Fair Work Ombudsman v Jorgensen

FEDERAL CIRCUIT COURT OF AUSTRALIA

FAIR WORK OMBUDSMAN v JORGENSEN

(No.2) [2018] FCCA 1202

Catchwords:
INDUSTRIAL LAW – Contempt of Court – Freezing Order – withdrawals contrary to orders - whether conduct covered by exceptions – onus of proof – exceptions not applying proved beyond reasonable doubt – conviction.

Legislation:

Fair Work Act 2009 (Cth)

Applicant:

FAIR WORK OMBUDSMAN

Respondent:

LEIGH ALAN JORGENSEN

File Number:

BRG 1032 of 2017

Judgment of:

Judge Vasta

Hearing date:

1,2 and 3 May 2018

Date of Last Submission:

3 May 2018

Delivered at:

Brisbane

Delivered on:

3 May 2018

REPRESENTATION

Counsel for the Applicant:

Ms E.S. Wilson QC

Ms C. Hartigan

Solicitors for the Applicant:

Ashurst Australia

Counsel for the Respondent:

Ms K.W. Gover

Solicitors for the Respondent:

Lillas & Loel Lawyers

ORDERS

THE COURT DECLARES:

A. The Court finds that the Applicants’ Charge 1(a)(i) of the Application that the Respondent breached Order 6 of the Orders of this Court dated 24 July 2015 and Order 2 of Orders of this Court dated 30 July 2015 is proved.

B. The Court finds that the Applicants’ Charge 1(a)(ii) of the Application that the Respondent breached Order 6 of the Orders of this Court dated 24 July 2015 and Order 2 of Orders of this Court dated 30 July 2015 is proved.

C. The Court finds that the Applicants’ Charge 1(a)(iii) of the Application that the Respondent breached Order 6 of the Orders of this Court dated 24 July 2015 and Order 2 of Orders of this Court dated 30 July 2015 is proved.

D. The Court finds that the Applicants’ Charge 1(a)(iv) of the Application that the Respondent breached Order 6 of the Orders of this Court dated 24 July 2015 and Order 2 of Orders of this Court dated 30 July 2015 is proved.

E. The Court finds that the Applicants’ Charge 1(a)(v) of the Application that the Respondent breached Order 6 of the Orders of this Court dated 24 July 2015 and Order 2 of Orders of this Court dated 30 July 2015 is proved.

F. The Court finds that the Applicants’ Charge 1(a)(vi) of the Application that the Respondent breached Order 6 of the Orders of this Court dated 24 July 2015 and Order 2 of Orders of this Court dated 30 July 2015 is proved.

G. The Court finds that the Applicants’ Charge 1(a)(vii) of the Application that the Respondent breached Order 6 of the Orders of this Court dated 24 July 2015 and Order 2 of Order of this Court dated 30 July 2015 is proved.

H. The Court finds that the Applicants’ Charge 1(a)(viii) of the Application that the Respondent breached Order 6 of the Orders of this Court dated 24 July 2015 and Order 2 of Order of this Court dated 30 July 2015 is proved.

The Court finds that the Applicants’ Charge 1(a)(ix) of the Application that the Respondent breached Order 6 of the Orders of this Court dated 24 July 2015 and Order 2 of Orders of this Court dated 30 July 2015 is proved.

THE COURT ORDERS:

That this matter be adjourned for Sentencing at 10.00am on 10 May 2018 in the Federal Circuit Court of Australia at Brisbane.
That the Respondent appear by video link from the Federal Circuit Court of Australia at Cairns.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT BRISBANE

BRG 1032 of 2017

FAIR WORK OMBUDSMAN

Applicant

And

LEIGH ALAN JORGENSEN

Respondent

REASONS FOR JUDGMENT

(As Corrected)

(Ex tempore)

The Respondent, Leigh Alan Jorgensen, has been charged with nine counts of contempt of an order made by His Honour Judge Jarrett on 24 July 2015. The evidence before me allows me to make certain inferences and conclusions.
The Respondent was the operator of Trek North Tours. Trek North Tours was incorporated as a company and it had its own bank account. It operated tourist information centres around the Cairns area and engaged tour desk agents to sell local tours to both walk-in and online customers. The Respondent was the sole director and shareholder of Trek North Tours.
Yubnub Pty Ltd was also incorporated as a company and it had its own bank accounts. The business of Trek North Tours (“TNT”), utilised both bank accounts. There did not seem to be any rhyme or reason as to when one bank account was used as against the other, but it is clear that both bank accounts were used for the business and, it seems, for no other enterprise.
The business, TNT, had very little in the way of assets, and it is not surprising that no bank would give this business an overdraft facility.
The Respondent was advised to set up a family trust. The family trust was indeed set up and a bank account was opened. The home of the Respondent became property of the family trust and, upon the bank having security of the home, the bank account was set up as a line of credit to the value of $260,000.00.
That account was able to be utilised for the use of the family trust. However, it is quite clear that the Respondent simply used that account for whatever purpose he wanted. It was an account that could be used for personal expenses and had been used for personal expenses.
Exhibit 2 in these proceedings is an index of accounts. For ease of use in these proceedings, they were given numbers. Whilst all accounts were somewhat relevant, the ones that were most relevant were the following:
a)Account number 1 in the name Leigh Jorgensen Family Trust, BSB 484-799 and account number 503197972
b)Account number 2 in the name of Yubnub Pty Ltd, BSB number 484-799 and account number 451643835.
c)Account number 4 in the name of Mr L A Jorgensen trading as trustee for Leigh Jorgensen Family Trust, BSB 484-799 and account number 451223852.
d)Account number 7 in the name Mr LA Jorgensen trading as Trek North Tours, BSB 484-799 and account number 452798506.
e)Account number 10, a MasterCard held with the Commonwealth Bank of Australia, number 5523 5052 7025 0991
f)Account number 9 in the name of Leigh Alan Jorgensen held with the Commonwealth Bank of Australia with BSB 064-804 and account number 00436254.
The clear and unequivocal evidence of the Respondent was that he used the trust account (account number 1) to pay bills of the business of TNT when he did not think that the balance of either the Trek North Tours account or Yubnub account was sufficient to meet the bill.
Because account number 1 was a line of credit, any debits attracted the payment of interest. Therefore, the Respondent wished to have that account with as little debit in it as possible to minimise the amount of interest that he had to pay. To this end, he would regularly clear the account of Yubnub (account number 2) or Trek North Tours (account number 7) and pay it into account number 1 to reduce that debit.
There is also evidence that suggests that the Respondent used his MasterCard, account number 10, to pay some of the expenses of the business. The MasterCard was paid solely by using funds from account number 9, the personal account of the Respondent. There have been transfers of money from account number 1 into account number 9 at various times, and one can also see the transfers from account number 9 to pay the MasterCard.
The picture painted, then, is that the Respondent mixed business money and personal money and treated all of his accounts as if they were accounts for him to do as he pleased. There are no reconciliations made so as to be able to divide personal revenue from business revenue and personal expenses from business expenses.
The Respondent gave evidence that he was able to make those reconciliations solely based on bank transfers that would be made. However, there is no evidence of any of these sorts of reconciliation. There is no evidence of BAS statements. There is no evidence of financial statements of the company either.
In any event, by the beginning of 2015 there was one business and that was Trek North Tours (TNT). There were two companies and two bank accounts that were running this business as well as sporadic bills of the business being paid through the family trust account and the MasterCard. The two bank accounts of the business were periodically cleared of funds which were then transferred to other accounts to ensure that debits were kept to a minimum.
In late 2014, the Applicant commenced proceedings against TNT, the company, and the Respondent personally alleging that the company and, via his liability pursuant to s.550, the Respondent himself, had failed to pay five employees their proper wages in accordance with their entitlements under the appropriate award.
The statement of claim filed in that matter alleged that the Respondent failed to comply with the notice to produce documents or records pursuant to s.712 of the Fair Work Act 2009 (Cth) (“the FW Act”). Compliance notices were issued to the Respondent and the company and those compliance notices were not satisfied by either the company or the Respondent.
Those allegations were part of the claim for pecuniary penalties and enforcement of the compliance notices brought by the Applicant against the Respondent in this Court.
The Respondent sought to act for both the company and himself and filed a response that did not address the statement of claim. His Honour Judge Jarrett made orders for the filing of material by both the Applicant and the Respondent and the company and, when he had the matter before him on 4 February 2015, he adjourned the matter to 25 May 2015.
The material before me shows that the Respondent blamed the Applicant for adverse media publicity as to the allegations of underpayment of workers. The Respondent believed that there was a downturn in business for TNT that was directly correlated to such adverse media publicity.
On 25 May 2015, the Respondent did not appear before Judge Jarrett. His Honour listed the matter for 1 June 2015 for a default hearing. His Honour noted that if the Respondent failed to appear then the Applicant would be at liberty to seek a default judgment.
However, on 1 June 2015, there was a solicitor who purported to appear for the company and the Respondent. His Honour struck out the response of the Respondent and directed that a proper response and defence be filed by 5 June 2015, as well as affidavits of evidence-in-chief of any witness relied upon by the company or the Respondent.
Four days after that deadline, 9 June 2015, a defence was filed. Without going into it, it was obviously, on the face of it, still quite deficient. There were no affidavits filed and, therefore, the Respondent had not complied with the order of His Honour.
On 19 June 2015, His Honour ruled that the Respondent was in default because he did not personally appear and the company was in default because it had not complied with r.9.04 of the Federal Circuit Court Rules 2001 (Cth) which does not allow companies to be represented by anyone other than legal representatives.
His Honour then went on, on 19 June 2015, to conduct a default hearing and he ordered that the company pay the amounts contained in the compliance notices, that is, a figure just under $30,000.00, as well as a pecuniary penalty in the sum of $55,000.00. His Honour also ordered that the respondent personally pay a pecuniary penalty in the sum of $12,000.00.
On 1 July 2015, a new business, Trek North Safaris, began operation. This business was also under the sole control of the Respondent. It was in the same industry as Trek North Tours. While the Respondent claimed that there was a difference to the two businesses, he could not sensibly delineate what distinguished one business from another. This is made even more abundantly clear when it is revealed that the company, Yubnub Pty Ltd, was now rebranded as Yubnub Pty Ltd trading as Trek North Safaris and the Yubnub bank account was now the operating account of this new business.
I can infer very easily that what the Respondent has done is created a new business name that is doing everything that the old business did, including operating the bank accounts in the way it has always done. There can be only one explanation for the establishment of this new business; that is, to attempt to defeat the pecuniary penalty order that had been made on 19 June 2015.
In reality, it truly was business as usual. Invoices, bookings, relationships with providers and all other associated trappings of the Trek North Tours business remained the same. The TNT bank account was still utilised for the business, but sparingly so.
The Respondent gave evidence that, at the very least, TNT was struggling by 19 June 2015 and that there no funds in TNT. Yet the financial report for the 2015/2016 year, which is annexed to the affidavit of the Respondent, shows that there is a profit, after tax, of just under $70,000.00 for the Trek North Safaris business. Given the continuity between the businesses, it is somewhat incongruous that TNT could have been struggling at the end of June 2015 yet Trek North Safaris could perform so well in the following financial year.
On 24 July 2015, the Applicant sought a freezing order against the accounts of the company and the Respondent. This was, obviously, so that the Respondent could not dissipate funds to therefore defeat the pecuniary penalty ordered by the Court.
His Honour Judge Jarrett made those freezing orders ex parte and also issued a penal notice. The Applicant served the Respondent with the notice and the matter was to be heard again on 30 July 2015 to ask that His Honour extend the freezing order. The freezing order is annexed to the affidavit of Mr Prain filed on 17 October 2017 at annexure SP8.
The order contained the following at order 7:
“7. For the purposes of this order,
(1) your assets include:
(a) all your assets, whether or not they are in your name and whether they are solely or co-owned;
(b) any asset which you have the power, directly or indirectly, to dispose of or deal with as if it were your own (you are to be regarded as having such power if a third party holds or controls the asset in accordance with your direct or indirect instructions); and
(c) the following assets in particular:
(i) the assets of your business A.C.N 156 455 828 PTY LTD TRADING AS TREK NORTH TOURS carried on from:
i. Unit 3, 87 Lake Street, Cairns,
ii. 43 The Esplanade, Cairns,
iii. 53−57 The Esplanade, Cairns, and
iv. Shop 10, 93 The Esplanade, Cairns.
or, if any or all of the assets have been sold, the net proceeds of the sale; and
(ii)any money in any bank accounts held by A.C.N 156 455 828 PTY LTD TRADING AS TREK NORTH TOURS, including, where applicable, the following accounts:
a. Account Number 451643835 held with either Suncorp Bank, Commonwealth Bank or any other banking institution (Account number 2),
b. Account Number 452798506 held with either Suncorp Bank, Commonwealth Bank or any other banking institution (Account number 7), and
c. Account Number 452058391 held with either Suncorp Bank, Commonwealth Bank or any other banking institution.
(2) the value of your assets is the value of the interest you have individually in your assets.”
This meant that the bank accounts operated by Yubnub Proprietary Limited and Trek North Tours were now frozen. The personal bank accounts of the Respondent were also frozen. The orders allowed for an exception at order 10:
“EXCEPTIONS TO THIS ORDER
10. This order does not prohibit you from:
(a) Paying the remuneration and employee entitlements of the First Respondent’s employees as required by law;
(b)Paying $15,000 for legal expenses;
(c) dealing with or disposing of any of your assets in the ordinary and proper course of your business, including paying business expenses bona fide and properly incurred; and
(d) in relation to matters not falling within (a), (b) or (c), dealing with or disposing of any of your assets in discharging obligations bona fide and properly incurred under a contract entered into before this order was made, provided that before doing so you give the applicant, if possible, at least two working days written notice of the particulars of the obligation.”
On 30 July 2015, the matter came before His Honour Judge Jarrett again. The Respondent appeared via telephone. There was discussion that there had been a transfer of funds out of one of the accounts subsequent to the Freezing Order having been made but His Honour was focussed on whether the Order should be extended. According to the transcript, His Honour asked the Respondent:
“Thank you, Mr Jorgensen; what’s your position?”
The Respondent replied:
“My position, your Honour, is I was aware of these orders a few days ago, but I did notice that it allowed for general business.”
His Honour then cut Mr Jorgensen off, saying:
“No, no, no. I want – I don’t want you to address the transfer. As Mr Moses has quite properly said, you may wish to take advice about that and there are ways and means about – in which you can provide evidence to the court about what, on its face, might be a breach of the orders.”
“So you’re probably best not to say anything about that because you need to understand that if the court concludes that you breached the order the penalty notice that was attached to the front of the order wasn’t there for fun. It’s a – there may well be serious consequences if the court concludes that you have breached the order, including sending you to jail. So it’s best that you don’t say anything about this just yet until you have had the benefit of legal advice. Do you understand that?”
The Respondent said:
“Yes, I do, your Honour.”
His Honour asked if the Respondent intended to bring any applications to have the orders set aside and the Respondent replied, “absolutely”, that he did.
Later in the transcript, it is reported that the Respondent wished to say something. His Honour asked about what. The Respondent said:
“Well, about the freezing orders in general. You know, the business has bills to pay every day, including wages today. “
His Honour said, “Yes.”
The Respondent said:
“It can’t – it literally can’t operate with those freezing orders. I myself personally am propping it up all the time. It’s struggling to be even a break-even business and without my assistance it definitely won’t survive.”
His Honour said, “Yes.”
The Respondent said:
“I just respectfully ask, I mean, I have got employees, I have got all sorts of financial commitments and it’s making it very difficult. I mean, I notice that my own personal account has been – I have been locked out of that, you know. It’s making it very hard for me to keep the doors open and keep people employed, etcetera. Now, I pay a lot of bills with my own credit card for the points, for example, and we’re talking a lot of bills. So locking my personal account down – account down is just absolutely detrimental to the business’s daily operations. You know, I wish nothing more than to have this matter heard and my – my dissents heard and I have this thing put behind me. But in the meantime it’s very detrimental to everyone I am involved with if these fairly malice orders persist, you know.”
His Honour asked:
“Anything else you would like to say?”
And the Respondent said that he wanted to read out a statement, but His Honour declined that.
At page 220, His Honour said:
“You have had plenty of time to set aside the default judgment and nothing has been done. If you bring an application at some stage it might be dealt with. Have you read the freezing orders?”
The Respondent said:
“I have now.”
His Honour replied:
“You have now?”
The Respondent said, “Yes.”
His Honour said:
“Do you understand what you can do so that the freezing orders might be lifted?”
The Respondent said:
“Yes, your Honour, and I have –“
His Honour said:
“Well, why don’t you do one of those things?”
The Respondent said:
“I will be. I – during this interval I did speak to my lawyer again and that’s – that’s all going to happen.”
His Honour said:
“Great. Well, until it happens the orders can remain in place. That might be some incentive to you to actually do something, Mr Jorgensen. Of course, the easiest thing that you might do is simply pay the pecuniary penalty orders that have been made. The employees could receive their money and it would be, as you say, behind you.”
The Respondent said:
“Your Honour, if I may, they were never employees and that’s when I heard –“
His Honour interrupted Mr Jorgensen:
“Mr Jorgensen, I don’t want to hear you on that. You have had your opportunity. If you apply to set the orders aside then no doubt that application will be heard and determined in the usual way.”
His Honour made a ruling on costs. His Honour then said:
“Now, in terms of the next court date, Mr Jorgensen, when do you think you might be able to have your applications, whatever they may be, ready to go to be heard by the court?”
The Respondent said:
“Well, that will be up to my – my legal advice to tell me. But he did – he did say that it would take quite some time to go through the substantial amount of, you know, paperwork that has come through so –“
His Honour said:
“You have to file an affidavit by the close of business on 4 August. It seems to me to be appropriate, subject to any submission that anybody might wish to make, to bring the matter back soon after that. I am sitting in Townsville on the week of 10 August so you’re in Cairns, aren’t you, Mr Jorgensen?”
The Respondent said:
“Yes, your Honour.”
His Honour said:
“And your instructors and you, Mr Moses, are in Sydney.”
And Mr Moses talked about what could be done to have the matter heard in Townsville.
His Honour said:
“So Townsville is convenient for everybody. The week after, I think, I am back in Brisbane which is inconvenient for everybody.”
And his Honour then said:
“I will adjourn the matter to Tuesday, 18 August here in Brisbane.”
And the Respondent said, “That’s suitable,” and the Respondent then said:
“Your Honour, may I ask the freezing orders of my personal account, what’s so – if – sorry, we will file an application for that to be removed. Okay?”
His Honour said:
“Excellent. You might also have noted in the orders that if you had paid the sum of $12,000, I think, from memory, into Court then the freezing order is of no effect. So the solution might be rather simple.”
His Honour then ended those proceedings.

The foreshadowed application to set aside the orders did not eventuate and, as will become evident, the Respondent paid his personal pecuniary penalty of $12,000.00 in mid-August and the freezing orders with regard to his personal bank accounts were then lifted. But the $55,000.00 pecuniary penalty order and the payment of the $29,000.00 in wages has not been made and so the freezing order with regard to the accounts remain in force.
On 4 August 2015, the first impugned transaction occurred. That was the Respondent transferring $2,330.00 from Yubnub (account number 2) into the family trust account (account number 1). The transfer of that amount of money had the effect of clearing the Yubnub account.
On 6 August 2015, the Respondent transferred an amount of $8,001.00 from account number 2 and directed it to the account number 1. That had the effect of clearing the Yubnub account.
On 9 August 2015, the Respondent transferred $9,996.95 from the account number 2 into the account number 1. That left a sum of $672.00. That $672.00 was transferred into account number 9. For reasons not clear to me, this action is not the subject of a charge of contempt.
Also on 9 August 2015, the Respondent transferred the sum of $4,558.00 from account number 7, (the Trek North Tours account), into account number 1. This had the result of clearing the Trek North Tours account.
On 10 August 2015, the Respondent transferred $2,569.00 from the account number 2 into the account number 1. This had the result of clearing the Yubnub account.
On 11 August 2015, the Respondent transferred $4,621.00 from account number 2 into the account number 1. This cleared the Yubnub account.
On 12 August 2015, the Respondent authorised and directed the transfer of funds of $4,713.64 from account number 2 into account number 1. This cleared the Yubnub account.
On 13 August 2015, the Respondent transferred an amount of $1,255.97 from account number 2 into account number 1. This cleared the Yubnub account.
On 14 August 2015, the Respondent transferred an amount of $2,990.00 from account number 2 and put that into account number 1. That had the result of leaving $2,216.46 in the account. That amount was then transferred into account number 9. Again, I am unsure why that transfer of the $2,216.46 was not a separate charge.
Those withdrawals were all made from bank accounts that had been frozen. It is upon the nine transactions that I have just highlighted, that the Applicant asked the Court to find that the Respondent is in contempt.
I accept that the elements of a charge of contempt are as submitted by the Applicant. That is:
a)that there must be a Court order in existence;
b)that the terms of the order were clear, unambiguous and capable of compliance;
c)that the respondent had knowledge of the Court order and knew of it from a particular date; and
d)that the respondent knowingly impeded the administration of justice.
The first three elements are easily met. There is no doubt that there is the existence of the Court order. It has been submitted in evidence and the Respondent has no cavil with the fact that it is in existence.
With respect to the second element, the terms of the order being clear, unambiguous and capable of compliance, the Respondent acknowledges that this is so, however, will only admit that the terms of the order were clear and objectively unambiguous. He has no cavil with it being capable of compliance.
There is no cavil with the fact that the Respondent knew of the Court order around 27 July and certainly by 30 July when the Order was extended.
It is the fourth element that the Respondent knowingly impeded the administration of justice that has been the focus of this trial.
The Respondent relies upon the exception in order 10 and claims that he disposed of assets in the ordinary and proper course of his business including paying business expenses, bona fide and properly incurred.
Much has been submitted to me about the onus of proof. I do not wish to go through a detailed consideration of this issue. Suffice to say that I am approaching this matter on this basis; that it is for the Applicant to prove each of the four elements beyond reasonable doubt.
Whilst the Respondent relies upon an exception, it is for him to show to me that there is evidence that could be considered as affording an exception to the order. Once it has been established that there is evidence upon which I could consider whether the exception has been made, it is for the Applicant to negate that beyond reasonable doubt.
The question is whether this disposition of assets occurred in the ordinary course of business and in the proper course of the business. Part of answering that is whether these withdrawals were bona fide business expenses which were properly incurred.
The evidence of the Respondent was that the family trust had often paid the bills of the business. Whilst there was no formal loan agreement, he said that it was understood by him that these were, to use his accountant’s words, “on call loans” although he seemed to have no real idea what an “on call loan” was. His understanding was that these were on call loans made by the family trust to the business.
In his evidence, the Respondent explained that because the family trust was often paying the bills, any transfer of money from the business accounts to the family trust, he believed was simply repaying a loan. This was not done with any precision but done on an ad-hoc basis to ensure that the trust was incurring the least amount of interest repayments as it possibly could.
The Respondent now argues that this is a disposing of assets “in the ordinary and proper course of the business” and that these were repayments of loans and therefore a bona fide business expense properly incurred.
I should look at whether these transactions could be categorised as business expenses firstly, because any conclusion I make on that aspect will go to the question of whether these transactions could be categorised as being in the ordinary and proper course of business.
I do not think that these payments can be categorised as business expenses. A business expense would occur if the Respondent (or the company) were paying a creditor but repaying a family trust who has paid a creditor, is not a business expense itself and certainly not in this case.
If one goes through the history of how these payments had been made, it is obvious to me that it does not really matter to the Respondent as to which entity pays the bill as long as, whenever there is too much credit in either of the business accounts that do not have debit or overdraft facilities, there is the minimum amount of debt in any other account for which a debit facility is enabled. That does not mean that the transferring of money becomes the payment of a business expense.
I accept the submission of the Applicant that, in such circumstances as obtained in this case, what was created was at the most, a financial obligation, maybe even a legal obligation, on behalf of the business to pay the family trust. Such obligations are not business expenses.
In this case one must also look at the fact that on 27 July, that is, about the time that the Applicant became aware of the orders, there was a credit in the account number 1 of $50.96.
On 31 July 2015, there is a transfer from account number 1 of $1,171.20.
On 3 August, there is a transfer of $12,000.00. This amount is readily seen as the payment of the pecuniary penalty order, personally incurred by the Respondent.
On 3 August, there is BPAY payment of $24,628.69 to Queensland Rail. Also that day, is another BPAY payment to Queensland Rail for $9,937.60.
All of those withdrawals left the account, which had been in the black on 27 July, now with a debit of $47,686.53. It is then that the payments, subject of the charges, have then been made on 4 August, 6 August, 9 August, the two payments on 9 August, 10 August, 11 August, 12 August, 13 August and 14 August.
In that time there is also another transfer from account number four into account number one and there are other transfers out of that account as well; one on 10 August for $966.00, one on 11 August of $3,300.00 and another two on 12 August, one of $555.00 and another one of $40.001 as well as one on 14 August of $7,500.00.
At the end of all of that with all of those transactions, the account is in debit in the sum of $9,420.14.
As has been said during the course of these proceedings that the total that was transferred, was a total of $41,035.56.
As one can see, those withdrawals do not correspond to any actual payment of the amounts that were paid to Queensland Rail. They are again sporadic.
As I have said, these withdrawals have cleared the account and simply go to reducing the debit amount, and therefore reducing the interest rates, of account number 1. As I have said, I do not see that this could be categorised as a business expense.
However, the finding that it is not a business expense does not itself mean that the exception has been negated. What really must be shown is that these withdrawals were not in the ordinary and proper course of this business.
There is no doubt that the Respondent had behaved in this manner in the past. There is no doubt that this was how he ran his business but just because this is how he ran his business does not mean that it was ordinary or proper.
The mixing of business funds with personal funds could never be seen as proper. The non-documenting of loans could never be seen as proper. The non-existence of any loan agreement could not be seen as proper. The complete lack of records could not be seen as proper and it could never have been seen as a proper conduct of business to periodically clear a business account solely to ensure that a family trust account incurred the least amount of interest payable.
Given that there was no exception allowed pursuant to Order 10(c), there was a prohibition on making any payments for Trek North Tours unless there was compliance with exception 10(d). There was no compliance with section 10(d), there was no notification given to the Fair Work Ombudsman at all that these nine withdrawals were going to be made.
But there is an even more fundamental problem with what the Respondent has done and it really goes to the heart of whether he has knowingly impeded the administration of justice.
On 1 March 2016, the accountant engaged by the Respondent, wrote a letter. This letter is exhibit 4 in these proceedings and was also tendered at enforcement hearings that had occurred in March 2016. It is from Mudit Jain and Associates Chartered Accountants in Ludhiana (Punjab, India). The letter reads:
“TO WHOMSOEVER IT MAY CONCERN
I, Mudit Jain, Practicing member of the Indian Institute of Chartered Accountants of India, having membership no. 533380, hereby certify that Mr Leigh Jorgensen, Managing Director of A.C.N 156 455 828 Pty Ltd needs to voluntarily dissolve this company.
As per signed declaration given by the director Mr Leigh Jorgensen, The Company has discontinued its business operations with effect from March 2015. At present, the Company has no Assets and Liabilities. Moreover, there was one pending litigation against the company in the court to clear its liabilities amounting to $12000 and $55,000 which was a “Default” and seemingly unfair judgement as per information submitted by Mr Leigh to me. The allegations that led to the Default judgement are based on lies and following the Default Judgement, FWO dragged the company through the media like some kind of “trophy kill”. The negative impact this caused has led to the failing of this company and it will not be able to pay this debt. This is compounded by the fact that Leigh Jorgensen, the director, has not been personally paid for years and is owed years of wages and entitlements. Although sacrificing over 60 hours per week for two years of his personal time to try and keep the company afloat since after the FWO and its media assault.(sic)
Apart from this Pending Litigation in Court, All other Conditions are fulfilled for De- registering a company (sic):
1)all members of the company agree to deregister;

2)the company is not carrying on business;

3)the company’s assets are worth less than $1000;

4)The company has no outstanding liabilities which include unpaid employee entitlements such as:
annual leave
long service leave
payment in lieu of notice
redundancy pay, and
wages; and
6) (sic) To the best of my knowledge, the company has paid all fees and penalties payable under the Corporations Act 2001 (Corporations Act).”
And it is signed by Mr Jain on 1 March 2016. This letter does seem to correspond with what the objective evidence is, and that is that this business, Trek North Tours, had effectively shut up shop and allowed Trek North Safaris to take over its operations.
It is quite obvious that there was continuity between the businesses such that, it was only the name that had changed. It is also clear, from what was said by the Respondent in the enforcement hearing, that he considered that Trek North Tours was at an end.
Trek North Tours had been using the Yubnub account and Yubnub Pty Ltd trading as Trek North Safaris, from 1 July 2015, had simply taken over, in effect, all of the business of Trek North Tours. The only rational inference is that from 1 July 2015, the business of Trek North Tours was not a going concern. The business of Trek North Safaris definitely was a going concern.
The freezing order was directed to the business of Trek North Tours. Therefore, any payments made, even if they were bona fide business payments and in the ordinary and proper course of running the business, could only be paid if they were business payments for Trek North Tours solely and not for any other business.
It is quite obvious from the evidence before me that any payments made after 1 July 2015 for business expenses, were made on behalf of Trek North Safaris. This must be the case notwithstanding that the invoices, which are Exhibit 1 in these proceedings, were not made out to North Trek Safaris. The invoice for $24,628.00 was made out to Trek North Tours, ACN 156455828 Pty Ltd and the $9,000.00 invoice was made out to Trek North Tudoods Pty Ltd. These were expenses for the new business, Trek North Safaris.
It is obvious to me that the Respondent simply let Trek North Tours “wither on the vine” so as to defeat the judgment made by His Honour, Judge Jarrett. The letter that is Exhibit 4, makes it clear that there are no other debts except that to the Fair Work Ombudsman.
The financials of Trek North Safaris show that it was a business that could be profitable and, in fact, was profitable from the time that it started business. The purpose of the Freezing Order was to ensure that the Fair Work Ombudsman was not defeated in any of its attempts to recover the money for the workers; that is, the nearly $30,000.00 and/or defeated in having the pecuniary penalty paid to the Commonwealth of Australia.
When one looks at a deliberate decision by the Respondent to ensure that Trek North Tours was no longer a going concern from 1 July 2015, it meant that there could be no exceptions under order 10(c) for the business, Trek North Tours. There was no compliance with Order 10(d).
So, on the three aspects that I have spoken of, I find that the Applicant has proven beyond reasonable doubt that the exceptions do not apply.
I therefore convict the Respondent of all nine charges of contempt of the order of His Honour Judge Jarrett.

I certify that the preceding eighty-seven (87) paragraphs are a true copy of the reasons for judgment of Judge Vasta

Date: 17 May 2018

CORRECTIONS:

Representation: Ashurst Australia as Solicitor for the Applicant instead of Fair Work Ombudsman.

[2018] FCCA 1202

3 May 2018

Key Legal Topics

Areas of Law

Employment Law

Statutory Interpretation

Legal Concepts

Breach

Penalty

Remedies

Statutory Construction