Fair Work Ombudsman v AM Retail Solutions & Anor (No.4)

[2010] FMCA 525

FEDERAL MAGISTRATES COURT OF AUSTRALIA

FAIR WORK OMBUDSMAN v AM RETAIL SOLUTIONS & ANOR (No.4) [2010] FMCA 525

INDUSTRIAL LAW – Contravention of civil remedy provisions of Workplace Relations Act and Regulations – numerous underpayments and other breaches of preserved State award – breaches of regulations requiring the making, retention and production of employee records – intentional participation of sole director of employer company – liability to penalties established – matter adjourned for penalty hearing.

Corporations Act 2001 (Cth), s.471B
Crimes Act 1914 (Cth), s.4AA
Criminal Code Act 1995 (Cth)
Workplace Relations Act 1996 (Cth), ss.4, 178, 182, 208, 234, 235, 246, 717, 719, 727, 728, 836, 846, Sch.8 Part 3
Workplace Relations Regulations 2006 (Cth), Ch.2 Pt.19, regs.14,3, 14.4, 14.5, 19.3, 19.4, 19.5, 19.8, 19.11, 19.12, 19.14, 19.18, 19.20, 19.21

Australian Competition and Consumer Commission v Albert [2005] FCA 1311
CEEEIPPASUA v QR Ltd (No.2) [2010] FCA 652
Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39
Construction, Forestry, Mining and Energy Union v Williams (2009) 262 ALR 417
Fair Work Ombudsman v AM Retail Solutions & Anor (No.2) [2010] FMCA 135
Fair Work Ombudsman v AM Retail Solutions & Anor (No.3) [2010] FMCA 208
Fair Work Ombudsman v McGrath & Anor [2010] FMCA 315
Poletti v Ecob (1989) 91 ALR 381
Ray v Rodano [1967] AR(NSW) 471
Workplace Ombudsman v AM Retail Solutions & Anor [2009] FMCA 1046
Yorke v Lucas (1985) 158 CLR 661

Applicant: FAIR WORK OMBUDSMAN

First Respondent: AM RETAIL SOLUTIONS
(ACN 103 251 038)

Second Respondent: ADIL MAGAR

File Number: SYG 3333 of 2008

Judgment of: Smith FM

Hearing dates:

16, 17, 18 March 2010

24, 25, 27, 28 May 2010
7 July 2010

Delivered at: Sydney

Delivered on: 7 September 2010

REPRESENTATION

Counsel for the Applicant: Mr P Newall

Solicitors for the Applicant: FCB Lawyers

Counsel for the Respondents: Mr A Narayan

Solicitors for the Respondents: Law Partners

ORDERS

1. The application is to be listed for further hearing. 

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 3333 of 2008

FAIR WORK OMBUDSMAN

Applicant

And

AM RETAIL SOLUTIONS (ACN 103 251 038)

First Respondent

ADIL MAGAR

Second Respondent

REASONS FOR JUDGMENT

1. This judgment contains my reasons for finding that the second respondent, Mr Adil Magar, is liable under ss.719 and 728 of the Workplace Relations Act 1996 (Cth), as a person involved in numerous contraventions of civil remedy provisions of that Act by the first respondent, AM Retail Solutions (‘AM Retail’). He is also known as ‘Eddie’ or ‘Eddy’ Magar, and I shall refer to him in this judgment as ‘Mr Magar’. At all relevant times since 2002, he was AM Retail’s company secretary, its sole director, and the sole shareholder of its $100 paid capital. Before it commenced a creditors voluntary winding up on 19 May 2009, AM Retail operated a business of retailing petrol at between 20 and 30 ‘Volume Plus’ service stations in Sydney and regional NSW. Its weekly payrolls for about 11 of its sites between 2006 and 2008 usually included about 30 mostly casual employees, with a substantial turn‑over of employees at these sites during each year. The background of the business, its relationship with other companies associated with Mr Magar and his family, and the involvement in AM Retail of other members of Mr Magar’s family including his father, Azir Magar, and two of his brothers, ‘Bill’ Magar and Mark Magar, are obscure on the evidence before me. However, the totality of the evidence shows clearly that Mr Magar was at all times, both in law and fact, the controlling mind and manager of the company, exercising full responsibility for AM Retail’s general employment policies and practices.

2. In the present proceedings, the Fair Work Ombudsman (‘the Ombudsman’) alleges that between 27 March 2006 and 3 May 2008, Mr Magar consciously ignored AM Retail’s obligations to pay significant numbers of its console operators various rates of pay and other monetary entitlements under the Vehicle Industry – Repair Services and Retail (State) Award (NSW), which I shall refer to as ‘the NAPSA’ or ‘the award’.  The cumulative value of underpayments to identified employees is alleged to be $514,530.64.  The Ombudsman alleges that the underpayments occurred in accordance with Mr Magar’s instructions to his payroll officer, site managers and other agents of AM Retail, and that he was “by act or omission, directly or indirectly, knowingly concerned in or party to” AM Retail’s contraventions of s.719, within the meaning of s.728(2)(c). In addition, the Ombudsman alleges that Mr Magar is a person involved in various breaches of the Workplace Relations Regulations 2006 (Cth) requiring record‑keeping of employee entitlements, and the production of records to workplace inspectors.

3. The Ombudsman’s proceedings have followed a troubled course.  They were commenced on 16 December 2008, before AM Retail went into liquidation.  An elaborate statement of claim was accompanied by tables itemising all of the unpaid employee entitlements and other contraventions which were alleged.  For twelve months, there were exchanges between the parties attempting to resolve the proceedings, or at least to procure an agreed statement of facts, but these were frustrated in circumstances which I addressed in Workplace Ombudsman v AM Retail Solutions & Anor [2009] FMCA 1046 and Fair Work Ombudsman v AM Retail Solutions & Anor (No.2) [2010] FMCA 135.

4. The proceedings against AM Retail became, and remain, stayed under s.471B of the Corporations Act 2001 (Cth).

5. Mr Magar does not contest the Court’s power to determine his liability for penalties, notwithstanding that AM Retail’s liability as principal offender has not been, and cannot be, determined, and notwithstanding that Mr Magar’s accessorial liability depends upon findings of breaches by the principal offender.  His counsel submitted, however, that I should not make declarations as to AM Retail’s breaches as part of my formal orders (citing Australian Competition and Consumer Commission v Albert [2005] FCA 1311 at [33]‑[35]). I am inclined to accept this submission. In any event, I shall defer formulating any final orders until I have completed the matter by hearing the parties in relation to the penalties to be imposed in the light of the findings I make in this judgment.

6. The hearing of the proceedings against Mr Magar commenced on 16 March 2010, and was continued over 8 interrupted days until I reserved to give the present judgment on the issues of his liability.  Mr Magar, in effect, put the Ombudsman to proof in relation to almost every significant allegation of fact and law, and exercised his right to give no notice of the evidence he intended to lead in defence.  Notwithstanding this challenge, the Ombudsman maintained the full complexity of his original allegations. As a consequence, the Ombudsman was required to tender bulky employment records located on the premises of AM Retail, which I admitted into evidence over objection (see Fair Work Ombudsman v AM Retail Solutions & Anor (No.3) [2010] FMCA 208). To enable the Court and Mr Magar’s representatives to understand the workplace inspector’s detailed calculations of the alleged underpayments, the Ombudsman prepared an impressively detailed 65 page schedule giving references to the documentary and other evidence in support of each alleged contravention. At the conclusion of the Ombudsman’s case, Mr Magar presented some evidence from his brother Mark Magar, but gave no evidence himself. Adjournments were required to allow each party to absorb material thus emerging in a staggered manner. The actually contested issues of law and fact only emerged in the course of the recent written and oral submissions of Mr Magar’s counsel.

7. However, his submissions allow me now to write a judgment which does not need to do more than accept or summarise matters of fact and law which appear uncontroversial.  These include: 

   i)the standing of the Ombudsman to bring the proceedings and the jurisdiction of the Court;

   ii)the identified statutory sources of the employees’ entitlements as ‘applicable provisions’ for the purposes of s.719(1), for breach of which AM Retail would be liable as an employer;

   iii)the correctness of all of the alleged underpayments to the particularised employees in relation to each of the identified ‘applicable provisions’, to the extent that the particulars are based on AM Retail’s own payroll documents as analysed by a workplace inspector, Ms Smithers;

   iv)the legal pathway by which breaches of AM Retail in these respects may be attached to Mr Magar under s.728(1); and

   v)the effect of jurisprudence as to what is required to be proved by the Ombudsman as to Mr Magar’s ‘mental state’ in relation to the employer’s contraventions, before the Court may find him to be a person involved within the ambit of s.728(2)(c).

8. I therefore propose not to burden this judgment with all the details of the alleged contraventions, which may be found in the amended statement of claim, the documentary evidence, and the schedules and submissions of the Fair Work Ombudsman.  I shall outline the unchallenged evidence, set out the evidence relied upon to establish Mr Magar’s personal involvement in the underpayment of AM Retail’s employees, describe the case presented by Mr Magar, and address the contentions and evidence relied upon by him in support of a general submission that I should discharge Mr Magar from any liability. 

9. For reasons which will appear, I have been persuaded to the applicable standard of proof in civil prosecutions (see Fair Work Ombudsman v McGrath & Anor [2010] FMCA 315 at [30]), that the Ombudsman has established Mr Magar’s liability to penalties for the contraventions of s.719, except in relation to some particulars concerning some of the contraventions and in relation to one alleged breach of the NAPSA. I have also found him liable for some of the contraventions in relation to record‑keeping and production of records to inspectors.

The liability of a person involved 

1. It is useful to trace the legal basis for the Ombudsman’s allegations against Mr Magar ‘backwards’ through the legislation.  His personal liability rests upon s.728: 

   728Involvement in contravention treated in same way as actual contravention 

   (1)A person who is involved in a contravention of a civil remedy provision is treated as having contravened that provision. 

   (2)For this purpose, a person is involved in a contravention of a civil remedy provision if, and only if, the person: 

   (a)has aided, abetted, counselled or procured the contravention; or

   (b)has induced the contravention, whether by threats or promises or otherwise; or

   (c)has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or

   (d)has conspired with others to effect the contravention. 

2. Although the Ombudsman’s amended statement of claim appears in paragraphs 3 and 56 to rely only upon s.728(2)(c), his counsel’s final submissions contended that Mr Magar’s liability for all contraventions was also established under paragraph (a). However, I do not need to consider whether I should entertain this submission, since I have accepted counsel’s submission that paragraph (c) provides a wider test, and is more clearly applicable to Mr Magar’s general involvement in the alleged contraventions. In those particulars or contraventions where I have not been satisfied under paragraph (c), I would not have reached a different conclusion if I had applied paragraph (a).

3. Both counsel accepted that my recent judgment in McGrath (supra) at [19]‑[30], correctly cited authority for the necessity to establish an element of mens rea under each of the paragraphs of s.728.  With particular reference to the language of (c), the majority judgment in Yorke v Lucas (1985) 158 CLR 661 held at 670 that a person cannot be ‘knowingly concerned’ in a contravention “unless he has knowledge of the essential facts constituting the contravention”, and that a ‘party to a contravention’ must “be an intentional participant, the necessary intent being based upon knowledge of the essential elements of the contravention”.  I also cited authority explaining how ‘knowledge’ of contravening conduct of the principle offender may be shown by ‘wilful blindness’ to that conduct: 

   24.In Giorgianni v The Queen (1985) 156 CLR 473, which was applied in Yorke v Lucas, it was made clear in relation to a strict liability offence, which could be established against a principal offender by proving an omission to take a required action, that the requirement of intentional participation by an accessory did not allow the accessory to be convicted merely by showing a negligent, reckless, or irresponsible failure by him to be aware of an essential fact and to ensure the taking of the required action. As Gibbs CJ said at 483:

   The failure to make such inquiries as a reasonable person would have made is not equivalent to knowledge; it is not enough to render a person liable as a secondary party that he ought to have known all the facts and would have done so if he had acted with reasonable care and diligence.  That is so even when the offence is one of strict liability, so that the actual perpetrator may be convicted in the absence of knowledge. 

   25.The judgments in Giorgianni recognised that in some circumstances a finding of ‘wilful blindness’ might be sufficient. However, as Gibbs CJ said at 487:

   However connivance, or wilful blindness, is only relevant to the liability of a secondary party to an offence because it virtually amounts to knowledge.  Recklessness, in the sense of not caring whether the facts exist or not, would be relevant only if it too was virtually equivalent to knowledge, in other words only if it amounted to wilful blindness. 

   26.Mason J explained ‘wilful blindness’ at 495:  

   It is enough if the defendant has deliberately shut his eyes to a relevant fact or has deliberately abstained from obtaining knowledge by making an inquiry for fear that he may learn the truth. 

4. Section 728 requires the Act to be applied to a person involved with the requisite state of mind in “a contravention of a civil remedy provision”, as if he or she were the principal offender.  The meaning of “civil remedy provision” is defined for this purpose in s.727:

   727Operation of this Division 

   (1)This Division sets out rules that apply for the purposes of these provisions: 

   (a)section 719; and

   (b)another provision of this Act that is declared (whether by that provision or by another provision of this Act) to be a civil remedy provision (whether or not for the purposes of a particular segment of this Act); and

   (c)another provision of this Act that provides a remedy for a contravention of a provision referred to in paragraph (b). 

   (2)Those provisions are called the civil remedy provisions. 

5. It is through the pathways of s.727(a) and (b) that the Ombudsman’s present proceedings diverge in relation to the alleged liability of Mr Magar for employee entitlements contraventions, and for records contraventions. I shall identify the contraventions and explain their legal basis under separate headings.

The alleged entitlements contraventions 

1. Mr Magar may be found liable under s.728 for AM Retail’s breaches of employee entitlements protections pursuant to the reference in s.727(1)(a) to s.719 as a ‘civil remedy provision’. Section 719(1) makes an employer liable for a penalty, whenever it “is bound by an applicable provision” and “breaches the provision”.  The potential “applicable provisions” are defined in s.717(1), to include “a term of one of these that applies to the person: (ii) the Australian Fair Pay and Conditions Standard” (‘the AFPCS’), and “(iv) a collective agreement”. The maximum penalty for each breach of a term of these sources of obligation is 60 penalty units for an individual and 300 penalty units for a body corporate, i.e. $6,600 and $33,000 respectively (see s.719(4)).

2. In the present case, the Ombudsman identifies ‘the AFPCS’ as a ‘preserved APCS’ notionally constituted by those parts of the NAPSA which contain terms specifying basic periodic rates of pay for permanent and casual employees (see s.208(1), applying the definitions in s.178). It is common ground that AM Retail was directly bound by s.182(1) to pay the particularised employees no less than the basic periodic rate of pay under the NAPSA. It was bound by s.234(2) to credit the statutory ‘guarantee’ of annual leave, and by s.235(1) to pay employees their basic periodic rate of pay under the NAPSA when taking that leave. It was also bound by s.246(2), (3) and (4) to accrue and pay personal leave at the basic rates of pay under the NAPSA.

3. In relation to other employee entitlements which were not directly taken from the NAPSA as part of the AFPCS, AM Retail was bound by the terms of the NAPSA, as a “notional agreement preserving State award” taking effect as a collective agreement under Sch.8 Part 3 of the Workplace Relations Act (see cl.38A(2)). These included various obligations to make payments to full‑time and casual employees in lieu of notice of termination, to pay casual loadings in relation to Saturday, Sunday and public holiday work, and to pay overtime loadings and penalty rates.

4. In total effect, therefore, in the absence of any other legal basis for determining the wages of its employees, AM Retail was at all times after the commencement of the WorkChoices legislation in March 2006, bound to pay its full‑time and casual staff employed at its petrol stations the rates of pay and other entitlements which continued to be found in the old State award, which became the NAPSA.  As I shall explain below, the evidence establishes that Mr Magar and his payroll officer were fully aware of the existence of the award and of its terms, and that they continued to operate, but he decided to pay the legally required rates of pay and other entitlements to only some of its employees at some of its petrol stations.  Throughout the relevant years Mr Magar directed AM Retail’s payroll officer to follow practices of paying disadvantageous rates of pay for many other employees at many of its petrol stations, in conscious disregard of the employees’ known legal entitlements. 

5. The separate ‘terms’ of the State award which constitute the AFPCS and the NAPSA provide the separate ‘applicable provisions’ which are alleged to have been contravened by AM Retail and Mr Magar.  In effect, the Ombudsman seeks findings that one contravention occurred in relation to each type of entitlement conferred by each term of the NAPSA, whether directly or indirectly as part of the AFPCS.  He alleges that most of the contraventions were constituted by underpayments to more than one employee in relation to more than one pay period.  Some contraventions are particularised by reference to numerous employees and to breaches which were repeated over long periods.  This approach to the identification of separate ‘contraventions of a civil remedy provision’ for which Mr Magar is alleged to be liable in relation to employee entitlements, reflects established jurisprudence on the statutory aggregation of multiple breaches of “an applicable provision” when they “arose out a course of conduct” (see s.719(2) and the cases recently cited by Logan J in CEEEIPPASUA v QR Ltd (No.2) [2010] FCA 652 at [27]‑[28]). The statutory aggregation of breaches was uncontroversial in the present case, and does not need to be further examined.

6. I also do not need to consider in the present judgment, and shall defer until I have received further submissions, whether penalties imposed for each aggregated contravention should be further reduced under sentencing principles recently discussed in Construction, Forestry, Mining and Energy Union v Williams (2009) 262 ALR 417 at [14]‑[19] and applied by their Honours at [25]‑[26] (see also Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39 at [39]‑[42]).

1. The consequence of the statutory aggregation of multiple breaches of separate terms of applicable provisions, is that Mr Magar could be found liable for each of the alleged contraventions, even if I were only satisfied that he was complicit in the denial of a particular type of entitlement to only one of the particularised employees on only one occasion.  However, as I shall explain, I am sufficiently satisfied by Ms Smithers’ analysis of AM Retail’s own employment and wages records, and by evidence as to Mr Magar’s general involvement in relevant personnel matters, to find that all of the particulars of most of these allegations have been made out, subject only to a few exceptions which I shall explain. 

2. As I have noted, Ms Smithers’ analysis of the underpayments constituting each contravention was not contested in any particular, in so far as it assumed the accuracy and sufficiency of AM Retail’s timesheets and payment records concerning almost all of the particularised employees.  I am therefore spared from the need to detail and examine in this judgment the documents she relied upon in relation to uncontroversial particulars involving most of the specified employees.  I can sufficiently summarise the ‘applicable provisions’ and the particulars of the contraventions alleged in the amended statement of claim, in the following list.  The named employees are persons who were called as witnesses, and whose evidence I shall examine below: 

   i)s.182(1) of the Act in relation to the AFPCS, involving the failure to pay 49 identified casual and ‘weekly employed’ employees, including Charmaine Bradshaw, Caitlyn Izzard, Mourad Gerges, Nagi Basta, Kamel Morgan, and Najah Hirmiz, the guaranteed basic periodic rates of pay for each hour worked. The breaches occurred over various periods between 27 March 2006 and 3 May 2008;

   ii)s.232(2) and s.234(2) of the Act in relation to the AFPCS, involving the failure to allow employees to accrue annual leave, and the failure to credit annual leave each month, in respect of 8 identified ‘weekly employed’ employees, including Nagi Basta, Kamel Morgan and Najah Hirmiz, during the period between 27 March 2006 and 3 May 2008;

   iii)s.235(2) of the Act in relation to the AFPCS, involving the failure to pay the full amounts due for accrued annual leave, payable upon the termination of the employments of 6 identified ‘weekly employed’ employees, including Mina Hanna, Nagi Basta and Kamel Morgan, on various dates in 2007 and 2008;

   iv)s.246(2), s.246(3) and s.246(4) of the Act in relation to the AFPCS, involving the failure to allow employees to accrue personal/carer’s leave, and the failure to credit that leave each month, in respect of 8 identified ‘weekly employed’ employees including Nagi Basta, Kamel Morgan and Najah Hirmiz, during the period between 27 March 2006 and 3 May 2008;

   v)Part A, cl.2(e)(i)(5) of the NAPSA, involving the failure to make the required payment in lieu of the required period of notice of termination of the employment of Kamel Morgan, where an underpayment of $2,910.80 is claimed;

   vi)Part A, cl.6(4)(a)(ii) of the NAPSA, involving the failure to pay loadings over and above the base rate for ordinary hours to casual employees who worked on weekends or public holidays.  This failure is alleged to have occurred throughout the period between 27 March 2006 and 3 May 2008, and involved the non‑payment of the relevant loadings to 33 casual employees who worked on a Saturday, 38 who worked on a Sunday, and 31 who worked on a public holiday.  They include Charmaine Bradshaw, Caitlyn Izzard, and Mourad Gerges;

   vii)Part A, cl.6(4)(c) of the NAPSA, involving  the failure to pay overtime loadings to casual employees on occasions when an employee worked in excess of 10 hours in a day or over an average of 38 hours per week.  The breaches occurred throughout the period between 27 March 2006 and 3 May 2008, and resulted in the underpayment of at least 23 employees, including Charmaine Bradshaw and Caitlyn Izzard. 

   viii)Part A, cl.14(a)(ii) of the NAPSA, involving the failure to pay the penalty rate prescribed as time and one‑half of the ordinary hourly rate for shifts worked on a Saturday, to 8 ‘weekly employed’ employees including Nagi Basta, Najah Hirmiz and Kamel Morgan, within the period between 27 March 2006 and 3 May 2008;

   ix)Part A, cl.15(a)(ii) of the NAPSA, involving the failure to pay the penalty rate of double‑time for shifts worked on a Sunday to 4 identified ‘weekly employed’ employees including Nagi Basta, within the period between 27 March 2006 and 3 May 2008;

   x)Part A, cl.16(a)(ii) of the NAPSA, involving the failure to pay the penalty rate of double time and one‑half of the ordinary hourly rate for shifts worked on a holiday to 7 ‘weekly employed’ employees including Nagi Basta, Najah Hirmiz and Kamel Morgan, within the period between 27 March 2006 and 3 May 2008;

   xi)Part A, cl.17(a)(i)‑(vi) of the NAPSA, being a failure to pay a large number of casual and weekly employees who worked an afternoon or evening shift the applicable loading in addition to their ordinary rate of pay.  The breaches occurred throughout the period between 27 March 2006 and 3 May 2008, and the employees who were affected included Charmaine Bradshaw, Caitlyn Izzard, Mourad Gerges, Najah Hirmiz, Kamel Morgan and Nagi Basta;

   xii)Part A, cll.18(a)(i), 18(a)(ii) and 18(a)(iii) of the NAPSA, involving the failure to pay penalty loadings for work falling outside their ordinary hours of work to 7 identified ‘weekly employed’ employees including Nagi Basta, Najah Hirmiz and Kamel Morgan, within the period between 27 March 2006 and 3 May 2008;

   xiii)Part A, cl.2(e)(ii)(7)(iv) of the NAPSA, involving the failure to provide, when requested by Mourad Gerges and Najah Hirmiz, written statements of their employment specifying the period that they worked and classifying the type of work they performed, following the terminations of their employment, respectively in 2008 and 2009;

   xiv)Part A, cl.11(a)(i) of the NAPSA, involving breaches of a requirement that ordinary hours should be rostered in accordance with defined work cycles.  It is alleged that, in breach of this requirement, 7 identified employees, including Nagi Basta, Najah Hirmiz and Kamel Morgan were rostered in excess of 38 ordinary hours on more than five days in some weeks within the period between 27 March 2006 and 3 May 2008. 

3. I shall explain my findings in relation to these allegations below, after listing the ‘records’ contraventions which are alleged, and then considering the evidence of the witnesses called by the parties. 

The alleged records contraventions 

1. An employer’s breach of the requirements of the Workplace Relations Regulations 2006 (Cth) becomes a contravention of a civil remedy provision of the Act for the purposes of accessorial liability under s.728 of the Act through a different pathway.

2. The making of regulations prescribing the keeping of records by employers and their production to workplace inspectors was authorised by ss.836 and 846(1) of the Act. Section 846(2)(g) enabled the making of regulations which imposed “civil penalties for contraventions of the regulations” not exceeding 10 penalty units for an individual or 50 penalty units for a body corporate. 

3. The regulations, which are confusing to navigate, then contained in Part 19 of Chapter 2 various regulations for the purpose:

   19.1Purpose of Part 19 

   (1)For sections 836 and 846 of the Act, these Regulations provide for: 

   (a)the making and retention by employers of records relating to the employment of employees; and

   (b)the inspection of records by workplace inspectors; and

   (c)the issue of pay slips to employees by employers. 

4. All of the subsequent regulations prescribing these obligations contain a provision that “subregulation (1) is a civil remedy provision” and that “strict liability applies to a physical element in subregulation (1)”. 

5. Regulation 14.3(2) in Ch.2 empowers a workplace inspector to apply to this Court, as an ‘eligible court’ under s.717, “for an order for a contravention of a civil remedy provision in these Regulations”. Regulations 14.4 and 14.5 in Ch.2 then provide:

   14.4Court may order pecuniary penalty 

   A court to which regulation 14.3 applies may order a person who contravenes a civil remedy provision in these Regulations to pay a pecuniary penalty of up to the maximum penalty permissible under paragraph 846 (2) (g) of the Act. 

   14.5Multiple contraventions of civil remedy provisions

   (1)This regulation applies if: 

   (a)a person commits 2 or more contraventions of a civil remedy provision of these Regulations; and

   (b)each contravention relates to the same action or course of conduct of the person. 

   (2)The contraventions are taken, for these Regulations, to be a single contravention of the civil remedy provision. 

   (3)However, if: 

   (a)a penalty has been imposed on the person in relation to a contravention of a civil remedy provision relating to an action or course of conduct of the person; and

   (b)the person subsequently commits a contravention of the civil remedy provision relating to the same action or course of conduct;

   subregulation (2) does not apply to the contravention mentioned in paragraph (b). 

6. These regulations provide the Court with jurisdiction to impose penalties on a principal offender for breach of a regulation in Ch.2 Pt.19. However, there is no regulation which directly empowers the imposition of a penalty on an accessory. Nor does s.727(1)(b) in its own terms extend accessorial liability under s.728 to breaches of the regulations, since its defined ‘civil remedy provisions’ must all be found in “another provision of this Act that is declared (whether by that provision or by another provision of this Act) to be a civil remedy provision …”. However, the Ombudsman submits that s.727(1)(b) extends to regulations which declare themselves to be civil remedy provisions, by reason of the definition in s.4(1):

   this Act includes the regulations but does not include Schedule 1 or regulations made under that Schedule. 

7. Mr Magar’s counsel did not dispute the applicability of the above legislation, and I accept that I have power to impose on Mr Magar a penalty of up to 10 penalty units, i.e. $1100 (see s.4AA of the Crimes Act 1914 (Cth)), for every breach by AM Retail of an obligation under Ch.2 Pt.19 of the Regulations, provided that his accessorial liability is established under s.728. Multiple breaches of the same ‘civil remedy provision’ must be aggregated under reg.14.5, and treated as “a single contravention of the civil remedy provision”. 

8. It therefore remains necessary to be satisfied in relation to at least one particular of each breach of a regulation that Mr Magar had the mental state alleged under s.728(2)(c), that is, that he had actual knowledge of the essential ingredients of the contravention by AM Retail and was intentionally ‘concerned in’ or ‘party to’ the contravention. This is notwithstanding that the obligations on AM Retail were declared in the various regulations to be “strict liability” offences, within the application of the Criminal Code Act 1995 (Cth). In this respect, I note that reg.19.3 also adopts other general provisions in relation to criminal responsibility from Chapter 2 of the Criminal Code, but I received no submissions referring to these provisions.

9. It will be necessary to examine closely the ingredients of some of the ‘records’ contraventions alleged against Mr Magar by the Ombudsman, and to examine the evidence of his involvement in the contraventions.  I shall do so below, after considering the evidence relating to the entitlements contraventions.  However, it is convenient to list at this point in my judgment, the particular contraventions which are alleged.  Again, due to the statutory aggregation of multiple breaches, the Ombudsman accepts that the Court should treat as a single contravention the aggregated single breaches of each of the identified regulations, notwithstanding that he has presented evidence of breaches of some of them involving numerous employees on repeated occasions. 

10. The separate regulations which are alleged to have been contravened in the amended statement of claim, with the particulars as refined in the Ombudsman’s ‘breach summary table’, are: 

    i)reg.19.4(2), which required AM Retail to “keep, or cause to be kept, an entry in a record” on prescribed matters relating to each employee for a defined seven year period.  This contravention is alleged to be evidenced by AM Retail’s claims to workplace inspectors in March and April 2008 not to be able to retrieve from its computer specified records when requested. 

    ii)reg.19.5, which required AM Retail to keep “the record relating to the employee … in a condition that allows a workplace inspector to determine the employee’s entitlements and whether the employee is receiving those entitlements”.  This is alleged to be evidenced by the state of AM Retail’s records which were discovered and copied by workplace inspectors when they attended its premises on 8 May 2008. 

    iii)reg.19.8(1)(c), which required an employee’s records to contain his or her status as full‑time or part‑time, and (d) his or her term of employment as permanent, temporary or casual, and (e) the date of his or her commencement.  These defects are alleged to be evidenced in the employee records obtained on 8 May 2008. 

    iv)reg.19.11(1), which required an employee’s records to contain “details of the rate of remuneration paid to the employee”, and under (3)(c) and (d) details of any loading and penalty rate for which the employee is “entitled to be paid”.  These defects are alleged to be evidenced in the employee records obtained on 8 May 2008. 

    v)reg.19.12(1)(a), (b) and (c), which required the record of an employee who was entitled to leave, to contain details of “the accrual of that leave”, “any leave taken by the employee”, and “the balance of the employee’s entitlement to that leave from time to time”.  These defects are alleged to be evidenced in the records of 8 ‘weekly employees’ obtained on 8 May 2008, including those of Nagi Basta, Kamel Morgan and Najah Hirmiz. 

    vi)reg.19.14(1)(a) and (b), which required records of the termination of an employee to contain “whether the termination was terminated (i) by consent; or (ii) by notice; or (iii) summarily; or (iv) some other manner, specifying the manner”.  These defects are alleged to be evidenced in the employee records of 6 former employees which were obtained on 8 May 2008, including those of Kamel Morgan, Mina Hanna, and Nagi Basta. 

    vii)reg.19.18(1)(b), (2) and (3)(b), which required AM Retail to make a copy of a record requested by a workplace inspector available to the inspector “in a legible form in the English language” within 3 business days at its office, or by post or fax within 14 days after the request.  It is alleged that there was a failure to comply with this requirement in relation to a request for records relating to Mina Hanna which was served on 4 March 2008. 

    viii)reg.19.20(1), (2)(a) and (b), which required AM Retail to issue pay slips “relating to each payment by the employee of an amount to the employee as remuneration”, “in electronic form or as hard copy”, and “within 1 day of the payment to which the pay slip relates”.  This is alleged in the Ombudsman’s ‘breach summary table’ not to have been done in relation to 8 ‘weekly employees’, including Nagi Basta, Kamel Morgan, and Najah Hirmiz.  

    ix)reg.19.20(3) and 19.21(1)(k)(i), which required payslips to include particulars of the amount of each superannuation contribution made by the employer for its pay period, and the name of the fund to which it was made.  It is alleged that this occurred in relation to the same 8 weekly employees. 

11. In final submissions, counsel for Mr Magar admitted that contraventions (ii), (iii), (vi) and (vii) had been established against AM Retail, but did not concede any others.  In relation to all of the alleged contraventions, he disputed that the Ombudsman had established the requisite mental element as against Mr Magar.  I shall explain my conclusions about these issues after discussing the evidence. 

The uncontested evidence of Mr Joe Zhou 

1. I have in a previous judgment explained how Ms Smithers and other inspectors obtained the payroll, timesheet, and other hard‑copy records of AM Retail, from which she identified and calculated the alleged underpayments which I have summarised above.  The records were located in the company’s head office at Carramar in Sydney, from which Mr Magar managed its affairs.  His management activities included closely supervising the actions of AM Retail’s payroll officer, Mr Joe Zhou, who also worked in that office. 

2. I shall below consider the inadequacies of the records thus located, and trace the course of the inspectors’ investigation in which it is alleged that there had been earlier failures to produce records to inspectors when required to do so.  However, I shall first consider the evidence of Mr Zhou, which importantly identified how he prepared each payroll over the period of the alleged contraventions, how he was closely supervised by Mr Magar, and how he acted on Mr Magar’s directions in relation to rates of pay and entitlements over the whole of the relevant period.  His evidence was not substantially contested by Mr Magar in his counsel’s final submissions, notably in relation to Mr Magar’s supervision of the payroll and Mr Zhou’s recounted conversations with Mr Magar, although submissions were made as to its implications. 

3. In his affidavit sworn on 1 October 2009, Mr Zhou said he was initially employed by AM Retail in August 2001 to inspect cash balances at Volume Plus petrol stations.  The balance of his affidavit is of such importance, that I shall extract it in its entirety, omitting parts which I rejected on formal grounds and gave leave for supplementary oral evidence. 

   3.In or around January 2002 I commenced performing work as a Payroll Officer for console and restaurant staff employed by AM Retail.  At that time another employee was responsible for the payroll for office staff.  After about 12 to 24 months of performing payroll duties for console and restaurant staff I was also asked to perform payroll functions for office staff. 

   4.Prior to January 2002 I had never had any experience as a Payroll Officer.  I had previously worked in an accounts receivable role for another employer for about one year. 

   Duties 

   5.During my employment with AM Retail, my duties included:  

   5.1payroll, initially for console and restaurant staff and later for office staff;

   5.2accounts payable;

   5.3banking on behalf of AM Retail;

   5.4preparing BAS statements on behalf of AM Retail; and

   5.5financial reporting. 

   6.I spent about one day per week performing payroll functions including: 

   6.1checking employee timesheets;

   6.2processing payroll;

   6.3printing out the payroll list;

   6.4organising payment for employees (including attending the bank);

   6.5printing group certificates for employees at the end of each financial year;

   6.6sending group certificates to employees at the end of each financial year; and

   6.7reporting to the tax office on payroll matters. 

   Payroll functions 

   7.In order to perform my payroll functions, I would have timesheets faxed to me from each Volume Plus service station owned by AM Retail on a weekly basis.  I would then insert the hours for each of the employees into the payroll computer system.  I would print the payroll list and attach it to the timesheets, which I would then show these to Adil Magar, who I knew as Eddy (“Eddy”).  Eddy would give me cash and I would go to the bank and deposit each employee’s wage in their individual bank accounts.  I did not pay any employees in cash during my employment with AM Retail. 

   8.Eddy would advise me whether staff were to be engaged on a permanent or casual basis. 

   9.When I initially undertook the payroll functions the payroll system was already in place.  Console and restaurant staff were paid $13 per hour for weekday shifts, $15.95 for night shifts from midnight to 6am, $15.95 for work performed on weekends and $20 for work performed on public holidays. 

   10.About one year after I commenced performing payroll functions I contacted the Office of Industrial Relations (“OIR”) to find out what rates of pay the employees should be being paid.  The OIR provided me with pay rates for Console Operators and restaurant staff.  I approached Eddy and we had a conversation to the following effect: 

   Me:“I have contacted the government and they have told me that we are not paying employees the right amount.  We should be paying the employees under the Vehicle Retail Award.  Do you want me to pay the employees under the Award?”  

   Eddy:“No, continue to pay the employees the rates that we have been paying them.” 

   11.On a number of occasions during my employment with AM Retail, including each time an update of the Award came out (i.e. when the pay rates increased) I would show Eddy the Award and have a conversation with him in words to the following effect: 

   Me:“The Award has been updated for Console Operators which has changed the amount they should be paid.  Should I pay them the new amount under the Award?” 

   Eddy:“No.  Keep paying them the amount you are paying them.” 

   12.I understood during my employment that some full time employees had negotiated special arrangements with Eddy where they were paid differently to the rates stated in paragraph 9 above.  Eddy advised me how much to pay these employees when they commenced employment. 

   13.There were also special arrangements in place for staff at the Bathurst store.  Sometime around 2004 or 2005 “James” an employee at the Bathurst store sent me a facsimile attaching a copy of an Award and requesting that the Bathurst employees be paid the rates under the Award.  I do not recall James’ last name.  I showed a copy of the Award to Eddy and we had a conversation to the following effect: 

   Me:“James from Bathurst has sent me a copy of this Award.  He said that the staff want to be paid the amounts specified in the Award.  Do you want me to pay these rates?” 

   Eddy:“Yes ok, but only for staff at that store.” 

   Overtime 

   14.Whilst I was engaged as Payroll Officer I did not pay any employees overtime rates or any money in addition to their rates of pay for additional hours worked.  

   Penalty Rates 

   15.During my employment with AM Retail no employees were paid penalty rates except for the $15.95 rate paid to casual staff and some full time employees for night shifts and weekends and the $20 rate paid to casual staff and some full time employees on public holidays. 

   Annual Leave  

   16.During my employment as Payroll Officer I was not aware of any records that were kept in respect of annual leave and personal leave and the accrual of such leave for Console Operators. 

   17.I recall on a couple of occasions that Eddy directed me to pay particular full time employees wages whilst they were on leave.  I did not make any specific record of payments made or leave taken. 

   18.I recall asking Eddy when I first started performing payroll duties if I should accrue annual leave and sick leave for the employees.  Eddy replied “No, they are not full time staff”.  I did not accrue annual leave or sick leave for Console Operators.  

   Personal Leave 

   19.During my employment as Payroll Officer I recall being contacted by a couple of employees and asked whether they were entitled to sick leave.  I recall about 6 times during my employment I was directed by Eddy to pay some full time employees sick leave, but in general sick leave was not paid. 

   Long Service Leave 

   20.During my employment I do not recall making any payments to employees, either during their employment or on termination of their employment, in respect of long service leave. 

   Superannuation 

   21.Whilst I was employed as Payroll Officer I recall processing superannuation payments on a couple of occasions.  AM Retail often did not make superannuation payments on time and I recall on at least one occasion having a conversation with Eddy to the following effect: 

   Me:“Eddy we are behind on our superannuation payments.  There are large fines if these payments are not made on time.  The tax office has already rung to follow up.” 

   Eddy:“I know that we have missed a couple of payments, we can’t afford to pay it now but we will get to it when we can.” 

   Entitlements on termination 

   22.During my employment I do not recall making any payments to employees on termination of their employment, including accrued annual leave, long service leave or payment in lieu of notice. 

   Supervision 

   23.When I initially interviewed for my role with AM Retail, I was interviewed by Bill Magar. 

   24.During my employment with AM Retail I reported to Eddy.  I understood that Eddy was the director and manager of AM Retail. 

   25.Eddy was based in the same office as me. 

   26.In about 2003 Eddy informed me that I was not entitled to send any faxes or correspondence to anyone without his prior approval. 

   Payslips 

   27.During my employment I issued payslips for employees.  These were faxed to each of the managers at the various Volume Plus stores and I also kept copies on my computer.  Payslips were not issued directly to each individual employee. 

   Termination of my employment with AM Retail 

   28.I terminated my employment with AM Retail in March 2008 by giving Eddy one week’s notice.  In exchange for only giving Eddy one week’s notice I advised Eddy that I did not require him to pay my accrued long service leave entitlements.  

1. In his oral evidence, Mr Zhou generally showed a reasonable ability to understand English, but at times his answers were poorly expressed or showed misunderstanding of counsel’s questioning.  Generally, he impressed me as an honest witness, and a person who was likely to have obtained, and followed meticulously, the directions of his managing director in relation to his duties as payroll officer.  Moreover, no challenge in cross‑examination was made to his evidence of the practices he had been directed by Mr Magar to follow over the relevant period.  No attempt was made to discredit Mr Zhou by pointing to a motive for giving incorrect evidence and, as I have indicated, Mr Magar’s counsel acknowledged in his final submissions that Mr Zhou’s credit was not impeached. 

2. In his oral evidence, Mr Zhou said that when he took over as payroll officer in 2002 he was shown how to do the payroll by the outgoing officer, and was told: “I can’t make any change without permission of the director”.  He said: “I just one of the employee.  Before I make any change I must consult with the director”.  He said: “If I get a new award I always ask Eddie whether or not we should change. … The answer, I can’t remember exactly, but I didn’t get instruction to change it”.  He also said: “I’d see Eddie every day almost”. 

3. In relation to the weekly payroll procedure explained by him in his affidavit, Mr Zhou confirmed Mr Magar’s direct involvement on a weekly basis.  He said: “he didn’t prepare any documents … I just prepare the payroll and he review and give me cash, then we do banking.  That’s it”. 

4. Mr Zhou said that if he was uncertain about a new employee’s wage rate, or if an employee asked him questions about his entitlements: “if I can’t answer this question, and ask them to talk to the site – to Eddie or manager or site manager, because I’m – I wasn’t involved to recruit the employee, so I have no idea how much we should pay the staff, you know”.  He later said that if he was approached by an employee or site manager: “I suggest them to ask Eddie, because I have no right to decide the rate, you know, how much we pay them”. 

5. In relation to annual leave and personal leave entitlements of employees, Mr Zhou confirmed deficiencies occurring at the head office of AM Retail.  He said: 

   Because once I took this job to payroll, no opening balance, the accrual annual leave or sick leave, so even I do – my records they are not accurate, and the most staff classify as casual work paid by the casual rate, so I don’t think is necessary to keep a record, you know. 

   He was referred to a record suggesting that leave credits were being kept in 2005 for one employee, Mina Hanna.  He said that Mr Hanna was ‘special’ because his employment was subject to a workers’ compensation insurance claim.  He said: 

   For most console operators I didn’t keep records of annual leave and sick leave for them because they were paid by hours with at casual rate.  So I thought it’s [sic: not] necessary to keep records, you know, for the annual leave and sick leave.  Even I keep it’s not accurate. 

6. In relation to overtime, Mr Zhou confirmed that overtime rates were not paid.  He said:  

   I can’t remember I paid that console operator overtime.  I just paid by the actual hours they did, you know.  

7. In relation to holiday pay or sick pay, he said: 

   The sick pay, only whatever sick pay, holiday leave pay was, only when I get instruction from director, I would do it.  I told you, I did whatever director told me, otherwise I can’t do anything about it. 

8. In his final submissions, counsel for Mr Magar submitted that Mr Zhou had given inconsistent evidence, when at one point he said that after taking cash and two copies of the approved payroll to the bank he: “bring back the copy to the office and file each week with a timesheet”, but later in re‑examination he said in relation to the copy stamped and returned by the bank teller: “I’d file with the weekly timesheets every time, and with all these people work with Adil Magar.  I gave to Bill … another director” (with one transcript correction, confirmed by my own notes).  It was obliquely submitted that this reference to ‘Bill’ Magar, might either undermine the weight to be given to Mr Zhou’s evidence generally, or suggest that another member of Mr Magar’s family might have been responsible for instructing and supervising Mr Zhou. 

9. However, I do not consider that this evidence provides any reason not to accept confidently the truth of all of Mr Zhou’s evidence.  Nor, in the absence of any other evidence suggesting that ‘Bill’ Magar had any role in the management of AM Retail, and in its employment practices in particular, would I conclude from it anything more than that ‘Bill’ Magar might have performed some clerical tasks around the office.  There is evidence from Mr Mark Magar that at some points in his life, he also performed office work and other duties, without taking over management responsibility from Mr Magar. 

10. I consider that generally Mr Zhou’s oral evidence under cross‑examination confirmed the payroll practices which he explained in his affidavit.  It is undoubted that he performed all the administrative work of preparing the weekly payroll and individual employee remittances, based upon the weekly employee timesheets sent from each of the petrol stations to AM Retail’s head office.  I also have no reason to disbelieve his evidence that on all occasions he applied the rates of pay which Mr Magar had directed were applicable to employees at particular sites or to some particular employees.  Moreover, I accept that Mr Magar kept personal control of the cash which was required to be taken to the bank to pay each payroll, and it is apparent that he gave close supervision to how each payroll and each employee’s pay had been calculated. 

11. I consider that Mark Magar’s evidence as to his observations of Mr Zhou’s activities at AM Retail’s office prior to 2005 and after August 2007 was broadly consistent with Mr Zhou’s evidence.  It did not cause me to doubt any relevant parts of it.  He confirmed that, in relation to weekly payroll matters, Mr Zhou “was the one that was basically executing everything”.  He confirmed that Mr Zhou did not work under his own supervision, and I do not consider that any of his evidence contradicts the evidence of Mr Zhou and other witnesses showing that Mr Magar instructed and supervised Mr Zhou personally.  He also confirmed that Mr Zhou received official information about current award rates, and claimed to have seen this information reach Mr Zhou in 2005 and 2007.  Mark Magar was unable to give any evidence contradicting Mr Zhou’s evidence that he obtained Mr Magar’s instructions not to implement the award rates except in relation to specified employees. 

12. On all the evidence, I accept that at times Mr Magar may have delegated some administrative functions to his father and one or more of his brothers.  Particularly at the end of the relevant period, there seems to have been an attempt to distance Mr Magar from the matters which were under investigation by the workplace inspectors during 2007 and 2008, and to interpose members of his family, particularly Mark Magar, in the company’s dealings with the inspectors and in defending the present proceedings.  However, I can find no evidence which identifies some person, other than Mr Magar, as responsible in fact for directing and supervising the particular wages and other entitlements to be paid by AM Retail to the relevant employees at any time over the period of the underpayments covered by the Ombudsman’s case. 

13. Mr Magar’s counsel established in cross‑examination of Mr Zhou and other witnesses, that it was usually the site managers at particular petrol stations who engaged casual employees and were responsible for their rostering.  However, it is clear that they did these functions under the supervision of Mr Magar, with the assistance of members of his family and other employees.  None of the witnesses gave any evidence showing that site managers, or any person other than Mr Magar, exercised an independent discretion on behalf of AM Retail to determine or depart from the pay rates and entitlements which had been directed by Mr Magar and were administered by Mr Zhou, in relation to employees who were engaged and rostered by site managers. 

14. The fact that employees other than Mr Magar were responsible for the weekly rostering of employees over periods attracting overtime, penalty rates and other loadings, does not detract from the evidence showing Mr Magar’s direct involvement in directing the rates of pay for which this work was to be paid.  It was not submitted that Mr Magar was unaware that work was routinely being performed by employees at times attracting more than a basic rate of pay, particularly on weekends.  As Mr Zhou confirmed: “most station run 24 hours a day”.  The rates directed by Mr Magar recognised this, but made inadequate provision in lieu of the award rates.  Finally, Mr Magar regularly, if not every week, inspected the weekly timesheets and payrolls which showed the particular times actually worked by all his employees.  I can therefore confidently conclude that there was direct knowledge and participation by Mr Magar in the underpayments of weekly wage rates which are alleged by the Ombudsman, including non‑payment of the award penalty and overtime rates.  It is largely irrelevant how the employees came to attract their entitlements to those rates. 

15. It is also irrelevant that there may have been one or more, perhaps many, employees of AM Retail who never appeared in the records obtained and analysed by Ms Smithers.  There is no clear evidence about the extent of employment ‘off the books’, although I doubt that this occurred extensively.  The contraventions alleged by the Ombudsman were confined in their particulars only to recorded employees, and only where their records were sufficient to allow the reconstruction of their award entitlements performed by Ms Smithers.  

16. Mr Magar’s counsel also established in cross‑examination that site managers at petrol stations were responsible for management of their site’s daily cash receipts, and at times were directed to disburse cash for the purposes of the business.  For example, it appears that AM Retails’ credit was so poor at times, that some petrol stations could only stock grocery items by paying cash to local sources of supplies.  However, cash receipts at sites appear to have been fully documented by cash register print‑outs, and were collected and closely supervised by members of Mr Magar’s family and other staff.  It appears to me improbable, and there is no evidence showing, that site mangers were generally directed or allowed to make cash payments to other employees by way of remuneration in addition to the weekly pay transmissions pursuant to the payroll administered by Mr Zhou.  I have accepted that this may have happened only in relation to one special employee, Mr Basta, whose circumstances I shall examine below. 

The evidence of other witnesses 

1. The Ombudsman called evidence from seven former employees of AM Retail other than Mr Zhou, some of whom had made complaints about being denied entitlements.  Essentially, their evidence tended to illustrate the circumstances of a small number of the multitude of particularised breaches which support the alleged contraventions listed above.  Considered generally, their evidence confirmed the underpayments which are alleged, and confirmed the conclusions drawn by Ms Smithers’ from her inspection of AM Retail records.  Their evidence also tended to confirm generally that wage rates were determined, not by managers locally at each petrol station, but in accordance with directions given by Mr Magar to Mr Zhou, and that payments for each pay period were calculated and made from head office in accordance with the procedure outlined in Mr Zhou’s evidence. 

2. I have taken into account these aspects of their evidence when deciding generally to accept Ms Smithers’ schedules of underpayments evidenced by AM Retail’s records, and when accepting all of Mr Zhou’s evidence.  However, essentially, their evidence in chief was only confirmatory or corroborative of that evidence and of the inferences I draw from it.  Since neither Ms Smithers’ schedules nor Mr Zhou’s evidence were generally disputed in final submissions, it is unnecessary for me to do more than summarise the witnesses’ evidence, and to locate the particular challenges made on behalf of Mr Magar. 

3. The first three of the witnesses called by the Ombudsman gave evidence which, at the end of the case, was not contested in any material respect by Mr Magar.  The last four were submitted to be witnesses whose “credit is suspect and they cannot be viewed as witnesses of truth”. 

4. Ms Caitlyn Izzard gave evidence that she was employed as a console operator at Holbrook Volume Plus Petrol Station from September 2006 until October 2007.  She was employed on a casual basis, working approximately sixteen hours per week, including two shifts on Saturdays and Sundays from 6am until 2pm, in accordance with rosters prepared by the site manager.  She was not paid overtime when she worked more than 38 hours a week, and was paid the hourly rates which prevailed at that site.  She was paid weekly by transfers into her bank account, and received no ‘cash in hand’ payments.  She met Mr Magar once.  

5. Ms Izzard confirmed the AM Retail records from which Ms Smithers’ had identified breaches of the AFPCS and NAPSA falling within the following entitlement contraventions listed above: (i) – underpayment of basic periodic rates of pay, (vi) – underpayment of casual loadings for weekends or public holidays, (vii) – underpayment of overtime loadings, and (xi) underpayment of afternoon and evening loadings.  No specific challenge was made to this evidence.  AM Retail’s records concerning Ms Izzard obtained on 8 May 2008 were alleged to support the following records contraventions: (ii) – not showing particular entitlements due or received, (iii) – not showing employment status, and (iv) – not showing details of loadings and penalty rates paid. 

6. Ms Charmaine Bradshaw gave evidence that she was employed by AM Retail on a casual basis at the Holbrook Volume Plus Petrol station as a cook and console operator between February and October 2007.  She worked shifts from 10pm to 6am, and at the end of her employment she worked six or seven days a week on shifts from 2pm to 10pm, averaging 48 hours per week.  She was paid different rates of pay but no overtime.  She received all wages by payments into her bank account, and she was given payslips by her site manager.  She resigned because she believed that she was consistently not being paid on time.  She subsequently did not receive a separation certificate nor a group certificate.  She met Mr Magar once, and spoke to him on the telephone to complain about delays in being paid.  Some outstanding pay was later received, but Ms Smithers’ schedules identified outstanding underpayments to Ms Bradshaw. 

7. Ms Bradshaw confirmed the AM Retail records from which Ms Smithers’ identified breaches of the AFPCS and NAPSA falling within the following entitlement contraventions listed above: (i) – underpayment of basic periodic rates of pay, (vi) – casual loadings for weekends or public holidays, (vii) – underpayment of overtime loadings, and (xi) underpayment of afternoon and evening loadings.  No specific challenge was made to this evidence.  AM Retail’s records concerning Ms Bradshaw obtained on 8 May 2008 were alleged to support the following records contraventions: (ii) – not showing particular entitlements due or received, (iii) – not showing employment status, and (iv) – not showing details of loadings and penalty rates paid. 

8. Mr Mourad Gerges gave evidence with the assistance of an Arabic interpreter.  He was employed by AM Retail as a console operator at Liverpool and Ingleburn petrol stations from February 2005 until February 2008.  He accepted information from his site managers that he was a casual employee.  He did not question his flat rates of pay for day, night and public holiday work, and thought that he was not entitled to “sick leave or other things”.  His wages were always paid into his bank account, but he received only two payslips from his manager. 

9. He said that he usually dealt with his site manager in relation to employment matters, and spoke to Joe Zhou only two times.  He regularly spoke on the telephone to Mr Adil Magar, who was “the big boss.  He is the owner”, when “he used to contact me like at night when he wanted me to change the price of petrol” and also when Mr Magar was checking fuel stocks. 

10. According to his affidavit, his employment came to an end when he was told that there was no more work for him at Ingleburn because the petrol station had been leased.  He said that he then received vague suggestions from Mark Magar that he might be employed elsewhere, but no acceptable offers eventuated over several weeks.  He agreed in cross‑examination that Mark Magar had suggested that he could be employed in Wollongong, and that he told Mark Magar that he did not have a car and could not travel there.  He never received any statement of service on termination when he requested this in a letter sent to AM Retail dated 1 February 2008, and later orally requested Mr Zhou to provide one.  According to his affidavit, Mr Zhou said: “Mark knows everything about you.  I don’t know anything.  You will need to talk to Mark”. 

11. I consider that Mr Gerges’ evidence was unimpaired in cross‑examination, and I accept it.  Evidence was led from Mark Magar which confirmed that no termination benefits had been paid, and that AM Retail never acknowledged that Mr Gerges’ employment had come to an end.  Mark Magar seems to have thought that, by taking this position, AM Retail’s obligations to provide an employment statement and make termination payments could be ignored.  However, it is clear in my opinion that the employer ceased to provide continuous casual work to the employee of the nature previously given, and that the previous employment relationship was, in effect, repudiated by the actions of the employer.  In those circumstances, in my opinion, Mr Gerges was entitled to all his award entitlements upon termination, including a statement of employment.  No submission was made to the contrary in the final submissions of Mr Magar’s counsel. 

12. Mr Gerges confirmed the AM Retail records from which Ms Smithers’ identified breaches of the AFPCS and NAPSA falling within the following entitlement contraventions listed above: (i) – underpayment of basic periodic rates of pay, (vi) – underpayment of casual loadings for weekends or public holidays, (xi) – underpayment of afternoon and evening loadings, and (xiii) failure to provide requested statement of employment upon termination.  No specific challenge was made to this evidence.  AM Retail’s records concerning Mr Gerges obtained on 8 May 2008 were alleged to support the following records contraventions: (ii) – not showing particular entitlements due or received, (iii) – not showing employment status, and (iv) – not showing details of loadings and penalty rates paid. 

13. Mr Mina Hanna gave evidence with the assistance of an Arabic interpreter.  He was referred for a job to Mr Magar by “a friend from the Church”.  He was employed by AM Retail from December 1997, initially as a shop assistant, helping Mr Magar to set up three new petrol stations, and then from 2001 as a console operator at petrol stations at Chester Hill, Ruse, and Ingleburn.  In 2000 he became a full‑time weekly employee, and as a result of a worker’s compensation claim in April 2004 he was placed on light duties, working only 4 hours shifts.  His wages were deposited into his bank account, but he was not provided with payslips “on a regular basis”.  He received pay without annual leave loading for the one occasion he took annual leave in 2003, and was not given any annual leave for later years. 

1. He last performed work for AM Retail in March 2006, and from that time he was “unfit for work due to a stress‑related workers compensation claim”.  He was paid until the end of June 2006 when, on my interpretation of unclear evidence, AM Retail ceased to be indemnified by its insurer, and ceased to make any payments to Mr Hanna.  Mr Hanna regarded his employment as being terminated at that time, but he could not extract an admission to this effect from anyone at AM Retail, and he never received any payments for accrued leave or other termination entitlements.  His letters seeking clarification of his employment status and an outstanding annual leave payment were ignored, so he complained to the Office of Industrial Relations in September 2007. 

2. I consider that his employment should in law be regarded as having terminated prior to that date, since it appears to me that both employee and employer had before then clearly abandoned all their mutual and legal obligations, but I am unable to make clear findings as to the exact date nor the legal characterisation of the termination, in the absence of clearer evidence and better submissions from the parties. 

3. Mr Hanna referred in his affidavit to a conversation with Mr Magar in late 2004 or 2005, in which he claimed to be owed money because his rate of pay had been “less than the amount that it should be”.  He said that Mr Magar responded: 

   I know someone is behind you pushing you to do this.  If you want to go to the Industrial Relations Office you go.  You think you will get money but you won’t get a cent from me.  I’m willing to spend $200,000 on a solicitor to prevent that. 

4. Mr Hanna is identified in the Ombudsman’s particulars of the alleged breaches of the AFPCS and NAPSA only in relation to the entitlement contravention listed above as (iii) – non‑payment of accrued leave payment on terminations.  In relation to the alleged records contraventions, he appears as a particular of contraventions (ii) – not showing particular entitlements due or received, (iii) – not showing employment status, (iv) – not showing details of loadings and penalty rates paid, (vi) – not keeping records explaining his termination, and (vii) – non‑production of requested records concerning his employment.  

5. In cross‑examination, counsel for Mr Magar challenged Mr Hanna’s claims as to his hours of work between 2000 and 2004, and suggested that they were ‘overinflated’.  I am not satisfied that this was based on any evidence now before me.  I am also not satisfied that such a point is relevant to the contraventions of which Mr Hanna’s employment provides particulars. 

6. Counsel for Mr Magar also put to Mr Hanna that he received a payment of $2,332.40 in November 2005 from Mr Zhou in respect of “one year holiday leave with loading” and “leave loading for previous holiday pays”, and that this disproved his assertion that he received no payments for holiday loadings for 2003, nor any payments for leave for the 2004 and 2005 years.  A ‘card inquiry’ print‑out with the above words handwritten by Mr Zhou on them is in evidence, and Mr Zhou confirmed that he “did pay this amount”.  However, the circumstances and calculations which led Mr Zhou to make this payment to Mr Hanna in 2005 are not shown in any evidence, and the document is equivocal as to the periods of employment the payment related to, and the extent to which AM Retail received indemnification from its workers compensation insurer.  Mr Hanna denied a memory of receiving this payment. 

7. As I have noted, non‑payment of accrued annual leave entitlements to Mr Hanna upon termination is one particular of the Ombudsman’s case in relation to contravention of s.235(2) of the Act. The particulars in Sch.2 to the amended statement of claim allege that leave accrued in Mr Hanna’s employment from 24 December 2002 until ‘June 2006’, that 20 days were taken, 49 days accrued, and that an unpaid balance of $5,705.17 should be found.

8. This balance appears to be based upon Ms Smithers’ analysis of AM Retail’s records, and appears not to credit AM Retail with the amount shown in the 2005 document identified by Mr Zhou, since it had not been produced by AM Retail prior to the hearing.  During the trial the Ombudsman amended Sch.2 to reduce the alleged amount owing to Mr Hanna, and it is possible that this took the 2005 payment into account.  However, this was not clarified in evidence nor submissions, and I consider that I should give Mr Magar the benefit of my uncertainty. 

9. No other payments to Mr Hanna in relation to leave entitlements are submitted by Mr Magar to have been omitted from the Ombudsman’s analysis of AM Retail’s records.  I consider that Ms Smither’s assessment of the records should be accepted, but giving the benefit of uncertainties about an additional credit for the 2005 payment of $2,332.40.  I accept Ms Smither’s calculations otherwise in relation to this underpayment to Mr Hanna, since they make reasonable assumptions in favour of AM Retail in relation to the exact date of Mr Hanna’s termination and his hours of employment, including during periods off work accepted by AM Retail’s workers compensation insurer, and are based on evidence which I accept.  I therefore find that there was an unpaid balance for annual leave entitlements owing to Mr Hanna on termination of $3,372.77.  I consider that the alleged contravention involving Mr Hanna is established, albeit only in relation to that amount of underpayment.  

10. I do not accept the submission of counsel for Mr Magar that Mr Hanna was generally discredited as a witness.  Mr Hanna’s oral evidence revealed a gap in his memory about the 2005 payment, and was often difficult to understand, but I consider that generally he attempted to give honest answers to the best of his ability. 

11. Nor do I accept that the evidence of this one payment to Mr Hanna in November 2005 in relation to accrued leave entitlements should be regarded as raising doubts about the alleged non‑payments to the five other particularised employees in contravention of s.235(2), nor any other contraventions based on Ms Smither’s analysis. As Mr Zhou said in his evidence, the November 2005 payment to Mr Hanna for leave entitlements was exceptional, and appears to have arisen from the involvement of a worker’s compensation insurer. It does not cause me to disbelieve the inference from AM Retail’s records, supported by Mr Zhou’s general evidence, and not contradicted by any other evidence presented by Mr Magar, that the six particularised weekly employees never received their full entitlements in relation to accrued leave upon the termination of their employment.

12. Mr Nagi Basta gave evidence with the assistance of an Arabic interpreter, at times also responding in broken English.  He was engaged personally by Mr Magar in September 1994 after he had “just arrived from Sudan”.  He remained an employee until November 2007, apart from a period between 1998 and 2000.  Over the years he worked as a console operator at Volume Plus petrol stations at Wentworthville, Lewisham, Alexandria, Guilford and Woolooware (or Cronulla).  He must have become one of the most experienced employees of AM Retail, and was at times directed by Mr Magar personally to undertake a variety of training, site manager and other subordinate roles in the business.  He said, and I accept, that “I always reported directly to Eddy, and nothing was ever done without Eddy first being informed and providing his permission”.  He was never given any documents concerning his employment, even weekly payslips, other than annual group certificates.  He took almost no time off work, even for illness, and took no annual leave between 2000 and 2007.  He regarded himself as a full‑time weekly employee, but Mr Magar told him that he was casual and not a permanent, and had no rights to paid time off.  The AM Retail payroll documents show that he was paid at the rates directed by Mr Magar to be applied by Mr Zhou, by transmissions into his bank account. 

13. Mr Basta’s evidence as to his termination was that he expressed dissatisfaction several times to Mr Magar about not receiving pay increases and paid leave, but received dismissive responses.  In August 2007, Mark Magar approached him with an offer that he “become a contractor and take over responsibilities for employees at the store”, but he declined these offers.  He was then told on 17 November 2007 by Mark Magar that “your employment has been terminated.  Give me the keys and leave”.  This direction was confirmed by Mr Magar on the telephone, and police were called who advised him to relinquish the keys.  It is clear that these events led to considerable ill‑feeling between Mr Basta and Mark Magar.  Mr Basta’s subsequent attempts to contact both Mr Magar and Mark Magar about his underpayments were fruitless, and he complained to the Workplace Ombudsman in December 2007. 

14. Mr Basta’s employment appears in the particulars of breaches of the AFPCS and NAPSA falling within the following entitlement contraventions listed above: (i) – underpayment of basic periodic rates of pay, (ii) – refusal to accrue and allow annual leave, (iii) – non‑payment on termination for accrued leave, (iv) – refusal to accrue and allow personal leave, (viii) – underpayment of Saturday penalty rates, (ix) – underpayment of Sunday penalty rates, (x) – underpayment of holiday penalty rates, (xi) – underpayment of afternoon and evening loadings, (xii) – overtime loadings, and (xiv) – exceeding limitation on hours in a work cycle.  AM Retail’s records obtained on 8 May 2008 concerning Mr Basta were alleged to support the following records contraventions: (ii) – not showing particular entitlements due or received, (iii) – not showing employment status, (iv) – not showing details of loadings and penalty rates paid, (v) – not keeping records of accrued leave, (vi) – not keeping records explaining termination, (viii) – non‑issue of payslips, and (ix) – superannuation details missing from payslips. 

15. Mr Basta swore in his affidavit that: 

    I was never paid cash in hand nor did I receive any additional pay during my employment with AM Retail Solutions, other than what was paid into my St George bank account. 

16. This statement was challenged in cross‑examination, and an attempt was made by Mr Magar’s counsel to establish that Mr Basta had received several $600 cash payments by way of remuneration, and that he might have received many more.  Two handwritten daily ‘safe drop’ summaries from the Woolooware petrol station made by Mr Basta and other employees in October and November 2007 were put to Mr Basta.  It was put to him that these evidenced that “you had an arrangement with Azir Magar, Eddie’s father, that you were to take $600 from the first safe drop of each week”.  Mr Basta denied this.  Mr Basta denied that the three star markings which now appear on the photocopies of the ‘safe drop’ summaries which are in evidence, and which were suggested to identify cash personally taken by him, were in his handwriting.  He said: “I don’t know what did they mean by that”.  Mr Basta was then shown copies of two ‘safe drop’ cash register print‑outs from 2005, showing cash of $600 being withdrawn from the till and with handwritten words “From Eddy to Nagi”.  Mr Basta acknowledged the writing as his.  He denied that they evidenced an arrangement for him to take cash remuneration which continued until October 2007.  Other similarly marked cash register ‘safe drop’ receipts were later tendered. 

17. Mr Basta denied that in October 2007 Mark Magar directed him to stop taking cash payments, and then in November 2007 told him that his employment was terminated because he had continued a practice which was ‘stealing’.  He also denied being accused prior to that time of making unauthorised sales of phone cards and of taking bottled water, and that these two matters were also reasons for his termination. 

18. In re‑examination, Mr Basta said that his marking of cash register print‑outs “from Eddy to Nagi” occurred “from the start of my job … once a week” because “that was an order from Eddy to do that.  … he told me that – he said “This is an order from me.  What I ask you to do, you do.  Don’t ask me about it”.  Mr Basta followed that direction, and in relation to the marked documents: “I used to put it in the safe drop”.  He gave no further evidence in re‑examination to clarify what he did with the cash whose withdrawal from the till was recorded on the cash register print‑outs in this manner. 

19. Mr Mark Magar said in evidence that around 19 August 2007 he “confiscated phone cards” from Mr Basta when he was working as a senior console operator at the Woolooware service station, and that he told him: “they are not to be sold here”.  He also said that after reviewing surveillance footage in September 2007 showing an operator “putting water in what I identified to be the boot of Mr Basta’s car”, he questioned Mr Basta about this.  He was told: “this was the Church’s water” because “they don’t have enough room”.  He told Mr Basta not to do this again.  Mark Magar also said that he told Mr Basta in late October 2007 not to “take cash from the till anymore under any circumstances”.  Mr Basta said to him: “this is my wage… I can’t live without this money”. 

20. Neither Mr Magar nor Mr Azir Magar were called as witnesses in relation to these matters.  The derivation of the three star markings on ‘safe drop’ summaries have never been explained to my satisfaction, since I accept Mr Basta’s denials that he made them.  Nor has the authorship and content of sundry markings in Arabic on these documents been explained by any evidence.  The originals of all of the tendered documents have not been tendered, and I give no weight to any of the documents or markings on any of the documents tendered on behalf of Mr Magar and received into evidence, unless they were precisely authenticated by competent witnesses. 

21. Mr Magar’s counsel did not contest that Mr Basta’s lengthy employment had been summarily terminated with acrimony in November 2007, nor that he had not been paid any termination payments.  However, he submitted that Mr Basta’s whole evidence about his dealings with AM Retail and with Mr Magar should not be accepted, because he was discredited by giving untrue evidence about receiving regular cash payments and the circumstances of his termination.  These, it was alleged, involved the discovery of dishonesty by Mr Basta and the taking out of an apprehended violence order by Mark Magar arising from threats made in early 2008. 

22. The circumstances of the apprehended violence order are insufficiently shown in the evidence before me, to allow me to draw any conclusions whether they might reflect upon Mr Basta’s credibility as a witness in the present case.  They seem to have arisen out of exchanges between Mr Basta and Mark Magar subsequent to Mr Basta’s employment being terminated, and the circumstances are not shown to have direct relevance to any issues now before me.  The evidence before me suggests that Mr Basta was treated unfairly, and had cause for feelings of resentment. 

23. In relation to the events and reasons for the termination, I am more inclined to accept the evidence of Mr Basta than the version of events which was put to him in cross‑examination.  I would not reject Mr Basta’s evidence about this nor generally, and I consider that much of it has the ring of truth, and was honestly given.  In particular, I accept Mr Basta’s evidence of his relationship and dealings with Mr Magar, since it is consistent with other evidence as to the role of Mr Magar in the business and is not contradicted by any evidence from Mr Magar. 

24. Moreover, Mr Magar has not established to my satisfaction that Mr Basta was summarily dismissed for any justifiable cause.  I think it more likely that he was dismissed because the informality of some aspects of his employment had become an embarrassment to the company and to Mr Magar, at a time when its affairs were under scrutiny by workplace inspectors, and because he declined to be involved in an attempt to move the staffing of the petrol station to contractors.  On the evidence before me, I consider it more probable than not that Mr Basta was entitled to receive all award entitlements upon termination without notice. 

25. However, I am left with evidence suggesting that Mr Basta made regular $600 cash withdrawals from AM Retail funds, including within the relevant period.  Although Mr Basta denies it, prima facie the circumstances suggest that they were made for his personal benefit by way of a wages supplement, although other reasons for Mr Magar directing these markings of the cash register slips are conceivable.  In this respect, I accept Mr Basta’s evidence – clearly confirmed by the actual words marked on the cash withdrawals, and the fact that they were kept in the records of AM Retail – that, whatever their explanation, the withdrawals were made and received on the directions of Mr Magar himself.  There is no evidence before me which establishes that some other member of the Magar family was responsible for the arrangement, and I do not accept that any special arrangement about cash was made with Mr Magar’s father and not with Mr Magar.  There is no evidence of this, in particular, from Mr Azir Magar. 

26. Counsel for the Ombudsman submitted that, in the absence of evidence from Mr Magar as to the underlying arrangement, even if I concluded that Mr Basta had received regular cash payments which are not recorded in AM Retail’s payroll records, I could not conclude that this money was debited from an account of AM Retail, as distinct from monies disposed of by Mr Magar personally, nor that they were made by AM Retail as additional wages for Mr Basta’s work for AM Retail, rather than for other unexplained consideration received by Mr Magar (citing Poletti v Ecob (1989) 91 ALR 381, and Ray v Rodano [1967] AR(NSW) 471). 

27. There was force in this submission.  However, at the end of the day the Ombudsman has the onus of proof as to underpayment of amounts due to Mr Basta under the award rates of pay and other entitlements.  Applying the principles discussed in Poletti (supra) at 393, I can see no basis for disregarding the prima facie evidence of cash wages supplements, in the absence of evidence that the payments from AM Retail monies were agreed to be appropriated for some purpose other than that of meeting AM Retail’s legal obligations in relation to Mr Basta’s periodic remuneration for the work he performed.  Since I am unable to identify the total amount which he might have received by way of cash supplements to the amounts shown in the payroll records, I have not been satisfied on the balance of probabilities at the requisite level of confidence that Mr Basta did not receive additional payments by way of periodic remuneration from AM Retail during the currency of his employment. 

28. I am therefore not satisfied that the payroll records of AM Retail concerning wages payments made to Mr Basta can be accepted to be probative of the periodic wages actually received by Mr Basta, nor that they can be relied upon by the Ombudsman as particulars of the entitlements contraventions numbered (i), (viii), (ix), (x), (xi), and (xii) in the above list, concerning underpayment of the award periodic rates of pay for work performed. 

29. However, my uncertainties about the amount of possible cash supplements to Mr Basta’s wages, do not require me to exclude Mr Basta’s employment from the particulars of entitlements contraventions (ii), (iii) and (iv).  These are established by AM Retail’s employee records in relation to the accrual of paid leave entitlements and non‑payment of unpaid leave upon termination.  It is undisputed that there are no records of the accrual and giving of paid leave to Mr Basta, and that he received no accrued leave payment upon termination.  Mr Basta’s own evidence – which I accept – that he was told that he was not entitled to any paid leave, and did not take any during his employment, is confirmed by Mr Zhou’s general evidence that it was not AM Retail’s practice to accrue leave.  This evidence has not been contradicted by Mr Magar, and, in my opinion, allows me to conclude that any cash payments to Mr Basta were probably, and explicitly, made for agreed purposes of supplementing periodic wages for the work performed by Mr Basta, and were not made as payment of leave entitlements, whether during the employment or upon its termination.  I am therefore satisfied that it is appropriate to include Mr Basta in the particulars of these contraventions which I accept. 

1. The employee records, aided by the evidence which I have accepted above of witnesses including Mr Zhou, also establish clearly that leave entitlements, payments and statements on termination, and observance of permitted work cycles, were ignored by AM Retail in relation to all the particularised instances. 

2. I am therefore satisfied that all the alleged entitlement contraventions by AM Retail, as the principal offender, are established on the evidence before me.  

3. It then becomes necessary to consider whether the Ombudsman has also established Mr Magar’s involvement in each of those contraventions, in the sense required by s.728(2)(c) of being “by act or omission, directly or indirectly, knowingly concerned in or party to” the contraventions of the employer.  As I have explained, this requires in relation to each particular breach comprising each contravention, that I am satisfied that he had actual knowledge of the essential ingredients of the contravention, and was intentionally “concerned in or party to” the contravention, either directly or indirectly.  

4. In my opinion, a conclusion as to Mr Magar’s intentional participation in most of AM Retail’s contraventions can be reached on a general view of the evidence about his involvement in relevant employment matters, in particular, in decisions about the rates of pay and the other award entitlements which were recognised. 

5. In effect, AM Retail’s own records suggest strongly that the relevant managers of the company must have been consciously ignoring the requirements of the preserved award in relation to the particularised employees.  Undoubtedly, lower than award rates of basic pay were being consciously paid, loadings and penalties were being consciously disregarded, and leave entitlements were deliberately not being accrued and allowed.  The award was simultaneously being observed in relation to some employees but not others.  Mr Zhou’s evidence explains this appearance of the records.  It is that all employee payments implemented policies or practices which had been established by the sole director and manager of the company prior to Mr Zhou’s employment as payroll officer.  The policies and practices were then periodically confirmed expressly by Mr Magar to Mr Zhou, when he drew attention to changes to award rates or otherwise sought directions as to wage rates and leave entitlements of particular employees or groups of employees. 

6. I accept Mr Zhou’s evidence to this effect without any reservations, and consider that it allows a confident inference on the balance of probabilities that Mr Magar was at all relevant times consciously aware that each payroll approved by him during the relevant period included underpayments of the particularised employees in relation to their award entitlements.  Allowing for the possibility that at times there may have been particular payrolls which he did not personally examine and approve, I am satisfied that his directions given on other occasions must have been implemented on those occasions, and must have been implemented with his knowledge and approval.  I can find no evidence of some other officer or manager of AM Retail, including Mr Zhou himself, being delegated with Mr Magar’s absolute control over employees’ wage rates.  I find that he intended, as sole director and statutory officer of the company, that all of the underpayments of wages evidenced by the company’s records should be made, and that all of the denials of the award rates of pay established on the evidence before me occurred with his general knowledge of the rates at which they were being paid and in accordance with his directions. 

7. Although awareness of the legal consequences of AM Retail’s breaches of the identified terms of the applicable provisions is not necessary to find Mr Magar liable for a penalty, I would also find that at all relevant times Mr Magar was aware that, on his directions and with his approval, the company was deliberately ignoring its statutory obligations under the award in relation to every underpayment and disregard of the award which is evidenced in its records. 

8. My acceptance of the uncontradicted evidence of Mr Zhou explains why I do not accept the submission of Mr Magar’s counsel that, in effect, Mr Zhou had been delegated the total responsibility for complying with legal requirements governing employee pay and entitlements, and for that reason Mr Magar was not a person ‘concerned’ in any contraventions by AM Retail, nor a ‘party’ to them, even if he had knowledge of all or some of them.  To the converse of this submission, I consider that the evidence shows clearly that Mr Magar at all relevant times directed Mr Zhou when, and when not, to comply with the requirements of the State award.  Mr Zhou was, in my opinion, never more than an administrative assistant to Mr Magar in relation to all payments to the employees, when performing his functions as payroll officer.  I find that Mr Zhou acted under Mr Magar’s actual and day‑to‑day supervision and directions, in all of his actions in relation to payment or non‑payment of the award entitlements.  I consider that Mr Zhou’s evidence establishes that at all relevant times Mr Magar had made or instigated all of the directions, policies and practices implemented by Mr Zhou, when omitting to observe all of the provisions of an award whose legal applicability to console operators was fully known to Mr Magar.  I consider that Mr Magar has thereby been shown to be a person ‘directly and knowingly concerned’ in every particular of the breaches of the award terms.  He was, at least a person ‘indirectly’ ‘a party to’ each of those breaches as an intentional participant, because at all times he intended that the employees should receive no more than his directions and employment practices had permitted, and he was aware that his intentions as the sole director and manager of AM Retail were being observed and implemented by Mr Zhou, his site managers, and all other agents of AM Retail. 

9. I am therefore satisfied that Mr Magar is liable under s.728 for AM Retail’s entitlements contraventions concerning rates of pay which I have described in the above list and numbered (i), (vi), (vii), (viii), (ix), (x), (xi) and (xii).  For reasons which I have explained above, I accept all the alleged particulars of these contraventions, except in relation to Mr Basta.  Although I accept that Mr Magar personally directed the amount of Mr Basta’s wages, including the possible cash supplements, and must have been aware that his recorded weekly pay did not comply with the award, I have not been satisfied as to those principal breaches by AM Retail. 

10. Mr Magar’s involvement in AM Retail’s failures to accrue annual and personal leave entitlements, and to allow the identified employees who were entitled to paid annual leave to take it, or to receive unpaid leave entitlements upon termination, is less clear than his involvement in the routine underpayments of award rates of pay. 

11. Under the award, leave entitlements accrued to ‘weekly employees’, i.e. those who were not casual employees.  Clause 2(a) of the award provided that “an employee not specifically engaged as a casual employee shall be deemed to be employed by the week”.  However, under cl.3(1): 

    The maximum period for which a casual employee can work continuously on a full time basis (ie. The total daily and weekly hours elsewhere prescribed in this award) shall be six weeks.  In any case where such full time employment extends beyond six weeks, the employee shall thereafter be deemed to be by the week. 

12. There is direct evidence that Mr Zhou was aware that AM Retail had a number of ‘weekly employed’ employees, for example in the letters he gave Mr Morgan in 2005 and 2007.  He was also aware of the terms of the award, in so far as they required employees to be classified as ‘casual’ or ‘weekly’ in relation to their wage rates and other entitlements.  Yet most of the payroll records show that generally the classifications of the console operators were not recorded, and leave entitlements of weekly employees were not recorded.  Mr Zhou, and the individual employees who were called as witnesses, explained that generally all console operators were told that they had no rights to paid leave, regardless of the length of their service.  The evidence shows that occasionally, and rarely, Mr Magar would give specific directions allowing a particular employee to take paid leave at a particular time.  It is uncontested that the six employees identified in relation to contravention (iii) were not paid for untaken accrued leave upon their termination.  Mr Zhou attributes all of these deficiencies to the employment practices he inherited, which were confirmed from time to time by the directions of Mr Magar (in particular, see paragraphs 16 to 18 of his affidavit, extracted above). 

13. In effect, the evidence points strongly to a conclusion that the leave entitlements of weekly employees were generally disregarded by AM Retail, both in relation to the necessary record‑keeping, and in the acknowledgement to employees of any rights to paid leave.  Paid leave was only given when a specific direction for this was given by Mr Magar to Mr Zhou or some other manager.  Mr Magar generally directed that all console operators were to be treated as ‘casual’ and were not entitled to paid leave, regardless of the length of their continuous full‑time work.  He treated the giving of paid leave to long‑term employees as a matter for his complete discretion.  In my opinion, these circumstances allow me to be satisfied on the balance of probabilities that Mr Magar was, if only indirectly, knowingly concerned in, and an intentional ‘party to’ all of AM Retail’s contraventions flowing from its disregard of its award obligations in relation to the accrual and allowing of paid leave and payments on termination.  

14. I therefore am satisfied that Mr Magar is liable to a penalty under ss.728 and 719 in relation to the entitlements contraventions numbered (ii), (iii), and (iv).  I have above explained why I have rejected his specific challenges in relation to the circumstances of the termination of the employments of Messrs Hanna, Basta and Morgan.  I accept all of the Ombudsman’s particulars of these contraventions. 

15. I also accept the evidence in support of the allegation constituting contravention (v) that Mr Morgan was not given the required payment in lieu of the required period of notice of termination.  He was peremptorily sacked, when another operator took over the petrol station he was managing.  He gave evidence of a conversation with Mr Magar, in which he was told that this would happen, and in which Mr Magar admitted: “I know you have rights to certain entitlements, but I don’t have the money to pay anyone their entitlements right now”.  I accept this evidence, and Mr Morgan’s evidence of lack of response from Mr Zhou and Mark Magar to his requests for termination documentation and payments.  In view of the evidence showing that Mr Magar was personally involved in the termination of Mr Morgan’s employment, their unresponsiveness, in my opinion, probably occurred with the knowledge and approval of Mr Magar, if not at his direction.  I therefore find that Mr Magar was knowingly concerned in AM Retail’s refusal to pay to Mr Morgan his entitlements due in lieu of the required notice of termination, and therefore liable for this single particular of contravention (v).  Mr Magar may also have been knowingly involved in its failure to provide to Mr Morgan a written statement of his past employment when so requested in writing by Mr Morgan, however Mr Morgan’s circumstances are not alleged as a particular of contravention (xiii). 

16. The Ombudsman relies upon the refusal to provide Mr Gerges with a statement of his employment upon termination, as one of two particulars of contravention (xiii).  I have noted above that a request for such a statement was included in a letter sent to AM Retail, and Mr Zhou appears to have acknowledged its receipt and the taking of instructions about it from his manager.  Although it is possible that a decision not to respond to the letter was communicated to Mr Zhou by Mark Magar, I consider on the balance of probabilities that this decision was probably made or confirmed by Mr Magar himself.  This would accord with his personal involvement in employment matters involving significant employees, and Mark’s role generally as an intermediary, rather than a delegate of management responsibilities in relation to significant employment matters.  I therefore am satisfied that Mr Magar was a person knowingly and intentionally concerned in this contravention. 

17. The Ombudsman also relies upon the failure to provide Mr Hirmiz with a statement of past employment, as a particular of contravention (xiii).  I consider it likely that Mr Magar was personally involved in the decision to terminate Mr Hirmiz’ employment in April 2009, inter alia, due to the conversation with him recounted in paragraph 37 of Mr Hirmiz’ affidavit, which I accept.  Although Mark Magar was undoubtedly being given the role of intermediary in AM Retail’s efforts to shed itself of many employees, Mark Magar’s own evidence tends to support the impression from the evidence of other witnesses that Mark Magar was acting only, in his own words, to “relay instructions between Adil and staff members at those sites”.  However, the evidence as to Mr Hirmiz making a request for a statement of employment consists only of an oral exchange with Mark Magar on the telephone: “Can I have a separation letter?” – “No”.  Unlike other employment matters, there is no evidence suggesting a general policy or practice directed by Mr Magar in relation to the refusal of statements of employment upon termination.  On the evidence before me, I am not satisfied that Mr Magar had knowledge that Mr Hirmiz had requested a statement of employment, and therefore do not find him “knowingly” involved in relation to all essential ingredients of this particular of this contravention. 

18. Mr Magar’s involvement in contravention (xiv) remains to be considered.  It is alleged that Ms Smithers’ analysis of the timesheets of the particularised employees shows that in some weeks their rostered ordinary hours were in breach of cl.11(a)(i) of the Award.  This required: 

    (a)Subject to Clause 12 – implementation of 38‑hour week and subject to the exceptions hereinafter provided, the ordinary hours of work of an employee shall be an average of 38 hours per week to be worked on not more than five days in any week, on the following basis: 

    (i)38 hours within a work cycle not exceeding seven consecutive days; or

    (ii)76 hours within a work cycle not exceeding fourteen consecutive days; or

    (iii)114 hours within a work cycle not exceeding twenty‑one consecutive days; or

    (iv)152 hours within a work cycle not exceeding twenty‑eight consecutive days; or

    (v)Any other work cycle during which a weekly average of 38 ordinary hours are worked or may be determined in accordance with subclause 12. 

    This limitation is subject to exceptions and consensual variations arising under cll.11 and 12, but no submissions were made to me that these were applicable to the circumstances of the specified employees. 

19. I had difficulty understanding these provisions of the award, in the absence of fuller submissions from the parties.  Moreover, it is common ground that rostering at each site was generally delegated by Mr Magar to the site managers to arrange after consultation with their employees.  I have not detected any evidence of a general direction or practice given or endorsed by Mr Magar for any particular ‘work cycle’ to be adopted at his petrol station sites over the relevant period, whether consistent or inconsistent with the award.  I accept that he regularly saw the actual hours worked by the particular employees after performing their rosters, when Mr Zhou showed him their timesheets upon which he had calculated their wages.  However, in my opinion this is insufficient alone to show sufficient awareness or intent, before the periods of work were performed which are identified in the particulars of this contravention, that the specified employees would be working those hours in breach of the award on the specified occasions.  I am therefore not satisfied that Mr Magar is a person knowingly involved in any of the alleged breaches by AM Retail of cl.11(a)(i) of the NAPSA. 

20. For all the above reasons, I have found Mr Magar liable to penalties in relation to all of the ‘entitlements’ contraventions alleged by the Ombudsman, with the exception of number (xiv).  I have above indicated a small number of instances where I have not accepted all of the particulars of these contraventions as alleged by the Ombudsman. 

Mr Magar’s liability for the records contraventions 

1. Understandably, the parties concentrated in their evidence and submissions more on the entitlement contraventions than the records contraventions.  I was therefore left with many uncertainties as to the effects of some of the regulations, in so far as their ‘essential ingredients’ need to be identified, and also as to how Mr Magar was alleged to have intentionally participated in the alleged breaches of some of them.  However, given the brevity of the relevant evidence and submissions, I shall deal with these allegations in a similarly abbreviated fashion. 

2. My conclusions on many of the records contraventions follow upon my above findings as to Mr Magar’s personal involvement in the employment practices of AM Retail relating to the employees and periods covered by the Ombudsman’s evidence. 

3. Mr Magar’s counsel conceded that AM Retail’s employments records obtained by the inspectors disclosed the deficiencies in relation to regs.19.8, and 19.14, which were alleged. That is, in failing to show the employment status of employees, and failing to record reasons for termination. Although it was not conceded, no challenge was made to the evidence that the records also did not record accrued leave and leave balances for the identified employees. However, Mr Magar’s counsel submitted that the evidence was insufficient to allow me to find that he was a person involved in these deficiencies, within the language of s.728(2)(c).

4. I have above found that Mr Zhou implemented Mr Magar’s specific directions to disregard award entitlements which required the classification of employees, and the recording of their entitlements in relation to wage rates and leave entitlements.  I consider that these findings allow me to find Mr Magar to be a person ‘indirectly’ and ‘knowingly’ involved as a ‘party to’ the consequential deficiencies in AM Retail’s record‑keeping.  Necessarily, his directions meant that the payroll officer was not required to keep the necessary records required to pay the different award rates of pay.  I consider on the balance of probabilities that at all times Mr Magar must have been aware that Mr Zhou was keeping only such records in relation to employment matters as were necessary to implement Mr Magar’s previous general directions about pay rates and his ad hoc directions about particular employees or work sites.  He must have been aware, and given implicit if not explicit approval, that other records would not be kept, which would otherwise be necessary to comply with the award requirements which he dispensed with. 

5. I therefore find Mr Magar liable in relation to the particularised breaches of the records contravention (iii), contravention (iv) – but only in relation to reg.19.11(3)(c) and (d), contravention (v) and contravention (vi). 

6. Contraventions (ii) and (vii) are also admitted to have been established in relation to AM Retail but not Mr Magar.  These allege breaches of reg.19.5 in failing to keep records in a condition allowing a workplace inspector “to determine the employee’s entitlements and whether the employee is receiving those entitlements”, and reg.19.18, in failing to make records of Mr Hanna’s employment available to inspectors within the required period. 

1. I consider that there is sufficient evidence to allow me to find Mr Magar to have been a knowing and intentional participant in these breaches.  The inability of inspectors to identify from AM Retail’s records the legal entitlements of its employees, and that they were being paid those entitlements, was manifest.  The reasons for the deficiencies in the records is also manifest.  It required an exceptionally arduous process of reconstruction, before the inspectors could identify the underpayments which they have put before the Court in this proceeding.  The deficiencies in the records were clearly the consequence of Mr Magar’s directions to Mr Zhou to ignore the award in relation to these employees, and Mr Magar must have been aware that his directions to Mr Zhou would have the inevitable consequence that records showing award entitlements were not being kept.  I consider that he is a person knowingly concerned in the breach of reg.19.5. 

2. I also consider that I can find Mr Magar to have been personally involved in the failure to produce Mr Hanna’s employment records actually held by AM Retail, until they were belatedly located during the inspectors’ attendance on 8 May 2008.  The company’s failure appropriately to respond to Mr Bodkin’s request concerning Mr Hanna’s records, as with other notices to produce, was communicated with a series of spurious excuses conveyed by the company’s solicitor, Mr Lalic in the correspondence I have extracted above.  In the absence of any contradiction whatsoever, I infer that Mr Lalic took his instructions from the only officer of the company with ostensible authority to instruct a solicitor to speak on its behalf – its company secretary, sole director and sole proprietor.  All the surrounding circumstances also point to Mr Lalic receiving his instructions from Mr Magar, whether directly or indirectly through the medium of Mark Magar. 

3. I therefore find Mr Magar liable in relation to the records contraventions (ii) and (vii). 

4. Turning to contravention (i), the Ombudsman’s case should not be understood as alleging that such records as were kept by AM Retail did not contain necessary information required under reg.19.4(1) and other regulations.  Such allegations are made in other contraventions, and this allegation (or the other allegations) would be bad for duplicity if it were so read.  Rather, the allegation in paragraph 35 of the amended statement of claim should be understood to assert a breach of reg.19.4(2), which requires that all necessary employee records which in fact came into existence should be kept for the required 7 year period.  The particulars then rely upon Mr Lalic’s communications prior to May 2008, in which he claimed that records were not retrievable, to establish this contravention. 

5. However, such a contention flies in the face of my finding that, in fact, Mr Lalic was conveying untrue instructions, and that in fact AM Retail had available records in hard copy, and perhaps also in retrievable electronic form, which were eventually produced when the inspectors attended the premises, or were subsequently produced on a further notice to produce.  There is no evidence establishing that there ever were in existence other relevant employee records which were never produced because they were not retained for the required 7 year period.  I am therefore not satisfied that AM Retail was in breach of reg.19.4(2) as alleged in relation to contravention (i).  I am necessarily not satisfied that Mr Magar is liable as an accessory to such a contravention. 

6. There remains for consideration the alleged records contraventions (viii) and (ix).  These allege a failure to issue payslips to eight specified weekly employees as required by reg.19.20, and failure to include in their payslips superannuation particulars as required by reg.19.21(1)(k)(i). 

7. In relation to (viii), the evidence of Mr Zhou is that his payroll activities included feeding data into the computer upon which individual employee payslips could be produced.  He said generally that he did produce those documents, and they were generally forwarded to site managers for distribution to the employees under their supervision.  There is evidence from some employees that, in fact, they received weekly payslips, but from others that they did not receive them.  The reasons for these failures were not explored on an individual basis in the evidence and submissions of the parties.  In the result, I am not satisfied that any failures were attributable to any action of Mr Zhou or of any other subordinate employee under Mr Magar’s management, of which he probably had knowledge at the time of the breach.  I am therefore not satisfied that any contravention of reg.19.20 by AM Retail has been established to have occurred with the intentional participation of Mr Magar. 

8. In relation to (ix), there are in evidence copies of payslips to these employees which omit necessary details of employer superannuation payments.  This was not contested on behalf of Mr Magar.  Nor was Mr Zhou’s evidence contested, that AM Retail often did not make superannuation payments on time, and that Mr Magar acknowledged this deficiency.  I am satisfied that the omission of these details on payslips was the necessary result of Mr Magar’s knowing inability to make employer contributions in time to include the required details in payslips.  I am satisfied, on the balance of probabilities, that he was aware that such information would not appear on the relevant payslips of these employees, and that he was, therefore, knowingly concerned in the contraventions alleged in (ix). 

9. For all the above reasons, I am satisfied that Mr Magar is liable for penalty under s.728 and reg.14.4, in relation to records contraventions (ii), (iii), (iv), (v), (vi), (vii) and (ix), but not (i) and (viii) in the above list. 

10. There may be some overlap in the circumstances of some of the entitlements and records contraventions which I have found.  I consider that this should be a matter for further submissions in the context of deciding what penalties should be imposed based on my above findings. 

11. I propose to publish this judgment, without making any final orders declaring Mr Magar’s liability to penalties.  In view of the complex particulars relied upon by the Ombudsman, I shall invite the parties to draw to my attention any obvious errors of fact which they notice, without inviting any general challenge to my reasoning.  The Ombudsman should also bring in short minutes of declarations of liability. 

12. I shall give directions for a further hearing on the quantum of penalties appropriately imposed on Mr Magar.  To assist my consideration of this, I invite the Ombudsman to include in his written submissions calculations or estimates of the monetary consequences of each of the entitlement contraventions, in so far as I have accepted the particulars alleged. 

I certify that the preceding one hundred and eighty-nine (189) paragraphs are a true copy of the reasons for judgment of Smith FM

Associate: 

Date:  7 September 2010