Fair Work Ombudsman v Maclean Bay Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Fair Work Ombudsman v Maclean Bay Pty Ltd [2012] FCA 10

Citation: Fair Work Ombudsman v Maclean Bay Pty Ltd [2012] FCA 10
Parties: FAIR WORK OMBUDSMAN v MACLEAN BAY PTY LTD (ACN 106 012 748) and WENDY ANN WELLS
File number: TAD 33 of 2010
Judge: MARSHALL J
Date of judgment: 16 January 2012
Catchwords: INDUSTRIAL LAW – sham contracting – compensation – breach of s 902(1) of the Workplace Relations Act 1996 (Cth) by a company – accessorial liability of a company director – liability of company for acts of an employee under s 826(1) of the Workplace Relations Act 1996 (Cth) – dismissal of an employee for a prohibited reason under s 792 – dismissal of casuals employed on a regular and systematic basis – meaning of “representation” in s 900(1) of the Workplace Relations Act 1996 (Cth) – breach of a requirement in a NAPSA to pay unused annual leave entitlements – breach of a requirement in a NAPSA to pay superannuation
Legislation: Workplace Relations Act 1996 (Cth) ss 728, 792, 809, 900, 901, 902, 904(2B)
Fair Work Act 2009 s 681
Fair Work (Transitional and Consequential Amendments) Act 2009
Evidence Act 1995 (Cth) s 140
Cases cited: Fair Work Ombudsman v Maclean Bay Pty Ltd [2010] FCA 1378
Qantas Airways v Gama (2008) 167 FCR 537
Jones v Dunkel (1959) 101 CLR 298
General Motors Holden Pty Ltd v Bowling (1975) 12 ALR 605
Bowling v General Motors Holden (1975) 8 ALR 197
Ryde-Eastwood Leagues Club v Taylor (1994) 56 IR 385
Hamzy v Tricon International Restaurants (2001) 115 FCR 78
Melrose Farm v Milward (2008) 175 IR 455
Construction, Forestry, Mining and Energy Union  v Clarke (2008) 170 FCR 574
Gate Gourmet Australia Pty Ltd (in liq) v Gate Gourmet Holding AG [2004] NSWSC 149
McGrath v Australian Naturalcare Products Pty Ltd (2008) 165 FCR 230
Jordan v Mornington Inn Pty Ltd [2007] 166 IR 33
Hollis v Vabu Pty Ltd [2001] 207 CLR 21
Patrick Stevedores No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1
Australian Workers Union v Johnson Matthey (Aust) Limited (2000) 171 ALR 410
Dates of hearing: 25, 26, 27 and 28 July 2011
Dates of last written submissions: 17 October 2011
Place: Hobart
Division: FAIR WORK DIVISION
Category: Catchwords
Number of paragraphs: 241
Counsel for the Applicant: Mr S Moore
Solicitor for the Applicant: Corrs Chambers Westgarth
Counsel for the Respondents: Mr P Hackett
Solicitor for the Respondents: Colwell Wright

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

FAIR WORK DIVISION

TAD 33 of 2010
BETWEEN:

FAIR WORK OMBUDSMAN
Applicant
AND:

MACLEAN BAY PTY LTD (ACN 106 012 748)
First Respondent

WENDY ANN WELLS
Second Respondent

JUDGE:

MARSHALL J

DATE OF ORDER:

16 JANUARY 2012

WHERE MADE:

MELBOURNE (HEARD IN HOBART)

THE COURT ORDERS THAT:

1.Pursuant to s 904(2B) of the Workplace Relations Act 1996 (Cth) (“the WR Act”), the first respondent pay Mrs Sharon Williams the sum of…

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Details
Case
[2012] FCA 10
Decision Date

CaseChat Overview and Summary

The Fair Work Ombudsman brought an action against Maclean Bay Pty Ltd in the Federal Circuit Court of Australia, alleging breaches of the Workplace Relations Act 1996 (Cth) concerning sham contracting, compensation, and other employment law violations. The key issues before the Court included determining whether the company's director, Mrs Wells, was liable for the company's actions under the Act, and whether the company was responsible for the actions of its employee under section 826(1). Additionally, the Court had to address whether the dismissal of casual employees who were employed on a regular and systematic basis constituted a breach of the Act, and interpret the term "representation" in section 900(1). The case also involved claims regarding unpaid annual leave and superannuation.

The Court examined the evidence and concluded that Mrs Wells made the decision to terminate Mrs Williams, contrary to Mr Wells' testimony that it was a joint decision. The Court found that Mrs Wells failed to provide evidence to counter the possibility that the dismissal was intended to engage Mrs Williams as an independent contractor. The Court emphasised that the failure to present evidence concerning subjective motivation in dismissing an employee could imply a sham contracting arrangement. Furthermore, the Court determined that the company's actions amounted to a sham arrangement aimed at avoiding lawful obligations to Mrs Williams. Mrs Wells' involvement in the sham contracting scheme established her accessorial liability for the breach of section 902(1) of the Act.

The Court ordered Maclean Bay Pty Ltd to compensate various employees for their respective claims under sections 904(2B) and 807(1)(b) of the Workplace Relations Act 1996 (Cth). The company was required to pay specific amounts to Mrs Sharon Williams, Mr Jeffrey Golding, Ms Sarah Harrison, Ms Rebecca Lord, Ms Lucy Richardson, and Mrs Robin Taylor within 30 days of the order. The remainder of the proceedings was adjourned for a directions hearing to determine any penalties for the breaches of the Act and the Notional Agreement Preserving State Awards.

Orders

Orders of the court

1. Pursuant to s 904(2B) of the Workplace Relations Act 1996 (Cth) (“the WR Act”), the first respondent pay Mrs Sharon Williams the sum of $4,815.50.

2. Pursuant to s 904(2B)(b) of the WR Act, the first respondent pay Mr Jeffrey Golding the sum of $1,892.10.

3. Pursuant to s 807(1)(b) of the WR Act, the first respondent pay Ms Sarah Harrison the sum of $22,035.73.

4. Pursuant to s 807(1)(b) of the WR Act, the first respondent pay Ms Rebecca Lord the sum of $332.27.

5. Pursuant to s 807(1)(b) of the WR Act, the first respondent pay Ms Lucy Richardson the sum of $4,815.50.

6. Pursuant to s 807(1)(b) of the WR Act the first respondent pay Mrs Robin Taylor the sum of $3,575.16.

7. All the sums referred to in the preceding paragraphs are to be paid to the recipient within 30 days of the making of this order.

8. The remainder of the proceeding is adjourned to a directions hearing at 2.15pm on 2 February 2012 in Hobart to program the further conduct of the proceeding in relation to the penalty, if any, which should be imposed on the respondents for breaches of the provisions of the WR Act and the Notional Agreement Preserving State Awards referred to in the accompanying reasons for judgment.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

I am satisfied that Mrs Wells made the decision to terminate Mrs Williams. I reject the evidence of Mr Wells that it was a joint decision. So much is consistent with the evidence of Mrs Robinson and Ms Holmes that they dealt with Mrs Wells solely on issues concerning staff at the resort. Mrs Wells failed to give evidence. She has not sought to discharge the onus of proving that she was not actuated by the purpose referred to in s 902(1)(b) of the WR Act. (viii) Conclusion The relevance of General Motors Holden v Bowling is discussed at [12] and [13] above. As adapted to deal with s 902, Bowling in the High Court relevantly stands for the proposition that the failure of an employer to adduce evidence concerning its subjective purpose in dismissing an employee will leave uncontroverted the possibility that the sole or dominant purpose in dismissing the employee was to engage the person as an independent contractor to perform the same, or substantially the same work. If I am in error in determining that the decision to dismiss Mrs Williams was that of Mrs Wells alone and that the correct view is that it was a joint decision of Mr and Mrs Wells, the failure to call Mrs Wells as to her motivation for the joint decision provides Maclean Bay with the same difficulties as discussed in Bowling concerning the absence of evidence from some decision makers. There is no sworn evidence from Mrs Wells before the Court as to her motivation. It is clear from the transcript of her interview with the applicant’s officers that her motivation may not have been the same as Mr Wells, assuming the acceptance at face value of his evidence in that regard (which I do not). Putting aside issues of onus, I am satisfied, in any event, that the better view of the evidence for the reasons set out above is that Maclean Bay, through Mrs Wells, dismissed Mrs Williams for the purpose of seeking that she be engaged as an independent contractor doing the same work as she was doing as an employee. When Mrs Robinson suggested that a contract for services be put to the then dismissed Mrs Williams, Mrs Wells showed no reluctance and engaged in an email exchange with Mrs Robinson to have a contract prepared for Mrs Williams only one week after her termination. Maclean Bay thereby attempted to achieve its purpose of having its receptionist engaged as a contractor. The only reason so much did not ensue was that Mrs Williams was reluctant to enter into what would have been a charade. The charade would have consisted of the parties’ pretence that a contract for services existed when the truth was to the contrary. Here, a receptionist engaged by one employer, at one site, subject to directions from a manager, was sought to be dressed up as a contractor because her employer wished to be released from its lawful obligations to her. So much amounts to a sham arrangement. Mrs Williams was prudent to resist such a sham arrangement. However, I have no doubt that the desire to establish such a sham arrangement with Mrs Williams was the sole or predominant reason for her dismissal by Mrs Wells. MRS WELLS’ ACCESSORIAL LIABILITY FOR THE BREACH OF S 902(1)

Ratio Decidendi

Legal Principle Established

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