Fair Work Ombudsman v Joys Child Care Limited & ANOR
[2019] FCCA 3356
•20 December 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v JOYS CHILD CARE LIMITED & ANOR | [2019] FCCA 3356 |
| Catchwords: INDUSTRIAL LAW – Failure to comply with Compliance Notices under s716 Fair Work 2009 (Cth) – whether there is a reasonable excuse under s716(6) – where First Respondent was a community based not-for-profit-company with registered charity status and which only engaged volunteers on an unpaid training program – where the said participants were in facts employees – no reasonable excuse established. |
| Legislation: Fair Work Act 2009 (Cth), ss.550, 717, 716. |
| Cases cited: Fair Work Ombudsman v Devine Marine Group Pty Ltd [2014] FCA 136 – Bank of the Valletta PLC v National Crime Authority [1999] FCA 791 – Takiato v The Queen (1986) 186 CLR 454 – Australian Securities and Investment Commission v Albarran [2008]. |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | JOYS CHILD CARE LIMITED |
| Second Respondent: | JAN SHANG |
| File Number: | SYG 1277 of 2018 |
| Judgment of: | Judge Altobelli |
| Hearing date: | 8 October 2019 |
| Date of Last Submission: | 8 October 2019 |
| Delivered at: | Wollongong |
| Delivered on: | 20 December 2019 |
REPRESENTATION
| Counsel for the Applicant: | Ms Gall |
| Solicitors for the Applicant: | The Fair Work Ombudsman |
| The Second Respondent appeared in person and as authorised representative of the First Respondent: |
DECLARATIONS:
The First Respondent contravened subsection 716(5) of the Fair Work Act 2009 (Cth) (FW Act), a civil remedy provision, by failing to comply with two compliance notices, each dated and issued on the First Respondent on 2 November 2017.
The Second Respondent was involved in the First Respondent’s contravention at paragraph 1 above, within the meaning of subsection 550(2) of the FW Act.
ORDERS:
Pursuant to subsection 545(1) of the FW Act, within 28 days of this order, the First Respondent and Second Respondent, jointly and severally, pay to the Applicant compensation equivalent to the amounts in the compliance notices, being $35,062.17 for Ms Ran Bing; and $19,689.92 for Ms Siyun Wang.
Pursuant to subsection 547(2) of the FW Act, within 28 days of this order, the First Respondent pay to the Applicant interest on the amounts in paragraph 3 above at the applicable pre-judgment rate.
The Applicant, within 14 days of receipt of the amounts in paragraphs 3 and 4 above, pay those amounts to Ms Bing and Ms Wang. In the event that the Applicant is unable to locate Ms Bing or Ms Wang, the Applicant will pay the amounts to the Consolidated Revenue Fund of the Commonwealth within a further 7 days.
The Applicant has liberty to apply on seven days’ notice in the event that any of the preceding orders are not complied with.
The matter be adjourned to 16 March 2020 at 9:30am for Mention (Court 3D, Lionel Bowen Building, 97-99 Goulburn Street, Sydney).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 1277 of 2018
| FAIR WORK OMBUDSMAN |
Applicant
And
| JOYS CHILD CARE LIMITED |
First Respondent
| JAN SHANG |
Second Respondent
REASONS FOR JUDGMENT
Introduction
These Reasons for Judgement explain the orders that have been made in this matter.
Background
The First Respondent conducts a community based day care venue at 60 Campbell Street, Parramatta. The Second Respondent is its public officer, and one of its Directors. The Applicant undertook an investigation into allegations the child care workers at the First Respondent’s Centre were performing unpaid work. As a result of the Applicant’s investigations, one of its inspectors issued two Compliance Notices pursuant to s716 of the Fair Work Act 2009 (Cth). The Notices concern two workers, Miss Bing, and Miss Wang, who were not paid for their services.
It is common ground that the First Respondent failed to comply with the Compliance Notices.
The present proceedings were commenced on 4 May 2018 when the Applicant commenced proceedings against the First Respondent alleging a contravention of s716(5) Fair Work Act, and against Mr Shang a Second Respondent, alleging that he was involved in the First Respondent’s contravention pursuant to s550(1) Fair Work Act.
The Respondents, through Mr Shang, filed a Response and Defence on 20 September 2018. In the Response, the Respondents indicated that they opposed the making of the orders sought by the Applicant. In the Defence, and doing the best the Court can to discern what was, in reality, the respondent’s substantive defence, the following points emerged:
(1)The activities of the First Respondent were community based.
(2)The First Respondent is a not-for-profit company limited by guarantee.
(3)The First Respondent was a registered charity.
(4)At no stage were either Miss Bing or Miss Wang engaged as employees.
(5)Miss Bing and Miss Wang were, at all relevant times, volunteers.
(6)No wages were paid by the First Respondent during the relevant period.
(7)The Second Respondent acted in an unpaid role for the First Respondent.
The evidence before the Court
The evidence before the Court consisted of the following. In the Applicant’s case, it relied on the following documents:
a)The Application and Points of Claim dated 4 May 2018;
b)Defence filed 20 September 2018
c)Affidavit of Yiwei Liu, filed 29 May 2019;
d)Affidavit of Ran Bing filed 29 May 2019;
e)Affidavit of Siyun Wang filed 29 May 2019;
f)Affidavit of Emma Jane Rodwell filed 29 May 2019; and
g)Applicant’s outline of submissions filed 7 August 2019.
In the Second Respondent’s case, he relied on the following documents:
a)Response filed 20 September 2018;
b)Defence filed 20 September 2018;
The following document were tendered as evidence during the course of the proceedings:
a)Company Extract Current & Historical for Joys Child Care Limited;
b)Certificate of Registration of Chinese Students Association Incorporated as a registered charity;
c)Volunteer Agreement signed by Siyun Wang;
d)Certificate of enrolment of Siyun Wang with Astar Training Institute;
e)Email chain between Mr Shang and David Schilling;
f)Centrelink Income Statement of Miss Ran Bing; and
g)Visa of Siyun Wang.
The applicable law
This is a case about alleged failure to comply with a Notice under s716 Fair Work Act.
Section 716 Compliance notice
(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;
(c) a term of an enterprise agreement;
(d) a term of a workplace determination;
(e) a term of a national minimum wage order;
(f) a term of an equal remuneration order.
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:
(a) set out the name of the person to whom the notice is given; and
(b) set out the name of the inspector who gave the notice; and
(c) set out brief details of the contravention; and
(d) explain that a failure to comply with the notice may contravene a civil remedyprovision; and
(e) explain that the person may apply to the Federal Court, the Federal Circuit Court or an eligible State or Territory Court for a review of the notice on either or both of the following grounds:
(i) the person has not committed a contravention set out in the notice;
(ii) the notice does not comply with subsection (2) or this subsection; and
(f) set out any other matters prescribed by the regulations.
Relationship with enforceable undertakings
(4) An inspector must not give a person a notice in relation to a contravention if:
(a) the person has given an undertaking under section 715 in relation to the contravention; and
(b) the undertaking has not been withdrawn.
(4A) An inspector must not apply for an order under Division 2 of Part 4-1 in relation to a contravention of a civil remedy provision by a person if:
(a) the inspector has given the person a notice in relation to the contravention; and
(b) either of the following subparagraphs applies:
(i) the notice has not been withdrawn, and the person has complied with the notice;
(ii) the person has made an application under section 717 in relation to the notice that has not been completely dealt with.
(4B) A person who complies with a notice in relation to a contravention of a civil remedy provision is not taken:
(a) to have admitted to contravening the provision; or
(b) to have been found to have contravened the provision.
Person must not fail to comply with notice
(5) A person must not fail to comply with a notice given under this section.
(6) Subsection (5) does not apply if the person has a reasonable excuse.
Section 717 Review of compliance notices
(1) A person who has been given a notice under section 716 may apply to the Federal Court, the Federal Circuit Court or an eligible State or Territory Court for a review of the notice on either or both of the following grounds:
(a) the person has not committed a contravention set out in the notice;
(b) the notice does not comply with subsection 716(2) or (3).
(2) At any time after the application has been made, the court may stay the operation of the notice on the terms and conditions that the court considers appropriate.
(3) The court may confirm, cancel or vary the notice after reviewing it.
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.
This case involves a consideration of whether the Respondents had a reasonable excuse for not complying with the Notices.
White J considered a number of authorities in Fair Work Ombudsman v Devine Marine Group Pty Ltd [2014] FCA 1365. These are set out at [154] -[155]
[154] Many authorities concerning the concept of “reasonable excuse” as a ground of exculpation were reviewed by Hely J in Bank of the Valletta PLC v National Crime Authority [1999] FCA 791. Hely j referred to the observation of the plurality in Takiato v The Queen (1986) 186 CLR 454 at 464 that 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. Hely J also referred to the observation of Dawson J is Takiato at 470, a reasonable excuse is no more or less than an excuse which would be accepted by a reasonable person. It is different from a lawful excuse.
[155] In Australian Securities and Investment Commission v Albarran [2008] FCA 147, Jacobson J summarised three propositions emerging from the Bank of Valletta:
[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 [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 the adverse consequences to an inquiry if the questions are not answered: Valetta at [44]. [47].
A little later in the Judgment White J said:
[165] The expense and inconvenience (and perhaps oppression) in complying, will not usually provide a “reasonable excuse” for non-compliance with the notice. It is to be expected that compliance will usually occasion a respondent some inconvenience and expense but, unless the circumstances are out of the ordinary this is to be taken to be a necessary incidence of compliance, and will not relieve the respondent from complying with the notice.
The Applicant’s Case
On behalf of the Applicant it was contended that it needed to establish:
a)That each of the Compliance Notices was a Compliance Notice given to the First Respondent in accordance with the Fair Work Act.
b)That each of the Compliance Notices was a Compliance Notice that required the First Respondent to take certain actions by 17 November 2017 and
c)That the First Respondent did not comply with the Compliance Notices by taking the specified actions by 17 November 2017.
On behalf of the Applicant it was submitted, and there is little doubt that this is the case, that it did not need to establish proof of the underlying breaches of the Fair Work Act or of a modern award. The Application related to failure to comply with Compliance Notices.
Again, doing the best the Court can to understand the Respondent’s case, it did not seem that there was any contention about the matters set out above either in the sense that they formed essential components of the Applicant’s case, or in the sense that the evidence did not in fact establish these matters.
In any event, as a result of the evidence led in the Applicant’s case, the Court is amply satisfied of the matters referred to above. The Compliance Notices were in accordance with the Fair Work Act. In particular, the Compliance Notices advised the Respondent that he could apply to an eligible Court to review the notices under s717 of the Act. That has not taken place.
The Compliance Notices required the First Respondent to do certain things. The Compliance Notices were handed to Mr Shang at the Centre. The Compliance Notices required the First Respondent to pay Miss Bing the sum of $35,062.17 and to pay Miss Wang $19,689.92.
There is no doubt that there was a failure to comply with the Compliance Notices. The fact is that the First Respondent has not paid Miss Bing and Miss Wang the amounts referred to in the Notices.
Is There a Defence Under S716(6)?
Whilst subsection (5) says that a person must not fail to comply with a notice given under this section, subsection (6) says that the aforementioned does not apply if the person has a reasonable excuse. Again, doing the best the Court can to understand the Respondent’s case, it would seem that it was being asserted by Mr Shang on behalf of the First Respondent, that it had a reasonable excuse for non-compliance. The reasonable excuse seems to be the First Respondent’s belief that Miss Bing and Miss Wang were not employees, but volunteers. The Court is prepared to take a broader view of the Respondent’s case and is prepared to infer that it contended that, somehow, the reasonable excuse was also established by reference to the fact that the First Respondent was a community based not-for-profit company with registered charity status, that in fact paid no wages.
The onus of proof to establish reasonable excuse was on the First Respondent. Given that the Respondents chose not to file any evidence in support of its defence, the Court accepts the Applicant’s submission that reasonable excuse cannot be established in the absence of evidence. Nonetheless, again the Court will give the Respondents the benefit of the doubt and seek to examine the evidence that is before the Court to see if the reasonable excuse defence can be inferred.
Mr Shang tendered a document entitled Volunteer Agreement which appeared to have been signed by Miss Wang. The Court is prepared to infer that a similar document was signed by Miss Bing. The document in question seeks to emphasise that, in this case Miss Wang, described in the agreement as a volunteer, did not intend any employment or contractual relationship to be created. The document emphasised that all duties were agreed to be performed on a voluntary basis, without remuneration or payment, other than reasonable reimbursement of expenses.
Both Miss Bing and Miss Wang gave evidence by way of affidavits. Neither were required by the Respondents for cross-examination. For present purposes, the focus will be on the affidavit of Miss Wang given that her Volunteer Agreement was in evidence. By way of summary of her evidence, she explained that in about January 2016, wanting to get into the child care sector, she saw an advertisement on the Seek, website for Joys Child Care seeking trainees. The advertisement stated that after a one year traineeship, which included on the job training, trainees would receive a one year contract to work with Joys. She applied and was accepted into what was described as the Joys Internship Program. She met with the Second Respondent on 27 February 2016 at the Centre in Parramatta. She deposes that Mr Shang interviewed her and said, amongst other things:
a)You will work at the centre while receive training and, after one year, you will receive a certificate in child care.
b)If you want a certificate then you need to work five to six hours per day, five days per week and you will receive one hour of teaching each day. You will need to do this for one year and this will be unpaid.
c)Joys cooperates with a college so you will work at the centre and teachers from the college will come here and give you different classes during the year.
d)The training expenses are very expensive, and this will be paid by Joys.
In effect, an offer was made which Miss Wang accepted. She commenced her “Internship Program” on 29 February. Miss Wang alleged that during her first day Mr Shang said to her words to the effect: “You will teach the children classes.” He also said words to the effect, “The course teachers will not come to the centre to teach in the first week. We need a minimum number of students of five or six students before a teacher will come.”
Miss Wang also deposes that on 29 February 2016 she filled out and signed an enrolment form for an ASTAR Training Institute course. Mr Shang explained to her words to the effect, “I will be the contact for ASTAR and will organise the classes and let you know when the teachers will come to Joys to teach.”
There was, in fact, only one class that was ever held on a Saturday, and this was a first aid class.
In March, Miss Wang deposes that she became concerned about the absence of classes and said to Mr Shang words to the effect, “When can we start the classes? When will the teacher come and teach us because it has been two weeks? If we don’t start the course then I won’t finish it on time, and I want to finish within a year.” She deposes that Mr Shang replied, “Don’t worry about it. When it starts, I will help you finish the course on time. The school also wants you to finish the course on time.”
In April 2016, classes had still not run and Miss Wang deposes to the following conversation with Mr Shang:
[Miss Wang]: “The lessons still have not started and this isn’t right. If I can’t start the course then I won’t finish on time.”
Mr Shang: “Okay. I have had a discussion with the college, and you can get the diploma by a different way through recognised prior learning. This will be a better learning method for you.”
[Miss Wang]: “What is this?”
Mr Shang: “You can get work experience here and after one year, you can show it to the school and get a diploma. I will change you into that course.”
[Miss Wang]: “Okay.”
Miss Wang deposes that twice she was given assignments from ASTAR, which she completed and returned to Mr Shang.
Miss Wang’s evidence is that other than the first aid class, she did not receive any training or attend any classes for the ASTAR course. All she did was to perform child care work.
In about November 2016, Miss Wang deposes to ringing ASTAR and speaking with a person who confirmed with her that she was enrolled in the school, but that the school had not received any assignments completed by her. When Miss Wang took this up with Mr Shang, he indicated to her that he would send all the papers to the school at the end of the course.
In February 2017, Miss Wang attended the ASTAR offices and this time was told, “If you want to obtain a qualification by recognised prior learning, you need to complete at least two years of full-time work.”
Attached to Miss Wang’s affidavit is a letter provided to her on 28 February 2017 apparently bearing the signature of Mr Shang. The letter, addressed, “to whom it may concern,” acknowledges that Miss Wang:
Has completed Joys Employment and Training Program at Joys Child Care Centre as a bilingual educator for one year from 29 February 2016 to 28 February 2017.
Later in the letter it states:
In her full time capacity with Joys Child Care, Miss Wang has managed her duties well while actively working towards an approved qualification: CHC50113 – Diploma of Early Childhood Education and Care.
Now she has completed Joys Employment and Training Program, we wish her well in her next chapter in securing long term employment in the child care industry.
The Respondents chose not to cross-examine Miss Wang. The Court accepts her evidence. Miss Bing gives similar evidence. The Court also accepts her evidence.
In so far as the Respondents contended that it had a reasonable excuse in failing to comply with the compliance notices because Miss Wang and Miss Bing were not employees, but were volunteers, the Court does not accept the submission. The document described as a Volunteer Agreement, does not assist the Respondent’s case. The actual arrangements entered into between Miss Bing, Miss Wang, and the Respondents, are as set out in Miss Bing and Miss Wang’s affidavit. The Court looks to the substance, and not the form, of the arrangements entered into by the Respondents with Miss Bing, and Miss Wang. Parallels are found in the discussion by the Full Court of the Federal Court in Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd [2015] FCAFC 37 about contracts which are a sham or a pretence: [132] – [150].
The Volunteer Agreement bears no resemblance to the one year traineeship that was advertised by the First Respondent and to which Miss Wang, for example, responded. The Volunteer Agreement does not describe what actually took place which is that Miss Wang and Miss Bing worked at the First Respondent’s Centre and did not receive the training and instruction which they were promised. It was a completely unequal relationship. Miss Bing and Miss Wang gave everything and received nothing in return. It would seem that the Respondents did everything they possibly could to disguise the arrangement that it had with Miss Bing and Miss Wang in ways that sought to avoid the impression of employment. But that is what it was in substance. This was neither a voluntary arrangement, nor was it an unpaid traineeship.
The reality of the situation is that Miss Bing and Miss Wang worked for the First Respondent and were not paid. For all practical purposes, these workers were taken advantage of by the Respondents. The fact that the First Respondent conducted a community based facility, was a not-for-profit company limited by guarantee, and was a registered charity, makes not the slightest difference to the reality of the situation. Neither their intentions, nor any altruistic motives, establish that the Respondents had a reasonable excuse. Indeed, on the facts of this case, it would give offence to the notion of reasonable excuse to hold that noble intentions and altruistic motives justifies what happened.
Mr Shang’s Accessorial Liability
Section 550 of the Act has been set out above. In order to establish the accessorial liability of Mr Shang it was necessary for the Applicant to prove that he had knowledge of the essential facts constituting the contravention, he was knowingly concerned in the contravention, and was an intentional participant in the contravention based on actual knowledge of the essential facts constituting the contravention.
There was no dispute that Mr Shang was a director of the First Respondent when the Compliance Notices were served, that he was responsible for the management of the First Respondent’s business and the primary person with authority and responsibility to comply with the Compliance Notices on behalf of the First Respondent. In addition, there is no doubt that he was given the Compliance Notices on behalf of the First Respondent on 2 November 2017, that he had knowledge of the contents of the same, and that he knew of the First Respondent’s obligation to comply with those Notices by 17 November 2017, or alternatively seek a review from the Court as, indeed, was explained to him by the Applicant’s inspector on 2 November 2017.
The evidence of Miss Wang and Miss Bing amply testifies to the nature and extent of Mr Shang’s responsibility for the management of the business.
It is self-evident that Mr Shang did not take any action to comply with the Notices and, indeed, a curious feature of this litigation has been Mr Shang’s openness about the fact that the First Respondent would not comply with the Notices.
Doing the best the Court can to understand Mr Shang’s opposition to the finding that he should be liable as an accessory under section 550, he seemed to contend that because he acted as a volunteer in his roles within the company, and having regard to the fact that the company was a non-profit public company limited by guarantee, engaged in what he perceived to be important community work, and was a registered charity, that all of these factors cumulatively, somehow, would lead the court to find that he was not an accessory. With the greatest of respect for Mr Shang whose enthusiastic advocacy for the cause of the Respondents was not matched by the substance of what he said, none of these matters go to the question of whether he was an accessory.
The Court finds that Mr Shang was, in substance, the controlling mind and body of the First Respondent, was aware not only of the content of the Compliance Notices but of the requirement to comply, and thus his conduct and subsequent inactivity makes him involved in, within the meaning of s550(2) of the Fair Work Act, the First Respondent’s contravention of s716(5) of the Act. Accordingly, the Court finds that Mr Shang has contravened that provision himself, pursuant to s550(1). He too lacked a reasonable excuse for the reasons set out above.
Declarations and orders made
The proposed minute of Orders by Applicant are as follows:
THE COURT DECLARES THAT:
1. The First Respondent contravened subsection 716(5) of the Fair Work Act 2009 (Cth) (FW Act) a civil remedy provision, by failing to comply with two compliance notices, each dated and issued on the First Respondent on 2 November 2017.
2. The Second Respondent was involved in the First Respondent’s contravention at paragraph 40 above, within the meaning of subsection 550(2) of the Fair Work Act 2009.
THE COURT ORDERS THAT:
1. Pursuant to subsection 545(1) of the Fair Work Act 2009 within 28 days of this order, the First Respondent and Second Respondent jointly and severally pay to the Applicant compensation equivalent to the amounts in the compliance notices, being $35,062.17 for Ms Ran Bing; and $19,689.92 for Ms Siyun Wang.
2. Pursuant to subsection 547(2) of the Fair Work Act 2009, within 28 days of this order, the First Respondent pay to the Applicant interest on the amounts in paragraph 1 at the applicable pre-judgment rate.
3. The Applicant, within 14 days of receipt of the amounts in paragraphs 2 and 3 above, pay those amounts to Ms Bing and Ms Wang. In the event that the Applicant is unable to locate Ms Bing or Ms Wang, the Applicant will pay the amounts to the Consolidated Revenue Fund of the Commonwealth within a further 7 days.
4. The Applicant has liberty to apply on seven days notice in the event that any of the preceding orders are not complied with.
5. The matter be adjourned to a date to be set for a directions hearing to timetable and list the matter for a hearing on civil penalties.
I certify that the preceding forty-three (43) paragraphs are a true copy of the reasons for judgment of Judge Altobelli
Associate:
Date: 20 December 2019
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