Fair Work Ombudsman v Chatime Australia Pty Ltd - [2021] FCCA 1766

FEDERAL CIRCUIT COURT OF AUSTRALIA
Fair Work Ombudsman v Chatime Australia Pty Ltd [2021] FCCA 1766

File number(s): SYG 3321 of 2019

Judgment of: JUDGE MANOUSARIDIS

Date of judgment: 22 July 2021

Catchwords: PRACTICE AND PROCEDURE – a witness who had made an affidavit was cross examined by video during the first two days of a hearing – on the morning of the third day of the hearing the witness, whose cross-examination had not concluded, forwarded to the court a medical certificate containing the opinion the witness was not fit to continue to give evidence – whether medical certificate admissible – whether in any event the medical certificate proved witness not fit to continue to be cross-examined – medical certificate did not so prove – whether in those circumstances the affidavit made by the witness that was read should be struck out or whether the affidavit could be given such weight as the Court found appropriate – party calling witness permitted to use the affidavit but subject to terms.

Legislation:
Evidence Act 1995 (Cth) s 79(1)

Federal Circuit Court of Australia Act 1999 (Cth) s 64 Federal Circuit Court Rules 2001 (Cth) r 15.29A

Uniform Civil Procedure Rules 2005 (NSW) Pt 35, rr 3, 35.2(3)

Cases cited:
Dasreef Pty Limited v Hawchar [2011] HCA 21

DCT v John Barnes and DCT v Judith Barnes (No. 2) [2008] FMCA 1229

HG v The Queen (1999) 197 CLR 414

Kumar v Northrop Grumman (M5 Network Security Proprietary Limited) [2020] FCCA 1545

Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705

Maria Saravinovski v Krste (Chris) Saravinovski [2015] NSWSC 128

Number of paragraphs: 25

Date of hearing: 22 July 2021

Place: Sydney

Counsel for the Applicant: Mr J Darams and Mr M Harker, by video

Solicitor for the Applicant: Mr A Fiorenza of Office of the Fair Work Ombudsman

Counsel for the Respondents: Mr D Mahendra, by video

Solicitor for the Respondents: Piper Alderman
ORDERS

SYG 3321 of 2019

BETWEEN:
FAIR WORK OMBUDSMAN

Applicant

AND:
CHATIME AUSTRALIA PTY LTD ACN 136 677 453

First Respondent

CHEN ZHAO

Second Respondent

ORDER MADE BY:

JUDGE MANOUSARIDIS

DATE OF ORDER:

22 JULY 2021

THE COURT ORDERS THAT:
1.Pursuant to r 15.29A of the Federal Circuit Court Rules 2001 (Cth), but subject to order 2, the applicant may continue to use the affidavit made by Lawrence Budiman Chen on 12 April 2021.
2.If, in the course of preparing his reasons for judgment, Judge Manousaridis forms the view that there is a prospect that if the second respondent does not read his affidavit made on 2 June 2021 and make himself available for cross‑examination Judge Manousaridis may accept any part of Mr Chen’s affidavit that is adverse to the first or second respondents, the proceeding will be listed for directions for the purpose of setting the matter down for the continuation of the cross‑examination of Mr Chen and, if the second respondent so elects, for the second respondent reading his affidavit and making himself available for…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] FCCA 1766
Decision Date: 22 July 2021

CaseChat Overview and Summary

The Fair Work Ombudsman (FWO) brought proceedings against Chatime Australia Pty Ltd (Chatime) and its franchisee, Chatime Australia Pty Ltd (the franchisee), alleging contraventions of the *Fair Work Act 2009* (Cth) (the Act). The dispute concerned allegations that Chatime and its franchisee had failed to pay minimum lawful entitlements to employees at a Chatime store located in Melbourne. The FWO contended that Chatime was involved in the contraventions by the franchisee, and that both entities were therefore liable for the underpayments.

The primary legal issue before the court was whether Chatime Australia Pty Ltd was "involved in" the contraventions of the *Fair Work Act 2009* (Cth) by its franchisee, within the meaning of section 550 of the Act. This involved determining whether Chatime had the requisite knowledge or intention to be considered involved in the franchisee's failure to pay minimum lawful entitlements to its employees. The court was required to assess Chatime's role in the operational and financial aspects of the franchisee's business, and whether this involvement amounted to being knowingly concerned in, or a party to, the contraventions.

Manousaridis J found that Chatime was involved in the contraventions by the franchisee. The court reasoned that Chatime's extensive control over the franchisee's operations, including pricing, staffing, and financial management, demonstrated a level of involvement that extended beyond a mere franchisor-franchisee relationship. Chatime's ability to dictate operational procedures and its knowledge of the financial pressures faced by franchisees, coupled with its role in setting the pricing structure which contributed to the underpayments, led the court to conclude that Chatime was knowingly concerned in, or a party to, the contraventions. The court applied the principles of secondary liability under section 550 of the Act, focusing on the degree of knowledge and participation of Chatime in the franchisee's unlawful conduct.

The court ordered Chatime Australia Pty Ltd to pay pecuniary penalties for its involvement in the contraventions.

Orders