Fair Work Ombudsman v Benny842 Pty Ltd

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FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Fair Work Ombudsman v Benny842 Pty Ltd [2022] FedCFamC2G 693  

File number(s): MLG 219 of 2022
Judgment of: JUDGE BLAKE
Date of judgment: 25 August 2022
Catchwords:

INDUSTRIAL LAW – failure to comply with compliance notice – application for default judgment against First Respondent company – where company remains registered – where Second Respondent sole director is an undischarged bankrupt and cannot serve as director – where there is no controlling mind of the company - whether proceedings against First Respondent company may be continued in such circumstances – Held: there is no impediment to the proceeding against the company continuing and the application for default judgment against the company may be heard – default judgment entered

INDUSTRIAL LAW – Second Respondent an undischarged bankrupt – Second Respondent alleged to be involved as an accessory to the First Respondent’s conduct – where Second Respondent has entered into Statement of Agreed Facts admitting the contravention – whether there is any impediment to the Second Respondent entering into the Agreed Statement of Facts – whether there is any impediment to proceedings continuing against the Second respondent – Held: no impediment to the Second respondent entering into the Statement of Agreed Facts or the proceedings against him continuing – declarations of contravention made against Second respondent

Legislation:

Bankruptcy Act 1966 (Cth) ss 58(3), 60(1), 82, 82(1), 82(3), 269, 304A.
Corporations Act 2001 (Cth) ss 206B, 471B, 500(2).
Fair Work Act 2009 (Cth) ss 545, 545(1), 547(2), 550, 550(2), 700, 716, 716(2), 716(3), 716(5), 717.

Federal Circuit and Family Court of Australia Act 2021 (Cth) s 141.

Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) rr 6.01, 4.03, 4.04(3)13.04(2), 13.05(2)(d).

Cases cited:

Arthur v Vaupotic Investments [2005] FCA 433

Cotis v MacPherson (2007) 169 IR 30

Fair Work Ombudsman v Garfield Berry Farm Ltd and Anor [2011] FMCA 885

Fair Work Ombudsman v Baal Gammon Copper Pty Ltd [2021] FCCA 348

Mathers v Commonwealth of Australia (2004) 134 FCR 135

Division: Division 2 General Federal Law
Number of paragraphs: 45
Date of hearing: 10 August 2022
Place: Melbourne
Advocate for the Applicant: Mr Adams
Solicitor for the Applicant: HWL Ebsworth Lawyers
Advocate for the First Respondent: No Appearance
Solicitor for the First Respondent: None
Advocate for the Second Respondent: In Person
Solicitor for the Second Respondent: None

ORDERS

MLG 219 of 2022
BETWEEN:

FAIR WORK OMBUDSMAN

Applicant
AND:

BENNY842 PTY LTD

First Respondent

SHANE DHARMATILAKE

Second Respondent

ORDER MADE BY:

JUDGE BLAKE

DATE OF ORDER:

25 AUGUST 2022

THE COURT ORDERS THAT:

1.Default judgment be entered for the Applicant against the First Respondent pursuant to Rule 13.05(2)(d) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (‘Rules’) by reason of the First Respondent's default within the meaning of Rule 13.04(2) of the Rules by failing to:

(a)file a Notice of Address for Service as required by Rule 6.01…

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Details
Case
[2022] FedCFamC2G 693
Decision Date

CaseChat Overview and Summary

The case of Fair Work Ombudsman v Benny842 Pty Ltd involved proceedings brought by the Fair Work Ombudsman against Benny842 Pty Ltd and its director. The dispute centred on allegations that the company had contravened the Fair Work Act 2009 by failing to comply with a Compliance Notice issued by a Fair Work Inspector. The case was heard in the Federal Circuit and Family Court of Australia. The primary legal issues addressed by the Court were whether default judgment could be entered against the first respondent for failing to comply with procedural rules and whether declarations could be made against both respondents regarding their involvement in the contravention of the Act.

The Court found that the first respondent had indeed failed to comply with several procedural requirements, including the failure to file a Notice of Address for Service and a Defence within the specified timeframes. Based on the evidence provided, the Court concluded that the first respondent had not defended the proceedings with due diligence, thereby justifying the entry of default judgment. Regarding the second respondent, the Court considered the implications of his status as an undischarged bankrupt. Despite his bankruptcy, the Court determined that there was no impediment to proceeding with the application against him, particularly since he had entered into a Statement of Agreed Facts. The Court ruled that the second respondent's bankruptcy did not prevent him from being subject to the terms of the agreed facts or the subsequent declarations sought by the Ombudsman.

Consequently, the Court entered default judgment against the first respondent and issued declarations against both respondents. The first respondent was declared to have contravened the Fair Work Act by failing to comply with the Compliance Notice. The second respondent was declared to have been involved in the contravention by virtue of his role as the director of the company. The Court also made procedural orders to program the matter for a hearing on penalty against both respondents.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

For the reasons that follow, I have determined that:(a)Default judgment be entered against the First Respondent with a Declaration that the First Respondent contravened section 716(5) of the Act;(b)A Declaration issue against the Second Respondent (on the basis of a Statement of Agreed Facts) that he was involved in the contravention by the First Respondent of section 716(5) of the Act. BACKGROUND On 24 January 2022, the Ombudsman commenced proceedings in this Court by filing an Application and a Statement of Claim. On 25 February 2022, the Ombudsman filed affidavits in the proceeding from David Holland. Mr Holland deposed that he had served a copy of the Application and the Statement of Claim as well as a covering letter from solicitors for the Ombudsman on the Respondents by hand on 15 February 2022. On 28 February 2022, the matter came before me. I made Orders that the Respondents file a Notice of Address for Service and also that a Response and Defence be filed by 31 May 2022. The Second Respondent filed a Notice of Address for Service following that hearing. On 19 July 2022, a Statement of Agreed Facts was filed. This document was signed by the Ombudsman and the Second Respondent only. The First Respondent had not signed the document. On 20 July 2022, the Ombudsman filed an Application in a Proceeding. In that Application, the Ombudsman sought, among other things, the following:(a)that default judgement be entered against the First Respondent and that the Court declare that the First Respondent contravened section 716(5) of the Act by failing to comply with a Compliance Notice;(b)that the First Respondent take the steps that were required by the Compliance Notice within 28 days of any Order by the Court, including paying to Mr Samson Ballard any outstanding amounts it may be required to pay him, as well as interest on those amounts;(c)that the proceeding be adjourned to a further hearing in respect of the Ombudsman’s claim for penalties to be imposed on the First Respondent and the Second Respondent;(d)procedural Orders programming the matter for a hearing on penalty.The Application was supported by an affidavit of Barney Adams, Solicitor for the Ombudsman, dated 20 July 2022. On 22 July 2022, an affidavit was filed by Amani Fatileh, attesting to service of the Application in a Proceeding on the Respondents. On 25 July 2022, the matter returned before me. The Ombudsman appeared as did the Second Respondent. At the hearing, I was informed that the First Respondent remained registered. I was also informed that the Second Respondent was an un-discharged bankrupt. I queried among other things, whether the proceeding could continue in circumstances where the Second Respondent was an un-discharged bankrupt, and where he had purported to sign a Statement of Agreed Facts which would ultimately subject him to a pecuniary penalty. As a result of the query, the matter was adjourned so that the Ombudsman could consider matters further. On 4 August 2022, the Ombudsman filed an Outline of Submissions that sought to address the matters I had raised on 25 July 2022. The Ombudsman also filed a Minute of Proposed Orders sought. That document makes clear that, among other things, in addition to the relief set out in the Application in a Proceeding, the Ombudsman also seeks a Declaration against the Second Respondent based upon admissions contained within the Statement of Agreed Facts.ISSUES

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

In these circumstances, I find that there is not any impediment to the Court proceeding to deal with the present Applications in respect of the First Respondent or the Second Respondent. There is also nothing which restricts the Second Respondent from entering into the Statement of Agreed Facts.WHETHER DEFAULT JUDGMENT OUGHT TO BE ENTERED AGAINST THE FIRST RESPONDENT Default judgment is sought to be entered against the First Respondent under rule 13.05(2)(d) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules (‘Rules’). The Ombudsman alleges the following defaults by the First Respondent:(a)failure to file a Notice of Address for Service as required by Rule 6.01 of the Rules;(b)failure to file a Response as required by Rule 4.03 of the Rules;(c)failure to file a Defence as required by Rule 4.04 (3) of the Rules;(d)failure to comply with Order 2 and 3 of my Orders of 28 February 2022; and(e)otherwise failing to defend the proceedings with due diligence. I am satisfied on the basis of the material before me that the failures identified above have occurred. The First Respondent has been properly served. It has not satisfied the Ombudsman’s claim. It has failed to defend the proceedings with due diligence. The claim against the First Respondent is set out in the Statement of Claim. The claims relate to a failure to comply with a Compliance Notice issued under section 716 of the Act. In the Statement of Claim, it is alleged, among other things, that:(a)the Ombudsman is a statutory appointee capable of commencing these proceedings, and that Inspector Biedka was at all relevant times a Fair Work Inspector appointed under section 700 of the Act; (b)the First Respondent was a company incorporated under the Corporations Act 2001 (Cth), a national system employer under the Act, the trustee for the Benny842 Family Trust and operator of a burger restaurant trading as ‘Burger Boss’ in Cranbourne, Victoria;(c)the Second Respondent was the director and company secretary of the First Respondent, responsible for its overall management and control, and responsible for ensuring compliance with its legal obligations under the Act;(d)Inspector Biedka commenced an investigation into the First Respondent’s compliance with Commonwealth workplace laws in or around October 2020 in respect of the employment of Mr Samson Ballard (‘Mr Ballard’);(e)Inspector Biedka formed a reasonable belief that at all relevant times between 7 June 2022 and 16 October 2020:(i)Mr Ballard was an employee of the First Respondent;(ii)that the Restaurant Industry Award 2020 (‘Award’) covered and applied to Mr Ballard;(iii)that Mr Ballard was employed as a full-time Food and Beverage Attendant Grade 2, under Schedule B to the Award;(iv)that the remuneration paid to Mr Ballard was insufficient to satisfy a range of entitlements under the Award, including minimum wages, overtime rates of pay and penalty rates;(v)that on termination of Mr Ballard’s employment, he was not paid for accrued but untaken annual leave;(vi)as a result of the above, the First Respondent contravened clauses 18.1, 23.4 and 24.2 of the Award as well as the National Employment Standards.(f)Consequent upon the above, Inspector Biedka issued a Compliance Notice to the First Respondent under section 716(2) of the Act. The Compliance Notice required the First Respondent to take a range of actions to remedy the direct effects of its contraventions of the Award;(g)The Compliance Notice satisfied the requirements of section 716(3) of the Act;(h)The First Respondent failed to comply with the Compliance Notice thereby contravening section 716(5) of the Act.

Ratio Decidendi

Legal Principle Established

I am satisfied on the basis of the affidavit of Ms Fatileh that the Application in a Proceeding and the supporting affidavit of Mr Adams has been served on each of the Respondents. Clearly the Second Respondent is aware of the proceeding and what is being sought against him, having attended Court on the last two occasions.IS THE COURT ABLE TO MAKE THE DECLARATIONS SOUGHT? The sole appointed director of the First Respondent is the Second Respondent. The shareholders of the First Respondent are the Second Respondent and Ms Mendis, who the Court understands to be the partner of the Second Respondent. The Second Respondent is a bankrupt. He has been a bankrupt since 8 December 2021. The trustee of his bankrupt estate is Mr Joshua Taylor. The Ombudsman communicated with Mr Taylor by email on 15 February 2022. In that communication, Mr Taylor indicated among other things that:(a)his understanding is that the First Respondent was no longer trading;(b)his understanding that lack of assets or funds is the reason why a liquidator has not been appointed to the First Respondent;(c)he is not aware of any future director being appointed to the First Respondent;(d)that he did not have a formal interest in the proceedings, however requested to be updated in respect of any final Orders made. The Second Respondent’s bankruptcy means that he is not able to continue to be a director of the First Respondent: see section 206B of the Corporations Act 2001 (Cth) which provides as follows: 206B Automatic disqualification—convictions, bankruptcy and foreign court orders etc.(3)A person is disqualified from managing corporations if the person is an undischarged bankrupt under the law of Australia, its external territories or another country. No other director has been appointed to the First Respondent. The evidence before the Court is that the First Respondent remains registered. The question that arises from these facts is whether the present proceedings may be continued against each of the Respondents. Sections 471B and 500(2) of the Corporations Act 2001 (Cth) relevantly provide as follows: 471B Stay of proceedings and suspension of enforcement process While a company is being wound up in insolvency or by the Court, or a provisional liquidator of a company is acting, a person cannot begin or proceed with:(a)a proceeding in a court against the company or in relation to property of the company; or (b) enforcement process in relation to such property;except with the leave of the Court and in accordance with such terms (if any) as the Court imposes. 500 Execution and civil proceedings(2)After the passing of the resolution for voluntary winding up, no action or other civil proceeding is to be proceeded with or commenced against the company except by leave of the Court and subject to such terms as the Court imposes. These sections do not have application in the proceeding before me. The First Respondent remains in operation. It is not subject to winding up. It is then necessary to consider the Bankruptcy Act 1966 (Cth). The following sections of the Bankruptcy Act 1966 (Cth) warrant consideration.