Fair Work Ombudsman v Pacific Security Services Pty Ltd - [2021] FedCFamC2G 111

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Pacific Security Services Pty Ltd [2021] FedCFamC2G 111

File number(s): MLG 3795 of 2020

Judgment of: JUDGE BLAKE

Date of judgment: 6 October 2021

Catchwords:
INDUSTRIAL LAW – Fair Work Act 2009 (Cth) ¬ failure to comply with Compliance Notice issued under section 716 of the Fair Work Act 2009 ¬ Respondent contended that Compliance Notice not validly issued because the inspector could not hold a reasonable belief as to whether the Respondent or another entity engaged the complainant - what factors lead to the formation of a reasonable belief under section 716 of the Fair Work Act 2009.

INDUSTRIAL LAW – Respondents contended Applicant did not have regard to all ascertainable evidence when forming a reasonable belief ¬ Respondents produced evidence to the Court that they had not produced to the Applicant prior to her forming her belief ¬ in the circumstances of this case, no regard should be had to evidence the Respondents did not disclose to the Applicant prior to her forming her belief to issue the compliance notice. Further, whether Inspector’s failure to issue a Notice to Produce to a third party meant she failed to undertake proper inquires leading to a conclusion a that her belief may not have been reasonably held ¬ contention rejected in the circumstances of the case ¬ the failure to issue the Notice to Produce was a significant issue, but does not alter the outcome because documents were obtained from the third party and placed before the Court by another means.

INDUSTRIAL LAW ¬ Court satisfied on the evidence that the Applicant’s belief was reasonable. Notice valid. Further, no reasonable excuse for failing to comply with the Notice to Produce ¬ Court making declaration the Respondent contravened the Act ¬ matter to be set down for penalty hearing.

Legislation:
Fair Work Act 2009 (Cth) ss 545(1), 547(2), 700, 716, 717

Security Services Industry Award 2010 (Cth) cl 10.5, 14.1, 15.1, 22.3

Cases cited:
Fair Work Ombudsman v Joys Child Care Ltd & Anor (No 2) [2020] FCCA 2326

George v Rockett (1990) 170 CLR 104

Hindu Society of Victoria (Australia) Inc v Fair Work Ombudsman [2016] FCCA 221

Potter v Fair Work Ombudsman [2014] FCA 187

Division: Division 2 General Federal Law

Number of paragraphs: 111

Date of last submission/s: 25 June 2021

Date of hearing: 13 & 14 May 2021

Counsel for the Applicant: Ms Campbell

Solicitor for the Applicant: Australian Government Solicitor

Counsel for the Respondent: Mr McKenny

Solicitor for the Respondent: Wisewould Mahony
ORDERS

MLG 3795 of 2020

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

BETWEEN: FAIR WORK OMBUDSMAN
Applicant

AND:

PACIFIC SECURITY SERVICES PTY LTD
Respondent

ORDER MADE BY:

JUDGE BLAKE

DATE OF ORDER:

6 OCTOBER 2021

THE COURT DECLARES THAT:
1.The Respondent contravened section 716(5) of the Fair Work Act 2009 (‘FW Act’) by failing to comply with the Compliance Notice.

THE COURT ORDERS THAT:
2.Pursuant to section 545(1) of the FW Act, the Respondent take the steps that were required by the Compliance Notice within 28 days from the date of this order, by:
(i)calculating and paying to the Applicant, on behalf of Mr Taj, the outstanding entitlements it was required to pay to Mr Taj (Outstanding Entitlements) in respect of the Contraventions;
(ii)calculating and paying superannuation contributions into Mr Taj’s nominated superannuation fund, or a superannuation fund as provided for by the Award, for any additional superannuation contributions it was required to pay under clause 20 of the Security Services Industry Award 2010 (“Award”) (Outstanding Superannuation) in respect of the Outstanding Entitlements; and
(iii)preparing, and producing to the Applicant, a schedule outlining its calculation of the Outstanding Entitlements and Outstanding Superannuation, and providing evidence to the Applicant that the Outstanding Entitlements and Outstanding Superannuation were rectified as set out in paragraphs 2(i) and 2(ii) above.

3.Pursuant to section 547(2) of the FW Act, that the Respondent pay interest calculated in accordance with the applicable pre-judgment interest rates prescribed by the Federal Court of Australia, on:
(i)the Outstanding Entitlement amount ordered to be paid pursuant to paragraph 2(i) to the Applicant, on behalf of Mr Taj, within 28 days of this order; and
(ii)the Outstanding Superannuation amount ordered to be paid pursuant to paragraph 2(ii) above, to Mr Taj’s nominated superannuation fund within 28 days of this order.

4.The Applicant distribute to Mr Taj the amounts paid pursuant to paragraphs 2(i) and 2(i) above within 180 days of the payment being made.
5.The parties submit a minute of proposed orders by consent within 21 days setting out directions for the filing of material for the conduct of a penalty hearing, and are to inform the Court of the estimated duration of any penalty hearing.

Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE BLAKE:

This is an Application by the Fair Work Ombudsman (‘Applicant’). The Applicant seeks, among other things, a declaration that Pacific Security Services Pty Ltd (‘Respondent’) has contravened section 716(5) of the Fair Work Act 2009 (‘Act’) by failing to comply with a Compliance Notice dated 24 February 2020 issued under section 716(2) of the Act (‘Compliance Notice’). Consequential orders are also sought by the Applicant under sections 545(1) and 547(2) of the Act, as well as orders for the imposition of pecuniary penalties under section 546 of the Act.
The Respondent concedes that it did not comply with the Compliance Notice. It submits, however, that for various reasons that I will come to, the Application should be dismissed.
For the reasons that follow, I have decided the Respondent has failed to comply with the Compliance Notice.
FACTUAL BACKGROUND
Ms Samantha Rowe (“Inspector Rowe”) is a Fair Work Inspector appointed under section 700 of the Act.
On 6 May 2019, the Applicant received a request for assistance from Kamran Taj. Mr Taj complained about his employment by an organisation known as Knight Watch Security Services Pty Ltd trading as Bluestar Security Services (Bluestar).
The Applicant commenced an investigation in relation to the complaint received from Mr Taj. Ultimately, Inspector Rowe formed the belief that the Respondent was the employer of Mr Taj, and further that Mr Taj was not an independent contractor. Whether that belief was reasonably held by Inspector Rowe is a matter of dispute. For present purposes, it is sufficient to record that Inspector Rowe formed the belief that Mr Taj’s employment was covered by the Security Services Industry Award 2010 (‘Award’) and that Mr Taj had been underpaid the following entitlements pursuant to the Award: minimum wages (clause 14.1 of the Award); casual loading (clause 10.5 of the Award); weekend penalty rates (clause 22.3 of the Award); night shift penalty rates (clause 22.3 of the Award); public holiday penalty rates (clause 22.3 of the Award) and vehicle allowances (clause 15.1 of the Award).
On 24 February 2020, Inspector Rowe gave the Compliance Notice to the Respondent. The Respondent admits it received the Compliance Notice.
The Compliance Notice, among other things, required the Respondent to calculate and rectify the effects of the contraventions of the Award identified by Inspector Rowe.
The Respondent did not comply with the Compliance Notice. Nor did it make any payment to Mr Taj as requested.
The Respondent did not seek to review the Compliance Notice under the procedure set out in section 717 of the Act.
Subsequent to the events above, and in the course of preparing for these proceedings, the Respondent produced a document entitled ‘Agency Agreement between Pacific Security Services Pty Ltd and Subcontractor’ (‘Agency Agreement’). The Agency Agreement is purportedly an agreement between the Respondent and Mr Taj under which, inter alia, Mr Taj agreed to provide services to the Respondent as an ‘independent contractor’.
ISSUES IN DISPUTE
There is not any dispute that Inspector Rowe had standing to issue the Compliance Notice, that the Compliance Notice was issued in its correct form, or that the Compliance Notice required the Respondent to undertake certain tasks. It is not in dispute that the Compliance Notice was not complied with by the Respondent. The Respondent accepted that if its submissions outlined below were not accepted by the Court, the outcome is that the Respondent has failed to comply with the Compliance Notice as contemplated by section 716(5) of the Act.
The Respondent contends that while Inspector Rowe may have had a belief that Mr Taj was employed by the Respondent and was owed various employment entitlements, that belief was not one that was ‘reasonable’ in the circumstances. The Respondent submits that section 716(1) of the Act has therefore not been satisfied and the Compliance Notice has not been validly issued. Further, the Respondent contends that it had a ‘reasonable excuse’ for not complying with the Compliance Notice as contemplated by section 716(6) of the Act. The factual basis underpinning the Respondent’s submissions is as follows. It contends that Mr Taj is properly to be regarded as an independent contractor either of the Respondent or of Bluestar. At the very least, it is contended by the Respondent that Inspector Rowe could not have reasonably believed that Mr Taj was an employee of the Respondent in the circumstances of the matter and further, that the surrounding circumstances mean the Respondent had a ‘reasonable excuse’ for not complying with the Compliance Notice.
In addition to any order that the Compliance Notice was invalid or of no legal effect, the Respondent sought that the Court make a finding that Mr Taj was an independent contractor of either the Respondent, or of Bluestar.
Accordingly, the issues before the Court are as follows:
(a)whether, for the purposes of section 716(1) of the Act, Inspector Rowe reasonably believed that the Respondent had contravened the terms of the Award;
(b)whether, for the purpose of section 716(6) of the Act, the Respondent had a reasonable excuse for failing to comply with the Compliance Notice;
(c)whether the Court should make a finding and orders that Mr Taj is an independent contractor of the Respondent or, alternatively, Bluestar;
(d)whether the Court should make a finding and orders that if Mr Taj is an employee, he is an employee of the Respondent or, alternatively, Bluestar.
THE POSITION OF THE PARTIES
Each of the parties filed extensive written submissions. An outline of submissions was received by the Court from each party (including a reply from the Applicant) prior to the hearing. Extensive written closing submissions were also received from each party (including a reply from the Applicant). The Applicant relied on affidavit and oral evidence from Mr Taj and Inspector Rowe. The Respondents relied on affidavit and oral evidence from Mr Kerala Kumaran Chanasery Krishnan, a Director of the Respondent (I will refer to him as ‘Mr Chanasery’, though in the evidence, he is sometimes referred to as ‘Kumar’), and Ms Tooba Khalliqy, a solicitor in the employ of the law firm representing the Respondent. Each party also tendered documents into evidence.
The Applicant submits that the issue the Court must determine is whether Inspector Rowe held a reasonable belief at the time that she issued the Compliance Notice to the Respondent, that the Respondent had contravened the Act.
The Respondent accepts that the Court must determine whether Inspector Rowe held a reasonable belief, but says there are three questions or issues that are corollaries to that consideration. These are said to be first, whether Mr Taj was an employee or subcontractor; second if Mr Taj was a subcontractor, whether he was a subcontractor of the Respondent or Bluestar; third if Mr Taj was an employee, whether he was an employee of the Respondent or Bluestar. The Respondent submits that it is necessary for the Court to determine these issues, and indeed make declarations about those issues, in order to reach a conclusion as to whether Inspector Rowe could reasonably hold the belief as contemplated by section 716(1) of the Act.
A feature of the Respondent’s case is its submission that Inspector Rowe failed to consider all relevant factors, and that her inquiries were deficient. It was submitted, inter-alia, that Inspector Rowe could not have formed a reasonable belief as required by section 716 (1) when she did not make proper inquiries and failed to consider all of the evidence. In this respect, the Respondent produced to the Court documentary and other evidence which were not before the Inspector, and asked the Court to consider that material, along with other evidence, to draw the conclusion that the belief held by Inspector Rowe was not reasonable.
The Applicant for its part submitted that it was not necessary for the Court to determine whether Mr Taj was an employee or subcontractor of either the Respondent or Bluestar. The Applicant submitted that the Court’s attention should be directed to, inter-alia, whether Inspector Rowe reasonably held a belief that the Respondent had contravened the Act at the time she issued the Compliance Notice. To that extent, it was submitted by the Applicant in determining whether Inspector Rowe held the relevant reasonable belief, that the Court needs to focus on the evidence before Inspector Rowe at the time she formed her belief, and not evidence that was not before her. It also submitted that there was no evidence that Inspector Rowe failed to consider material that was before her.
In order to resolve these matters, it is now necessary to turn to the evidence in the case and in particular the evidence of Inspector Rowe.
THE WITNESS EVIDENCE
The evidence before Inspector Rowe at the time she issued the Compliance Notice
Upon receiving the complaint from Mr Taj, officers engaged by the Applicant commenced a range of inquiries. These are summarised below.
Mr Taj provided a range of information to the offices of the Applicant at the time, or shortly after, making his complaint. That information included email correspondence, text messages, certificates, invoices, bank statements, leave forms, and identification cards. The information provided is described in greater detail below.
Annexed to Inspector Rowe’s affidavit was a range of material that Mr Taj provided for the purpose of the investigation. That material discloses, among other things, the following:
(a)Mr Taj communicated with Esther Palmer from ‘Pacific Security Services rostering team’ in connection with his work locations, roster, and induction;
(b)The involvement of Bluestar in the arrangements with Mr Taj, for example, an email from ‘Bluestar Security’ to ‘Esther’ dated 9 April 2018 requesting information to enter Mr Taj’s details into the Smartek Epworth Compliance System; an email between Karen Xuereb at Bluestar Security and Esther dated 9 April 2018 passing on information regarding guarding arrangements being handled by Brad Clarke, an Administration Manager, at Bluestar Security; an email from Ms Palmer dated 29 May 2018 passing on information from ‘Kumar and Bluestar head office’ concerning arrangements for the Eid and Ramadan festivals; a form dated 10 January 2019 entitled ‘Bluestar Counselling and Discipline Form’ that records a final warning given to Mr Taj for using a mobile device on shift; and leave record or application forms for Mr Taj that carry the logo of ‘Bluestar Security’;
(c)an email from Ms Palmer to all guards asking that they keep their phones switched on 24 hours dated 2 May 2018,
(d)an email dated 3 May 2018 between Mr Taj, Ms Palmer and Mr Graeme Head, Victoria Operations Manager for Bluestar, regarding a uniform for Mr Taj;
(e)An email from Ms Palmer dated 28 May 2018 addressed to ‘our security team’ advising that there was a search for new Security officers and asking recipients of the email to send any resume to the email address [email protected];
(f)an email from Ms Palmer to Mr Taj dated 6 June 2018 advising him that leave had been authorised;
(g)an email from Ms Palmer dated 7 June 2018 on behalf of ‘Kumar and management’ advising of new pay rates for security guards;
(h)an email from Ms Palmer copied to Mr Chanasery dated 7 September 2018 advising that the company does not tolerate shift changes or days off;
(i)an email from Ms Palmer dated 11 September 2018 advising that annual leave would not be accepted for December;
(j)an email from Ms Palmer dated 12 November 2018 to all Security officers regarding the use of mobile phones and other devices and stating that ‘you are an ambassador for Bluestar Security’;
(k)emails between Mr Palmer and Mr Taj on around 16 - 17 November 2018 regarding attendance at a compulsory training session;
(l)an email from Ms Palmer dated 22 May 2019 informing Mr Taj to let her know if he does not get paid because sometimes ‘Kumar doesn’t pay on time’;
(m)screenshots of text messages between Mr Taj and the rostering manager of the Respondent. Some of the messages come from ‘Karrie’ but also carry the words ‘Esther Roster’;
(n)invoices from Mr Taj for hours worked;
(o)Mr Taj’s bank statements showing payments made to his account (I observe that it is not clear from the bank account statements alone which entity made the payments to Mr Taj in respect of his work);
(p)Mr Taj’s Smartek Health identification card which identifies under his name, the company as being ‘Bluestar Security Services’.
Mr Taj in his communications with the Applicant was asked which entity hired him. In an email dated 15 September 2019, he advised the Applicant that ‘BLUESTAR hired me, as my interview for job happens at their office and later I went Bluestar office for meeting. We got everything from Bluestar and we were reporting to Manager Graeme Head (Bluestar’s direct employee)’.
It is also pertinent to note that on 28 May 2019, Mr Taj was interviewed by Inspector Shacklock from the Applicant’s office. In that interview, Mr Taj confirmed that his complaint in relation to work related to his performance of work with ‘Knight Watch Security’ (Bluestar). He also gave information on a range of other matters, including that his uniforms bore the Bluestar logo, and that the email address that he was communicating with in relation to work was ‘[email protected]’, and the Bluestar disciplinary form. He provided a range of information about the arrangements for his work and also answered questions relating to whether he was conducting a business.
Inquiries were also made by the Applicant of the Respondent. An interview was sought with Mr Chanasery, however he declined to participate. Notices to produce documents were also sent to the Respondent. Pursuant to those Notices, the Respondent produced a range of documentation including text messages, a written warning given to Mr Taj regarding mobile phone use, invoices for payments issued to Mr Taj, correspondence between Bluestar and Mr Chanasery regarding a period of leave Mr Taj was due to take, emails regarding shifts to be worked, Mr Taj’s security license and resume, and Mr Taj’s resignation email.

Subsequently, on 4 September 2019, Inspector Rowe made inquiries of Bluestar to request records or documents relating to which business entity engaged Mr Taj. In response to those inquiries, Inspector Rowe received an email from Mr Davernaris, a Director of Bluestar advising that it did not have any record of Mr Taj on its sites. A Notice to Produce was never issued to Bluestar by the Applicant.
It is apparent from what is set out above that in forming her belief in order to issue the Compliance Notice, Inspector Rowe relied principally upon information provided by Mr Taj and documentary evidence provided by the Respondent.
It is also apparent from the evidence of Inspector Rowe that she was cognisant of two important issues prior to and at the time she came to form her belief. The first was whether Mr Taj was an employee or contractor. The second was the identity of the entity that engaged Mr Taj.
Insofar as the first issue above is concerned, in her evidence, Inspector Rowe deposed to considering and weighing a range of factors in order to form a belief as to whether Mr Taj was an employee or contractor. The matters taken into account by Inspector Rowe in forming her belief as to whether Mr Taj was an employee or independent contractor included the following:
(a)Mr Taj initially meeting with Mr Chanasery, undertaking induction with him, that there were no discussions between Mr Taj and Mr Chanasery as to whether Mr Taj would be an independent contractor nor was there any discussion that Mr Taj would operate his own business, pay his own superannuation or make arrangements for workers compensation. These were factors that Inspector Rowe regarded as being supportive of Mr Taj being an employee;
(b)there was an expectation that Mr Taj would perform work for a long period which Inspector Rowe regarded as being supportive of Mr Taj being an employee;
(c)the directions of Esther Palmer to Mr Taj regarding leave, shift swapping and when and where Mr Taj was required to work. The directions given by Ms Palmer to Mr Taj emanated from an email address entitled ‘[email protected]’. Inspector Rowe considered this information as being supportive of Mr Taj being an employee;
(d)the length of the period that Mr Taj worked being 15 November 2017 to 19 May 2019 with regular rostered shifts, which Inspector Rowe regarded as being supportive of Mr Taj being an employee;
(e)Mr Taj’s placing of an ABN on invoices, which Inspector Rowe regarded as supportive of a conclusion that Mr Taj was an independent contractor;
(f)the absence of a written contract governing Mr Taj’s work which Inspector Rowe regarded as being a neutral factor;
(g)the nature of the work in which no qualifications or experience were necessary, the provision to Mr Taj of induction and training, and the requirement upon Mr Taj to have a license and working with children check, which Inspector Rowe regarded as being supportive of the conclusion that Mr Taj was an employee;
(h)Mr Taj being unable to choose his location of work, which Inspector Rowe regarded as being supportive of the conclusion that Mr Taj was an employee;
(i)the provision of a uniform to Mr Taj (branded with a Bluestar logo) which he was not required to pay for, which Inspector Rowe regarded as being supportive of the conclusion that Mr Taj was an employee;
(j)the Respondent not providing equipment for use on site, and Mr Taj sometimes using his own mobile phone and his own vehicle, and bearing his own vehicle costs, which Inspector Rowe regarded as being a neutral indicator of Mr Taj’s status;
(k)Mr Taj’s hours of work which were recorded on timesheets or electronic sign in systems, which Inspector Rowe regarded as being supportive of the conclusion that Mr Taj was an employee;
(l)the right to direct and control work, which Inspector Rowe considered as being supportive of a conclusion that Mr Taj was an employee. The evidence considered by Inspector Rowe to support this conclusion included the warning given to Mr Taj by Ms Palmer and Mr Chanasery, the emails to Mr Taj regarding leave, use of phones and other devices, the provision of uniforms and meal breaks and an offer of counselling to Mr Taj;
(m)Mr Taj not having the ability to subcontract or delegate his work, however being able to swap shifts with other guards with approval from Ms Palmer, which Inspector Rowe regarded as being supportive of the conclusion that Mr Taj was an employee;
(n)Mr Taj was free to perform work for others , which Inspector Rowe considered as supportive of the conclusion that Mr Taj was an independent contractor;
(o)Mr Taj not having any entitlements to leave, but being required to request leave when he wanted to be absent from work, which Inspector Rowe regarded as a being weakly supportive of a conclusion that Mr Taj was an independent contractor. I observe on this point that there was also evidence before Inspector Rowe that Mr Taj was forbidden to take leave during certain religious holidays and also on certain Fridays;
(p)Mr Taj being required to submit invoices for his work, and being paid by reference to time worked rather than task. As a result of this latter matter, Inspector Rowe regarded these matters as being supportive of the conclusion that Mr Taj was an employee;
(q)neither party paying income tax or superannuation, which Inspector Rowe regarded as weakly supportive of the conclusion that Mr Taj was an independent contractor;
(r)Mr Taj being responsible for his own mobile phone and vehicle costs, and the Respondent covering half the cost of parking at Epworth Hospital, which Inspector Rowe regarded as supportive of the conclusion that Mr Taj was an independent contractor;
(s)Mr Taj not having any established business systems and using the Respondent’s timesheets and policies, which Inspector Rowe regarded as supportive a conclusion that Mr Taj was an employee;
(t)the absence of evidence that Mr Taj advertised his services, which Inspector Rowe regarded as supportive of the conclusion that Mr Taj was an employee;
(u)the absence of evidence that Mr Taj created any goodwill which Inspector Rowe regarded as supportive of the conclusion that Mr Taj was an employee;
(v)Mr Taj being engaged in low skilled work, which Inspector Rowe regarded as the supportive of the conclusion that Mr Taj was an employee;
(w)Mr Taj not holding any business related insurance, which Inspector Rowe regarded as supporting of the conclusion that Mr Taj was an employee
Insofar as Inspector Rowe formed a belief that it was the Respondent that employed Mr Taj, her evidence was that she had regard to the following matters in forming the belief that the Respondent and not Bluestar was the entity that engaged Mr Taj: the Respondent was part of the security industry and not a labour hire company; the Respondent had provided induction training to Mr Taj and continued to instruct him throughout his engagement as to how to perform work, there was not any written agreement between Mr Taj and the Respondent or Bluestar, and Bluestar did not have any records of Mr Taj working at their sites. I also observe that there was evidence before Inspector Rowe that the Respondent set the rates of pay payable to Mr Taj and other security guards.
On the basis of what is set out above, Inspector Rowe formed the belief that at all relevant times during the period 15 November 2017 to 19 May 2019, Mr Taj performed work as an employee on a casual basis as a security officer for the Respondent, the work was performed on Saturdays, Sundays and on public holidays and weekdays, that on weekdays Mr Taj performed work between the hours of 6pm and 6am, that Mr Taj used his own motor vehicle in performing his duties, and that the Respondent paid Mr Taj a flat rate of pay for the hours he worked.
Finally, Inspector Rowe gave evidence that she formed a number of other beliefs in relation to the matters that were before her. These included that the Respondent was covered by the Security Services Industry Award 2010 (‘Award’) in respect of its employment of Mr Taj, that Mr Taj was a Level 1 Security Officer under the Award, and that the Respondent had contravened various provisions within the Award in respect of its employment of Mr Taj. It is unnecessary to deal with these matters in any great detail at present in light of the way the parties, and in particular the Respondent, conducted the proceeding.
Inspector Rowe was cross examined about her investigation and the formation of her beliefs. Under cross examination, she:
(a)accepted that her request for documents from Bluestar was a general request;
(b)accepted that she had not issued a Notice to Produce to Bluestar even though she had the power to do so, because she did not think it was necessary,
(c)accepted that Bluestar was in a position to have assisted her to understand the relationship with the Respondent and accepted she could not be certain that Bluestar did not have any records of Mr Taj working at their sites;
(d)accepted generally that relationships between principals and subcontractors required further examination;
(e)stated that she had not seen the Agency Agreement between the Respondent and Mr Taj and that it would have been a relevant document for her to consider (as noted earlier, the Agency Agreement has only been produced in the course of the proceedings);
(f)said she turned her mind to whether Mr Taj was employed by Bluestar, but ruled it out because Bluestar did not pay Mr Taj, engage him or control his employment;
(g)admitted certain leave documents she viewed bore the logo of Bluestar;
(h)considered that control was a significant factor in the application of the multifactor test used to assess whether a person is engaged as an employee or an independent contractor;
(i)accepted there was material before her at the time she formed her belief that showed Bluestar had a degree of control over the guards and that there was evidence of Bluestar giving instructions to the guards, though she also stated there was other evidence regarding Mr Taj’s communications with the Respondent’s rostering team in relation to when and where he worked and the leave he was permitted to take;
(j)accepted that a warning given to Mr Taj was recorded on a Bluestar form and stated that it caused her to consider whether Bluestar might be the employer for Mr Taj, but that she ultimately formed the view that Bluestar did not employ Mr Taj;
(k)stated that she was not required to respond to correspondence from the Respondent’s solicitors after she had formed her belief that the Respondent employed Mr Taj;
(l)accepted that Mr Taj’s Smartek photo identification was an indicator that he worked for Bluestar;
(m)accepted that Mr Taj’s statement in an email to her that he was employed by Bluestar was a statement of significance, and further stated that she gave it weight in her consideration of the matters before her;
(n)accepted that the positions of three persons needed to be considered - Mr Taj, the Respondent and Bluestar - and that the arrangements were potentially complex;
(o)accepted that documents ultimately obtained by the Respondent’s solicitors from Bluestar would have been relevant to the enquiry as to whether Mr Taj was a contractor, but stated that she had asked for the documents, and they were not before her at the time she considered matters;
(p)accepted there were various references to Bluestar in an email from Ms Palmer (Exhibit KT-4);
(q)agreed that she was generally aware there were contractor arrangements between the Respondent and Bluestar;
(r)was aware during her investigation generally of the existence of subcontractor agreements between the Respondent and Bluestar, but not the detail of any particular agreement.
While the beliefs of Inspector Rowe and how she came to hold those views are critical to this matter, it is relevant also to consider the evidence from other witnesses.
Mr Taj gave evidence by video link from Pakistan. His evidence was, among other things, that at the time he approached the Applicant he was under the impression that he was engaged by Bluestar. He also gave evidence, among other things:
(a)of the circumstances of his engagement by Mr Chanasery;
(b)of his attendance at an office in Hallam to collect his uniform which was branded with the Bluestar logo;
(c)that he could not recall being given a written contract and that he had no recollection of signing the Agency Agreement;
(d)of his work arrangements, the rostering arrangements, his requests for leave, the equipment he used or was provided with and the arrangements by which he invoiced for services he performed;
(e)about Ms Palmer assuming the role of roster manager and her email address being ‘[email protected];
(f)the email he received from ‘[email protected]’ advising of his new pay rates applicable in June 2018;
(g)the warning he was given.
Mr Chanasery gave evidence and was cross examined. His evidence was, among other things:
(a)that he registered the Respondent in 2010;
(b)that the Respondent had entered into various subcontractor agreements with Bluestar;
(c)the Respondent generally engaged guards as independent contractors who would then provide security services to Bluestar;
(d)guards engaged by the Respondent were ultimately under the management and control of Bluestar, and he gave examples of that management and control including Bluestar’s requirement to interview and approve candidates, candidates being required to undergo training and induction in accordance with Bluestar’s policy, Bluestar’s provision to successful candidates of Bluestar branded uniforms, Bluestar’s protocols in relation to requests for leave and Bluestar’s ability to terminate the engagement of a security guard;
(e)that he was asked by Bluestar to engage Ms Palmer as the Respondent’s rostering manager in around February 2018 and he agreed to do so, resulting in Ms Palmer being an employee of the Respondent;
(f)the circumstances surrounding the engagement of Mr Taj and the discussions he had with Mr Taj at that time;
(g)of his provision to Mr Taj of an independent contractor agreement between Mr Taj and the Respondent, and his provision to Mr Taj of certain Bluestar policies;
(h)the work arrangements for Mr Taj;
(i)that he had little control over what Ms Palmer communicated to the guards including Mr Taj;
(j)his non-involvement in the warning given to Mr Taj.
The Applicant objected to large parts of the evidence given by Mr Chanasery, largely on relevance and opinion grounds. In particular, objection was taken to evidence concerning the contractual arrangements between the Respondent and Bluestar, evidence about Bluestar’s management and control of the guards, evidence about Mr Chanasery’s discussions with Mr Taj at the time of engagement (aspects of which Mr Taj denied), evidence about the warning given to Mr Taj and evidence about the rates paid by Bluestar. I have considered the evidence but ultimately, for reasons which I expand upon further below, have given it little or no weight.
Ms Khaliqy gave evidence about, among other things:
(a)the correspondence passing between the Respondent and Inspector Rowe;
(b)the Agency Agreement, and attached a copy of the Agency Agreement;
(c)her inquiries of Bluestar for information and documents, and the response received from Bluestar.
The Applicant objected to large parts of the evidence given by Ms Khaliqy on evidence and opinion grounds. I have considered the evidence but ultimately, for reasons which I expand upon further below have given it little or no weight.
DID INSPECTOR ROWE REASONABLY BELIEVE THAT THE RESPONDENT CONTRAVENED THE TERMS OF THE AWARD?
Section 716 of the Act
The outcome of this proceeding turns on the proper construction and application of section 716 of the Act to the circumstances of this case.
Section 716(1) of the Act provides as follows:
(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;
(g)a provision of Part 6‑4C (which deals with the Coronavirus economic response);
(h)a jobkeeper enabling direction (within the meaning of Part 6‑4C);
(i)a provision of an agreement authorised by Part 6‑4C.
Subsections 716(2) – (4B) deal with, among other things, the giving of a Compliance Notice, the content of a Compliance Notice, the relationship between a Compliance Notice and enforceable undertakings, the relationship with civil remedy provisions and whether or not compliance with a Compliance Notice constitutes self-incrimination.
Subsections 716(5) and (6) then provide as follows:
(5) A person must not fail to comply with a notice given under this section.
Note: This subsection is a civil remedy provision (see Part 4‑1).
(6) Subsection (5) does not apply if the person has a reasonable excuse.
It is also relevant to note the terms of section 717 of the Act. That section provides as follows:
(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:
•the person has not committed a contravention set out in the notice;
•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.
No application was made by the Respondent pursuant to section 717 of the Act.
A contravention of section 716(5) of the Act is to be proved by establishing that a Compliance Notice was given and that there is non-compliance. Actual proof of the underlying contraventions of a modern award is not required: see Hindu Society of Victoria (Australia) Inc v Fair Work Ombudsman [2016] FCCA 221.
Insofar as section 716(5) is concerned, the Act does not define ‘reasonable excuse’. A person who seeks to argue that he or she had a ‘reasonable excuse’ for non-compliance with a Compliance Notice bears the onus of proof: see Potter v Fair Work Ombudsman [2014] FCA 187 at [72].
The regime provided for in section 716 of the Act is one that enables efficient rectification of underpayments of wages and entitlements. As Judge Altobelli (as he then was) said in Fair Work Ombudsman v Joys Child Care Ltd & Anor (No 2) [2020] FCCA 2326 at [11]:
A compliance notice issued pursuant to section 716 of the FW Act provides an important statutory mechanism for a Fair Work Inspector to deal with non-compliance with minimum entitlements in the FW Act, as an alternative to commencing litigation for each underlying contravention of an entitlement. The compliance notice framework creates an opportunity for a person to whom it is served to rectify the matters set out in the notice and gain protection from civil remedy proceedings in respect of the underlying contravention(s), thus encouraging efficient and cost effective rectification of contraventions and payment of outstanding employee entitlements. Section 717 of the FW Act also provides a clear mechanism for a recipient of the notice to seek a review of the notice.
(footnotes omitted)

There is then the question of what may constitute ‘reasonably believes’ for the purposes of section 716(1) of the Act. ‘Reasonably believes’ is a term that is not defined in the Act. I was not taken to any authority which has considered the words ‘reasonably believes’ in the context of section 716 of the Act.
In George v Rockett (1990) 170 CLR 104 at 116 (‘Rockett’), the High Court identified features of a belief that may be reasonably held. Rockett was concerned with the question of whether a Magistrate tasked with deciding whether to issue a search warrant had reasonable grounds for believing that a specified thing will afford evidence as to the commission of an offence. The High Court considered the complaint and found it contained no facts which might have satisfied the magistrate sufficient for him to issue the warrant. In so far as to what may be sufficient to ground a belief that may be reasonably held, the High Court stated:
The objective circumstances sufficient to show a reason to believe something need to point more clearly to the subject matter of the belief, but that is not to say that the objective circumstances must establish on the balance of probabilities that the subject matter in fact occurred or exists: the assent of belief is given on more slender evidence than proof. Belief is an inclination of the mind towards assenting to, rather than rejecting, a proposition and the grounds which can reasonably induce that inclination of the mind may, depending on the circumstances, leave something to surmise or conjecture.
The High Court in Rockett also referred to the comments of Lord Atkin in Liversidge v. Anderson (1942) AC 206 and said the following:
When a statute prescribes that there must be "reasonable grounds" for a state of mind - including suspicion and belief - it requires the existence of facts which are sufficient to induce that state of mind in a reasonable person.
Clearly, the comments of the High Court in Rockett were made in circumstances that differ markedly from those that are before me. While that might be the case, given the apparent absence of authority directly on the construction of section 716(1) of the Act, I regard the comments of the High Court as to what might give rise to a belief reasonably held to be instructive.
When the above is considered, the following emerges. The legislative provisions contained within section 716 and 717 of the Act represent a delicate balancing act between competing considerations that are designed to enable efficient rectification of underpayments. An inspector may form a reasonable belief as to contraventions on ‘more slender evidence than proof’ (Rockett) and issue a Compliance Notice. Once the notice is issued, the recipient has a choice. The recipient can seek to comply with the notice. By doing so, the recipient gains the benefits set out in section 716(4B). Or, the recipient can elect to challenge the notice under section 717. A recipient that does neither of these things may be prosecuted for failing to comply with the Compliance Notice, which is itself a breach of a civil remedy provision and may attract the imposition of a pecuniary penalty: section 716(5) and Part 4-1 of the Act.
I have set out the legislative context above because it informs consideration of whether a person may hold a ‘reasonable belief’. Whether a belief is reasonably held is to be assessed by reference to the matters referred to in Rockett and the objective circumstances, including the statutory context. The fact that a person may be subjected to the imposition of a pecuniary penalty for failing to comply with a Compliance Notice in my view should inform or influence (along with other facts) whether a belief is reasonably held for the purposes of section 716(1). In weighing that matter, however, the Court also should be cognisant of and give weight to the fact that the Act provides protection to ensure that a person cannot be prosecuted on evidence less slender than what is ordinarily required for proof, because of the mechanism for review provided in section 717 of the Act.
The issues that confronted Inspector Rowe
As will be apparent from the evidence given by Inspector Rowe, at least two issues confronted her. The first was whether Mr Taj was an employee of the Respondent, or indeed any other person. The second issue was the identity of the entity that engaged Mr Taj.
The question of whether a person is properly to be characterised as an employee or independent contractor is not always an easy one to resolve. The Courts have adopted what is commonly or colloquially known as a ‘multifactor test’ that is to be applied when considering whether a person is to be characterised as an employee or an independent contractor. The application of that test requires a decision-maker to identify and weigh a range of different facts and circumstances in order to arrive at a conclusion as to whether a person is an employee or contractor. Reasonable minds may sometimes differ as to whether a person is an employee or independent contractor when the multifactor test is applied to a set of circumstances. The numerous High Court authorities and decisions of other courts in this area attest to the difficulties or uncertainties involved.
The task of characterising or assessing whether a person is an employee or independent contractor becomes even more difficult when a decision-maker (such as an inspector, or a Court) has imperfect information. That was the situation which confronted Inspector Rowe. Inspector Rowe was able to obtain some documents from the Respondent when it responded to the Notice to Produce. Mr Chanasery on behalf of the Respondent, however, refused to participate in an interview despite being asked to do so. That deprived Inspector Rowe of the opportunity to obtain information from one party to the engagement of Mr Taj. Mr Chanasery has now given evidence in this proceeding and provided information that Inspector Rowe did not have access to at the time she decided to issue the Compliance Notice. Furthermore, it is now apparent that the Respondent did not provide all documents in its possession to Inspector Rowe when it responded to the Notice to Produce. The principal example of this is the Agency Agreement that has been produced during the course of these proceedings, but was not produced to Inspector Rowe.
As I have noted above, Inspector Rowe faced a further difficulty in this case. That was to identify the entity (either the Respondent or Bluestar) which engaged Mr Taj. This was an important issue to resolve and Inspector Rowe was aware of it. Despite that, however, Inspector Rowe did not issue Bluestar with a Notice to Produce. Her request to Mr Head of 4 September 2018 produced a reply from Mr Davernis, a Director of Bluestar, that Mr Taj was engaged by the Respondent, that Bluestar was not aware of Mr Taj’s existence on its sites and that it did not have rosters, payslips, or induction cards to support his existence on any site. It is apparent now that the information provided by Mr Davernis to Inspector Rowe may not have been correct. Ms Khaliqy on behalf of the Respondent obtained a range of documents from Bluestar during the course of the proceeding, including a subcontractor agreement between Bluestar and the Respondent (‘Service Agreement’), invoices from the Respondent to Bluestar, and a copy of the Bluestar Security Subcontractor Security Officer Handbook (‘Handbook’).
The information that has now come to light that was not before Inspector Rowe
A fundamental difference emerged between the parties as to how the Court should go about its task of determining whether Inspector Rowe held a reasonable belief and in particular, what regard the Court should have to information that has come to light that was not before Inspector Rowe. The Applicant submits, in essence, that in determining whether Inspector Rowe held a reasonable belief, the Court should examine the material that Inspector Rowe had before her at the time she formed her belief. The Respondent contends in essence that a reasonable belief can only be formed and characterised as such when regard is had to ‘all of the ascertainable evidence’. The Respondent urged the Court to have regard to, among other things, the range of information it placed before the Court to which the Inspector did not have access. That included information from the Respondent such as the Agency Agreement, Mr Chanasery’s evidence about the arrangements with Bluestar and the evidence and information Ms Khaliqy obtained from Bluestar.
Section 716 requires an inspector to ‘reasonably believe[s]’ that a contravention of a specified instrument has occurred before a Compliance Notice can be issued. Self-evidently, an inspector can only form such a reasonable belief on the basis of evidence and material that the inspector has before him or her at the time. That does not necessarily mean, however, that a Court asked to consider whether an inspector held a reasonable belief for the purposes of section 716(1) of the Act should limit itself to the information that was before the inspector. Nothing in the words of section 716(1) (or elsewhere) limits the Court to considering information that was not before the inspector in determining whether the inspector held a reasonable belief.
It also pertinent in considering this issue to consider the comments of the High Court of Australia in Rockett. Rockett focuses attention on the Court considering the ‘objective circumstances’ and whether those circumstances are sufficient to show a reason to believe something. Rockett focuses attention on the fact that such objective circumstances need not establish on the balance of probabilities that a particular fact or matter occurred, and emphasises that a reasonable belief can be given on more slender evidence than proof.
The proposition that any and all material or evidence which arises after an inspector forms a belief under section 716(1) of the Act is always irrelevant to the Court making a determination as to whether the belief was reasonably held at the time is, in my view, unsound. A short example illustrates the point. An inspector may in a particular investigation make only cursory enquiries about an alleged contravention of the Act before deciding to issue a Compliance Notice under section 716(1) of the Act. It would not be correct in that situation, in my view, to disregard material which emerges later. That material may, in a particular set of circumstances, illuminate the cursory or limited nature of the investigation that was undertaken and may be relevant in a Court forming a view as to whether the belief of the inspector was reasonably held in the circumstances.
Accordingly, I do not accept the proposition that I should disregard as irrelevant, all information or evidence that has come to light since Inspector Rowe formed the belief. Whether that information or evidence should be considered, and the weight to be given to that evidence or information, should be assessed in light of all the circumstances of the matter.
Did Inspector Rowe reasonably believe the contraventions occurred?
The situation that confronted Inspector Rowe is in my experience a commercially and industrially common one. A client requires a particular service, in this case, security services. It enters into a contract with a provider, in this case Bluestar. The provider (Bluestar), in order to fulfil its obligation to the client, enters into a further contract with another provider (in this case the Respondent) to provide labour in the form of security guards. While this situation is commercially and industrially common, it can give rise to difficult issues including which of the three entities in the commercial chain that I have just described is properly to be regarded as the entity that has engaged the persons performing the work, and further, whether workers are engaged as employees or independent contractors.
The difficulties that I have described mean that often, when it comes to assessing what has occurred and what the proper characterisation of the working relationships are, the evidence does not point uniformly in one way. So it is with this case. The evidence in this matter at times points to different conclusions. It is the role of the Court to, as best as it can given the conflicting evidence, weigh it all up and arrive at a considered conclusion.
These difficulties were difficulties that confronted Inspector Rowe. In my view, Inspector Rowe was alive to the difficulties that confronted her. I am satisfied that she identified the principal issues in the case before her. These included whether Mr Taj was properly to be regarded as a contractor or employee, and the identification of the entity that engaged Mr Taj. Further, Inspector Rowe correctly (and no submission was advanced to the contrary) identified the relevant tests to apply in order to assess whether Mr Taj was an independent contractor or employee, and sought to apply those tests to the facts before her.
I have set out earlier all of the evidence. The evidence that supports a conclusion that it was the Respondent who engaged Mr Taj is, in many respects, powerful. It includes the following. Mr Taj invoiced the Respondent. The Respondent paid Mr Taj. The Respondent communicated to Mr Taj about his rates of pay and delays with his payments. Importantly, Mr Taj received directions from Ms Palmer using the Respondent’s email address and those directions related to matters as diverse as the location of the work, the rostering arrangements, shift changes, leave arrangements, the location and timing and performance of work (e.g. not using mobile phones) and induction and training. Mr Taj was given a warning by persons engaged by the Respondent. When Mr Taj gave notice to end his engagement, he sent that notice to Ms Palmer and Ms Chanasery. These are not trivial matters.
The evidence suggesting that it was Bluestar that engaged Mr Taj included the following. Mr Taj initially believed he was engaged by Bluestar. He attended Bluestar’s offices for an interview prior to being engaged. Mr Taj wore a uniform with the Bluestar logo. He carried a Smartek/Bluestar identification card. Forms for leave bore the Bluestar logo. Bluestar communicated its wishes for leave on Eid and Ramadan though the Respondent to Mr Taj, and communicated about other matters as well. The warning given to Mr Taj was on a document that bore the Bluestar logo. Mr Taj along with other security guards was informed by Ms Palmer that ‘you are an ambassador for Bluestar Security’.
There are a number of observations to be made about the evidence that is said to support a conclusion that it was Bluestar that engaged Mr Taj. First, not all of the evidence is persuasive. That Mr Taj attended the Bluestar office for an interview, that he carried a Bluestar identification card, that Bluestar communicated its wishes for leave arrangements to Mr Taj and the Respondent, and that Mr Taj was told he was an ambassador for Bluestar and wore a Bluestar uniform are unsurprising given the nature of the contractual arrangements I have described above. It is not unusual that Bluestar would wish to meet persons who would work on sites they were contractually obliged to staff, or that such persons were required to carry an identification card, or that it would communicate about when leave might be taken. After all, in the commercial contractual chain, Bluestar presumably needed to be sure it could meet its contractual commitments and reinforce its expectations of its subcontractor (the Respondent) and those whom it engaged. I also note that in many instances, the communications to Mr Taj do not come directly from Bluestar to him, but come to him through the Respondent (in the form of Ms Palmer). Second, that Mr Taj believed initially he was engaged by Bluestar is a matter to which I give some weight, but not a significant amount. After all, the commercial arrangements while common, are often complex. Third, that certain documentation such as leave forms or the warning bore the Bluestar logo are matters of more significance and fall into that category of evidence which points to a different conclusion. Having said that, however, I note that not even the document that records the warning given to Mr Taj can be said to persuasively point to Bluestar being the entity that engaged Mr Taj. That is because while it bears the logo of Bluestar, the manager of Mr Taj is recorded as being ‘Esther/Kumar’, two individuals engaged by the Respondent.
Finally, on this issue, it is relevant to note that while the Respondent during the running of the case sought to make much of the fact that Bluestar was potentially the entity that engaged Mr Taj, that has not always been its position. In a letter to the Applicant dated 3 March 2020, the Respondent stated unequivocally that it engaged Mr Taj (as an independent contractor). That letter was sent from the Respondent’s representatives, who are experienced industrial and employment lawyers. Further, I note that the evidence given by Mr Chanasery in this proceeding was that, inter alia, the Respondent engaged individuals as security guards.
When all of the above is considered, the evidence points more toward Mr Taj having been engaged by the Respondent.
The next issue that Inspector Rowe had to confront was whether Mr Taj was engaged as an employee or an independent contractor. I have summarised the evidence on this issue earlier in these reasons. In summary, the evidence that supports Mr Taj being engaged as an employee includes the following. He initially met with Mr Chanasery and at that time there was not a discussion that he would be an independent contractor (though this fact is now disputed by the Respondent, who has produced the Agency Agreement). Mr Taj was directed by Ms Palmer (an employee of the Respondent) in relation to leave arrangements, the shifts he was to work, and the rostering arrangements. He was not able to choose his own work location. He was forbidden from taking leave at particular times. The work performed by Mr Taj was low skilled in nature. He was provided with a uniform (albeit with the Bluestar logo). He recorded his hours of work on electronic systems. The nature of how he performed his work was subject to direction and control, for example, he was given a warning about excessive use of mobile phones. While he was able to swap shifts, such an arrangement required the approval. There was no established business that Mr Taj appeared to be conducting or any business systems. There is no evidence of Mr Taj taking out business-related insurances, advertising his services, or building goodwill in any business.
The evidence in support of Mr Taj being engaged as an independent contractor includes the following. He invoiced the Respondent for the work he performed, and he placed an ABN on his invoices (although it appears this was not consistent in the earlier part of the engagement period). He did not have entitlements to leave. There was not any evidence of income tax or superannuation being withheld. He was responsible for his own telephone and vehicle costs.
It can be seen that on this issue, the evidence points both ways. When it is weighed up and the multifactor test is applied and the arrangements as a whole are considered, the evidence points more toward a conclusion that Mr Taj was an employee of the Respondent rather than an independent contractor.
A number of contentions were advanced by the Respondent as to why I should find that Inspector Rowe could not reasonably believe that a contravention of the instruments specified in section 716(1) occurred. It is appropriate now to consider those contentions.
The evidence of Mr Chanasery and the Agency Agreement
The Respondent submitted that for Inspector Rowe’s belief to be characterised as reasonable, regard must be had to ‘all of the ascertainable evidence’. In that regard, the Respondent urged the Court to consider and give weight both to the Agency Agreement and to the evidence of Mr Chanasery. It was submitted that when such evidence was considered and weighed, Inspector Rowe could not have reasonably believed that Mr Taj was an employee.

I have difficulty accepting the submission above. None of the evidence referred to above which is now sought to be relied on by the Respondent was ‘ascertainable’ to the Inspector at the time she reviewed matters and formed her belief. This was not for any want of trying on Inspector Rowe’s part. She issued a Notice to Produce to the Respondent. Inexplicably, the Agency Agreement was not sent to her by the Respondent. No explanation has been provided by the Respondent as to why that document was not provided to Inspector Rowe earlier. Further, Mr Chanasery was invited to attend an interview with officers from the Applicant’s office but declined to do so. While Mr Chanasery was within his rights to refuse to attend the interview, by taking that course, he deprived Inspector Rowe of information that was important to her enquiries, and the formation of her beliefs. A respondent cannot in a case such as the present, in my view, either not provide information or fail to fully comply with a Notice to Produce thereby depriving an inspector of information during an investigation, and then come to court, produce that information and say that the inspector could not reasonably believe contraventions have occurred because he or she failed to consider all of the ascertainable evidence. Put simply, the evidence was not ascertainable at the time through no fault of the Inspector.
The Agency Agreement was not produced when it ought to have been produced. It was not before the Inspector at the time she formed her belief. It was not before Inspector Rowe when she issued the Notice. In the circumstances of this case, it is not relevant to the Court’s consideration of whether Inspector Rowe reasonably believed contraventions of the instruments specified in section 716(1) of the Act occurred.
Large parts of Mr Chanasery’s evidence were the subject of objections from the Applicant. The objections were largely made on the ground of relevance. The objections related, among others things, to the evidence of Mr Chanasery concerning the arrangements between the Respondent and Bluestar, and the work arrangements for Mr Taj. Once again, this was information that the Respondent had the opportunity to place before Inspector Rowe prior to her forming her beliefs. It did not do so. In the circumstances of this case, it is information that is not relevant to ascertaining whether Inspector Rowe could reasonably believe the contraventions had occurred at the time she formed that belief.
To the extent I may be wrong in considering as not relevant, the Agency Agreement or aspects of Mr Chanasery’s evidence referred to above, I would add that had I been required to consider that evidence, it would not have altered my view as to whether Inspector Rowe held a reasonable belief that the contraventions occurred. The existence of the Agency Agreement is simply one factor in the application of the multifactor test that Inspector Rowe would have been required to consider and weigh. It is not determinative of the question of either whether Mr Taj is an independent contractor or employee, or whether Inspector Rowe reasonably believed the contraventions occurred. Any weight to be given to the Agency Agreement recedes even further when one considers the following. First, it appears to have been executed (assuming it was validly executed by both parties, a matter disputed by Mr Taj) at a point in time after Mr Taj commenced working for the Respondent. Second, key terms in the Agency Agreement are not specified, for example, the rate of pay in Schedule 1. Third, there is not any evidence that other terms of the Agreement were complied with, for example, clause 14 which required Mr Taj to among other things take out all necessary insurances including liability, indemnity, and WorkCover insurances. In fact, the evidence suggests Mr Taj did none of these things. That leads to a serious question about whether the arrangements in the Agency Agreement were ever taken seriously be either party to it.
Insofar as I might be required to consider Mr Chanasery’s evidence, contrary to my view about its relevance expressed above, I note the following. First, Mr Chanasery stated that Bluestar ‘controlled’ and ‘managed’ the guards. To the extent such statements are made generally, I uphold the objections that these constitute opinion evidence. What matters in a case such as the present is not Mr Chanasery’s opinion of a fact in issue, but rather, direct evidence of what occurred so the Court can assess that evidence and determine whether Bluestar did control or manage the guards.
Second, Mr Chanasery referred to some examples of behaviour that he contended demonstrated that Bluestar managed or controlled the guards, such as whether guards could change sites, and attached emails to his affidavit to support that evidence. I have reviewed that evidence including the emails. The tenor of the evidence (emails attached to Mr Chanasery’s affidavit) suggests in a not insignificant way that what is really occurring at time is Bluestar expressing its dissatisfaction at the service given by the Respondent and seeking to correct that. Further, at least one of the emails makes it clear that it is Mr Chanasery’s responsibility to deal with the guards. The evidence taken as a whole falls short, in my view, of demonstrating conclusively that Bluestar managed and controlled the guards in the manner suggested by the Respondent.
Third, there is the Service Agreement. The Service Agreement does not advance the Respondent’s case. While signed, it is undated. There is not evidence that it was in force at the time Mr Taj performed work. Further, the Service Agreement applies to services performed in New South Wales (clause 3.3 and Schedule 1). Mr Taj performed work in Victoria. In short, the Service Agreement is a distraction.
There is then Mr Chanasery’s explanation as to how the Respondent hired Mr Palmer, and how Ms Palmer was acting for Bluestar while engaged by the Respondent. That evidence is difficult to believe. Nevertheless, if it occurred, it occurred with Mr Chanasery’s blessing. It does not alter the fact, that Mr Palmer was engaged or employed by the Respondent and was apparently acting within the scope of her actual or apparent authority as an employee of the Respondent.
Given the concerns I have about Mr Chanasery’s evidence as outlined above, if I had been required to consider it, it would not have altered my view of the situation.
Inspector Rowe’s inquiries of Bluestar
The Respondent contends that Inspector Rowe could not have held a reasonable belief as to the alleged contraventions because she failed to make proper and comprehensive enquiries with Bluestar. This, it is submitted, is an example of the failure of Inspector Rowe to consider all relevant factors or pursue proper inquiries which may have influenced her belief.
Inspector Rowe was well aware that it was important to understand the role of Bluestar. Mr Taj had told her that he believed he was engaged by Bluestar. She knew certain documents bore the Bluestar logo. She knew Mr Taj wore a Bluestar uniform. Under cross examination she admitted there was material before her at the time that showed Bluestar had a degree of control over security guards. She also accepted under cross examination that Bluestar was in a position to have assisted her to understand the various relationships.
Inspector Rowe’s enquiry of Bluestar bears close examination given the matters above and the contentions of the Respondent. She sought from Bluestar, inter alia, records or documents demonstrating which business entity hired Mr Taj. She also sought other documents such as a copy of any contract between the Respondent and Bluestar, a list of security guards who worked for Bluestar and the Respondent, and payroll details. In response to these queries, she was informed by Mr Davernaris that Mr Taj worked for the Respondent, that Bluestar did not know of Mr Taj’s existence on any of its sites, and that Bluestar did not have any rosters, payslips, or induction cards to support Mr Taj’s existence on-site. Mr Davernaris ultimately directed Inspector Rowe to contact the Respondent with any queries.
The exchange noted above was criticised by the Respondent as being not proper and not comprehensive. That criticism in my view is warranted when regard is had to the following.
The statements Mr Davernaris made to Inspector Rowe were only, it seems, partly true. Mr Davernaris’ statement that he did not have documents such as rosters or payslips for Mr Taj appears to be accurate. It is to be remembered that Ms Khaliqy sought documents from Bluestar, and she has not obtained and placed before the Court any of these documents from Bluestar. It would therefore seem Bluestar does not have such documents.
Less comfortably for the Applicant, however, Mr Davernaris does not appear to have been completely candid in his response. He was asked to produce any contract between the Respondent and Bluestar. He failed to do so. Yet Ms Khaliqy ultimately succeeded in obtaining such a document (the Service Agreement) from Bluestar.
In my view, in a case such as the present, Inspector Rowe needed to do more than simply accept Bluestar’s word as to the information or documents it had in its possession. Self-evidently, Bluestar’s role was important to understand. Inspector Rowe ought to have, at the very least, issued a Notice to Produce to Bluestar given all of the circumstances that confronted her. The failure to do so, in my view, constituted a failure to make all proper inquiries.
The question which then confronts the Court is whether this failure by Inspector Rowe to make proper inquiries of Bluestar means she could not have reasonably believed the alleged contraventions to have occurred. This is a matter I have considered carefully and at great length. I was initially troubled by what I regard as the Applicant’s failure to have made more thorough and comprehensive enquiries of Bluestar, particularly when one has regard to how complex arrangements of this type can be. Ultimately, however, I have come to the view that the failure to make more comprehensive enquiries of Bluestar does not produce the result that Inspector Rowe could not reasonably believe the contraventions to have occurred. I have come to this view for the following reasons.
First, the significance or otherwise of the failure to make proper inquiries of Bluestar and what impact that might have had on Inspector Rowe is able to be assessed in this case. That is because Ms Khaliqy sought documents and information from Bluestar and produced that information to the Court. Taking each of the categories of documents produced by Ms Khaliqy in turn:
(a)the Service Agreement does not assist in determining whether Mr Taj is an employee or independent contractor. It is simply a commercial agreement between the Respondent and Bluestar under which the Respondent provides services to Bluestar. For the reasons already stated, it is of no consequence in this case;
(b)the Respondent’s invoices to Bluestar do not shed any light on whether Mr Taj was an employee or independent contractor of either Bluestar or the Respondent. The invoices simply contain summaries of hours worked and charged for by site location. No individual is referred to in the invoices. Even if an individual were referred to, there is not anything on the invoices to suggest that the individual was an employee or independent contractor;
(c)the Handbook sets out the expectations of Bluestar in relation to work performance and conduct. The existence of the Handbook itself is not unusual. It is a document that one may expect to find in a commercial arrangement of the type I have described, where an entity in the position of Bluestar that is ultimately responsible to the client, wants to make sure that persons it contracts with to perform work understand what is expected of them. Its existence is consistent with the terms of the Service Agreement or documents like it. Having said that, it is not a clearly drafted document. It appears to apply principally to the security guard contractors of Bluestar, but even that is sometimes unclear given the language. The document itself is general and makes no specific reference to any individual. I observe that in his evidence, Mr Taj denied ever seeing this document.
Accordingly, when regard is had to the above, even if this information had been before Inspector Rowe following the issue of a Notice to Produce to Bluestar, it is the view of the Court that it would not have altered her reasonable belief.
Respondent’s other submissions
The Respondent contended that Inspector Rowe could not hold a reasonable belief as to the contraventions because it could be demonstrated, on all of the evidence currently before the Court, that the belief held was unreasonable. Indeed, the Court was urged on the evidence before it to make findings and grant declaratory relief that Mr Taj was a subcontractor of the Respondent, or an employee of Bluestar. I do not accept these submissions.
First, the evidence supports a conclusion that Inspector Rowe’s belief as to Mr Taj being an employee of the Respondent was reasonable. The evidence does not, in my view, support a conclusion that Mr Taj was an employee or contractor of Bluestar, or that Mr Taj was a contactor to the Respondent.
Second, the relevant question before the Court is whether Inspector Rowe reasonably believed the contraventions to have occurred. It is not necessary for the Applicant to prove the alleged contraventions. All that matters is whether Inspector Rowe reasonably believed (applying the principles in Rockett) the contraventions occurred. A reasonable belief can be reached on more slender evidence than proof. Contrary to the Respondent’s submission, there is nothing perverse about this outcome when all of the circumstances of the case, and the statutory context, is considered.
In making the comments above, I am conscious that the Respondent sought to broaden the issues in the case by asking the Court to make findings about the ultimate status of Mr Taj as an employee or independent contractor of either the Respondent or Bluestar. I decline to make that order for the reasons I have already outlined above. In addition to those reasons, I note the following. To the extent the Respondent claimed that relief at trial, it was relief that was not foreshadowed in its Response. If the intention of the Respondent was to invite the Court to grant that relief as a defence to the claim, then it was of such importance that in my view, it needed to be set out in the Response. It was not. Further, the relief sought, when it was foreshadowed, changed over time. It was first raised in the Respondent’s Outline of Submissions filed prior to the trial. At that time, the Respondent asked the Court to make a finding ‘Mr Taj was an independent contractor of the respondent’ and ‘in the alternative if there was an employment relationship between Mr Taj and another entity it was with Bluestar’. By the time it came to file its closing submissions, the Respondent submitted that the Court needed to answer questions that included ‘if Mr Taj was a subcontractor was he a subcontractor of the Respondent or Bluestar’ and ‘if Mr Taj was an employee was he an employee of the Respondent or Bluestar’. I would decline to entertain the questions raised, or grant the relief sought, in circumstances where the Respondent’s position has changed throughout the course of the proceeding and where it was not properly raised in the Response. Proper notice of the relief sought needed to be given to the Applicant.
There is one further reason that I would not grant the relief sought by the Respondent. Granting such relief would necessarily affect, or have the very real potential to affect, the contractual and potentially other rights of Bluestar and Mr Taj. Neither Bluestar nor Mr Taj are participants in this proceeding. Neither has been given, as far as I can tell, any proper notice of the issues raised in the relief sought by the Respondent. In short, neither has been granted procedural fairness.
The Respondent made much of what it alleged was the deficient inquiries undertaken by Inspector Rowe. Inspector Rowe’s investigation was criticised for not being comprehensive or sufficient. It is said that Inspector Rowe failed to make proper inquiries of Bluestar. It was said she failed to consider the Agency Agreement. It was said that she failed to properly weigh the facts before her when applying the multifactor test in order to determine whether Mr Taj was an employee or an independent contractor. I have dealt with key aspects underpinning this submission earlier and rely on my earlier findings. To these may be added the following. Any inquiry or investigation is capable of being criticised on the grounds that more should have been done. Whether that criticism is valid in any particular set of circumstances depends upon, among other things, the nature of the investigation and the purpose for which it was undertaken. In this matter, the investigation or enquiry by Inspector Rowe only needed to continue until such time as Inspector Rowe could form a reasonable belief in all of the circumstances that a contravention occurred. Inspector Rowe was not required to conduct an investigation to the standard that she was satisfied, or able to prove, that a particular contravention has occurred.
When all of the above is considered, I find that Inspector Rowe reasonably believed for the purposes of section 716 of the Act that there were contraventions of the Award. The Compliance Notice was validly issued.
DOES THE RESPONDENT HAVE A REASONABLE EXCUSE FOR FAILING TO COMPLY WITH THE COMPLIANCE NOTICE?
A failure to comply with a Compliance Notice is a contravention of section 716(5) of the Act, unless the person has a ‘reasonable excuse’ as contemplated by section 716(6) of the Act. The term ‘reasonable excuse’ is not defined in the Act. A person who seeks to rely on the defence of ‘reasonable excuse’ bears the onus of proof: Potter v Fair Work Ombudsman [2014] FCA 187 at [72].
I understood the Respondent to advance two submissions under this ground. First, the Respondent had a reasonable excuse for not complying with the Compliance Notice because the Compliance Notice was not valid. The Compliance Notice was not valid because Inspector Rowe could not have held the requisite reasonable belief under section 716(1) when she issued the Notice. Second, the decision by the Respondent to challenge the validity of the Compliance Notice is itself a reasonable excuse for failing to comply with the Compliance Notice. These submissions were advanced notwithstanding that the Respondent did not raise the issue of ‘reasonable excuse’ in its Response.
Insofar as the first submission is concerned, I have found that Inspector Rowe’s beliefs were reasonably held. I am satisfied that the Compliance Notice otherwise complies with the requirements set out in section 716 of the Act. I did not understand the Respondent to otherwise contend that there was any other feature of the Compliance Notice that rendered it invalid. Further, I observe that a Compliance Notice that is invalid need not be the subject of a ‘reasonable excuse’ because such a notice could never be enforced. Accordingly, the first submission of the Respondent must be rejected for these reasons.
The second submission of the Respondent must also be rejected. If all that was required to invoke the ‘reasonable excuse’ defence in section 716(6) was for a respondent to challenge the validity of a Compliance Notice, then potentially any challenge to the validity of the notice however meritorious or not would provide a respondent with a ‘reasonable excuse’ not to comply with the Compliance Notice. That, it seems to me, is an odd outcome. Further, if the mere belief that a Compliance Notice was invalid was sufficient to invoke the defence of ‘reasonable excuse’ in section 716(6) of the Act, it would potentially mean that there would never be a reason or purpose for a recipient of a Compliance Notice to make an application for review of the notice under section 717 of the Act.

Finally, as I have noted, a respondent seeking to raise the defence of ‘reasonable excuse’ under section 716(6) of the Act bears the onus of proof. The Respondent has not given any evidence as to any other excuse for failing to comply with the Compliance Notice, other than the evidence already considered as to its belief as to why Mr Taj was not an employee of it. A reasonable excuse cannot be established absent evidence.
In view of these matters, I find that the Respondent did not have a reasonable excuse for failing to comply with the Compliance Notice.
DISPOSITION
The Court will make a declaration that the Respondent contravened section 716(5) of the Act by failing to comply with the Compliance Notice. The Court will also make orders that the Respondent take steps to calculate the outstanding entitlements due to Mr Taj, and to pay those entitlements to him with interest. The Court directs the parties to file proposed minutes of consent orders to prepare the matter for a hearing on penalty and to inform the court of the likely duration of any penalty hearing.

I certify that the preceding one hundred and eleven (111) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Blake.
Associate:
Dated: 1 October 2021

File number(s):	MLG 3795 of 2020
Judgment of:	JUDGE BLAKE
Date of judgment:	6 October 2021
Catchwords:	INDUSTRIAL LAW – Fair Work Act 2009 (Cth) ¬ failure to comply with Compliance Notice issued under section 716 of the Fair Work Act 2009 ¬ Respondent contended that Compliance Notice not validly issued because the inspector could not hold a reasonable belief as to whether the Respondent or another entity engaged the complainant - what factors lead to the formation of a reasonable belief under section 716 of the Fair Work Act 2009. INDUSTRIAL LAW – Respondents contended Applicant did not have regard to all ascertainable evidence when forming a reasonable belief ¬ Respondents produced evidence to the Court that they had not produced to the Applicant prior to her forming her belief ¬ in the circumstances of this case, no regard should be had to evidence the Respondents did not disclose to the Applicant prior to her forming her belief to issue the compliance notice. Further, whether Inspector’s failure to issue a Notice to Produce to a third party meant she failed to undertake proper inquires leading to a conclusion a that her belief may not have been reasonably held ¬ contention rejected in the circumstances of the case ¬ the failure to issue the Notice to Produce was a significant issue, but does not alter the outcome because documents were obtained from the third party and placed before the Court by another means. INDUSTRIAL LAW ¬ Court satisfied on the evidence that the Applicant’s belief was reasonable. Notice valid. Further, no reasonable excuse for failing to comply with the Notice to Produce ¬ Court making declaration the Respondent contravened the Act ¬ matter to be set down for penalty hearing.

Legislation:	Fair Work Act 2009 (Cth) ss 545(1), 547(2), 700, 716, 717 Security Services Industry Award 2010 (Cth) cl 10.5, 14.1, 15.1, 22.3
Cases cited:	Fair Work Ombudsman v Joys Child Care Ltd & Anor (No 2) [2020] FCCA 2326 George v Rockett (1990) 170 CLR 104 Hindu Society of Victoria (Australia) Inc v Fair Work Ombudsman [2016] FCCA 221 Potter v Fair Work Ombudsman [2014] FCA 187
Division:	Division 2 General Federal Law
Number of paragraphs:	111
Date of last submission/s:	25 June 2021
Date of hearing:	13 & 14 May 2021
Counsel for the Applicant:	Ms Campbell
Solicitor for the Applicant:	Australian Government Solicitor
Counsel for the Respondent:	Mr McKenny
Solicitor for the Respondent:	Wisewould Mahony

MLG 3795 of 2020
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN:	FAIR WORK OMBUDSMAN Applicant
AND:
PACIFIC SECURITY SERVICES PTY LTD Respondent

ORDER MADE BY:	JUDGE BLAKE
DATE OF ORDER:	6 OCTOBER 2021