Fair Work Ombudsman v Oz Staff Career Services Pty Ltd
[2016] FCCA 105
•12 February 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FWO v OZ STAFF CAREER SERVICES PTY LTD & ORS | [2016] FCCA 105 |
| Catchwords: INDUSTRIAL LAW – Application for imposition of civil penalties for contraventions arising from breach of an award and also for contraventions of regulations relating to record keeping – allegations of breach of award admitted by first and second respondent – whether third respondent accessorally liable for award breaches of first respondent – whether first respondent contravened regulations concerning keeping of records in multiple ways – whether second and third respondents liable as accessories – consideration of evidence as a whole – all alleged contraventions established. |
| Legislation: Cleaning Services Award 2010 Fair Work Act 2009, ss.323, 323(1)(a), 324, 324(1)(b), 550, 550(2)(c), 712, 793 |
| Australian Competition and Consumer Commission (ACCC) v Air New Zealand Ltd [2014] FCA 1157 Transport Industries Insurance Co. Ltd v Longmuir (1997) 1 VR 125 United Group Resources Pty Ltd v Calabro (No 5) [2011] FCA 1408 Commissioner for Corporate Affairs v Green (1978) VR 505 Fair Work Ombudsman v Devine Marine Group Pty Ltd [2014] FCA 1365 |
| Applicant: | FAIR WORK OMBUDSMAN |
First Respondent: | OZ STAFF CAREER SERVICES PTY LTD (IN LIQUIDATION) (ACN 147 550 865) |
| Second Respondent: | TRAVICE BLOM |
| Third Respondent: | ALESSANDRO LINOSSI |
| File Number: | MLG 2306 of 2013 |
| Judgment of: | Judge Burchardt |
| Hearing dates: | 4 & 5 November 2015 |
| Date of Last Submission: | 12 November 2015 |
| Delivered at: | Melbourne |
| Delivered on: | 12 February 2016 |
REPRESENTATION
| Counsel for the Applicant: | Ms Dowsett |
| Solicitors for the Applicant: | Office of the Fair Work Ombudsman |
| Counsel for the First and Second Respondents: | Mr McDougall |
| Solicitors for the First and Second Respondents: | Baker & McKenzie |
| Counsel for the Third Respondent: | Mr McKenny |
| Solicitors for the Third Respondent: | Kliger Partners |
THE COURT DECLARES THAT:
The First Respondent has contravened:
(a)Section 323(1)(a) of the Fair Work Act 2009 (“the FW Act”), by deducting the Administration Fee Deduction from the wages of the 102 Employees listed in Schedule 1 of the amended Statement of Claim and thereby failing to pay them in relation to the performance of work in full during the Audit Period;
(b)Section 323(1)(a) of the FW Act, by deducting the Meal Deduction from the wages of 44 Employees named in Schedule 1 of the amended Statement of Claim and thereby failing to pay them in relation to the performance of work in full for the pay periods ending 15 April 2012, 22 April 2012 and 24 March 2013;
(c)Regulation 3.44(1) of the Fair Work Regulations 2009 (“the FW Regulations”), by failing to ensure that the records that the First Respondent is required to keep under regulations 3.33(1)(b) and 3.33(1)(c) of the FW Regulations were not false or misleading to the First Respondent’s knowledge;
(d)Regulation 3.44(4) of the FW Regulations, by altering records that the First Respondent was required to keep under the FW Regulations; and
(e)Regulation 3.44(6) of the FW Regulations by Regulations by making use of the First Payment Records knowing that the entries of the net payment and omission of the Administration Fee Deduction in payslips for the 17 Employees in Schedule 2 were false and misleading.
The Second Respondent was involved in each of the contraventions by the First Respondent set out in declaration (1)(a)-(e) above.
The Third Respondent was involved in:
(a)The contravention by the First Respondent in declaration (1)(a) above in the period from 4 February 2013 to 12 May 2013;
(b)The contravention by the First Respondent in declaration (1)(b) above in respect of Meal Deductions that occurred in the pay period ending 24 March 2013; and
(c)Each of the contraventions by the First Respondent set out in declaration (1)(d) to (e) above.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 2306 of 2013
| FAIR WORK OMBUDSMAN |
Applicant
And
| OZ STAFF CAREER SERVICES PTY LTD (IN LIQUIDATION) (ACN 147 550 865) |
First Respondent
| TRAVICE BLOM |
Second Respondent
| ALESSANDRO LINOSSI |
Third Respondent
REASONS FOR JUDGMENT
Introductory
This proceeding, which has a number of pleading complexities
to which I shall return, is essentially concerned with whether or not the second and third respondents were involved in a contravention
of a civil remedy provision committed by the first respondent. To an extent each of the respondents, and more particularly the third respondent, put in issue whether or not any contravention of a civil penalty provision has occurred at all. The second and third respondents elected not to call evidence. Essentially they have told the applicant
to prove the case.
For the reasons that follow, I think that the Fair Work Ombudsman (“FWO”) has proved the case and there will be declarations accordingly. Further consideration will need to be given to what penalties should be imposed upon the second and third respondents.
The issues in the proceeding
As earlier indicated, the pleadings in this matter are not by any means easy to follow. The respondents articulated a large number
of objections and qualifications in their Defences including assertions that matters pleaded were objectionably argumentative
or conclusionary, vexatious, ambiguous and embarrassing and the like. None of these objections was pressed in any way at trial.
The amended Statement of Claim relevantly pleads that the first respondent employed 102 casual cleaners named in Schedule 1
to the amended Statement of Claim (“the employees”) in the period from 5 December 2011 to 12 May 2013 (“the audit period”).
The pleading relevantly asserts that at all times the first respondent was covered by the Cleaning Services Award 2010 (“the Award”) and that an administration fee was unlawfully deducted from the wages payable
to the employees, that meal deductions were unlawfully deducted during the pay periods ending 15 April 2012, 22 April 2012 and
24 March 2013 and that these two matters constituted contraventions
of s.323(1)(a) of the Fair Work Act 2009 (“the FW Act”).
The amended Statement of Claim also asserts that the first respondent was required by s.535(1) of the FW Act to make and keep employee records of the kind required by the Fair Work Regulations 2009
(“the FW Regulations”). It is further pleaded that these records were relevantly false and misleading, were impermissibly altered, and put
to impermissible use, all in contravention of reg.3.44 of the
FW Regulations.
The Defences of the first, second and third respondents all vary. Any endeavour to recite in detail the various points of difference between them would lead to a prolixity that is better avoided. It is sufficient
to note the following paraphrase of Defences.
The first respondent admits making the administration fee deductions and meal deductions but denies the contraventions of the
FW Regulations relating to the keeping of records.
The second respondent pleaded penalty privilege and privilege against self-incrimination in relation to the assertion that during the audit period he had knowledge of the first respondent’s practices in relation to the deduction of administration fees and meal deductions (paragraph 4(c)(v) of the amended Statement of Claim) and of payslips and their contents (paragraph 4(c)(vi) of the amended Statement of Claim).
He does, however, admit a number of matters pleaded including that
he was the Chief Executive Officer of the business, was responsible
for the overall direction, management and supervision of the business, and had knowledge of various practices (to which it will be necessary to return) in relation to the payment to cleaners employed from time
to time by the first respondent.
At the start of the trial, however, counsel for the applicant informed
me (transcript P-5) that counsel for the second respondent had informed her that morning that the second respondent had conceded that he had knowing involvement with the both the administration fee and meal deduction contraventions. The matter proceeded on this footing.
The third respondent, once again putting matters somewhat generally, admits that during the audit period he had knowledge of the first respondent’s practices in relation to the deduction of administration fees and meal deductions but so far as practices in relation to payslips are concerned he relies upon the penalty privilege. His admissions
as to the practices in relation to the payment of wages to the employees are inconsistent with those of the first and second respondents.
It should be noted that it was clarified in the course of the running
of the trial by counsel for the applicant that the alleged contraventions in which it is said the second and third respondents were involved
so far as the administration fee was concerned are for the audit period
(5 December 2011 to 12 May 2013) and in respect of meal deductions as against the second respondent the pay periods 15 April 2012,
22 April 2012 and 24 March 2013, but only 24 March 2013 against
the third respondent.
This is, of course, a somewhat generalised analysis of the pleadings which are, as I have already said, multifaceted but hopefully give sufficient indication of the matters in issue.
Did the first respondent contravene the FW Act?
Obviously the accessorial liability of the second and third respondents cannot arise unless contravention of the FW Act by the first respondent are themselves established. It is therefore necessary to examine
the conduct of the first respondent. This obviously brings us to the evidence. It will be remembered that the first respondent has expressly admitted contraventions in relation to the administration fee and meal deductions but the second respondent has not pleaded to those matters save to the extent that he relies upon penalty privilege and the third respondent does not admit any contraventions at all.
The applicant has, relevantly for these purposes, filed three Affidavits. Two were affirmed by Fair Work Inspector (“FWI”) Ashley Kate Hurrell on 13 July 2015 and 20 October 2015 respectively. A further Affidavit of FWI Kez Ma was affirmed on 9 July 2015. Much of the material in all of these Affidavits derives from business records kept
by the applicant.
Given the express admissions made by the first respondent
in paragraphs 9, 11, 12, 15, 16, 18, 19, 23, 24 and 25 of the Defence
of the first respondent it is immediately apparent that the first respondent did contravene the FW Act in its actions of deducting
an administration fee and meal allowance deductions from time to time.
To the extent that the Defence is qualified, e.g. paragraph 9:
“Subject to proof as to the period or periods in which each of the persons within the class that constitutes the Employees
was employed, the first respondent admits the allegations
in paragraph 9.”
the matters asserted are clearly made out from the Affidavit material that the applicant has filed.
Given that neither FWI Ma nor FWI Hurrell were cross-examined at all about their Affidavits and annexures proving the contraventions alleged against the first respondent, it is not in my opinion necessary to detail the various annexures that make good the propositions pleaded.
It would be a laborious and unprofitable exercise in the circumstances.
So far as the matter of the FW Regulations is concerned, this is a more complex issue.
The alleged contraventions of the FW Regulations as to record keeping
It is apparent from the Affidavit of FWI Hurrell, affirmed 13 July 2015, that on 29 February 2012 an officer of the applicant received from
the third respondent payslips, timesheet data and sign-in sheets for
10 Oz Staff employees working at Crown Casino for the pay periods ending 11 December 2011 and 18 December 2011 and also for
15 Oz Staff employees working at Federation Square during the same period. The payslips provided are at tab 6 to the annexures to FWI Hurrell’s Affidavit and do not show any deductions other than tax. Given the admissions made by the first and second respondents that
an administration fee was being deducted throughout the relevant audit period it is apparent that this set of payslips was inaccurate.
Did the first respondent contravene the record keeping FW Regulations?
Consideration of this question requires attention both to the pleadings and to the evidence given. Once again it is not easy to work out from the various qualified admissions made exactly where the true ground lies.
At paragraph 34 of the Statement of Claim filed on 20 December 2013 the applicant pleads the existence of reg.3.44(1) of the FW Regulations and its binding force upon the first respondent. The Defence of the first respondent repeats paragraph 4 of the Defence (which as far
as I can see is relevant to paragraph 35 of the Statement of Claim)
but otherwise denies the allegations. In fact it is clear beyond
any question that reg.3.44(1) required the first respondent to ensure that any records it was required to keep under the FW Act
or FW Regulations were not false or misleading to the first respondent’s knowledge. That is what the Regulation says.
At paragraph 35 of the Statement of Claim filed 20 December 2013 pleads the deduction of the administration fees from the wages of the 17 employees listed in Schedule 2 in the pay periods ending
11 December 2011 and/or 18 December 2011 and particularises
the matters set out in paragraph 16 of the Statement of Claim. The first respondent refers to paragraph 4 of the Defence (not apparently directly relevant to paragraph 35) but otherwise denies the allegations.
Nonetheless since the first respondent’s Defence admits at paragraph 16 deducting the administration fees shown in column 5 of Schedule 1 to the amended Statement of Claim, it is clear that some admission
is made that the administration fee was deducted.
The Defence asserts at paragraph 34 that paragraph 34 of the amended Statement of Claim is vexatious, ambiguous and embarrassing and otherwise not admitted. This is not a helpful pleading. The objections as to the form of the pleading were, as earlier indicated, not pressed and the FW Regulations speak for themselves.
At paragraph 36 the Statement of Claim pleads that the first payment records (being records produced on 29 February 2012 by the third respondent on behalf of the first respondent as earlier indicated) specified no deductions had been made from the wages of the employees in the pay periods ending 11 December 2011 and/or
18 December 2011. The first respondent admits the same at paragraph 36.
Paragraph 37 pleads that the actual payment records for the employees concerned in response to the Notice to Produce served in July 2013 did show the administration fee deduction and this matter is likewise admitted by the first respondent.
Paragraph 38 pleads that the net pay and the actual payment records present the amount actually paid to the employees listed in Schedule 2 and that matter is admitted by the first respondent.
Paragraph 39 of the amended Statement of Claim pleads that the first payment records were false and/or misleading by reason of them not specifying the administration fee deductions and the actual net amounts paid to each of the employees listed in Schedule 2 and the Defence
of the first respondent admits inter-alia that the first payment records were false and misleading.
At paragraph 40 it is pleaded that at least during the period from
31 January 2012 to 29 February 2012 the first respondent knew that the first payment records were false and misleading in the manner admitted in paragraph 39. The particulars refer to, inter-alia, a meeting
on 4 February 2013 attended by FWI Kez Ma and Assistant Director Andrew Edwards with the second and third respondents and alleged admissions made at that meeting. The matter is also referred
to by means of rolled up reference to antecedent parts of the amended Statement of Claim.
The amended Statement of Claim goes on at paragraph 43 to assert that at all times reg.3.44(4) of the FW Regulations required the first respondent not to alter any record that was required to be kept. Paragraph 43 of the Defence of the first respondent admits the terms
of the FW Regulation but otherwise takes a pleading objection not pressed at trial and pleads penalty privilege on behalf of the second respondent.
Paragraph 44 of the amended Statement of Claim pleads the alteration of the records to remove the administration fee deduction, a matter
to which the first respondent declines to plead to preserve the penalty privilege of the second respondent.
Paragraph 46 pleads the terms of reg.3.44(6) of the FW Regulations and the requirement arising therefrom not to make use of an entry in an employee record if the first respondent did so knowing that the entry was false or misleading. The first respondent again declines to plead
to preserve the penalty privilege of the second respondent.
Paragraph 47 pleads that by virtue of the contravention alleged
in paragraph 42 the first payment records contained knowingly false and misleading entries and at paragraph 50 a rolled up pleading asserts that the first respondent contravened reg.3.44(6). All these matters
are the subject of pleading based on penalty privilege by the first respondent.
As indicated, perhaps already more than once, the rolled up nature
of the pleadings in this case by both sides, together with the qualified admissions made, make it difficult to discern what is truly in issue. Doing the best I can, it seems to be agreed that the first records produced did not include the administration fee and the actual payment records subsequently produced did. It is admitted consequentially
by the first respondent that the first payment records were false and misleading. It is not admitted, however, that this was done to the first respondent’s knowledge, nor is the alteration of records admitted and, finally, it is not admitted that the first respondent only made use of the false records.
The Defence of the third respondent can be paraphrased briefly.
No concessions of any moment are made.
The evidence
Although, of course, the evidence called by the applicant traversed
the alteration of records issues, it is convenient to deal with all of the evidence, both on affidavit and oral, at this stage and the annexures
of FWI Hurrell to the Affidavit affirmed 13 July 2015.
Ms Hurrell is a Senior FWI employed by the applicant. The Affidavit commences with details of the confirmation of her appointment.
It should be noted that no issue has been taken in this proceeding
as to the competence of the applicant to bring the application and
it is clear that that is not a matter in issue. In any event the materials filed clearly establish the formal matters pleaded in paragraph 1 of the amended Statement of Claim.
FWI Hurrell deposes at paragraph 8 that since 28 February 2013
she has had the primary carriage of the FWO investigation into alleged contraventions of the FW Act by the first respondent. At paragraphs
9-11 she indicates the existence of records held by the applicant and the fact that her Affidavit is made based partly on her own knowledge and by reference to files held by the FWO.
At paragraphs 13-38 FWI Hurrell details what is described as the 2012 Targeted Audit. It should be noted, again, that there is no challenge
by the respondents to the reliance by Ms Hurrell on the various business records to which she refers.
It is clear that on or around 20 January 2012 the FWO started a targeted audit in relation to cleaners employed by the first respondent working at sites including Crown Casino and Federation Square (paragraph 14).
On 20 January 2012 Senior FWI David Mullins sent a letter addressed to the Proper Officer of Oz Staff Pty Ltd (“OSPL”) which stated
the focus of the audit and requested production of employment records including time and wage records for 10 employees performing work
at Crown Casino and a further 10 at Federation Square and also completion of the Entity Information Form (paragraph 16, Tab 2).
It is clear that Mr Linossi, the third respondent, contacted the FWO
to request an extension of time to respond to the audit (paragraph 17, Tab 3) and on 29 February 2012 Senior FWI David Mullins received an email from Mr Linossi attaching inter-alia a completed Entity Information Form and various payslips, timesheet data and sign-in sheets for 10 Oz Staff employees working at Crown Casino for the pay periods ending 11 December 2011 and 18 December 2011 and 15 such staff at Federation Square for the same period (paragraph 19, Tabs 4-6).
The payslips at Tab 6 are referred to in the amended Statement
of Claim as the first payment records (and also in FWI Hurrell’s Affidavit) and clearly do not show any deductions for administration fees. They also make it clear that it is the first respondent, not OPSL, which was the employer.
The Affidavit goes on to record further requests for information by the FWO through its officers to the first respondent through Mr Linossi including a file note, 21 May 2012, in which a FWI recorded
Mr Linossi as, “The ER advised that he was struggling to make
the information clear enough for me and was getting confused”, (paragraph 29, Tab 11).It is clear that Mr Linossi did a lot of work to provide the FWO with the information sought.
On 8 June 2012 FWI Maunsell created a file note which shows that FWI Maunsell spoke to Mr Linossi on 8 June 2012 that:
“I advised that the FWO had been approached about some deductions that had been made to numerous casual employees
in relation to meals eaten at Crown. I advised that we had requested that the employees not lodge complaints at this stage as we are in communication with the ER and I requested that
he investigate the matter and rectify any deductions that were not authorised. I confirmed that the employees had been told
to contact me directly in a few weeks if the deductions were continuing” (paragraph 33, Tab 15).
On 19 June 2012 FWI Maunsell sent a letter to the first respondent addressed to Mr Linossi. This was a document entitled “Completion
of Audit” and set out various conclusions on the part of FWI Maunsell, concluding that the first respondent had contravened various aspects
of the FW Regulations and certain underpayments of wages in respect of several dozen employees nominated in the audit letter (paragraph 34, Tab 16).
On 19 June 2012 FWI Maunsell created a further file note
of a conversation with Mr Linossi that day which relevantly recorded:
“The ER advised that he had a look back through and found that there had been some monies deducted and he is investigating
it at the moment …” (paragraph 35, Tab 17).
FWI Hurrell’s Affidavit goes on to record her taking over
the investigation in March 2013 and her first contact with a solicitor
at Gadens Lawyers who was then acting for the first respondent.
On 16 April 2013 Mr Croxford, the solicitor concerned, emailed
Ms Hurrell confirming that he no longer acted on behalf of the first respondent and inviting Ms Hurrell to call Mr Linossi who would assist to finalise the matter (paragraph 41, Tab 23).
Mr Croxford was replaced, so to speak, by Mr Ben Burke from Baker & McKenzie. Subsequently on 17 May 2013 Mr Ben Be of Baker
& McKenzie attended the FWO office in Melbourne to deliver a folder which included various documents (paragraph 44). The materials provided included a letter from Mr Burke indicating that the first respondent uses a software system called Fast Track to create and send payslips.
FWI Hurrell deposed that she reviewed the various materials before
her which, of course, had been produced pursuant to a Notice
to Produce earlier sent to Gadens Lawyers by FWI Hurrell
on 13 March 2013 (paragraph 39). FWI Hurrell concluded (paragraph 47):
“… I then identified that the individual pay records for the five employees showed that a deduction of $25.00 called “Ozstaff Admin Fee” occurred in most pay periods from the time
the employee commenced through to the last pay period of the pay slips ending 14 April 2013.” (paragraph 47).
FWI Hurrell noted that the first payment records for one employee were different to the records produced pursuant to the Notice
to Produce because the former did not disclose the Ozstaff Admin Fee (paragraph 48).
Following various toing and froing between FWI Hurrell and Mr Burke, FWI Hurrell issued a Notice to Produce records or documents pursuant to s.712 of the FW Act on 18 June 2013 (paragraph 59, Tab 34).
On 15 July 2013 Mr Be delivered to FWI Hurrell documents responding to the Notice to Produce (paragraph 60, Tab 35).
The payslips produced at Tab 35 are those described as the actual payment records in the amended Statement of Claim and in FWI Hurrell’s Affidavit. They show the deduction of an Ozstaff Admin Fee generally, but not invariably, in the amount of $25.00, and at least
in one instance not showing any such deduction in the given week at all.
Following various steps taken by FWI Hurrell and interaction with
Mr Burke further payslips were provided which in addition to showing the Ozstaff administration fee showed deductions for what was described as Ikon Meal Pay Slips (paragraph 68, Tab 40).
On 5 August 2013 the solicitors for the first respondent declined
an offer for a proper officer of the first respondent to engage
in a recorded interview (paragraph 69, Tab 41).
FWI Hurrell then deposed to a detailed review she had undertaken
of the payslips produced in the 2012 pay records and the 2013
pay records and confirmed that each set of records included payslips for the pay periods ending 11 December 2011 and 18 December 2011. She concluded that there were a number of differences between
the First Payment Records and the Actual Payment records which
are set out at paragraph 75 of FWI Hurrell’s Affidavit. The comparison documents are at Tab 42 and do, indeed, show multiple differences between the two sets of documents.
Thereafter FWI Hurrell sought to contact some of the employees whose pay records had been provided and she received a call from
a Mr Gilin Wilson on 25 July 2013 in which Mr Wilson confirmed that deductions occurred every week during his employment by the first respondent (paragraph 77).
Mr Wilson sent an email attaching his bank statement for December 2011 (Tab 45) showing the salary paid to him by the first respondent from 4 November 2011 until 30 March 2013.
FWI Hurrell compared the bank statement with the payslips provided and found that the payment on 16 December 2011 was consistent
with the net amount in the Actual Payment Record for the pay period ending 11 December 2011; the payment on 23 December 2011
was consistent with the net amounts in both the First Payment Record and the Actual Payment Record for the week ending 18 December 2011; and a further payment on 30 December 2011 (paragraph 80).
Subsequently Mr Wilson emailed a copy of his payslip from
30 December 2011 with an accompanying letter from Baggy Dewasurendra. This payslip showed a deduction of $25.00 identified as “Ozstaff Administration Fee” and a net payment consistent with
Mr Wilson’s bank statement (paragraph 81, Tab 46).
Once again FWI Hurrell examined the payslip against the Actual Payment Records and the First Payment Records and found that the payslip provided was consistent with the Actual Payment Records
but had a number of differences from the First Payment Records.
FWI Hurrell went on to record her view that in the light of Mr Wilson’s bank statements and the First Payment Records and the Actual Payment Records she concluded that the Actual Payment Records contained accurate information as to the amounts deducted from
the common employees and the amounts paid to them. The common employees were, of course, the persons whose payslips were analysed and compared at Tab 42.
Having referred to an acknowledgement by Mr Burke on behalf of the first respondent that underpayments would be resolved in respect of the administration fee and meals deduction (paragraph 88) and confirmed her calculations of the amounts in Schedule 1 of the amended Statement of Claim were correct (paragraphs 90-91) FWI Hurrell went on to deal with matters asserted against the second and third respondents to which I will return.
Second Affidavit of FWI Ashley Kate Hurrell affirmed 20 October 2015
This Affidavit is essentially facultative. FWI Hurrell deposed that
she had served a subpoena on FastTrack Pty Ltd following which
she was able to annex copies of subpoenaed documents of what were described as base product payslips (exhibit AKH-1) and two support requests made by the third respondent to FastTrack (exhibit AKH-2).
The Affidavit of FWI Kez Ma
The Affidavit of FWI Ma details his employment with the applicant and gives details of what he describes as an Initial Investigation following the commencement of the targeted audit on 20 January 2012 already referred to by FWI Hurrell (paragraph 8).
FWI Ma goes on to give details of an anonymous complaint made
to the FWO around 29 June 2012 alleging that “admin fees” were being deducted from wages of the employees of the first respondent (paragraph 9).
By November 2012 FWI Ma was given carriage of the investigation into the anonymous complaint and on 22 November 2012
he telephoned the third respondent and informed him about the complaint and its investigation. FWI Ma contacted Mr Linossi because he had been the primary contact for the first respondent during
the 2012 audit.
FWI Ma deposed that he issued a Notice to Produce to the Proper Officer of the first respondent by leaving it with Mr Linossi.
The Notice requested payslips for all cleaners at Federation Square
and Crown Casino employed by the first respondent in the period from
1 November 2012 to 26 November 2012 (paragraph 16).
Following further exchanges between FWI Ma and Mr Linossi, FWI Ma and FWI Edwards attended Crown Casino in January 2013
in an attempt to speak with cleaners employed by the first respondent but failed to do so (paragraph 23).
Following further inquiries FWI Edwards and FWI Ma met with two groups of four employees of the first respondent. Annexure K-M8
is FWI Ma’s file notes of the meeting. The notes record each employee’s assertion asserting that an administration fee of $25.00
was deducted from each pay cycle and that the deduction was still continuing.
FWI Ma’s Affidavit then traverses a meeting with the second and third respondents by himself and FWI Edwards on 4 February 2013.
FWI Ma provided a record of the meeting based on his recollection
of it and the notes he took at it which are annexure KM-9.
In paragraphs 33-34 of the Affidavit is a record of a conversation essentially conducted by Mr Blom, the second respondent, and FWI Edwards. FWI Ma and Mr Linossi, the third respondent,
were obviously within earshot. Relevantly Mr Blom made a number
of assertions including:
“The administration fee is not an illegal deduction, but it is an unauthorised deduction. The old Oz Staff company received legal advice, as well as advice from an accountant and the Fair Work Ombudsman that the deduction was ok.
…
The deduction was never something we tried to hide. It was always displayed on payslips. Other companies do the exact same thing, but they try to hide it.
The deduction is included on the payslips so employees
can deduct it on their tax.
…
(a)The deduction only happens for cleaning employees. …
(b)
The company did not stop the deductions earlier because
we knew the Fair Work Ombudsman was looking into it.
We thought it would look bad for the deductions to stop
all of a sudden.
(c)We planned to stop the deductions in 2013, but because
of the investigation we didn’t. Now, the deductions will stop at the end of this month. The deductions aren’t going to be absorbed into the hourly rate or affect the hourly rate in any way. The deductions are going to disappear.
(d)I was not fond of the deduction when I took over as director, and even when I was part director of the company. Now
I’m the sole director, I’ve got full control and I will stop
the deductions.
…
(f)The deduction was in writing in the contract or offer
of employment from the old Oz Staff company, but it’s not
in writing for the new company, Oz Staff Career Services
Pty Ltd.
(g)The purpose of the deduction if (sic) for employees to gain access to the Oz Staff database, if they are suitable to work. It is like a service fee. It’s also to keep employees accountable in their commitment to the company, take
the job seriously and show up to work because the company has invested money and resources in inducting them.
Most employees would be inducted and then not show
up to work and quit.
(h)The new bunch of employees may not have been told about the deductions.
(i)If Oz Staff has to back pay all of its employees, we cannot afford to do this. We do not have the resources to do such
a large scale operation.” (paragraph 34).
For present purposes the Affidavit does not take the matter further.
The Affidavit of Mr Jason Quirk affirmed 7 October 2015
Mr Quirk deposed that he is employed by FastTrack in the role
of Chief Technical Officer. He deposes to substantial experience in the IT industry. He described the FastTrack Payroll Manager System
as a payroll software program designed by FastTrack specifically
for the recruitment and labour hire sector. It provides payee management, payroll processing and billing functions for businesses that engage in labour hire, outsourcing and back office support functions (paragraph 6).
At paragraph 8 Mr Quirk deposed:
“Licensed users cannot alter or customise the Software themselves, but licensees can request customisation of the Software. FastTrack has a Development and Testing Team that can provide customised software solutions to customers
who seek this.”
Mr Quirk went on to describe the process by which pay runs
are effected including the creation of what is referred to as a Batch. Once a Batch has been rolled over (the figures are confirmed
and locked to the software to prevent further changes) the Batch cannot be changed or edited by software users. At paragraph 21
Mr Quirk deposed to the various things that cannot be so changed including inter-alia pay items, the rate of pay and the gross and
net amounts and the amount of any deductions.
After a Batch is confirmed the software generates payslips for each candidate who has been paid and users cannot alter the format of the template payslip in the software that they choose other than to add
a company or business logo or to elect to show or hide the comment box appearing at the bottom. Put shortly Mr Quirk’s Affidavit suggests that the system is tightly controlled and it is difficult to make
any alterations once a payslip is created and, indeed, before that once
a Batch is confirmed.
At paragraphs 33-36 Mr Quirk deposed to the way in which changing processed pay run records can occur. This can be done by either
what is called a “reversal” or an “adjustment”. This may occur,
for example, when underpayments or errors occur. A reversal is where a user can reverse an entire Batch. This does not alter or change
the original Batch record. The software instead creates a negative copy of the Batch being reversed so that the amounts paid and deducted
and any hours of work are cancelled out by the reversal.
A reversal also generates a new payslip for the candidates included
in the reversal Batch which shows the negative reversal of the information from the earlier Batch. This is a separate and additional payslip to the one the software generated for the original pay run Batch that has been reversed.
An adjustment is where changes can be made to some payments of pay details for one or more candidates from an earlier Batch. Creating
an adjustment generates a new payslip. The adjustment will not
be shown on the original payslip created by the original Batch. However, if payslips are reprinted for Batches that follow the date
of the adjustment, the year to date figures in reprinted payslips will
be altered.
The oral evidence given during the proceeding
The evidence of FWI Kez Ma
What follows is taken from my notes unless indicated otherwise.
In evidence-in-chief FWI Ma corrected some errors (which are
of no moment) in his Affidavit but otherwise adopted it as true and correct.
Under cross-examination by counsel for the second respondent
FWI Ma confirmed that the meeting described in his Affidavit
which took place on 4 February 2012 between FWI Edwards, himself, and the two respondents was a meeting about a complaint
about deductions. There were possible issues as to payments under
the minimum wage. FWI Edwards spoke for the applicant
and FWI Ma made notes in his notebook. The notes were not attached to his Affidavit but were created on 4 February 2012.
When it was put to him that the second respondent, Mr Blom,
was always open about the deductions FWI Ma agreed.
Under cross-examination by counsel for the third respondent FWI Ma confirmed that he had called Mr Linossi and told him his inquiry
was about unpaid wages and deductions. He had told him it was
an audit. This proceeding is only about deductions. He was asked
if he had asked who the Payroll Officer was and could not recall.
He confirmed that he gave Mr Linossi the Notice to Produce because Mr Linossi was the Human Resources Manager.
When taken to paragraph 31 of his Affidavit FWI Ma confirmed
that there had been no meetings with employees of the first respondent before 4 February 2013. Questions were put to Mr Blom.
When taken to paragraph 33 and asked who the complainant
FWI Edwards had referred to was FWI Ma could not recall. He only had the first name and email address.
In my view nothing of any great moment emerged from the remainder of the cross-examination of FWI Ma. I should interpolate and say that FWI Ma struck me as being an entirely honest witness but, given
his removal from the investigation, perhaps unsurprisingly, he had little recollection other than what he could take from his notes.
The evidence of FWI Ashley Kate Hurrell
FWI Hurrell, likewise, corrected certain minor errors in her Affidavit material and added a minor matter, and a payslip omitted from those matters previously provided.
Under cross-examination by counsel for the second respondent
FWI Hurrell confirmed that she was aware that at a meeting
on 4 February 2013 the second respondent offered full cooperation
to the applicant.
When taken to paragraph 48 of her first Affidavit (her review
of the Audit file and 2012 Pay Records) FWI Hurrell confirmed that she was not in contact with the first respondent at that time. She did not mention the first records when dealing with Baker & McKenzie and did not say that the applicant had records showing payments.
She did not seek any explanation from Baker & McKenzie.
After finding discrepancies she did not ask the respondent
or its lawyers for an explanation.
Under cross-examination by counsel for the third respondent
FWI Hurrell confirmed that deductions were only one area of concern. The 2012 Audit checked everything. FWI Hurrell confirmed that the person asked for information is assumed to be able to get it.
FWI Hurrell confirmed that the contents of paragraph 35
of her Affidavit related to meals deductions.
FWI Hurrell was not aware of the structure of the first respondent.
She never spoke with Mr Linossi but only with legal representatives
of the company. She knew it was a labour hire business and operated in different areas with different awards.
It was standard practice to ask any Proper Officer of a respondent
for information and the email she sent to Mr Burke on 15 July 2013 was sent at a time she had a limited understanding of the first respondent’s operations. At the time she was investigating it was not clear that deductions had stopped and she raised this with Mr Burke who was her sole contact.
FWI Hurrell made it plain that she did not raise her contact
with Mr Wilson with Mr Linossi. She had had no contact with him. She had not spoken to Mr Dewasurendra. Her sole contact was
with the legal representative.
When cross-examined about her second Affidavit FWI Hurrell confirmed that she was the person who selected the documents
to be annexed to it. She did not recall seeing training records. She said she saw about 10 support items but there were others. One of those annexed to the Affidavit related to pay.
It is sufficient for present purposes to say that FWI Hurrell
was a careful, thoughtful witness who responded directly and clearly
to questions put to her and was clearly being truthful.
The evidence of Mr Jason Quirk
Mr Quirk was interposed during the evidence of FWI Hurrell
(more accurately during the hearing of the objections to her Affidavit evidence to which I shall return). He is the FastTrack
Chief Technology Officer and he confirmed his Affidavit as true
and correct.
Counsel for the second respondent did not have any questions
for Mr Quirk.
Under cross-examination by counsel for the third respondent Mr Quirk confirmed that he is responsible for managing software solutions. There is a licence with every client including the first respondent. There had been a subpoena served on FastTrack and three staff
were involved in the response of whom Mr Quirk was one.
He confirmed that FastTrack gets a vast array of questions including requests for help. A number of documents were put to him in cross-examination and exhibit M1 was accepted as an example of the type
of support request made to the organisation and exhibit M2
were training records.
Mr Quirk confirmed that one entry was a job post for Mr Linossi’s training which related to advertising for positions.
Mr Quirk confirmed that FastTrack’s records would show whether
pay records had been changed. Records cannot be changed without
the structured process available described in his Affidavit.
It should be noted that Mr Quirk was an excellent responsive witness entirely familiar with the field with which he was giving evidence.
The relevant provisions of the FW Act
It should be noted, first, that there is no issue in this case that the first respondent was covered by the Cleaning Services Award 2010
at all material times in relation to the employment of the employees with whom the case is concerned (see paragraph 12, Defence
of the first and second respondents).
Likewise, there is no issue between the applicant and the first
and second respondents that the deduction of the administration fee
and the meal deductions infringed s.323 of the FW Act, and were
not permitted deductions within the meaning of s.324 of the FW Act.
There is, however, such an issue in respect of the third respondent,
who denies (under cover of the various other objections not pressed) that the administration fee deduction was not a permitted deduction within the meaning of s.324 of the FW Act and makes the same defence in relation to the meal deductions.
It is not necessary to set out s.323 of the FW Act in full.
It is essentially a continuation of Truck Act provisions and requires
the employer to pay any employee amounts payable in relation
to the performance of work in full (s.323(1)(a)). Section 324 permits various deductions, but only if a number of pre-conditions are met, including inter alia that the deduction is authorised in writing
by the employee and is principally for the employee’s benefit (s.324(1)(b)).
Regulation 3.44(1) of the FW Regulations reads:
“An employer must ensure that a record that the employer
is required to keep under the Act or these Regulations
is not false or misleading to the employer's knowledge.”Regulation 3.44(4) says:
“(4) An employer must not alter a record that the employer
is required to keep under the Act or these Regulations except:(a) in compliance with sub-regulation (2) or (3); or
(b)to any extent otherwise permitted by the Act or these Regulations.”
Regulation 3.44(6) provides:
“A person must not make use of an entry in an employee record made and kept by an employer for this Subdivision if the person does so knowing that the entry is false or misleading.”
Pursuant to s.535 of the FW Act, in conjunction with FW Regulation 3.33(1)(b) and 3.33(1)(c), the first respondent was required to keep employee records which specified the gross net amounts paid to each employee and specified any deductions made from the gross amount paid to each of its employees. Although these matters are objected
to on various grounds and otherwise not admitted by all three respondents, in my view, the legislation is clear, and the obligation pleaded by the applicant is clearly made out.
Section 793 of the FW Act deals with liability of bodies corporate.
It relevantly provides:
“Conduct of a body corporate
(1) Any conduct engaged in on behalf of a body corporate:
(a) by an officer, employee or agent (an official ) of the body within the scope of his or her actual or apparent authority; or
(b) by any other person at the direction or with the consent or agreement (whether express or implied) of an official
of the body, if the giving of the direction, consent
or agreement is within the scope of the actual or apparent authority of the official;
is taken, for the purposes of this Act and the procedural rules,
to have been engaged in also by the body.”
State of mind of a body corporate
“(2) If, for the purposes of this Act or the procedural rules,
it is necessary to establish the state of mind of a body corporate in relation to particular conduct, it is enough to show:
(a) that the conduct was engaged in by a person referred
to in paragraph (1)(a) or (b); and
(b) that the person had that state of mind.”
Meaning of state of mind
“(3) The state of mind of a person includes:
(a) the knowledge, intention, opinion, belief or purpose
of the person; and
(b) the person's reasons for the intention, opinion, belief
or purpose.”
The final relevant provision of the legislation is s.550 of the FW Act, which provides:
“(1) A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.
(2) A person is involved in a contravention of a civil remedy provision if, and only if, the person:
(a) has aided, abetted, counselled or procured
the contravention; or
(b) has induced the contravention, whether by threats
or promises or otherwise; or
(c) has been in any way, by act or omission, directly
or indirectly, knowingly concerned in or party to the contravention; or
(d) has conspired with others to effect the contravention.”
The relevant authorities
The parties in their submissions had much to say about the applicable authorities that touched upon various aspects of this case. Equally unsurprisingly, each member of counsel sought to emphasise aspects
of the case law that might be thought to support their position. While
I have had regard to all the authority cited to me, perhaps the following extracts give the flavour of what the parties wished to put.
Counsel for the applicant referred the Court to Australian Competition and Consumer Commission (ACCC) v Air New Zealand Ltd [2014] FCA 1157, where Perram J said at [480]-[481]:
“480. In civil proceedings such as the present, a different approach will result from the lower civil standard of proof.
The question will be whether the party alleged collusion
has proven it on the balance of probabilities: Bradshaw
v McEwans (1951) 217 ALR 1 at 5. That party will need
to show that its hypothesis of collusion is more probable than not. A party accused of collusion will be able to resist proof
of such a case in two ways. The first will be to attack
the adequacy with which the various circumstances have been proved, that is to say, the alleged colluder may attack the very existence of the alleged circumstances. This situation is not relevant to the current analysis and may be put to one side. Secondly, the alleged colluder may seek to prove that there is an alternative hypothesis which explains the circumstances.
The legal burden of proof will remain on the party alleging collusion but within that framework it will be forensically useful for the respondent to seek to show that there is an alternative innocent hypothesis which is more likely than the one relied upon by the applicant. In that context, an unlike the criminal law, it will not suffice to point only to the fact of a reasonable hypothesis consistent with innocence. The endeavour will
be forensically useful only if the hypothesis is more likely than not. Even so, one needs to keep steadily in mind that it is
the applicant who ultimately bears the onus of proof.
481. Finally, when it comes to assessing the circumstantial case the question is not whether each of the circumstances individually proves the existence of the alleged arrangement
or understanding. Rather, the issue is whether all of the circumstances taken together do so. To approach the matter
on any other basis destroys the integrity of the circumstantial case.”
In a similar vein, the Court of Appeal of Victoria in Transport Industries Insurance Co. Ltd v Longmuir (1997) 1 VR 125 confirmed that:
“(1) The trial judge erred in considering each item
of circumstantial evidence in isolation from the others
and seeking to determine whether the ultimate fact could
be inferred from each such item of evidence. The proper approach was to consider the weight of the combination
of proven facts and to determine whether the combined weight
of those facts supported the inference, as a matter
of probability.” (See (1) in the headnote – being an authorised report).
I refer also to the judgment of Winneke P at p.131, where his Honour said:
“(c) Finally, it seems to me that the learned judge, by adopting the process of reasoning which he did, deprived himself
of assessing the evidential impact of the failure
by the respondent to give evidence. As I have already indicated, the combined force of the proven facts were capable of raising
a probable inference against the respondent that he was the person who lit the fire. So much was implicit in the learned judge’s ruling that the respondent had a case to answer.
The failure by a party to deny or explain facts which it is in that party’s power to explain or deny “gives a colour to the other evidence against him”: per Baron Alderson, Boyle v Wiseman (1855) 10 Exch. 647 at 651; 156 E.R. 598 at 600. As Rich J. said in Insurance Commissioner v Joyce (1948) 77 C.L.R. 39
at 49:
[W]hen circumstances are proved indicating a conclusion and the only party who can give direct evidence of the matter prefers the well of the court to the witness box
a court is entitled to be bold.”
Finally, I refer to United Group Resources Pty Ltd v Calabro (No 5) [2011] FCA 1408, where McKerracher J said at [72]:
“The applicants and the ABCC submit that in this case, in which the civil standard applies, ‘you need only circumstances raising a more probable inference in favour of what is alleged’ (Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1 (at 5)). A fact may be proved by inference if according to common experience the fact is the more probable inference from the unexplained primary facts (Bradshaw (at 6)). Certainty is never possible, and is not required (Transport Industries Insurance Co Ltd
v Longmuir [1997] 1 VR 125 (at 141)); all that is necessary
is that ‘circumstances are proved in which it is reasonable
to find a balance of probabilities in favour of the conclusions sought’ (Bradshaw (at 5)). For the purpose of considering whether this test is met the Court must ‘consider
the accumulation of the evidence’ (Chamberlain v The Queen (No 2) (1984) 153 CLR 521 (at 535)). It is appropriate ‘not only to evaluate each of the factual contentions separately but also
to form an appreciation of the overall effect of the whole of the evidence’ (Clay v Clay (1999) 20 WAR 427 (at 55)),
by considering ‘the weight which is to be given to the united force of all the circumstances put together’ (Belhaven and Stenton Peerage [1875] 1 App. Cas 278 (at 279)). The Court may draw an inference from a combination of intermediate facts, even if none of them in isolation would support the inference (Chamberlain (at 536)). It also means that:
[a] true picture is to be derived from an accumulation
of detail. The overall effect of the detailed picture
can sometimes be best appreciated by standing back
and viewing it from a distance, making an informed, considered, qualitative appreciation of the whole.
The overall effect of the detail is not necessarily the same
as the sum total of the individual details. (Longmuir
(at 141)).
The overall effect can be a product of primary facts that
are combined like ‘strands in a cable’ (Seltsam (at [90])).”
Counsel for the first and second respondents drew the Court’s attention to authorities said to require a purposive element in various contraventions, including, in particular, “the making use of”
(see Commissioner for Corporate Affairs v Green (1978) VR 505
at p.510 and p.512-515).
Counsel also dealt with accessorial liability alleged against the second respondent and referred to Fair Work Ombudsman v Devine Marine Group Pty Ltd [2014] FCA 1365 at [176] and following, where White J said:
“176. Although the general principles relating to accessorial liability are settled, their application in a case such
as the present is not without difficulty. In order to aid, abet, counsel or procure the relevant contravention, the person must intentionally participate in the contravention with the requisite intention: Yorke v Lucas (1984) 158 CLR 661 at 667. In order to have the requisite intention, the person must have knowledge of “the essential matters” which go to make up the events, whether or not the person knows that those matters amount
to a crime: Yorke v Lucas at 667. Although it is necessary
for the person to be an intentional participant and to have knowledge of the matters or things constituting
the contravention, it is not necessary for the person to know those matters or things do constitute a contravention: Rural Press Ltd v Australian Competition and Consumer Commission [2002] FCAFC 213; (2002) 118 FCR 236 at [159]-[160]. That is to say, it is not necessary that the accessory should appreciate that the conduct in question is unlawful. The Full Court
in Rafferty v Madgwicks [2012] FCAFC 37; (2012) 287 ALR 437 summarised the position in this respect at [254]:
[W]hile the identification of the elements of a contravention requires careful legal analysis, “[i]n order to know
the essential facts, and thus satisfy s 75B(1) … and like provisions, it is not necessary to know those facts
are capable of characterisation in the language of the statute” … This is another aspect of the longstanding principle that it is not necessary for a person to “recognise” the contravention as such, or explicitly to think about
the relevant legislation that their actions may contravene …
177. Actual, rather than imputed, knowledge is required.
So much was made clear in Giorgianni v The Queen (1985) 156 CLR 473 at 506-7 by Wilson, Deane and Dawson JJ:
… [Offences of aiding and abetting and counselling
and procuring] require intentional participation in a crime by lending assistance or encouragement. They do not,
of course, require knowledge of the law and it is necessary to distinguish between knowledge of or belief in the existence of facts which constitute a criminal offence
and knowledge or belief that those facts are made a criminal offence under the law. The necessary intent is absent
if the person alleged to be a secondary participant does not know or believe that what he is assisting or encouraging
is something which goes to make up the facts which constitute the commission of the relevant criminal offence. He need not recognise the criminal offence as such,
but his participation must be intentionally aimed at the commission of the acts which constitute it. It is not sufficient if his knowledge or belief extends only to the possibility or even probability that the acts which
he is assisting or encouraging are such, whether he realises it or not, as to constitute the factual ingredients of a crime. If that were sufficient, a person might be guilty of aiding, abetting, counselling or procuring the commission
of an offence which formed no part of his design. Intent
is required and it is an intent which must be based upon knowledge or belief of the necessary facts …
178. The notion of being “knowingly concerned”
in a contravention has a different emphasis from that of aiding, abetting, counselling or procuring a contravention. To be knowingly concerned in a contravention, the person must have engaged in some act or conduct which implicates or involves him or her in the contravention so that there can be a “practical connection between” the person and the contravention.” (authorities omitted).
Counsel for the third respondent referred to Yorke v Lucas and Madgwicks. In order to ground accessorial liability, it was submitted that the conduct must be intentional and the alleged contravenor must have knowledge of the essential facts. Constructive knowledge
is not enough.
I will return to the submissions made about individual aspects
of the matters in dispute in due course, but these submissions traverse, for present purposes, the submissions the parties made about the state of the law to be applied.
At the end of this somewhat lengthy and turgid recitation, I come
at last to the matters the Court is required to determine.
Was the third respondent involved in the contravention of the civil penalty provisions constituted by the unauthorised deductions of the administration fee and the meals allowances?
It should be remembered, again, that the first and second respondents expressly admit their own involvement in such a contravention,
albeit subject to certain qualifications.
The third respondent does not admit that the first respondent contravened the FW Act in respect of the administration fee and
the meal deductions. That non-admission, while clearly open
to the third respondent, is, in my view, somewhat misguided. The first and second respondents have, admittedly in a slightly qualified way, clearly admitted that the administration fee and the meal deductions were unlawful and constituted a contravention by each of them
of s.323(1)(a) of the FW Act. In the circumstances, the finding
as against the third respondent that the first respondent so contravened is completely inevitable.
The question then becomes whether the third respondent was involved in the contravention within the meaning ascribed to that phrase in s.550 of the FW Act. It should be remembered that the terms of s.550(2)
are broadly drawn and include, in subsection 2(c) “has been in any way, by act or omission, directly or indirectly, knowingly concerned
in or party to the contravention.”It will be remembered in his Defence the third respondent admits that he knew generically that employees were paid weekly and some may have been cleaners (paragraph 7(a)(i) Defence). The third respondent admits that the first respondent used a payroll software package to process pays to the class of cleaners called FastTrack (paragraph 7(a)(ii) Defence).
The third respondent denies the allegation that the first respondent issued payslips to the employees that were generated by the FastTrack system and further pleads that he does not have responsibility
for issuing payslips (paragraph 7(a)(iii) Defence). The third respondent repeats the same pleading in relation to the assertion in paragraph 7(a)(iv) of the amended Statement of Claim that the FastTrack software system records information about the gross amounts earned by
and the net amounts paid to employees in relation to the performance of work.
Noteworthily, the third respondent admits that he knew about
the practices and processes for payment of wages to employees, including the deduction of administration fees and meal deductions from employees’ wages (paragraph 7(a)(v) of the Defence.
The third respondent repeats his privilege defence in relation
to paragraph 7(a)(vi) of the amended Statement of Claim.
The third respondent also admits paragraph 6 of the amended Statement of Claim, which is relevantly an assertion that:
“The Third Respondent is and was at all material times employed as the “Occupational Health & Safety and Human Resources
Co-ordinator” of the First Respondent and a member of the First Respondent’s leadership team.”
The third respondent denies the terms of his involvement asserted
in paragraphs 55 to 57 of the amended Statement of Claim and relies, essentially, on penalty privilege.
The times at which it is said that the third respondent was involved
in the contravention relating to the administration fee is from
4 February 2013 until 12 May 2013, and the pay period alleging involvement in the meals deduction is only 24 March 2013.
There is no doubt that the third respondent was the designated point
of contact between the applicant’s various investigative officers from time to time and the first respondent until this role was effectively taken over by lawyers engaged by the first respondent. It is clear from Tab 15 to exhibit AKH-1 that on 8 June 2012 the third respondent
had a phone discussion with FWI Maunsell in which he was told
by FWI Maunsell that the applicant had been approached
about deductions made to numerous casual employees in relation
to meals eaten at Crown, and the third respondent advised
FWI Maunsell that there had been some confusion with some
of the casual employees at the Crown site, so he would investigate.
From Tab 16, to exhibit AKH-1, it is clear that on 19 June 2012
FWI Maunsell wrote to the third respondent stating inter alia
(Court Book page 135):
“As discussed in our telephone conversation on 8 June 2012,
it has been alleged that deductions are being made
to employee’s wages that are unauthorised. The information provided throughout the course of this audit, does not show
any unauthorised deductions being made.
As discussed in our telephone conversation on 19 June 2012,
the Company has confirmed that a full investigation will occur into these allegations to ensure that no unauthorised deductions are made to employee’s wages.”
That letter itself was contemporaneous with a phone call between
the third respondent and FWI Maunsell (Tab 17 to AKH-1) which asserts inter alia:
“… The ER advised that he had a look back through and found that there had been some monies deducted and he
is investigating it at the moment.”
On 29 July 2013, Messrs Baker & McKenzie, who by then were acting for the first respondent, wrote to Ms Hurrell annexing payslips for the pay period 18 March 2013 to 24 March 2013, which show deductions for both the administration fee and meals (AKH-1, Tab 40).
Counsel for the applicant submitted that no further explanation was provided by the respondents thereafter, and I accept that this is so.
It was therefore submitted that the third respondent could be inferred
to have knowledge of deductions in the pay period 24 March 2013 and that, if not, he was wilfully blind.
Counsel for the third respondent, in addition to referring
to the authorities summarised earlier, emphasised that it is necessary for the applicant to prove that the third respondent had knowledge
of the essential facts that constituted the contravention of the FW Act. Constructive knowledge, it was submitted, is not enough, and it was submitted that although the third respondent dealt with the applicant, this did not prove knowledge of the various contraventions
of the legislation. It was further submitted that the awareness of meal deductions pleaded in paragraph 55B of the amended Statement
of Claim, if made out, was not sufficient to establish knowledge
on the part of the third respondent. It was submitted there was
no evidence the third respondent was providing instructions to anyone.
So far as it was put that the administration fee was known to the third respondent from 4 February 2013 to 12 May 2013, counsel submitted that nothing was put to Mr Linossi at the meeting on 4 February 2013.
So far as it was pleaded that the third respondent was the person
with authority to produce the actual payment records, as alleged
in paragraph 55D, counsel submitted that this authority was not enough to establish knowledge of the contraventions.
Insofar as the applicant sought to rely upon the third respondent’s earlier dealings with the Fair Work Infoline (see paragraphs 125 to 148 of FWI Hurrell’s Affidavit affirmed 13 July 2015), counsel submitted that such contact as that was was at the time of the introduction
of Modern Awards in 2010, the conduct in which the third respondent was involved was limited as to both meals and the deduction of the administration fee, and took place well after the inquiries made by the third respondent in 2010.
There is no question that the Affidavit of FWI Hurrell establishes
that the third respondent contacted the Fair Work Infoline on a number of occasions between 11 January 2010 and 18 June 2012. The contrary was not, I think, suggested. It is not necessary to traverse the analysis of Mr Linossi’s calls as set out in FWI Hurrell’s Affidavit.
It is sufficient to say, however, that it is apparent that the third respondent was heavily involved in the details surrounding the rates
of pay to employees of the first respondent.
Even accepting, as I do, that Mr Linossi was a silent figure
at the meeting on 4 February 2013, FWI Ma’s evidence establishes quite clearly, to my mind, that the third respondent did indeed know from that date, if not earlier, of the deductions being asserted
by the Fair Work Ombudsman. If he professes not to have understood this, he must indeed have been wilfully blind.
Similarly, I do not accept that the third respondent’s role in the provision of the actual payment records, and for that matter the first payment records, can be put as wholly facultative and administrative. These were matters in respect of which the third respondent well knew, he being the primary point of contact, were under active investigation by the applicant. It is far more probable than otherwise that he knew all about it, given his role both in terms of his position of employment and as a contact with the applicant.
The third respondent has not actively propounded any hypothesis consistent with the result he desires. He has not given evidence.
As indicated by Rich J, in these circumstances the Court is entitled
to be somewhat more bold than would otherwise be the case. Taken
as a whole, in my view, the evidence does establish that it is more probable than otherwise that the third respondent was well aware
of the contraventions of the first and second respondent in relation
to the administration fee deductions and meal deductions alleged against him. He was aware that the deductions were being made.
He had knowledge of this, as I find. He knew that the deductions
were not lawful from his interrelationship with the Fair Work Inspectors he had met in 2012 and 2013. He thus had knowledge
of the constituent parts of the contravention, albeit that he may not have known which section of the FW Act, if any, was capable of being contravened. This state of knowledge, in my view, is sufficient,
if nothing else, to constitute involvement within the meaning
of s.550(2)(c) of the FW Act. A person who knows of the contravention and takes no steps to correct it is clearly in some way,
at least indirectly, a person who has “in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention.”
The alleged contraventions of the records regulations
On the evidence as it stands, it is clear that when the first respondent was first asked to produce the relevant wages records, it produced a set of records that were false. The first payment records did not record
the administration fee deductions and did not record the meal deductions. The true records (the actual payment records) ultimately provided did have these records. It is therefore inevitably the case
that the records first provided were false and misleading. These documents were clearly provided by Mr Linossi (see Tabs 4 and 5
to exhibit AKH-1). They were clearly provided by the first respondent, even though the initial request for information was sent to Oz Staff
Pty Ltd.
The assertion that the first payment records were false and/or misleading is expressly admitted by the first respondent at paragraph 39(b) of the Defence of the first respondent.
The amended Statement of Claim asserts that the state of knowledge
of the first respondent is taken pursuant to s.793 of the FW Act to have the state of mind of the second and third respondent in relation
to conduct by each of them that was within their scope of their respective, actual or apparent authority. Although this matter
is not admitted and, indeed, is the subject of the penalty privilege pleading by the second and third respondents, so far as the first respondent is concerned, it is neither here nor there, as the first respondent admits the contravention.
The real question is the state of knowledge of the second respondent and third respondent.
I accept the submissions of the applicant that the second respondent was at all relevant times in total control of the first respondent. There are no other directors, and one way or the other, the corporate structure of the first respondent makes it clear that it was wholly the creature
of the second respondent.
The evidence of FWI Ma, not relevantly damaged in cross-examination, was that at the meeting on 4 February 2013 the second respondent
was well aware of the administration fee deduction. He asserted it was not an illegal deduction and gave reasons why it might be contained
on the employees’ payslips. He also confirmed the meal deductions and said that these would be stopping shortly.
Given the production of the false payment records, and given
the position that the second respondent occupied with the first respondent, it is clear in my view beyond doubt that the second respondent was knowingly involved with the contravention
in the provision of false and misleading pay records. I do not accept, as counsel for the second respondent submitted, that the contraventions themselves are not proved, nor that there is no evidence sufficient
to establish accessorial liability. Counsel submitted that there
was no evidence that the second respondent had any knowledge of the content of the first payment records. I do not accept that submission. The second respondent actively asserted to FWI Ma and FWI Edwards that the deductions were made so that employees could claim their various payments against their tax.
So far as the third respondent is concerned, I have already dealt with his state of knowledge of the affairs of the company. Once again,
I simply do not accept that the person running the Human Resources activities of the first respondent and intimately involved, as he clearly was, with Award matters was not aware not only that the deductions were being made but that the records which were forwarded
to the applicant not showing those deductions were false
and misleading. He was clearly involved within the meaning of s.550 of the FW Act.
The breach of FW Regulations by alteration of records
The evidence of Mr Quirk was clear. The first payment records could not have been produced by using the FastTrack system in a proper way.
Counsel for the second respondent submitted that this could have occurred for any number of reasons, including simple human error.
He submitted that there was no evidence as to how the records came
to be incorrect. Counsel said that the first set of documents could
be error, stupidity or worse.
I do not accept this submission, either. The reality is that it is far more probable than otherwise that these records were altered by the first respondent’s officers. They were provided to the applicant in response to an audit. As I have already found, they were known to be false at the time, and correct records were subsequently produced. It follows inevitably that these were altered by the first respondent and I have already found that the second respondent’s state of control of the first respondent means that it is more probable than otherwise that he was knowingly involved in the matter.
The same, once again, can be said of the third respondent. It is not necessary to re-traverse his involvement with the matter.
The making use of the records
The first respondent provided the first payment records to the applicant, as I find, knowing they were false and misleading. My conclusion can be stated shortly. This was plainly putting the documents to a use, and it plainly contravened reg.3.44(6).
For the reasons already traversed in relation to both the second and third respondents, I find they were knowingly concerned in the contraventions.
The second respondent’s prior history
I am buttressed in all these conclusions in relation to the second respondent by the admissible material, (see my ex tempore ruling 4 November 2015), set out in the Affidavit of FWI Hurrell, which shows a number of past complaints against the first and second respondents. These go to suggest a familiarity with industrial practice inconsistent with the position for which the second respondent now contends.
Conclusion
This judgment has been as laborious to create as it will doubtless be to read. The somewhat confusing way in which the matter was pleaded has made it difficult to distrain where the true controversy between the parties lies.
Nonetheless, I have arrived at the conclusions expressed above. The position contended for by the applicant has been successful in every respect, and it will be appropriate to give the parties an opportunity to consider these reasons for judgment and hear submissions as to the future conduct of the matter. I have prepared draft declarations as sought by the applicant, as these seem beyond argument. The Orders sought may require (and in the case of penalties will require) further consideration.
I certify that the preceding one hundred and sixty-seven (167) paragraphs are a true copy of the reasons for judgment of Judge Burchardt.
Associate:
Date: 12 February 2016
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