Fair Work Ombudsman v Finetune Holdings Pty Ltd and Anor (No.2)
[2012] FMCA 349
•11 May 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v FINETUNE HOLDINGS PTY LTD & ANOR (No.2) | [2012] FMCA 349 |
| INDUSTRIAL LAW – Civil penalty provisions – alleged failure to comply with notice to produce – whether voluntary resolution and compliance undertaking processes complied with – agreement for payment in State Magistrates Court – whether reasonable excuse not to comply – objects of Fair Work Act – statutory powers and duties of Fair Work Ombudsman and Fair Work Inspectors. |
| STATUTES – Interpretation – objects – statutory powers and duties of Fair Work Ombudsman and Fair Work Inspectors. |
| WORDS AND PHRASES – “ensure”. |
| Fair Work Act 2009 (Cth), ss.3, 14(1), 535, 536, 539(1) and (2), 546(1), 550, 568, 570, 700, 701, 706, 712(1), (2), (3) and (4), 713(1) and (2), 715(2) and (4), 681, 682 Fair Work Regulations 2009 (Cth), Part 3-6 Federal Magistrates Act 1999 (Cth), s.16 Trade Practices Act 1974 (Cth), s.155 |
| Alcantara & Anor v Buildpower Pty Ltd (2010) 199 IR 73; [2010] FMCA 626 R v The Credit Tribunal; Ex parte General Motors Acceptance Corporation, Australia (1977) 137 CLR 545 Riley McKay Pty Ltd v Bannerman (1977) 31 FLR 129 Village Building Co Limited v Airservices Australia & Anor (2008) 170 FCR 147; [2008] FCAFC 57 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | FINETUNE HOLDINGS PTY LTD |
| Second Respondent: | ANTONINO RECHICHI |
| File Number: | PEG 142 of 2010 |
| Judgment of: | Lucev FM |
| Hearing date: | 7 April 2011 |
| Date of Last Submission: | 7 April 2011 |
| Delivered at: | Perth |
| Delivered on: | 11 May 2012 |
REPRESENTATION
| Counsel for the Applicant: | Mr S Ellis |
| Solicitor for the Applicant: | Gregory Spain, Office of the Fair Work Ombudsman |
| For the First Respondent: | No appearance |
| For the Second Respondent: | Mr A Rechichi in person |
DECLARATION AND ORDERS
The Court declares that:
(a)the first respondent, by failing to comply with a Notice to Produce Records or Documents dated 23 November 2009 issued pursuant to s.712 of the Fair Work Act 2009 (Cth) to make available the following records or documents by 5.00pm on 8 December 2009:
(i)pay advice in the form of pay slips for Mr King Cheong from 1 September 2008 to 31 August 2009;
(ii)time records in the form of rosters for Mr King Cheong from 1 September 2008 to 31 August 2009;
(iii)tax file number declaration for Mr King Cheong;
(iv)job description detailing the duties for Mr King Cheong;
(v)records indicating termination date (example: resignation letter or letter of termination),
contravened s.712(3) of the Fair Work Act 2009 (Cth).
(b)The second respondent has, in respect of the contravention of the Fair Work Act 2009 (Cth) referred to in sub-paragraph (a) above:
(i)Aided and abetted the first respondent to engage in the contravention; and
(ii)was directly or indirectly, knowingly concerned in, or party to the contravention,
for the purposes of s.550 of the Fair Work Act 2009 (Cth), and has therefore contravened s.712(3) of the Fair Work Act 2009 (Cth).
The Court orders that:
(a)the matter be adjourned to a directions hearing at 4.00pm on 21 May 2012;
(b)costs, if any, be reserved.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG 142 of 2010
| FAIR WORK OMBUDSMAN |
Applicant
And
| FINETUNE HOLDINGS PTY LTD |
First Respondent
| ANTONINO RECHICHI |
Second Respondent
REASONS FOR JUDGMENT
Application
The applicant, the Fair Work Ombudsman,[1] seeks declarations and orders against each respondent, Finetune Holdings Pty Ltd[2] and Antonino Rechichi,[3] for an alleged contravention of the Fair Work Act 2009 (Cth).[4]
[1] “FW Ombudsman”.
[2] “Finetune Holdings”.
[3] “Mr Rechichi”.
[4] “FW Act”.
The FW Ombudsman alleges that:
a)Finetune Holdings failed to comply with a notice to produce records or documents issued under s.712 of the FW Act;[5] and
b)Mr Rechichi also contravened s.712 of the FW Act by virtue of s.550 of the FW Act, as Mr Rechichi was involved in Finetune Holdings’ contraventions.
[5] “NTP”.
There is no admission of liability by Finetune Holdings (who are unrepresented in these proceedings)[6] or Mr Rechichi. These Reasons for Judgment deal only with the issue of the liability of Finetune Holdings and Mr Rechichi for the alleged contravention of s.712 of the FW Act by reason of the alleged failure to comply with the NTP.[7]
[6] See Fair Work Ombudsman v Finetune Holdings Pty Ltd & Anor [2010] FMCA 889 where Mr Rechichi’s application for leave to appear as a non-lawyer on behalf of Finetune Holdings was dismissed.
[7] The FW Ombudsman did not press for relief in relation to an alleged breach of s.535 of the FW Act.
Some relevant legislative provisions briefly discussed
Under s.539(2) of the FW Act the FW Ombudsman, who is a Fair Work Inspector[8] for the purposes of the FW Act,[9] has standing to bring proceedings under the FW Act. Those proceedings may be brought for compliance purposes, including determining whether the FW Act has been complied with.[10] To facilitate FW Inspectors exercising their powers under the FW Act for compliance purposes s.712(1) of the FW Act provides FW Inspectors with the power to require persons to produce records or documents. Section 712(3) of the FW Act is a civil penalty provision.[11] Failure to comply with a notice to produce records or documents under s.712(1) of the FW Act is a contravention of the civil penalty provision in s.712(3) of the FW Act for which this Court is empowered to impose a penalty under the FW Act.[12] The Court is also empowered to make declarations in relation to alleged contraventions of the FW Act.[13]
Factual background related to the NTP
[8] “FW Inspector”.
[9] FW Act, s.701
[10] FW Act, s.706.
[11] FW Act, s.539(1) and (2).
[12] FW Act, s.546(1).
[13] Federal Magistrates Act 1999 (Cth), s.16; FW Act, s.568.
Formal matters
David Warner[14] and Michael Truong[15] were each FW Inspectors appointed by the FW Ombudsman under s.700 of the FW Act.[16]
[14] “Inspector Warner”.
[15] “Inspector Truong”.
[16] See Inspector Warner’s affidavit, sworn 16 February 2011, para.1 (“Inspector Warner’s Affidavit”) and Inspector Truong’s affidavit, sworn 16 February 2011, para.1 (“Inspector Truong’s February 2011 Affidavit”).
Finetune Holdings is a constitutional corporation.[17] Finetune Holdings is therefore an employer to which the FW Act applies.[18]
[17] Affidavit of Abby Jayne Becroft, sworn 10 February 2011, Annexure AJB4 (“Ms Becroft’s Affidavit”).
[18] FW Act, s.14(1), definition of “national system employer”.
Mr Rechichi was, at all material times, the sole director of Finetune Holdings and its company secretary.[19]
[19] Ms Becroft’s Affidavit, Annexure AJB4.
The NTP – service and alleged failure to comply
On 23 November 2009 Inspector Warner attended Finetune Holdings’ principal place of business and served the NTP, dated 23 November 2009, upon Finetune Holdings.[20] The NTP required production of the following records or documents:
[20] Inspector Warner’s Affidavit, para.5.
1.Pay advice in the form of pay slips for Mr King Cheong from 1 September 2008 to 31 August 2009
2.Time records in the form of rosters for Mr King Cheong from 1 September 2008 to 31 August 2009
3.Tax file number declaration for Mr King Cheong
4.Job description detailing the duties for Mr King Cheong
5.Records indicating termination date (example: resignation letter or letter of termination).
Production was required by 5:00pm on 8 December 2009, and was said to be for the purposes of:
· determining whether Part 2-9, Division 2 the Workplace Relations Act 1996 (the Australian Fair Pay and Conditions Standard) (as continued in operation by the Fair Work (Transitional Provisions and Consequential Amendments Act) 2009) is being or has been complied with;
· determining whether an award based transitional instrument, namely the Technical Services – Architects Award 2000, is being or has been complied with;
· determining whether the FW Act is being or has been complied with, specifically:
· Section 535 (compliance with employer obligations in relation to employee records)
· Section 536 (compliance with employer obligations in relation to pay slips)
The NTP warned that:
Failure to comply with this Notice, without reasonable excuse, is a contravention of subsection 712(3) of the Act and may attract a maximum penalty of $33,000 in respect of a body corporate or $6,600 in respect of an individual.[21]
[21] Inspector Warner’s Affidavit, Annexure DW1.
On 9 December 2009 Inspector Truong wrote to Mr Rechichi, in his capacity as director of Finetune Holdings.[22] The First Letter noted, amongst other things, that the NTP had not been complied with, and gave Finetune Holdings an opportunity to provide a reasonable excuse for non-compliance with the NTP by 17 December 2009. No response was received to the First Letter.[23]
[22] Inspector Truong’s February 2011 Affidavit, Annexure MT6 (“First Letter”).
[23] Inspector Truong’s February 2011 Affidavit, para.18.
Inspector Truong wrote to Mr Rechichi, again in Mr Rechichi’s capacity as director of Finetune Holdings, for a second time on 30 June 2010.[24] The Second Letter noted that there had been no compliance with the NTP, and gave Finetune Holdings a further opportunity to provide a reasonable excuse for non-compliance by 7 July 2010. No response was received to the Second Letter.[25]
[24] Inspector Truong’s February 2011 Affidavit, Annexure MT8 (“Second Letter”).
[25] Inspector Truong’s February 2011 Affidavit, para.23.
The present proceedings were commenced on 19 August 2010.
On 12 September 2010 Mr Rechichi sent by email to Ms Becroft, a solicitor acting for the FW Ombudsman, a copy of documents and records of a kind requested under the NTP.[26] The documents and records:
a)run to 64 pages;
b)appear to be mainly computer generated documents and records; and
c)were documents which Mr Rechichi admitted were already in Finetune Holdings’ “system”.[27]
[26] Ms Becroft’s Affidavit, para.6.
[27] Transcript, 7 April 2011, page 13.
Liability
Section 712(2) of the FW Act provides that a notice to produce must:
a)be in writing;
b)be served on the person; and
c)require production by the person at a specified place within a specified period of at least 14 days.
In relation to the NTP:
a)it is in writing;[28]
b)it was served on Finetune Holdings by Inspector Warner on 23 November 2009;[29] and
c)it required Finetune Holdings to produce the relevant records and documents at a specified place within a specified period of at least 14 days.
[28] Inspector Warner’s Affidavit, Annexure DW1.
[29] Inspector Warner’s Affidavit, para.5.
The requirements of s.712 of the FW Act for the NTP to be in writing, to be served and for it to specify a place at which the documents are to be produced within a specified timeframe have therefore all been met. On the face of it, Finetune Holdings is liable under s.712 of the FW Act for failure to comply with the NTP.
Finetune Holdings has not filed a defence in these proceedings. Subject to the defence of reasonable excuse under s.712(4) of the FW Act, raised by Mr Rechichi but applicable to Finetune Holdings, the contraventions alleged against Finetune Holdings have been proven to the satisfaction of the Court by reason of the various requirements of s.712 of the FW Act having been met, and the failure to produce records or documents of a kind requested under the NTP until after these proceedings were commenced, and more than nine months after the date specified in the NTP.
The evidence establishes that Mr Rechichi was at all relevant times:
a)the sole director and company secretary of Finetune Holdings;[30] and
b)aware of the day-to-day activities of Finetune Holdings.[31]
[30] Ms Becroft’s Affidavit, Annexure AJB4.
[31] Affidavit of Antonino Rechichi, affirmed 24 February 2011, para.1 (“Mr Rechichi’s February 2011 Affidavit”).
Overall, the evidence establishes that Finetune Holdings’ contravention of s.712(3) of the FW Act occurred directly through the activities and agency of Mr Rechichi. Indeed no other person was involved in the matter on behalf of Finetune Holdings until solicitors for Finetune Holdings wrote to the FW Ombudsman in September 2010.[32]
[32] Ms Becroft’s Affidavit, Annexure AJB2.
On the evidence, the Court concludes that Mr Rechichi:
a)aided and abetted Finetune Holdings’ contravention of s.712(3) of the FW Act by not producing the records and documents requested in the NTP within the required time; and
b)was knowingly concerned in Finetune Holdings’ contravention of s.712(3) of the FW Act.
From that conclusion it follows that Mr Rechichi was involved in Finetune Holdings’ contravention of s.712(3) of the FW Act, and that ordinarily under s.550 of the FW Act, Mr Rechichi would be taken to have also contravened s.712(3) of the FW Act.
Any finding of contravention Mr Rechichi is also subject to findings on the defence of reasonable excuse under s.712(4) of the FW Act.
Reasonable excuse
What constitutes a reasonable excuse?
What constitutes a “reasonable excuse” under s.712(4) of the FW Act so as to result in the non-application of s.712(3) of the FW Act which provides that a person served with a notice to produce must not fail to comply with that notice?
For relevant purposes the scope of “reasonable excuse” as a ground of exculpation from the operation of a statutory prescription is set out in Australian Securities and Investments Commission v Albarran.[33] In Albarran, adopting the analysis in Bank of Valetta PLC v National Crime Authority & Anor,[34] three propositions are said to be able to be “gleaned” from Bank of Valetta,[35] as follows:
81 First, the question of what constitutes "reasonable excuse" is to be determined from the terms and structure of the particular statute and the circumstances of each particular case: Valletta at [39], [47].
82 Second, reasonable excuse is not confined to physical or practical difficulties in complying with the statutory prescription. It includes any excuse which would be accepted by a reasonable person as sufficient to justify non-compliance, but it is necessary to bear in mind the importance of the particular statutory prescription to the overall statutory regime: Valletta at [42].
83 Third, the question of what constitutes reasonable excuse involves an objective determination in all the circumstances. These include the adverse consequences to an individual of being compelled to answer and the adverse consequences to an inquiry if the questions are not answered: Valletta at [44], [47].[36]
[33] (2008) 169 FCR 448; [2008] FCA 147 (“Albarran”).
[34] (1999) 164 ALR 45; [1999] FCA 791 (“Bank of Valetta”).
[35] Albarran FCR at 462 per Jacobson J; FCA at para.80 per Jacobson J.
[36] Albarran FCR at 463 per Jacobson J; FCA at paras.81-83 per Jacobson J.
In Controlled Consultants Proprietary Limited v Commissioner for Corporate Affairs[37] the High Court found, on the construction of the relevant sections of a State securities industry code, that a defence of reasonable excuse did not include the privilege against self-incrimination so far as production of books was concerned, but was directed to other matters, “such as the physical and practical difficulties which may be involved in their production.”[38]
[37] (1985) 156 CLR 385 (“Controlled Consultants”).
[38] Controlled Consultants at 392 per Gibbs CJ, Mason and Dawson JJ.
In Taikato v The Queen[39] the majority of the High Court observed that:
But decisions on other statutes provide no guidance because what is a reasonable excuse depends not only on the circumstances of the individual case but also on the purpose of the provision to which the defence of “reasonable excuse” is an exception.[40]
[39] (1996) 186 CLR 454 (“Taikato”).
[40] Taikato at 464 per Brennan CJ, Toohey, McHugh and Gummow JJ.
Determining what constitutes a reasonable excuse may not be easy,[41] and may involve questions of degree, and minds may differ as to the ultimate answer.[42]
[41] Taikato at 464 per Brennan CJ, Toohey, McHugh and Gummow JJ.
[42] Taikato at 470 per Dawson J.
Ultimately, an excuse acceptable to a reasonable person, bearing in mind the purpose of the legislation, is a reasonable excuse.
The fact that a notice to produce records or documents is burdensome may not necessarily be sufficient to constitute a reasonable excuse warranting non-compliance with a notice.
In relation to notices under s.155 of the Trade Practices Act 1974 (Cth)[43] the Federal Court said in Riley McKay Pty Ltd v Bannerman[44] that:
It is not … a good ground of objection to a notice under s 155 that it is burdensome or oppressive. It is clear that when such a notice is given, the answering of it may involve the recipient in considerable work and expense. This, in itself, may constitute a kind of penalty whether or not there is ultimately found to have been a contravention. The legislation assumes that the public interest necessitates this.[45]
[43] “TP Act”.
[44] (1977) 31 FLR 129 (“Riley McKay”).
[45] Riley McKay at 136 per Bowen CJ.
Although Riley McKay was a case concerning a notice to answer questions, it was approved by a Full Court of the Federal Court in Melbourne Home of Ford Pty Ltd & Ors v Trade Practices Commission and Bannerman (No. 3),[46] in a case concerning a notice under s.155 of the TP Act to answer questions and to produce documents. In Melbourne Home of Ford the Full Court of the Federal Court observed that such a notice was not open to objection on the ground that it is burdensome to furnish the information or produce the documents if “the information to be furnished or the documents to be produced in accordance with the notice respectively answer the description of “information relating to” or “documents relating to” the matter specified in the notice”.[47] Further the Federal Court said that:
In the case of a matter that may constitute a contravention, the chairman may not know the constitutive facts of a contravention (if there has been one) and he may ultimately ascertain that there has been no contravention in the conduct or transaction which he is investigating. Because his attention has been drawn to a particular act or transaction which warrants investigation and because he has reason to believe that the person to whom the notice is given is capable of furnishing information relating to the matter under investigation he is engaged in a function of investigation, not in a task of proving an allegation. The power conferred by s 155(1) is in aid of that function and is a power which authorizes inquiries both wide in scope and indefinite in subject matter. It is an investigative power which is under consideration here and it is not possible to define a priori the limits of an investigation which might property be made. The power should not be narrowly confined.[48]
[46] (1980) 47 FLR 163 (“Melbourne Home of Ford”).
[47] Melbourne Home of Ford at 173 per Brennan, Keely and Fisher JJ.
[48] Melbourne Home of Ford at 173 per Brennan, Keely and Fisher JJ.
It follows from Riley McKay and Melbourne Home of Ford that the usual business activities and constraints, time pressures and resourcing issues, may not be the sort of physical or practical difficulties amounting to a reasonable excuse for non-compliance with a statutory notice to produce. The type of difficulty required is more than just usual business activity. Examples might include:
a)the debilitating illness or injury of the person (or a close family member of the person) running a one-person or very small company;
b)a fire, flood or other natural disaster which has destroyed the documents required to be produced, or delayed their production; or
c)the prior removal of the documents required to be produced by the police or some government agency.
The legislative purpose
Statutory objects may be relevant to the proper construction of an Act.[49] At the outset consideration must be given to the legislative objects of the FW Act. Section 3 of the FW Act provides that:
[49] Tickner v Bropho (1993) 40 FCR 183 at 192-193 per Black CJ; and 208-209 per Lockhart J; Re Yanner (2000) 100 FCR 551 at 586-587 per Dowsett J; [2000] FCA 975 at para.97 per Dowsett J.
The object of this Act is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians by:
(a) providing workplace relations laws that are fair to working Australians, are flexible for businesses, promote productivity and economic growth for Australia's future economic prosperity and take into account Australia's international labour obligations; and
(b) ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders; and
(c) ensuring that the guaranteed safety net of fair, relevant and enforceable minimum wages and conditions can no longer be undermined by the making of statutory individual employment agreements of any kind given that such agreements can never be part of a fair workplace relations system; and
(d) assisting employees to balance their work and family responsibilities by providing for flexible working arrangements; and
(e) enabling fairness and representation at work and the prevention of discrimination by recognising the right to freedom of association and the right to be represented, protecting against unfair treatment and discrimination, providing accessible and effective procedures to resolve grievances and disputes and providing effective compliance mechanisms; and
(f) achieving productivity and fairness through an emphasis on enterprise-level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action; and
(g) acknowledging the special circumstances of small and medium-sized businesses.
The Explanatory Memorandum to the Fair Work Bill 2008 (Cth)[50] observed that:
[50] “FW Bill, Explanatory Memorandum”.
The Bill implements the following major reforms:
. it establishes a simple and stable safety net comprising:
- the NES, which will apply to all employees and guarantee:
o maximum weekly hours of work;
o a right to request flexible working arrangements;
o parental leave and related entitlements;
o annual leave;
o personal/carer's leave and compassionate leave;
o community service leave;
o long service leave;
o public holidays;
o notice of termination and redundancy pay; and
o provision of a Fair Work Information Statement.
- modern awards, which provide flexibility and stability for employers and their employees and which may include:
o additional minimum terms and conditions of employment (such as minimum wages, overtime and penalty rates, allowances, representation and dispute settlement) tailored to the needs of the particular industry or occupation to which the award relates; and
o terms which supplement the NES.
…
. It establishes a new institutional framework for the administration of the new workplace relations system comprising:
…
- the Fair Work Ombudsman, whose key function is to promote harmonious and cooperative workplace relations and compliance with the Bill through education, assistance and advice and, where necessary, undertake enforcement activities, such as investigation, issuing compliance notices and initiating court proceedings.[51]
[51] FW Bill, Explanatory Memorandum.
The language of the objects in s.3(b) of the FW Act is particularly emphatic: it is directed to “ensuring” the “guaranteed” safety net and to the guaranteed minimum terms and conditions being “enforceable”. To “ensure” is, relevantly, to “guarantee” “secure, make safe” and “make certain”.[52] The use of “ensuring” can be contrasted with the use of less emphatic words such as “providing”, “assisting”, “enabling”, “achieving” and “acknowledging” used to describe the intent of the other objects set out in the other paragraphs of s.3 of the FW Act. That contrast leads the Court to the conclusion that the “guaranteed safety net” object is, together with the anti-individual agreement object in s.3(c) of the FW Act, seemingly, on the face of the FW Act, the most important of the objects of the FW Act.
[52] The Shorter Oxford English Dictionary on Historical Principles, Volume I (Oxford: Clarendon Press, 1973) page 663.
Used in its ordinary sense, in relation to private rights or privileges, “ensure” might impose an absolute obligation contractually.[53]
[53] AF Textile Printers Pty Ltd v Thalut Nominees Pty Ltd & Ors (2007) 17 VR 334 at 348 per Mandie J; [2007] VSC 73 at para.54 per Mandie J.
When used in a statute in relation to a mortgagee’s obligation to take “reasonable care” to “ensure” that a property is sold at market value, “ensure” imposes an obligation beyond that of reasonable care, and one extending to the making of arrangements, to ensure that the sale of the property is properly advertised,[54] or the “doing of what ought reasonably to be done”[55] so as to “make sure that market value is achieved”.[56] The duty thus imposed cannot be delegated to an agent so as to relieve the mortgagee of the duty.[57]
[54] Commercial and General Acceptance Ltd v Nixon (1981) 152 CLR 491 at 505 per Mason J (“Commercial and General Acceptance”).
[55] Commercial and General Acceptance at 524 per Brennan J.
[56] Commercial and General Acceptance at 521 per Wilson J.
[57] Commercial and General Acceptance at 508 per Aickin J, 521 per Wilson J and 524 per Brennan J.
When used in relation to a public duty, or the fulfilment of a public function, taking a strict view of the meaning of “ensure” might lead to invalidity of the acts of a public body which did not meet that standard. The law, to avoid the harshness of that outcome, imposes a legal duty susceptible to the remedies of a declaration of past breach and an injunction from future breach.[58]
[58] Village Building Co Limited (ACN 056 509 025) v Airservices Australia & Anor (2007) 241 ALR 685 at 593 per Rares J; [2007] FCA 1242 at para.33 per Rares J (“Village Building”). Village Building was affirmed on appeal, but on other grounds as this issue was not in contention on the appeal: see Village Building Co Limited v Airservices Australia & Anor (2008) 170 FCR 147; [2008] FCAFC 57.
When considering the use of “ensure” in the objects section of an Act, it is necessary to bear in mind that the whole of the provisions of the Act must be looked at to determine Parliament’s intent, and not only the objects section of an Act. Thus it is necessary to also look at the substantive provisions giving effect to the object or objects under consideration.[59] Like a statement of intention in an Act, and without being definitive, an objects section in an Act may assist in the determination of the operative effect of that Act, especially in cases of ambiguity or uncertainty.[60] Objects clauses in an Act give “practical content” to terms capable of wide-ranging meaning and application.[61]
[59] Municipal Officers’ Association of Australia v Lancaster & Anor (1981) 54 FLR 129 at 161 per Evatt and Northrop JJ.
[60] R v The Credit Tribunal; Ex parte General Motors Acceptance Corporation, Australia (1977) 137 CLR 545 at 552 per Barwick CJ.
[61] Russo v Aiello & Anor (2003) 215 CLR 643 at 645 per Gleeson CJ; [2003] HCA 53 at para.5 per Gleeson CJ.
The Office of the FW Ombudsman is established under s.681 of the FW Act, and the functions of the FW Ombudsman under s.682(1) include:
(a) to promote:
(i) harmonious, productive and cooperative workplace relations; and
(ii) compliance with this Act and fair work instruments;
including by providing education, assistance and advice to employees, employers, outworkers, outworker entities and organisations and producing best practice guides to workplace relations or workplace practices;
(b) to monitor compliance with this Act and fair work instruments;
(c) to inquire into, and investigate, any act or practice that may be contrary to this Act, a fair work instrument or a safety net contractual entitlement;
(d) to commence proceedings in a court, or to make applications to FWA, to enforce this Act, fair work instruments and safety net contractual entitlements;
…
(g) any other functions conferred on the Fair Work Ombudsman by any Act.
Under s.706(1) of the FW Act an FW Inspector’s powers may be exercised for the following compliance purposes:
(a) determining whether this Act or a fair work instrument is being, or has been, complied with;
(b) subject to subsection (2), determining whether a safety net contractual entitlement is being, or has been, contravened by a person;
but under s.706(2) of the FW Act the compliance powers under s.706(1)(b) of the FW Act may only be exercised:
… if the Inspector reasonably believes that the person has contravened one or more of the following:
(a) a provision of the National Employment Standards;
(b) a term of a modern award;
Section 712 of the FW Act, which lies at the heart of these proceedings, provides for an Inspector to require a person, by notice, to produce a record or document to an Inspector, and that a person served with a notice to produce must not fail to comply with the notice, provided they do not have a reasonable excuse for their failure to comply.
Section 713 of the FW Act relates to self-incrimination and exposure to penalty, and provides as follows:
(1) A person is not excused from producing a record or document under paragraph 709(d), or subsection 712(1), on the ground that the production of the record or document might tend to incriminate the person or expose the person to a penalty.
(2) However, in the case of an individual none of the following are admissible in evidence against the individual in criminal proceedings:
(a) the record or document produced;
(b) producing the record or document;
(c) any information, document or thing obtained as a direct or indirect consequence of producing the record or document;
(d) any record or document that is inspected or copied under paragraph 709(e);
(e) any information, document or thing obtained as a direct or indirect consequence of inspecting or copying a record or document under paragraph 709(e).
From the objects in s.3 (and especially s.3(b)) of the FW Act, the enactment of provisions relevant to the Office of the FW Ombudsman, its functions, and the powers of FW Inspectors, a number of conclusions relevant to this matter may be drawn, including the following:
a)ensuring a guaranteed safety net of fair and enforceable minimum terms and conditions, through, amongst other things, National Employment Standards and modern awards is one of the most important objects of the FW Act;
b)the functions, particularly the investigatory function,[62] support the conclusion that the guaranteed safety net is a most important object of the FW Act, as do the purposes for which an FW Inspector’s powers may be exercised,[63] and an FW Inspector’s power to require the production of records or documents;[64] and
c)the removal of the privilege against self-incrimination and exposure to penalty in relation to the production of records or documents under s.712(1) of the FW Act manifests the importance the Parliament perceives in an FW Inspector having access to records or documents for the purposes of investigations directed towards ensuring a guaranteed safety net of fair and enforceable minimum terms and conditions.[65] That is reinforced by the fact that any record or document produced, the producing of the record or document, or any information, document or thing obtained as a direct or indirect consequence of producing the record or document, is inadmissible in evidence against an individual in criminal proceedings.[66]
[62] FW Act, s.682(1)(b).
[63] FW Act, s.706(1)(a)(b) and (2)(a)(b).
[64] FW Act, s.712.
[65] FW Act, s.713(1).
[66] FW Act, s.713(2).
The asserted reasonable excuse
The basis for the asserted reasonable excuse for non-compliance is set out in a Statement of Defence filed 29 December 2010, and in Mr Rechichi’s February 2011 Affidavit, and appears to be that:
a)Mr Rechichi thought that there had been complete resolution of all actions or investigations which the FW Ombudsman might take or pursue against Finetune Holdings and Mr Rechichi arising out of or in connection with Mr Cheong’s employment, that resolution having allegedly been effected by reason of:
i)a letter dated 6 October 2009 from the FW Ombudsman to Mr Rechichi;[67]
ii)an allegedly amended Compliance Undertaking;[68] and
iii)the settlement of proceedings brought by Mr Cheong in the Western Australian Magistrates Court;[69]
b)other business activities required Mr Rechichi’s urgent attention;[70] and
c)Inspector Truong engaged in a personal vendetta against Mr Rechichi.[71]
The alleged complete resolution
[67] Mr Rechichi’s February 2011 Affidavit, Attachment B (“6 October 2009 Letter”).
[68] Mr Rechichi’s February 2011 Affidavit, Attachment D (“Amended Compliance Undertaking”).
[69] “State Magistrates Court Proceedings”.
[70] Mr Rechichi’s February 2011 Affidavit, paras.25(b)-25(e).
[71] Mr Rechichi’s February 2011 Affidavit, paras.27-28.
The 6 October 2009 Letter
In order to understand the context of the 6 October 2009 Letter it is necessary to refer to earlier correspondence between the parties. On 21 September 2009 the FW Ombudsman wrote to Mr Rechichi, at “Rechi Chi Architects” concerning a complaint made by Mr Cheong.[72] The 21 September 2009 Letter provided as follows:
[72] Mr Rechichi’s February 2011 Affidavit, Attachment A (“21 September 2009 Letter”).
…
On review of the information supplied with the complaint it appears that a resolution may be reached quickly and informally without the need to commence a formal investigation.
FWO provides an assisted voluntary resolution service aimed at resolving disputes that have arisen in the workplace by working with employees and employers to understand their obligations.
The first step in the resolution process is to contact both the employee and employer in order to ascertain the exact nature of the dispute. To achieve this, it is my intention to contact you on 24 September. If this is not suitable please contact me on [telephone number] to arrange an alternate time.
Once the dispute is clarified I will assess the issues and provide both parties with a view on how the matter can be resolved. It is important to note that any recommendations made by FWO as part of the resolution process are not final determinations and FWO reserves the right to take any further compliance action as required.
If after provision of advice either party is not satisfied with the recommended outcome, FWO will consider escalating the matter for formal investigation.
The resolution process operates to strict time frames (25 days from lodgement of the complaint), and any issues that cannot be resolved at the end of this period will be referred to a Fair Work Inspector for a full investigation. This includes assessing the suitability of the matter for further enforcement action consistent with the FWO Litigation Policy, which can be accessed at >
The 6 October 2009 Letter, addressed to Mr Rechichi at Finetune Holdings Pty Ltd, but at the same address as the 21 September 2009 Letter addressed to “Rechi Chi Architects”, was in the following terms:
…
I am writing to confirm that Assisted Voluntary Resolution has been achieved between King Cheong and you by –
· The commitment of back pay instalments being made by you to King Cheong as follows:
· $2500.00 net on 30/10/2009, $2500.00 net on 21/11/2009 and $5240.90 net on 4/12/2009.
· These payments are to be made as direct deposits into King Cheong’s bank account.
Please be advised that the Fair Work Ombudsman will be taking no further action in relation to this matter at this time. If payment is not made according to the undertaking detailed above, Mr. King Cheong has been advised to contact the Fair Work Inspector at which time the matter will be referred directly to a full investigation.
…
There is no dispute that the 6 October 2009 Letter was provided to Finetune Holdings on or about that date. The payments referred to in the 6 October 2009 Letter were not made by Finetune Holdings by the due dates. Mr Rechichi admitted this in cross-examination.[73]
[73] Transcript, 7 April 2011, page 4.
The Court accepts the evidence of Inspector Truong that he spoke to Mr Rechichi on or shortly after 30 October 2009 and that Mr Rechichi then indicated that the payment due on 30 October 2009 to Mr Cheong would be made by 6 November 2009.[74] However, the payment was not made by the amended date.
[74] Inspector Truong’s Further Affidavit, sworn 3 March 2011, para.8 and Annexure M-13 (“Inspector Truong’s March 2011 Affidavit”); Transcript, 8 March 2011, pages 17-18.
The 6 October 2009 Letter dealt only with Mr Cheong’s entitlement to the payment of his wages. It contained no undertaking on behalf of the FW Ombudsman to take no further action generally against Finetune Holdings. Moreover, it expressly reserved the right to take further action, especially if the resolution achieved, which was for Finetune Holdings to pay Mr Cheong in instalments, was not fulfilled by Finetune Holdings. Whilst the FW Ombudsman advises that “no further action” will be taken “at this time”, that is qualified by the further advice that “[i]f payment is not made according to the undertaking detailed above”, subject to Mr Cheong contacting the relevant FW Inspector, “the matter will be referred directly to a full investigation”. In this respect it reflected the terms of the 21 September 2009 Letter explaining the process of assisted voluntary resolution.[75] The 6 October 2009 Letter was therefore not an impediment to:
a)Inspector Truong further investigating compliance issues related to Finetune Holdings; or
b)the FW Ombudsman later issuing the NTP to Finetune Holdings.
[75] Mr Rechichi’s February 2011 Affidavit, Attachment A.
The Court observes that the 6 October 2009 Letter simply did not relate to the same matter as is the subject of the NTP, and hence these proceedings. The 6 October 2009 Letter related to the underpayment of Mr Cheong’s wages, whilst the NTP related to the production of documents and records for the purposes of a broader investigation as to whether:
a)the Australian Fair Pay and Conditions Standard;
b)the Technical Services – Architects Award 2000; and
c)employer obligations under the FW Act in relation to employee records and pay slips,
had been complied with by Finetune Holdings.
The Court also observes that the fact that it was Inspector Truong who made contact with Mr Cheong to determine whether or not payment had been made in accordance with Mr Rechichi’s agreement to make payment by the later date of 6 November 2009 does not preclude Inspector Truong from acting as he did. The Court accepts that, in the circumstances, it was necessary for Inspector Truong “to assess whether the agreements made … have been actioned” and that if they had not been actioned “then at that point in time is when the Fair Work Ombudsman decides whether or not to action into that full investigation”.[76] Inspector Truong would, in the Court’s view, have failed to properly exercise his duties and responsibilities as an FW Inspector if he had failed to pursue this matter solely on the basis that he had not been contacted by Mr Cheong, but rather that the contact with Mr Cheong had been made by Inspector Truong.
[76] Transcript, 8 March 2011, page 16.
In the circumstances, Mr Rechichi cannot rely upon the 6 October 2009 Letter as providing any reasonable excuse for his failure to comply with the NTP, which at the dates of Mr Rechichi’s failure to comply with the terms of the assisted voluntary resolution processes set out in the 6 October 2009 Letter, was still more than six weeks away from being issued, and more than eight weeks away from the requested documents and records being required to be produced.
Amended Compliance Undertaking
Following the failure to pay to Mr Cheong the $2500 by the amended date Inspector Truong, on or about 16 November 2009, sent to Mr Rechichi a proposed Compliance Undertaking[77] which was in the following terms:
[77] Inspector Truong’s February 2011 Affidavit, para.8 and Annexure MT3; Mr Rechichi’s Affidavit, para.25(a) (“Proposed Compliance Undertaking”). The Proposed Compliance Undertaking was erroneously dated 18 October 2009: Transcript, 8 March 2011, page 19.
1. I Anthony Rechichi, accept responsibility for payments to Mr. King Cheong, a former employee of Finetune Holdings Pty Ltd trading as Rechichi Architects, of which I am a Director and by making my signature hereon I acknowledge the terms of this Compliance Undertaking.
2. The Fair Work Ombudsman has estimated the value of the underpayment arising from the contravention to be $10,240.90 (net).
3. I, Anthony Rechichi, does not dispute the estimates of the Fair Work Ombudsman and I agree to pay Mr King Cheong in accordance with the below payment plan:
Payment Date Amount
30/11/09 $2500.00 (net)
14/12/09 $2500.00 (net)
28/12/09 $5240.90 (net)
4. I, Anthony Rechichi, agrees to transfer the amounts listed above to the bank account of Mr. King Cheong to which I have confirmed I have the details of, on the dates listed above (net amounts) along with an accompanying pay slip to Mr. King Cheong at [address].
5. I, Anthony Rechichi, agree to sign and deliver this Compliance Undertaking before 12.00pm 19 November 2009 to Lvl 9, 140 St Georges Terrace PERTH WA 6003.
The Fair Work Ombudsman may commence enforcement action on the Compliance Undertaking identified above. This may include commencing litigation against Finetune Holdings Pty Ltd trading as Rechichi Architects to recover any outstanding amounts owed to affected employees and/or seek penalties for non-compliance with Commonwealth workplace laws.
The Fair Work Ombudsman may also commence litigation seeking penalties against any individual involved in a contravention of Commonwealth workplace laws.
Failure to deliver the Compliance Undertaking before the time and date specified above will result in the initiation of a full investigation. While these terms and conditions of payments by instalments have been accepted, it should be noted that any default to the payment arrangements may also result in litigation being commenced pertaining to this claim without notice.
Should you require further information or wish to discuss this determination of the contravention, please contact me on [telephone number], by email at [email address], by fax on [fax number] or by post to the address above. Please quote the reference number [number].[78]
[78] Inspector Truong’s February 2011 Affidavit, para.8 and Annexure MT-3 (“Proposed Compliance Undertaking”).
Mr Rechichi did not enter into the Proposed Compliance Undertaking.[79] Instead Mr Rechichi asserts that on 19 November 2009 he sent to the FW Ombudsman the Amended Compliance Undertaking, which was the same as the Proposed Compliance Undertaking, save that the first five paragraphs were amended as follows:
[79] Inspector Truong’s February 2011 Affidavit, para.9.
1
. I Anthony Rechichi, acceptFINETUNE HOLDINGS P/L accepts responsibility for payments to Mr. King Cheong, a former employee of Finetune Holdings Pty Ltd trading asRechi Chi Architects,RECHICHI ARCHITECTSof which I am a Director and by making my signature hereon I acknowledge the terms of this Compliance Undertaking.2. The Fair Work Ombudsman has estimated the value of the underpayment arising from the contravention to be $10,240.90 (net).
3.
I, Anthony Rechichi,FINETUNE HOLDINGS P/L does not dispute the estimates of the Fair Work Ombudsman and I agree to pay Mr King Cheong in accordance with the below payment plan:Payment Date Amount
30/11/09 $2500.00 (net)
14/12/09 $2500.00 (net)
28/12/09 $5240.90 (net)
4.
I, Anthony Rechichi,FINETUNE HOLDINGS P/L agrees to transfer the amounts listed above to the bank account of Mr. King Cheong to which I have confirmed I have the details of, on the dates listed above (net amounts) along with an accompanying pay slip to Mr. King Cheong at [address].5
. I, Anthony Rechichi,FINETUNE HOLDINGS P/L agree to sign and deliver this Compliance Undertaking before 12.00pm 19 November 2009 to Lvl 9, 140 St Georges Terrace PERTH WA 6003.Mr Rechichi initially asserted that he faxed the Amended Compliance Undertaking to the FW Ombudsman on or about 19 November 2009.[80] Inspector Truong denied that the Amended Compliance Undertaking was provided.[81]
[80] Mr Rechichi’s February 2011 Affidavit, para.10 and Attachment D.
[81] Inspector Truong’s March 2011 Affidavit, paras.2, 3 and 17 and Annexure MT-12; Transcript, 8 March 2011, page 29.
A number of matters emerge from the evidence with respect to the Amended Compliance Undertaking. They are as follows:
a)the Amended Compliance Undertaking was the undertaking that Mr Rechichi was prepared to enter into, on behalf of Finetune Holdings;[82]
b)there was no agreement as to the terms of the Amended Compliance Undertaking:
i)as there was “no signed compliance undertaking”, and therefore “no agreement in place because it wasn’t signed” as asserted by Inspector Truong;[83] and
ii)because Inspector Truong “made it clear to me [Mr Rechichi] that he … was not prepared to change [the substantive terms of the Proposed Compliance Undertaking]”;[84] and
c)the Amended Compliance Undertaking was not faxed to Inspector Truong as initially asserted by Mr Rechichi, consistent with the evidence given by Inspector Truong under cross-examination,[85] and it was not received by Inspector Truong (or the Office of the FW Ombudsman) because, as was ultimately effectively conceded by Mr Rechichi under cross-examination, he did not fax the Amended Compliance Undertaking to Inspector Truong:
“ [Counsel] And you didn’t fax to him the version of the compliance undertaking with your handwritten changes on it, did you? --- [Mr Rechichi] I probably didn’t, no.”[86]
[82] Transcript, 7 April 2011, page 10.
[83] Transcript, 8 March 2011, page 38.
[84] Transcript, 7 April 2011, page 10.
[85] Transcript, 8 March 2011, pages 28-29.
[86] Transcript, 7 April 2011, page 11.
As at 19 November 2009, or shortly thereafter, Finetune Holdings had:
a)reneged on the assisted voluntary resolution set out in the 6 October 2009 Letter, and
b)not entered into a compliance undertaking, and nor had the FW Ombudsman accepted such an undertaking from Mr Rechichi.[87]
Consequently, the argument that the NTP was not complied with because there was an agreement, in the form of the Amended Compliance Undertaking must fail, especially in circumstances where Mr Rechichi concedes that the basis for such an agreement, the Amended Compliance Undertaking, was never sent back to Inspector Truong or the FW Ombudsman.
[87] FW Act, s.715(2) and (4).
There was therefore no impediment to the issuance of the NTP on 23 November 2009 on the basis of any compliance undertaking having been entered into by Finetune Holdings, because it had not done so.
State Magistrates Court Proceedings
Mr Rechichi asserts that Finetune Holdings had a reasonable excuse for not complying with the NTP because of an agreement reached with Mr Cheong in the State Magistrates Court Proceedings.[88]
[88] Mr Rechichi’s February 2011 Affidavit, para.29.
The difficulty with this assertion can be demonstrated by a simple recitation of the facts. Relevantly, they are as follows:
a)the NTP was served on Finetune Holdings on 23 November 2009;[89]
b)the records and documents required to be produced under the NTP were required to be produced by 5.00pm on 8 December 2009;[90]
c)it is common ground that Finetune Holdings did not produce any documents or records as required by the NTP within the specified time;
d)the State Magistrates Court Proceedings were commenced by Mr Cheong lodging a General Procedure Claim[91] in the Magistrates Court of Western Australia on 8 March 2010;[92]
e)Mr Cheong’s Claim expressly made reference to the NTP and Mr Rechichi’s alleged failure to comply with the NTP;[93] and
f)on 2 June 2010 the Magistrates Court of Western Australia issued a general order by consent in the State Magistrates Court Proceedings, requiring Finetune Holdings to pay to Mr Cheong the sum of $5,500 on or before 2 September 2010.
[89] See para.8 above.
[90] See para.8 above.
[91] “Mr Cheong’s Claim”.
[92] Ms Becroft’s Affidavit, Annexure MT11.
[93] Ms Becroft’s Affidavit, Annexure MT11.
The State Magistrates Court Proceedings could never have provided Finetune Holdings a reasonable excuse not to comply with the NTP because:
a)Mr Cheong’s claim in respect of those proceedings was issued almost three months after the time for compliance with the NTP had passed; and
b)the general order requiring Finetune Holdings to pay Mr Cheong $5,500 did not issue until almost six months after the time for compliance with the NTP had passed.
Furthermore, the State Magistrates Court Proceedings were limited to the alleged underpayment of Mr Cheong, and not the broader set of issues in relation to which the NTP had been issued.[94] In any event, the FW Ombudsman exercises the powers under s.712 independent of the actions of the persons the subject of the records or documents sought to be produced.[95]
[94] See para.8 above.
[95] Alcantara & Anor v Buildpower Pty Ltd (2010) 199 IR 73 at 88 per Lucev FM; [2010] FMCA 626 at paras.67-69 per Lucev FM.
Therefore, the State Magistrates Court Proceedings did not, and could not have, provided a reasonable excuse for Finetune Holdings’ failure to comply with the NTP.
In any event, it is not apparent as to how the FW Ombudsman would, in the exercise of its statutory functions, ever have been bound by the settlement of private proceedings between Mr Cheong and Finetune Holdings in relation to the underpayment, when what the NTP sought was the production of records and documents relating to a broader set of issues.[96] Even if the Amended Compliance Undertaking had been complied with, it was limited to its terms, and its terms did not preclude the FW Ombudsman from investigating other matters related to Mr Cheong’s employment with Finetune Holdings. In any event, the FW Ombudsman could not be estopped from pursuing any matters, or any additional matters, as:
a)estoppel does not run against the exercise of a discretion reposed in the executive and regulated by statute;[97] and
b)especially where statutory rights are created, as here, for the benefit of the public or a section of the public, they should not be estopped.[98]
[96] See para.8 above.
[97] Attorney-General v Quinn (1990) 170 CLR 1 at 17-18 per Mason CJ; Minister for Immigration and Ethnic Affairs v Kurtovic (1990) 21 FCR 193 at 207-211 per Gummow J; Crosthwaite v National Jet Systems Pty Ltd (No. 4) (2010) 205 IR 176 at 196 per Lucev FM; [2010] FMCA 965 at para.56 per Lucev FM (“Crosthwaite (No. 4”)”).
[98] Kidd v Savage River Mines (1984) 6 FCR 398 at 409-410 per Gray J, cited with approval in Metropolitan Health Service Board v Australian Nursing Federation (2000) 99 FCR 95 at 105-107 per French J; [2000] FCA 784 at paras.22-24 per French J; Crosthwaite (No. 4) IR at 196 per Lucev FM; FMCA at para.56 per Lucev FM.
Business Activities
It is contended that there was a reasonable excuse for non-compliance with the NTP by Finetune Holdings because Mr Rechichi was particularly busy in the lead up to Christmas 2009 because:
a)Finetune Holdings had ceased trading;
b)Finetune Holdings had moved to new premises after having been at its previous premises for in excess of 18 years;
c)Finetune Holdings was forced to vacate its previous premises within six weeks of being given notice because the property was to be re-developed by the landlord, and this was an extremely difficult period of time;
d)it was approaching the Christmas break and Mr Rechichi was under enormous pressure to attend to the work on hand; and
e)the tasks involved required Mr Rechichi’s urgent undivided attention in order for him to fully fulfil his contractual obligations at the time.[99]
[99] Mr Rechichi’s February 2011 Affidavit, para.25(b)-(e).
The FW Ombudsman submits that these matters do not give rise to a reasonable excuse under s.712(4) of the FW Act because:
a)they are commonplace incidents of business life, and if they amount to a “reasonable excuse”, the effectiveness of the power to require the production of documents would be fatally undermined;
b)employers are required to maintain proper employment records in respect of each employee under Part 3-6 of the Fair Work Regulations 2009 (Cth) and these documents should have been readily available; and
c)the NTP required production of employment records in respect of a single employee, namely Mr Cheong, and the documents which were eventually produced in response to the NTP were not voluminous.[100]
[100] Ms Becroft’s Affidavit, Annexure AJB3.
Much of the effect of Mr Rechichi’s affidavit evidence is undercut by his own unprompted evidence in re-examination.[101] Referring to the eventual production in September 2010 of the records and documents the subject of the NTP Mr Rechichi said:
… They were produced on advice that I considered after consulting with my lawyer that I should produce them as they were necessary to be produced, in light of the commencement of these proceedings. Prior to that, I did not believe that I had to produce those documents.[102]
[101] Because he was self-represented Mr Rechichi conducted his own re-examination: see Transcript, 8 April 2011, pages 12-14.
[102] Transcript, 7 April 2011, page 13.
That evidence demonstrates not that the records and documents the subject of the NTP were not produced because of the business activities of Finetune Holdings and Mr Rechichi, but because:
a)Mr Rechichi did not believe he had to produce them earlier (a belief which was erroneous if it was based on the 6 October 2009 Letter and the Amended Compliance Undertaking, for reasons outlined above);[103] and
b)the records and documents were only finally produced because of the institution of these proceedings, and then only on legal advice.[104]
[103] See paras.44-57 above.
[104] See also Mr Rechichi’s February 2011 Affidavit, para.32: “… when I was served with these proceedings … I … obtained legal advice and shortly thereafter provided the documentation in answer to the NTP.”
The evidence further indicates that once the FW Ombudsman had, in correspondence dated 8 September 2010, invited Finetune Holdings and Mr Rechichi to “re-assess their position” and “advise … in advance of the directions hearing on 13 September 2010”, that it then only took four days for the documents to be produced and forwarded to the FW Ombudsman by email.[105] The records and documents thus produced were admitted by Mr Rechichi in cross-examination to be “documents that I had in the system already”.[106] Thus, a small volume of documents (64 pages), in relation to a single employee, was able to be produce within four days from within the system maintained by Finetune Holdings for the maintenance of such records.
[105] Ms Becroft’s Affidavit, Annexures AJB 2 and AJB 3.
[106] Transcript, 7 April 2011, page 12.
Documents attached to Mr Rechichi’s March 2011 Affidavit indicate that:
a)on 5 November 2009 La Trobe Financial wrote to Finetune Holdings advising that legal action had been commenced against it with respect to a loan facility (being Loan Account: 520.91300 Caprice) in order for La Trobe Financial to take possession of property, the only property identifiable from the letter being that to which it was addressed, namely 112 St Leonards Avenue in West Leederville;[107]
b)although the 5 November 2009 letter from La Trobe Financial indicated that legal action had commenced, it is not apparent what legal action was taken with respect to the specified loan account;
c)on 13 January 2010 La Trobe Financial again wrote to Finetune Holdings, this time giving an indicative total payout calculation as at 25 January 2010 for a different loan account (being Loan Account: 522.87700) in relation to the discharge of a mortgage on a property at 1 Hilda Street, North Perth;[108]
d)on or about 2 March 2010 Finetune Holdings entered into a contract for sale of land for the Hilda Street Property, to settle on 9 March 2010;[109]
e)on 10 September 2010 Permanent Mortgages Pty Ltd[110] issued a Writ of Summons against Finetune Holdings and Mr Rechichi out of the Supreme Court of Western Australia. The Writ claimed possession of the St Leonards Avenue Property, of which Mr Rechichi was said to be the registered proprietor. A loan from Permanent Mortgages to Finetune Holdings of $1,237,500 in or about 7 March 2007 was said to be secured by a mortgage over the St Leonards Avenue property. Permanent Mortgages sought possession of the property or payment of $1,311,154.58 plus pre and post judgment interest, arising from an alleged default by Finetune Holdings, notified to Finetune Holdings on or about 8 June 2010, and which alleged default remained unremedied at the time of the issuance of the Writ;[111]
f)on 30 September 2010 Professional Payment Services[112] issued a chamber summons out of the Supreme Court of Western Australia to enter judgment against Mr Rechichi, Finetune Holdings and another company, pursuant to a consent order made by a Registrar of the Supreme Court on 16 February 2010, which order had seemingly been stayed. Professional Payment Services sought judgment in accordance with the consent order, and in particular vacant possession of St Leonards Avenue Property, and that it be permitted to sell the St Leonards Avenue Property, which was mortgaged to it by Mr Rechichi on 22 March 2010. Professional Payment Services’ chamber summons was listed for an attendance before a Registrar in chambers at 9.30am on 12 October 2010; [113]
g)on 9 October 2010 Mr Rechichi entered into a contract for sale of land for the St Leonards Avenue Property. That contract for sale of land was not, on its face, subject to any relevant special conditions with respect to any litigation;[114]
h)there is no indication in the papers as to what happened with respect to Professional Payment Services’ chamber summons; and
i)on 14 December 2010 solicitors for the liquidator of a company called Dalmain Holdings Pty Ltd wrote to Mr Rechichi and Finetune Holdings referring to a judgment handed down by a Master of the Supreme Court of Western Australia on 13 December 2010, being judgment for $86,487.93 plus interest on that amount from 30 June 2005, with a total principal and interest of $114,794.36. Payment of the judgment debt together with interest in full was sought by 7 January 2011 with a threat of bankruptcy proceedings against Mr Rechichi and winding-up proceedings against Finetune Holdings in the event of a failure to make full payment.[115]
[107] Mr Rechichi’s March 2011 Affidavit, Attachment A (“St Leonards Avenue Property”).
[108] Mr Rechichi’s March 2011 Affidavit, Attachment B (“Hilda Street Property”).
[109] Mr Rechichi’s March 2011 Affidavit, Attachment B.
[110] “Permanent Mortgages”.
[111] Mr Rechichi’s March 2011 Affidavit, Attachment A.
[112] “Professional Payment Services”.
[113] Mr Rechichi’s March 2011 Affidavit, Attachment D.
[114] Mr Rechichi’s March 2011 Affidavit, Attachment C.
[115] Mr Rechichi’s March 2011 Affidavit, Attachment E.
There is evidence that an application was made to wind-up Finetune Holdings on 8 February 2010, and dismissed on 9 March 2010.[116]
[116] Ms Becroft’s Affidavit, Annexure AJB 4.
The evidence as to Finetune Holdings’ trading activities indicates that, in addition to Mr Rechichi’s architectural practice, Finetune Holdings had involvement in real estate purchases, with a view to development of the properties, and their sale at a profit.[117] The evidence does not however indicate that Finetune Holdings ceased trading in November 2009 as:
a)Mr Rechichi continued to conduct the architectural practice, which he claims was very busy, at least up until Christmas 2009; and
b)albeit that the sale appears to have been forced by legal action, or the threat of legal action, the Hilda Street Property, which was owned by Finetune Holdings,[118] was sold in March 2010, and whilst it is asserted by Mr Rechichi that the sale was below market price, it is not evident as to whether it sold for a profit or otherwise.[119]
[117] Mr Rechichi’s March 2011 Affidavit, paras.5 and 18.
[118] Mr Rechichi’s March 2011 Affidavit, para.10.
[119] Mr Rechichi’s March 2011 Affidavit, para.18 and Attachment B.
The significance of the above evidence is that whilst it is clear that Mr Rechichi and Finetune Holdings were obviously in some financial difficulty over a period of time, there is evidence that:
a)Finetune Holdings had not ceased trading at the time at which it was required to comply with the NTP;
b)even if Finetune Holdings did cease trading, it was still an operating company after November 2009, capable of:
i)engaging in legal proceedings; and
ii)selling property; and
c)apart from a letter from La Trobe Financial on 9 November 2011 to Finetune Holdings indicating that legal action had commenced concerning the St Leonards Avenue Property (a matter about which there is no further evidence in respect of the relevant loan account), there is no other indication that there were any other legal proceedings on foot at or about the time of the issuance of the NTP on 23 November 2009 or the time for compliance with the NTP on 8 December 2009.
The evidence indicates that Finetune Holdings had moved from its former premises at 218 William Street, Northbridge some time after the 6 October 2009 Letter was sent to that address,[120] but that prior to the service of the NTP on 23 November 2009 it was in its new premises at 99-101 Francis Street, Northbridge.[121] Therefore any pressures with respect to the actual move between offices were in the past by the time compliance with the NTP was required.
[120] Inspector Truong’s February 2011 Affidavit, Annexure MT-1.
[121] Inspector Warner’s Affidavit, para.5.
As to the assertion that Mr Rechichi was under pressure to deliver with respect to Finetune Holdings’ obligations prior to the Christmas break of 2009 there is no evidence as to the precise nature of those obligations, or the work which was required to fulfil them. On the evidence, there is no reason for the Court to assume anything other than that they were the usual obligations of a professional service firm in a pre-Christmas rush.
In the circumstances, the business activities alleged on behalf of Finetune Holdings and Mr Rechichi have either not been made out, or would not amount in any event to a sufficient, or sufficiently burdensome, physical or practical difficulty so as to constitute a reasonable excuse for non-compliance with the NTP.
Finally, the Court observes that in September 2010 when following legal advice the records and documents were finally produced within four days, at a time when, on the evidence, Finetune Holdings was probably under as much pressure, both legally and financially, as it was in December 2009 when the NTP ought to have been complied with. As such, Finetune Holdings’ ability to produce the documents in September 2010 demonstrates and confirms why its business activities were not a reasonable excuse for its non-compliance with the NTP in December 2009.
Alleged Vendetta
It is argued that Inspector Truong acted in excess of his discretion and pursued a personal vendetta against Mr Rechichi and that that constituted a reasonable excuse for non-compliance with the NTP by Finetune Holdings.
The FW Ombudsman accepts that an NTP must be issued in good faith for the purposes contemplated by the FW Act, namely, investigating breaches of the FW Act and enforcing compliance with the FW Act.[122]
[122] Citing Pyneboard Pty Ltd & Ors v Trade Practices Commission & Anor (1982) 57 FLR 368 at 373-374 per Northrop, Deane and Fisher JJ.
The FW Ombudsman submits that there is no credible evidence to suggest that Inspector Truong acted otherwise than in the proper discharge of his duties under the FW Act.
Inspector Truong addressed the issues as to why the NTP was issued.[123] It is evident that Inspector Truong’s investigation was not limited to the underpayment of Mr Cheong, and that other possible contraventions were possible, were being inquired into, and were in fact allegedly revealed by the documents ultimately produced in response to the NTP.[124]
[123] Inspector Truong’s February 2011Affidavit, paras.21 and 30 and Inspector Truong’s March 2011 Affidavit, para.18.
[124] Inspector Truong’s February 2011 Affidavit, para.30.
At the time the NTP issued Finetune Holdings had:
a)failed to comply with the terms of the assisted voluntary resolution set out in the 6 October 2009 Letter;
b)failed to comply with an undertaking, given through Mr Rechichi, to make the first of the payments under the assisted voluntary resolution set out in the 6 October 2009 Letter, by a later date, 6 November 2009, as agreed between Inspector Truong and Mr Rechichi; and
c)not accepted a Proposed Compliance Undertaking prepared by the FW Ombudsman and not returned to the FW Ombudsman its own Amended Compliance Undertaking.
In the circumstances, there can be no question that, viewed objectively, there was a proper basis for the issuance of the NTP to Finetune Holdings on 23 November 2009.
There is no evidence capable of sustaining a finding that Inspector Truong pursued a “vendetta” against Finetune Holdings or Mr Rechichi. Even if Inspector Truong was, as asserted by Mr Rechichi, “irate”, “stern” and “abrupt”[125] such an attitude might well have been warranted in the face of the conduct of Finetune Holdings and Mr Rechichi in the period from on or about 6 October 2009 to the time at which the NTP issued on 23 November 2009. That said, having observed Inspector Truong in the witness box, the Court does not accept that he would have become “irate”. The Court does accept that Inspector Truong might have been “stern” and “abrupt”, but such qualities might, from time to time, be necessary in carrying out a FW Inspector’s role, and it is easy to see why they might have been necessary in this case. Less subjectively, and more pertinently, there is no evidence that Inspector Truong acted in a manner which exceeded his powers, or was inconsistent with his duties, as a FW Inspector. As a FW Inspector, Inspector Truong was entitled to seek to inquire into and investigate possible non-compliance with the Australian Fair Pay and Conditions Standard, the relevant award, and an employer’s record-keeping obligations.
[125] Mr Rechichi’s February 2011 Affidavit, para.14.
In the circumstances, no reasonable excuse for non-compliance with the NTP has been established on the basis of any alleged vendetta against Finetune Holdings and Mr Rechichi by Inspector Truong.
Conclusion – reasonable excuse
For the reasons set out above, Finetune Holdings has not established that it had any reasonable excuse for non-compliance with the NTP.
Conclusion – liability
As the Court has observed above,[126] the requirements of s.712 of the FW Act establishing liability for failure by Finetune Holdings to comply with the NTP have been established, subject to the asserted defence of reasonable excuse raised by Finetune Holdings. That defence not having been established, the Court concludes that Finetune Holdings failed to comply with the NTP, and as such contravened the civil penalty provision contained in s.712(3) of the FW Act with respect to the NTP. Likewise, Mr Rechichi was involved in Finetune Holdings’ contravention, and is liable for, and has contravened, the civil penalty provision contained in s.712(3) of the FW Act by reason of Finetune Holdings’ contravention, for the reasons also set out above.[127]
[126] See para.16 above.
[127] See para.19 above.
Conclusion and orders
The Court has concluded that:
a)in contravention of s.712(3) of the FW Act, Finetune Holdings did not produce the records or documents requested in the NTP within the required time period;
b)Finetune Holdings did not have a reasonable excuse under s.712(4) of the FW Act for not complying with the NTP; and
c)Mr Rechichi was involved in Finetune Holdings’ contravention of s.712(3) of the FW Act, and is therefore taken to have also contravened s.712(3) of the FW Act.
The Court will:
a)make declarations of contravention by Finetune Holdings and Mr Rechichi in accordance with the above findings;
b)order that the proceedings be adjourned to a directions hearing at 4.00pm on 21 May 2012, to set the matter down for hearing as to penalty. Any further issues or orders required, or arising from these Reasons for Judgment, can be addressed at the directions hearing, unless the parties agree consent orders (including consent orders as to penalty) in the meantime; and
c)order that costs, if any,[128] be reserved.
[128] FW Act, s.570.
I certify that the preceding eighty-seven (87) paragraphs are a true copy of the reasons for judgment of Lucev FM
Date: 11 May 2012
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