Fair Work Ombudsman v ANSA Finance Pty Ltd
[2022] FedCFamC2G 833
Federal Circuit and Family Court of Australia
(DIVISION 2)
Fair Work Ombudsman v ANSA Finance Pty Ltd [2022] FedCFamC2G 833
File number: MLG 2773 of 2021 Judgment of: JUDGE FORBES Date of judgment: 14 October 2022 Catchwords: INDUSTRIAL LAW – Fair Work Act – multiple Compliance Notices issued pursuant to s 716 - whether inspector had reasonable belief of contraventions – failure to comply with Compliance Notice – whether respondent had “reasonable excuse” for non-compliance – consideration of respondent’s reasons for non-compliance - whether respondent liable - whether manager of respondent involved in contraventions – accessorial liability under s 550 Legislation: Fair Work Act 2009 (Cth) s 90, 117, 536, 550, 567, 568, 716, 717
Federal Circuit and Family Court of Australia Act 2021 (Cth) s 141
Cases cited: Construction, Forestry, Mining and Energy Union v Clarke (2007) 164 IR 299
Devonshire v Magellan Powertronics Pty Ltd [2013] FMCA 207
Fair Work Ombudsman v C & H Entertainment Pty Ltd [2021] FCCA 1216
Fair Work Ombudsman v Gothic Downs Pty Ltd [2022] FedCFamC2G 21
Fair Work Ombudsman v Joys Child Care Limited & Anor [2019] FCCA 3356
Potter v Fair Work Ombudsman [2014] FCA 187
Qantas Airways Ltd v Transport Workers Union of Australia (2011) 280 ALR 503
Rural Press Ltd v Australian Competition and Consumer Commission [2002] FCAFC 213
Yorke v Lucas (1985) 158 CLR 661
Division: Division 2 General Federal Law Number of paragraphs: 197 Date of hearing: 21 September 2022 Place: Melbourne Counsel for the Applicant: Ms Campbell of Counsel Solicitor for the Applicant: HWL Ebsworth First Respondent: Mr Fuoco with leave Second Respondent: In person ORDERS
MLG 2773 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: ANSA FINANCE PTY LTD
First Respondent
JOSHUA FUOCO
Second Respondent
order made by:
JUDGE FORBES
DATE OF ORDER:
14 OCTOBER 2022
NOTING THAT for the purposes of the following declarations and orders, the expressions “Chawla Compliance Notice”, “Mantzioukas Compliance Notice”, “White Compliance Notice” and “Jern Compliance Notice” shall each bear the meaning attributed to same in the statement of claim filed by the Applicant on 21 October 2021
THE COURT DECLARES THAT:
1.The First Respondent (Ansa Finance) contravened sub-sections:
(a)716(5) of the Fair Work Act 2009 (Cth) (FW Act), by failing to comply with the Chawla Compliance Notice, the Mantzioukas Compliance Notice, the White Compliance Notice and the Jern Compliance Notice; and
(b)536(1) of the FW Act, by failing to give pay slips to Mr Mantzioukas within one working day of payments being made to him in relation to the performance of work.
2.That the Second Respondent was involved, within the meaning of section 550(2) of the FW Act, in the contraventions by Ansa Finance of section 716(5) and section 536(1) of the FW Act referred to in declaration 1 above.
THE COURT ORDERS THAT:
3.Pursuant to section 545(1) of the FW Act, Ansa Finance take the steps that were required by the Chawla Compliance Notice, the Mantzioukas Compliance Notice, the White Compliance Notice and the Jern Compliance Notice within 28 days from the date of this order, by:
(a)calculating and paying the outstanding amounts it was required to pay to Ms Chawla, Mr Mantzioukas, Mr White and Mr Jern in respect of each of the entitlements and for the periods specified in the Chawla Compliance Notice, the Mantzioukas Compliance Notice, the White Compliance Notice and the Jern Compliance Notice;
(b)calculating and paying into Ms Chawla, Mr Mantzioukas, Mr White and Mr Jern’s nominated superannuation fund any additional superannuation contributions required to be paid on the outstanding entitlements referred to in order 3(a) above (as required by clause 19.2 of the Award); and
(c)preparing and producing to the Applicant, a schedule outlining its calculation of the outstanding entitlements and additional superannuation contributions required to be paid to Ms Chawla, Mr Mantzioukas, Mr White and Mr Jern and providing proof that the outstanding entitlements and additional superannuation contributions were rectified as set out in orders 3(a) and 3(b) above; and
(d)pursuant to section 547(2) of the FW Act, Ansa Finance pay to Ms Chawla, Mr Mantzioukas, Mr White and Mr Jern interest on the amounts owed to them pursuant to orders 3(a) above within 28 days of the date of this order.
4.The matter be listed on 9 November 2022 at 9.30am for the making of directions regarding the hearing and determination of the Applicant’s claim for penalties to be imposed on the First and Second Respondent for the declared contraventions.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE FORBES
Application
This proceeding relates to alleged contraventions of section 716(5) and section 536(1) of the Fair Work Act 2009 (Cth) (FW Act) by the first respondent, Ansa Finance Pty Ltd and the alleged involvement of the second respondent, Mr Joshua Fuoco, in those contraventions pursuant to section 550(1) of the FW Act.
Background
Ansa Finance Pty Ltd (Ansa Finance) operates a finance broking business. The registered office of the company is at an address in Abbotsford, Victoria and its current director is Mr Dindo Varona. The business is conducted from the second respondent’s residence in Toorak, Victoria. The second respondent (Mr Fuoco) is not an owner or director of Ansa Finance, but he describes himself as its “marketing manager” and as will be explained there is little doubt that he is principally if not solely responsible for the day to day operations of the business.
At times, Ansa Finance has employed people to perform work in various aspects of its finance broking business. Some of those employees have made complaints to the Fair Work Ombudsman (Ombudsman) in respect of alleged underpayment of wages and entitlements. These complaints have been the subject of investigation by the Ombudsman and have given rise to a reasonable belief by Fair Work Inspectors (FWI) that Ansa Finance has contravened fair work instruments which underpin the former employees’ entitlements.
Pursuant to section 716(2) of the FW Act four compliance notices were issued to Ansa Finance by FWI Christine Cox on the following dates:
(a)21 January 2021, in respect of Ms Ishmeet Chawla (Chawla Compliance Notice);
(b)31 March 2021, in respect of Mr Matthew Mantzioukas (Mantzioukas Compliance Notice);
(c)14 May 2021, in respect of Mr Mitchell White (White Compliance Notice); and
(d)29 June 2021, in respect of Mr Lance Jern (Jern Compliance Notice)
(e)(collectively, the "Compliance Notices")
It is not disputed that each of Ms Chawla, Mr Mantzioukas, Mr White and Mr Jern were at relevant times employed by Ansa Finance, although there is in respect of Mr Jern a dispute as to whether he was employed for the period between 11 and 18 August 2020.
Each of the Compliance Notices required Ansa Finance within 28 days to take steps to calculate each employees’ entitlement to wages and superannuation for the period worked, to rectify any underpayments and to produce evidence to the Ombudsman that each of those steps had been taken.
The steps required to be taken by Ansa Finance under the Compliance Notices have not been taken. The reasons why, including whether Ansa Finance had a “reasonable excuse”[1] for not doing so, are explored in more detail later in these reasons.
[1] s. 716(6) Fair Work Act 2009 (Cth)
The Ombudsman alleges that by failing to comply with the Compliance Notices, the first respondent contravened section 716(5) of the FW Act.
The Ombudsman also alleges that Ansa Finance contravened section 536(1) of the FW Act by failing to provide Mr Mantzioukas with pay slips within one working day of paying an amount to him in relation to the performance of work.
The Ombudsman alleges that pursuant to section 550(1) of the FW Act Mr Fuoco was relevantly “involved in” each of the contraventions above and is thereby liable as an accessory to Ansa Finance’s contraventions.
Orders sought by the Ombudsmam
In this application the Ombudsman asks the Court to make:
(a)declarations of contraventions of the FW Act by each of the respondents pursuant to s 141 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) and sections 567 and 568 of the FW Act;
(b)orders that the first respondent, Ansa Finance, take the action required by the Compliance Notices, including by calculating and paying outstanding entitlements to the relevant employees;
(c)orders that Ansa Finance make payments relating to interest and superannuation;
(d)orders imposing pecuniary penalties upon Ansa Finance for its contraventions of the FW Act and upon Mr Fuoco personally in respect of his involvement in Ansa Finance’s contraventions.
The respondents deny the allegations and contest the orders and declarations sought by the Ombudsman.
In accordance with the usual practice of this Court in dealing with such matters, it has been agreed that questions of liability should be determined initially. The issue of penalties is a matter which does not fall to be determined unless liability has been established.
Statutory framework
In its written outline of submissions the Ombudsman conveniently and accurately describes the statutory scheme within which the FW Act compliance notice regime operates. Citing relevant and binding authority, the Ombudsman describes the intent and operation of the scheme as follows[2]:
[2] Outline of Submissions at [10]-[18]
10. Section 716 of the FW Act enables a Fair Work Inspector (FWI) to issue a compliance notice as a means to address identified non-compliance with certain obligations arising under the FW Act, including an employer’s obligations under a modern award and the National Employment Standards (NES).
11. The ability for a FWI to issue a compliance notice is to provide a mechanism for the efficient and cost-effective rectification of identified contraventions of the FW Act, including underpayments, as an alternative to commencing litigation[3].
[3] Fair Work Ombudsman v Baal Gammon Copper Pty Ltd [2021] FCCA 348 at [9]; Fair Work Ombudsman v Anahata Naturals Pty Ltd [2014] FCCA 2954 at [41]
12.In order to issue a compliance notice to an employer in respect of a contravention of a term of a modern award or NES, the FWI must hold a reasonable belief that the employer has contravened that term. The test for the circumstances sufficient to constitute a reasonable belief were described by the High Court in George v Rockett[4]. As summarised by this Court, the test for a reasonable belief is more than a suspicion, there must be a rational basis for the belief, and it requires an assessment to be made based on the information available to the FWI at the time the reasonable belief was formed. It does not require proof on a balance of probabilities, nor is it to be based on information that might be known at a future point in time.[5]
[4] (1990) 170 CLR 104, 116
[5] Fair Work Ombudsman v Gothic Downs Pty Ltd [2022] FedCFamC2G 21 at [22] (Gothic Downs)
13. The compliance notice may require the employer to do either or both of the following within such reasonable time as is specified in the notice:
(a) take specified action to remedy the direct effects of the contravention; and
(b) produce reasonable evidence of the person’s compliance with the notice.
14. The compliance notice must contain the matters set out in section 716(3) of the FW Act.
15.An employer that fails to comply with a compliance notice contravenes section 716(5) of the FW Act (which is a civil remedy provision), unless they have a “reasonable excuse”. An employer who seeks to rely on the exception of “reasonable excuse” bears the onus of proof[6]. In order to demonstrate a reasonable excuse, it must be an excuse that would be regarded as reasonable by a reasonable person in the relevant circumstances[7].
16.A breach of section 716(5) is established by proving that the relevant notice was given and that there was subsequent non-compliance with the notice. Categorical proof of the underlying breaches of the modern award or NES is not required[8].
17.Section 717 of the FW Act provides an employer with the ability to apply to the Court to challenge a compliance notice issued to it. This is on the ground that either or both:
(a)the employer has not committed one or more of the contraventions set out in the compliance notice; and/or
(b)the compliance notice does not comply with section 716(20 or (3) of the FW Act.
18.Where an employer seeks to apply to challenge a compliance notice issued to it pursuant to section 717 of the FW Act, the Court may confirm, cancel or vary the notice as a result of that challenge. It is through this process that a person conventional late the question of whether the contraventions set out in the compliance notice occurred[9], or if the compliance notice did not comply with section 716(2) or (3) of the FW Act.
[6] Potter v Fair Work Ombudsman [2014] FCA 187 at [72]; Fair Work Ombudsman v Joys Child Care Limited & Anor [2019] FCCA 3356 at [20]
[7] Fair Work Ombudsman v C&H Entertainment Pty Ltd [2021] FCCA 1216
[8] Gothic Downs at [13]
[9] Gothic Downs at [15]
Brief procedural background
These proceedings were commenced by way of an application and statement of claim filed on 28 October 2021.
At the first directions hearing on 2 December 2021, the Court made an order by consent for substituted service, such that service of documents upon the email address of Mr Fuoco would be deemed effective service upon both the first and second respondents. The Court otherwise made orders for the respondents to file and serve a response and any defence and for the applicant to file and serve a reply.
On 16 December 2021, Mr Fuoco provided an unsealed copy of a “Response-General Federal Law” to a senior lawyer at the Ombudsman’s office. In that response, the respondents opposed the making of the orders and declarations sought by the Ombudsman and opposed penalties on two bases. First, on the ground that Ansa Finance had been significantly impacted by the COVID-19 pandemic such that its turnover had declined by at least 90% which qualified the company for state government grants. Secondly, on the ground that Mr Fuoco had suffered medical issues and that he considered the pursuit of orders by the Ombudsman as an abuse of power.
On 23 December 2021, Mr Fuoco provided the Ombudsman with a document entitled “Defence Response” which pleaded to each of the paragraphs in the statement of claim.
Although neither of the above documents properly complied with the usual Court form, and were not filed by Mr Fuoco within the time specified in earlier orders, the Ombudsman and the Court acknowledge that the respondents contest the application and wished to defend the matter. Mr Fuoco is not a lawyer and is self-represented. He has informed the Court that he has authority to represent Ansa Finance and he has been granted leave to represent it in these proceedings. Given the respondents’ status as unrepresented litigants the Court has been prepared to accommodate some departures from the rules.
On 9 February 2022 after hearing from the parties, the Court made orders requiring them to file and serve any affidavit evidence and written submissions in respect of the question of liability. The matter was otherwise listed for hearing on 1 September 2022.
On 5 April 2022, the Ombudsman filed affidavits of FWIs Ms Christine Maree Cox and Ms Linda Trang Tran. In their extensive and detailed affidavits (which together included 91 annexures) Ms Cox and Ms Tran depose to their knowledge of the alleged contraventions. On 20 April 2022 the Ombudsman filed a written outline of submissions.
Subsequently, shortly before trial, the Ombudsman filed a further affidavit from its solicitors dated 29 August 2022 which deposed to service of various documents upon the respondents, including the Tran affidavit, Cox affidavit, the outline of submissions and an electronic Court Book.
ADJOURNMENT
As mentioned, the matter was listed for trial on 1 September 2022. On that day Ms Campbell of counsel appeared for the Ombudsman. Mr Fuoco appeared on behalf of Ansa Finance and once again confirmed that he had authority to do so. Mr Fuoco also represented himself in relation to the claim that he was involved in the company’s contraventions.
Having regard for the respondents’ status as self-represented litigants and noting that they had not filed any affidavits or outlines of submissions, the Court explained the hearing procedure. It quickly became evident that Mr Fuoco did wish to put evidence before the Court and that he wished to cross-examine one of the Ombudsman’s witnesses, FWI Christine Cox. He sought an adjournment to prepare that evidence and cross-examination.
Ms Campbell understandably objected to the adjournment application and properly drew the Court’s attention to previous orders and trial directions. She submitted that the respondents had been on notice of the hearing date for months, that they had had more than adequate opportunity to prepare their case and that delay would occasion costs to the Ombudsman and ongoing prejudice and unfairness to the former employees in respect of whom the Compliance Notices were issued.
There was considerable force in Ms Campbell’s submission and I note that this may be relevant to the question of costs at a subsequent hearing. Nonetheless, as these proceedings involve the alleged contravention of civil remedy provisions of the FW Act and the potential for declarations and pecuniary penalties to be imposed against the respondents, I agreed to provide the respondents with a short adjournment, until 12 September 2022. To ensure the matter was properly prepared for trial, I directed the respondents to file and serve any affidavits upon which they intended to rely, to file an outline of submissions in support of their defence and to give notice to the Ombudsman of any witnesses required to be made available for cross-examination and the topics on which they would be cross-examined. The Ombudsman was afforded an opportunity to reply to any affidavits or submissions filed by the respondents.
On 7 September 2022, Mr Fuoco filed an outline of submissions on behalf of the respondents and gave notice of his intention to cross-examine Ms Cox. The outline of submissions included hyperlinks to four webpages, extracts of which he said he would rely upon to demonstrate the extreme difficulties faced by private enterprise employers during the COVID-19 pandemic. The written submission also included a list of loans settled by Ansa Finance in the past 12 months which were said to be illustrative of “what is actually possible when a staff member properly discharges their responsibilities as a contributing staff member pursuant to their employment contract”.
Mr Fuoco also filed an affidavit, in pleading format, which responded with admissions, denials and non-admissions to the paragraphs of the Ombudsman’s statement of claim and the paragraphs of the Ombudsman’s written outline of submissions.
On 9 September 2022 the Ombudsman’s solicitors filed an outline of submissions in reply and in support of an application for costs thrown away by reason of the adjournment on 1 September 2022.
Hearing
The trial resumed before me on 12 September 2022. Again Ms Campbell of counsel appeared on behalf of the Ombudsman and Mr Fuoco appeared for both respondents.
In order to establish each contravention of section 716(5) of the FW Act, the Ombudsman submitted that it must prove the following facts:
(a)that a compliance notice was given to Ansa Finance;
(b)that the compliance notice required Ansa Finance to do one or more things contemplated by section 716(2) of the Act; and
(c)that Ansa Finance did not comply with the terms of the compliance notice.
The Ombudsman relied upon the following evidence:
(1)Affidavit of solicitor Christina Candiloro filed on 18 March 2022[10]
(2)Affidavit of FWI Linda Tran filed on 5 April 2022[11]
(3)Affidavit of FWI Christine Cox filed on 6 April 2022[12]; and
(4)Affidavit of solicitor Barney Adams filed on 29 August 2022[13]
[10] Court Book, volume 1 (CB1) at [19]
[11] CB1 at [474]
[12] CB1 at [34]
[13] CB, volume 2 (CB2) at [3]
The affidavits of Ms Candiloro, Ms Tran and Mr Adams were read into evidence without objection. Only Ms Cox was required for cross-examination, but most of her affidavit was unchallenged.
The respondents relied upon the affidavit and outline of submissions filed by Mr Fuoco on 7 September 2022. Mr Fuoco gave some oral evidence and was cross-examined. He also tendered a number of documents without objection.
Evidence of the alleged contraventions
The narrative set out below is derived from the affidavits and cross-examination referred to above. Unless otherwise stated the evidence was not challenged.
The Chawla Compliance Notice
Ms Chawla was employed by Ansa Finance on a full-time basis between 13 September 2020 and 27 November 2020. By virtue of the nature of her work (about which there is some minor but immaterial disagreement) she was covered by the Banking, Finance and Insurance Award 2020 (the Award) and was entitled to the minimum rates of pay and other entitlements prescribed by that instrument.
From on or about 6 January 2021, following a complaint to the Ombudsman, FWIs Cox and Tran commenced an investigation into the circumstances of Ms Chawla’s employment. In the course of that investigation there were numerous communications between the inspectors and Mr Fuoco during which it is alleged that Mr Fuoco made admissions including that Ms Chawla was owed approximately $1,200.00.
Ms Cox gave evidence that by 19 January 2021, based on information obtained during the course of that investigation, she formed a reasonable belief[14] pursuant to s 716(1) of the FW Act that:
(a)Ms Chawla was employed by Ansa Finance on a full-time basis during the period 13 September 2020 until 27 November 2020;
(b)Ms Chawla was covered by the Award and was classified as a Level 3 employee; and
(c)Ansa Finance had contravened provisions of the Award and the National Employment Standards (NES) by not paying Ms Chawla the wages that were owed to her for work performed between 13 November 2020 and 27 November 2020 and payments in respect of accrued and untaken annual leave on termination of her employment, including annual leave loading.
[14] Cox affidavit at [10], Annexure CMC-6
By reason of her reasonable belief that Ansa Finance had contravened the Award and NES, Ms Cox issued a compliance notice to Ansa Finance on 21 January 2021 (Chawla Compliance Notice)
The Chawla Compliance Notice [15] required Ansa Finance to
(a)calculate Ms Chawla's entitlements under the Award with respect to clauses 15.1 (minimum rates) and 22.3 (annual leave loading) of the Award, and the NES with respect to section 90(2) (annual leave on termination) of the FW Act;
(b)rectify any underpayment of those entitlements by 24 February 2021; and
(c)provide a schedule of Ansa Finance's calculations and proof of rectification of any underpayment by 3 March 2021.
[15] Cox affidavit at [12], annexure CMC-8
The Chawla Compliance Notice contained an explanation regarding the consequences of any failure to comply, including that the recipient may contravene a civil remedy provision. The notice also informed Ansa Finance that it may apply for a review of the Compliance Notice on the grounds that the company had not committed a contravention as set out in the notice and/or that the notice did not comply with section 716 of the FW Act.
Ms Cox deposes that the Chawla Compliance Notice was posted by express post to Mr Batzialis, the then company director of Ansa Finance, at the company’s then registered office. The notice was also emailed to Mr Fuoco at an email address known to belong to him. I note that email address has consistently been used for communications between Mr Fuoco and the Ombudsman and he has provided it as an address for service in these proceedings.
There is evidence that Mr Fuoco acknowledged receipt of the Chawla Compliance Notice in a conversation with Ms Tran. When cross-examined, Mr Fuoco said that he now does not recall reading all of the compliance notice and that he did not read the second page at the time. Notwithstanding, I am satisfied that Mr Fuoco did receive the Chawla Compliance Notice on or about 21 January 2021.
Ms Cox gave evidence that the Ombudsman was not provided with any evidence that Ansa Finance had taken steps to rectify the alleged contraventions. For that reason, on 25 February 2021, Ms Cox authorised a letter (headed “Failure to Comply with a Compliance Notice”)[16] to be sent to the company director Mr Batzialis requesting that Ansa Finance inform Ms Tran within 7 days whether it had a reasonable excuse for its failure to comply with the notice. The correspondence also informed the company that if a reasonable excuse was not provided the Ombudsman might commence legal action without further notice.
[16] Cox affidavit at [16], Annexure CMC-11
Ms Cox also gave evidence of a conversation[17] she had with Mr Fuoco on 11 March 2021 in which she enquired as the reason for the company’s non-compliance with the Chawla Compliance Notice. She says that in that conversation Mr Fuoco said that he did not realise the notice had not been complied with and that he had instructed the company’s new bookkeeper to make the payment a priority. Ms Cox says that she informed Mr Fuoco about the consequences of non-compliance and that he assured her the payment would be made the following day. This evidence was not challenged.
[17] Cox affidavit at [17] and file note Annexure CMC-12
It is not contested that the steps required to be taken by the Chawla Compliance Notice were not taken and still have not been taken by Ansa Finance. Under cross-examination when Mr Fuoco was asked what steps he had taken he said that he had “examined the veracity of what was said to be owed” and had “done his best to comply” but he accepted that he did not undertake a calculation of entitlements and confirmed that no payment has been made to Ms Chawla. Mr Fuoco also conceded that the company did not take steps to seek a review of the Chawla Compliance Notice pursuant to section 717 of the FW Act.
Mantzioukas Compliance Notice
Mr Matthew Mantzioukas was employed by Ansa Finance on a full-time basis between approximately 7 December 2020 and 18 February 2021. By virtue of the nature of his work as a finance broker he was covered by the Award and was entitled to the minimum rates of pay and other entitlements prescribed by that instrument.
It appears that at or about the end of his employment with Ansa Finance bitter points of disagreement arose between Mr Mantziouka and Mr Fuoco regarding various matters including whether Mr Mantzioukas had retained equipment belonging to the company and whether he had locked Mr Fuoco out of access to text messages and other electronic information relevant to the company’s operations. For his part it seems Mr Mantzioukas had his own complaints against Ansa Finance regarding alleged underpayment for hours worked and an allegation that he had not been provided payslips. These contested issues were the subject of emails exchanged between Mr Mantzioukas and Mr Fuoco over some weeks.
From 18 February 2021 Mr Fuoco copied FWI Tran into his correspondence with Mr Mantzioukas, which included Mr Mantzioukas’ allegations that the company had contravened the Award and the FW Act. It appears that Mr Fuoco did this because he was in ongoing dispute with Mr Mantzioukas about a range of matters and felt that bringing Ms Tran into the loop was way of putting “on record” that he had gone above and beyond what was required to resolve their dispute.[18]
[18] Tran affidavit at [20], Annexure LTT-14
Ms Cox gave evidence that around 4 March 2021, as a result of the correspondence which had been referred to her by Ms Tran, the Ombudsman commenced a further investigation. By that time Mr Mantzioukas had provided certain documents to Ms Tran, including bank statements for the period of his employment with Ansa Finance and a text message exchange with Mr Fuoco relating to his resignation.
Based on information provided to her, including recommendations from Ms Tran, FWI Cox says that by 22 March 2021 she had formed a reasonable belief that:
(a)Mr Mantzioukas was employed by Ansa Finance between 7 December 2020 and 18 Fairbury 2021 on a full-time basis as a finance broker;
(b)he was covered by the Award and classified as a level 3;
(c)he was not paid for hours worked for the fortnights ending 11 December 2020 and 19 February 2021; and
(d)by reason of the above, Ansa Finance had contravened clause 15.1 of the Award and had breached the NES (annual leave on termination) with respect to Mr Mantzioukas’ employment.
On 31 March 2021, FWI Cox issued a compliance notice (Mantzioukas Compliance Notice) to Ansa Finance pursuant to section 716(2) of the Act.
The Mantzioukas Compliance Notice required Ansa Finance to take various steps including that it :
(a)calculate Mr Mantzioukas’ entitlements under the Award with respect to clauses 15.1 (minimum rates) and the NES with respect to section 90(2) (annual leave on termination) of the FW Act;
(b)rectify any underpayment of those entitlements by 3 May 2021; and
(c)provide a schedule of Ansa Finance's calculations and proof of rectification of any underpayment by 10 May 2021.
Also on the same day, Ms Cox issued Ansa Finance with an infringement notice pursuant to regulation 4.04 of the Fair Work Regulations 2009 (Cth) (MantzioukasInfringement Notice) alleging that the company had contravened section 536(1) of the FW Act by failing to give Mr Mantzioukas a payslip within one working day of making a payment to him.
In her affidavit, Ms Cox deposes that she gave the Mantzioukas Compliance Notice and the Mantzioukas Infringement Notice to Ansa Finance by posting them to its registered office and principal place of business. Ms Tran gave evidence that she later checked tracking information in relation to the express post envelopes and was able to confirm that they had been delivered to the registered office and the principal place of business on 1 April 2021.
The Mantzioukas Compliance Notice was also emailed by Ms Tran to Mr Fuoco at the email address he had used for correspondence with the Ombudsman.
The Mantzioukas Compliance Notice was in a similar form to that sent to Ms Chawla, in the sense that it provided an explanation of the consequences of any failure to comply and notification that Ansa Finance may apply for a review of the notice on certain grounds. Ms Cox gave evidence that a copy of the Award and the Ombudsman’s “recordkeeping and payslips fact sheet” was also attached to the email sent to Mr Fuoco.
When cross-examined, Mr Fuoco did not contest service or receipt of the Mantzioukas Compliance Notice although he said he may not have read the entire notice or the information regarding the company’s rights to seek review.
Shortly following service of the Mantzioukas Compliance Notice and the Mantzioukas Infringement Notice upon the company and Mr Fuoco, but before the specified date for compliance, there were communications between Mr Fuoco and FWI Tran.
On 8 April 2021 Ms Tran received a telephone call from Mr Fuoco in which he advised that he had been off work since 1 April 2021 and had been taken to hospital on 6 April 2021 following an episode of chest pain. Mr Fuoco also informed Ms Tran that Ansa Finance was having IT issues and that he would have to be contacted via an alternate email address.
Following that phone call FWI Tran sent an email to Mr Fuoco’s alternate email address attaching a copy of the Mantzioukas Compliance Notice. Again, a copy of the Award and the Ombudsman’s recordkeeping and payslips fact sheet were also attached. Later that day Mr Fuoco emailed Ms Tran a copy of his hospital discharge documents[19].
[19] Tran affidavit at [22]-[24], Annexures LTT-15, 16, 17
On 30 April 2021 Ms Tran took various steps to ensure that documents sent to the Ansa Finance registered office had been passed on to its director Mr Batzialis. As a result of her enquiries FWI Tran received an email from the company’s accountants, Stantins Accountants & Auditors, confirming that both the Chawla and Mantzioukas Compliance Notices and the Mantzioukas Infringement Notice had been provided Ansa Finance.
By 3 May 2021 the Ombudsman had not received any evidence that Ansa Finance had rectified any underpayments allegedly owing to Mr Mantzioukas. Accordingly, the following day, Ms Cox authorised Ms Tran to send a letter to Ansa Finance titled “Failure to Comply with a Compliance Notice”. That letter[20] was in substantially identical form to the letter sent on 25 February 2021 in relation to Ms Chawla. As with that earlier correspondence, it invited the company to inform Ms Tran within 7 days whether it had a reasonable excuse for failing to comply with the compliance notice and cautioned that if a reasonable excuse was not provided, the Ombudsman might commence legal action without further notice. The “Failure to Comply with a Compliance Notice” letter was sent by email to Ansa Finance at the alternative email address nominated by Mr Fuoco.
[20] Cox affidavit at [33], Annexure CMC-25
In their affidavits FWI Cox and Tran also depose to a number of communications with Mr Fuoco between 4 May and 13 May 2021.
On 4 May 2021 Ms Tran phoned Mr Fuoco on his mobile. She says that during that phone call Mr Fuoco confirmed that the business of Ansa Finance operated from his residential address and that he had received the Mantzioukas Compliance Notice. Mr Fuoco informed Ms Tran that as a result of his recent hospital admission he was “not officially working”. Ms Tran says that she then asked for the contact details for the director of Ansa Finance, Mr Batzialis, and that Mr Fuoco refused to provide those details. According to Ms Tran, Mr Fuoco said that Mr Batzialis had no day-to-day involvement in Ansa Finance and that any matter raised with Mr Batzialis would just be referred back to him[21].
[21] Tran affidavit at [28], Annexure LTT-23.
On 5 May 2021 Ms Tran contacted Mr Batzialis who confirmed that he was the director of Ansa Finance but said that he was not aware of the investigations relating to Ms Chawla or Mr Mantzioukas. Mr Batzialis informed Ms Tran that he would speak to Mr Fuoco about these matters.
Later that day Mr Fuoco contacted Ms Tran and inquired whether she had spoken to Mr Batzialis. During the telephone call Mr Fuoco told Ms Tran that he had been experiencing health issues since February 2021 and that he would email details of his reasonable excuse for failing to comply with the Chawla and Matzioukas Compliance Notices[22]. Subsequently Mr Fuoco sent an email to Ms Tran providing details of his purported absence from work for the previous 8 weeks and also set out some details of the IT concerns he alleged the company had been experiencing. In that email Mr Fuoco sought that the Matzioukas Infringement Notice be withdrawn[23].
[22] Tran affidavit at [31], annexure LTT-25
[23] Cox affidavit at [34], Annexure CMC-26
On 6 May 2021, Mr Fuoco sent Ms Tran an email which included details of Ansa Finance’s alleged IT issues and some payslips for Mr Mantzioukas[24].
[24] Cox affidavit at [35], annexure CMC-27
The following day, 7 May 2021, Ms Tran called Mr Batzialis. In that telephone call Mr Batzialis said that he had resigned as the director of Ansa Finance and that Mr Fuoco was handling the Chawla and Mantzioukas Compliance Notices.
On 13 May 2021 Mr Fuoco informed Ms Tran that all future correspondence should be sent to him and his accountant, Mr Chris Karlis, until a new director was appointed.
On 27 May 2021 Ms Tran emailed a letter to the company’s new director Mr Dindo Varona via the alternate email address nominated by Mr Fuoco. The letter, authored by the Ombudsman’s Director of Compliance Alan Wells, informed Ansa Finance that the Ombudsman did not consider the company’s reasons[25] for not complying with the Mantzioukas Compliance Notice constituted a “reasonable excuse”. That correspondence included a copy of the Ombudsman’s Compliance and Enforcement policy[26]. A second letter addressed to Mr Varona was emailed by Ms Tran to Mr Fuoco informing the company that the Ombudsman would not be withdrawing the Mantzioukas Infringement Notice[27].
[25] Mr Fuoco’s health issues and company IT issues as set out in correspondence from Mr Fuoco on 5 May 2021
[26] Cox affidavit at [36], Annexure CMC-28
[27] Cox affidavit at [37], Annexure CMC-29
On 27 May 2021, Ms Tran was informed by Mr Mantzioukas that he had not received any payment from Ansa Finance.
FWI Cox gave evidence that as at the date of affirming her affidavit on 5 May 2022, Ansa Finance had not:
(a)provided a schedule of calculations or proof of rectification of any underpayment in accordance with the Mantzioukas Compliance Notice;
(b)made any payment in respect of the Mantzioukas Infringement Notice; and
(c)sought a review of the Mantzioukas Compliance Notice under section 717 of the FW Act.
There is no other evidence that there has been any compliance with the Mantzioukas Compliance Notice.
When cross-examined, Mr Fuoco said that he did not pay Mr Mantzioukas in accordance with the Mantzioukas Compliance Notice because he was not sure if the former employee was actually owed anything. He also said that he and the company did not have the resources to respond to the notices. He said that unlike Ms Chawla in respect of whom he concedes monies are owed, the respondents are not so confident that Mr Mantzioukas is owed money. When asked whether he had undertaken any calculations in respect of Mr Mantzioukas, Mr Fuoco conceded that he had not and he was unable to say how long it would take him to do so. He said at the time these issues arose he had trouble contacting his bookkeeper.
White Compliance Notice
Mr Mitchell White was employed by Ansa Finance between 18 March and 15 April 2021 as a full-time employee, covered by the Award.
On 14 April 2021 the Ombudsman received a request for assistance from Mr White who alleged contraventions of the Award and the FW Act in respect of his employment. Mr White alleged that he had been employed by Ansa Finance as an assistant finance broker, that he had not been paid wages for hours worked between 18 March and 8 April 2021 and that he had not been paid out accrued or untaken annual leave on termination of his employment.
Again, FWI Tran assisted FWI Cox in undertaking an investigation into these complaints.
On 26 April 2021 Mr White confirmed the nature of his complaint in a discussion with Ms Tran. Mr White emailed Ms Tran a copy of his contract of employment, confirmation of the work he performed during his employment and various text message exchanges between himself and Mr Fuoco[28].
[28] Cox affidavit at [41]-[42], Annexures CMC-32, 33 sheet
On 4 May 2021 Ms Tran called Mr Fuoco in respect of the allegations made by Mr White. During that call Mr Fuoco informed Ms Tran that he had not paid Mr White wages for the same reasons that he had not paid the amounts required by the Chawla or Mantzioukas Compliance Notices. That is, Mr Fuoco reiterated that by reason of his health condition he was under strict supervision, on reduced hours of work and was not working at full capacity.
In that call Ms Tran informed Mr Fuoco that the Ombudsman would likely issue another compliance notice, this time in relation to Mr White. She told him that the timeframe for compliance is usually one month, but given his health situation she invited him to propose a longer timeframe. Mr Fuoco informed Ms Tran that he was scheduled to see a specialist on 17 June 2021 and she agreed to make the compliance date after that appointment. She also informed Mr Fuoco that should anything arise from that appointment he was within his rights to put it forward to the Ombudsman as part of any “reasonable excuse”.
Ms Cox deposes that on 12 May 2021 she formed a reasonable belief based on information obtained during the investigation that:
(a)Mr White had been employed by Ansa Finance between 18 March and 8 April 2021 as a full time assistant finance broker;
(b)Mr White was covered by the Award and properly classified as a Level 2 employee; and
(c)in respect of his employment, Ansa Finance had contravened clause 15.1 of the Award and section 90(2) of the FW Act because Mr White was not paid for all hours worked during his employment or for accrued and untaken annual leave on termination of his employment, including annual leave loading[29].
[29] Cox affidavit at [44]
On 14 May 2021, pursuant to the reasonable belief referred to in the previous paragraph, Ms Cox issued a compliance notice to Ansa Finance under section 716 of the FW Act (White Compliance Notice). Consistent with her approach in relation to Ms Chawla and Mr Mantzioukas, the White Compliance Notice issued in relation to Mr White required Ansa Finance to take various steps to calculate his entitlements under the award, to rectify any underpayments and to provide a schedule of calculations and proof of rectification to the Ombudsman. The date for compliance with the White Compliance Notice was set at 7 July 2021. Again, consistent with earlier compliance notices, Ansa Finance was informed that any failure to comply may contravene a civil remedy provision of the FW Act and that the company could apply for a review of the notice on specified grounds[30].
[30] Cox affidavit at [46], CMC-36
In their affidavits Ms Cox and Ms Tran depose to service of the White Compliance Notice by mail to Ansa Finance’s registered office and principal place of business and by email to Mr Fuoco and the company director on 17 May 2021. Ms Tran gives evidence that tracking searches of the express post envelopes confirm they were delivered on 18 May 2021[31].
[31] Tran affidavit at [40]
When cross-examined, Mr Fuoco again did not seriously contest service or receipt of the White Compliance Notice. He conceded that he probably received it but said that he had no recollection of having read it and had no awareness of the company’s right to seek a review of the compliance notice.
On 17 May 2021 Ms Tran had a conversation with Mr Fuoco in respect of the White Compliance Notice. In that conversation Mr Fuoco said that making payments to Ms Chawla, Mr Mantzioukas and Mr White was his “priority”.[32]
[32] Tran affidavit at [39]
By 30 June 2021 the Ombudsman had not received any evidence that Ansa Finance had made payment to Mr White or had taken any of the other steps required by the White Compliance Notice. As a result, the following day, 1 July 2021, FWI Leigh Pace emailed a “Failure to Comply with Compliance Notice” letter to Mr Fuoco. Consistent with similar letters sent in respect of the Chawla and Mantzioukas Compliance Notices, Ansa Finance was asked to inform Ms Tran within 7 days whether it had any excuse for failing to comply and the company was cautioned that if a reasonable excuse was not provided, the Ombudsman might commence legal action without further notice.
There is no evidence that Ansa Finance has taken any steps to comply with the White Compliance Notice. Ms Tran deposes that she received a text message from Mr White on 26 October 2021 in which he advised that he had not received any payment. When cross-examined in relation to the White Compliance Notice, Mr Fuoco agreed that the company had not taken any steps to comply and had not taken any steps to calculate underpayments.
Jern Compliance Notice
On 20 May 2021 the Ombudsman received a request for assistance from Mr Lance Jern, another former employee of Ansa Finance. Mr Jern had been employed by Ansa Finance as a full-time assistant mortgage/finance broker between February and August 2020. The precise dates of his employment are disputed by Mr Fuoco.
In his request for assistance, Mr Jern alleged that he had not received a payment in lieu of notice of termination and claimed that accrued and untaken annual leave had not been paid to him.
On or around 11 June 2021 the Ombudsman commenced a further investigation into Ansa Finance, on this occasion in respect of its employment of Mr Jern. Once again, Ms Tran assisted FWI Cox in relation to that investigation. In response to a request from Ms Tran, Mr Jern provided the Ombudsman with a copy of his contract of employment, payslips, correspondence with Ansa Finance and Mr Fuoco and calculations of the amounts he believed he was owed[33].
[33] Cox affidavit at [53]-[54], annexure CMC-41
Between 8 June and 24 June 2021 Ms Cox was on annual leave. During that period Ms Tran’s investigation of Mr Jern’s employment was assisted by FWI Philip Marsh.
On 25 June 2021 Ms Tran received a chain of email correspondence from Mr Fuoco in which he alleged that Mr Jern had been in breach of his contract of employment with Ansa Finance. It is clear from those emails and various text messages that the separation between Mr Jern and Mr Fuoco developed into a hostile dispute involving claims of serious misconduct on the one hand and counterclaims of underpayment on the other. Mr Fuoco’s position was that Mr Jern had been terminated on 10 August 2020 for serious misconduct and that he had been paid for all hours worked to that date and for accrued annual leave entitlements at the date of termination.
Ms Cox deposes that by 28 June 2021 she had formed a reasonable belief that:
(a)Mr Jern was an employee of Ansa Finance between 17 February 2020 and 11 August 2020;
(b)that he was covered by the Award, and was properly classified as a Level 3 employee; and
(c)at the time of his termination Mr Jern had not been paid any amount in lieu of notice or any amount in respect of accrued and untaken annual leave by reason of which Ansa Finance had contravened s 90(2) (in respect of annual leave on termination) and s 117(2) (in respect of payment in lieu on termination) of the FW Act[34].
[34] Cox affidavit at [57], Annexure CMC-43
On 29 June 2021, Ms Cox caused another compliance notice[35] (Jern Compliance Notice) to be issued in respect of Ansa Finance’s employment of Mr Jern. The Jern Compliance Notice required Ansa Finance to calculate Mr Jern’s entitlements under the NES with respect to payment in lieu of notice on termination and accrued but unused annual leave. The notice required Ansa Finance to rectify any underpayment of those entitlements by 30 July 2021 and to provide evidence of calculations and rectification of any underpayment to the Ombudsman by 6 August 2021.
[35] Cox affidavit at [60], Annexure CMC-46
The Ombudsman presented evidence that the Jern Compliance Notice was sent by express post to the registered office of Ansa Finance on 29 June 2021 and by email to Mr Fuoco on 30 June 2021. Ms Tran gives evidence that she was responsible for emailing the compliance notice to Mr Fuoco. She also deposes that she undertook tracking searches for the express post envelopes which confirm that the Jern Compliance Notice was delivered to the registered office of Ansa Finance on 30 June 2021 and to its principal place of business on 2 July 2021. Mr Fuoco does not contest service.
On 29 July 2021 Ms Tran emailed Mr Fuoco to remind him that payment pursuant to the Jern Compliance Notice was required by the following day[36].
[36] Cox affidavit at 63, annexure CMC-49
There is no evidence that Ansa Finance complied with the Jern Compliance Notice.
Under cross-examination Mr Fuoco agreed that the company had not taken steps to perform calculations to ascertain outstanding payments and said he did not know how long that would take. He also conceded that the company did not takes steps to seek a review of the Jern Compliance Notice. Mr Fuoco said he did not accept that any payments were owed to Mr Jern because he had never been presented with a contract to prove that Mr Jern had worked for the week covered by the notice. He said that he had repeatedly asked the Ombudsman for proof that Mr Jern was employed for that period but had never been provided with any.
In relation to compliance generally, Ms Cox gave evidence that at the time of affirming her affidavit on 5 May 2022, the Ombudsman had not received a schedule of calculations or proof of rectification of any underpayment in respect of the Chawla Compliance Notice, Mantzioukas Compliance Notice, White Compliance Notice or Jern Compliance Notice. Nor is she aware of Ansa Finance having made any application under section 717 of the FW Act to the Federal Court, Federal Circuit and Family Court or an eligible State or Territory Court for a review of any of the Compliance Notices before the dates by which the Compliance Notices required action to be taken, or at all. Mr Fuoco does not contest this evidence.
Respondents’ Response
The respondents submit that they should not be found liable for the contraventions alleged by the Ombudsman. In his written and oral submissions Mr Fuoco advanced a number of bases for the respondents’ defence.
First, at least in relation to the Jern Compliance Notice, the respondents challenge the basis of the Fair Work Inspector’s “reasonable belief” that there had been a contravention of the FW Act. Mr Fuoco submitted that despite an exchange of several emails with the Ombudsman, he has not been provided with an employment contract which proves that Mr Jern was employed for the period in respect of which entitlements are allegedly owed. He submitted that he struggled to believe that the inspector could hold a reasonable belief that there had been a contravention in respect of Mr Jern.
Secondly, the respondents assert that the “reasonable time”[37] in which an employer must take specific action under a compliance notice and produce evidence of compliance to the Ombudsman was not properly “configured or duly quantified” by the Ombudsman during the COVID-19 pandemic. Although Mr Fuoco did not develop this argument orally, it appears to be part of a broader overarching submission that the Ombudsman acted unreasonably by requiring compliance with the Compliance Notices at a time when the business encountered severe financial difficulties during the COVID-19 pandemic and in circumstances where Mr Fuoco was suffering from a health condition and was endeavouring to engage with the Ombudsman in relation to queries he had about the notices. I infer from his submissions that the respondents contend that the 28 day timeframe for compliance was not, in those circumstances, a “reasonable time” for the purposes of section 716(2) of the FW Act and that the notices should be regarded as invalid that reason.
[37] section 716(2)
Thirdly, the respondents submit that Ansa Finance had a “reasonable excuse” for not complying with the Compliance Notices. For that reason it is submitted that the Court cannot find that it had failed to comply with the notice pursuant to section 716(5).
Mr Fuoco cites two circumstances which individually or in combination constitute a reasonable excuse for non-compliance with each of the notices. First, in oral evidence he asserted that he suffered health issues which impacted his capacity for work between October 2020 and mid-June 2021. It appears that he suffered chest pains or some suspected cardiac event which required treatment and monitoring over that period of time from a general practitioner and a cardiologist. He gave evidence that he was given explicit instructions by his cardiologist not to do any work, although he admits that he did work for approximately one to one and a half hours per day notwithstanding that instruction. Nonetheless, Mr Fuoco said that those hours were a fraction of the 10 hour day he previously worked in running the business of Ansa Finance. His evidence was that although he did do some work he was able to achieve very little and he could not make a significant contribution to the business. Mr Fuoco said that this health condition was a reason why Ansa Finance was not able to respond to the notices in a timely fashion.
As to the impact of the COVID-19 pandemic, Mr Fuoco gave evidence that Ansa Finance commenced operation in October 2018. He described the business as still being a fledgling business when the effects of the pandemic, including lockdowns, descended. He said that the business was very small, labour-driven and customer-focused, unlike other online lenders. As staff were required to work from home he did not have the capacity to monitor what they were doing and this impacted productivity. Mr Fuoco gave evidence that the revenue of the business declined by approximately 90% which then qualified the company for state and federal grants. He said that the effect of these difficult financial and trading conditions was that the company did not have the resources or the time to respond to the compliance notices.
Mr Fuoco gave oral evidence that he had informed the Ombudsman about both his health condition and the company’s financial difficulties. In relation to his health Mr Fuoco said that he recalled furnishing the Ombudsman with “28 pages of reports” from the Alfred Hospital and his general practitioner and that those documents were sent by email to FWI Cox, FWI Tran and the Ombudsman’s solicitor, Ms Candiloro. Mr Fuoco also claimed that he sent emails to the Ombudsman which included bank statements and details of the state and federal grants received by Ansa Finance as evidence that the business had suffered a serious decline in revenue by reason of the pandemic. He said this information had been sent to the Ombudsman in support of the company’s claim that it had a reasonable excuse for not complying with the Compliance Notices. However, he said much of this health and financial information did not appear to have been included in the Court Book produced by the Ombudsman for the trial, a matter about which he raised some criticism.
Notwithstanding that the respondents had been given ample opportunity to file evidence before the hearing, I decided in the interests of fairness to afford Mr Fuoco an opportunity over an extended luncheon adjournment to produce the health and financial documents about which he had given oral evidence.
Over the luncheon adjournment Mr Fuoco forwarded to my associate and to the Ombudsman’s instructing solicitor various emails he had exchanged with the Ombudsman and attachments.
When the matter resumed Mr Fuoco sought to rely on an email which he had sent to Ms Tran on 5 May 2021 which annexed pages of medical and hospital discharge records[38]. This document and its attachments had in fact been included as an annexure to Ms Cox’s affidavit[39] and was in the Court Book. The documents were admitted into evidence without objection.
[38] Exhibit R1
[39] Cox affidavit, Annexure CMC-26
Mr Fuoco also sought to introduce three email chains[40] evidencing communications between him and inspectors or solicitors at the Ombudsman’s office from late September to early November 2021 regarding various points of disputation about the notices and the company’s non-compliance. Each of these documents was also admitted into evidence without objection.
[40] Exhibits R2, R3, R4
It is appropriate at this juncture to briefly describe the content of the tendered documents.
Amongst the emails produced by Mr Fuoco there are communications with the Ombudsman from which the Court infers the parties sought to negotiate a practical resolution of the underpayment claims and non-compliance issues without resort to litigation. In the course of that correspondence on 27 September 2021[41] the Ombudsman invited Ansa Finance to provide evidence demonstrating its current financial circumstances (by way of a Statement of Financial Circumstances and supporting material such as balance sheets, profit and loss statements, tax returns and bank statements), to provide calculations of the amounts owing to the former employees and to provide a payment plan to discharge the amounts owed under the Compliance Notices. The Ombudsman indicated that subject to the parties agreeing to a payment plan and Ansa Finance complying with it, legal proceedings would not be issued.
[41] Exhibit R4, Email from Fiona Malishev, FWO senior lawyer, to Mr Fuoco dated 27 September 2021
There were then further exchanges during which Mr Fuoco and the Ombudsman’s legal counsel discussed issues such as whether information prepared by the company’s accountants for the purposes of obtaining a State government grant would be sufficient for the purposes of demonstrating Ansa’s current financial circumstances, the details of the exact amounts of underpayments alleged to be outstanding to the former employees, instalment arrangements for any payment plan and the conditions on which the Ombudsman would not issue proceedings[42].
[42] Exhibit R2, emails between Mr Fuoco and Ms Malishev, 28, 29 and 30 September 2021; Exhibit R4, emails between Mr Fuoco and Ms Malishev, 28, 29 and 30 September, 1 and 4 October 2021;
On 30 September 2021[43], the Ombudsman informed Mr Fuoco that it required Ansa Finance to complete a Statement of Financial Circumstances and to provide any supporting documentation by no later than 6 October 2021, failing which would result in legal proceedings being issued. The Ombudsman cautioned that even if Ansa Finance did provide that information, the material would be considered, but it should not be taken as an agreement by the Ombudsman to any proposed payment plan.
[43] Exhibits R2 and R4
On 6 October 2021 Mr Fuoco sent the Ombudsman[44] various documents including a Statement of Financial Circumstances, four bank statements covering the period 29 July 2020 to 29 July 2021 and an exported pdf spreadsheet showing credits for the period to October 2021 including evidence that the company had received a $20,000.00 government grant. The bank statements showed decreasing receipts in each of the quarters ending January and April 2021 and then a slight improvement from the quarter ending July 2021. The Statement of Financial Circumstances also included a proposed payment plan in respect of the employees Chalwa, White and Mantzioukas and some commentary by Mr Fuoco forecasting that Ansa Finance would return to pre-pandemic performance from November 2021.
[44] Exhibits R3 and R4, email from Mr Fuoco to Ms Malishev and Ms Candiloro, FWO lawyers
The email chains provided by Mr Fuoco reveal that the Ombudsman was not content with the information provided or Ansa Finance’s failure to calculate the amounts owing to the four former employees. In an email dated 7 October 2021[45] the Ombudsman’s senior lawyer stated that unless by 5pm the following day, 8 October 2021, Ansa Finance provided calculations of the amounts owing to each of the former employees as required by the Compliance Notices and proposed a payment plan in relation to Mr Jern, the Ombudsman would initiate proceedings without further notice. The Ombudsman subsequently extended this ultimatum until 13 October 2021.
[45] Exhibit R3
It is not necessary to say more about these emails, save to observe that from 7 October 2021 relations between Mr Fuoco and the Ombudsman took a turn for the worse. On 17 October 2021 Mr Fuoco sent an email[46] to the Ombudsman’s senior lawyer and, among other things, sought clarification about what was required of Ansa Finance to stave off further action. The emails tendered by Mr Fuoco do not disclose a reply, but I infer from subsequent emails that there may not have been one. As noted earlier, the Ombudsman commenced proceedings against the respondents on 28 October 2021 and by 1 November 2021 Mr Fuoco stated[47] that he would be contacting his local member of parliament and making a complaint to the Commonwealth Ombudsman about the Ombudsman’s conduct.
[46] Exhibit R3
[47] Exhibit R3, emails from Mr Fuoco to Ms Malishev and Ms Candiloro dated 1 November 2021
In his final address, Mr Fuoco submitted that the Ombudsman had not acted reasonably in not accepting his medical condition or the company’s financial circumstances as a reasonable excuse for the purposes of s 716(6). While he acknowledged that at least two of the former employees (Chawla and White) are owed money and that the company had not complied with the compliance notices, Mr Fuoco said during the pandemic the company had made a conscious decision to prioritise keeping the business afloat and getting it into a position where it was able to pay outstanding wages.
The next element of the company’s claim that it had a reasonable excuse for non-compliance was a submission that the Ombudsman had failed to properly inform Ansa Finance of its right to challenge or seek review of the Compliance Notices pursuant to section 717 of the FW Act. In his final address, Mr Fuoco said that he had had numerous interactions with the Ombudsman, Ms Tran in particular, and was never told that there was another way of challenging the Compliance Notices. He said that he had made efforts to ascertain the company’s options in relation to the notices but he had not been advised of the pathways available to him and always assumed that the Ombudsman would provide him with that information.
Finally, Mr Fuoco submitted that the Mantzoukis and White Compliance Notices were not valid because those employees had “failed to satisfy the performance of work defined by the FW Act”. The substance of this submission was somewhat vague and not properly developed, but I infer that Mr Fuoco believes that those employees either did not perform or adequately perform work during the alleged period of employment (White) or engaged in conduct which was not consistent with their employment contracts (Mantzoukis), such that they were not at law entitled to the underpayments alleged.
Consideration
It is to be recalled that the Ombudsman seeks declarations and orders against the respondents in relation to four alleged contraventions of s 716(5) of the FW Act.
The facts that the Ombudsman must prove to establish those contraventions are that:
(a)a Fair Work Inspector formed the reasonable belief that Ansa Finance had contravened one or more of the fair work instruments referred to in s 716(1);
(b)the Fair Work Inspector issued Compliance Notices requiring Ansa Finance to do one or more things contemplated by section 716(2);
(c)each Compliance Notice was given to Ansa Finance; and
(d)Ansa Finance failed to comply with each of the Compliance Notices.
To establish liability on the part of Mr Fuoco, the Ombudsman must also establish to the requisite level of proof that Mr Fuoco was “involved” in the company’s contraventions. The issue of accessorial liability is dealt with later in these reasons.
The Ombudsman submits that it is not an element of the contraventions that Ansa Finance did not have a “reasonable excuse” – in other words it does not fall to the Ombudsman to prove the negative. The Ombudsman submits that it is for the respondent to raise “reasonable excuse” as a defence to an alleged contravention of s 716(5) and that it falls to the respondent to produce evidence and satisfy the Court that a reasonable excuse existed at the relevant time. An employer who seeks to rely on the exception of “reasonable excuse” bears the onus of proof[48].
[48] Potter v Fair Work Ombudsman [2014] FCA 187 at [72]; Fair Work Ombudsman v Joys Child Care Limited & Anor [2019] FCCA 3356 at [20]
The Ombudsman also submits that whether or not a reasonable excuse exists is an objective fact to be determined by the Court on all the evidence; it is not to be determined based on the respondent’s subjective belief. It must be an excuse that would be regarded as reasonable by a reasonable person in the relevant circumstances[49].
[49] Fair Work Ombudsman v C&H Entertainment Pty Ltd [2021] FCCA 1216
Turning then to each of the elements of the alleged contraventions.
Inspector’s reasonable belief
In relation to each Contravention Notice, the Ombudsman must prove that a Fair Work Inspector formed the reasonable belief that Ansa Finance had contravened one or more of the fair work instruments referred to in s 716(1) of the FW Act.
In determining whether or not there was a reasonable belief, is not necessary for the Court to be satisfied on the balance of probabilities that the underlying contraventions of fair work instruments have in fact occurred. The proper test is whether there was a rational basis for the Inspector’s belief based on the information available to the Inspector at the time the reasonable belief was formed[50].
[50] Gothic Downs at [22]
I am satisfied on the evidence that in respect of each of Chawla, Mantzioukas, White and Jern FWI Cox formed a reasonable belief that Ansa Finance had contravened one or more of the instruments referred to in section 716(1) of the Act. Ms Cox gave direct evidence that she formed the requisite belief and she exhibited to her affidavit various documents and decision records which evidenced the basis for that belief.
In their defence, the respondents formally deny that FWI Cox formed a reasonable belief in relation to the alleged contraventions which underpinned the various Compliance Notices. In submissions Mr Fuoco expressed dissatisfaction with the notices and, at least in relation to Mr Jern, said he disagrees that there was a proper basis for the Inspector’s belief.
However, none of the evidence or submissions advanced by Mr Fuoco on behalf of the respondents persuades me that the Inspector’s belief was not properly formed or was not rationally based. Disagreement with the Inspector’s belief may be a basis on which a recipient might seek to have a compliance notice reviewed, set aside or varied pursuant to s 717, but it does not undermine the jurisdictional precondition for the issuing of a notice.
Compliance Notices required Ansa Finance to take steps
Pursuant to s 716(2) of the FW Act a compliance notice may require a person to do either or both of the following within such reasonable time as is specified, namely:
(a)take specified action to remedy the direct effects of the contravention the Inspector reasonably believes to have occurred; and/or
(b)to produce reasonable evidence of the person’s compliance with the notice.
In addition, a compliance notice must meet certain formal requirements as to its content. Section 716(3) requires that a notice:
(a)set out the name of the person to whom the notice is given; and
(b)set out the name of the inspector who gave the notice; and
(c)set out brief details of the contravention; and
(d)explain that a failure to comply with the notice may contravene a civil remedy provision; and
(e)explain that the person may apply to the Federal Court, the Federal Circuit and Family Court of Australia (Division 2) or an eligible State or Territory Court for a review of the notice on either or both of the following grounds:
(f)the person has not committed a contravention set out in the notice; or
(g)the notice does not comply with ss 716(2) or (3)
Save for the identified contraventions in relation to which the Inspector held a reasonable belief and the specific steps to be taken, each of the Chawla, Mantzioukas, White and Jern Compliance Notices were in substantially identical form. I am satisfied that each complied with the requirements of sub-sections 716(2) and (3).
Each of the Compliance Notices required steps to be taken of the type contemplated by s 716(2). Each required Ansa Finance to calculate the relevant former employee’s hours of work, wages and entitlements pursuant to the Award, to rectify any underpayment and to provide evidence to the Ombudsman of the steps taken.
Each of the notices provided a period greater than 28 days for compliance. Ms Cox gave evidence that 28 days is the standard timeframe provided by the Ombudsman for compliance and I am satisfied that it was reasonable in the circumstances. I note the evidence from Ms Tran that on at least one occasion she discussed and proposed a longer timeframe with Mr Fuoco when he advised her he had a forthcoming medical appointment which would determine his fitness for work.
I reject the respondent’s submission that the timeframe for compliance was unreasonable. There is almost no evidence to suggest that Ansa Finance took any steps to comply. This is not a case where the employer diligently applied itself to compliance only to find that it was unable to meet the timeframe due to the volume or complexity of calculations to be undertaken or for some other reason. Here, the evidence overwhelmingly indicates that compliance would not have been time consuming or complex.
I am satisfied in all the circumstances of this case that each of the Compliance Notices provided a reasonable time for compliance.
Ansa Finance was given the Compliance Notices
Although Mr Fuoco says that he cannot recall exactly when some of the Compliance Notices were served or whether he read the whole or only some parts of the notices and accompanying correspondence, there is ample evidence to satisfy me that each document was properly served by express post to both the registered office and principal place of business of Ansa Finance and by email to Mr Fuoco. Where documents were served by post, tracking searches undertaken by FWI Tran confirmed that the documents were delivered. Mr Fuoco does not contest that emails sent to him were received.
Each of the Compliance Notices was also served with a covering letter which drew the recipient’s attention to the steps required to be taken under the notice and provided an explanation of the potential consequences of non-compliance, including exposure to litigation and civil penalties. Relevantly, the covering letters and the substantive notices drew attention to the right to apply to a Court for review of the compliance notice pursuant to section 717.
Failed to comply with each of the Compliance Notices
I am satisfied on the evidence, including admissions made by Mr Fuoco under cross-examination, that Ansa Finance did not take the steps required of it under each of the Compliance Notices, within the reasonable time specified in those notices.
As mentioned, each of the notices specified a period of at least 28 days for compliance and then a further 7 days for Ansa Finance to provide the Ombudsman with the evidence of its compliance. There is no evidence before the Court that these timeframes were met or that any meaningful steps were taken to comply with the notices.
Each of the notices remained valid during their currency. There is no evidence that Ansa Finance made an application to a Federal or eligible State Court to have any of the notices reviewed varied or set aside.
I am satisfied to the requisite standard that Ansa Finance has failed to comply with each of the Chawla, Mantzioukas, White and Jern Compliance Notices in contravention of s 716(5) of the FW Act.
Reasonable excuse
Pursuant to s 716(5) of the FW Act, a failure to comply with a compliance notice is a contravention of the Act. However, that provision does not apply if a person has a “reasonable excuse”. Where a reasonable excuse is demonstrated the civil remedy provision relating to failure to comply is not engaged.
An employer who seeks to rely on the exception of “reasonable excuse” bears the onus of proof. The excuse proffered must be one which would be regarded as reasonable by a reasonable person in the relevant circumstances. It is a matter to be determined objectively by the Court having regard to all the evidence.
The Court’s consideration of whether there is a “reasonable excuse” is properly directed to the steps required to be taken under the compliance notice. It is not an enquiry into whether the alleged substantive contravention of fair work instruments has been made out by the Ombudsman or whether the respondents have a proper basis to contest the Inspector’s reasonable belief. The relevant question is whether objectively the respondent had a reasonable excuse for not doing what the compliance notice required it to do.
The Ombudsman submits that under the statutory scheme any legal or merit challenge to the validity of a compliance notice should be made by way of an application for review under s 717 of the Act. Counsel for the Ombudsman likened that to an avenue for judicial review that would normally be available in relation to administrative decisions. There is some force in this submission.
The thrust of the Ombudsman’s submission is that the statutory compliance scheme can be likened to the framework around other summary statutory infringements such as parking or traffic fines. In like situations a person who receives an infringement notice usually faces a binary choice - either comply with the notice or challenge the basis of it by initiating some kind of judicial review. If review is not sought, the infringement notice presumptively stands as a valid instrument and requires the recipient to take the steps required by the notice. So too it is with a compliance notice under the FW Act. In the absence of an application for review pursuant to s 717, the recipient is required to take the steps specified in the notice unless it has a “reasonable excuse”.
In my view it is implicit from the text of the legislative scheme that a disagreement with the alleged substantive contravention[51] or the form of the notice[52] does not constitute a reasonable excuse unless an application for review has been made. If an application for review is made the Court has power to stay its operation on terms it considers appropriate. Parliament cannot have intended that an employer’s disagreement with a notice, without more, could nullify the operation of s 716(5).
[51] s 716(3)(e)(i) and s 717(1)(a)
[52] s 716(3)(e)(ii) and s 717(1)(b)
In my view the question for the Court is whether Ansa Finance can establish a reasonable excuse for not being able to do the things that the Compliance Notices required it to do. It is a question properly directed to the recipient’s capacity or ability, rather than its will.
Mr Fuoco’s health issues
Depending on the circumstances, it is conceivable that the health of a person responsible for compliance might constitute a reasonable excuse for non-compliance.
Each of the Compliance Notices were issued to Ansa Finance and required the company to take certain steps to calculate and rectify alleged contraventions. The compliance date for each of the notices was as follows:
Name Date of Notice Compliance date Chawla 21 January 2021 24 February 2021 Mantzioukas 31 March 2021 3 May 2021 White 17 May 2021 30 June 2021 Jern 29 June 2021 30 July 2021
Mr Fuoco gave evidence that between October 2020 and 17 June 2021 he suffered health issues which he said significantly impacted his capacity for work. As mentioned earlier, he gave evidence that he was given instructions by his cardiologist not to do any work or to reduce his workload, and although he did work for approximately one to one and a half hours per day, he was unable to make a significant contribution to the business.
There is evidence to corroborate some of this. On a fair reading of the various email communications passing between Mr Fuoco and the Ombudsman, Mr Fuoco did raise his health issues and did provide some medical records to substantiate his illness[53]. The Ombudsman accepts that there is evidence that Mr Fuoco was admitted to a hospital for two discrete and brief periods, on 6 April and 24 April 2021. There is a general practitioner’s medical certificate covering the period 28 April to 17 June 2021 which recommends that Mr Fuoco work “reduced hours”. Mr Fuoco also produced an Alfred Hospital Department of Radiology appointment for 11 June 2021 and he told Ms Tran that he had an appointment to a see a specialist on 17 June 2021. He later told Ms Tran that he had been cleared to return to a full workload on the Monday after 17 June 2021[54].
[53] Cox affidavit, Annexure CMC-26; Tran affidavit, Annexure LTT-17, Exhibit R1
[54] Tran affidavit, Annexure LTT-32
The Ombudsman cites several reasons why Mr Fuoco’s medical condition should not be accepted as a reasonable excuse for Ansa Finance’s failure to comply with each of the Compliance Notices.
First, it is submitted that the medical evidence is only of limited compass. Apart from two admissions to the Alfred Hospital Emergency Department on 6 April and 24 April 2021, the evidence does not point to a total or even substantial incapacity for work for the full period alleged by Mr Fuoco. The Ombudsman accepts the general practitioner’s recommendation that Mr Fuoco should work reduced hours, presumably advice which is consistent with that which Mr Fuoco says he received from his cardiologist. However, the Ombudsman submits that “reduced hours” is a far cry from not being able to work at all. The Ombudsman also submits that even on reduced hours of one to two hours per day, Mr Fuoco has offered no explanation as to why steps were not taken to comply with the notices, given that those steps involved some basic calculations and would have been relatively straightforward. Given Mr Fuoco admits to doing some work during the period of his illness, the Ombudsman invites the Court to infer that the respondents simply chose to prioritise other work ahead of taking the steps to ensure compliance with the statutory notices.
Secondly, the objective medical evidence covers a period of approximately two months from early April until mid-June 2021. That evidence corresponds only with the period during which steps were required to be taken in relation to the Mantzioukas and possibly the White Compliance Notices. Under cross-examination Mr Fuoco conceded that he did not raise any health issues during the compliance period for the Chawla notice and it appears that the Jern notice was issued after Mr Fuoco had been given the all-clear to return to full-time work in mid-June 2021.
Thirdly, the Ombudsman emphasised that the Compliance Notices were issued to the first respondent, Ansa Finance. Mr Fuoco is a manager of the company and would appear to have significant day-to-day responsibilities for its operations, but he is not the director or an officer of Ansa Finance. The Ombudsman submits that the corporate respondent Ansa Finance has given no explanation as to why another person, such as its director, did not or could not have taken the necessary steps to ensure the company’s compliance with the notices. It is submitted that even if Mr Fuoco was indisposed due to health issues, it was incumbent upon those responsible for the legal entity to have arranged for someone else to meet its statutory obligations.
In his written submissions Mr Fuoco is critical that the Ombudsman has not acquired an expert medical opinion. This criticism is misplaced as the respondents bear the onus on this issue.
Counsel for the Ombudsman observed, correctly, that the issue for the Court is whether Ansa Finance had a reasonable excuse, not whether Mr Fuoco had a reasonable excuse.
The objective evidence before the Court does not persuade me that from 21 January until 30 July 2021 health issues excused compliance with the Compliance Notices. Although I accept that Mr Fuoco suffered a period of ill health and that this impacted his capacity to work, probably at a difficult time during the pandemic, I am not satisfied on the evidence that was a reasonable excuse for the company’s non-compliance. Mr Fuoco was not totally incapacitated for all that time. He did perform work for most of the period during which he suffered ill health although, in accordance with medical advice, he substantially reduced his hours. As the large volume of emails attests, Mr Fuoco was clearly capable of communicating and engaging with the Ombudsman. On his own evidence, it would appear that he attended to various other activities aimed at getting the business back on its feet.
There is no proper explanation as to how Mr Fuoco’s ill health prevented Ansa Finance from taking steps to calculate and rectify outstanding entitlements pursuant to the Compliance Notices. There is no evidence that any of those steps have even been attempted.
The COVID19 pandemic and financial incapacity
Ansa Finance submits that a 90% reduction in revenue, which qualified the company for a $20,000 state government grant, should be regarded as a reasonable excuse for its non-compliance. Mr Fuoco submits that the company’s resources were significantly depleted by the reduced revenue and that this contributed to its inability to comply with the notices. However, the connection between the two has never really been spelt out.
There is some evidence which corroborates the company’s claimed financial difficulties. There is evidence of a Statement of Financial Circumstances and 12 months of bank statements which attest to declining revenues and the receipt of government assistance. The Court is of course entitled to take judicial notice of the COVID-19 pandemic and the obvious fact that it has had severe economic ramifications. However, the effect of the pandemic has not been consistent and its impact on any individual business requires analysis of its financial position at a forensic level.
Respectfully, there is insufficient evidence from which the Court can assess the true state of the company’s overall financial position at the various times it was required to comply with the Compliance Notices. Ansa Finance could have produced BAS statements, cash flow statements or expert financial opinion to explain and substantiate its defence of reasonable excuse, but it has not done so. It is one thing to assert financial stress, it is another thing altogether to assert financial incapacity.
Even if the Court accepts that the company’s revenue declined for a period by 90% and that the company faced significant financial challenges that does not adequately explain why Ansa finance had a reasonable excuse for not meeting its statutory obligations. Financial difficulty, it has long been recognised, is not a justification for an employer to fail to comply with its statutory and award obligations[55].
[55] Fair Work Ombudsman v South Gin Pty Ltd (No.2) [2016] FCA 832 at [50] per White J
In his final address to the Court, Mr Fuoco conceded that the respondents made a conscious decision to get the business “back on its feet” ahead of meeting its compliance notice obligations. He submitted that the company prioritised keeping the business afloat as a means of putting itself in the best position of being able to pay outstanding wages. That was the company’s order of priority. That choice by the respondents does not in my view constitute a reasonable excuse.
Right of review
In his affidavit affirmed on 7 September 2022 and in his oral submissions Mr Fuoco submitted that the right to seek a review of a compliance notice in a relevant Federal or State Court was never brought to his attention by the Ombudsman or any of its representatives. In submissions he was particularly critical of the Ombudsman in this respect and said that he expected the regulator, acting reasonably, would have brought this matter to his attention in the numerous telephone discussions he had with Ms Tran and others.
In my view this submission is misplaced.
I am comfortably satisfied that the right to seek a review of the Compliance Notices was made known to the respondents. The right to make an application to a Court for a review pursuant to s 717 was explicitly stated in each of the Compliance Notices that was issued to Ansa Finance[56]. Indeed, it is a prescribed requirement of a compliance notice for the recipient’s attention to be drawn to that right. Furthermore, the right to seek a review was also referred to in each of the covering letters[57] which accompanied the various Compliance Notices and in one of the non-compliance letters[58] that was sent to the company.
[56] CB1, pp 108, 205, 310, 459, 502, 592, 647, 672
[57] CB1, pp 117, 217, 320, 468, 501, 591, 646, 671
[58] CB1, pp 260-261
It is incumbent on the recipient of an important statutory notice to read it. The seriousness of the notices is self-evident and it was always open to the respondents to have looked to the underlying legislation or to have sought legal advice as to the avenues available to them.
The respondents’ complaint that the right of review was not brought to their attention lacks merit and does not give rise to what a reasonable person would regard as a reasonable excuse for non-compliance.
Performance of work requirement
Mr Fuoco also submitted that Ansa Finance had a reasonable excuse for not complying with the Mantzioukas and Jern Compliance Notices because those employees had not met their “performance of work” obligations under the FW Act. The basis of this submission was unclear, but I infer that it related to Mr Fuoco’s belief that these employees were not entitled to any outstanding payments and entitlements because they had either not been employed or worked as contended for by the Ombudsman.
This submission appears to attack the underlying contravention rather than the compliance notice itself. As I have already discussed, disagreement with the notice does not constitute a reasonable excuse. If Ansa Finance was of the view that it had not committed one or more of the contraventions set out in the Compliance Notices, it could have made an application to seek review of the notice. It has not done so.
Conclusion on reasonable excuse
For the reasons set out above, the first respondent has not demonstrated a reasonable excuse for its failure to comply with each of the Chawla, Mantzioukas, White and Jern Compliance Notices.
It seems to me on the evidence that the company and Mr Fuoco made choices about how the company’s resources, finances and his time were best allocated. I am not unsympathetic to the conundrum faced by small businesses in the midst of economic uncertainty, where no doubt difficult choices have to be made. However, implicit in the decision to get the company back on its feet before attending to outstanding statutory obligations is a value judgement about where employee entitlements sit in the hierarchy of corporate priorities.
There can be few priorities more important than discharging the statutory obligation of calculating an employee’s entitlements in accordance with binding fair work instruments and paying employees what they are entitled to receive at the time they are entitled to receive it. The decision not to comply was a decision of choice, not capacity.
Payslips - Contravention of section 536(1)
Section 536(1) of the FW Act requires an employer to give an employee a payslip within one working day of paying the employee for the performance of work.
The evidence satisfies me that Mr Mantzioukas was employed by Ansa Finance and performed work for the first respondent during the period 7 December 2020 until at least early February 2021. Although there is some dispute about his end date, it is not contested that he was employed for at least that period.
Ansa Finance did not provide Mr Mantzioukas with payslips until May 2021[59]. Although the respondents deny that they contravened s 536(1), they admit having failed to provide Mr Mantzioukas payslips within one day of paying him an amount in relation to the performance of work.
[59] Cox affidavit at [35], Annexure CMC-26
The elements of that contravention are made out.
Accessorial Liability
The Ombudsman seeks a declaration that Mr Fuoco was involved in each of Ansa Finance’s contraventions pursuant to section 550(1) of the FW Act.
Section 550 has the effect of deeming a person involved in a contravention (often referred to as an accessory) to be a contravenor. That is, where a person has been “involved in” a contravention in the requisite sense, that person is taken to have contravened the civil remedy provision him or herself. Section 550 is not a civil remedy provision itself and it does not establish a separate contravention. Rather, it deems an accessory to a contravention to be a contravenor and operates to enable that person’s involvement in the contravention to be “treated in the same way as actual contravention”[60]
[60] see Heading to s 550; see also Devonshire v Magellan Powertronics Pty Ltd [2013] FMCA 207 at [81], [84]
Relevantly a person will be “involved in a contravention of the civil remedy provision” where they have “aided, abetted, counselled or procured the contravention” or where they have “been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention…”[61].
[61] Fair Work Act 2009 (Cth) s 550(2)
Citing relevant authority, the Ombudsman submits that in order to aid, abet, counsel or procure a contravention, a person must intentionally participate in the contravention with the requisite intention[62]. In order to have the requisite intention, the person must have knowledge of “the essential matters” which go to make up the events, whether or not the person actually knows that those matters amount to a contravention[63]. It is not necessary that the accessory should appreciate that the conduct in question is unlawful[64].
[62] Yorke v Lucas (1985) 158 CLR 661, 667
[63] Ibid
[64] Rural Press Ltd v Australian Competition and Consumer Commission [2002] FCAFC 213 at [159]-[160]
The Ombudsman also submits that for a person to be “knowingly concerned” in a contravention, that person must have engaged in some act or conduct which “implicates or involves him or her” in the contravention so that there be a “practical connection between” the person and the contravention[65].
[65] Construction, Forestry, Mining and Energy Union v Clarke (2007) 164 IR 299 at [26]; Qantas Airways Ltd v Transport Workers’ Union of Australia (2011) 280 ALR 503 at [324]-[325].
To be “involved in” conduct, there has to be some conduct by a person which “implicates” him or her in the offending conduct such that they become “involved in” or “associated with” that conduct.
In this matter the conclusion that Mr Fuoco was involved in the company’s contraventions of s 716(5) is inescapable. There is ample evidence to satisfy the Court that at all material times Mr Fuoco was to all intents and purposes the public face, the corporate mind and the operational arms and legs of Ansa Finance. This is so notwithstanding he was not a director of the company. There is no evidence that the company had any business other than the finance broking business operated by Mr Fuoco and in all practical respects he was the touchpoint for all communications between the Ombudsman and the company.
Mr Fuoco was responsible for the management of the Ansa Finance business and he has never contended otherwise. He told Ms Tran that he took sole responsibility for the business[66] and the Ombudsman points to numerous instances where Mr Fuoco was the practical operative in the conduct of Ansa Finance in respect of the compliance notices[67].
[66] Tran affidavit at [46]
[67] Tran affidavit at [9], [11], [17], [19], [20], [22], [28], [31], [33], [39], [46]
When cross-examined, Mr Fuoco conceded that he was responsible for recruitment and management of employees. He said he was responsible for employee contracts and for discussions with employees regarding pay and entitlements. He said that he is currently the only employee of the company.
As set out elsewhere in these reasons, Mr Fuoco does not seriously challenge service or receipt of the Compliance Notices. He concedes that he received those notices although he contends that he may not have read them all. I am satisfied that Mr Fuoco had knowledge of each of the Compliance Notices and that he was aware of the steps required to be taken in relation to them. I am also satisfied that he had actual or ostensible authority on behalf of Ansa Finance to take the necessary steps on its behalf and for ensuring compliance by the company with its legal obligations under the FW Act.
If there were any doubt about Mr Fuoco’s involvement in the contraventions, that must be dispelled by the respondents’ submissions on the issue of “reasonable excuse”. The respondents point to Mr Fuoco’s health condition as the company’s reasonable excuse. Mr Fuoco gave evidence that the company’s failure to comply with the notices was a consequence of his inability to devote himself fully to the business. When describing the company’s non-compliance during a period of alleged financial difficulty, Mr Fuoco said “we” made a conscious decision to prioritise getting the company back on its feet. In all practical respects the company’s excuse and Mr Fuoco’s excuse are presented as one and the same.
For the above-mentioned reasons, I am satisfied to the requisite standard of proof that Mr Fuoco was involved in the first respondent’s contraventions of s 716(5) of the FW Act. For the same reasons I am also satisfied that Mr Fuoco was involved in the company’s contravention of s 536(1) of the FW Act.
Disposition
For the reasons set out above, I consider it appropriate to make the declarations set out at paragraphs 1 and 2 and the orders set out at paragraph 3 of Annexure A attached to the outline of submissions filed on behalf of the Ombudsman on 20 April 2022.
In respect of the first respondent’s contraventions and the second respondent’s involvement the Ombudsman seeks the imposition of pecuniary penalties pursuant to s 546(1) of the FW Act. In accordance with the usual practice of the Court in matters of this kind, I propose listing this proceeding for further directions on a date to be fixed, at which time the Court will determine a trial date and will issue directions for the filing of evidence and submissions on the question of penalties.
I certify that the preceding one hundred and ninety-seven (197) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Forbes. Associate:
Dated: 14 October 2022
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