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 2012; and
(iii)the respondent failed to attend the directions hearings on either 1 November 2012 and 6 December 2012.
FOR THE PURPOSES OF THESE PROCEEDINGS AND UPON ADMISSIONS WHICH THE RESPONDENT IS DEEMED TO HAVE MADE BY REASON OF HER DEFAULT, THE COURT FINDS THAT:
Kijani Investments Pty Ltd (in liquidation) (ACN 117 114 011) (Kijani Investments) contravened the following civil penalty provisions:
(a)subsection 182(1) of the Workplace Relations Act 1996 (Cth) (WR Act) and item 5 of Schedule 16 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (Transitional Act), by failing to pay the following employees their basic periodic rates of pay under the Australian Pay and Classification Scale derived from the Shop Employees (State) Award:
(i)Amy Rebecca Franks;
(ii)Georgina Dart;
(iii)Ashley Louise Jenkins.
(b)subsection 185(2) of the WR Act, by failing to pay Amy Rebecca Franks her guaranteed casual loading percentage under the Australian Pay and Classification Scale derived from the Shop Employees (State) Award;
(c)clause 8(a) of the “Kijani Investments Pty Ltd ATF The Dawe Investments Trust Employee Collective Agreement” (Kijani ECA), by failing to pay the following employees their required rates of pay under the Kijani ECA:
(i)Alex Reuben Barnett;
(ii)Georgina Dart;
(iii)Amy Rebecca Franks;
(iv)Skie-Lee Huff.
(v)Ashley Louise Jenkins;
(vi)Daniela Anna Labella;
(vii)Alexandra Moate;
(viii)Sarah Eliza Harriett Ray;
(ix)Victoria Strohmeier.
(d)clause 8(e) of the Kijani ECA, by failing to pay the following employees their required casual loading under the Kijani ECA:
(i)Alex Reuben Barnett;
(ii)Amy Rebecca Franks;
(iii)Skie-Lee Huff;
(iv)Ashley Louise Jenkins;
(v)Daniela Anna Labella;
(vi)Sarah Eliza Harriett Ray;
(vii)Victoria Strohmeier;
(viii)Joanne Freya Thomas.
(e)clause 16 of the Australian Workplace Agreement lodged by Kijani Investments with the Employment Advocate on 2 February 2006 with respect to the employment of Lee Mayberry, by failing to pay Lee Mayberry the required rate of pay for her age and classification;
(f)clause 16 of the Australian Workplace Agreement lodged by Kijani Investments with the Employment Advocate on 15 September 2006 with respect to the employment of Georgina Dart, by failing to pay Georgina Dart the required rate of pay for her age and classification;
(g)clause 15(b) of the Kijani ECA, by failing to pay Georgina Dart her required paid annual leave;
(h)subsection 235(2) of the WR Act, by failing to pay Georgina Dart her accrued but unused annual leave on termination;
(i)subsection 90(2) of the FW Act, by failing to pay Georgina Dart and Alexandra Moate their accrued but unused annual leave on termination;
(j)clause 16 of the Kijani ECA, by failing to pay Georgina Dart her required personal/carer’s leave;
(k)clause 20 of the Kijani ECA, by failing to pay Daniela Anna Labella and Skie-Lee Huff their required remuneration upon termination;
(l)subsection 536(1) of the Fair Work Act 2009 (Cth) (FW Act), by failing to provide to the following employees a written pay slip within one day of a payment made as remuneration:
(i)Alex Reuben Barnett;
(ii)Georgina Dart;
(iii)Amy Rebecca Franks;
(iv)Skie-Lee Huff;
(v)Ashley Louise Jenkins;
(vi)Daniela Anna Labella;
(vii)Lee Mayberry;
(viii)Alexandra Moate;
(ix)Sarah Eliza Harriett Ray;
(x)Victoria Strohmeier;
(xi)Joanne Freya Thomas.
(m)subregulations 19.8(1)(d)-(e), 19.11(1)-(2), 19.11(4), 19.12(1) and 19.13(1) of the Workplace Relations Regulations 2006 (Cth), by failing to make or keep employee records with the required content for the following employees:
(i)Alex Reuben Barnett;
(ii)Georgina Dart;
(iii)Amy Rebecca Franks;
(iv)Skie-Lee Huff;
(v)Ashley Louise Jenkins;
(vi)Daniela Anna Labella;
(vii)Lee Mayberry;
(viii)Alexandra Moate;
(n)subsection 535(1) of the FW Act, by virtue of contraventions of regulations 3.32(d), 3.32(e), 3.33(1), 3.33(2), 3.36(1), and 3.37 of the Fair Work Regulations 2009 (Cth), by failing to make or keep employee records with the required content for the following employees:
(i)Alex Reuben Barnett;
(ii)Georgina Dart;
(iii)Amy Rebecca Franks;
(iv)Skie-Lee Huff;
(v)Ashley Louise Jenkins;
(vi)Daniela Anna Labella;
(vii)Lee Mayberry;
(viii)Alexandra Moate;
(ix)Sarah Eliza Harriett Ray;
(x)Victoria Strohmeier;
(xi)Joanne Freya Thomas;
(o)subsection 712(3) of the FW Act, by failing to comply with Notices to Produce issued on 19 April 2010, 18 August 2010, 23 November 2010 and 7 March 2011.
THE COURT DECLARES THAT:
Upon admissions which the respondent is taken to have made, consequent upon non-compliance with Court Orders, the respondent was involved in (pursuant to section 728 of the WR Act and section 550 of the FW Act) contraventions of the civil penalty provisions found to be committed in paragraph 3 above.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 654 of 2012
| FAIR WORK OMBUDSMAN |
Applicant
And
| NICOLE DAWE |
Respondent
REASONS FOR JUDGMENT
The applicant seeks declarations that Kijani Investments Pty Ltd, being the employer of certain identified employees, contravened various sections of the Workplace Relations Act 1996 (Cth). The applicant also seeks a declaration that the respondent was involved in the contraventions committed by Kijani Investments Pty Ltd, being a director of Kijani Investments Pty Ltd, during the period of contraventions.
On 23 March 2012, the applicant filed a statement of claim that set out in detail the allegations of breach by Kijani Investments Pty Ltd, and by the respondent.
The statement of claim also sought orders that the respondent pay penalties for the contraventions by Kijani Investments Pty Ltd of various industrial awards and workplace relations statutory obligations. The statement of claim also sought orders that the identified and named employees who were underpaid be compensated from any penalty imposed.
To the extent that any penalty awarded by the court exceeds the compensation to the employees, the applicant seeks an order that the remaining penalty be paid to the Consolidated Revenue Fund of the Commonwealth.
The statement of claim also sought orders that interest be payable on the underpayments and ordered to be paid to the employees.
The declarations are sought to be made by the applicant ex parte on the basis that the applicant seeks default judgement pursuant to r.13.03B(2)(c) of the Federal Magistrates Court Rules 2001 (Cth) based on the failure of the respondent to comply with various directions made by the court over the history of the proceeding.
The history of the proceeding is helpfully set out in the applicant’s written submission as follows:
“4. In summary, pursuant to rule 13.03B(2)(c) of the Federal Magistrates Court Rules 2001 (Federal Magistrates Court Rules), where a respondent is in default (as defined at rule 13.03A of the Federal Magistrates Court Rules), the Court may give judgment against the respondent for the relief that:
a) the applicant appears entitled to on the statement of claim; and
b) the Court is satisfied it has power to grant.
Has there been a default?
5. The matter was commenced by way of application and statement of claim on 23 March 2012. The respondent was served personally with the application and statement of claim on 30 March 2012.
6. The respondent has appeared in Court for directions hearings on 15 May 2012 and 22 June 2012 and has also attended mediation conferences on 1 August 2012 and 3 October 2012.
7. The respondent has not responded to any form of communication (including telephone, email or post) since 3 October 2012.
8. Rule 13.03A(2) of the Federal Magistrates Court Rules provides relevantly that 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.
9. The respondent is in default for the purposes of Rule 13.03A(2)(iii) of the Federal Magistrates Court Rules by way of her failure to file documents:
a) on 22 June 2012 the Court ordered the respondent to file and serve a Defence by 6 July 2012;
b) 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
c) to date, no defence and/or evidence has been filed by the respondent, as required by the orders of the Court.
10. The respondent was notified of her obligation to file documents pursuant to the Court Orders dated 22 June 2012 and 1 October 2012 as follows:
a) in respect of the Court Orders dated 22 June 2012, the respondent was in attendance at the time the Court Orders were made; and
b) in respect of the Court Orders dated 1 October 2012, the respondent was served with a copy of the Court Orders by the applicant via email and post (see affidavit of Anna Kovalsky affirmed on 6 December 2012).
11. Additionally, the respondent is in default for the purposes of Rule 13.03C of the Federal Magistrates Court Rules by way of her failure to appear at two directions hearings:
a) on 25 October 2012, the Court listed the matter for a directions hearing on 1 November 2012;
b) on 1 November 2012, the Court listed the matter for a directions hearing on 6 December 2012; and
c) the respondent failed to attend the directions hearings on either 1 November 2012 and 6 December 2012.
12. The respondent was notified that the matter had been listed for directions hearings on 1 November and 6 December 2012 as follows:
a) in respect of the directions hearing on 1 November 2012, both parties were informed via email by the Deputy Associate to Federal Magistrate Emmett dated 25 October 2012 that the matter had been listed for a directions hearing on 1 November 2012; and
b) in respect of the directions hearing on 6 December 2012, the respondent was served with a copy of the Court Orders dated 1 November 2012 by the applicant via email and post (see affidavit of Anna Kovalsky affirmed on 6 December 2012).”
In the circumstances, I am satisfied that the respondent is in default for the purpose of rule 13.03A(2) and 13.03C of the Federal Magistrate Court Rules 2001 (Cth). In such circumstances, rule 13.03B(2)(c) of the Federal Magistrate Court Rules 2001 (Cth) provides that where a respondent is in default, then the Court may give judgment against the respondent if the Court is satisfied that the respondent has had reasonable notice of the proceedings and has been properly served with all relevant material; and, that the applicant appears to be entitled on the statement of claim to the relief claimed and it is within the court’s power to grant the relief sought.
I accept as accurate the applicant’s summary of the statement of claim and that the court has power to grant the relief sought. I am also satisfied that the statement of claim discloses a proper cause of action Those submissions are as follows:
“14. The factual background to the alleged contraventions is set out at paragraphs 1 to 123 of the statement of claim. In summary:
a) the respondent was a director, company secretary and shareholder of Kijani Investments Pty Ltd (in liquidation) (ACN 117 114 011) (Kijani Investments) and was involved in its day-to-day operation and in the overall direction, supervision and management of its operations;
b) Kijani Investments operated four Subway franchise stores in and around Newcastle in the State of New South Wales;
c) the eleven employees (Employees) listed at paragraph 5 of the statement of claim were employed by Kijani Investments;
d) Kijani Investments failed to pay the Employee’s in accordance with their minimum entitlements as detailed in Annexures B to L of the statement of claim;
e) on 19 April 2010, 18 August 2010, 23 November 2010 and 7 March 2011, the applicant issued a Notice to Produce Records or Documents (NTP) to Kijani Investments pursuant to section 712(1) of the FW Act;
f) the NTPs specified that the records requested under the NTP be produced to the applicant within 14 clear days of service of the NTP; and
g) Kijani Investments failed to produce to the applicant the records in accordance with the terms of the NTP.
15. The respondent was knowingly concerned in or a party to each of Kijani Investments contraventions of the WR Act, Transitional Act, and FW Act, so that by operation of section 728 of the WR Act and subsection 550(1) of the FW Act she is taken to have been involved in each of the contraventions and to have contravened each of the relevant provisions.
16. The facts set out in paragraphs 1 to 102 of the statement of claim give rise to 14 contraventions of Commonwealth workplace laws as set out at paragraph 124 of the statement of claim.
17. The facts alleged at paragraphs 103 to 123 of the statement of claim establish that the respondent was involved in the contraventions committed by Kijani Investments. These are all civil remedy provisions for the purposes of section 718(1) of the WR Act, item 16 of Schedule 16 of the Transitional Act and section 539 of the FW Act. These provisions enable an inspector to apply to the Court for orders in relation to a contravention of a civil remedy provision. The applicant is an inspector by operation of s 701 of the Fair Work Act.
18. On that basis it is submitted that the applicant is “entitled” to the relief sought in the application for default judgement, in the sense that it has made out a case for some form of relief: see ACCC v Dataline at [53]. The applicant acknowledges that the relief sought is discretionary.
19. In respect of the standard of proof required, it has been established that an order for default judgment under mirror provisions found in the Federal Court Rules (rule 5.22 of the Federal Court Rules 2011, formerly order 35A of the Federal Court Rules 1979) does not require proof by evidence of the applicant’s claim; it is sufficient if there is a basis for the relief sought on the face of the statement of claim: Arthur v Vaupotic Investments Pty Ltd [2005] FCA 433 at [3], cited recently in Australian Building & Construction Commissioner v Abbott (No. 3) [2011] FCA 340, [11] and Australian Competition and Consumer Commission v Yellow Page Marketing BV (No. 2) [2011] FCA 352, [14].
20. The general rule is that applications such as those under rule 13.03B(2)(c) of the Federal Magistrates Rules and rule 5.22 of the Federal Court Rules are determined on the face of the facts pleaded in the statement of claim alone. However, where discretionary relief is claimed the Court can and should receive evidence relevant to the exercise of its discretion: ACCC v Yellow Page Marketing at [61]-[63], citing Australian Competition and Consumer Commission v. Dataline.net.au Pty Ltd (2006) 236 ALR 665, [48]-[51].
Does the Court have the power to make orders sought?
21. The orders that the Court may make if it is satisfied that a person has contravened a civil remedy provision include declarations, under section 16 of the Federal Magistrates’ Act 1999 (Cth).”
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.
Further, I accept the written submission of the applicant that Kijani Investments Pty Ltd is not a party to the proceeding, the Court should not make declarations regarding it as the primary contravener. Rather, the more appropriate course is to make findings of fact on deemed admissions due to the respondent’s default. I accept that those findings of fact can then form the basis of the declaratory relief sought against the accessory. The applicant’s submissions are as follows:
“36. The applicant submits that in circumstances where the primary contravener is not a party to proceedings the Court should not make declarations regarding the primary contravener; rather, the more appropriate construction is to make a finding of fact. The finding of fact can then form the basis of declaratory relief against the accessory.
37. The issue of the proper construction of Court Orders seeking declaratory relief against an accessory where a primary contravener is not party to proceedings has been considered in the following Federal Court matters:
a) in Australian Competition and Consumer Commission v Black on White Pty Ltd [2001] FCA 187, the fourth respondent submitted that a declaration could not be made against him (in respect of accessorial liability) when the first respondent was non-existent (as it had been placed into liquidation and deregistered). In response to this submission Spender J stated at [48]:
“It is not correct to say, as the fourth respondent contends, that the declaratory relief sought by the applicant against the fourth respondent presupposes the making of a declaration by the Court that the first respondent has engaged in conduct which is in contravention of ss 52 and 51AB of the Act. A declaration against the fourth respondent would be dependent, in the circumstances of this case, only on a finding that on the basis of evidence proved to the satisfaction of the Court the first respondent had engaged in conduct in contravention of those sections.”
b) in Australian Competition and Consumer Commission v Albert & Anor (2005) 223 ALR 467, Jacobson J specifically dealt with the issue of whether the court ought to make declarations in respect of conduct of corporations which are not parties to the proceedings and stated at [33] to [35]:
‘33 Counsel for the ACCC gave evidence from the bar table that the companies are in liquidation. He observed that ordinarily leave would be required to proceed against them, but in the circumstances, there would be little point in the ACCC seeking injunctions against the companies. However, he argued, without making declarations in respect of conduct of the companies, it would not be possible for the court to declare the respondents knowingly concerned in the contraventions.
34 This submission cannot be accepted. An action may be maintained against individuals alleged to have been involved in a contravention of s 52, within the meaning of s 75B of the Act, although proceedings are not pursued against the corporation which is the primary contravener: Matheson Engineers Pty Limited v El Raghy (1992) 37 FCR 6 at [9] per French J; see also Australian Competition and Consumer Commission v Australian Securities and Investment Commission (2000) 174 ALR 688 at [47] per Austin J; and see Australian Competition and Consumer Commission v Black on White Pty Limited (2001) 110 FCR 1 at [48] per Spender J.
35 Moreover, it would be an entirely inappropriate exercise of the court’s discretion to make declarations that companies which are not parties to the proceedings have contravened the provisions of the Act. The companies’ rights would be affected by the declarations and there is no proper contradictor; see Corporate Affairs Commission (NSW) v Transphere Pty Limited (1988) 15 NSWLR 596 at 605-606 per Young J; News Limited v Australian Rugby Football League Limited (1996) 64 FCR 410 at 523 – 525.
Jacobson J subsequently stated at [37]:
37 Accordingly, I will not make the declarations sought in respect of the companies but I will make the declarations sought against the first and second respondents.’
38. Based on the authorities cited above, the applicant submits that declarations may be made in respect of accessories to a contravention in circumstances where the primary contravener is not a party to proceedings. Where this occurs, the appropriate construction of Court Orders is, where necessary, to make a finding of fact against the primary contravener and make declarations only in respect of the accessories who are parties to the proceedings.”
I also accept the applicant’s written submission that the Court orders should make clear that the declarations made are dependant on deemed admissions due to the respondent’s default. That submission is as follows:
“39. The applicant submits that the construction of the Court Orders in this matter should also make clear that any declarations made are dependent on deemed admissions due to the respondent’s default. In particular the applicant refers to the decision of Kiefel J in the matter of Australian Competition and Consumer Commission (ACCC) v Dataline.Net.Au Pty Ltd (2006) 236 ALR 665 at [59]:
‘Cases such as this, involving the protection of consumers, are of public interest. Declarations are often utilised in such cases to identify for the public what conduct contributes a contravention and to make apparent that it is considered to warrant an order recognising its seriousness. It is however important that there be no misunderstanding as to the basis upon which they are made. This could be overcome by a statement, preceding the declarations, that orders are made: “upon admissions which [the respondent in question] is taken to have made, consequent upon non-compliance with orders of the court.’
40. The above approach was subsequently followed by Mansfield J in Bank of Kuwait and the idlee East v The Ship MV “Mawashi Al Gaseem” (No 2) (2007) 240 ALR 120 and by Gilmour J in Hadgkiss v Aldin & Ors (No 2) [2007] FCA 2069 and Australian Building and Construction Commissioner v Abbott (No 3) [2011] FCA 340.”
On 1 November 2012, I made the following notations and orders:
“THE COURT NOTES THAT:
1. The respondent has not filed a defence by 13 July 2012 in accordance with the Orders made by Registrar Wall dated 22 June 2012, nor has the respondent claimed penalty privilege.
2. The respondent did not attend the directions hearing heard at 10am on 1 November 2012.
3. If the respondent does not comply with Order 3 below, then this matter will be listed for an ex parte hearing as set out in Order 8 below.
THE COURT ORDERS THAT:
1. All evidence in chief in the proceedings shall be given by way of affidavits, subject to the further directions of the Court.
2. The applicant must file and serve all affidavits relied upon on or before 21 November 2012.
3. The respondent must file and serve a defence and all affidavits relied upon on or before 5 December 2012.
4. The applicant must file and serve any reply to any defence served and all affidavits in reply on or before 12 December 2012.
5. The applicant must file and serve an outline of submissions at least 7 days prior to the hearing date.
6. The respondent must file and serve an outline of submissions at least 5 days prior to the hearing date.
7. The proceeding is listed for a 5 day hearing commencing on 17 June 2013 at 10:00am before me. If the respondent fails to attend Court on this day, then the hearing will proceed on an ex parte basis pursuant to rule 13.03B(2)(e) of the Federal Magistrates Court Rules 2001 (Cth).
8. If the respondent does not comply with Order 3 above on or before 5 December 2012:
a. Orders 3 to 7 above are vacated; and
b. the applicant must within 1 day notify the Associate to appoint a directions hearing so that, pursuant to rule 13.03B(2)(e) of the Federal Magistrates Court Rules 2001 (Cth), the matter can be listed for a 2 day ex parte hearing.
9. The matter is otherwise stood over for further directions on 6 December 2012 at 10:00am in Courtroom 12.1, Level 12, 80 William Street, Sydney before me.
10. The applicant to provide a copy of this Order to the respondent forthwith.”
On 6 December 2012, I made the following orders and notation:
“1. The applicant has leave to file draft orders in respect of the accessorial liability of the respondent, including any evidence relating to the position of Kirjani Investments in relation to the orders sought, together with submissions in support, any time prior to 1 March 2013, in which case the Court may make such orders in Chambers.
2. The applicant file a statement of facts and submissions in support of any declaration and penalty sought by the applicant against the respondent arising from the accessorial liability of the respondent, by 1 March 2013.
3. The matter is set down for hearing and/or directions on 14 March 2013 at 10:00am in Courtroom 12.1, Level 12, 80 William Street, Sydney, before me, unless the applicant requests the Court to make a determination on penalty on the papers.
NOTE: The applicant seeks default judgment in respect of the liability of the respondent pursuant to rule 13.03B of the Federal Magistrates Court Rules 2001 (Cth).”
The applicant read the affidavit of Anna Kovalsky, affirmed 6 December 2012, in relation to service upon the respondent of the orders made by me on 1 November 2012. On the evidence before me I am satisfied that the respondent is, or should be, aware of the entitlement of the applicant to proceed ex parte to default judgment. I am satisfied that for whatever reason the respondent has chosen not to attend.
In all the circumstances, I am satisfied that the declarations and notations sought by the applicant in their draft notations and orders should be made. Those notations and orders are as follows:
“THE COURT NOTES THAT:
1. 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.
2. 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 2012; and
iii) the respondent failed to attend the directions hearings on either 1 November 2012 and 6 December 2012.
FOR THE PURPOSES OF THESE PROCEEDINGS THE COURT FINDS THAT:
3. Kijani Investments Pty Ltd (in liquidation) (ACN 117 114 011) (Kijani Investments) contravened the following civil penalty provisions:
a) subsection 182(1) of the Workplace Relations Act 1996 (Cth) (WR Act) and item 5 of Schedule 16 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (Transitional Act), by failing to pay the following employees their basic periodic rates of pay under the Australian Pay and Classification Scale derived from the Shop Employees (State) Award:
i) Amy Rebecca Franks;
ii) Georgina Dart;
iii) Ashley Louise Jenkins.
b) subsection 185(2) of the WR Act, by failing to pay Amy Rebecca Franks her guaranteed casual loading percentage under the Australian Pay and Classification Scale derived from the Shop Employees (State) Award;
c) clause 8(a) of the “Kijani Investments Pty Ltd ATF The Dawe Investments Trust Employee Collective Agreement” (Kijani ECA), by failing to pay the following employees their required rates of pay under the Kijani ECA:
i) Alex Reuben Barnett;
ii) Georgina Dart;
iii) Amy Rebecca Franks;
iv) Skie-Lee Huff.
v) Ashley Louise Jenkins;
vi) Daniela Anna Labella;
vii) Alexandra Moate;
viii) Sarah Eliza Harriett Ray;
ix) Victoria Strohmeier.
d) clause 8(e) of the Kijani ECA, by failing to pay the following employees their required casual loading under the Kijani ECA:
i) Alex Reuben Barnett;
ii) Amy Rebecca Franks;
iii) Skie-Lee Huff;
iv) Ashley Louise Jenkins;
v) Daniela Anna Labella;
vi) Sarah Eliza Harriett Ray;
vii) Victoria Strohmeier;
viii) Joanne Freya Thomas.
e) clause 16 of the Australian Workplace Agreement lodged by Kijani Investments with the Employment Advocate on 2 February 2006 with respect to the employment of Lee Mayberry, by failing to pay Lee Mayberry the required rate of pay for her age and classification;
f) clause 16 of the Australian Workplace Agreement lodged by Kijani Investments with the Employment Advocate on 15 September 2006 with respect to the employment of Georgina Dart, by failing to pay Georgina Dart the required rate of pay for her age and classification;
g) clause 15(b) of the Kijani ECA, by failing to pay Georgina Dart her required paid annual leave;
h) subsection 235(2) of the WR Act, by failing to pay Georgina Dart her accrued but unused annual leave on termination;
i) subsection 90(2) of the FW Act, by failing to pay Georgina Dart and Alexandra Moate their accrued but unused annual leave on termination;
j) clause 16 of the Kijani ECA, by failing to pay Georgina Dart her required personal/carer’s leave;
k) clause 20 of the Kijani ECA, by failing to pay Daniela Anna Labella and Skie-Lee Huff their required remuneration upon termination;
l) subsection 536(1) of the Fair Work Act 2009 (Cth) (FW Act), by failing to provide to the following employees a written pay slip within one day of a payment made as remuneration:
i) Alex Reuben Barnett;
ii) Georgina Dart;
iii) Amy Rebecca Franks;
iv) Skie-Lee Huff;
v) Ashley Louise Jenkins;
vi) Daniela Anna Labella;
vii) Lee Mayberry;
viii) Alexandra Moate;
ix) Sarah Eliza Harriett Ray;
x) Victoria Strohmeier;
xi) Joanne Freya Thomas.
m) subregulations 19.8(1)(d)-(e), 19.11(1)-(2), 19.11(4), 19.12(1) and 19.13(1) of the Workplace Relations Regulations 2006 (Cth), by failing to make or keep employee records with the required content for the following employees:
i) Alex Reuben Barnett;
ii) Georgina Dart;
iii) Amy Rebecca Franks;
iv) Skie-Lee Huff;
v) Ashley Louise Jenkins;
vi) Daniela Anna Labella;
vii) Lee Mayberry;
viii) Alexandra Moate;
n) subsection 535(1) of the FW Act, by virtue of contraventions of regulations 3.32(d), 3.32(e), 3.33(1), 3.33(2), 3.36(1), and 3.37 of the Fair Work Regulations 2009 (Cth), by failing to make or keep employee records with the required content for the following employees:
i) Alex Reuben Barnett;
ii) Georgina Dart;
iii) Amy Rebecca Franks;
iv) Skie-Lee Huff;
v) Ashley Louise Jenkins;
vi) Daniela Anna Labella;
vii) Lee Mayberry;
viii) Alexandra Moate;
ix) Sarah Eliza Harriett Ray;
x) Victoria Strohmeier;
xi) Joanne Freya Thomas;
o) subsection 712(3) of the FW Act, by failing to comply with Notices to Produce issued on 19 April 2010, 18 August 2010, 23 November 2010 and 7 March 2011.
THE COURT DECLARES THAT:
4. Upon admissions which the respondent is taken to have made, consequent upon non-compliance with Court Orders, the respondent was involved in (pursuant to section 728 of the WR Act and section 550 of the FW Act) contraventions of the civil penalty provisions found to be committed in paragraph 3 above.”
It is appropriate that following the making of the notations and declaration in the terms above, the matter should be set down for a hearing on the assessment of quantum, including any penalty.
I certify that the preceding seventeen (17) paragraphs are a true copy of the reasons for judgment of Emmett FM
Date: 15 February 2013
The Fair Work Ombudsman is also bound by the Legal Services Directions 2005, including the Commonwealth’s obligation to act as a model litigant. The Financial Management and Accountability Act 1997 and related regulations require the Fair Work Ombudsman to be accountable in the expenditure of public funds, including in relation to legal proceedings.In FWO v Tiger Telco Pty Ltd (in liq) [2012] FCA 479 Bromberg J also made declarations in relation to the accessory where the primary contravener was in liquidation, based on a Statement of Agreed Facts in which the accessory made admissions. This approach has been taken by the Federal Magistrates Court in many similar matters.
- AGLC
- FAIR WORK OMBUDSMAN v DAWE [2013] FMCA 94
- 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.