Fair Work Ombudsman v First Step Finance Pty Ltd
[2024] FedCFamC2G 772
•11 June 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v First Step Finance Pty Ltd [2024] FedCFamC2G 772
File number(s): SYG 1916 of 2023 Judgment of: JUDGE CAMERON Date of judgment: 11 June 2024 Catchwords: PRACTICE & PROCEDURE - Default judgment following non-compliance with Court rules and orders. Legislation: Fair Work Act 2009 (Cth)
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)
Federal Court Rules 2011 (Cth)
Division: Fair Work Number of paragraphs: 17 Date of hearing: 11 June 2024 Place: Sydney Solicitor for the Applicant: Ms R. Miguntenna, Office of the Fair Work Ombudsman Solicitor for the First and Second Respondents No appearance by or on behalf of the respondents ORDERS
SYG 1916 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
ApplicantAND: FIRST STEP FINANCE PTY LTD (ACN 615 460 332)
First RespondentDAVID BRIAN WARD
Second Respondent
ORDER MADE BY:
JUDGE CAMERON
DATE OF ORDER:
11 JUNE 2024
THE COURT DECLARES THAT:
1.Upon admissions taken to have been made by reason of the first respondent’s default, the first respondent contravened:
(a)section 716(5) of the Fair Work Act 2009 (Cth) (FW Act) by failing to comply with a compliance notice given to the first respondent on 17 August 2021 in respect of Mr Clinton Wayne Hawthorne (Hawthorne Compliance Notice);
(b)section 716(5) of the FW Act by failing to comply with a compliance notice given to the first respondent on 8 September 2022 in respect of Mr Jackson Tutahi (Tutahi Compliance Notice);
(c)section 716(5) of the FW Act by failing to comply with a compliance notice given to the first respondent on 21 August 2023 in respect of Mr Ellie Varant Bomoushakian (Bomoushakian Compliance Notice); and
(d)section 536(3) of the FW Act by giving two pay slips to each of Ms Tutahi and Mr Bomoushakian which it knew to be false or misleading.
2.Upon admissions taken to have been made by reason of the second respondent’s default, the second respondent was involved, within the meaning of section 550(2)(c) of the FW Act, in the first respondent’s contraventions referred to in declarations 1(a), (b), (c) and (d) above and, by reason of section 550(1) of the FW Act, is taken to have contravened:
(a)section 716(5) of the FW Act, as referred to in declarations 1(a), (b) and (c) above; and
(b)section 563(3) of the FW Act, as referred to in declaration 1(d) above.
THE COURT ORDERS THAT:
1.Default judgment be entered for the applicant against each of the first and second respondents pursuant to rule 13.05(2)(c) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Rules) by reason of their failure to:
(a)give an address for service, as required by rule 6.01 of the Rules and order 4 of the Court’s orders dated 2 February 2024 (constituting default within the meaning of rules 13.04(2)(b)(i), (iii) and (iv));
(b)file and serve a response and defence to the application and amended statement of claim, as required by order 6 of the Court’s orders dated 2 February 2024, order 1 of the Court’s orders dated 12 April 2024 and rules 4.03 and 4.04 of the Rules (constituting default within the meaning of rr 13.04(2)(b)(ii) and (iii) and (iv)); and
(c)defend the proceedings with due diligence (constituting default within the meaning of rule 13.04(2)(b)(vii)).
2.Pursuant to section 545(1) of the FW Act, the first respondent take the steps that were required by the Hawthorne Compliance Notice within 28 days of this order by:
(a)paying to the applicant the outstanding entitlement of $3,556.81; and
(b)producing to the applicant evidence of the first respondent’s compliance with the order set out in order 2(a) above.
3.Pursuant to section 545(1) of the FW Act, the first respondent take the steps that were required by the Tutahi Compliance Notice within 28 days of this order by:
(a)paying to the applicant the outstanding entitlement of $8,704.04;
(b)paying to Mr Tutahi’s nominated superannuation fund any additional superannuation contributions required to be paid due to the payment of the outstanding entitlement of $8,704.04; and
(c)producing to the applicant evidence of the first respondent’s compliance with the orders set out in orders 3(a) and (b) above.
4.Pursuant to section 545(1) of the FW Act, the first respondent take the steps that were required by the Bomoushakian Compliance Notice within 28 days of this order by:
(a)paying to the applicant the outstanding entitlement of $10,259.61 less the payment of $6,000 made on 19 February 2024 and any payments made in respect of pay as you go tax;
(b)paying to Mr Bomoushakian’s nominated superannuation fund any additional superannuation contributions required to be paid due to the payment of the previous outstanding entitlement of $23,261.21; and
(c)producing to the applicant evidence of the first respondent’s compliance with the orders set out in orders 4(a) and (b) above.
5.Pursuant to section 547(2) of the FW Act, the first respondent pay to the applicant within 28 days of this order interest on the amounts owed to Mr Hawthorne, Mr Tutahi and Mr Bomoushakian pursuant to orders 2(a), 3(a) and 4(a) above at the applicable pre-judgment interest rate prescribed by the Federal Court of Australia.
6.The applicant distribute to Mr Hawthorne, Mr Tutahi and Mr Bomoushakian the amounts paid to the applicant pursuant to orders 2(a), 3(a), 4(a) and 5 above within 60 days of the payments being made.
7.The matter stand over for hearing in respect of the applicant’s claim for pecuniary penalties to 13 August 2024 at 2:15pm.
8.The applicant file and serve evidence and submissions relating to penalty on or before 16 July 2024.
9.The first and second respondents file and serve evidence and submissions relating to penalty on or before 30 July 2024.
10.The parties have liberty to apply on 3 days’ notice.
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 CAMERON
INTRODUCTION
On 30 November 2023 this proceeding was brought by the Fair Work Ombudsman (FWO) under the Fair Work Act 2009 (Cth) (FW Act) in respect of the failure by the first respondent, First Step Finance Pty Ltd (FSF), to obey compliance notices dated 17 August 2021, 8 September 2022 and 21 August 2023 (Compliance Notices) which the Ombudsman had served on it. The second respondent, David Ward, is and was at all relevant times FSF’s sole director and was responsible for its overall management. He was also alleged to be responsible for ensuring FSF’s compliance with its legal obligations under the FW Act.
In her amended statement of claim filed on 9 February 2024, the Ombudsman alleged that FSF had contravened s.716(5) of the FW Act by failing to comply with the requirements of the Compliance Notices, most relevantly by not paying out on termination the accrued annual leave entitlements of its employees Messrs Hawthorne, Tutahi and Bomoushakian, and had contravened s.536(3) of the FW Act by issuing pay slips to Mr Tuhati and Mr Bomoushakian which it knew to be false or misleading. The Ombudsman alleged that Mr Ward was involved, within the meaning of s.550(2) of the FW Act, in FSF’s contraventions of the FW Act. The Ombudsman sought, against both respondents, declarations of contraventions and orders for payment to her of the outstanding underpayments together with any related superannuation contributions, interest and pecuniary penalties.
On 10 May 2024 the Ombudsman filed an application in a proceeding seeking default judgment against the respondents pursuant to r.13.05(2)(c) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (Rules). These reasons concern that application.
BACKGROUND HISTORY
On two earlier occasions, the Court made orders which are particularly relevant to the present application in a proceeding. The first of these was made on 2 February 2024 and relevantly provided:
4. The first and second respondents file and serve any notice of address for service by 9 February 2024.
…
6. The first and second respondents file and serve a response and defence by 8 March 2024.
On 12 April 2024, the Court further ordered:
1.The first and second respondents file and serve a response and defence on or before 24 April 2024.
and noted:
4. If one or both of the respondents do not comply with order 1 above, the applicant might apply under r.13.05(2)(c) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) for default judgment.
Service
On 2 February 2024 the Ombudsman filed affidavits of service affirmed by Joseph Khoury on 21 December 2023 and by her solicitor, Ms Miguntenna, on 1 February 2024, evidencing service of the originating application and statement of claim on FSF and on Mr Ward by substituted service in accordance with orders made on 2 February 2024.
On 12 April 2024 the Ombudsman filed an affidavit of service affirmed by Ms Miguntenna on 11 April 2024 evidencing, amongst other things, service on the respondents of a copy of the orders made on 2 February 2024 and the amended statement of claim filed on 9 February 2024. On 13 May 2024, the Ombudsman filed the affidavit of Kathleen Davies, deposing to service on the respondents of the orders made on 12 April 2024.
On 4 June 2024 the Ombudsman filed an affidavit of service affirmed that day by Ms Davis evidencing service on the respondents of the current application in a proceeding and supporting affidavit.
Neither respondent has filed a notice of address for service, a response or a defence and neither has appeared at previous listings of this proceeding. They have not appeared today.
APPLICATION IN A PROCEEDING
The Ombudsman’s application in a proceeding sought the following orders:
1. Default judgment be entered for the Applicant against each of the First and Second Respondents pursuant to rule 13.05(2)(c) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Rules) by reason of their failure to:
(a)give an address for service, as required by rule 6.01 of the Rules and order 4 of the Court’s orders dated 2 February 2024 (constituting default within the meaning of rules 13.04(2)(b)(i), (iii) and (iv));
(b) file and serve a response and defence to the Originating Application and Amended Statement of Claim, as required by order 6 of the Court’s orders dated 2 February 2024, order 1 of the Court’s orders dated 12 April 2024 and rules 4.03 and 4.04 of the Rules (constituting default within the meaning of rules 13.04(2)(b)(ii) and (iii) and (iv)); and
(c)defend the proceedings with due diligence (constituting default within the meaning of rule 13.04(2)(b)(vii)).
2. Upon admissions taken to have been made by reason of the First Respondent’s default, declarations be made that the First Respondent contravened:
(a) section 716(5) of the Fair Work Act 2009 (Cth) (FW Act) by failing to comply with a compliance notice given to the First Respondent on 17 August 2021 in respect of Mr Clinton Wayne Hawthorne (Hawthorne Compliance Notice);
(b) section 716(5) of the FW Act by failing to comply with a compliance notice given to the First Respondent on 8 September 2022 in respect of Mr Jackson Tutahi (Tutahi Compliance Notice);
(c)section 716(5) of the FW Act by failing to comply with a compliance notice given to the First Respondent on 21 August 2023 in respect of Mr Ellie Varant Bomoushakian (Bomoushakian Compliance Notice); and
(d)section 536(3) of the FW Act by giving two pay slips to each of Ms Tutahi and Mr Bomoushakian which it knew to be false or misleading.
3.Upon admissions taken to have been made by reason of the Second Respondent’s default, declarations be made that the Second Respondent was involved, within the meaning of section 550(2)(c) of the FW Act, in the First Respondent’s contraventions referred to in paragraphs 2(a)-(d) above and, by reason of section 550(1), is taken to have contravened:
(a) section 716(5) of the FW Act, as referred to in paragraph 2(a)-(c) above; and
(b) section 563(3) of the FW Act, as referred to in paragraph 2(d) above.
4. Orders be made that:
(a) pursuant to section 545(1) of the FW Act, the First Respondent take the steps that were required by the Hawthorne Compliance Notice within 28 days of this order by:
(i)paying to the Applicant the outstanding entitlement of $3,556.81; and
(ii)producing to the Applicant evidence of the First Respondent’s compliance with the order set out in paragraph 4(a)(i) above.
(b)pursuant to section 545(1) of the FW Act, the First Respondent take the steps that were required by the Tutahi Compliance Notice within 28 days of this order by:
(i)paying to the Applicant the outstanding entitlement of $8,704.04;
(ii) paying to Mr Tutahi’s nominated superannuation fund any additional superannuation contributions required to be paid by clause 19.2 of the Banking, Finance and Insurance Award 2020 due to the payment of the outstanding entitlement of $8,704.04; and
(iii)producing to the Applicant evidence of the First Respondent’s compliance with the orders set out in paragraph 4(b)(i) and (ii) above.
(c) pursuant to section 545(1) of the FW Act, the First Respondent take the steps that were required by the Bomoushakian Compliance Notice within 28 days of this order by:
(i)paying to the Applicant the outstanding entitlement of $10,259.61 less the payment of $6,000 made on 19 February 2024 and any payments made in respect of pay as you go tax;
(ii)paying to Mr Bomoushakian’s nominated superannuation fund any additional superannuation contributions required to be paid due to the payment of the previous outstanding entitlement of $23,261.21; and
(iii)producing to the Applicant evidence of the First Respondent’s compliance with the orders set out in paragraph 4(c)(i) and (ii) above.
(d)pursuant to section 547(2) of the FW Act, the First Respondent pay interest on the amounts owed to Mr Hawthorne, Mr Tutahi and Mr Bomoushakian pursuant to paragraphs 4(a)(i), 4(b)(i) and 4(c)(i) to the Applicant at the applicable pre-judgment interest rate prescribed by the Federal Court of Australia within 28 days of this order.
(e)the Applicant distribute to Mr Hawthorne, Mr Tutahi and Mr Bomoushakian the amounts paid to the Applicant pursuant to paragraphs 4(a)(i), 4(b)(i), 4(c)(i) and 4(d) within 60 days of the payments being made.
(f)the matter be adjourned to a date to be fixed for a further hearing in respect of the Applicant’s claim for civil pecuniary penalties for the contraventions declared at orders 2 and 3 above.
(g)the Applicant file and serve evidence and submissions relating to penalty no later than 28 days prior to the date of the hearing fixed pursuant to order 4(f) above.
(h)the First and Second Respondents file and serve evidence and submissions relating to penalty no later than 14 days prior to the date of the hearing fixed pursuant to order 4(f) above.
(i)the parties have liberty to apply in the event that any of the above orders are not complied with.
(j) such further orders as the Court considers appropriate.
LEGISLATION AND RULES
The FW Act relevantly provides:
716 Compliance notices
Application of this section
(1) This section applies if an inspector reasonably believes that a person has contravened one or more of the following:
(a) a provision of the National Employment Standards;
(b) a term of a modern award;
…
Giving a notice
(2) The inspector may, except as provided by subsection (4), give the person a notice requiring the person to do either or both of the following within such reasonable time as is specified in the notice:
(a) take specified action to remedy the direct effects of the contravention referred to in subsection (1);
(b) produce reasonable evidence of the person's compliance with the notice.
(3) The notice must also:
...
(c) set out brief details of the contravention; and
(d) explain that a failure to comply with the notice may contravene a civil remedy provision; …
…
Person must not fail to comply with notice
(5) A person must not fail to comply with a notice given under this section.
…
550 Involvement in contravention treated in same way as actual contravention
(1) A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.
(2) A person is involved in a contravention of a civil remedy provision if, and only if, the person:
(a) has aided, abetted, counselled or procured the contravention; or
(b) has induced the contravention, whether by threats or promises or otherwise; or
(c) has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d) has conspired with others to effect the contravention.
...
The Rules relevantly provide:
4.03 Response to application
(1) A respondent to an application who seeks to do any of the following must file a response in accordance with the approved form:
(a) indicate consent to an order sought by the applicant;
(b) ask the Court to make another order;
(c) ask the Court to dismiss the application;
(d) seek orders in a matter other than the matter set out in the application;
(e) make a cross‑claim against the applicant or another party.
...
(3) A response must be filed and served within 28 days after service of the application to which it relates.
...
6.01 Address for service
(1) A party to a proceeding must give an address for service.
...
13.04 When a party is in default
…
(2) For the purposes of rule 13.05, a respondent is in default if the respondent:
(a) has not satisfied the applicant’s claim; and
(b) fails to:
(i) give an address for service before the time for the respondent to give an address has expired; or
(ii) file a response before the time for the respondent to file a response has expired; ...
…
13.05 Orders on default
…
(2) If a respondent is in default, the Court may:
…
(c) if the proceeding was started by an application supported by a statement of claim or the Court has ordered that the proceeding continue on pleadings—give judgment against the respondent for the relief that:
(i) the applicant appears entitled to on the statement of claim; and
(ii) the Court is satisfied it has power to grant; or
(d) give judgment or make any other order against the respondent;
…
The Federal Court Rules 2011 (Cth) (FCA Rules) relevantly provide:
16.07 Admissions, denials and deemed admissions
(1) A party pleading to an allegation of fact in another party’s pleading must specifically admit or deny every allegation of fact in the pleading.
(2) Allegations that are not specifically denied are taken to be admitted.
…
16.32 Defence to application
A respondent must file a defence, in accordance with Form 33, within 28 days after service of the statement of claim.
Those rules are applied in this Court, that is to say, the Federal Circuit and Family Court of Australia (Division 2), by virtue of items 13 and 15 of sch.1 to the Rules.
EVIDENCE
Kathleen Davies
I note that Ms Davies’s affidavit affirmed 10 May 2024 annexes a copy of what is said to be Mr Hawthorne’s most recent payslip. That payslip identifies Mr Hawthorne’s pay rate as $67.71 per hour. It is to be noted that in annexure A to the amended statement of claim, Mr Hawthorne’s unpaid salary is calculated by reference to a pay rate of $96.1538 cents per hour. Recalculating the amount owed to Mr Hawthorne by reference to what I am now told is the correct pay rate produces an amount owing to him of $3,556.81. That correction will be relevant for the orders to be made later today. It should also be noted that certain payments have been made to Mr Bomoushakian, which go some way to extinguishing the debt owed to him but not entirely, and these have been particularised in paragraphs 31A and 31B of the amended statement of claim.
CONSIDERATION
I am satisfied that the respondents have been served as required by the Rules and the orders the Court made previously and I am satisfied that the respondents are in default not only of their obligations under the Rules to which I have referred, but also of their obligations under the orders that the Court has made in this proceeding. The respondents’ failure to file pleadings in the time made available under the Rules has the consequence that the allegations made in the Ombudsman’s statement of claim are deemed to have been admitted.
I also have had regard to the written submissions filed on behalf of the Ombudsman and, in particular to the comments there concerning service and the effectiveness of service on the respondents. In the circumstances, it seems to me that the orders which the Ombudsman seeks in her application in a proceeding filed on 10 May 2024 should be made.
CONCLUSION
As, pursuant to r.16.07(2) of the FCA Rules, the respondents are taken to have made the admissions recorded earlier and by reason of the respondents’ default for the purposes of r.13.04(2) of the Rules, default judgment will be entered for the Ombudsman against the respondents pursuant to r.13.05(2)(c) the Rules.
I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Cameron. Associate:
Dated: 21 August 2024
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