Fair Work Ombudsman v Garfield Berry Farm Pty Ltd - [2011] FMCA 885

FEDERAL MAGISTRATES COURT OF AUSTRALIA

FAIR WORK OMBUDSMAN v GARFIELD BERRY FARM PTY LTD & ANOR

[2011] FMCA 885

FAIR WORK – Underpayment of wages – default judgment – orders and declarations.

Bankruptcy Act 1966, ss.58(3), 60, 82(3)
Fair Work Act 2009, ss.539, 550, 712(3)
Federal Magistrates Court Rules 2001, r13.03B(2)(c)
Workplace Relations Act 1996 (repealed), ss.182(1), 185 (2), 717, 718(1), 728

Arthur v Vaupotic Investments Proprietary Limited (2005) FCA 433
Australian Building and Construction Commissioner v Abbott (No.3) (2011) FCA 340
Australian Competition and Consumer Commission v Yellow Page Marketing BV (No.2) (2011) FCA 352
Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd (2006) 236 ALR 665
Curtis v MacPherson (2007) 169 IR 30
Fair Work Ombudsman v Bundy Market Meats Pty Ltd (2009) 190 IR 180; [2009] FMCA 994
Mathers v Commonwealth of Australia (2004) 134 FCR 135; [2004] FCA 217

Applicant:

FAIR WORK OMBUDSMAN

First Respondent:	GARFIELD BERRY FARM PTY LTD
Second Respondent	MARIA DOHERTY

File Number:

MLG 739 of 2011

Judgment of:

Riley FM

Hearing date:

9 November 2011

Date of Last Submission:

9 November 2011

Delivered at:

Melbourne

Delivered on:

9 November 2011

REPRESENTATION

Counsel for the Applicant:

Ms Nicholas

Solicitors for the Applicant:

Office of the Fair Work Ombudsman

Counsel for the Respondents:

No appearance

Solicitors for the Respondents:

No appearance

UPON ADMISSIONS that are taken to have been made consequent upon non-compliance with orders of the court

THE COURT ORDERS THAT:

Judgment be entered for the applicant pursuant to Rule 13.03B(2)(c) of the Federal Magistrates Court Rules 2001.
By 16 November 2011, the first respondent pay to Davin McKay $31,040.50, plus interest of $1,250.12.
The matter be adjourned to 15 February 2012 at 9:30 am for further hearing with respect to the applicant’s claim for penalties to be imposed on the respondents.
Payment referred to in order 2 hereof be forwarded to the applicant in the form of bank cheque made out to Davin McKay.

AND THE COURT DECLARES THAT:

The first respondent contravened:
(a)section 182(1) of the Workplace Relations Act 1996 (WR Act) by failing to pay to Davin McKay the basic periodic rate of pay prescribed under the Australian Pay and Classification Scale (APCS) derived from the Shop, Distributive and Allied Employees’ Association – Victorian Shops Interim (Roping-in No.1) Award 2003 (the Award) for all hours of work.
(b)section 185(2) of the WR Act by failing to pay to Davin McKay the basic periodic rate of pay plus a casual loading of 25% prescribed under the APCS derived from the Award for all hours of work.
(c)clause 35.2 of the Award by failing to pay to Davin McKay the additional annual leave amount in lieu of annual leave prescribed under the APCS for all hours of work, namely 1/12 of the basic periodic rate of pay.
(d)section 712(3) of the Fair Work Act 2009 (FW Act) on two occasions by failing to comply with the terms of notices to produce served on 10 November 2010 and 20 November 2010.
The second respondent:
(a)was involved in the first respondent’s contraventions specified in declaration 1 hereof within the meaning of section 728(1) of the WR Act and section 550(1) of the FW Act;
(b)contravened the provisions specified in declaration 1 hereof; and
(c)contravened section 712(3) of the FW Act by failing to comply with the terms of a notice to produce served on her on 26 November 2010.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT MELBOURNE

MLG 739 of 2011

FAIR WORK OMBUDSMAN

Applicant

And

GARFIELD BERRY FARM PTY LTD

First Respondent

And

MARIA DOHERTY

Second Respondent

REASONS FOR JUDGMENT

(Revised from transcript)

This is an application for certain orders and declarations in relation to alleged breaches of the Fair Work Act 1999 and the Workplace Relations Act 1996 (repealed) by the first respondent in which the second respondent is alleged to have been involved.
The matter comes before the court today on an application in a case seeking default judgment. I am satisfied by an affidavit of Anica Grace Winterburn, affirmed today, that the application in a case has been properly served on both respondents. They did not appear in court today.
The principal default that is alleged against both respondents is a failure to file and serve a response in accordance with both the rules of court and an order of the court. It is also alleged that the respondents failed to file and serve a notice of address for service in adequate time.
The application is brought pursuant to rule 13.03B(2)(c) of the Federal Magistrates Court Rules 2001. Under that rule, the court may give judgment in an application supported by a statement of claim for relief that the applicant appears to be entitled to on the statement of claim and that the court is satisfied that it has the power to grant. It is not necessary for there to be proof by evidence of the applicant’s claim.

It is sufficient that there be a basis for the relief that is sought on the face of the statement of claim. Authority for that proposition is Arthur v Vaupotic Investments Proprietary Limited (2005) FCA 433 at 3, Australian Building and Construction Commissioner v Abbott (No. 3) (2011) FCA 340 at 11, and Australian Competition and Consumer Commission v Yellow Page Marketing BV (No. 2) (2011) FCA 352 at 14.
The complication in this case is that what is sought today is primarily a set of declarations. Those declarations do appear to be appropriate based on the statement of claim. However, there has been authority in the past to the effect that it is not appropriate for a court to make declarations by consent or based on noncompliance with orders of the court. However, there is more recent authority that in certain cases it is appropriate for the court to make declarations in such circumstances.
In particular, I refer to Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd (2006) 236 ALR 665. In that case, Kiefel J, at paragraphs 52 to 59, considered the rationale for the previous approach taken by the courts. Her Honour came to the view that that approach may no longer be warranted, particularly in public interest cases such as this, and particularly if the declarations are preceded by a statement that they are made upon admissions which the respondents are taken to have made consequent upon noncompliance with orders of the court.
Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd (2006) 236 ALR 665 was cited with approval by Gordon J in Australian Competition and Consumer Commission v Yellow Page Marketing BV (No.2) (2011) FCA 352 at 66. In that case, her Honour also said at [67] that it was necessary for the court, in considering whether to grant such declarations, to consider various factors, including whether the declaration will have any utility, whether the proceeding involves a matter of public interest, and whether the circumstances call for the marking of the court’s disapproval of the contravening conduct.
In the present case, it seems to me to be clear that the declarations would have utility. The effect of making the declarations is that it will also then be possible to order the first respondent to make up the shortfall in the wages to Mr McKay, who is the underlying complainant in this matter. It will also enable the court to ultimately impose penalties for the conduct in this case which involves significant contraventions of the Fair Work Act 2009 and Workplace Relations Act 1996 (repealed). Those contraventions do call for action marking the court’s disapproval of the contravening conduct. In all the circumstances, I am satisfied that it is appropriate in this case to make the declarations that are sought on the basis of deemed admissions. The statement of claim supports the relief which is sought.
There are two other matters which complicate the situation. The first is that there has been an application to wind up the first respondent filed by the Australian Taxation Office. I am told that that is coming on for hearing on 21 November 2011. The mere fact of the filing of an application, as I understand it, does not prevent the court today proceeding to make declarations against the first respondent or making an order that the first respondent pay the amount of the underpaid wages.
The second complication is that it appears on the material before me that a sequestration order was made against the second respondent’s estate on 11 July 2011. It seems that the creditor’s petition was filed by a person by the name of Anna Corrone, who is the second respondent’s sister.
The second respondent is now bankrupt. However, the Bankruptcy Act 1966 does not cause an automatic stay of these proceedings, and there is no application today for a stay. I note that s.58(3) of the Bankruptcy Act1966 provides that:
Except as provided by this Act, after a debtor has become a bankrupt, it is not competent for a creditor:
(a) to enforce any remedy against the person or property of the bankrupt in respect of a provable debt; or
(b) except with the leave of the court and on such terms as the court thinks fit, to commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding.
The legal proceeding in this case, as I understand it, is not in respect of a provable debt. Section 82(3) of the Bankruptcy Act 1966 provides that:
Penalties or fines imposed by a court in respect of an offence against a law, whether a law of the Commonwealth or not, are not provable in bankruptcy.
What is sought ultimately in this case is a penalty or fine in respect of an offence against a law of the Commonwealth. There is authority that penalties imposed under the Fair Work Act2009 are not debts provable in the bankruptcy. They are authorities of this court, namely, Curtis v MacPherson (2007) 169 IR 30 at paragraphs 6 to 10, and Fair Work Ombudsman v Bundy Market Meats Pty Ltd (2009) 190 IR 180; [2009] FMCA 994 at 2. This court, of course, should follow decisions of other Federal Magistrates for reasons of judicial comity, unless it is thought that those decisions are clearly wrong. I am not of the view that they are clearly wrong. On the contrary, it seems to me that they are correct.
There is also a decision of the Federal Court, Mathers v Commonwealth of Australia (2004) 134 FCR 135; [2004] FCA 217, where Heerey J considered the meaning of the word “offence” in s.82(3) of the Bankruptcy Act 1966. His Honour noted that a criminal offence is one type of offence, and “offence”, in fact, means any contravention of a law. It seems to me that on the authority of Mathers, it is clear that the penalties that would be imposed under the Fair Work Act 2009 and Workplace Relations Act 1996 (repealed) in this case would be penalties in respect of an offence against a law. Consequently, they would not be debts provable in the bankruptcy, and there is nothing to prohibit the court proceeding with the application in this case.
I would also note, for completeness, s.60 of the Bankruptcy Act 1966. That section provides that the court may stay proceedings, whether civil or criminal, against the person or property of the debtor in respect of the non-payment of a provable debt, or of a pecuniary penalty payable in consequence of the non-payment of a provable debt. In the present case, the applicant submitted the amount of money underpaid to the worker in this case would be a provable debt. The money should have been paid by the first respondent, rather than the second respondent. Consequently, the wages that were underpaid would not be a provable debt in the bankruptcy of the second respondent. In any event, no application for a stay has been made, so the question is moot at this point.
Based on the matters set out in the statement of claim, the applicant appears to be entitled to the relief it seeks. The statement of claim indicates that the first respondent was the employer of Mr McKay. The second respondent was the director of the first respondent, and, at the time of Mr McKay’s employment, was responsible for the overall direction, management and supervision of the first respondent’s operations. The second respondent was involved in the employment of employees of the first respondent, and was responsible for or involved in setting and adjusting pay rates, wages and conditions for employees, and the making of payments to employees.
Mr McKay was employed between about 5 December 2006 and about 12 June 2009 on a casual basis, as an adult retail worker, performing duties including customer service, sales, packing shelves, cleaning, and maintaining the retail area. He was paid $10.79 per hour gross from his commencement until 7 January 2007, and then $11.27 per hour gross from 8 January 2007 until 4 November 2007, and $12.76 per hour gross from 5 November 2007 until the end of his employment. The Shop, Distributive and Allied Employee’ Associate – Victoria Shops Interim (Roping-in No.1) Award 2003 (“the Award”), which applied to Mr McKay, required him to be paid considerably more.

It required him to be paid $20.20 per hour from 1 December 2006 until 30 September 2007, then $20.38 per hour from 1 October 2007 until 30 September 2008, and then $21.14 from 1 October 2008 until the end of his employment.
Two notices to produce were served on the first respondent seeking production of records or documents, as particularised in schedule B of the statement of claim. One notice was served on the second respondent seeking production of records, as particularised in schedule B of the statement of claim. No documents were produced by either respondent within the specified periods. Only one document, a pay report comprising five pages in total, was subsequently produced to the office of the applicant.
From the statement of claim, it seems clear that the second respondent was knowingly concerned in, or a party to, each of the first respondent’s contraventions of the Workplace Relations Act 1996 (repealed), the Award, and the Fair Work Act2009. Pursuant to the operation of s.728 of the Workplace Relations Act 1996 (repealed) and s.550 of the Fair Work Act 2009, the second respondent is taken to have been involved in each of the contraventions and to have contravened each of the relevant provisions.
The facts set out in the statement of claim indicate that there were six contraventions:
a)contravention of s.182(1) of the Workplace Relations Act 1996 (repealed) and the APCS derived from the relevant award by failing to pay Mr McKay the base periodic rate of pay for each ordinary hour worked at the rate stated in paragraph 9 of the statement of claim;
b)contravention of s.185(2) of the Workplace Relations Act 1996 (repealed) and the APCS derived from the award by failing to pay Mr McKay the casual loading of 25 per cent of the base rate of pay for each ordinary hour worked at the rate stated in paragraph 10 of the statement of claim;
c)contravention of clause 32.5 of the award by failing to pay Mr McKay the additional annual leave amount for a casual employee of half the ordinary hourly rates of pay payable in lieu of annual leave, at the rate stated in paragraph 11 of the statement of claim;
d)contravention of s.712(3) of the Fair Work Act 2009 by failing to comply with the notice to produce dated 9 November 2010, and served on the first respondent on 10 November 2010;
e)contravention of s.712(3) of the Fair Work Act 2009 by failing to comply with the notice to produce dated 10 November 2010 and served on the first respondent on 20 November 2010; and
f)contravention of s.712(3) of the Fair Work Act 2009 by failing to comply with the notice to produce dated 10 November 2010, and served on the second respondent on 20 November 2010.
The facts alleged in the statement of claim indicate an entitlement to findings that the first and second respondents contravened applicable provisions, as defined by s.717 of the Workplace Relations Act 1996 (repealed) namely:
a)a term of the Australian Fair Pay and Conditions Standard – section 218(1), Item 2 of the Workplace Relations Act 1996 (repealed); and
b)a term of an award – section 718(1), Item 3 of the Workplace Relations Act 1996 (repealed).
I am satisfied that the facts alleged in the statement of claim also establish that the first and second respondents contravened section 712(3) of the Fair Work Act 2009, and consequently a civil remedy may be imposed under section 539 of the Fair Work Act 2009.
I am satisfied that the Fair Work Ombudsman has the standing to bring this proceeding. In all the circumstances, it seems to me to be appropriate and proper to make the declarations and orders that are sought. The amount of the penalties to be imposed on the respondents will be determined separately.

I certify that the preceding twenty-three (23) paragraphs are a true copy of the reasons for judgment of Riley FM.

Date: 16 November 2011,