NSD 1939 of 2016 NSD 1940 of 2016 NSD 1941 of 2016 NSD 1942 of 2016 NSD 1943 of 2016
Judge:
FLICK J
Date of judgment:
25 July 2017
Catchwords:
INDUSTRIAL LAW – non-payment of wages and other entitlements
INDUSTRIAL LAW – accessorial liability – meaning of “involved in”
PRACTICE AND PROCEDURE – application for leave to withdraw an admission in pleadings – leave refused
PRACTICE AND PROCEDURE – order for payment of costs in a fixed sum – denial of procedural fairness – order lacking a rational evidential foundation – based upon unverified estimates – order set aside
CONSTITUTIONAL LAW – constitutional corporations – what constitutes a trading corporation
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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Details
AGLC
Fair Work Ombudsman v Priority Matters Pty Ltd [2017] FCA 833
Case
[2017] FCA 833
Decision Date
CaseChat Overview and Summary
In the case of Fair Work Ombudsman v Priority Matters Pty Ltd, the Fair Work Ombudsman brought proceedings against several corporate entities and their directors for non-payment of wages and other entitlements, alleging contraventions of the Fair Work Act. The primary Judge in the Federal Circuit Court found in favour of the Fair Work Ombudsman, ordering compensation for the employees and interest on the loss suffered due to the contraventions. The individual respondents, Mr Silverbrook and Ms Lee, appealed the decision, arguing that they were not liable for the contraventions and that the corporations were not "constitutional corporations" as defined in the Fair Work Act.
The primary legal issues in this case were whether Mr Silverbrook and Ms Lee were "involved in" the contraventions of the Fair Work Act, whether the corporations were "constitutional corporations," and whether the orders for interest and costs were properly made. The appeal court considered the arguments made by the parties and examined the relevant provisions of the Fair Work Act and the Australian Constitution.
The appeal court found that Mr Silverbrook and Ms Lee were not liable for the contraventions as they were not "involved in" the contraventions within the meaning of s 550 of the Fair Work Act. The court held that the primary Judge's conclusion on this point was correct. Regarding the corporations, the appeal court found that the primary Judge was correct in concluding that the corporations were "constitutional corporations" within the meaning of s 12 of the Fair Work Act. The court also found that the orders for interest and costs were not properly made due to a lack of rational evidential foundation, and thus set them aside.
In conclusion, the appeal court set aside the findings of liability against Mr Silverbrook and Ms Lee and affirmed the findings of liability against the corporate respondents. The orders for interest and costs were set aside, and the matter was remitted to the primary Judge for reconsideration of those orders. The parties were directed to bring in Short Minutes of Orders to give effect to these reasons within 14 days.
Orders
Orders of the court
1. The parties are to bring in Short Minutes of Orders to give effect to these reasons within 14 days.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Section 547 provides as follows:Interest up to judgment(1)This section applies to an order (other than a pecuniary penalty order) under this Division in relation to an amount that a person was required to pay to, or on behalf of, another person under this Act or a fair work instrument.(2)In making the order the court must, on application, include an amount of interest in the sum ordered, unless good cause is shown to the contrary.(3)Without limiting subsection (2), in determining the amount of interest, the court must take into account the period between the day the relevant cause of action arose and the day the order is made. The orders made provided for the payment of compensation pursuant to s 545(2)(b) for “loss”; the orders requiring the payment of interest was interest upon the “loss … suffered because of the contravention”. No error is exposed.THE LIABILITY OF THE INDIVIDUALS – SECTION 550 Although the corporate employers were found to have contravened provisions of the Fair Work Act, the Individual Respondents – Mr Silverbrook and Ms Lee – were found to assume no liability. Mr Silverbrook was alleged to have been “involved in” the corporate contraventions pursuant to s 550 of the Fair Work Act. Ms Lee was named as a Respondent in the Silverbrook Research proceeding in the Federal Circuit Court in her role as a director of Silverbrook Research; Ms Lee was similarly alleged to have been “involved in” the contraventions of that corporate employer. If reference is made (by way of example) to the Priority Matters proceeding, the Federal Circuit Court Judge concluded that that corporate employer had contravened ss 44(1), 45, 293, 323(1) and 542 of the Fair Work Act. The allegations of accessorial liability as against Mr Silverbrook were, however, rejected: [2016] FCCA 1474 at [200] to [212]. In each of the five proceedings, it was concluded by the primary Judge that the conduct of Mr Silverbrook (and in the Silverbrook Research proceeding, Ms Lee) did not fall within the reach of s 550 of the Fair Work Act: [2016] FCCA 1474 at [212], [225], [237], [254] and [268]. The conclusion of the primary Judge as to the application of s 550 to Mr Silverbrook and Ms Lee is to be set aside.Section 550 & the pleadings Section 550 provides as follows: Involvement in contravention treated in same way as actual contravention (1)A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision. (2)A person is involved in a contravention of a civil remedy provision if, and only if, the person: (a) has aided, abetted, counselled or procured the contravention; or (b)has induced the contravention, whether by threats or promises or otherwise; or (c)has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or(d)has conspired with others to effect the contravention. If reference is made to the proceeding instituted against Priority Matters, the Statement of Claim filed in the Federal Circuit Court set forth the material facts and proceeded to advance the following claim as against Mr Silverbrook:44.By reason of the matters pleaded in paragraphs 3 and 41 to 43 above, the Second Respondent:(a)had actual knowledge of the factual matters which comprise each of the contraventions alleged against the First Respondent; and(b)was an intentional participant in the factual matters which comprise the contraventions alleged against the First Respondent.Paragraph [45] goes on to plead that Mr Silverbrook was “involved in each of the contraventions” and pleads the terms of s 550(2). The following Particulars are then provided:Particularsi.The Second Respondent was aware of the requirement to pay minimum wages and entitlements to the Employees.ii.The Second Respondent had knowledge of the wages and entitlements owed to the Employees and their entitlement to be paid in full.iii.The Second Respondent was aware of, and responsible for, the on-going failure to pay the wages and statutory entitlements of the Employees.iv.The Second Respondent participated and intended to participate in the on-going failure to pay the wages and statutory entitlements of the Employees.Paragraph [46] then pleads that:by operation of section 550(1) of the [Fair Work Act], the Second Respondent is taken to have himself personally contravened each of the provisions alleged to have been contravened by the First Respondent herein.The arguments advanced
Ratio Decidendi
Legal Principle Established
No application for an adjournment was made.CONSTITUTIONAL CORPORATIONS The first Ground of Appeal as set forth in the Notices of Cross-Appeal contends that the Federal Circuit Court Judge erred in concluding that each of the corporate employers was a National System Employer within the meaning of s 12 of the Fair Work Act despite them not being, so it was contended, “constitutional corporations”. The principal argument advanced on behalf of the Corporate Respondents was that a corporation established for the sole purpose of being the repository of a discrete subject matter of intellectual property could not fall within the definition of a “constitutional corporation” as defined in s 12 of the Fair Work Act if it did not trade or carry on business. The argument, however, confronted at least two difficulties, namely: ·the fact that the Defences as filed contained admissions to the effect that each corporate employer was a “constitutional corporation”; and·the fact that findings had been made by the primary Judge that each was a “constitutional corporation”. It is concluded that the primary Judge was correct in rejecting the present argument. The Fair Work Act The relevance of the definition of a “constitutional corporation” sufficiently emerges if reference is made to s 323 of the Fair Work Act. Section 323(1) provides as follows: Method and frequency of payment(1)An employer must pay an employee amounts payable to the employee in relation to the performance of work:(a) in full (except as provided by section 324); and(b)in money by one, or a combination, of the methods referred to in subsection (2); and(c) at least monthly.Sections 44 and 293 similarly refer to an “employer”. The terms “employee” and “employer” are defined in s 322 as follows: Meanings of employee and employerIn this Part, employee means a national system employee, and employer means a national system employer.Section 12, being the Dictionary to the Fair Work Act, defines a “national system employee” by reference to s 13; and defines a “national system employer” by reference to s 14. Section 14(1)(a) in turn provides that a “national system employer” includes “a constitutional corporation, so far as it employs, or usually employs, an individual”. Section 12 relevantly provides as follows:The DictionaryIn this Act:…constitutional corporation means a corporation to which paragraph 51(xx) of the Constitution applies. …Section 51(xx) & corporations Section 51(xx) of the Constitution provides as follows: The Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to:…(xx)foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth;… For the purposes of s 51(xx), it has been said that the phrase “trading corporation” is not a term of art: The Queen v Judges of the Federal Court of Australia; Ex parte Western Australian National Football League (Incorporated) (1979) 143 CLR 190 at 233. Mason J (as his Honour then was) there observed:“Trading corporation” is not and never has been a term of art or one having a special legal meaning. … Essentially it is a description or label given to a corporation when its trading activities form a sufficiently significant proportion of its overall activities as to merit its description as a trading corporation.See also: (1979) 143 CLR at 219 per Stephen J.