Fair Work Ombudsman v Civic National Pty Ltd
[2016] FCCA 2459
•22 September 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v CIVIC NATIONAL PTY LTD & ANOR | [2016] FCCA 2459 |
| Catchwords: INDUSTRIAL LAW – Breach of record keeping obligations. |
| Legislation: Fair Work Act 2009 (Cth), ss.14, 539, 545, 546, 701 Fair Work Regulations 2009 (Cth) Federal Circuit Court of Australia Act 1999 (Cth), s.16 Federal Circuit Court Rules 2001 (Cth) |
| Cases cited: Arthur v Vaupotic Investments Pty Ltd [2005] FCA 433 Australian Competition and Consumer Commission v Dataline.net au Pty Ltd (2006) 236 ALR 665 Australian Competition and Consumer Commission v Yellow Page Marketing BV (No 2) [2011] FCA 352 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | CIVIC NATIONAL PTY LTD |
| Second Respondent: | SAID SABBAGH |
| File Number: | SYG 768 of 2016 |
| Judgment of: | Judge Driver |
| Hearing date: | 22 September 2016 |
| Delivered at: | Sydney |
| Delivered on: | 22 September 2016 |
REPRESENTATION
| Counsel for the Applicant: | Ms V Bulut |
| Solicitors for the Applicant: | Office of the Fair Work Ombudsman |
| No appearance by or on behalf of the Respondents: |
INTERLOCUTORY ORDERS
The second respondent is granted leave not to appear at today’s interlocutory hearing
Pursuant to rule 13.03B(2)(c) of the Federal Circuit Court Rules 2001 (Cth), the Court declares that the first respondent contravened the following civil remedy provisions:
(a)regulation 3.44(1) of the Fair Work Regulations 2009 (Cth) by failing to ensure that the employee records of payment in respect of each of Mr Mohmad Karim, Mr Sam Hafiz, Mr Fadi Minkara, Mr Hikmat Melhem and Mr Hussam El Kassas and also the employee records of payment in respect of Mr Farouk Lagha for the period from 1 July 2014 to 23 November 2014 were not knowingly false or misleading; and
(b)regulation 3.44(6) of the Fair Work Regulations 2009 (Cth) by making use of the employee records of payment in respect of each of Mr Mohamad Karim, Mr Sam Hafiz, Mr Fari Minkara, Mr Hikmat Melhem and Mr Hussam El Kassas and also the employee records of payment in respect of Mr Farouk Lagha for the period from 1 July 2014 to 23 November 2014 despite knowing them to be false or misleading.
The applicant and second respondent are to file a Statement of Agreed Facts by 9 October 2016.
The applicant is to file and serve any affidavit material on which it wishes to rely on the issue of penalty on or before 19 October 2016.
The respondents are to file and serve any affidavit material on which they wish to rely on the issue of penalty on or before 29 October 2016.
The applicant is to file and serve any evidence in reply and any submissions on the issue of penalty on or before 8 November 2016.
The respondents are to file and serve any submissions on the issue of penalty on or before 18 November 2016.
The applicant is to file and serve any submission in reply by 23 November 2016.
The matter be listed for a penalty hearing for 1 day on 30 November 2016 commencing at 10.15am.
The parties have liberty to apply for further directions or orders on three days notice.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG768 of 2016
| FAIR WORK OMBUDSMAN |
Applicant
And
| CIVIC NATIONAL PTY LTD |
First Respondent
| SAID SABBAGH |
Second Respondent
REASONS FOR JUDGMENT
Introduction and background
On 22 September 2016 I gave judgment for the applicant (FWO) on its Application in a Case filed on 8 August 2016 against the first respondent (Civic National) (default judgment application). The following are my reasons for the orders I made on that application.
These proceedings, and the relief sought by the FWO, concern alleged contraventions of the Fair Work Regulations 2009 (Cth) (Regulations) in relation to Civic National’s record-keeping obligations.
In respect of the default judgment application, the FWO relies on the following documents:
a)statement of claim filed on 31 March 2016;
b)affidavit of Fiona Mary-Anne Mullins sworn on 3 May 2016 2016 (Mullins Affidavit);
c)affidavit of Vicki Bella Stagoll affirmed on 4 August 2016 (Stagoll Affidavit); and
d)affidavit of Elishka Regina Skelding affirmed on 16 September 2016 (Skelding Affidavit).
The FWO makes this default judgment application based on Civic National’s failure to comply with the Federal Circuit Court Rules 2001 (Cth) (Federal Circuit Court Rules) set out below.
The FWO seeks declarations of contravention and orders on default, pursuant to rule 13.03B of the Federal Circuit Court Rules.
The FWO alleges that Civic National has contravened various provisions of the Regulations as set out at [20], [26] and [30] of the statement of claim.
The FWO also alleges that the second respondent (Mr Sabbagh) was involved in each of Civic National’s contraventions as set out at [32] and [33] of the statement of claim. Mr Sabbagh has agreed to proceed to a penalty hearing in relation to the contraventions. He was excused from attending on 22 September 2016 at his request.
Principles regarding default judgment
Rule 13.03B(2)(c) of the Federal Circuit Court Rules enables the Court to give judgment against a respondent in a proceeding which was commenced by an application supported by a statement of claim for the relief that:
a)the applicant appears entitled to on the statement of claim; and
b)the Court is satisfied it has the power to grant.
An order for default judgment under rule 13.03B(2)(c) can be made where there is a basis for the relief sought by the applicant on the face of the statement of claim. There is no requirement for proof by way of evidence of the applicant's claim[1].
[1] Arthur v Vaupotic Investments Pty Ltd [2005] FCA 433 at [3], cited in Luna Park v Bose [2006] FCA 94 at [20] and more recently in Tyco (Australia) Pty Ltd t/as ADT Security v Signature Security Group Pty Ltd (No 7) [2011] FCA 615 at [5] and Australian Competition and Consumer Commission v Yellow Page Marketing BV (No 2) [2011] FCA 352 (ACCC v Yellow Page (No. 2)) at [14]
Generally, an application under rule 13.03B(2)(c) is determined on the face of the facts pleaded in the statement of claim alone. However, where discretionary relief is claimed, the Court may receive evidence relevant to the exercise of its discretion[2].
[2] ACCC v Yellow Page (No. 2) at [61] to [63], citing Australian Competition and Consumer Commission v Dataline.net au Pty Ltd (2006) 236 ALR 665 (ACCC v Dateline) at [48] to [51]. These decisions were decided in respect of order 35A of the now repealed Federal Court Rules 1979 (Cth). Rule 13.03B(2)(c) of the Federal Circuit Court Rules is in identical terms to order 35A and is in similar terms to rule 5.23(2)(c) of the current Federal Court Rules 2011 (Cth)
Relevant provisions
Rule 13.03A(2) of the Federal Circuit Court Rules provides that a respondent will be in default for the purposes of rule 13.03B if a respondent:
a)has not satisfied the applicant's claim; and
b)fails to:
i)give an address for service before the time for the respondent to give an address for service has expired;
ii)file a response before the time for the respondent to file a response has expired;
iii)comply with an order of the Court in the proceeding;
iv)file and serve a document required under the Federal Circuit Court Rules;
v)produce a document as required by Part 14 of the Federal Circuit Court Rules;
vi)do any act required to be done by the Federal Circuit Court Rules; or
vii)defend the proceedings with due diligence.
Rule 13.03C(2) of the Federal Circuit Court Rules provides that if a party to a proceeding is absent from a hearing, the Court may make an order of the kind mentioned in rule 13.03B(2).
For the purposes of demonstrating that Civic National’s conduct provides a basis for the Court to order default judgment, the FWO relies on the following provisions of the Rules:
a)rule 4.03, which requires any response filed by a respondent to be filed and served within 14 days of the application to which it relates;
b)rule 9.04, which provides that, except with leave of the Court, a corporation must not carry on a proceeding unless they are represented by a lawyer;
c)rule 13.03A(2)(b)(iii), which provides that a respondent will be in default if they fail to comply with an order of the Court in the proceeding; and/or
d)rule 13.03A(2)(b)(vii), which provides that a respondent will be in default if they fail to defend the proceedings with due diligence.
History of the proceedings
On 31 March 2016, the FWO commenced proceedings against Civil National and Mr Sabbagh, by way of an application and a statement of claim for alleged contraventions of the Regulations concerning record-keeping obligations.
Mr Sabbagh filed a Notice of Address for Service on 3 May 2016.
The matter was listed for a first court date on 5 May 2016. Each of the respondents were represented by a lawyer, although the appearance for Civic National was mentioned by the FWO on that occasion. The Court made the following consent orders:
1. The first and second respondents file and serve a response or notices of address for service in accordance with the approved form.
2. The first and second respondents file and serve defences to the Statement of Claim by 25 May 2016.
3. The applicant file and serve any reply by 15 June 2016.
…
The Court varied the above orders, by consent of the FWO and Mr Sabbagh, on 27 May 2016. On that occasion, the Court ordered that:
1. The first and second respondents file and serve a response or notices of address for service in accordance with the approved form.
2. The first and second respondents file and serve defences to the Statement of Claim by 1 June 2016.
3. The applicant file and serve any reply by 22 June 2016.
…
Mr Sabbagh filed a Defence on 2 June 2016 and has agreed to proceed to a penalty hearing. In his defence Mr Sabbagh admits almost all the material allegations against both him and Civic National. He was formerly the sole director and shareholder of Civic National although exhibit A1[3] establishes that that changed in 2015.
[3] A company extract for Civic National
Civic National was represented by lawyers at the early stages of the proceedings[4], however, on 5 July 2016, the lawyers acting for Civic National indicated to the FWO that they were no longer able to obtain formal instructions from Civic National[5].
[4] Mullins Affidavit at [11]-[12]
[5] Stagoll Affidavit at [22]-[23]
On 8 August 2016, the FWO filed the default judgment application.
On 9 August 2016 and again on 2 September 2016, the FWO caused the default judgment application to be served on Civic National by way of express post[6].
[6] Skelding Affidavit at [6] and [8]
Default by Civic National
Civic National:
a)has not formally and on the record obtained legal representation or sought leave pursuant to rule 9.04 of the Federal Circuit Court Rules;
b)has not filed a notice of address for service or a defence as required by orders 1 and 3 made by the Court on 27 May 2016[7]; and
c)has not defended the proceedings with due diligence in accordance with rule 13.03A(2)(b)(vii).
[7] Stagoll Affidavit at [30]
On the basis of the matters set out above, the FWO submits, and I accept, that Civic National is in default as defined by rule 13.03A(2) in that it:
a)has failed to give an address for service before the time for Civic National to give an address has expired;
b)has failed to file a response before the time for Civic National to file a response has expired;
c)has not complied with an order of the Court in the proceeding; and
d)has not contacted either the FWO or the Court to propose how the matter will proceed, to seek additional time to take any steps, or to seek advice or legal representation and in doing so, has failed to defend the proceedings with due diligence.
Entitlement to relief
The factual background to the alleged contraventions of the Regulations is set out in the statement of claim, as follows:
a)Civic National is and was a national system employer within the meaning of s.14 of the Fair Work Act 2009 (Cth) (Fair Work Act)[8];
[8] statement of claim at [2(d)]
b)at all material times, Civic National provided shopping trolley collection services at stores at three shopping centres in or around Wagga Wagga in the State of New South Wales[9];
[9] statement of claim at [2(e)]
c)at all material times, Mr Sabbagh was the sole director and shareholder of Civic National[10];
d)at all material times, Mr Sabbagh was responsible for the operation and financial management of Civic National’s business, responsible for making decisions on its behalf, and responsible for the overall direction, management and supervision of Civic National’s operations in respect of maintaining employee records[11];
e)at all material times, Civic National was covered and bound by the Fair Work Act in respect of the employment of its employees[12];
f)at all material times, Civic National has obligations pursuant to the Fair Work Act and the Regulations to keep accurate employee records in relation to each of its employees[13];
g)in response to a notice to produce issued by the FWO, Civic National produced documents relating to five employees (the Employees) and a further employee by the name of Farouk Lagha (Mr Lagha)[14];
h)the records produced by Civic National in relation to the Employees outlined the payment purportedly paid to the Employees and the amounts withheld for tax[15];
i)the Australian Taxation Office (ATO) has no records of Civic National making any payments to the ATO, for the relevant period, in the relation to the Employees[16];
j)the records produced by Civic National Respondent in relation to the Employees were false or misleading, and when Civic National caused the records to be produced, Civic National knew the records were false or misleading[17];
k)notwithstanding that Civic National produced employee records with respect to Mr Lagha for the relevant period, Mr Lagha did not perform work for Civic National in that period as Mr Lagha was overseas for the entire period[18]; and
l)the records produced by Civic National Respondent in relation to Mr Lagha were false or misleading, and when Civic National caused the records to be produced, Civic National knew the records were false or misleading[19].
[10] statement of claim at [3]
[11] statement of claim at [4]
[12] statement of claim at [8]
[13] statement of claim at [13]
[14] statement of claim at [9]-[10]
[15] statement of claim at [16]
[16] statement of claim at [17]
[17] statement of claim at [18]-[19]
[18] statement of claim at [24]-[25]
[19] statement of claim at [30]
In summary, Civic National:
a)contravened regulation 3.44(1) of the Regulations by failing to ensure that the records it was required to keep in accordance with regulation 3.33(1)(b) and (3)(d) of the Regulations were not false or misleading[20]; and
b)contravened regulation 3.44(6) of the Regulations by making use of records knowing them to be false or misleading[21].
[20] statement of claim at [20] and [26]
[21] statement of claim at [30]
The facts summarised above give rise to the contraventions of the Regulations by Civic National as pleaded in the statement of claim.
Regulations 3.44(1) and 3.44(6) of the Regulations are civil remedy provisions for the purposes of s.539(3) of the Fair Work Act. Regulation 4.01A(2) of the Regulations enables an inspector to apply to the Court for orders in relation to contraventions of Regulations 3.44(1) and 3.44(6) of the Regulations. The FWO is an inspector for the purposes of the Fair Work Act (s.701 of the Fair Work Act) and has standing to bring this proceeding.
For the reasons set out above, the FWO submits, and I accept, that it has an “entitlement” to the relief sought in this default judgment application as it has made out a case for relief on the face of the statement of claim[22]. The FWO acknowledges that the relief sought is discretionary, in particular the making of declarations.
Court’s power to make the orders sought
[22] ACCC v Dateline at [53]
Court's powers
Pursuant to s.545(1) of the Fair Work Act, the Court may make any order it considers appropriate if it is satisfied that a person has contravened a civil remedy provision of the Fair Work Act. The orders that the Court may make include:
a)declarations, pursuant to s.16 of the Federal Circuit Court Act 1999 (Cth); and
b)pecuniary penalties, pursuant to s.546 of the Fair Work Act.
Declarations
The Court has a wide discretionary power to make declarations[23]. The Court may make declarations based on admissions to be made consequent on default[24]. This is particularly so in a case such as the present which involves issues of public interest, namely in enforcing compliance with a safety net of minimum terms and conditions of employment.
[23] Federal Circuit Court Act, s.16; Dataline at [58]; ACCC v Yellow Page (No 2) at [65]
[24] ACCC v Dateline at [54]-[59]; ACCC v Yellow Page (No 2) at [66]-[69]
The declarations sought by the FWO in the statement of claim have been framed to identify the contravening conduct accurately and concisely[25].
[25] ACCC v Dateline at [63]; ACCC v Yellow Page (No 2) at [68]
I accept that there will be utility in making the declarations sought by the FWO because they clearly identify the contravening conduct. There is a public interest to be served in making the declarations sought, in that they will help to educate employers about their obligations to employees and warn them of the consequences of failing to comply with legislative obligations regarding the keeping of employee records, and will assist in achieving general deterrence. This is particularly warranted in a matter involving vulnerable employees in an industry which relies on transient labour. Making the declarations sought would also mark the Court's disapproval of the contravening conduct[26].
[26] ACCC v Yellow Page (No 2) at [69]
Separate hearing as to penalty
The FWO submits, and I accept, that in the circumstances of this case it is appropriate for the Court to list the matter for a hearing in respect of penalty on a separate date to be fixed, for the following reasons:
a)in the event that the Court makes the orders, the FWO seeks the opportunity to place evidence specific to penalty before the Court; and
b)it is appropriate to allow the respondents an opportunity to file evidence and/or submissions about the appropriate penalty to be imposed in the proceeding. A separate hearing would allow for a timetable for this to occur.
I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of Judge Driver
Date: 23 September 2016
9
5
5