FEDERAL MAGISTRATES COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v DAWE | [2013] FMCA 94 |
| INDUSTRIAL LAW – PRACTICE & PROCEDURE – Default judgment – declarations made – accessorial liability – findings of fact for proceeding only against non party based on deemed admissions due to respondent’s default. |
| Workplace Relations Act 1996 (Cth), ss.185, 235, 728 Federal Magistrates Court Rules 2001, rr.13.03A, 13.03B, 13.03C Fair Work Act 2009 (Cth), ss.90.535, 536, 539, 550, 712 Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth), sch.16 |
| Applicant: | FAIR WORK OMBUDSMAN |
| Respondent: | NICOLE DAWE |
| File Number: | SYG 654 of 2012 |
| Judgment of: | Emmett FM |
| Hearing date: | 6 December 2012 |
| Date of Last Submission: | 24 December 2012 |
| Delivered at: | Sydney |
| Delivered on: | 15 February 2013 |
REPRESENTATION
| Solicitors for the Applicant: | Office of Fair Work Ombudsman |
| Solicitors for the Respondent: | No appearance by the Respondent |
THE COURT NOTES THAT:
The respondent is in default for the purposes of Rule 13.03A(2) of the Federal Magistrates Court Rules 2001 (Cth) by way of the following:
(a)failure to file documents:
(i)on 22 June 2012 the Court ordered the respondent to file and serve a Defence by 6 July 2012;
(ii)on 1 November 2012, the Court ordered the respondent to file and serve a defence and all affidavits relied upon on or before 5 December 2012; and
(iii)to date, no defence and/or evidence has been filed by the respondent, as required by the orders of the Court.
The respondent is in default for the purposes of Rule 13.03C of the Federal Magistrates Court Rules 2001 (Cth) by way of the following:
(a)failure to attend:
(i)on 25 October 2012, the Court listed the matter for a directions hearing on 1 November 2012;
(ii)on 1 November 2012, the Court listed the matter for a directions hearing on 6 December…
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- Case
- [2013] FMCA 94
- Decision Date
CaseChat Overview and Summary
The central legal issue was whether the court could hold Mr. Dawe liable as an accessory when the primary contravener, Kijani Investments, was not a party to the proceedings and had been wound up. The Fair Work Ombudsman submitted that it was not necessary for the primary contravener to be a party to the proceedings to establish liability against an accessory, relying on relevant statutory provisions and precedents. The court needed to determine whether the Fair Work Ombudsman's submissions were legally sound and consistent with the intent of the Fair Work Act 2009 and the Workplace Relations Act 1996.
The court accepted the Fair Work Ombudsman's submissions, ruling that the liquidation of Kijani Investments did not prevent the court from making findings and orders against Mr. Dawe as an officer of the company. The court found that the relevant statutes did not require the primary contravener to be a party to proceedings for accessorial liability to be established. It further held that proceeding against the primary contravener in liquidation would be impractical and would limit the effectiveness of the legislation, which aims to hold all persons involved in contraventions liable. The court found that there were valid policy reasons for enabling proceedings to be brought against accessories without a primary contravener, particularly in cases where the primary contravener was in liquidation or had absconded.
The final orders of the court were that the Fair Work Ombudsman's submissions were accepted, and liability could be established against Mr. Dawe as an accessory to the contraventions committed by Kijani Investments. The court found Mr. Dawe liable for the unpaid employee entitlements and ordered him to pay the relevant amounts, along with interest and costs.
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Ratio Decidendi
Legal Principle Established
I further accept the written submissions of the applicant that orders can be made against a person in the position of the respondent where that person is found to be an accessory even though the primary contravener is not a party to the proceedings. Those submissions are as follows:“22. The alleged primary contravener is Kijani Investments. Kijani Investments was the entity which employed the 11 employees who form part of this claim. The respondent was a director, company secretary and shareholder of Kijani Investments.23. On 9 March 2012, District Registrar Wall of the Federal Court of Australia in Sydney ordered that Kijani Investments be wound up (as a result of proceedings relating primarily to unpaid employee superannuation entitlements: Deputy Commissioner of Taxation v Kijani Investments Pty Ltd - NSD35/2012.24. Pursuant to section 471B of the Corporations Act 2001 (Cth) (Corporations Act), while a company is being wound up in insolvency or by the Court, a person cannot begin or proceed with a proceeding in a court against the company or in relation to property of the company.25. However, the liquidation of Kijani Investments is no obstacle to the Court making findings and orders against the respondent alone as an officer of the company: section 601AD(1) of the Corporations Act. Can liability be established against an accessory when the primary contravener is not a party to proceedings?26. The applicant submits that it is not necessary for the primary contravener to be a party to proceedings in order for liability to be found against an accessory. In particular, the applicant relies upon the decision of Austin J in Australian Competition and Consumer Commission v Australian Securities and Investments Commission (2000) 174 ALR 688 at [47]:“It is not necessary to join the company in order to obtain relief against its officers by way of pecuniary penalty, injunction or declaration (see s 76 (1)(b)-(f) of the Trade Practices Act), since an independent cause of action arises in relation to each person who was relevantly involved in the contravention.”27. Further the applicant submits that neither the Workplace Relations Act 1996 (WR Act) nor the Fair Work Act 2009 (FW Act) impose any requirements that accessorial liability may only be pursued where the primary contravener is a party to proceedings or that liability must be established against the primary contravener for accessorial liability to be made out. 28. If it were necessary to proceed and establish liability against the primary contravener and, in circumstances where the primary contravener was in liquidation, to seek and obtain the Court’s leave to proceed against the primary contravener, this would limit and complicate the circumstances in which accessorial liability could be pursued in a manner not anticipated by the legislature. This would undermine the WR Act and FW Act’s protections afforded to complainants and accessories and, given the beneficial nature of the legislation, the potential operation and scope of the legislation should not be restricted and complicated in this manner unless the legislation clearly required this, which it does not. 29. There are several decisions of this Court recognising that proceedings can be brought against accessories where the primary contravener is not a party or is in liquidation (with the proceedings stayed) and there is no prior finding of contravention against that primary contravener. They include:a) Matheson Engineers Pty Ltd v El Raghy (1992) 37 FCR 6 at 9;b) Richardson and Wrench (Holdings) Pty Ltd v Ligon No 174 Pty Ltd (1994) 123 ALR 681; c) Australian Competition and Consumer Commission v Black on White Pty Ltd and Ors (2001) 110 FCR 1 at paragraphs [41] to [53];d) Fair Work Ombudsman v Tiger Telco Pty Ltd (in Liq) [2012] FCA 479;e) Fair Work Ombudsman v Wongtas Pty Ltd (No 2) [2012] FCA 30;f) GM Holden Ltd (ACN 006 893 232) and Others v Paine and Others - (2011) 281 ALR 406 at paragraphs [67]-[68][1].30. Additionally, there are valid policy reasons for enabling proceedings to be brought and liability be established against accessories without a primary contravener. The operation of legislation in regulatory areas including corporate conduct, trade practices, consumer protection and workplace relations would be significantly undermined if it were impossible for a regulator to bring actions without proceeding against and establishing a contravention as against the primary contravener as a respondent. For instance, if the primary contravener absconded from the jurisdiction, it would be impossible to bring any action against accessories. Further, there would be an incentive for liquidation of the primary contravener to enable the accessories to avoid liability.31. In this regard, if it were necessary to proceed and establish liability against the primary contravener in order to proceed against the accessory and the primary contravener were placed into liquidation, then it would be necessary for an applicant to seek and obtain the Court’s leave to proceed against the primary contravener pursuant to the Corporations Act in all such cases. 32. If leave were granted, the case against the accessory would then need to be proved by first establishing liability against the primary contravener, which would require evidence from or admissions by the primary contravener or the liquidator on its behalf, as applicable, and then establishing the accessories’ relevant involvement in those contraventions. As liquidators in such circumstances would not have had the authority to speak on behalf of the primary contravener at the time the contraventions occurred, they would often have to seek instructions from the relevant accessories in any event. However, in many such cases where, for example, a corporation has been wound up and / or no liquidator has been appointed, there is no one to speak on behalf of that corporation.33. This would result in processes which would be inherently more difficult, complex, time consuming and costly to the courts, regulators, other parties and liquidators than proceeding and establishing liability against the accessories only. In this regard, accessories would also be prevented from receiving the full mitigatory benefit of making admissions on liability on their own behalf and being able to proceed to a hearing on penalty only regarding the contraventions alleged against them personally.34. The Applicant is obligated to only initiate proceedings if, according to processes outlined in the FWO Litigation Policy, it has been determined that there are reasonable prospects of success in the proceedings and it is in the public interest to commence the litigation.[2] These processes would apply to any application to seek leave of the Court to proceed as against a respondent in liquidation and, therefore, there would need to be sound legal and policy reasons for making such an application. In the past, the Applicant has not generally sought to do so, as the Applicant has been able to proceed and obtain orders and declarations against the accessories only.[3]35. The accessorial liability provisions are designed to ensure that all persons involved in contraventions may be held liable, without the protection of the “corporate veil”, and that accessories can meet and deal with the case against them in their own right. The WR Act and FW Act is beneficial legislation and the potential operation and scope of such beneficial legislation should not be restricted unless the legislation clearly required this, which it does not.”[1] This judgment went on appeal: (2011) 286 ALR 309. The appeal was partially successful, but the appeal did not challenge this aspect of the judgment. [2] The Litigation Policy of the Office of the Fair Work Ombudsman sets out in detail the public interest considerations which guide the decision to institute or continue proceedings, including considerations of seriousness, deterrence, time and cost of proceedings, and promoting confidence in the law. [3] Recently in FWO vWongtas Pty Ltd (No 2) [2012] FCA 30 Cowdroy J made declarations in relation to accessories where the primary contravener was in liquidation. The matter proceeded by way of penalty hearing based on a Statement of Agreed Facts between the FWO and the accessory parties.