Fair Work Ombudsman v Express Cars Direct Australia Wide Pty Ltd
[2024] FedCFamC2G 775
•23 August 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Express Cars Direct Australia Wide Pty Ltd [2024] FedCFamC2G 775
File number: MLG 1274 of 2023 Judgment of: JUDGE SYMONS Date of judgment: 23 August 2024 Catchwords: INDUSTRIAL LAW – Fair Work Act – compliance notice issued pursuant to s 716 – determination of primary and accessorial liability – failure to comply with compliance notice – where first respondent challenges the underlying underpayment contravention but has not sought to bring a review application under s 717 – liability established – declarations made – question of further orders reserved – matter set down for penalty hearing Legislation: Fair Work Act 2009 (Cth), ss 550, 567, 568, 716, 717
Federal Circuit and Family Court of Australia Act 2021 (Cth), s 141
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth), rr 9.03(1), 13.05(2)
Cases cited: Fair Work Ombudsman v ANSA Finance Pty Ltd [2022] FedCFamC2G 833
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 Double Hao International Pty Ltd [2024] FedCFamC2G 343
Fair Work Ombudsman v Extrados Solutions Pty Ltd & Anor [2014] FCCA 815
Fair Work Ombudsman v Gothic Downs Pty Ltd [2022] FedCFamC2G 21
Fair Work Ombudsman v Joys Child Care Ltd & Anor (No 2) [2020] FCCA 2326
Fair Work Ombudsman v Taing [2024] FedCFamC2G 270
Hindu Society of Victoria (Australia) Inc v Fair Work Ombudsman [2016] FCCA 221; (2016) 304 FLR 264
Division: Division 2 General Federal Law Number of paragraphs: 79 Date of last submissions: 8 August 2024 Date of hearing: On the papers Place: Melbourne Solicitor for the Applicant: Mr S Witton, Australian Government Solicitor Solicitor for the Respondents: Mr I Hone, Hone Legal ORDERS
MLG 1274 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: EXPRESS CARS DIRECT AUSTRALIA WIDE PTY LTD
First Respondent
BILLY PETREVSKI
Second Respondent
ORDER MADE BY:
JUDGE SYMONS
DATE OF ORDER:
23 AUGUST 2024
THE COURT DECLARES THAT:
1.The first respondent contravened s 716(5) of the Fair Work Act 2009 (Cth) by failing to comply with a compliance notice issued on 26 August 2022.
2.The second respondent was involved, within the meaning of s 550(2) of the Fair Work Act 2009 (Cth), in the first respondent’s contravention of s 716(5) of that Act.
THE COURT ORDERS THAT:
3.The applicant file and serve any further affidavits directed at the issue of penalty on or before 12 September 2024.
4.The respondents file and serve any further affidavits directed at the issue of penalty on or before 26 September 2024.
5.The applicant file and serve written submissions on the question of penalty and any further relief sought on or before 10 October 2024.
6.The respondents file and serve responsive written submissions on or before 24 October 2024.
7.The matter be listed for penalty hearing before Judge Symons at the Federal Circuit and Family Court of Australia in Melbourne on 31 October 2024 at 10.00 am on an estimate of half a day.
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 SYMONS:
This proceeding relates to an alleged contravention of s 716(5) of the Fair Work Act 2009 (Cth) (FW Act) by the first respondent, Express Cars Direct Australia Wide Pty Ltd (Express Cars) and the alleged involvement of the second respondent, Mr Billy Petrevski (Mr Petrevski), in this contravention pursuant to s 550(1) of the FW Act.
BACKGROUND
Express Cars is a business operating in the transport industry. Mr Petrevski is the sole director, secretary and shareholder of Express Cars.
Pursuant to s 716(2) of the FW Act, a compliance notice was issued to Express Cars by Fair Work Inspector (FWI) Villanueva on 26 August 2022 in respect of Mr Marco Lucente (Compliance Notice).
It is not disputed that Mr Lucente was at relevant times employed by Express Cars.
The Compliance Notice required Express Cars, by 3 October 2022, to take steps to calculate Mr Lucente’s entitlement to payment of wages and annual leave on termination and in the event of an underpayment, make a payment of the outstanding amount to Mr Lucente along with any additional superannuation contributions and produce evidence to the Fair Work Ombudsman (Ombudsman) that each of these steps had been taken.
The steps required to be taken by Express Cars under the Compliance Notice have not been taken. The reasons why, including whether Express Cars had a “reasonable excuse”[1] for not doing so, are explored in more detail later in these reasons.
[1] Section 716(6) Fair Work Act 2009 (Cth).
Orders sought by the Ombudsman
In this application the Ombudsman asks the Court to make:
(a)declarations of contraventions of the FW Act by each of the respondents pursuant to s 141 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) and ss 567 and 568 of the FW Act;
(b)orders that the first respondent take the steps required by the Compliance Notice, including by calculating and paying to Mr Lucente what is referred to as the “Underpayment Amount” (being the amount of $4,380.62);
(c)orders that Express Cars pay interest on the Underpayment Amount;
(d)orders imposing pecuniary penalties upon Express Cars for its contravention of the FW Act and upon Mr Petrevski personally in respect of his involvement in Express Car’s contravention.
Although the respondents make some admissions, including that Express Cars failed to take the steps required by the Compliance Notice, they contest the orders sought by the Ombudsman.
In accordance with the usual practice of this Court in dealing with such matters, it has been agreed that questions of liability should be determined initially, and this judgment deals only with this preliminary issue.
Statutory framework
In its written outline of submissions on liability the Ombudsman accurately describes the operation and intent of the statutory scheme within which the FW Act compliance notice regime operates as follows:[2]
[2] Outline of submissions in relation to liability at [13]-[21].
13. Section 716 of the FW Act empowers an inspector to issue a compliance notice to address non-compliance with the FW Act, including non-compliance with a modern award.[3]
[3] See ss 716 and 717 of the FW Act and Fair Work Ombudsman v Joys Child Care Ltd & Anor (No 2) [2020] FCCA 2326, [11].
14. The notice may be issued to a person.[4]
[4] Section 2C of the Acts Interpretation Act 1901 (Cth).
15. A compliance notice may require the person to:
15.1take specified action to remedy the effects of a contravention; and
15.2produce reasonable evidence of the person’s compliance with the compliance notice,
within the time specified in the notice.
16.A compliance notice must also contain the matters specified in s 716(3) of the FW Act.
17.A person who, without a reasonable excuse, fails to comply with a compliance notice will have contravened s 716(5), which is a civil remedy provision.
18.A contravention of s 716(5) is proven by establishing that the compliance notice was given and there has been non-compliance with the compliance notice. Actual proof of the underlying contraventions of a modern award is not required.[5]
19.The regime provided for in s 716 of the FW Act enables the efficient rectification of underpayments. In Fair Work Ombudsman v Joys Child Care Limited & Anor (No 2) [2020] FCCA 2326, [11] Judge Altobelli stated:
‘A compliance notice issued pursuant to section 716 of the FW Act provides an important statutory mechanism for a Fair Work Inspector to deal with non-compliance with minimum entitlements in the FW Act as an alternative to commencing litigation for each underlying contravention of an entitlement. The compliance notice framework creates an opportunity for a person to whom it is served to rectify the matters set out in the notice and gain protection from civil remedy proceedings in respect of the underlying contravention(s) and payment of outstanding employee entitlements. Section 717 of the FW Act also provides a clear mechanism for a recipient of the notice to seek a review of the notice’
(footnotes omitted)
20.The ability for a Fair Work Inspector to issue a compliance notice is to provide a mechanism for the efficient and cost-effective rectification of identified contraventions of the FW Act, including underpayments, as an alternative to commencing litigation.
21.Section 717 of the FW Act provides an avenue for the recipient of a compliance notice to challenge the notice on the grounds that it has not committed one or more of the contraventions set out in the notice, or that the notice does not comply with s 716(2) or (3) of the FW Act.
[5] Hindu Society of Victoria (Australia) Inc v Fair Work Ombudsman [2016] FCCA 221; (2016) 304 FLR 264, [26] citing Judge Jarret in Fair Work Ombudsman v Extrados Solutions Pty Ltd & Anor [2014] FCCA 815.
Procedural background
These proceedings were commenced by way of an application and statement of claim filed on 17 July 2023.
At the first directions hearing on 28 August 2023 there was no appearance by or on behalf of either respondent. Orders were made that would facilitate the filing of an application in a proceeding (and the listing of a hearing in November) seeking judgment in default.
This course ultimately became unnecessary when on 20 October 2023, the first and second respondents filed a Notice of Address for Service indicating legal representation had been obtained.
On 2 November 2023, the following orders (November orders) were made by consent:
…
2.By 24 November 2023, the Applicant file and serve any evidence in relation to liability.
3.By 22 December 2023, the Respondents file and serve any evidence in relation to liability.
4. By 29 January 2024, the Applicant file and serve submissions on liability.
5. By 12 February 2024, the Respondents file and serve submissions in reply.
6. By 26 February 2024, the Applicant to file and serve any submissions in response.
7. The matter be listed for hearing on liability on 30 May 2024 at 2:15pm.
…
On 9 November 2023, the respondents filed a joint defence in which they indicated they were opposed to the making of the declarations and orders sought by the Ombudsman. The defence was prepared by solicitor Mr Hone.
In accordance with the November orders, the Ombudsman filed the affidavit of Tracey Higgs on 24 November 2023 (Higgs affidavit). Ms Higgs is a Senior Investigator employed by the Ombudsman and holds an appointment as an FWI. She supervised the work of FWI Villanueva at relevant times.
Following the filing of the defence, neither the first nor second respondent (or Mr Hone on their behalf) filed any further material as required by the November orders. Mr Hone did not file a Notice of Withdrawal in accordance with r 9.03(1) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (Rules).
On 24 January 2024, the Ombudsman filed written submissions on the question of liability in accordance with the November orders.
In circumstances where both respondents and/or their legal representative ceased engaging in proceedings, the Ombudsman filed an Application in a Proceeding on 8 March 2024 inviting the Court to enter judgment in default against both respondents in accordance with r 13.05(2)(c) of the Rules. The application for default judgment was supported by the affidavit of Samuel Tristan Witton affirmed on 8 March 2024. Mr Witton deposed to having had no further contact with Mr Hone beyond the signing of the November consent orders that timetabled the matter to a liability hearing. The application was accepted for filing and listed for hearing on the date previously allocated to the liability hearing.
THE HEARING ON 28 MAY 2024
When the matter came before me on 28 May 2024, Mr Witton appeared as solicitor advocate for the Ombudsman. When the matter commenced at 10:00am, there was no appearance by Mr Hone on behalf of the respondents. I had my associate attempt to contact Mr Hone by telephone to confirm his whereabouts and to ascertain whether he intended to participate in the hearing. Mr Hone answered and advised he was aware of the hearing, but that he had “no instructions to appear” and instead was “finalising written submissions”.
Upon receipt of this information, I had my associate contact Mr Hone again and advise that he was required to appear via telephone at the hearing and would shortly be dialled in via a Microsoft Teams link. Mr Hone indicated that he had another court engagement also being conducted via Microsoft Teams but did not otherwise indicate that he would not accept the call to join him to the hearing.
When my associate attempted to dial Mr Hone into the hearing at 10:12 and 10:14 am, using the same contact number that had been used to communicate with Mr Hone approximately 10 minutes earlier, Mr Hone did not answer.
Whilst the Ombudsman sought to proceed with the application for default judgment, I expressed reluctance to proceed on that basis, in circumstances where firstly, Mr Hone, (despite failing to appear) had intimated a wish to file written submissions, and secondly, because the Court was entirely unaware of what knowledge (if any) the respondents had concerning Mr Hone’s conduct. Whilst cognisant of the inconvenience caused to the Ombudsman, I had concerns as to whether the acts of Mr Hone could reasonably engage the default jurisdiction of the Court and whether those acts could or should be imputed to the respondents.
The Court made orders as follows (May Orders):
1. The matter is adjourned to 8 August 2024 at 10:00am for mention.
2. Mr Ian Hone of Hone Legal is required to appear in person on the adjourned date, and to provide an explanation as to his conduct in the proceeding.
3. The legal representative of the applicant is permitted to appear via electronic communication on the adjourned date.
THE COURT NOTES THAT:
A. In the event that Mr Hone fails to appear on the adjourned date and/or fails to provide an acceptable explanation for his conduct to date in this proceeding, the Court may refer the matter of his conduct to the Victorian Legal Service Board & Commissioner.
EVENTS FOLLOWING THE HEARING ON 28 MAY 2024
At 11:10 am on 28 May 2024, Mr Hone filed the foreshadowed written submissions on behalf of the respondents, notwithstanding that the deadline for this to occur had expired almost three months prior and that he had neither sought nor been granted leave to do so.
The respondents’ submissions read in full:
1. The Respondents admit that they failed to respond to the Compliance Notice referred to in the Statement of Claim filed herein in accordance with the requirements of the legislation. Notwithstanding that the Respondents did respond to the notice by email identifying that the employee had been paid holiday pay over a period of approximately 2 months from mid February 2021 to mid April 2021 as well as a fortnight each year over the Christmas-New Year shutdown.
2. The Respondents submit however that upon a proper calculation all entitlements have been paid to the employee and there is no amount owing to the employee as alleged in the said notice.
3. The Respondents rely upon the documents attached hereto evidencing the payments of all amounts due to the employee.
4. In particular the attached documents evidence the payment of the following hours of holiday pay being paid to the employee which are not acknowledged by the employee or take into account by the said Notice: One fortnight per year over the Christmas – New Year shutdown period and on or about 15 February 2021 to on or about 14 April 2021 during which period the employee was off work for an operation and paid holiday pay which was inadvertently not deducted from the records of holiday pay outstanding to the employee. This is reflected by the fact that over this period the First Respondent did not receive income from its client Calleja Transport which was the client to whom the employee’s services were supplied. These periods exceed the alleged accumulated.
5. In the premises whilst there has been a breach by the Respondents by reason of their failure to respond to the said notice there has been no substantive failure on their part as in fact all entitlements have been paid to the employee and the employee’s denials of same are simply untrue.
6. In the circumstances there is no basis to order the Respondents to pay any entitlements to the employees or any interest on unpaid entitlements or any penalty for failure to pay all due entitlements as this is simply not the case. Further it is submitted that in the circumstances in the absence of an underlying failure to pay all due entitlements to the employee the Court should exercise it’s discretion not to impose any penalty on the Respondents for their failure to respond properly to the said notice notwithstanding such failure is acknowledged as in and of itself a breach of the obligations of the Respondents.
Despite making reference to documents, the submissions did not include any attachments.
On 8 August 2024, again without seeking leave and some seven months after the deadline for doing so had passed, the respondents filed (at 3.44 am) an affidavit of Mr Petrevski with annexures running to 172 pages (Petrevski affidavit).
THE HEARING ON 8 AUGUST 2024
When the matter came before me on 8 August 2024, Mr Hone appeared in person and Mr Witton, on behalf of the Ombudsman, appeared via Microsoft Teams.
Upon the commencement of the hearing, I noted that the reason for the matter having been called on was for the respondent’s lawyer, Mr Hone, to explain the series of events which had occurred in the period beginning in November last year, up until 28 May 2024, and events since that time, particularly noting the Ombudsman’s efforts to communicate with him.
In response, Mr Hone told the Court that he had found it exceptionally difficult to obtain coherent instructions in this matter. He said that the respondents had been acting under enormous financial and personal pressure throughout the course of these proceedings. He raised matters from the bar table that were properly directed at questions of penalty but intimated that the respondents now sought to introduce a defence of “reasonable excuse” and made an oral application to amend the respondents’ defence to do so. The Ombudsman opposed the application.
I refused the amendment application and gave reasons for doing so that primarily reflected the lateness of the application, the opportunities available to make the application at an earlier stage and the tenuous basis upon which it was put; the Petrevski affidavit, which I gave leave to the respondents to read, confirmed only that the respondents sought to contest the underlying underpayment contravention.
It was decided that the question of liability would be reserved and determined “on the papers” with those papers comprising:
For the Ombudsman - the statement of claim filed on 17 July 2023, the Higgs affidavit and the Ombudsman’s outline of submissions on liability filed on 24 January 2024.
For the respondents - the defence filed on 9 November 2023, the Petrevski affidavit and the respondents’ submissions filed on 28 May 2024.
THE CASE ON LIABILITY
In order to establish that Express Cars contravened s 716(5) of the FW Act, the Ombudsman must prove the following facts:
(a)that a compliance notice was given to Express Cars;
(b)that the compliance notice required Express Cars to do one or more things contemplated by s 716(2) of the FW Act; and
(c)that Express Cars did not comply with the terms of the compliance notice.
In order to establish these facts, the Ombudsman relied upon the Higgs affidavit.
Evidence of the alleged contravention
The narrative set out below is derived from the Higgs affidavit which was not contradicted or undermined by anything contained in the Petrevski affidavit.
The Compliance Notice
Mr Lucente was employed by Express Cars on a full-time basis between 29 April 2019 and 10 May 2021. By virtue of the nature of his work he was covered by the Road Transport & Distribution Modern Award 2020 (the Award) and was entitled to the minimum rates of pay and other entitlements prescribed by that instrument.
From on or about 22 June 2021 to 29 November 2021, following a request for assistance from Mr Lucente, FWI Villanueva conducted an investigation into the circumstances of Mr Lucente’s employment with Express Cars. In the course of that investigation there were numerous communications between members of the Ombudsman’s Compliance and Enforcement Group, including FWI Villanueva, and Mr Petrevski.
Although FWI Villanueva’s employment with the Ombudsman ended on 24 March 2023 (before the start of this proceeding), it may be inferred from the face of the Compliance Notice and the evidence matrix prepared by FWI Villanueva with respect to the Compliance Notice[6] that during the course of the investigation, FWI Villanueva formed a reasonable belief, pursuant to s 716(1) of the FW Act that:
(a)Mr Lucente was employed by Express Cars on a full-time basis during the period 29 April 2019 until 17 May 2021;
(b)Mr Lucente was covered by the Award and was classified as a transport worker grade 6;
(c)Express Cars had contravened provisions of the Award and the National Employment Standards (NES) by not paying Mr Lucente payments in respect of wages and accrued untaken annual leave on termination of his employment.
[6] Higgs affidavit, annexure TH-25.
By reason of her reasonable belief that Express Cars had contravened the Award and the NES, FWI Villanueva issued the Compliance Notice to Express Cars.[7]
[7] Higgs affidavit, annexure TH-24.
The Compliance Notice required Express Cars to:
(a)calculate Mr Lucente’s entitlements under the Award with respect to clauses 18.5(a) (payment on termination of employment) and 24.4 (annual leave loading) and s 90(2) of the FW Act (annual leave on termination);
(b)rectify any underpayments of those entitlements by 3 October 2022;
(c)calculate and pay any additional superannuation contributions required by clause 20.2 of the Award in respect of any identified underpayments; and
(d)provide a schedule of Express Cars’ calculations and proof of rectification of any underpayments by 10 October 2022.
The Compliance Notice contained an explanation regarding the consequences of any failure to comply, including that the recipient may contravene a civil remedy provision. The Compliance Notice also informed Express Cars that it may apply for review of the Compliance Notice on the grounds that the company had not committed a contravention as set out in the notice and/or that the Compliance Notice did not comply with sections 716(2) or 716(3) of the FW Act.
Ms Higgs deposes that on 26 August 2022, the Compliance Notice was posted by prepaid express post to Mr Petrevski, addressed to the location of the company’s registered office. The Compliance Notice was also sent by prepaid express post to the alternative mailing address for Express Cars (this being a PO Box in Taylors Lakes, Victoria). Ms Higgs produced evidence of the tracking numbers and the receipt for both of these deliveries. The Compliance Notice was also sent to the respondents at two email addresses, through which Mr Petrevski had been communicating with the Ombudsman. Ms Higgs produced evidence of an automated delivery receipt confirmation for both email addresses. On 21 September 2022, during a phone conversation with FWI Villanueva, Mr Petrevski confirmed his receipt of the Compliance Notice. In their defence, the respondents admit that they received the Compliance Notice by post and by email.[8]
[8] Paragraph 3 of the respondents’ defence read with paragraphs 9-11 of the applicant’s statement of claim.
Ms Higgs gave evidence that the Ombudsman was not provided with any evidence that Express Cars had taken steps to comply with the Compliance Notice either by 3 October 2022 or at any time after. This evidence is consistent with the position recorded in the respondents’ defence which is to admit the allegation that Express Cars failed to take the action specified in the Compliance Notice.[9]
[9] Paragraph 5 of the respondents’ defence, read with paragraph 14 of the applicant’s statement of claim.
It is also the case that there is no evidence before the Court that Express Cars has made any application under s 717 of the FW Act to the Federal Court, Federal Circuit and Family Court or an eligible State or Territory Court for a review of the Compliance Notice.
Respondents’ response
As their written submissions record, the respondents submit that they should not be found liable for the contraventions alleged by the Ombudsman for the reason that there was no substantive failure on their part because all entitlements have and had been paid to Mr Lucente. The Petrevski affidavit is directed at establishing this point through a combination of assertions and documentary material.
The difficulty for the respondents however is that the vehicle through which to raise an objection of this nature is an application for review made under s 717(a) of the FW Act by which the respondents could argue that Express Cars did not commit any of the contraventions set out in the Compliance Notice and if successful in that endeavour, the Compliance Notice would fall away. However, as noted above, there is no evidence that an application of this kind has been made. Instead, the respondents seek to ventilate the question of compliance by their defence of the present proceeding brought by the Ombudsman. This proceeding alleges a failure to comply with the Compliance Notice. The respondents’ approach is therefore misconceived.
Further, while Mr Hone obliquely raised the possibility of a “reasonable excuse” defence, the respondents were refused leave to amend their pleading so as to introduce such a claim and the Petrevski affidavit (which was said to support the grant of leave) contains no evidence that I consider would support such a pleading. Mr Petrevski simply deposes to the view reflected in the respondents’ written submissions and defence that upon termination, Mr Lucente had no outstanding entitlements and then refers to the documents (principally pay slips and bank statements) and circumstances which he says support this conclusion.
Consideration
The Ombudsman seeks declarations and orders against the respondents in relation to an alleged contravention of s 716(5) of the FW Act.
The facts that the Ombudsman must prove to establish those contraventions are that:
(a)a Fair Work Inspector formed the reasonable belief that Express Cars had contravened one or more of the fair work instruments referred to in s 716(1);
(b)the Fair Work Inspector the Compliance Notice requiring Express Cars to do one or more things contemplated by s 716(2);
(c)the Compliance Notice was given to Express Cars; and
(d)Express Cars failed to comply with the Compliance Notice.
To establish liability on the part of Mr Petrevski, the Ombudsman must also establish to the required level of proof that Mr Petrevski was “involved” in the company’s contravention. This is a matter to which I will return.
Inspector’s reasonable belief
In relation to the Contravention Notice, the Ombudsman must prove that a Fair Work Inspector formed the reasonable belief that Express Cars had contravened one or more of the fair work instruments referred to in s 716(1) of the FW Act.
In determining whether or not there was a reasonable belief, it is not necessary for the Court to be satisfied on the balance of probabilities that the underlying contraventions of fair work instruments have in fact occurred. The proper test is whether there was a rational basis for the Inspector’s belief based on the information available to the Inspector at the time the reasonable belief was formed.[10]
[10] Fair Work Ombudsman v Gothic Downs Pty Ltd [2022] FedCFamC2G 21 at [22].
I am satisfied on the evidence that FWI Villanueva formed a reasonable belief that Express Cars had contravened one or more of the instruments referred to in s 716(1) of the FW Act. Although FWI Villaneuva did not give direct evidence, I accept that it is clear from the matrix that she prepared that she held the belief that Express Cars had contravened certain provisions of the Award and the NES and that there was a rational basis for the holding of this belief.
In their defence, the respondents appear to deny that FWI Villaneuva formed a reasonable belief in relation to the alleged contraventions of the Award and the NES. However, the defence is based on the proposition that FWI Villanueva was “in error” because there were no contraventions. That is not the test. Actual proof of the underlying contraventions is not required.
Compliance Notice required Express Cars to take steps
Pursuant to s 716(2) of the FW Act, a compliance notice may require a person to do either or both of the following within such reasonable time as is specified, namely:
(a)take specified action to remedy the direct effects of the contravention the Inspector reasonably believes to have occurred; and/or
(b)to produce reasonable evidence of the person’s compliance with the notice.
In addition, a compliance notice must meet certain formal requirements as to its content. Section 716(3) requires that a notice:
(a)set out the name of the person to whom the notice is given;
(b)set out the name of the inspector who gave the notice;
(c)set out brief details of the contravention;
(d)explain that a failure to comply with the notice may contravene a civil remedy provision;
(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; or
(ii)the notice does not comply with ss 716(2) or (3).
I am satisfied that the Compliance Notice complied with the requirements of ss 716(2) and (3).
The Compliance Notice required steps to be taken of the type contemplated by s 716(2) in that it required Express Cars to calculate Mr Lucente’s entitlement to wages and accrued but untaken annual leave pursuant to the Award and the NES. The Compliance Notice required Express Cars to rectify any underpayment and to provide evidence to the Ombudsman of the steps taken.
The Compliance Notice provided a period greater than 28 days for compliance. In different proceedings, the Ombudsman has informed this Court that 28 days “is the standard timeframe” provided by the Ombudsman for compliance with statutory notices[11] and I accept this to be a reasonable period in the circumstances of this case.
[11] Refer Fair Work Ombudsman v ANSA Finance Pty Ltd [2022] FedCFamC2G 833 at [137].
Express Cars was given the Compliance Notice
As noted earlier, the respondents admit in their defence that they received the Compliance Notice by post and by email.
Express Cars failed to comply with the Compliance Notice
The respondents admit that they failed to take the steps identified in the Compliance Notice.
Reasonable excuse
A defence of reasonable excuse is not properly before the Court. However, the narrative pressed by the respondents is that their failure to take the steps required by the Compliance Notice can be explained and is justified because they challenge the underlying contraventions.
However, as Judge Forbes observed in Fair Work Ombudsman v ANSA Finance Pty Ltd [2022] FedCFamC2G 833 at [148], the Court’s consideration of whether there is a “reasonable excuse” is properly directed to the steps required to be taken under the compliance notice and is not an enquiry into whether the alleged substantive contravention of fair work instruments has been made out by the Ombudsman or whether the respondents have a proper basis to contest the Inspector’s reasonable belief.
At [151]-[152] of Ansa Finance, his Honour set out the following reasoning which I respectfully adopt:
In my view it is implicit from the text of the legislative scheme that a disagreement with the alleged substantive contravention or the form of the notice does not constitute a reasonable excuse unless an application for review has been made. If an application for review is made the Court has power to stay its operation on terms that it considers appropriate. Parliament cannot have intended that an employer’s disagreement with a notice, without more, could nullify the operation of s 716(5).
In my view, the question for the Court is whether Ansa Finance can establish a reasonable excuse for not being able to do the things that the Compliance Notices required it to do. It is a question properly directed at the recipient’s capacity or ability, rather than its will.
Here, quite plainly, the respondents’ position is that they took no action because they didn’t agree with the matters that underscored the Compliance Notice. This was an exercise of will rather than a decision based on incapacity or inability. Express Cars has not demonstrated a reasonable excuse for its failure to comply with the Compliance Notice.
Accessorial Liability
The respondents admit in their defence that Mr Petrevski was responsible for ensuring that Express Cars complied with the Compliance Notice.[12] The respondents also admit that Mr Petrevski was the sole director of Express Cars, its operative and controlling mind, responsible for the overall operation, management and control of Express Cars and responsible for ensuring that it complied with its legal obligations under the FW Act.[13]
[12] Paragraph 8 of the defence read with paragraph 18 of the statement of claim.
[13] Paragraph 1 of the defence read with paragraphs 1-7 of the statement of claim.
The respondents admit that FWI Villanueva gave Express Cars the Compliance Notice and that the Compliance Notice included a requirement to remedy the direct effects of the underpayment within a specified timeframe.[14]
[14] Paragraph 3 of the defence read with paragraphs 9-12 of the statement of claim.
The respondents admit that Express Cars failed to remedy the direct effects of the underpayment or produce evidence of compliance with the Compliance Notice within the specified timeframe.[15]
[15] Paragraph 5 of the defence read with paragraph 14 of the statement of claim.
The Ombudsman submits, and I accept, that by virtue of the admissions recited above, Mr Petrevski had actual knowledge of the Compliance Notice and the requirements which were imposed on Express Cars, and nonetheless failed to comply as the sole director and controlling mind of Express Cars.
This conclusion is reinforced in my view by the correspondence annexed to the Higgs affidavit and the Petrevski affidavit that reveals, amongst other things, that Mr Petrevski was the person with whom the office of the Ombudsman was dealing with exclusively in the lead up to and following the giving of the Compliance Notice. The material also reveals that Mr Petrevski identified himself as the person responsible for gathering information related to the investigation[16] and was the person to whom a failure to comply notice was sent.[17]
[16] Annexure TH-21 to the Higgs affidavit.
[17] Annexure BP-1 to the Petrevski affidavit.
I am comfortably satisfied in these circumstances that, for the purposes of s 550(2) of the FW Act, Mr Petrevski was involved in Express Car’s contravention of s 716(5) of the FW Act and through the operation of s 550(1) is taken himself to have contravened that provision.
RELIEF
In circumstances where I have found that both Express Cars and Mr Petrevski contravened s 716(5) it is appropriate that I make the declarations sought by the Ombudsman in Annexure A to their submissions on liability.
The Ombudsman also seeks orders that she says would have the effect of requiring Express Cars to “take the steps required by the Compliance Notice” by paying the amount of $4,380.62 plus interest to Mr Lucente. The Ombudsman submits that these orders can be made pursuant to s 545(1) of the FW Act.
This position has in recent times been questioned and there are several decisions of this Court that suggest that an order seeking payment of a predetermined amount is not one that can or should be made in compliance notice proceedings.[18]
[18] For example, 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 Taing [2024] FedCFamC2G 270 and Fair Work Ombudsman v Double Hao International Pty Ltd [2024] FedCFamC2G 343.
The Ombudsman has not been given an opportunity to address this issue. Should she wish to maintain an application for an order requiring an underpayment to be made then this is a matter that can be addressed in submissions on penalty.
The matter will otherwise be set down for a hearing on penalty and procedural orders made in the terms appearing at the beginning of this judgment.
I certify that the preceding seventy-nine (79) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Symons . Associate:
Dated: 23 August 2024
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