Fair Work Ombudsman v Polyfone Telecom Pty Ltd
[2023] FedCFamC2G 807
•16 October 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Polyfone Telecom Pty Ltd [2023] FedCFamC2G 807
File number(s): BRG 89 of 2022 Judgment of: JUDGE MANSINI Date of judgment: 16 October 2023 Catchwords: INDUSTRIAL LAW – application for declaratory relief – where Second Respondent contravened the Fair Work Act 2009 (Cth) by being involved in the First Respondent’s contravention of s.716(5) – question of penalty (if any) to be determined separately. Legislation: Fair Work Act 2009 (Cth) ss.90(2), 99, 539, 545(2), 546, 550, 716
Federal Circuit and Family Court of Australia Act 2021 (Cth) s.190
Corporations Act 2001 (Cth) s.471B
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) r.13.10
Clerks – Private Sector Award 2020
Telecommunications Services Award 2020
Cases cited: Fair Work Ombudsman v Tsurc Pty Ltd [2014] FCCA 2472 Division: Division 2 General Federal Law Number of paragraphs: 47 Date of hearing: 4 September 2023 Place: Melbourne (by web conference) Counsel for the Applicant: Ms P Willoughby Solicitor for the Applicant: Fair Work Ombudsman First Respondent: No appearance Second Respondent: Litigant in person ORDERS
BRG 89 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: POLYFONE TELECOM PTY LIMITED (ACN 109 390 490)
First Respondent
PAUL DESMOND WALLACE
Second Respondent
ORDER MADE BY:
JUDGE MANSINI
DATE OF ORDER:
16 OCTOBER 2023
THE COURT ORDERS THAT:
1.The proceedings against the First Respondent be permanently stayed.
THE COURT DECLARES THAT:
2.The Second Respondent was involved, within the meaning of s.550(2) of the Fair Work Act 2009 (Cth) (Act), in the First Respondent’s failure to comply with the statutory compliance notice dated 11 February 2021 and contravention of s.716(5) of the Act.
THE COURT FURTHER ORDERS THAT:
3.The matter be listed for directions before Judge Vasta at 9.30 am (AEST) on 23 October 2023 in-person in the Brisbane registry.
4.The parties have liberty to apply.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order 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 MANSINI
INTRODUCTION
This is an application by the Fair Work Ombudsman (FWO) in relation to a telecommunications and parts business that did not comply with a statutory compliance notice.
The notice was issued following a FWO investigation by which the FWO concluded that there had been underpayments in respect of minimum entitlements to paid personal or carer’s leave and paid annual leave on termination.
Since these proceedings commenced, the First Respondent company was placed into liquidation and the FWO no longer sought to continue against it. The Second Respondent initially opposed the foundation of the statutory compliance notice but ultimately declined to defend the allegation that he had contravened Fair Work Act 2009 (Cth) (Act) by his involvement in the company’s failure to comply with the notice.
These reasons explain the findings I have made in relation to the Second Respondent’s contravention and declaratory relief granted. The question of what (if any) penalty is to be imposed will be subject of a separate hearing and determination.
CONTEXT
On 4 March 2022, the FWO commenced proceedings in this Court by filing an application and a statement of claim.
Programming orders were made but the First and Second Respondents did not file a defence by 11 July 2022 or 19 September 2022 in accordance with those orders or at all.
On 17 October 2022, the Second Respondent filed a notice of address for service. On 20 October 2022, an affidavit of the Second Respondent was filed with the Court and, on its face, appeared to dispute various factual matters including as to the factual foundation or validity of the statutory compliance notice subject of these proceedings.
On 21 March 2023, consistent with their agreement, the parties attended mediation before a Registrar of this Court. As the matter did not resolve, an agreed statement of facts was ordered to be filed within 21 days. There is evidence before the Court that the FWO attempted to agree a statement of facts with the Second Respondent which agreement was not forthcoming.
On 4 August 2023, the Federal Court of Australia entered orders against the First Respondent in proceedings NSD528/2023 that it be wound up in insolvency under the provisions of the Corporations Act 2001 (Cth) and a liquidator be appointed.
By application in a proceeding filed 15 August 2023, the FWO sought: orders that the proceedings be stayed against the First Respondent; that summary judgment be entered against the Second Respondent; a declaration that the Second Respondent was involved, within the meaning of s.550(2) of the Act, in the First Respondent’s failure to comply with the statutory compliance notice and contravention of s.716(5) of the Act; and orders that the question of penalty to be imposed on the Second Respondent be programmed and heard separately.
On 4 September 2023, the matter proceeded to hearing before the Court as presently constituted, convened electronically by Microsoft Teams. The FWO was represented by Counsel and the Second Respondent represented himself.
MATERIALS AND SUBMISSIONS BEFORE THE COURT
In summary, the FWO filed the following materials on which it sought to rely:
(a)Application lodged 3 March 2022 and accepted for filing on 4 March 2022;
(b)Amended statement of claim lodged 11 August 2023 and accepted for filing on 15 August 2023;
(c)Application in a proceeding lodged 11 August 2023 and accepted for filing on 15 August 2023;
(d)Affidavit of Rebecca Toome filed 11 August 2023; and
(e)Affidavit of Phoebe Kelly filed 11 August 2023.
At the time of the hearing on 4 September 2023, it remained the case that nothing had been filed by or on behalf of the First Respondent or the Second Respondent since the mediation or since the Second Respondent’s notice of address for service and affidavit filed in October 2022.
The parties’ oral submissions at hearing on 4 September 2023 are relevantly summarised in the following paragraphs:
(a)The FWO confirmed that it did not seek leave of the Court to continue the proceedings as against the First Respondent and sought a permanent stay of the proceedings in respect of the First Respondent. There was no opposition to this course.
(b)The Second Respondent addressed the Court in response to the FWO’s application for summary judgment. He told the Court of his personal difficulties and hardship. The Second Respondent submitted that he did not agree with certain alleged facts which underpinned the statutory compliance notice. But he accepted that the statutory notice had not been challenged or set aside notwithstanding the opportunities afforded. Further, and following an adjournment to reflect on his position, the Second Respondent clearly conveyed that he did not intend to defend the allegation as to his involvement in the First Respondent’s contravention of the statutory compliance notice. However, the Second Respondent would seek the opportunity to address the Court as to the question of what (if any) penalty ought be imposed as a result of the admitted contravention.
It falls then to consider the material before the Court as to whether there was a contravention and it is appropriate to make the declaration sought.
THE EVIDENCE
The Court received evidence of the following, which ultimately was not disputed, and constitutes findings I have made.
The FWO is and was at all material times:
(a)a statutory appointee of the Commonwealth appointed by the Governor-General by written instrument pursuant to s.687(1) of the Act;
(b)a Fair Work Inspector pursuant to s.701 of the Act; and
(c)a person with standing to bring these proceedings and to apply for orders for contraventions of civil remedy provisions pursuant to s.539(2) of the Act.
The First Respondent, Polyfone Telecom Pty Ltd (ACN 109 390 490) (in liquidation), at all material times:
(a)was a company incorporated under the Corporations Act 2001 (Cth) and registered since 4 June 2004;
(b)was a “national system employer” within the meaning of s.14 of the Act and required to comply with the Act in respect of its employees;
(c)was the trustee of the Polyfone Telecom Trust ABN 53 796 096 629, which operated a business that sold wholesale internet and VOIP services to schools and businesses (Business); and
(d)from at least 1 December 2014 to 15 October 2019, was an associated entity of Macquarie Technology Group International Pty Ltd ACN 123 183 451 (since deregistered) (MTGI) within the meaning of s.50AAA(7) of the Corporations Act 2001 (Cth).
The Second Respondent, a Mr Paul Desmond Wallace, at all relevant times:
(a)is and was a natural person capable of being sued;
(b)was the sole director and secretary and the majority shareholder of the First Respondent from 4 June 2004;
(c)was the sole director of MTGI from 18 December 2006 to 15 October 2019;
(d)was the sole shareholder of MTGI from 18 December 2006 to 10 May 2020;
(e)is a person who was responsible for:
(i)the overall operation, management and control of the First Respondent; and
(ii)ensuring the First Respondent complied with its legal obligations under the Act; and
(f)is and was a person whose conduct (engaged in on behalf of the First Respondent and within the scope of his actual or apparent authority) is taken to be that of the First Respondent under s.793(1) of the Act.
On or about 25 November 2020, the FWO commenced an investigation into the First Respondent in respect of a former employee of the First Respondent.
The investigator, Fair Work Inspector (FWO Inspector) O’Leary, was at all relevant times appointed under s.700 of the Act.
On 6 January 2021, FWO Inspector O’Leary prepared a decision record which reflected that he had formed a belief that:
a.from 1 December 2014 to 4 September 2020, the First Respondent employed Mr Ian Kerr (Employee) to work at the Business on a full-time basis;
b.the Second Respondent was a director and shareholder of the First Respondent;
c.between 20 April 2009 and 30 November 2014, the Employee was employed by Macquarie Technology Group International Pty Ltd (MTGI) on a full-time basis;
d.MTGI had been deregistered at the date of the investigation, but the Second Respondent had been a director and shareholder of MTGI;
e.the Employee’s accrued annual leave entitlements transferred from MTGI to the First Respondent on or around 1 December 2014;
f.MTGI had previously been the subject of litigation by the Applicant;
g.the Fair Work Act 2009 (Cth) (FW Act) and the Clerks – Private Sector Award 2020 (Clerks Award), a modern award under the FW Act, covered and applied to the First Respondent in respect of the employment of the Employee;
h.at the time the Employee’s employment ended on 4 September 2020, the Employee:
a.had 600.19 hours of untaken accrued annual leave; and
b.had not been paid any amount for 4 days of paid personal leave taken from 1 September 2020 to 4 September 2020;
i.the First Respondent had not paid the Employee:
a.any amount in respect of his entitlement to accrued and untaken annual leave on termination; and
b.any amount in respect of his entitlement to paid personal leave for the period 1 September 2020 to 4 September 2020;
j.for the reasons above, the First Respondent contravened:
a.section 99 of the FW Act and clause 33 of the Award; and
b.section 90(2) of the FW Act and clause 32 of the Award.
On 8 February 2021, FWO Inspector O’Leary gave a statutory compliance notice to the First Respondent which was later withdrawn on 11 February 2021 due to identified errors (namely, an incorrect reference to the Clerks – Private Sector Award 2020).
On 11 February 2021, FWO Inspector O’Leary gave a statutory compliance notice to the First Respondent which is the notice subject of these proceedings (statutory compliance notice). The issuing inspector formed a reasonable belief within s.716(1) of the Act that the First Respondent had contravened sections of the Act, as follows:
No Section Details of contravention (a) Section 99 of the FW Act Personal leave
Failing to pay the Employee personal leave for 4 days – being Tuesday 1 September2020, Wednesday 2 September 2020, Thursday 3 September 2020 and Friday 4 September 2020 (Personal Leave Entitlement).(b) Section 90(2) of the FW Act Payment of annual leave on termination of employment
Failing to pay the Employee, when his employment ended, for any period of accrued but untaken paid annual leave, the amounts that would have been payable (including any applicable annual leave loading calculated in accordance with clause 22.3 of the Award) had the Employee taken those accrued periods of paid annual leave (Annual Leave on Termination Entitlement).
By the statutory compliance notice the First Respondent was required, by 15 March 2021, to take a range of actions to calculate and remedy the direct effects of the identified contraventions including consequential superannuation entitlements and to keep a record of same. The FWO specified the time for production of reasonable evidence of compliance with the actions specified therein including proof of payment as by 22 March 2021.
On 26 March 2021, a FWO Inspector Rollins sent an email to the Second Respondent which notified that FWO Inspector O’Leary was on leave and attached a Failure to Comply with Compliance Notice. By that further notice, the First Respondent was afforded a further 7 days to advise the FWO if it had a reasonable excuse for not complying with the statutory compliance notice.
On 26 March 2021, the Second Respondent contacted FWO Inspector Rollins by phone and stated that his representative would contact him the following week in relation to the former employee.
On 14 May 2021, the Second Respondent contacted FWO Inspector Rollins by phone and stated that his representative would contact him in relation to the statutory compliance notice.
On 18 May 2021, the Second Respondent’s then legal representative contacted FWO Inspector Rollins by phone and raised that the statutory compliance notice did not reflect the “correct” employer of the former employee since 1 December 2014.
On 19 May 2021, the Respondents’ then legal representative sent a letter to FWO Inspector Rollins by which they disputed the grounds on which the statutory compliance notice was issued and detailed the First Respondent’s intentions to make payment to the former employee for personal leave and annual leave entitlements, without admission of liability.
Between 19 May 2021 to 4 June 2021, FWO Inspector Rollins and the Respondents’ then legal representative exchanged several emails in respect of the First Respondent’s intention to make payment to the former employee.
On or around 4 June 2021, the First Respondent provided evidence to the FWO that it had paid the former employee $10,136.00 for:
(a)164.13 hours of untaken accrued annual leave at an hourly rate of $51.68, in the amount of $8,482.24 gross; and
(b)4 days’ personal leave for the period 1 September 2020 to 4 September 2020, in the amount of $1,653.76 gross.
On 16 June 2021, a FWO Inspector Mackie received an email from the Respondents’ then legal representative, which attached a pay slip that broke down the gross payment of $10,136.00 made to the former employee (for 32 hours’ unpaid personal leave, and for 164.13 hours’ accrued but unused annual leave owed on termination (excluding loading) accrued after 1 December 2014).
On 28 June 2021, FWO Inspector Rollins sent an email to the Respondents’ then legal representative which provided that the former employee had confirmed that the gross payment of $10,136.00 was received and that the matter would be reviewed by the FWO’s legal team as to whether there was compliance with the statutory compliance notice.
As at 11 August 2023, the evidence before the Court was that the former employee had not at any time been paid the following as required by the statutory compliance notice:
(a)Of the originally outstanding 600.19 hours’ annual leave owed on termination, a remaining amount of 436.06 hours, payable in accordance with the Act and amounting to $26,479.30;
(b)Annual leave loading on the 164.13 hours of annual leave paid by the First Respondent in June 2021, payable in accordance with the Act and amounting to $1,484.39; and
(c)Superannuation contributions payable on the 4 days’ personal leave paid by the First Respondent in June 2021, payable pursuant to the obligation in the Award and amounting to $157.11.
Accordingly, the First Respondent had not complied with the statutory compliance notice by 22 March 2021 and had since partially (but not entirely) complied with the statutory compliance notice.
CONSIDERATION
Pursuant to s.190 of the Federal Circuit and Family Court of Australia Act 2021 (Cth), the overarching purpose of the civil practice and procedure provisions is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible. That overarching purpose includes the objectives of just determination of all proceedings before this Court, the efficient use of the judicial and administrative resources available, the efficient disposal of this Court’s overall caseload, disposal of all proceedings in a timely manner and resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute.
It may be appropriate to dispose of a matter by summary judgment pursuant to r.13.10 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (GFL Rules) where, in a proceeding:
(a)there is evidence of the facts on which the claim or part is based; and
(b)there is evidence given by a party or some responsible person that the opposing party has no answer to the claim or part of the claim or the Court is satisfied that the opposing party has no reasonable prospect of successfully defending the claim or part of the claim.
Sections 716(5) and 550(1) of the Act are civil remedy provisions.
Section 716(5) provides (and at all relevant times provided):
Compliance notices
…
Person must not fail to comply with notice
(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).
Section 550 provides (and at all relevant times provided):
Involvement in contravention treated in same way as actual contravention
(1)A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.
Note:If a person (the involved person ) is taken under this subsection to have contravened a civil remedy provision, the involved person's contravention may be a serious contravention (see subsection 557A(5A)). Serious contraventions attract higher maximum penalties (see subsection 539(2)).
(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.
A fair work inspector may apply to this Court for orders in relation to contraventions of ss.716(5) and 550(1): s.539(2). The Court may make any order it considers appropriate where satisfied that a person has contravened a civil remedy provision: s.545(2). The Court may also make a pecuniary penalty order for such contravention: s.546.
Having regard to the procedural and factual context and submissions made at the hearing, I am satisfied that the Second Respondent was afforded substantial opportunity to defend the claim as to his involvement in the First Respondent’s contravention of s.716(5). At the hearing, he did not seek further opportunity to do so and the Second Respondent was understood to essentially admit the contravention by his involvement within the meaning of s.550 of the Act. Were that understanding incorrect, having regard to the overarching purpose and r.13.10 of the GFL Rules, I would nonetheless have been content to proceed to summary judgment in the knowledge that the FWO appears to be entitled to the claim for relief sought on the amended pleadings and evidence filed and the Court is satisfied that on what is before it, it is within its powers to grant the relief sought: Fair Work Ombudsman v Tsurc Pty Ltd [2014] FCCA 2472 at [10]-[11] (per Nicholls J).
I am satisfied that the amended statement of claim filed in this matter and upon which the FWO relies complies with the rules of pleading and properly pleads a cause of action that supports the grant of relief in the form of a declaration. In particular, I am satisfied that the facts alleged in the statement of claim together with the effective admission of the Second Respondent establish that the First Respondent contravened s.716(5) by failing to comply with the statutory compliance notice issued by FWO Inspector O’Leary issued on 11 February 2021 and the Second Respondent by his knowledge of the contravention and knowing concern was involved in the First Respondent’s contravention by failing to comply with the statutory compliance notice, pursuant to s.550(1) and within the meaning of s.550(2) of the Act.
The Court has a wide discretion to make declarations. Having regard to the Second Respondent’s submissions and in the particular circumstances of this case, I am satisfied that it is an appropriate case for declaratory relief if for no other reason than to record the Court’s disapproval of the contravening conduct.
In all of the circumstances, it is appropriate that the Second Respondent be afforded opportunity to consider, prepare and file written evidence and submissions in relation to the question of what (if any) penalty ought be imposed pursuant to s.546 of the Act, for his contravention of s.716(5) by his involvement in the contravention in accordance with s.550 of the Act. The matter will be returned to Judge Vasta for that purpose.
For completeness, by operation of s.471B of the Corporations Act 2001 (Cth), whilst a company is being wound up in insolvency or a provisional liquidator is acting, a person cannot proceed with a proceeding in a court against the company in relation to property or enforcement in relation to property of the company. To the extent necessary, I consider it appropriate and will order that these proceedings be permanently stayed as against the First Respondent.
I certify that the preceding forty-seven (47) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Mansini. Associate:
Dated: 16 October 2023
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