court has itself accepted), the rights of the public in the efficient discharge by courts of their functions must be weighed against unreasonable delay in concluding litigation.
(footnotes omitted)
In this passage Kirby J emphasises that it is critically important for Courts to provide the opportunity to litigants to participate in litigation. Whether litigants take this opportunity or not is their decision, and this decision may be influenced by a range of factors such as those identified in the passage extracted above. As Kirby J also observes, the rights of other parties are commonly involved - such as the Applicant. In addition, he refers to the rights of non-parties which, in this case could embrace not just the public, but all other litigants before this Court.
A reasonable explanation for the Respondents’ absence at the Hearing?
The evidence in this regard was given by Mr Jiang, both in his own right as Second Respondent, and on behalf of the company as First Respondent. His Affidavit affirmed 25 August 2017 contains considerable background material which can be summarised in a few short sentences.
Mr Jiang seems to preside over quite an extensive conglomerate of companies and businesses which operate in several countries across the globe. He relies very heavily on delegations of power, including in respect of matters of employment, to his senior employees. Mr Jiang trusted his senior employee to effectively manage his businesses, including employment matters.
English is not his first language.
Mr Jiang had previous involvement with the Fair Work Ombudsman’s office. In 2014, for example, he entered into an enforceable undertaking in relation to contraventions of workplace laws by 3CW Chinese Radio Pty Ltd, a company within his conglomerate. He signed the enforceable undertaking. He did not read the document carefully. He deposes at paragraph 66 of his Affidavit not to have sufficient appreciation of the content of the enforceable undertaking or of how serious it was at the time of signing. He purported to rely on his senior employees in this regard.
He delegated responsibility for ensuring compliance with the terms of the enforceable undertaking.
Mr Jiang was clearly aware of the investigation that resulted in the present proceedings. He spoke with the Applicant’s inspectors on 31 July 2014. At paragraph 70 he deposes to understanding the matter under investigation was serious, but again he believed that the matter could be handled effectively by those to whom he had delegated responsibility for the matter.
He deposes to a number of matters, some of which gave rise to the question of whether that which he deposed to was, in substance, inconsistent with the Statement of Agreed Facts in the substantive matter. For present purposes, the Court considers this irrelevant. It was not an issue in respect of which the Court needed to make a determination.
Mr Jiang was clearly aware of the proceedings. He was aware that lawyers had been engaged to represent him and the company. He had communicated with those lawyers. This is even though he had delegated responsibility for the matter to others.
In considering Mr Jiang’s evidence, a number of non-contentious chronological matters need to be set out. Thus, for example, there is no doubt that the hearing date of 15 March 2016 was set down on 20 August 2015. Consent Orders were made on that date in relation to a timetable for filing and serving of an Amended Defence and Statement of Agreed Facts. Both the Amended Defence and Statement of Agreed Facts were in fact filed.
On 28 October 2015, all parties again entered into Consent Orders in relation to a timetable for the filing and serving of any evidence on penalty, as well as submissions. Whilst the Applicant complied with this direction, the Respondents did not.
Mr Jiang, in his Affidavit, deposes that on 11 January 2016, the solicitors that had hitherto been instructed in the matter, FCG Legal, filed a Notice of Intention to Withdraw. On 27 January 2016, the Notice of Withdrawal was itself filed. The Court can only assume that, given that Mr Jiang deposes to this in his Affidavit, that these were matters known to him. The above facts are deposed to at paragraphs 107 and 109 of his Affidavit affirmed 25 August 2017.
At paragraph 5 of the said Affidavit he attests to: “The facts set out in this affidavit are true, and based on my own knowledge”.
The circumstances of FCG Legal withdrawing from the proceeding are not explained by Mr Jiang in his Affidavit. This information is found in the Affidavit of Ms Winterburn affirmed 21 September 2017, at paragraph 24 and the annexure referred to therein. The annexure is an email from a lawyer at FCG Legal to the Fair Work Ombudsman’s office dated Tuesday 8 December 2015 at 8:50 am.
The relevant part states:
We have been having great difficulties seeking instructions from our clients therefore are unable to indicate at this stage when the materials will be filed.
The Court finds that it is more likely than not that the Respondents’ lawyers filed a Notice of Withdrawal because of the great difficulty they were having in obtaining instructions from their clients, i.e. the Respondents. The Court has already averted to paragraph 109 of its Reasons for Judgment in the substantive matter and suggested that a theme of this litigation is the Respondents’ failure “to meaningfully engage”. The distinct impression formed from the email in question is that the Respondents’ own lawyers might have shared a similar concern.
At paragraph 110 of Mr Jiang’s Affidavit he explains actions undertaken in January 2016. He deposes to “the file relating to these proceedings” to be sent to a Ms Zhang of Minter Ellison Lawyers (paragraph 110). He goes on to depose:
I understood that Ms Zhang was an administrative officer with Minter Ellison and that she would arrange for the provision of advice from Minter Ellison Lawyers.
In cross-examination, Mr Jiang confirmed that he knew that Ms Zhang was an administrative officer, and not a lawyer.
Mr Jiang gives evidence about the conversations that he had with Ms Zhang on 16 February 2016, using the WeChat electronic message facility. The messages in question were annexed to his Affidavit affirmed 28 November 2017. The significance of this conversation becomes apparent from paragraph 112 of Mr Jiang’s affidavit of 25 August 2017 in which he says:
As a result of Ms Zhang’s comments about the matter, I was of the understanding the judgment had already been made, and I did not think there was any prospect of defending the matter.
The transcript of the conversation is, thus, very important, and will be reproduced in full:
Recording 9
16 February 2016 at 8:14PM
59 seconds
English Translation
Jiang? (inaudible), as for your matter, I have asked. Our staff has taken a carefully look at the photo you sent me and said, basically, the court has given an initially verdict. As for this time, the court has already made the ruling, um, that is, the Fairwork has collected evidences, to prove you actually did, eh, that is to say, um, underpaid. Um, that is, the wage you paid was below the average wage standard, and um you were already given notice. Then, the court has already made ruling that it’s your fault. So, this trial is mainly to inform you, um, that you’ll have to compensate. Apart from the compensating, um, the wage that you underpaid, um also how much you’ll have to pay to compensate the Fairwork. Um, what he meant was that, there is no need for you to, unless you insist it is especially necessary, he thinks there’s no necessity in going to court and go through this trial.
Recording 10
16 February 2016 at 8:14PM
37 seconds
English Translation
Unless you have very sufficient evidences to prove that your company didn’t underpay. Um, that is you didn’t pay below the average wage standard. Or, say, you have enough evidences to prove, this, this employee is, just, fooling around. Um, otherwise, he thinks, you spending money on lawyers, to have lawyers handling this issue, does not really make sense. Um, according to his advice, um, if you don’t have very sufficient evidences, then, you should accept the punishment, and then it’ll be ok. He said that, this letter, generally has already made it very clear.
It is clear from the transcript of the WeChat message that Mr Jiang had sent, or caused to be sent to Ms Zhang a document of some sort. This must be the reference to “the photo” referred to at the beginning of the message. Whilst at paragraph 110 of Mr Jiang’s Affidavit of 28 August 2017 he deposes to arranging for, “the file relating to these proceedings” to be sent to Ms Zhang, he provides no further description of what in fact was sent.
Ms Zhang is referred to as talking about a document which, presumably, led her to conclude that, “the Court has given an initially verdict”. There is, however, no such document on the Court’s file. Indeed, there is no document on the Court’s file, whether an order made, or any document that has been filed in the proceedings, that could reasonably create the impression that a verdict had been entered.
Indeed, as previously noted, the matter had been listed for penalty hearing on 15 March 2016 as early as 20 August 2015, a matter which the Respondents must be deemed to have known about given the fact that they were represented at the time.
It is possible that Ms Zhang was referring to the Statement of Agreed Facts. This hypothesis is derived from the next part of the transcript where she refers to: “The Court has already made the ruling, um, that is, the Fair Work has collected evidences, to prove you actually did .... underpaid”.
The Statement of Agreed Facts is annexed to my Reasons for Judgment delivered 31 May 2016. Reflecting on them once again, it is hard to see how this document could be reasonably construed as a judgment, a verdict, or ruling. Nonetheless, Ms Zhang appears to have taken that view.
In the message, however, Ms Zhang refers to a “trial”, the purpose of which, “is mainly to inform you ... that you will have to compensate.” The comments that follow suggest an appreciation that what she described as the “trial” was for the purpose of quantifying the compensation. This part is correct. It is also consistent with knowledge which the Respondents already had, as early as 20 August 2015.
Thus, at this point in the conversation, a reasonable inference is that Mr Jiang had been told that there was to be a Court event, the purpose of which was to quantify the compensation for what appeared to be contraventions. The Court observes that there is nothing new here: that was plainly already known to the Respondents. Their lawyers knew. That knowledge is imputed to them.
The message continues to suggest that there was no need to go to Court. The last three lines of what is described as recording 9 seems to suggest at Ms Zhang was merely passing on advice or information that she had received from someone else. Thus, she says, “.. what he meant ..”.
In the transcription of recording 10 which seems a continuation of the earlier conversation, though it is possible there was some brief interruption, Ms Zhang goes on to suggest that in the absence of any other evidence, the purported advice from Minter Ellison was that the Respondents, “should accept the punishment, ...”
Recording 10 concludes by referring to a letter, i.e. “this letter”. This, of course, is contrary to the hypothesis that what had been sent to Ms Zhang was a Statement of Agreed Facts. It is unclear what documents were sent to Ms Zhang at Minter Ellison. It would have been helpful for the Court to have known this. It was certainly within the capacity of the Respondents to have led this evidence.
It is impossible to accept the submission made on behalf of the Respondents at paragraphs 24 and 25 of the written submissions dated 20 October 2017, in the absence of evidence of what information was given to Minter Ellison.
In these submissions, the Respondents emphasise that they merely relied on advice given by Minter Ellison which led them to believe, perhaps erroneously, that they had no opportunity to contest any penalty to be imposed. The submission goes on to say, however, that consistent with authorities, the fault of the solicitor should not be borne by the client.
But in deciding whether the Respondents had a reasonable explanation for not attending the penalty hearing, the Court must understand what information was given to Minter Ellison before it can accept the proposition that the Respondents merely acted on the advice that they were given. With respect, much more evidence would have needed to have been led before the Court would conclude that Minter Ellison was somehow in error, and that their culpability should not be borne by the Respondents.
In the cross-examination of Mr Jiang it was put to him that he did not take any steps to check the advice that Ms Zhang had given him, with a lawyer. He explained that that was correct, insofar as it related to Minter Ellison. The follow-up question was whether he had checked the advice with any lawyer at all? Mr Jiang explained that, yes he did, indeed with two Chinese lawyers, who he said, believed the advice that Minter Ellison had given. Both such lawyers were in Melbourne.
The Court does not accept this evidence. If Mr Jiang had, in fact, checked the Minter Ellison advice not to attend the penalty hearing with any other lawyer, it would be reasonable to expect that he would have deposed to it in one of his lengthy Affidavits. He has not. The submission made that Mr Jiang’s evidence in cross-examination was not convincing is certainly borne out on this point.
Mr Jiang was further cross-examined about his knowledge of the need to, in fact, make submissions as to penalty. It was put to him, for example, that the reason why FCG Legal ceased to act for him and the company, was that they had asked for money to be paid into their trust account so that submissions might be drafted.
Mr Jiang conceded that that was possibly one reason. When it was suggested that there was, therefore, an opportunity for him and the company to make submissions, all he could say was that it was not clear at the time. He was reminded about what he had deposed to at paragraph 96 of his affidavit of 25 August 2017:
On or about 2015, employees of the group told me that Ms Goh from FCG would not proceed with filing submissions on penalty in these proceedings until FCG had received an advance payment into their trust account.
Mr Jiang agreed that he had so deposed. When it was suggested that he must have understood that the funds related to the preparation of submissions on penalty, he explained that at the time he did not have full knowledge about the payment issue, that FCG was doing other work for him and the company, and that whilst he understood money had to be paid into his lawyer’s trust account he did not understand that it was in relation to the penalty submissions.
With respect to Mr Jiang, his evidence is implausible. Quite apart from the fact that his evidence in cross-examination was inconsistent with paragraph 96 of his Affidavit, it simply does not make sense. He was an experienced businessman. Even from his evidence it is clear he is not unaccustomed to engaging lawyers. He was aware of a penalty hearing. He was aware that FCG would not proceed to filing submissions on penalty without payment into their trust account. With respect, his memory must have failed him.
It is far more likely than not that Mr Jiang knew from the end of 2015 onwards that he had the opportunity to file submissions on penalty, and that if he did not, penalties would be imposed upon him without reference to submissions. He was clearly a busy businessman, probably with the right intentions, but thinly spread in terms of his commitments and capacity to meet those commitments.
Returning to his Affidavit, at paragraph 113 he explains that he did not attend the hearing on 15 March 2016, “consequently..” i.e. as a consequence of the advice that he received from Ms Zhang. In fact, he was in Melbourne attending to business that day. He accepts in his Affidavit that at the hearing that neither of the Respondents were represented.
At paragraph 117 he makes this rather surprising statement:-
I did not receive any call from the Court on 15 March 2016, and I was not informed by my staff that they had received a call from the Court on 15 March 2016.
The comment is surprising insofar as it suggests the Respondents had an entitlement, or an expectation, to receive communication from the Court when they have not attended a hearing that had been set down seven months earlier. The Court does not accept that it had any obligation to communicate with the Respondents in the circumstances.
The opportunity for the Respondents to participate in the penalty hearing was not exhausted after 15 March 2016. At any time before the Orders were made and Reasons for Judgment were published on 31 May 2016, the Respondents could have communicated with the Court and asked for the matter to be relisted. They did not do so.
The Court notes that in the Notice of Intention to Withdraw as Lawyer filed by FCG Legal on 11 January 2016, it clearly states that the case was listed on 15 March 2016 for penalty hearing. Moreover, the annexures to Ms Winterburn’s Affidavit establish that on 2 February 2016, obviously in response to the withdrawal of FCG Lawyers, the Applicant corresponded with the Respondent at an address, being Suite 402, 158 City Road, Southbank, Victoria, 3006. The letter also appears to have been emailed to Mr Jiang at a yahoo.com email address.
Mr Jiang gives evidence about this email address at paragraphs 118-124 of his Affidavit. In effect, the substance of this evidence is that he did not use that email address at any time. Moreover, from August 2015 there would have been no-one receiving or checking correspondence sent to the First Respondent company at its Sydney office. There is no explanation, however, about why correspondence notifying the Respondents about the hearing, addressed to the Melbourne address, was not received.
At paragraph 125 of his Affidavit Mr Jiang explains that on 30 May 2016, he engaged a lawyer from AXL Legal to attend Court to obtain the Judgment. Indeed, that firm did attend to receive Judgment. Nothing was said to the Court at all about the Respondents’ non-attendance at the hearing, or a protest about not knowing about the hearing, or even the faintest suggestion that there was some procedural unfairness or injustice so far as the Respondents were concerned if the Court were to proceed to make Orders and deliver Reasons for Judgment. Another opportunity was lost.
What is particularly interesting is that Ms Winterburn’s Affidavit annexes a copy of an email dated 27 May 2016, addressed to Mr Jiang, advising him that the Court would deliver its penalty judgment on 31 May 2016. This email was sent to the same email address that Mr Jiang deposed to not using at any time.
One wonders, therefore, how Mr Jiang became aware of the matter being listed for Judgment. A review of the Court’s file indicates that when my Chambers advised the parties of the intention to deliver Judgment on 31 May 2016, my Chambers did not have an email address for the Respondents, and requested the Applicants to notify the Respondents.
How, then, did Mr Jiang become aware of the listing for Judgment such that he could instruct AXL Legal to attend Court? He does not explain this in his evidence. The only evidence before the Court is that the Applicant communicated with him on the yahoo.com email address.
At paragraph 34 of Ms Winterburn’s Affidavit, she provides a possible explanation. The correspondence notifying of the penalty decision was also sent to another email address: [email protected].
It is possible that the Respondents became aware of the Judgment date through this email address, but it is curious that this evidence comes from the Applicant, rather than from the Respondents themselves.
In any event, paragraph 35 of Ms Winterburn’s Affidavit, together with the annexed file note at tab 9, explains that Mr Eliopoulos from AXL Legal rang an officer of the Fair Work Ombudsman at 4:05pm on 30 May 2016.
To summarise the file note, Mr Eliopoulos explained that he acted for both Mr Jiang and the company, that the company had received the email notifying them of Judgment, explaining that he had no idea what it was about, and after receiving some explanation of the background and history, apparently asking the question: “Can they appeal?”
It is interesting that the Respondent's then solicitor, Mr Eliopoulos of AXL Legal, had apparently raised the issue of an appeal even before Judgment was delivered. It would be a reasonable inference to conclude that, at some stage, this was raised with the Respondents.
Having regard to the evidence as a reasonable explanation for the Respondents’ absence at the penalty hearing being provided, it is worth returning to Clifford & Mountford. At paragraph 34 of Federal Magistrate Jarrett’s reasons he states:
From the abovementioned authorities, it seems to me that the following principles emerge in respect of applications under r.16.05(2)(a):
a) The discretion to be exercised is unfettered, but nonetheless to be exercised judicially and bearing in mind the public interest in there being an end to litigation.
b) There are three criteria, each of which should usually be demonstrated before a judgment or order is set aside under r.16.05(2)(a), namely:
i) a reasonable explanation for the applicant's absence at the trial or hearing;
ii) material arguments available to the applicant that might reasonably lead to the making of an order different to that sought to be set aside; and
iii) no prejudice to the party with the benefit of the orders sought to be set aside that is not able to be adequately addressed by the Court.
c) Matters relevant to the three criteria set out above will include, but will not necessarily be limited to:
i) Whether a party with notice of proceedings disregarded the opportunity of appearing at and participating in the trial;
ii) Delay, if any, in bringing the application to set aside and whether, if during the period of delay the successful party has acted on the judgment, or third parties have acquired rights by reference to it;
iii) the conduct of the applicant since the judgment or order sought to be set aside was made.
For present purposes, the focus is on whether the Respondents have established a reasonable explanation for their absence at the trial or hearing and, also relevantly, whether the Respondents, who had notice of proceedings, disregarded the opportunity of appearing at and participating at, in this case, the penalty hearing.
Moreover the comments made by Kirby J in Allesch v Maunz (at 185‑186) extracted at paragraph 62 of His Honour's reasons are also pertinent.
The facts establish, to the Court's satisfaction, that the Respondents knew of the penalty hearing and did not take advantage of the opportunity to be heard at that penalty hearing. The focus is on whether their failure to take advantage of the opportunity offered was, in all the circumstances, reasonable. The onus of proof was on the Respondents. They have failed to discharge that onus.
Kirby J referred to a number of possible explanations why litigants do not take the opportunity given to them to be heard:
Sometimes, through stubbornness, confusion, misunderstanding, fear or other emotions, a party may not take advantage of the opportunity to be heard, although such opportunity is provided.
Kirby J may well have added ambivalence, indifference or insouciance. The Court does not accept that there is any evidence before it that the Respondents were reasonably confused or had reasonably misunderstood what was required of them. The Second Respondent acted unwisely in accepting the advice of Ms Zhang from Minter Ellison. The Court does not accept Mr Jiang's evidence that he then checked this advice elsewhere. The Court concludes, moreover, that it was not reasonable for Mr Jiang to have relied on Ms Zhang’s advice.
In closing submissions, Counsel for the Respondents argued that even if the Respondents had knowledge, that did not, on the facts of this case, amount to understanding. The Court accepts that the Second Respondent had limited capacity in the English language. He was, however, an experienced business person, conducting business in several countries, and one who was quite accustomed to obtaining legal representation when the need arose. To the extent that it was asserted that the Second Respondent's limited capacity in the English language was an explanation for why any knowledge he had was not converted into understanding on his part, the Court does not accept the same.
To the extent that the submission that the Second Respondent's knowledge did not equate to understanding, because of the manner in which he delegated the management of his business interests and relied on his senior employees, the Court does not accept this. There is nothing reasonable about setting up business structures on which delegations are made, and then seeking, in effect, to hide behind those delegations when something goes wrong.
The Second Respondent's lack of familiarity with the Court processes (referred, for example, at paragraph 14 in his Affidavit of 28 November 2017) does not constitute a reasonable explanation in circumstances where the Respondent was represented until relatively shortly before the penalty hearing, and was represented on the day the judgment was given, and thereafter. The overall impression formed from the evidence is that the Respondents chose not to be represented at the penalty hearing.
Indeed, a reasonable hypothesis from the totality of the evidence before the Court is that the First and Second Respondents were content to “wait and see” the outcome of the penalty hearing. This was clearly unreasonable, and probably foolish, particularly after becoming aware of the submissions as to penalty that had been filed on behalf of the Applicant.
The Court is not satisfied that the Respondents had provided a reasonable explanation for their absence at the penalty hearing. In fact, the Court finds that they, with notice of the proceedings, disregarded the opportunity of appearing at and participating in the penalty hearing.
For this reason alone, the application in the case should be dismissed. Nonetheless, the Court will consider the other criteria suggested in Clifford & Mountford.
Do the Respondents have material arguments available that might reasonably lead to the making of an order different to that sought to be set aside?
The Court is satisfied, having regard to the extensive submissions made on this point on the part of all parties that the Respondents have at least an arguable case. A strong theme in the Respondents' submissions was that this, per se, should justify the Orders being set aside. The Court does not accept this submission. The Court does not accept that an application such as the present should be determined by reference to one criteria that has primacy over others.
In the list of authorities relied on by the Respondents, reference is made to a decision of Siopis J in 3D Funtimes Limited v Intellec Development Group Pty Limited (No. 2) [2011] FCA 407, where at paragraph 19 of the Reasons for Judgment, His Honour suggests that if a delinquent party nonetheless disclosed that it:
…has a defence of sufficient merit to warrant setting aside the orders –
then the orders should be set aside on the basis that:
the delinquency of the absentee party may well be reflected by the making of an adverse costs order.
The Court noted that Counsel for the Respondents seemed very careful not to suggest, or even intimate, that one option available to the Court was to set aside the Orders but on the basis that the Respondent pay the Applicant’s costs. One suspects that the Respondents’ case trod lightly on this point because of the provisions of s.570 of the Act, which sets a very high threshold before a Court will make an order for costs. Section 570 states:
Costs only if proceedings instituted vexatiously etc.
(1) A party to proceedings (including an appeal) in a court (including a court of a State or Territory) in relation to a matter arising under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or section 569 or 569A.
Note: The Commonwealth might be ordered to pay costs under section 569. A State or Territory might be ordered to pay costs under section 569A.
(2) The party may be ordered to pay the costs only if:
(a) the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or
(b) the court is satisfied that the party's unreasonable act or omission caused the other party to incur the costs; or
(c) the court is satisfied of both of the following:
(i) the party unreasonably refused to participate in a matter before the FWC;
(ii) the matter arose from the same facts as the proceedings.
The point is costs do not automatically follow the event in this type of proceedings, and thus the question of costs plays a much lesser role than it might in other contexts.
The Court finds persuasive the observations made by Mason ACJ, Wilson and Brennan JJ in Wentworth v Woollahra Municipal Council (1982) 149 CLR 672 (at 3):
The public interest in maintaining the finality of litigation necessarily means that the power to reopen to enable a rehearing must be exercised with great caution. Generally speaking, it will not be exercised unless the applicant can show that by accident without fault on his part he has not been heard.
Even in cases where the Respondent’s case is considered to be an arguable one, the public interest in maintaining the finality of litigation must be considered. It should be remembered that, if the Respondents’ case is considered to be an arguable one, it was no less arguable at the time of the hearing than it is now. Thus, even though the Court accepts that the Respondents have an arguable case, the Court declines to exercise its discretion in the Respondents’ favour in the circumstances of this case.
Is there any prejudice to the Applicant if the orders are set aside that may not be adequately addressed by the Court?
The Applicant contends that it would be significantly prejudiced if the Orders were set aside because two of its witnesses, Mr Stella and Ms Shen, are no longer available. Mr Stella gave evidence in the substantive proceedings. He was previously a Fair Work Inspector appointed under the Act. In Ms Winterburn's Affidavit, she deposes to the fact that he no longer works as a Fair Work Inspector, and indeed, his current employer is unknown.
Moreover, the Applicant contends that Ms Shen, who was indeed one of the employees adversely affected by the Respondents’ contraventions, no longer resides in Australia, having left on 25 May 2015.
These facts were not put in contention by the Respondents, but on their behalf it is asserted that in circumstances where the Respondents continued not to dispute liability, but only penalty, there can be no prejudice to the Applicant. Indeed, the Respondents contend that the risk suggested by the Applicant is purely hypothetical – it is no more than a mere potential risk.
Even if the Orders were set aside and the matter were allowed to be re‑litigated on the question of penalty only, this Court believes there is nonetheless prejudice to the Applicant, which is more than just hypothetical or theoretical prejudice. The factors relevant to penalty were discussed in my Reasons for Judgment from paragraph 49 onwards. The evidence of both Ms Shen, and Mr Stella, underpin the Court’s findings. It is hard to see how the issue of penalty, which is itself dependent in so many ways on matters historical, would not have continued to depend on the evidence of these two witnesses. Given their unavailability, the prejudice to the Applicant is more real than theoretical.
Whilst Counsel for the Respondents suggested that any prejudice might be cured at hearing “by way of submissions and evidentiary measures” (submissions paragraph 30) it is hard to imagine what these might be, and if Counsel had something in mind, it would have assisted the Court much more to have articulated precisely what was being suggested.
The Court is satisfied from the evidence that there is prejudice to the Applicant that cannot be adequately addressed by the Court, and thus this is another basis for declining the application to set aside the Orders.
Should the application be set aside for delay in bringing it, notwithstanding any other factors?
The Applicant submits, presumably on an independent basis to the other criteria set out above, that the Respondents’ application should be dismissed because of the delay in bringing it. Federal Magistrate Jarrett, in Clifford & Mountford, certainly referred to the issue of delay in bringing the application to set aside as being one matter to be taken into account. Whether the delay should be considered a separate criteria, or a subset of the earlier ones, is a matter that need not be decided for present purposes.
Suffice it to say, for the reasons that will be set out below, that this Court would dismiss the application in a case to set aside the order because of the extensive delay in bringing the said application. The theme of this case, referred to at paragraph 109 of my substantive judgment, once again re-emerges. The Respondents’ failure to meaningfully engage in the application to set aside the Orders made against is apparent.
The Respondents were represented on 31 May 2016 when Orders were made and Reasons for Judgment were published. The Orders were formally entered on 1 June 2016. The Application in a Case to set aside the Orders was lodged 30 June 2017, 13 months later. How did this extraordinary delay come about?
The Affidavit of Mr Jiang of 25 August 2017 sets out the relevant evidence from the Respondents’ perspective. Mr Jiang must have been told about the outcome of the proceedings on the same day as the Orders were made because he deposes that on 31 May 2016 he instructed an employee, his personal assistant, to engage specialist employment lawyers on behalf of the Respondents. On 17 June 2016, his employee contacted Harmers Workplace Lawyers, the lawyers representing the Respondents in the present proceedings.
On 22 June 2016, Mr Jiang deposes to having contacted them in relation to the matter, presumably personally. There then followed some correspondence which the Court finds somewhat surprising in the circumstances. The first was a letter dated 1 July 2016 from Harmers to the Applicant which, amongst other things, sought a copy of “the prosecution brief”. The second letter, dated 7 July 2016, was a letter from Harmers to the Registry of this Court seeking a copy of the Court file and “the transcript of the hearing held on 15 March 2016”.
It is somewhat surprising that a firm such as Harmers, describing themselves as workplace lawyers, would seek a copy of the prosecution brief, a concept unknown in civil penalty proceedings. It is surprising to think that Harmers thought that the Court should supply a transcript, presumably at the taxpayers’ expense.
What is interesting about the letter of 7 July 2016, is that it requests access to the Court file, preferably through the online Commonwealth Courts Portal. Clearly, and unsurprisingly, Harmers were aware of the existence of the Commonwealth Courts Portal, because at any time they could have filed a Notice of Address for Service and thereby have gained access directly to all the relevant documents. It was only on 2 November 2016 that the Respondents caused their solicitors to file a Notice of Change of Solicitor. This, of course, resulted in gaining access to the Portal.
In Mr Jiang’s Affidavit he refers to and annexes correspondence between Harmers and the Applicant, including letters in response to the Harmers letter of 1 July 2016, asking for copies of the prosecution brief. Indeed, there is implicit criticism of the Applicant for not supplying to Harmers documents in respect of the proceeding until 3 May 2017. This criticism, implicit as it may be, is completely misplaced given everything that Harmers could have done to come onto the record, and thus access the Portal, much earlier than it did. To the extent that, expressly or implicitly, the Respondents seek to explain any part of their extraordinary delay in filing the Application in a Case by reference to acts or omissions of the Applicant, the Court rejects such contention.
In Mr Jiang’s Affidavit, he refers to a letter from the Applicant to Harmers on 5 September 2016 pointing out that the Respondents had not yet made an application under r.16.05 of the Rules. It was fair of the Applicant to have done so, but arguably unnecessary. The Respondents, apparently duly advised by Harmers, should have known not only that an application had to be filed, but had to be filed promptly.
Mr Jiang goes on to explain that Harmers made contact with him in September seeking instruction, that there were delays “due to language issues and my international travel commitments” (paragraph 131(h) Jiang Affidavit). Apparently by May, possibly June, the actual Application in a Case and Affidavit had been prepared, but certainly had not been translated into Chinese by 1 June. The Application in a Case was lodged 30 June 2017, accompanied by the Affidavit of Mr Yu, a solicitor engaged by Harmers. Mr Jiang's first Affidavit was not filed until 25 August 2017.
Based on the evidence of the second respondent alone, it would seem that the explanation for the extraordinary delay in bringing the application, and then adducing the relevant evidence of Mr Jiang, was attributable to the language issues and Mr Jiang's international travel commitments.
The delay is significant, indeed extraordinary. The Applicant submits that the evidence demonstrates that the Respondents’ failure to advance the application with any degree of expediency was, in reality, because Mr Jiang prioritised other business commitments over and above these proceedings. The Applicant refers to the Affidavit of Mr Yu which, in essence, refers to the significant difficulties he had experienced in obtaining instructions from Mr Jiang, apparently because he was travelling on business, and the employees to which he had delegated the matter did not understand what needed to be done.
In the written submissions filed on behalf of the Respondents, acknowledgement is made of the fact that:
It has taken some time to file the respondents' application.
The Respondents submit that the delay was excusable having regard to a number of circumstances and reasons, including those set out at paragraph 39 of the submissions:
The evidence shows that the delay was for a number of reasons, including:
a) the need to obtain instructions, which was difficult in light of the limited prior involvement of the Second Respondent in the proceedings and the departure of relevant employees;
b) the language difficulties of the Second Respondent and those employed by the Group, which required translation of documents (including court documents) and interpretation of meetings and phone calls (translations taking additional time on each occasion);
c) the need to obtain documents relevant to the proceedings; including from others within the Group, the Court file and the Applicant; and
d) the Respondents’ business commitments overseas.
At paragraph 40, the Respondents submit that Mr Jiang's business travel commitments was one cause of the delay, but not the only factor. Perhaps the Respondents’ main submission, however, is that no real prejudice has occasioned from the delay in bringing the application.
The Court accepts that, in assessing whether the Respondents have unreasonably delayed bringing the application to set aside the Orders, a relevant factor is whether prejudice has been occasioned to the Applicant. Other factors include whether the Applicant has contributed to the delay (it clearly has not), or waived the delay (it clearly has not), and whether in the context of the rights at stake in the proceeding it would be unfair to the Applicant as the beneficiary of the Orders made.
The Court believes that there has been prejudice to the Applicant. It has not been able to enforce the Orders made, or seek to recover the civil penalties imposed against the Respondents, because of these proceedings. It is highly unlikely, for example, that I would have declined to grant a stay of the Orders if one had been sought, and the evidence was that the Applicant was seeking to recover the amounts ordered to be paid. The fact that no stay was sought reflects the reality that, other than a demand for payment, no attempt was made to enforce the Orders or recover the amounts payable.
The Court acknowledges that interest is accruing on the civil penalties, but even that does not ensure recovery of the penalties, and it is the opportunity to recover that has been denied to the Applicant. The moneys in question were ordered to be paid into consolidated revenue, so that public interest in these proceedings, and thus the public prejudice in the Respondents’ prosecution of its application, becomes self-evident.
The Court would have dismissed the Application in a Case on the basis unreasonable delay in its prosecution, in any event. The same indifference, ambivalence, or insouciance that seems to have pervaded the Respondents’ participation in the civil penalty proceeding merely continued once Orders were made and judgment delivered.
I certify that the preceding one hundred and fifteen (115) paragraphs are a true copy of the reasons for judgment of Judge Altobelli
Date: 20 July 2018
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