Fair Work Ombudsman v DB Richardson Trading Pty Ltd

Case •

[2022] FedCFamC2G 1049

Federal Circuit and Family Court of Australia

(DIVISION 2)

Fair Work Ombudsman v DB Richardson Trading Pty Ltd [2022] FedCFamC2G 1049   

File number(s): MLG 1273 of 2022
Judgment of: JUDGE MANSINI
Date of judgment: 16 December 2022  
Catchwords: INDUSTRIAL LAW – FAIR WORK – electrical industry - failure to comply with compliance notice – application for default judgment against First Respondent company – Second Respondent alleged to be involved as an accessory to the First Respondent’s conduct – default judgment entered - declarations of contraventions and orders directed at compliance made
Legislation:

Fair Work Act 2009 (Cth) ss.90(2), 545(1), 547(2), 550, 550(2), 716(2), 716(5)

Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) rr.4.03(3), 4.04(3)(a), 6.01, 13.04(2), 13.05(2), 13.06

Electrical, Electronic and Communications Award 2010

Electrical, Electronic and Communications Award 2020  
Cases cited:

Arthur v Vaupotic Investments Pty Ltd [2005] FCA 433

Australian Competition and Consumer Commission v Dataline.Net.Au Pty Limited  [2006] FCA 1427

Australian Competition and Consumer Commission v MSY Technology Pty Ltd [2012] FCAFC 56

Macquarie Bank Limited v Seagle [2005] FCA 1239

Mildura Grand Pty Ltd (in liq) v Bendigo Skyrider Pty Ltd [2011] FCA 626

Speedo Holdings B.V. v Evans (No 2) [2011] FCA 1227

Division: Division 2 General Federal Law
Number of paragraphs: 45
Date of hearing: 13 December 2022
Place: Melbourne
Advocate for the Applicant: Ms S Vassallo
Solicitor for the Applicant: Office of the Fair Work Ombudsman
Solicitor for the First Respondent: None
Solicitor for the Second Respondent: None

ORDERS

MLG 1273 of 2022

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN:

FAIR WORK OMBUDSMAN
Applicant
AND:

DB RICHARDSON TRADING PTY LTD
First Respondent

DESMOND BRIAN RICHARDSON
Second Respondent

order made by:

JUDGE MANSINI

DATE OF ORDER:

16 December 2022

Amended pursuant to r.17.05(2)(g) of the Federal Circuit and Family Court Rules (Division 2) (General Federal Law) 2021 on 21 December 2022.

THE COURT DECLARES THAT:

1.Upon admissions that the Respondents are taken to have made consequent upon the Respondents’ default pursuant to rule 13.04(2) of the Federal Circuit and Family Court of Australia (General Federal Law) Rules 2021 (Rules):

(a)the First Respondent contravened section 716(5) of the Fair Work Act 2009 (Cth) (Act) by failing to comply with a compliance notice given to it on 15 September 2021 (Compliance Notice); and

(b)the Second Respondent was involved, within the meaning of section 550(2) of the Act, in the First Respondent’s contravention of section 716(5) of the Act by failing to comply with the Compliance Notice.

THE COURT ORDERS THAT:

2.Pursuant to section 545(1) of the Act, the First Respondent take the steps that were required by the Compliance Notice within 28 days of this order by:

(a)calculating and paying to the Fair Work Ombudsman (FWO) the outstanding entitlements it was required to pay to the two former employees specified in and pursuant to the Compliance Notice (Outstanding Entitlements);

(b)calculating and paying superannuation contributions into the former employees’ nominated superannuation funds for any additional superannuation contributions it is required to pay under clause 19.2 of the Electrical, Electronic and Communications Award 2020 in respect of the Outstanding Entitlements referred to at order 2(a) above (Outstanding Superannuation);

(c)preparing and producing to the FWO a schedule outlining the First Respondent’s calculations of the Outstanding Entitlements and Outstanding Superannuation as set out in orders 2(a) and 2(b) above; and

(d)providing evidence to the FWO that the Outstanding Superannuation as set out in order 2(b) above has been rectified.

3.Pursuant to section 547(2) of the Act, within 28 days of this order, the First Respondent pay interest to the Applicant in respect of the Outstanding Entitlements required to be paid under order 2(a) above.

4.The FWO distribute to the former employees the amounts paid pursuant to order 2(a) and order 3 above within 180 days of the payment being made.

5.The matter is adjourned to 10.00am on 9 March 2023 for a further hearing in respect of the FWO’s claim for penalties to be imposed on the First Respondent and Second Respondent pursuant to section 546(1) of the Act for the contraventions set out at declarations 1(a) and (b) above.

6.By 4.00pm on 30 January 2023, the FWO is to file and serve evidence and submissions relating to penalty.

7.By 4.00pm on 20 February 2023, the First Respondent and Second Respondent are to file and serve evidence and submissions relating to penalty.

8.By 4.00pm on 27 February 2023, the FWO is to file and serve any submissions in reply relating to penalty.

9.The parties have liberty to apply.

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 MANSINI

Introduction

  1. Before the Court is an application for default judgment including declarations of contraventions of the Fair Work Act 2009 (Cth) (Act).

  2. The Fair Work Ombudsman (FWO) claimed that DB Richardson Trading Pty Ltd (the First Respondent) contravened s.716(5) of the Act by failing to comply with the requirements of a compliance notice issued under s.716(2) of the Act and that Mr Desmond Brian Richardson (the Second Respondent) was involved in the First Respondent’s contravention within the meaning of s.550 of the Act.

    Context

    Procedural

  3. On 6 June 2022, the FWO commenced this proceeding by filing an application and a statement of claim (originating materials).

  4. On 25 August 2022, the matter was listed for initial mention before the Court as presently constituted. There was no appearance for or on behalf of either Respondent and no materials filed by the Respondents at that time. The FWO had filed two affidavits, evidencing service of the originating materials and the Court’s notice of listing on the First and Second Respondents at their last known business email address and last known email address (dated 27 June 2022 and 16 August 2022). Following that mention, procedural orders were made which required the Respondents to file and serve a notice of address for service by 23 September 2022, any response and defence by 30 September 2022 and listing the matter for further mention on 26 October 2022.

  5. On 26 August 2022, the FWO sent a letter by express post and email to the Second Respondent, explaining the orders of 25 August 2022 and notifying of the next court date on 26 October 2022.

  6. Neither Respondent filed a notice of address for service by 23 September 2022 or at all.

  7. Neither Respondent filed a response and defence by 30 September 2022 or at all.

  8. On 17 October 2022, the FWO filed an application in a proceeding seeking that default judgment be entered for the FWO against the Respondents by reason of the First and Second Respondents’ default pursuant to r.13.04(2) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (Rules) by their failure to file and serve a notice of address for service as required by r.6.01 of the Rules, failure to file and serve a response and any defence as required by r.4.03(3) and 4.04(3)(a) of the Rules, failure to comply with the orders of the Court dated 25 August 2022, failure to attend the directions hearing on 25 August 2022, and failure to defend the proceedings with due diligence in accordance with r.13.04(2)(b)(vii) of the Rules (the Application for Default Judgment). An affidavit was filed in support, which evidenced the FWO’s attempted notification and service of the proceeding on the Respondents and various communications to the Respondents over the period of 10 June to 13 October 2022.

  9. The Application for Default Judgment was listed for mention on 26 October 2022. At the hearing, the FWO appeared and the Second Respondent appeared in person and also sought to represent the First Respondent. The Second Respondent was informed of r.9.04 of the Rules, which provided (and provides) that the First Respondent company must be legally represented unless it obtains permission from the Court. On that occasion, the Second Respondent said he will take that into consideration, and told the Court this was the first time that either he or the company had been in court, and he does not believe they will be in this situation again.

  10. Given the appearance of the Second Respondent for the first time, it was accepted that default judgment was premature and the Respondents were afforded further opportunity to take the necessary steps in the proceedings with the benefit of an explanation as to what was required of them and an amended program allowing more time for compliance with the Court’s orders. It was foreshadowed by the FWO that the Respondents could expect the Application for Default Judgment would be pressed if they did not comply with the amended program. Further orders were made on 26 October 2022 requiring the Respondents to file and service a notice of address for service by 3 November 2022, a response and defence by 24 November 2022 and listing the matter for hearing before the Court as presently constituted at 10.00am on 13 December 2022.

  11. Neither Respondent filed a notice of address for service by 3 November 2022 or at all.

  12. Neither Respondent filed a response and defence by 24 November 2022 or at all.

  13. On 13 December 2022, the Application for Default Judgment proceeded to hearing. The FWO was represented by a FWO solicitor and the Respondents did not enter any appearance. The Court received evidence of the various steps taken by the FWO to effect service of the proceedings and various orders of the Court on the Respondents over the period 10 June 2022 to 2 December 2022.

  14. Being satisfied that the Respondents were properly on notice of the Application for Default Judgment, the orders of 26 October 2022 and the hearing listed for 13 December 2022, I determined it appropriate to proceed with the hearing pursuant to r.13.05.

  15. At the hearing, the FWO addressed the Court about the steps taken in the proceedings to date and the substance of their claim. At the time of the hearing, it remained the case that neither Respondent had filed material in accordance with the directions of the Court or at all.

    default judgment

    Statutory framework

  16. Sub-rule 13.05(2) of the Rules applies to a respondent who “is in default”. Under r.13.04(2) of the Rules a respondent is in default if the respondent has not satisfied the applicant’s claim and the respondent has failed to do one or more of the things identified in r.13.04(2)(b) of the Rules. Of those things at r.13.04(2)(b), relevant to the present application are the failures to: give an address for service before the time for doing so has expired, file a response or defence before the time for doing so has expired, comply with orders of the Court in the proceeding, and defend the proceeding with due diligence.

  17. When a respondent is in default, or when a respondent is absent from a hearing, the Court may make one of the orders set out in r.13.05(2) of the Rules. Relevantly, rr.13.05(2)(c) and (d) provide that if a respondent is in default the Court may:

    […]

    (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;

    […]

    The FWO’s claim

  18. The allegations of the FWO in its statement of claim are set out in the following paragraphs.

  19. The Applicant is the FWO. The FWO is and was at all material times:

    (a)a statutory appointee of the Commonwealth appointed by the Governor-General by written instrument pursuant to s.687(1) of the Act;

    (b)a Fair Work Inspector pursuant to s.701 of the Act; and

    (c)a person with standing under s.539(2) of the Act to apply for orders in respect of contraventions of civil remedy provisions under the Act.

  20. The First Respondent, DB Richardson Trading Pty Ltd, is and was at all material times:

    (a)a company incorporated under the Corporations Act 2001 (Cth) and registered since 24 September 2018;

    (b)a “constitutional corporation” within the meaning of s.12 of the Act;

    (c)a “national system employer” within the meaning of s.14 of the Act;

    (d)by reason of the matters at (a) to (c), covered by the Act in respect of its employees; and

    (e)the operator of an electrical services business trading as “Electrafi” in Ashburton, in the state of Victoria.

  21. The Second Respondent, a Mr Desmond Brian Richardson, is and was at all relevant times:

    (a)a natural person capable of being sued;

    (b)the sole director of DB Richardson;

    (c)the operative and controlling mind of DB Richardson;

    (d)responsible for the overall operation, management and control of DB Richardson; and

    (e)responsible for ensuring that DB Richardson complied with its legal obligations under the Act.

  22. In or about April 2021, the FWO commenced an investigation into the First Respondent in respect of two former employees who were employed to work for the First Respondent:

    (a)as a junior apprentice on a casual basis from 9 January 2020 to 21 April 2020 and then on a part-time basis from 22 April 2020 to 3 December 2020 (employee 1); and

    (b)as an adult apprentice on a casual basis from 17 May 2020 to 27 October 2020 and then on a full-time basis from 28 October 2020 to 26 February 2021 (employee 2).

  23. The investigator, Fair Work Inspector Schebella (FWO Inspector), is and was at all material times appointed under s.700 of the Act. The investigation included correspondence between the FWO Inspector and the Second Respondent by way of email.

  24. On 15 September 2021, FWO Inspector Schebella gave a compliance notice to the First Respondent (Compliance Notice) - the issuing inspector having formed a reasonable belief within s.716(1) of the Act that the First Respondent had contravened various sections of the National Employment Standards in the Act; terms of the Electrical, Electronic and Communications Award 2010 (Electrical Award 2010); and, from 13 November 2020, terms of the Electrical, Electronic and Communications Award 2020 (Electrical Award 2020).

  25. In respect of employee 1, the FWO Inspector determined the Respondents had breached:

    (a)clause 16.4(a) of the Electrical Award 2010 (junior apprentice minimum wage)

    (b)clause 16.4(a) of the Electrical Award 2020 (junior apprentice minimum wage);

    (c)clause 16 of the Electrical Award 2010 (minimum wage);

    (d)clause 10.3(b) of the Electrical Award 2010 (casual loading of 25% of minimum wage); and

    (e)section 90(2) of the Act (annual leave).

  26. In respect of employee 2, the FWO Inspector determined the Respondents had breached:

    (a)clause 16.4(b) of the Electrical Award 2010 (adult apprentice minimum wage);

    (b)clause 16.4(b) of the Electrical Award 2020 (adult apprentice minimum wage);

    (c)clause 16 of the Electrical Award 2010 (minimum wage);

    (d)clause 10.3(b) of the Electrical Award 2010 (casual loading of 25% of minimum wage); and

    (e)section 90(2) of the Act (annual leave).

  27. By the Compliance Notice the First Respondent was required, by 15 October 2021, to take a range of actions to calculate and remedy the direct effects of the identified contraventions matters and keep a record of same. The FWO specified the time for production of reasonable evidence of compliance with the actions specified therein including proof of payment was by 22 October 2021.

  28. On 15 September 2021, the FWO Inspector received an email from the Second Respondent acknowledging receipt of the Compliance Notice.

  29. On 6 June 2022, the FWO commenced proceedings in this Court.

  30. The FWO claimed the First Respondent breached s.716(5) of the Act by failing to take the action required by the Compliance Notice by 15 October 2021 or at all and by failing to produce to the FWO evidence of its compliance with the Compliance Notice by 22 October 2021 or at all.

  31. The FWO also claimed that the Second Respondent had actual knowledge of the Compliance Notice given to the First Respondent and the requirement to comply within the timeframe specified, that he had actual knowledge that the First Respondent failed to comply with the Compliance Notice and that he was an intentional participant in the First Respondent’s failure to comply, such that he was involved within the meaning of s.550(2)(c) of the Act in the First Respondent’s contravention of s.716(5).

    Relief sought

  32. By its Application for Default Judgment, the FWO sought relief including declarations that:

    a.the First Respondent contravened section 716(5) of the Fair Work Act 2009 (Cth) (FW Act) by failing to comply with a compliance notice given to it on 15 September 2021 (Compliance Notice); and

    b.the Second Respondent was involved in, within the meaning of section 550(2) of the FW Act, the First Respondent’s contravention of section 716(5) of the FW Act by failing to comply with the Compliance Notice.

  33. The Application for Default Judgment also sought orders that:

    3.a. pursuant to section 545(1) of the Act that the First Respondent take the steps required by the Compliance Notice within 28 days of this order, by:

    i. calculating and paying to the Applicant the outstanding entitlements it was required to pay to [the employees] (Employees) by the Compliance Notice (Outstanding Entitlements);

    ii. calculating and paying superannuation contributions into the Employees’ nominated superannuation funds for any additional superannuation contributions it is required to pay under clause 19.2 of the Electrical, Electronic and Communications Award 2020 in respect of the Outstanding Entitlements referred to at paragraph 3(a)(i) above (Outstanding Superannuation);

    iii. preparing and producing to the Applicant a schedule outlining the First Respondent’s calculations of the Outstanding Entitlements and Outstanding Superannuation as set out in paragraphs 3(a)(i) and 3(a)(ii) above; and

    iv. providing evidence to the Applicant that the Outstanding Superannuation as set out in paragraph 3(a)(ii) above has been rectified;

    b. pursuant to section 547(2) of the FW Act, within 28 days of this order, the First Respondent pay interest to the Applicant in respect of the Outstanding Entitlements required to be paid under paragraph 3(a)(i) above;

    c. the Applicant distribute to the Employees the amounts paid pursuant to paragraphs 3(a)(i) and 3(b) above within 180 days of the payment being made;

    d. the matter is adjourned to a date to be fixed for a further hearing in respect of the Applicant’s claim for penalties to be imposed on the First and Second Respondent pursuant to section 546(1) of the FW Act for the contraventions set out at paragraph 2 above;

    e. the Applicant file and serve evidence and submissions relating to penalty no later than 28 days prior to the date of the hearing fixed pursuant to paragraph 3(d) above;

    f. the First and Second Respondents file and serve evidence and submissions relating to penalty no later than 14 days prior to the date of the hearing fixed pursuant to paragraph 3(d) above;

    g.the Applicant file and serve any submissions in reply relating to penalty no later than 7 days prior to the date of the hearing fixed pursuant to paragraph 3(d) above;

    h.        the parties have liberty to apply; and

    i.         such further order or orders as the Court considers appropriate.

  1. In the Application for Default Judgment, the FWO foreshadowed that it would seek penalties to be programmed for separate hearing at a later date.

    consideration

    Are the Respondents in default?

  2. The Respondents have respectively failed to:

    (a)file a notice of address for service by 23 September 2022 as required by r.6.01 of the Rules;

    (b)file a response and defence by 30 September 2022 as required by rr.4.03(3) and 4.04(3)(a) of the Rules;

    (c)comply with Court orders of 25 August 2022 as required by r.13.04(2)(b)(ii) of the Rules;

    (d)comply with Court orders of 26 October 2022 as required by r.13.04(2)(b)(ii) of the Rules; and

    (e)attend the hearing on 13 December 2022 and defend the proceeding with due diligence as required by r.13.04(2)(b)(iv) of the Rules.

  3. I am therefore satisfied that the Respondents are in default within the meaning of r.13.04(2) of the Rules.

    Should default judgment be entered and a declaration be made against the Respondents?

  4. The principles guiding the exercise of the Court’s power in relation to default judgment are well settled.

  5. The Court may make an order under r.13.05(2)(c) of the Rules if it is satisfied that the document, which the applicant has filed with the application, is on its face a statement of claim which complies with the rules of pleading set out in the Federal Court Rules 2011 (Cth). The Federal Court Rules apply to general federal law proceedings in this Court pursuant to r.1.06(3) of the Rules. The statement of claim must plead at least one reasonable cause of action that supports the granting of the relief sought in the application and “each element of the relevant civil wrong” of which the applicant complains must be “properly and discretely pleaded in the statement of claim”: Macquarie Bank Limited v Seagle [2005] FCA 1239 at [24].

  6. The Court does not require proof by way of evidence but only requires that there is a claim for the relief sought: Arthur v Vaupotic Investments Pty Ltd [2005] FCA 433 at [3]; Mildura Grand Pty Ltd (in liq) v Bendigo Skyrider Pty Ltd [2011] FCA 626 at [9]. Nonetheless, it is permissible to adduce evidence relevant to relief: Australian Competition and Consumer Commission v Dataline.Net.Au Pty Limited [2006] FCA 1427, at [50] and [51].

  7. In any event, the Court retains a discretion not to make an order under r.13.05(2)(c) of the Rules even if the preconditions for making an order are satisfied: Speedo Holdings B.V. v Evans (No 2) [2011] FCA 1227 at [20] (Flick J).

  8. I am satisfied that the statement of claim filed in this matter and upon which the FWO relies complies with the rules of pleading and properly pleads a cause of action that supports the granting of relief. In particular, I am satisfied that the facts alleged in the statement of claim establish that the First Respondent contravened s.716(5) of the Act and that the Second Respondent was a person involved, within the meaning of s.550(2) of the Act, in the First Respondent’s contravention.

  9. This Court has a wide discretion to make declarations, including in circumstances where due to their default, the respondents are deemed to have made admissions.  In this respect, there is no longer a requirement for there to be a proper contradictor before declaratory relief can be granted: Australian Competition and Consumer Commission v MSY Technology Pty Ltd [2012] FCAFC 56 at [30] per Greenwood, Logan and Yates JJ. However, appropriate caution should be exercised and the particular characteristics of an application for default judgment should be borne in mind. In particular, default judgment is given on the basis of the claim as pleaded by the applicant and in the absence of a defence or contradictory evidence. Accordingly, it is appropriate to make clear that there has been no adjudication on the merits of the FWO’s claims by including wording in the declaration to the effect that the declarations are made “upon admissions which the respondents in question are taken to have made consequent upon their non-compliance with the requirements of the rules of Court”, as suggested by Kiefel J, as her Honour then was, in Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd [2006] FCA 1427 at [59].

  10. I am satisfied that this is an appropriate case for declaratory relief, if for no other reason than to record the Court’s disapproval of the contravening conduct.

    Should orders be made requiring compliance and payment of interest?

  11. On the basis of the admissions taken to have been made by the Respondents, compliance with the Compliance Notice remains outstanding. I am satisfied that it is appropriate to make orders of the kind sought by the FWO, that require the First Respondent to take the steps that were required by the Compliance Notice and that the First Respondent pay interest on the amount of the underpayment owing to the former employees.

    Conclusion

  12. For the above reasons, declarations and orders will be made as against the First Respondent and Second Respondent. The question of what penalty (if any) be ordered will be fixed for separate hearing.

I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Mansini.

Associate:

Dated:       16 December 2022

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Cases Citing This Decision

1

Fair Work Ombudsman v HML Holdings Pty Ltd [2023] FedCFamC2G 119
Cases Cited

6

Statutory Material Cited

0

Macquarie Bank Ltd v Seagle [2005] FCA 1239
Arthur v Vaupotic Investments Pty Ltd [2005] FCA 433
Rathner, in the matter of Mildura Grand Pty Ltd (in liq) v Bendigo Skyrider Pty Ltd [2011] FCA 626