Fair Work Ombudsman v Clark Projects Pty Ltd
[2025] FedCFamC2G 24
•28 February 2025
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Clark Projects Pty Ltd [2025] FedCFamC2G 24
File number(s): SYG 1981 of 2024 Judgment of: JUDGE DOUST Date of judgment: 28 February 2025 Catchwords: FAIR WORK – compliance notice issued under s 716 of the Fair Work Act 2009 (Cth) (the Act) – whether contravention of s 716(5) of the Act – default judgment – whether orders for payment of compensation should be made – whether declaration of contravention should be made Legislation: Corporations Act 2001 (Cth) s 109X
Fair Work Act 2009 (Cth) ss 545, 547, 716, 717
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) rr 4.03, 4.04, 6.01, 6.08, 13.04(2), 13.05(2)
Federal Court Rules 2011 (Cth) rr 5.23(2), 16.07
Cases cited: Australian Building and Construction Commission v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157; (2018) 92 ALJR 219; [2018] HCA 3
Chappel v Hart (1998) 195 CLR 232; (1998) 72 ALJR 1344; [1998] HCA 55
Dafallah v Fair Work Commission (2014) 225 FCR 559; [2014] FCA 328
Fair Work Ombudsman v Carers Portland Inc [2023] FedCFamC2G 620
Fair Work Ombudsman v Cobra Security Services Pty Ltd [2024] FedCFamC2G 336
Fair Work Ombudsman v Pure Telecom Pty Ltd [2024] FedCFamC2G 664
Fair Work Ombudsman v Sails Waterfront Bar & Grill Pty Ltd (No.2) [2021] FCCA 1511
Fair Work Ombudsman v Taing [2024] FedCFamC2G 270
Kazal v Thunder Studios Inc (California) [2023] FCAFC 174
March v Strahmare (E & MH) Pty Ltd (1991) 171 CLR 506; (1991) 65 ALJR 334; [1991] HCA 12
Patrick Stevedores Holdings Pty Ltd v Construction, Forestry, Maritime, Mining and Energy Union (No 4) [2021] FCA 1481
Thomson v STX Pan Ocean Co Ltd [2012] FCAFC 15
Division: Fair Work Number of paragraphs: 74 Date of hearing: 22 November 2024 Place: Sydney Counsel for the Applicant: Mr C McDermott Solicitor for the Applicant: Ms R O’Brien, Office of the Fair Work Ombudsman The Respondent: No appearance ORDERS
SYG 1981 of 2024 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: CLARK PROJECTS PTY LTD ACN 617 266 501
Respondent
ORDER MADE BY:
JUDGE DOUST
DATE OF ORDER:
28 FEBRUARY 2025
THE COURT ORDERS THAT:
1.Upon the default by the respondent, the Court declares that the respondent contravened s 716(5) of the Fair Work Act2009 (Cth) (FW Act) by failing to comply with the compliance notice issued to it by Fair Work Inspector Heidi-Marie Brown on 22 June 2023.
2.Pursuant to s 545(1) of the FW Act, the respondent shall take the following steps to remedy the direct effects of its non-compliance with the compliance notice:
(a)within 28 days of this order pay $5,183.35, being the Underpayment Amount of $4,583.18, along with interest, to Mr Nathan Lee;
(b)within 42 days of this order calculate and pay any additional superannuation contributions payable in respect of the Underpayment Amount into Mr Nathan Lee’s nominated superannuation fund; and
(c)within 56 days of this order provide evidence of the payments in 2(a) and 2(b) above to the applicant.
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 DOUST:
INTRODUCTION
The originating process
The applicant commenced the proceeding on 19 August 2024 by an originating application (the application) accompanied by a statement of claim (the statement of claim) as contemplated in r 4.04(2)(b) of the Federal Circuit and Family Court of Australia (Division 2) General Federal Law Rules 2021 (Cth) (GFL Rules).
The statement of claim recited that, in around December 2022, an inspector appointed by the applicant commenced an investigation in respect of the employment of Mr Nathan Lee by the respondent. As a result of that investigation the inspector formed the belief that:
(1)the respondent had employed Mr Lee to work on a casual basis as a tradesperson labourer in the respondent’s business in the period between 3 August 2022 and 21 September 2022;
(2)the respondent had failed to pay Mr Lee amounts payable to him under the Building and Construction General On-Site Award 2020 (the Award) (a “modern award” within the meaning of that term in the Fair Work Act2009 (Cth) (FW Act)) by:
(a)its failure to pay him at the appropriate casual minimum rate in respect of “ordinary hours” for the period between 3 August 2022 and 4 September 2022; and
(b)its failure to pay him at all for hours worked between 5 September 2022 and 21 September 2022;
(3)the respondent had contravened various clauses of the Award by failing to pay Mr Lee amounts required under the specified clauses of the Award (the alleged contraventions).
The statement of claim alleged that the inspector had, on 22 June 2023, given the respondent a compliance notice pursuant to s 716(2) of the FW Act in respect of those alleged contraventions (the compliance notice). The compliance notice required the respondent, by 31 July 2023, to:
(1)identify the hours worked by Mr Lee between 3 August 2022 and 21 September 2022;
(2)identify the amount the respondent in fact paid to Mr Lee in respect of that work;
(3)calculate the amount the respondent should have paid to Mr Lee in respect of that work;
(4)pay to Mr Lee the difference between those amounts; and
(5)calculate and pay any superannuation contributions payable as a consequence.
The compliance notice further required the respondent to produce reasonable evidence to the applicant by 7 August 2023 that the respondent had complied with the compliance notice.
The statement of claim pleaded that the respondent did not take the steps required by the compliance notice in the time specified in the compliance notice, or at all, and alleged that therefore the respondent had contravened s 716(5) of the FW Act.
Section 716 of the FW Act provided, at the time of the issue of the compliance notice, as follows:
716 Compliance notices
Application of this section
(1) This section applies if an inspector reasonably believes that a person has contravened one or more of the following:
(a) a provision of the National Employment Standards;
(b) a term of a modern award;
(c) a term of an enterprise agreement;
(d) a term of a workplace determination;
(e) a term of a national minimum wage order;
(f) a term of an equal remuneration order;
(fa) subsection 536AA(1) or (2) (which deal with employer obligations in relation to advertising rates of pay);
(g) a provision of Part 6‑4C (which deals with the Coronavirus economic response);
(h) a jobkeeper enabling direction (within the meaning of Part 6‑4C);
(i) a provision of an agreement authorised by Part 6‑4C.
Giving a notice
(2) The inspector may, except as provided by subsection (4), give the person a notice requiring the person 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 referred to in subsection (1);
(b) produce reasonable evidence of the person’s compliance with the notice.
(3) The notice must also:
(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:
(i) the person has not committed a contravention set out in the notice;
(ii) the notice does not comply with subsection (2) or this subsection; and
(f) set out any other matters prescribed by the regulations.
Relationship with enforceable undertakings
(4) An inspector must not give a person a notice in relation to a contravention if:
(a) the person has given an undertaking under section 715 in relation to the contravention; and
(b) the undertaking has not been withdrawn.
Relationship with civil remedy provisions
(4A) An inspector must not apply for an order under Division 2 of Part 4‑1 in relation to a contravention of a civil remedy provision by a person if:
(a) the inspector has given the person a notice in relation to the contravention; and
(b) either of the following subparagraphs applies:
(i) the notice has not been withdrawn, and the person has complied with the notice;
(ii) the person has made an application under section 717 in relation to the notice that has not been completely dealt with.
Note: A person other than an inspector who is otherwise entitled to apply for an order in relation to the contravention may do so.
(4B) A person who complies with a notice in relation to a contravention of a civil remedy provision is not taken:
(a) to have admitted to contravening the provision; or
(b) to have been found to have contravened the provision.
Person must not fail to comply with notice
(5) A person must not fail to comply with a notice given under this section.
Note: This subsection is a civil remedy provision (see Part 4‑1).
(6) Subsection (5) does not apply if the person has a reasonable excuse.
The statement of claim further pleaded that if the respondent had complied with the compliance notice it would have undertaken calculations in accordance with annexure A to the statement of claim showing that there was an amount of $4,583.18 outstanding to Mr Lee (the Underpayment Amount) and would have paid that amount to him. The statement of claim pleaded that by reason of the respondent’s contravention of s 716(5) of the FW Act, the respondent failed to pay the Underpayment Amount to Mr Lee and Mr Lee suffered loss of $4,583.18.
The progress of the proceeding after commencement (and the respondent’s lack of engagement with it) is described in further detail below.
The application in a proceeding
On 17 October 2024, the applicant filed an application in a proceeding seeking, inter alia, the following orders:
1. An order that default judgment is entered for the Applicant against Clark Projects Pty Ltd (Clark Projects) pursuant to rule 13.05(2)(c) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (Court Rules) by reason of Clark Projects’ failure to:
(a) file and serve a Notice of Address for Service in accordance with rule 13.04(2)(b)(i) of the Court Rules;
(b) file and serve a Defence within 28 days of service in accordance with rule 4.04(3)(a) of the Court Rules;
(c) comply with orders 1 and 2 of the orders of Judge Papadopoulos made on 13 September 2024; and
(d) defend the proceedings with due diligence in accordance with rule 13.04(2)(b)(vii).
2. Upon the admissions which Clark Projects are taken to have made by reason of its default, the Court makes the following declarations and orders:
(a) a declaration that Clark Projects contravened section 716(5) of the Fair Work Act 2009 (Cth) (FW Act) by failing to comply with a compliance notice issued to it on 22 June 2023 (Compliance Notice); and
(b) an order pursuant to section 545(1) of the FW Act that Clark Projects take the following steps to remedy the direct effects of its non-compliance with the Compliance Notice, within 28 days of this order:
(i) pay $4,583.18 (Underpayment Amount) to Mr Nathan Lee;
(ii) calculate and pay any additional superannuation contributions on the Underpayment Amount into Mr Lee’s nominated superannuation fund; and
(iii) provide evidence of these payments to the Applicant;
(c) an order pursuant to section 547(2) of the FW Act that Clark Projects pay interest on the Underpayment Amount to Mr Lee at the applicable pre-judgment interest rate, within 28 days of this order;
The application in a proceeding also sought orders for the programming of a hearing to determine the penalty to be imposed upon the respondent in respect of the alleged contravention of s 716(5) of the FW Act.
Questions that arise for determination
The determination of the application in a proceeding requires the Court to determine the following matters:
(1)whether the respondent is in default within the meaning of the GFL Rules;
(2)if so, whether the Court is empowered to make some or all of the following orders:
(a)an order declaring that the respondent contravened s 716(5) of the FW Act;
(b)orders requiring the respondent to pay moneys to the worker to remedy the contravention, and if so, in what amount;
(c)orders for the payment of interest on the above sums; and
(3)whether the Court, in the proper exercise of its discretion, should make any or all of the above orders.
The further question arising on the applicant’s pleaded case, that being whether the Court should impose a pecuniary penalty, and if so, in what quantum, was left to be determined at a further hearing.
Hearing of the application in a proceeding
The application in a proceeding was heard on 22 November 2024. The respondent did not attend the hearing. The applicant read the following affidavits in support of the application:
(1)affidavit of Rebekah Maree O’Brien, affirmed 3 September 2024;
(2)affidavit of Rebekah Maree O’Brien, affirmed 17 October 2024;
(3)affidavit of Rebekah Maree O’Brien, affirmed 25 October 2024;
(4)affidavit of Leigh Pace, affirmed 13 November 2024.
The applicant also tendered a letter dated 14 November 2024 from the office of the Fair Work Ombudsman to Mr Jackson Cartwright, Clark Projects Pty Ltd.
The history of the proceeding, relevant to the first question, namely, that of the respondent’s alleged default, is related below.
PROCEDURAL HISTORY
The day after the proceeding was commenced, Rebekah Maree O’Brien, a lawyer employed by the applicant, caused a letter (the 20 August 2024 letter) to be sent by express post to the registered office (and principal place of business) of the respondent. The 20 August 2024 letter enclosed the application and statement of claim in the matter.
Ms O’Brien also sent an email to the address “[email protected]” (the accounts email address), being an email address that had previously been used by the applicant to correspond with the respondent, attaching the 20 August 2024 letter and its enclosures.
Both the covering page of the application and the 20 August 2024 letter advised the respondent of the first court date, namely 13 September 2024.
Ms O’Brien affirmed, in her affidavit of 3 September 2024, that a search of the Australia Post tracking website showed that the 20 August letter sent by express post had been delivered on 22 August 2024.
The Court is satisfied, given that evidence, that the respondent was served with the application and statement of claim in accordance with the requirements of r 6.08(2)(a) of the GFL Rules and s 109X of the Corporations Act2001 (Cth).
The respondent was obliged by r 4.03 of the GFL Rules to file a response in accordance with the approved form, and to serve it upon the applicant, within 28 days after service of the application upon it. Given that the respondent was served on 22 August 2024, the date by which the respondent was required by the GFL Rules to have filed and served such response was 19 September 2024. Pursuant to r 4.04(3)(a) of the GFL Rules, the respondent was also required to file a defence along with such response. As at the date of publication of this judgment, the respondent has filed neither of those documents.
The respondent was also obliged by r 6.01(1) of the GFL Rules to give an address for service. As at the date of publication of this judgment it has not done so.
The matter was listed for its first court date on 13 September 2024. On that date there was no appearance on behalf of the respondent. Judge Papadopoulos made the following orders:
(1)The Respondent file and serve a Notice of Address for Service on or before 20 September 2024.
(2)The Respondent shall file and serve a Defence on or before 4:00pm on 11 October 2024.
(3)The Applicant shall file and serve any reply on or before 4:00pm on 25 October 2024.
(4)The matter be listed for directions on 1 November 2024 at 9:30am.
(5)Each party have liberty to apply on the giving of three days’ notice.
On 17 October 2024 Ms O’Brien affirmed in her affidavit of that date that:
(1)she had sent an email to the accounts email address on 16 September 2024;
(2)the email had attached a letter from Ms O’Brien dated 16 September 2024 (the 16 September 2024 letter) and enclosed a copy of the orders made by the Court on 13 September 2024. The 16 September 2024 letter referred the respondent to rr 4.03(3) and 4.04(4) of the GFL Rules and the requirement that the respondent file and serve a response and defence. It advised the respondent that the matter was listed for a further directions hearing on 1 November 2024 at 9:30 am, and warned the respondent that if it failed to file a notice of address for service, defence, or response, and/or failed to attend the upcoming hearing, the applicant may seek orders for default judgement against the company pursuant to r 13.04 of the GFL Rules;
(3)she had caused the 16 September 2024 letter, along with the orders enclosed with that letter, to be sent by express post to the respondent’s registered address;
(4)a search of the Australia Post tracking website showed that the 16 September 2024 letter had been delivered to the respondent on 19 September 2024; and
(5)as at the date of affirming the affidavit, Ms O’Brien had not received any correspondence from the respondent or any representative on its behalf.
No representative of the respondent attended the directions hearing in this Court on 1 November 2024. As at that date the respondent had not filed any document with the Court nor had it communicated in any other way with the Court. Ms O’Brien advised the Court on that date that there had been a communication from a representative of the respondent to her office the day prior to the directions hearing in which the representative gave an indication of the respondent’s inability to attend the directions hearing. However, there was no communication by the respondent to the Court to that effect, nor has there been any subsequent communication by the respondent with the Court.
On 1 November 2024, the Court listed the application in a proceeding for hearing on 22 November 2024 at 10.15 a.m. and made directions for the filing and service by the parties of outlines of submissions and any further affidavit evidence prior to that date.
Shortly after the directions hearing on 1 November 2024, the Court sent a sealed copy of the orders made that day by email to the accounts email address. On 14 November 2024 the Court wrote by email to the parties (including to the respondent at the accounts email address) advising of the listing and the courtroom in which the hearing would be held. The Court wrote by email again that day (again to the respondent at the accounts email address) giving the parties leave to attend the hearing by audiovisual link.
The applicant also wrote to the respondent by email on 14 November:
(1)serving the applicant’s submissions and the affidavit filed on 13 November 2023 (sic);
(2)advising of the listing of the interlocutory hearing and the applicant’s intention to seek leave to attend that hearing remotely;
(3)reminding the respondent of the requirement to file and serve its evidence and submissions by 20 November 2024; and
(4)encouraging the respondent to seek legal advice.
The respondent did not appear at any stage during the hearing on 22 November 2024, either in person or by accessing the video link that had been emailed to the parties. The matter was called outside the courtroom shortly after the commencement of the hearing and there was no response to that call. At the date of this judgment the respondent has not engaged with the Court by filing any notice of address for service, filing any response or defence, or communicating by any other means concerning the matter. The respondent has not given any indication that it has any intention to defend the proceeding to any extent.
PROCEDURE ON DEFAULT
Rule 13.04(2) of the GFL Rules provides as follows:
(2) For the purposes of rule 13.05, a respondent is in default if the 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 has expired; or
(ii)file a response before the time for the respondent to file a response has expired; or
(iii) comply with an order of the Court in the proceeding; or
(iv) file and serve a document required under these Rules; or
(v) produce a document as required by Part 14; or
(vi) do any act required to be done by these Rules; or
(vii) defend the proceeding with due diligence.
Rule 13.04(2) establishes a definition of “default” which has two limbs; the first limb in r 13.04(2)(a), and the second limb in r 13.04(2)(b).
The first limb of the definition is that contained in r 13.04(2)(a) of the GFL Rules, namely a failure to satisfy the claim. The respondent has not satisfied the applicant’s claim. The first limb of the definition is met.
The second limb of the definition is met where the respondent has failed in one or more of the ways in rr 13.04(2) (i) to (vii).
The respondent has failed to:
(1)comply with the order made by the Court on 13 September 2024 that it file a notice of address for service by 20 September 2024 (a failure of the type in rr 13.04(2)(b)(i) and (iii));
(2)file a response before the time in r 4.03(3) expired (a failure of the type in r 13.04(2)(b)(ii)); and
(3)comply with the order made by the Court on 13 September 2024 that it file a defence by 11 October 2024 (a failure of the type in rule 13.04(2)(b)(iii)).
Having regard to the above failures by the respondent to file the documents required of it by the GFL Rules in order for it to participate in the proceeding in a timely manner or at all, its disregard of the Court’s orders, its failure to appear before the Court on 13 September 2024, 1 November 2024 and 22 November 2024, and its failure otherwise to take any step to indicate to the Court any intention to defend the proceeding to any extent, the Court is satisfied that the respondent is in default as it has:
(a)failed to take the steps listed above; and
(b)Failed, having regard to each of those failures, and the respondent’s failure to take any other step to engage with the proceeding, to defend the proceeding with due diligence, as comprehended in r 13.04(2)(b)(vii).
The respondent is therefore in default within the meaning of r 13.04(2).
By reason of that default, the Court’s discretion under r 13.05(2) is enlivened.
Rules 13.05(2) and 13.05(6) of the GFL Rules provide as follows:
(2) If a respondent is in default, the Court may:
(a)order that a step in the proceeding be taken within the time limited in the order; or
(b)if the claim against the respondent is for a debt or liquidated damages—grant leave to the applicant to enter judgment against the respondent for:
(i) the debt or liquidated damages; and
(ii) if appropriate—costs; or
(c)if the proceeding was started by an application supported by a Statement of Claim or the Court has ordered that the proceeding continue on pleadings—give judgment against the respondent for the relief that:
(i)the applicant appears entitled to on the Statement of Claim; and
(ii) the Court is satisfied it has power to grant; or
(d) give judgment or make any other order against the respondent; or
(e)make an order mentioned in paragraph (b), (c) or (d) to take effect if the respondent does not take a step ordered by the Court in the proceeding in the time limited in the order.
…
(6)The Court may make an order of the kind mentioned in subrule (1), (2) or (4), or any other order, or may give any directions, and specify any consequences for non‑compliance with the order, that the Court thinks just.
Rule 13.05(2) essentially gives the Court two choices in the present circumstances. To give the respondent a further opportunity to engage with the proceeding in a specified time, or alternatively, to proceed to give such of the relief claimed in the proceeding as is appropriate in the particular type of proceeding. It is appropriate in the present circumstances to take the latter step. Both the originating process, and the orders of the Court made on 13 September 2024 and 1 November 2024 were brought to the respondent’s attention. The respondent has had several opportunities to defend the proceeding and has taken no step even to indicate any such desire, let alone to take any of the steps required of a respondent under the GFL Rules. The applicant should now be allowed to proceed for the relief it seeks.
The present matter, which was commenced by a statement of claim is comprehended in rule 13.05(2)(c). The Court may give such relief as the applicant appears entitled to on the statement of claim, and which the Court is satisfied it has the power to grant.
Rule 13.05(2) is in essentially the same terms as r 5.23(2) of the Federal Court Rules 2011 (Cth) (FC Rules). Rule 5.23(2) of the FC Rules operates such that judgment in default does not require proof of the claim by evidence, only that there is a claim for the relief on the face of the statement of claim: see Kazal v Thunder Studios Inc (California) (2023) 416 ALR 24; [2023] FCAFC 174 (Kazal), and the decisions referred to therein at [212]. At [223] of Kazal, Wheelahan J (with whom Wigney and Abraham JJ agreed) opined that rule 5.23(2) of the FC Rules operates independently (of the rules concerning pleadings) to empower the Court to grant relief. Rule 16.07 of the FC Rules, which provides that allegations that are not specifically denied in a pleading are taken to be admitted, does not operate where there has been a failure to file a defence to deem all of the pleaded facts to be admitted (Kazal at [224]). Hence orders made pursuant to r 5.23 of the FC Rules (and by extension, r 13.05(2) of the GFL Rules) in the event of default are not premised on there having been deemed admissions of the pleaded facts. The relevance of this distinction becomes apparent below.
The particular claims for relief are dealt with in turn below.
ORDERS
Declaration
In the statement of claim the applicant seeks a declaration that the respondent contravened s 716(5) of the FW Act by failing to comply with the compliance notice.
It is appropriate to make a declaration in the circumstances. The applicant seeks that relief and appears entitled to it upon the statement of claim, which pleads the giving of a compliance notice, and the respondent’s failure to comply with that notice in a timely manner, or at all.
There is a public interest in the subject matter of the proceeding that justifies the making of a declaration of the contravention of s 716(5) which is alleged. The applicant has the function of promoting and monitoring compliance with the FW Act and fair work instruments (such as the Award) and to inquire into any act or practice that may be contrary to the FW Act or a fair work instrument. In service of those functions the applicant and her delegates may issue compliance notices under s 716 where they have a reasonable belief as to such contravention.
However, in the absence of any contradictor, and, as set out above, no deemed admissions which may be said to arise from the failure to file a defence, it is appropriate to make clear the circumstances in which the declaration is made. The declaration should be in the following terms:
Upon the default by the respondent, pursuant to r 13.05(2) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth), the Court declares that the respondent contravened s 716(5) of the Fair Work Act2009 (Cth) by failing to comply with the compliance noticed issued to it by Fair Work Inspector Heidi-Marie Brown on 22 June 2023.
Orders for Compensation
The statement of claim included a prayer for the following orders.
(a)pursuant to section 545(1) of the FW Act, the Respondent is to take the following steps to remedy the direct effects of its non-compliance with the Compliance Notice, within 28 days of this order:
(i) pay the Underpayment Amount to Mr Lee;
(ii)calculate and pay any additional superannuation contributions on the Underpayment Amount into Mr Lee’s nominated superannuation fund;
(iii)provide proof to the Applicant that the Underpayment Amount and superannuation contributions have been rectified;
(b)pursuant to section 547(2) of the FW Act, the Respondent is to pay interest on the Underpayment Amount to Mr Lee at the applicable pre-judgment interest rate, within 28 days of this order;
“Underpayment Amount” is defined in the statement of claim as $4,583.18.
The statement of claim pleads, following the pleading concerning the contravention of s 716(5) of the FW Act, as follows:
12. If the Respondent had complied with the Compliance Notice, it would have:
(a)completed the calculations set out at Annexure A showing the amount of $4,583.18 remains outstanding to Mr Lee (Underpayment Amount); and
(b) paid the Underpayment Amount to Mr Lee.
13.By reason of the Respondent’s contravention as pleaded in paragraph 11 above:
(a) the Respondent failed to pay the Underpayment Amount to Mr Lee; and
(b) Mr Lee has suffered loss to a total of $4,583.18.
In the application in a proceeding, the applicant framed the prayer for compensatory relief, consequent upon the respondent’s default, as follows:
2.Upon the admissions which Clark Projects are taken to have made by reason of its default, the Court makes the following declarations and orders:
…
(b) an order pursuant to section 545(1) of the FW Act that Clark Projects take the following steps to remedy the direct effects of its non-compliance with the Compliance Notice, within 28 days of this order:
(i) pay $4,583.18 (Underpayment Amount) to Mr Nathan Lee;
(ii) calculate and pay any additional superannuation contributions on the Underpayment Amount into Mr Lee’s nominated superannuation fund; and
(iii) provide evidence of these payments to the Applicant;
(c) an order pursuant to section 547(2) of the FW Act that Clark Projects pay interest on the Underpayment Amount to Mr Lee at the applicable pre-judgment interest rate, within 28 days of this order;
For reasons discussed above, it is not appropriate to make orders referring to admissions which are taken to have been made as a consequence of the default of the respondent. However, it is within the Court’s power to make orders for the payment of compensation, and it is appropriate to do so in the present matter.
The power to make orders for the payment of compensation is contained in s 545 of the FW Act. That section presently provides as follows:
(1) Federal Court and Federal Circuit and Family Court of Australia (Division 2)
(1)The Federal Court or the Federal Circuit and Family Court of Australia (Division 2) may make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision.
Note 1: For the court’s power to make pecuniary penalty orders, see section 546.
Note 2: For limitations on orders in relation to costs, see section 570.
Note 3:The Federal Court and the Federal Circuit and Family Court of Australia (Division 2) may grant injunctions in relation to industrial action under subsections 417(3) and 421(3).
Note 4:There are limitations on orders that can be made in relation to contraventions of subsection 463(1) or (2) (which deals with protected action ballot orders) (see subsection 463(3)).
(2)Without limiting subsection (1), orders the Federal Court or Federal Circuit and Family Court of Australia (Division 2) may make include the following:
(a) an order granting an injunction, or interim injunction, to prevent, stop or remedy the effects of a contravention;
(b) an order awarding compensation for loss that a person has suffered because of the contravention;
(c) an order for reinstatement of a person;
(d) an order requiring a person to comply, either wholly or partly, with a notice (other than an infringement notice) given to the person by an inspector or the Fair Work Ombudsman.
Eligible State or Territory courts
(3)An eligible State or Territory court may order an employer to pay an amount to, or on behalf of, an employee of the employer if the court is satisfied that:
(a)the employer was required to pay the amount under this Act or a fair work instrument; and
(b)the employer has contravened a civil remedy provision by failing to pay the amount.
Note 1: For the court’s power to make pecuniary penalty orders, see section 546.
Note 2: For limitations on orders in relation to costs, see section 570.
(3A)An eligible State or Territory court may order an outworker entity to pay an amount to, or on behalf of, an outworker if the court is satisfied that:
(a) the outworker entity was required to pay the amount under a modern award; and
(b) the outworker entity has contravened a civil remedy provision by failing to pay the amount.
Note 1: For the court’s power to make pecuniary penalty orders, see section 546.
Note 2: For limitations on orders in relation to costs, see section 570.
When orders may be made
(4) A court may make an order under this section:
(a) on its own initiative, during proceedings before the court; or
(b) on application.
Time limit for orders in relation to underpayments
(5) A court must not make an order under this section in relation to an underpayment that relates to a period that is more than 6 years before the proceedings concerned commenced.
Section 545(2)(d) of the FW Act was inserted by the Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 (Cth) and took effect on 27 February 2024. It was in effect at the time the proceeding was commenced, but not in s 545(2) at the time of the issue of the compliance notice, or at the time the compliance notice specified for compliance.
Section 545(1) of the FW Act empowers the Court to make orders which are preventative, remedial or compensatory: Australian Building and Construction Commission v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157; (2018) 92 ALJR 219; [2018] HCA 3 (the Non-Indemnification Order case), per Keane, Gordon & Nettle JJ at [103] – [110]. However, the subsection is not to be read down by reference to the specific types of orders that are listed in s 545(2): at [105]; per Kiefel CJ at [23].
There are different (and firmly held) views in this Court as to whether orders for the payment of compensation may, or should, be made pursuant to s 545 of the FW Act consequent upon a finding of contravention of s 716 of the FW Act. In the present circumstances, those orders should be made for the reasons that follow.
The Court is entitled, where it is satisfied that a person has contravened a civil remedy provision, to make orders awarding compensation for loss that a person has suffered as a consequence of a contravention. Such power should only be exercised where there is an appropriate causal connection between the contravention and the loss claimed: Dafallah v Fair Work Commission (2014) 225 FCR 559; [2014] FCA 328 at [159].
Given the fact that the matter now proceeds under r 13.05(2) of the GFL Rules, the question that arises is whether there is an appropriate causal connection pleaded on the statement of claim. The Court does not require the moving party to prove, by evidence, its entitlement to the relief it seeks.
Taking the pleading on its face, there is a causal connection between the contravention and the loss claimed. The pleading recites that the inspector formed a belief that the respondent had failed to pay the employee amounts payable to him pursuant to the Award and issued a compliance notice in respect of the suspected modern award contraventions, requiring the respondent to calculate the underpayment to the employee and then to make payment to the employee of that amount. Although the compliance notice itself did not specify the precise amount to be paid by the respondent, the statement of claim quantified that amount and provided details of its calculation in annexure A. The pleading then recited that the respondent would have paid the Underpayment Amount if it had complied with the compliance notice, and that the employee suffered loss of that amount as a consequence of the respondent’s failure to comply with the compliance notice. On its face, the statement of claim makes a causal link between the contravention and the loss suffered by the employee.
In Fair Work Ombudsman v Taing [2024] FedCFamC2G 270, her Honour Judge Mansini declined to make orders for the payment of compensation in proceedings alleging a contravention of s 716(5) of the FW Act, reasoning (at [80]) that the loss in that instance was occasioned not by the employer’s failure to comply with the compliance notice, but by the failure of the employer to pay the underlying entitlement that was the subject of the compliance notice.
I respectfully differ.
When considering an award of statutory compensation, there is no imperative to search for, or identify, any “sole” cause of the loss: Patrick Stevedores Holdings Pty Ltd v Construction, Forestry, Maritime, Mining and Energy Union (No 4) [2021] FCA 1481 at [24]-[25]. The purpose for which the causation test is applied is not a philosophical or scientific one, but is concerned with the attribution of legal responsibility: March v Strahmare (E & MH) Pty Ltd (1991) 171 CLR 506; (1991) 65 ALJR 334; [1991] HCA 12 at 509 [6]. Although questions of causation often arise in a context where there is more than one party who might conceivably be regarded as having contributed to a loss, in this matter, only the respondent could have caused the relevant loss.
Whilst the loss which is pleaded is premised on an earlier failure by the respondent to pay amounts to which the employee was entitled, the compliance notice imposed a further obligation upon the respondent. It required the respondent, on pain of a civil penalty, to comply with it by undertaking a calculation and making a payment to the employee. That obligation could only be avoided in the event of a successful review of the compliance notice pursuant to s 717 of the FW Act, either on the basis that the recipient had not committed the contraventions referred to in the compliance notice, or because the compliance notice did not comply with the requirements of ss 716(2) or (3) of the FW Act. The compliance notice obliged the respondent to either advance an argument as to why the compliance notice was wrong or wrongly issued, or failing such step (or failing to persuade a court to set aside the compliance notice), to comply with it by making a payment that would have remedied that loss. The respondent did not take the former step.
The failure to comply with the obligation imposed by the compliance notice may itself be regarded as causing loss. The position is somewhat analogous with that of a surgeon engaged to carry out a procedure to repair an injury. If a surgeon breaches their duty by failing to attend and carry out the surgical procedure, or carries out the procedure negligently, and compliance with their duty would have repaired the injury, it does not avail them, when considering the question of causation, that the patient had already suffered the injury. The circumstance that calls an obligation into existence does not break the chain of causation between the breach of that obligation and the loss suffered: Chappel v Hart (1998) 195 CLR 232; (1998) 72 ALJR 1344; [1998] HCA 55, per Gaudron J at [13]-[14].
Whilst the contravention which is before the Court is not the underlying award contravention, and that contravention has not itself been pleaded and proved, that does not make it inappropriate to make orders for the payment of compensation in this matter. I differ respectfully with the view expressed by Judge Forbes in Fair Work Ombudsman v Cobra Security Services Pty Ltd [2024] FedCFamC2G 336.
The absence of an express pleading of the underlying contravention should not be material. Pleadings are not an end in themselves. They are a means of attaining justice and serve the purpose of giving notice to the other party of the case it must meet: Thomson v STX Pan Ocean Co Ltd [2012] FCAFC 15 at [13]. There is no deficit of notice in the present matter. The pleading in this instance included the allegation (accompanied by the usual solicitor’s certificate) that if the respondent had complied with the compliance notice it would have undertaken a calculation in accordance with that set out in annexure A to the statement of claim, showing the amount of $4,583.18 was outstanding to the employee, and would then have paid such amount. That can only be understood as a pleading by the applicant that the stated belief of the inspector in the compliance notice, as to the respondent’s Award contraventions by failures to pay amounts required under that Award, was correct. It was open to the respondent to request particularisation of the pleaded loss if it was unable to understand the basis upon which that loss was pleaded. The respondent did not do so. The absence of an express pleading of the underlying contravention caused no injustice in the present matter as the respondent was put on notice of the case it had to meet, the period of the employment, the Award that the applicant alleged applied, the amount of compensation that was sought, and the basis upon which that compensation was calculated.
So far as the question of proof of such contravention is concerned, had the respondent appeared, it may have (if the underlying facts supported such a pleading) denied the pleaded loss. That would have effectively put the applicant to proof of the underlying entitlement on which the claim to compensation was premised. The respondent did not do so.
In circumstances of default, as set out above, the GFL Rules empower the Court to grant the relief to which the applicant appears entitled on the statement of claim without the claim needing to be proved. To the extent there is some doubt that the compensation sought in the present matter reflects the true measure of the respondent’s liability, such doubt is inescapable where judgment is given by default pursuant to r 13.05(2)(c) for the relief to which the applicant appears entitled on the statement of claim. That doubt is “managed”, within the GFL Rules, by the capacity of a party against whom default judgment is given to move the Court pursuant to r 17.05(2) to have judgment set aside. The requirement in a statement of claim for a solicitor’s certificate also provides the Court some confidence that there is a proper and provable basis for the claim that has been advanced.
Judge Blake in Fair Work Ombudsman v Carers Portland Inc [2023] FedCFamC2G 620 at [56] opined that because there is an avenue under the FW Act to pursue contraventions of Awards, the legislature could not have intended that compensation could effectively be obtained for such contraventions in proceedings for a contravention of s 716(5), and that the integrity of the contravention provisions of the FW Act would be undermined if the relief available under those provisions could be granted without proving the underlying contravention. I respectfully take a different approach to the question. Implicit in concern for the integrity of the contravention provisions is a concern that compensation may be awarded which does not reflect the true measure of the employee entitlement. As set out above the Court may only award compensation where it is appropriate. That will, where there is a contest, involve the Court being satisfied that the compensation sought reflects the amount that would have been paid had the respondent complied with the compliance notice (leaving aside such deduction as may be appropriate to reflect any subsequent payment by the respondent). Where the Court proceeds to award compensation on a default, proof of the claim is not required, but in that respect the situation is no different from any other matter (including a matter alleging an Award contravention) where orders are made following default.
Nothing about that approach affects the manner in which the provisions in the FW Act concerning contraventions of Awards operate. Compensation being awarded in an instance like the present does not raise the prospect of a raft of proceedings where compensation is granted without a proper basis being made out. The class of matters where this question arises is limited. Only inspectors, as defined in the FW Act, may issue, and bring proceedings for, failure to comply with, compliance notices. An application for compensation arising from failure to comply with a compliance notice may only be made where the respondent has not approached the Court to vary or cancel the notice pursuant to s 717 of the FW Act, or has approached the Court and failed to have the notice set aside, and has then also failed to comply with the compliance notice without having a reasonable excuse. That is, compensation will only be ordered after the employer has had two opportunities to contest the allegation of the underlying contravention and the quantum of the underpayment. If in that event the Court is satisfied, whether on the basis of admissions (as was Judge Cameron in Fair Work Ombudsman v Pure Telecom Pty Ltd [2024] FedCFamC2G 664), or after a contest as to quantum, that the compensation being sought reflects the true measure of an employer’s compliance obligation, it is not clear what statutory purpose would be served by declining to make orders for such compensation but to instead require the regulator or some other party to commence another proceeding, exposing the employer to a possible further civil penalty, before such compensation may be ordered.
CONCLUSION
It is appropriate for the Court to make orders for the payment of compensation in the sum of the Underpayment Amount by the respondent to the employee in the present circumstances. Those circumstances include that the respondent has been on notice since the commencement of the proceeding of the quantum of compensation sought by the applicant and the basis of the calculation of that compensation, has had an opportunity to be heard as to the making of any such orders and the quantum of any compensation to be ordered, and has declined to appear to defend the proceeding.
I am also satisfied that such orders would be a proper exercise of the Court’s power to make orders to remedy the effects of a contravention, as contemplated in s 545(2)(a) of the FW Act, as discussed by Judge Manousaridis in Fair Work Ombudsman v Sails Waterfront Bar & Grill Pty Ltd (No.2) [2021] FCCA 1511.
I am satisfied, for the same reasons that it is appropriate to make orders for the respondent to calculate and pay additional superannuation contributions on the Underpayment Amount. Those steps were also required by the compliance notice. However, I consider it appropriate in the circumstances to allow the respondent additional time to comply with such order, anticipating that such step may be more administratively complicated than the payment to the employee of the outstanding monies.
I am also satisfied that it is appropriate, pursuant to s 547 of the FW Act, to include in the order for payment of compensation an amount of interest on the Underpayment Amount for the period from 1 August 2023 (the date following the final date for compliance with the compliance notice) to the date of judgment, at the rates used by the Federal Court, namely, at the extant cash rate in any period plus 4%, that is for the period 1 August to 31 December 2023, at the rate of 8.10%, and for the period from 1 January 2024 to date at the rate of 8.35%. The amount of compensation I have ordered be paid by the respondent to the nominated employee includes that amount.
I will order accordingly.
I will hear the parties as to the further directions required to hear the claim for orders imposing a civil penalty upon the respondent.
I certify that the preceding seventy-four (74) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Doust. Associate:
Dated: 28 February 2025
16
4