Fair Work Ombudsman v Priority Matters Pty Ltd (No 4); Fair Work Ombudsman v Superlattice Solar Pty Ltd (No 4); Fair Work Ombudsman v Geneasys Pty Ltd (in Liq) (No 4); Fair Work Ombudsman v Silverbrook (No 4)
[2019] FCCA 56
•22 February 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v PRIORITY MATTERS PTY LTD & ANOR (No 4) FAIR WORK OMBUDSMAN v SUPERLATTICE SOLAR PTY LTD & ANOR (No 4) FAIR WORK OMBUDSMAN v GENEASYS PTY LTD (IN LIQ) & ANOR (No 4) FAIR WORK OMBUDSMAN v SILVERBROOK & ANOR (No 4) FAIR WORK OMBUDSMAN v MPOWA PTY LTD & ANOR (No 4) | [2019] FCCA 56 |
| Catchwords: INDUSTRIAL LAW – Fair work – accessorial liability for established breaches of the Fair Work Act 2009 (Cth) by corporations – individuals found not to be personally liable – matter remitted on appeal for further hearing on that issue – consideration of factors bearing on accessorial liability – liability established. |
| Legislation: Acts Interpretation Act 1901 (Cth), s.2C Clerks Private Sector Award 2010 Corporations Act 2001 (Cth) Fair Work Act 2009 (Cth), ss.44, 45, 50, 90, 99, 116, 117, 119, 293, 323, 324, 328, 539, 542, 545, 544, 546, 547, 550, 570, 687, 701 Professional Employees Award 2010 |
| Cases cited: Australian Building and Construction Commissioner v Parker (2017) 266 IR 340 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | PRIORITY MATTERS PTY LTD |
| Second Respondent: | KIA SILVERBROOK |
| File Number: | SYG 3209 of 2013 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | SUPERLATTICE SOLAR PTY LTD |
| Second Respondent: | KIA SILVERBROOK |
| File Number: | SYG 3210 of 2013 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | GENEASYS PTY LTD (IN LIQ) |
| Second Respondent: | KIA SILVERBROOK |
| File Number: | SYG3228 of 2013 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | KIA SILVERBROOK |
| Second Respondent: | JANETTE LEE |
| File Number | SYG1743 of 2014 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | MPOWA PTY LTD |
| Second Respondent: | KIA SILVERBROOK |
| File Number: | SYG1780 of 2014 |
| Judgment of: | Judge Driver |
| Hearing dates: | 20, 21 August 2018 |
| Delivered at: | Sydney |
| Delivered on: | 22 February 2019 |
REPRESENTATION
| Counsel for the Applicant: | Ms E Raper, with Ms V Brigden |
| Solicitors for the Applicant: | Fair Work Ombudsman |
| Solicitors for the Respondents: | Mr P Argy of Keypoint Law |
ORDERS
Fair Work Ombudsman v Priority Matters Pty Ltd & Kia Silverbrook (SYG3209/2013)
The Court declares that, during the period from 11 March 2013 to 9 August 2013, Priority Matters Pty Ltd contravened:
(a)section 323(1) of the Fair Work Act 2009 (Cth) (Fair Work Act), by failing to pay Bolton, Dalton, Lee, Marsh, Nair, Fitzgerald, Netana, Nget, News, Pavlovski, Tang, Teh, van Rensburg, Zhang and Zou amounts payable to them in respect of the performance of work in full (except as provided by way of permitted deduction under s.324 of the Fair Work Act);
(b)section 44(1) of the Fair Work Act Act, by failing to pay Bolton, Dalton, Lee, Nair, Fitzgerald, Nget, News, Tang, Teh, van Rensburg, Zhang and Zou amounts payable to them in respect of paid public holidays in accordance with s.116 of the Fair Work Act;
(c)section 44(1) of the Fair Work Act, by failing to pay Bolton, Lee and van Rensburg for their untaken paid annual leave on termination of their employment in accordance with s.90(2) of the Fair Work Act;
(d)section 45 of the Fair Work Act, by failing to pay Dalton, Fitzgerald, Marsh, Nair, Netana, News, Pavlovski, Nget minimum rates of pay in accordance with clause A.2.5 of the Clerks Private Sector Award 2010;
(e)section 45 of the Fair Work Act, by failing to pay Marsh any casual loading in accordance with clause A.5.4 of the Clerks Private Sector Award 2010;
(f)section 293 of the Fair Work Act, by failing to pay Bolton, van Rensburg, Lee, Zou, Tang, Teh and Zhang the national minimum wage; and
(g)section 542 of the Fair Work Act, by failing to pay Bolton, Dalton, Lee, Marsh, Nair, Fitzgerald, Netana, Nget, News, Pavlovski, Tang, Teh, van Rensburg, Zhang and Zou their safety net contractual entitlements.
The Court declares that Mr Kia Silverbrook was involved, within the meaning of s.550(1) of the Fair Work Act, in each of the contraventions referred to in declaration 1 above.
Fair Work Ombudsman v Superlattice Solar Pty Ltd & Kia Silverbrook (SYG3210/2013)
The Court declares that, during the period 11 March 2013 to 19 August 2013, Superlattice Solar Pty Ltd contravened:
(a)section 323(1) of the Fair Work Act, by failing to pay Dr Wohlthat amounts payable to him in respect of the performance of work in full (except as provided by way of permitted deduction under s.324 of the Fair Work Act);
(b)section 44(1) of the Fair Work Act, by failing to pay Dr Wohlthat amounts payable to him in respect of paid public holidays in accordance with s.116 of the Fair Work Act;
(c)section 44(1) of the Fair Work Act, by failing to pay Dr Wohlthat for his untaken paid annual leave on termination of his employment in accordance with s.90(2) of the Fair Work Act;
(d)section 45 of the Fair Work Act, by failing to pay Dr Wohlthat minimum rates of pay in accordance with clause A.2.5 of the Professional Employees Award 2010;
(e)section 44(1) of the Fair Work Act, by failing to pay Dr Wohlthat payment in lieu of notice of termination in accordance with s.117(2);
(f)section 45 of the Fair Work Act, by failing to give Dr Wohlthat one month’s notice of termination in accordance with clause 12.2 of the Professional Employees Award 2010; and
(g)section 542 of the Fair Work Act, by failing to pay Dr Wohlthat his safety net contractual entitlements.
The Court declares that Mr Kia Silverbrook was involved, within the meaning of s.550(1) of the Fair Work Act, in each of the contraventions referred to in declaration 3 above.
Fair Work Ombudsman v Geneasys Pty Ltd (in liq) & Kia Silverbrook (SYG3228/2013)
The Court declares that, during the period from 25 February 2013 to 9 August 2013, Mr Kia Silverbrook was involved, within the meaning of s.550 of the Fair Work Act, in contraventions by Geneasys Pty Ltd (in liquidation) of:
(a)section 323(1) of the Fair Work Act, by failing to pay Worsman, Boulter, Azimi, Moini and Facer amounts payable to them in respect of the performance of work in full (except as provided by way of permitted deduction under s.324 of the Fair Work Act);
(b)section 44(1) of the Fair Work Act, by failing to pay Worsman, Boulter, Azimi, Moini and Facer amounts payable to them in respect of paid public holidays in accordance with s.116 of the Fair Work Act;
(c)section 44(1) of the Fair Work Act, by failing to pay Boulter for a period of annual leave in accordance with s.90(1) of the Fair Work Act;
(d)section 44(1) of the Fair Work Act, by failing to pay Worsman, Boulter, Azimi, Moini and Facer for their untaken paid annual leave on termination of their employment in accordance with s.90(2) of the Fair Work Act;
(e)section 44(1) of the Fair Work Act, by failing to pay Worsman payment in lieu of notice of termination in accordance with s.117(2);
(f)section 45 of the Fair Work Act, by failing to give Worsman one month’s notice of termination in accordance with clause 12.2 of the Professional Employees Award 2010;
(g)section 293 of the Fair Work Act, by failing to pay Azimi, Moini and Facer the national minimum wage;
(h)section 328 of the Fair Work Act, by failing to comply with a guarantee of annual earnings given to Azimi, Moini and Facer; and
(i)section 542 of the Fair Work Act, by failing to pay Worsman and Boulter their safety net contractual entitlements.
Fair Work Ombudsman v Kia Silverbrook & Janette Lee (SYG1743/2014)
The Court declares that, during the period from 7 February 2013 to 12 December 2013, Mr Kia Silverbrook and Ms Janette Lee were involved, within the meaning of s.550 of the Fair Work Act, in contraventions by Silverbrook Research Pty Ltd (in liquidation) of:
(a)section 323(1) of the Fair Work Act, by failing to pay Chan, Harrison, McCarthy, Mohamad and Nguyen amounts payable to them in respect of the performance of work in full (except as provided by way of permitted deduction under s.324 of the Fair Work Act);
(b)section 44(1) of the Fair Work Act, by failing to pay Chan, Harrison, McCarthy, Mohamad and Nguyen amounts payable to them in respect of paid public holidays in accordance with s.116 of the Fair Work Act;
(c)section 44(1) of the Fair Work Act, by failing to pay Chan for periods of personal leave in accordance with s.99 of the Fair Work Act;
(d)section 44(1) of the Fair Work Act, by failing to pay Chan and Harrison for periods of annual leave in accordance with s.90(1) of the Fair Work Act;
(e)section 44(1) of the Fair Work Act, by failing to pay Harrison, McCarthy, Mohamad and Nguyen for their untaken paid annual leave on termination of their employment in accordance with s.90(2) of the Fair Work Act;
(f)section 44(1) of the Fair Work Act, by failing to pay McCarthy payment in lieu of notice of termination in accordance with subsection 117(2);
(g)section 44(1) of the Fair Work Act, by failing to pay McCarthy redundancy pay in accordance with s.119 of the Fair Work Act;
(h)section 45 of the Fair Work Act, by failing to pay Chan and Nguyen minimum rates of pay in accordance with clause A.2.5 of the Clerks Private Sector Award 2010;
(i)section 45 of the Fair Work Act, by failing to pay Harrison minimum rates of pay in accordance with clause 15 of the Professional Employees Award 2010;
(j)section 293 of the Fair Work Act, by failing to pay McCarthy and Mohamad the national minimum wage; and
(k)section 542 of the Fair Work Act, by failing to pay Chan, Harrison, McCarthy, Mohamad and Nguyen their safety net contractual entitlements.
Fair Work Ombudsman v Mpowa Pty Ltd & Kia Silverbrook (SYG 1780/2014)
The Court declares that, during the period from 25 February 2013 to 13 December 2013, Mpowa Pty Ltd contravened:
(a)section 323(1) of the Fair Work Act, by failing to pay Childs, Dumbrell, Herceg, Jones, Kalsi, Kelly, Lai, Long, Maier, Newman, Ramani, Shepanski, Toth, Tucker, Whitlock, Whittaker and Yourlo amounts payable to them in respect of the performance of work in full (except as provided by way of permitted deduction under s.324 of the Fair Work Act)
(b)section 44(1) of the Fair Work Act, by failing to pay Childs, Dumbrell, Jones, Kelly, Lai, Maier, Newman, Shepanski, Toth, Whittaker and Whitlock for their periods of annual leave in accordance with s.90(1) of the Fair Work Act;
(c)section 44(1) of the Fair Work Act, by failing to pay Kalsi, Shepanski, and Yourlo for their untaken paid annual leave on termination of their employment in accordance with s.90(2) of the Fair Work Act;
(d)section 44(1) of the Fair Work Act, by failing to pay Childs, Dumbrell, Lai, Newman, Ramani, Shepanski and Whittaker for their periods of personal leave in accordance with s.99 of the Fair Work Act;
(e)section 44(1) of the Fair Work Act, by failing to pay Childs, Dumbrell, Jones, Kalsi, Kelly, Lai, Long, Maier, Newman, Ramani, Shepanski, Toth, Whitlock, Whittaker and Yourlo amounts payable to them in respect of paid public holidays in accordance with s.116 of the Fair Work Act;
(f)section 44(1) of the Fair Work Act, by failing to pay Yourlo payment in lieu of notice of termination in accordance with s.117(2) of the Fair Work Act;
(g)section 44(1) of the Fair Work Act, by failing to pay Yourlo redundancy pay in accordance with s.119 of the Fair Work Act;
(h)section 45 of the Fair Work Act, by failing to pay Yourlo redundancy pay in accordance with clause 13.5 of the Professionals Employees Award 2010;
(i)section 45 of the Fair Work Act, by failing to pay Toth, Yourlo, Childs, Dumbrell, Jones, Kalsi, Kelly, Lai, Long, Maier, Newman, Ramani, Shepanski, Tucker, Whitlock and Whittaker minimum rates of pay in accordance with clause 15 and A.3.6 of the Professionals Employees Award 2010;
(j)section 293 of the Fair Work Act by failing to pay Herceg the national minimum wage; and
(k)section 542 of the Fair Work Act, by failing to pay Childs, Dumbrell, Herceg, Jones, Kalsi, Kelly, Lai, Long, Maier, Newman, Ramani, Shepanski, Toth, Tucker, Whitlock, Whittaker and Yourlo their safety net contractual entitlements.
The Court declares that Mr Kia Silverbrook was involved, within the meaning of s.550(1) of the Fair Work Act in each of the contraventions referred to in declaration 7 above.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 3209 of 2013
| FAIR WORK OMBUDSMAN |
Applicant
And
| PRIORITY MATTERS PTY LTD |
First Respondent
| KIA SILVERBROOK |
Second Respondent
SYG 3210 of 2013
| FAIR WORK OMBUDSMAN |
Applicant
And
| SUPERLATTICE SOLAR PTY LTD |
First Respondent
| KIA SILVERBROOK |
Second Respondent
SYG 3228 of 2013
| FAIR WORK OMBUDSMAN |
Applicant
And
| GENEASYS PTY LTD (IN LIQ) |
First Respondent
| KIA SILVERBROOK |
Second Respondent
SYG 1743 of 2014
| FAIR WORK OMBUDSMAN |
Applicant
And
| KIA SILVERBROOK |
First Respondent
| JANETTE LEE |
Second Respondent
SYG 1780 OF 2014
| FAIR WORK OMBUDSMAN |
Applicant
And
| MPOWA PTY LTD |
First Respondent
| KIA SILVERBROOK |
Second Respondent
REASONS FOR JUDGMENT
Introduction and background
These are five matters brought in this Court under the Fair Work Act 2009 (Cth) (Fair Work Act) which were dealt with concurrently. Briefly, the basic facts are that, between February and December 2013, a number of employees were not paid their entitlements. The principal application to make good the underpayments was claimed against the five respondent companies (Corporate Respondents) but two individuals, Mr Kia Silverbrook and Ms Janette Lee (Directors), were said to be accessorily liable.
In 2016, a judge of this Court delivered three judgments.[1] The corporate employers were held to have contravened the Fair Work Act; the individual respondents were held not to be liable. An order for costs in a lump sum of $800,000 was made against the Fair Work Ombudsman in favour of the individual respondents.
[1] Fair Work Ombudsman v Priority Matters Pty Ltd & Anor [2016] FCCA 1474 (the primary judgment); Fair Work Ombudsman v Priority Matters Pty Ltd & Anor (No 2) [2016] FCCA 2696 (the recusal judgment) and Fair Work Ombudsman v Priority Matters Pty Ltd & Anor (No 3) [2016] FCCA 2744 (the penalty and costs judgment)
The Fair Work Ombudsman appealed on various bases to the Federal Court. The Federal Court (Flick J) concluded that all three judgments of this Court should be set aside in whole or part and the proceedings remitted to this Court for further hearing.[2] The Court has been reconstituted for that purpose.
[2] Fair Work Ombudsman v Priority Matters Pty Ltd [2017] FCA 833 (the appeal judgment)
In dealing with the matter on remittal, it is important to keep at the forefront of one’s mind the orders made in this Court and the orders made in the Federal Court on appeal. In the primary judgment, this Court made the following orders:
SYG 3209 of 2013
(1) Pursuant to s.545(2)(b) of the Fair Work Act 2009 Priority Matters Pty Ltd being the first respondent pay the total of $452,997.98 to the applicant, comprising:
(a) Kenneth Bolton $133,973.39
(b) Tracey Dalton $12,638.01
(c) Christine Lee $58,864.42
(d) Donna Marsh $436.70
(e) Ana Nair $13,527.28
(f) Tanya Fitzgerald (née Nair) $10,647.92
(g) Lisa Netana $820.39
(h) Leonie News $23,583.73
(i) Narith Nget $3,434.30
(j) Julie Pavlovski $6,674.08
(k) Hui Helen Tang $14,825.76
(l) Winnie Siew Kim The $21,036.08
(m) Gideon van Rensburg $110,746.08
(n) Yinyin Zhang $18,495.44
(o) Annie Y-Guan Zou $23,294.40
being the amounts owed to the said former employees as a result of the contraventions by the first respondent, within 28 days of the date of the final order disposing of any penalty hearing.
(2) Pursuant to s.547(2) of the Fair Work Act 2009, the first respondent pay interest on the amounts owed to the employees calculated from 20 December 2013 within 28 days of the date of the final order disposing of any penalty hearing.
(3) The penalty hearing, unless the application for a penalty is disposed of by a consent order, be fixed on a date to be agreed.
(4) Judgment for the second respondent against the applicant.
(5) Further directions are to be made for hearing as to penalty and costs.
(6) Liberty granted to apply in relation to the subject matter of the further directions on 2 days’ notice.
SYG 3210 of 2013
(1) Pursuant to s.545(2)(b) and s.545(1) of the Fair Work Act 2009 Superlattice Solar Pty Ltd being the first respondent pay $55,969.11 to the applicant, being the amount owed to Soren Wohlthat, as a result of the contraventions by the first respondent, within 28 days of the date of the final order disposing of any penalty hearing.
(2) Pursuant to s.547(2) of the Fair Work Act 2009, the first respondent pay interest on the said amount owed to the employee calculated from 20 December 2013 within 28 days of the date of the final order disposing of any penalty hearing.
(3) The penalty hearing, unless the application for a penalty is disposed of by a consent order, be fixed on a date to be agreed.
(4) Judgment for the second respondent against the applicant.
(5) Further directions are to be made for hearing as to penalty and costs
(6) Liberty granted to apply in relation to the subject matter of the further directions on 2 days’ notice.
SYG 3228 of 2013
(1) Judgment for the second respondent against the applicant.
(2) Further directions are to be made as for hearing as to costs.
(3) Liberty granted to apply in relation to the subject matter of the further directions on 2 days’ notice.
SYG 1743 of 2014
(1) Judgment for the first respondent and second respondent against the applicant.
(2) Further directions are to be made for hearing as to costs.
(3) Liberty granted to apply in relation to the subject matter of the further directions on 2 days’ notice.
SYG 1780 of 2014
(1) Pursuant to s.545(2)(b) of the Fair Work Act 2009 Mpowa Pty Ltd being the first respondent pay the total of $608,433.26 to the applicant, comprising:
(a) Michael Shepanski $62,393.66
(b) Jane Childs $54,398.82
(c) Tim Long $116,564.03
(d) Anthony Whitlock $20,026.94
(e) Kong Yin Lai $32,568.61
(f) Yogesh Ramani $20,922.06
(g) Chris Jones $26,271.93
(h) Greg Dumbrell $32,201.34
(i) Malcolm Whittaker $47,176.30
(j) Andy Newman $53,167.98
(k) Gregg Kelly $47,558.77
(l) Luke Tucker $6,296.19
(m) Zoltan Toth $37,384.78
(n) Zhenya Yourlo $51,501.85
being the amounts owed to the said employees as a result of the contraventions by the first respondent, within 28 days of the date of the final order disposing of any penalty hearing.
(2) Pursuant to s.547(2) of the Fair Work Act 2009, the first respondent pay interest on the amounts owed to the employees calculated from 20 December 2013 within 28 days of the date of the final order disposing of any penalty hearing.
(3) The penalty hearing, unless the application for a penalty is disposed of by a consent order, be fixed on a date to be agreed.
(4) Judgment for the second respondent against the applicant.
(5) Further directions are to be made for hearing as to penalty and costs.
(6) Liberty granted to apply in relation to the subject matter of the further directions on 2 days’ notice.
In the recusal judgment, this Court ordered as follows:
(1) The application in a case for recusal is dismissed.
(2) The adjournment application by the Applicant is granted and the matter is fixed part-heard on penalty and costs at 2:15 P.M. on Friday 21 October 2016.
In the penalty and costs judgment, this Court made the following orders:
SYG 3209 of 2013
(1) Pursuant to s.546 of the Fair Work Act 2009 (Cth) the First Respondent pay to the Commonwealth of Australia a pecuniary penalty in the amount of $45,000.00 within 28 days.
(2) Pursuant to s.570(2) of the Fair Work Act 2009 (Cth) the Applicant pay the costs of the Second Respondent in the proceedings as well as the costs ordered in SYG 3210 of 2013, SYG 3228 of 2013, SYG 1743 of 2014 and SYG 1780 of 2014, as one single set of costs in the fixed amount of $800,000.00.
SYG 3210 of 2013
(1) Pursuant to s.546 of the Fair Work Act 2009 (Cth) the First Respondent pay to the Commonwealth of Australia a pecuniary penalty in the amount of $5,000.00 within 28 days.
(2) Pursuant to s.570(2) of the Fair Work Act 2009 (Cth) the Applicant pay the costs of the Second Respondent as part of one single set of costs as fixed in matter number SYG 3209 of 2013.
SYG 3228 of 2013
(1) Pursuant to s.570(2) of the Fair Work Act 2009 (Cth) the Applicant pay the costs of the Second Respondent as part of one single set of costs as fixed in matter number SYG 3209 of 2013.
SYG 1743 of 2014
(1) Pursuant to s.570(2) of the Fair Work Act 2009 (Cth) the Applicant pay the costs of the First and Second Respondents as part of one single set of costs as fixed in matter number SYG 3209 of 2013.
SYG 1780 of 2014
(1) Pursuant to r.16.05(2)(e) of the Federal Circuit Court Rules 2001 (Cth), the Orders entered on 17 June 2016 are amended by varying order 2 by deleting “20 December 2013” and inserting “27 June 2014”.
At the time of delivering judgment on the appeal, Flick J ordered that the parties bring in short minutes of order to give effect to his reasons. Subsequently, on 16 August 2017, Flick J made the following orders by consent:
In respect of each of matters NSD1939/2016, NSD1940/2016, NSD1941/2016, NSD1942/2016 and NSD1943/2016:
1. The Notice of Objection to Competency of Appeal in each matter is dismissed.
2. The Notice of Contention in each matter is dismissed.
3. The Cross Appeal in each matter is dismissed.
4. The application made by the Respondents in Court on 16 March 2017 to withdraw admissions in the Defence filed in each proceedings below, is refused.
5. The appeal in each matter is allowed in part.
6. In respect of the judgment delivered by the Federal Circuit Court on 17 June 2016 in Fair Work Ombudsman v Priority Matters Pty Ltd & Ors [2016] FCCA 1474 (the “Primary Judgment”):
(a) the findings as to the application of section 550 of the Fair Work Act 2009 (Cth) (the “FW Act”) to Mr Silverbrook and Ms Lee at [133], [139], [212], [225], [237], [250], [254], [268] are set aside;
(b) the findings concerning communications with the Australian Taxation Office and the actions of the Appellant at [151]–[153], [160], [163], [172] and [174] are set aside;
(c) the findings concerning the Appellant’s Interlocutory Application for contempt in matter SYG3209/2013 and the actions of the Appellant at [284]–[293] are set aside.
7. In respect of the orders issued by the Federal Circuit Court on 17 June 2016 consequent on the Primary Judgment:
(a) in matter SYG3209/2013, Order 4 is set aside;
(b) in matter SYG3210/2013, Order 4 is set aside;
(c) in matter SYG1743/2014, Order 1 is set aside;
(d) in matter SYG3228/2013, Order 1 is set aside;
(e) in matter SYG1780/2014, Order 4 is set aside.
8. The whole of the judgment delivered by the Federal Circuit Court on 18 October 2016 in Fair Work Ombudsman v Priority Matters Pty Ltd & Ors (No 2) [2016] FCCA 2696 (the “Recusal Judgment”) is set aside.
9. The orders issued in each matter by the Federal Circuit Court on 18 October 2016 consequent on the Recusal Judgment are set aside.
10. The whole of the judgment delivered by the Federal Circuit Court on 21 October 2016 in Fair Work Ombudsman v Priority Matters Pty Ltd & Ors (No 3) [2016] FCCA 2744 (the “Penalty and Costs Judgment”) is set aside.
11. In respect of the orders for costs and penalties issued by the Federal Circuit Court on 21 October 2016 consequent on the Penalty and Costs Judgment:
(a) in matter SYG3209/2013, Orders 1 and 2 are set aside;
(b) in matter SYG3210/2013, Orders 1 and 2 are set aside;
(c) in matter SYG1743/2014, Order 1 is set aside;
(d) in matter SYG3228/2013, Order 1 is set aside;
(e) in matter SYG1780/2014, Orders 2 and 3 are set aside.
12. Each of the proceedings be remitted to the Federal Circuit Court, differently constituted, for further hearing according to law, only in respect of:
(a) liability of Mr Silverbrook under section 550 of the FW Act in matters SYG3209/2013, SYG3210/2013, SYG1743/2014, SYG3228/2013 and SYG1780/2014;
(b) liability of Ms Lee under section 550 of the FW Act in matter SYG1743/2014;
(c) declarations and quantum of penalty in respect of the corporate respondents; and
(d) (subject to liability) declarations and quantum of penalty in respect of Mr Silverbrook and Ms Lee.
13. No order as to costs.
THE COURT NOTES THAT:
14. Undertakings have been provided by the parties to the Court, that:
(a) the Appellant will refund to Superlattice Solar Pty Ltd and Mpowa Pty Limited the amounts of penalties set out in the Orders of the Federal Circuit Court on 21 October 2016 in matters SYG3210/2013 and SYG1780/2014 respectively, consequent on those Orders being set aside in Order 11; and
(b) the Respondents, Superlattice Solar Pty Ltd and Mpowa Pty Limited, will have the monies refunded to them by the Appellant in respect of penalties, held on the trust account of their solicitors until matters SYG3210/2013 and SYG1780/2014 are disposed of.
It follows that the only matters requiring redetermination in this Court in consequence of the remittal are the matters identified in Order 12 of the Federal Court set out above.
Annexure A to this judgment sets out an overview of each of the proceedings, the primary contraventions made out in respect of each of the Corporate Respondents, and the issues on remitter. Declarations are sought in these proceedings in respect of the Corporate Respondents, and proposed declarations based on the findings made by the Court in the primary judgment were included in the Fair Work Ombudsman’s submissions.
It was agreed between the Court and the parties that in these proceedings the Court would deal with the liability of the Directors and the question of penalty would be dealt with subsequently.
It is also important to keep in mind in what capacity the individual respondents are said to be accessorily liable. Below is a table setting out the corporate employer in each proceeding and the respective respondents:
Proceeding
Corporate Employers
First Respondent
Second Respondent
SYG3209/2013
Priority Matters Pty Ltd
(Priority Matters)Priority Matters
Kia Silverbrook
SYG3210/2013
Superlattice Solar Pty Ltd
(Superlattice)Superlattice
Kia Silverbrook
SYG3228/2013
Geneasys Pty Ltd (in liq)
(Geneasys)Geneasys
Kia Silverbrook
SYG1743/2014
Silverbrook Research Pty Ltd (in liq) (Silverbrook Research)
Kia Silverbrook
Janette Lee
SYG1780/2014
Mpowa Pty Ltd
(Mpowa)Mpowa
Kia Silverbrook
It should be noted in that connection that while Mr Silverbrook is a respondent in all five of the proceedings, Ms Lee is a respondent only in matter SYG1743 of 2014.
The Fair Work Ombudsman brought the proceedings against the Corporate Respondents in respect of their collective failure to pay wages and entitlements under the Fair Work Act, totalling in excess of $1.9 million (excluding interest), to 43 employees over a period of 10 months from February to December 2013. In addition, the Fair Work Ombudsman alleged that the Directors were accessorily liable for the Corporate Respondents’ contraventions.
This Court found in the primary judgment that the Corporate Respondents contravened a number of provisions of the Fair Work Act,[3] but did not find that the Directors were accessories to the primary contraventions.[4] I set out below in respect of each Corporate Respondent the number of contraventions found, the contravention period, the number of employees concerned and the quantum of underpayment:
[3] primary judgment at [202]-[211] (Priority Matters), [216]-[220] and [224] (Superlattice), [227]-[235] (Geneasys), [239]-[249] (Silverbrook Research) and [256] and [258]-[266] (Mpowa), summarised at [299]; order 1 in SYG 3209 of 2013 (Priority Matters), order 1 in SYG 3210 of 2013 (Superlattice) and order 1 in SYG 1780 of 2014 (Mpowa).
[4] primary judgment at [212] (Priority Matters), [225] (Superlattice), [237] (Geneasys), [250]-[254] (Silverbrook Research), [268] (Mpowa); order 1 in SYG 3228 of 2013 and order 1 in SYG 1743 of 2014.
Company
Employees
Contraventions
Audit Period
Underpayment
Priority Matters
15
7
11.03.13to 09.08.13
$452,997.98
Superlattice
1
7
11 03.13 to 19.08.13
$55,969.11
Geneasys
5
9
25.02.13 to 09.08.13
$362,972.97
Silverbrook Research
5
11
07.02.13 to 12.12.13
$390,894.62
Mpowa
17
11
25.02.13 to 13.12.13
$608,433.26
It is particularly important to bear in mind that on appeal, the Federal Court, amongst other things, affirmed the findings of the primary judge that the Corporate Respondents were liable for the pleaded contraventions but set aside the primary judge’s findings that the Directors were not accessorily liable.[5]
[5] appeal judgment at [17], [62], [81], [91], [98], [102], [128] and [134]-[135], summarised at [234]; orders 6 and 7 made by the Federal Court on 16 August 2017 in proceedings NSD 1939 of 2016, NSD 1940 of 2016, NSD 1941 of 2016, NSD 1942 of 2016 and NSD 1943 of 2016.
The respondents submit that it is also important for the Court to understand the context of these proceedings in order to appreciate why the contraventions committed by the Corporate Respondents occurred and why, in their submission, the Directors should not be found to have been knowingly concerned in those contraventions. To that end, the respondents sought to rely, not only upon the evidence received by the primary judge, but new evidence said to have at least contextual significance and to provide an up to date appraisal by the Directors concerning their activities and state of knowledge at the relevant time.
The Fair Work Ombudsman emphasises that this is not a retrial but a continuation of the proceedings before the primary judge.[6] Accordingly, all evidence filed in the proceedings and obtained under examination or cross-examination remains in the proceedings. Evidence which has already been adduced need not be adduced again. Findings which have been made and which were not disturbed on appeal remain unaffected by the remittal.[7]
[6] Sklavos v Australasian College of Dermatologists [2017] FCAFC 128; (2017) 347 ALR 78 at [177] (Bromberg J, with Griffiths and Bromwich JJ relevantly agreeing).
[7] Fernando v Commonwealth of Australia [2014] FCAFC 181; (2014) 231 FCR 251 at [147]-[148] (Besanko and Robertson JJ); SZQER v Minister for Immigration [2014] FCAFC 14 at [63] (Robertson J, with Tracey and Flick JJ agreeing).
As a consequence, the Fair Work Ombudsman relied on the evidence already filed in the proceedings. That evidence is, for a proceeding in this Court, exceptionally detailed. A table setting out that evidence is annexed to these reasons.[8]
[8] annexure B.
The Fair Work Ombudsman opposed the respondents having leave to rely upon fresh affidavits filed by them in March 2018. After argument, and subject to some deletions, I received the new evidence on a provisional basis, subject to submissions on relevance. This is discussed further below.
In addition to the voluminous exhibits previously received by the primary judge, I received one additional exhibit.[9]
[9] exhibit R1.
In making my rulings on evidence, I accepted the following propositions put by the respondents.
A preliminary issue concerned the scope of the remittal to this Court, and what additional evidence may be adduced by the parties. I have accepted the respondents’ submissions on that issue as qualified below that this Court should take the following approach:
a)this Court is to make fresh findings of fact and a determination as to whether the Directors are liable as accessories to the Corporate Respondents’ contraventions;
b)this Court is not bound to accept any findings of fact made by the primary judge which were left undisturbed by the Federal Court and which have some bearing upon the issue of accessorial liability;
c)evidence filed with the Court or adduced under examination or cross-examination remains evidence in the remitted proceedings;
d)the parties were entitled to file further evidence in relation to accessorial liability, as the Court has permitted in the case of the respondents.[10] This covers both fresh evidence as well as a re‑packaging or reframing of prior evidence in light of Flick J’s reasons.
[10] order 2 of my orders made on 12 December 2017.
This approach is consistent with the terms of Flick J’s remittal in the appeal judgment. At [129], Flick J directed that “(f)indings of fact should be made on re-hearing and a fresh determination made as to their accessorial liability.” Section 28(1)(c) of the Federal Court of Australia Act 1976 (Cth) expressly permits the making of remittals that are subject to directions of the nature made by Flick J.
I accepted that the task for the Fair Work Ombudsman was not simply to rely upon the factual findings made by the primary judge supporting the case of accessorial liability but rather, to deal with all of the available evidence bearing upon that issue.
Further, the respondents contend that, not only are they entitled to adduce fresh evidence bearing upon accessorial liability, but they are also entitled to take the benefit of positive credibility findings made by the primary judge in respect of the evidence before him. I find that, while I must give weight to the credibility findings of the primary judge, I am not bound by them, and, to the extent that they bear upon the factual findings and conclusions of the Court on accessorial liability which were disturbed on appeal, the weight to be given to them should be slight.
The standing of the Fair Work Ombudsman
A further preliminary point concerned the status of the Fair Work Ombudsman and whether she has standing and authority to appear in these proceedings.
The proceedings were commenced under s.539(2) of the Fair Work Act.[11] At the time the proceedings were commenced, the Fair Work Ombudsman was Ms Natalie James. However, by operation of ss.687(4) and 701, Ms James is no longer an inspector. The respondents contended that she therefore has no standing to make the present application. There has been no application by the current Fair Work Ombudsman (Ms Sandra Parker) to replace Ms James as the applicant in the proceedings, and no application by Ms James to be permitted to continue the proceedings in some other capacity.
[11] see [1] of the Statements of Claim in each of the proceedings [Priority Matters: Court Book Vol 1: Tab 2; Superlattice: Court Book Vol 1: Tab 6; Geneasys: Court Book Vol 1: Tab 10; Silverbrook Research: Court Book Vol 1: Tab 14; Mpowa: Court Book Vol 1: Tab 19].
The respondents submitted that the present Fair Work Ombudsman should have to make a fresh application to the Court for orders that the Directors are liable as accessories, if this was permitted within the time limit in s.544 of the Fair Work Act, failing which the proceedings should be struck out as incompetent.
I rejected the respondents’ contention in oral argument on the first day of the trial of the matter before me. My reasons for doing so appear on transcript at page 28, lines 34-39 and page 29, lines 16-19 in the following terms:
I’m against you on the question of standing, Mr Argy. I have no doubt that the scheme of the Act is to allow the person holding the office of the Fair Work Ombudsman from time to time to bring proceedings [in the name of the office], given the automatic conferral of the powers of an inspector on the holder of that office. The only question would be a question of fact whether a particular person did hold that office at a particular time, and I gather that was dealt with earlier in the proceedings.
…
I’m still against you on the basis that section 701 makes clear that the person holding the office from time to time has the powers and office of an inspector and can do whatever an inspector can do. So that point’s resolved against you.
Considerations regarding the determination of accessorial liability
Knowledge and involvement
The task before the Court in these proceedings is to determine whether the Directors were involved in the Corporate Respondents’ contraventions. In making that assessment, the following principles may be extracted from the authorities:[12]
[12] Yorke v Lucas (1985) 158 CLR 661; Rural Press Ltd v Australian Competition and Consumer Commission [2002] FCAFC 213; (2002) 118 FCR 236 at 281-2; Dowling v Kirk & 16 Ors [2007] FMCA 2106; see also NSW Nurses Association v SOS Nursing & Home Care Service Pty Ltd [2011] FMCA 225 per Emmett FM (as she then was) at [165].
a)a person (including a body corporate[13]) will only be regarded as “involved” in a contravention if the person intentionally participated in the contravention;
[13] section 2C of the Acts Interpretation Act 1901 (Cth).
b)intentional participation requires actual, not constructive, knowledge of the essential matters that make up the contravention;[14]
c)being “knowingly concerned” in a contravention requires association with, implication in, or a practical connection with the contravening conduct;[15]
d)however, it is not necessary that the person physically do anything to further the contravention. It is sufficient if the person, by what they said and agreed to do, in fact became associated with and thus involved, in the relevant sense, in the conduct constituting the contravention;[16]
e)it is the knowledge of the alleged accessory and not what might be postulated of a hypothetical person in the position of the alleged accessory which must be demonstrated, although what might be postulated of such a hypothetical person is not irrelevant. Knowledge must be the only rational inference available;[17]
f)the requisite actual knowledge must be present at the time of the contravention. A later acquisition of knowledge of the essential matters is not sufficient;[18] and
g)there are three qualifications with regard to knowledge:
i)first, it is unnecessary to prove that the respondents knew that their actual participation was a breach of the Fair Work Act. This is consistent with the common law and statutory principle that no person will be excused from liability because of ignorance of the law;[19]
ii)secondly, where there is a combination of suspicious circumstances and a failure to make enquiry, it may be possible to infer actual knowledge (wilful blindness);[20] and
iii)where the accessory is involved in and has actual knowledge of the “system” of non-compliance, proof of actual knowledge of each single instance of non-compliance is not necessary. Proof of the accessory’s knowledge of the system of non-compliance is a conventional and not novel means of establishing the accessory’s liability.[21]
[14] Compaq Computer Australia Pty Ltd v Merry (1998) 157 ALR 1 at 4-5; Yorke v Lucas and Quinlivan v Australian Competition and Consumer Commission (2004) 160 FCR 1 at [9].
[15] Qantas Airways Ltd v Transports Workers’ Union ofAustralia [2011] FCA 470; (2011) 280 ALR 503 at [324]-[325]; Trade Practices Commission v Australia Meat Holdings Pty Ltd (1988) 83 ALR 299 Wilcox J at 357 citing Ashbury v Reid [1961] WAR 49; see Fair Work Ombudsman v South Jin Pty Ltd [2015] FCA 1456 at [227].
[16] R v Tannous(1987) 10 NSWLR 303 at 308; cited in Leighton Contractors Pty Ltd v Construction, Forestry, Mining and Energy Union (2006) 154 IR 228, per Le Miere J at [29]; Qantas Airways at [325].
[17] Pereira v Director of Public Prosecutions (1988) 82 ALR 217 at 219-220.
[18] South Jin at [234].
[19] Walden v Hensler[1987] HCA 54; (1987) 163 CLR 561.
[20] Pereira at 219-220 per Mason CJ, Deane, Dawson, Toohey and Gaudron JJ; Compaq Computer at 5.
[21] Australian Communications and Media Authority v Mobilegate Ltd A Company Incorporated in Hong Kong (No 8) (2010) 275 ALR 293 at [172]; Fair Work Ombudsman v Grouped Property Services Pty Ltd [2016] FCA 1034 at [955]-[957].
Wilful blindness
Further, with regard to wilful blindness, intention may be proved by showing an intention by some act or conduct which contributes to the commission of the offence, or by proving “wilful blindness” or a “deliberate shutting of one’s eyes to what is going on”,[22] which includes “deliberately abstain[ing] from asking questions or making enquiries.”[23] It does not include recklessness, negligence or foresight of the probable consequences of conduct.[24]
[22] Giorgianni v R (1985) 156 CLR 473.
[23] Medical Benefits Funds of Australia Ltd v Cassidy (2003) 135 FCR 1 at [87]; Pereira at 219-220.
[24] The relevant principles are addressed in, for example, Yorke v Lucas at 667-670 and 676-677; Edwards v R (1992) 173 CLR 653; Australian Competition and Consumer Commission v Giraffe World Australia Pty Ltd (No 2) (1999) 95 FCR 302 at [184]-[187]; Rural Press Ltd at [67], and on appeal [2003] HCA 75; (2003) 216 CLR 53 at [48]; Australian Competition and Consumer Commission v IMB Group Pty Ltd [2003] FCAFC 17 at [133]-[134]; Cassidy at [12] and [66]-[94]; Quinlivan at [9]; Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v John Holland Pty Ltd (2009) 180 IR 350 at [44] and [45]; Fair Work Ombudsman v Quincolli Pty Ltd [2011] FMCA 139 at [68].
In South Jin Pty Ltd White J held at [231]–[233] that actual knowledge can be inferred from the combination of a respondent’s knowledge of suspicious circumstances and the decision by the respondent not to make enquiries to remove those suspicions, but not every deliberate failure to make enquiries will support the inference of actual knowledge. Where a person does not know because he does not want to know, where “the substance of the thing is borne in upon his mind with a conviction that full details or precise proofs may be dangerous, because they may embarrass his denials or compromise his protests”,[25] he has that knowledge, but deliberately refrains from asking questions or seeking further information in order to maintain a state of apparent ignorance. That is wilful blindness.
Lack of necessity for the accessory to know that their conduct was unlawful or constituted a contravention
[25] Zamora (No 2) [1921] 1 AC 801 at 812-3 per Lord Sumner.
An accessory does not need to have knowledge that their conduct was unlawful or constituted a contravention.[26]
[26] Yorke v Lucas; Giraffe World at [186]; Rural Press Ltd at [159]-[163]. See also Rural Press Ltd v Australian Competition and Consumer Commission (2003) 216 CLR 53 at [48] (Gummow, Hayne and Heydon JJ).
The Fair Work Ombudsman submits that the accessory need not know the existence or content of the relevant industrial instrument. There have been differing views in the Federal Court in this regard. The recent divide has arisen from Potter v Fair Work Ombudsman[27] as well as Fair Work Ombudsman v Devine Marine Group Pty Ltd,[28] which is in part consistent with Potter. Potter is authority for the proposition that an alleged accessory must have actual knowledge not only of the existence of the relevant award but also that it applied to the employees in question.[29] In Potter, Cowdroy J held:[30]
The primary submission of the FWO is that Mrs Potter did not need to know that the Clerical NAPSA applied; rather, the only essential fact was that the Employees were not remunerated at the rate set under the provisions of the Clerical NAPSA. This is said to be because it is not necessary that an accessory know that an offence has been committed: Giorgianni v R (1985) 156 CLR 473 at 506.
Knowledge that the Clerical NAPSA applied to the Employees is not identical to knowledge that a failure to pay the Employees in accordance with the Clerical NAPSA constitutes a breach of a civil remedy provision, although it is undeniable that the difference is a small one. The Court finds that, to be an accessory to the underpayment contraventions, Mrs Potter must have known the Clerical NAPSA applied to the Employees. It is not difficult to imagine a situation in which directors of a company honestly but mistakenly arrange for the company’s employees to be paid under an incorrect award. There would be no doubt that the company had underpaid its employees, and by virtue of that fact, contravened the FW Act. If the position were as the FWO submits however, the directors would be liable as accessories to those contraventions simply because they knew how much the employees were being paid and because they had knowledge of the existence of the applicable award, even though they honestly believed that such award did not apply.
[27] [2014] FCA 187.
[28] [2014] FCA 1365.
[29] Potter per Cowdroy J at [81].
[30] at [80] and [81].
In Devine Marine, White J held at [194] that it was not necessary for a person to know of the application of any particular award; it was sufficient that the accessory knew that an award was applicable.[31] Fair Work Ombudsman v Al Hilfi[32] at [44] also provides some support (albeit obiter) for the reasoning in Potter and Devine Marine.
[31] The Court made findings that knowledge of a national minimum wage order was required despite concessions from both Directors that they were generally aware of a national minimum wage (Transcript 11 March 2016, 387.5-35; Transcript 15 March 2016 480.24-36).
[32] [2012] FCA 1166.
However, the ratio of Potter appears to be contrary to Giorgianni v R.[33] The Fair Work Ombudsman invites the Court to distinguish between knowledge of the existence of facts which constitute the contravention and knowledge of the law (or in this case an award or instrument) that make the facts constitute a contravention.
[33] (1985) CLR 473, discussed in Fair Work Ombudsman v Liquid Fuel Pty Ltd & Ors [2015] FCCA 2694 per Judge O’Sullivan at [36]-[38].
Some support for this distinction can be found in Fair Work Ombudsman v Access Embroidery (Australia) Pty Ltd & Anor[34] (although not binding), where it was stated at [74] that a claim of lack of knowledge of the existence of the relevant awards and legislation and the requirements under them was the same as claiming ignorance of the law, and such a defence must fail.
[34] [2012] FMCA 835.
In Gore v ASIC,[35] the Full Federal Court (Dowsett, Rares and Gleeson JJ) considered the accessorial liability of a person in respect of a contravention of provisions of the Corporations Act 2001 (Cth) prohibiting the offer of securities without a disclosure document being lodged if disclosure was required under the legislation. Dowsett and Gleeson JJ held that an accessory needed to have knowledge of the facts which gave rise to the contravention, namely that there had been an offer of securities or that an application for an offer was distributed, the facts which created the need for disclosure, and that no disclosure form had been lodged with ASIC. Their Honours expressly disclaimed the idea that the accessory needed to know of the relevant legal provisions which rendered the principal contravener’s conduct unlawful, and thus there was no need to prove that disclosure was required by law.[36] Rares J found to like effect at [216]–[217].
[35] (2017) 341 ALR 189.
[36] at [38]
Fair Work Ombudsman v Valuair Limited (No2)[37] is consistent with that position, where Buchanan J stated at [122]:
Proof of a case under s 550(2)(c) need only demonstrate knowledge of the facts upon which liability depends. It does not require proof of the legal consequences of those facts, or proof of intent (see Yorke v Lucas[1985] HCA 65; (1985) 158 CLR 661).
[37] [2014] FCA 759.
In Fair Work Ombudsman v Pocomwell Limited (No 2)[38] the Federal Court considered s.550(2)(c) of the Fair Work Act and the matters that ought to be regarded as the essential elements of an offence or contravention for the purpose of the rule in Yorke v Lucas.[39]
[38] [2013] FCA 1139.
[39] at [279]-[281]
A number of other obiter statements in the authorities are consistent with there being no requirement of knowledge of the particular award, or an award, before an accessory will be found liable.[40]
[40] Fair Work Ombudsman v Grouped Property Services Pty Ltd [2016] FCA 1034 at [1019]; South Jin at [227]; Emwest Products Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union [2002] FCA 61; (2002) 117 FCR 588 at [34]; Mobilegate Ltd (No. 8) per Logan J at [171]-[172].
Further, in Australian Building and Construction Commissioner v Parker,[41] in the context of s.50 of the Fair Work Act, Flick J discussed Potter, Al Hilfi and Grouped Property Services, concluding at [128] that:
… that section does not require the person contravening a term of an enterprise agreement to have any knowledge of the existence of an enterprise agreement and does not require knowledge of the term being contravened or the fact that the act of contravention is in fact contravening conduct. If the “elements” of s 50 do not encompass those matters, it is – with respect – difficult to see why an accessory need have any greater knowledge. For a person to contravene s 50, it is sufficient to prove that conduct took place which was in fact a contravention of a term of an enterprise agreement. For the purposes of accessorial liability, all that need be proved is that the accessory had knowledge of the conduct.
[41] (2017) 266 IR 340.
The recent decision of the Full Federal Court in EZY Accounting 123 Pty Ltd v Fair Work Ombudsman[42] from [11] contains a helpful discussion of the authorities. At [34] the Full Federal Court stated the following:
It was open to the primary Judge to hold that Mr Lau was "knowingly concerned" in the contravening conduct of Blue Impressions based, as it was, on a system of payment where adult employees were invariably paid a flat hourly rate of pay which was below the Award base rate applicable for ordinary hours of work and insufficient to meet any additional requirement made by the Award for a penalty rate to be paid where applicable. Mr Lau knew that system of payment; he knew that the Award provided for a base rate; and he knew it contained provisions for the payment of penalty rates whenever applicable. He also knew that the inevitable result of his facilitation of Blue Impression's system would be that employees working ordinary hours would be underpaid the Award base rate of pay and that employees entitled under the Award to any additional penalty payments would not be paid the applicable penalty. That knowledge and involvement was sufficient to implicate Mr Lau in Blue Impression's contraventions of s 45 of [the] Fair Work Act irrespective of the fact that Mr Lau did not know about the particular employment of Mr Zheng, or the particular hours that he worked or the particular provisions in the Award which gave rise to Mr Zheng's entitlement to be paid a particular penalty rate. As Katzmann J said in Grouped Property Services [2016] FCA 1034 at [957], (2016) 152 ALD 209 at 349 "where an alleged accessory is aware of a system producing certain outcomes, and those outcomes constitute contraventions of the Act, it is unnecessary to show that the alleged accessory knew the details of each particular instance of those outcomes in order to show the requisite knowledge".
[42] [2018] FCAFC 134.
I adopt and apply that proposition in the present case, while noting the different factual context in this case.
In this case, I accept that the essential fact requiring knowledge was that wages and entitlements were payable to the employees. That the entitlement to those sums was due to an applicable award is the legal element of the offence and not a requirement for liability under s.550 of the Fair Work Act to be made out. In any event, the facts of the present case are distinguishable from those in cases such as Devine Marine as, for a number of months, some employees of the Corporate Respondents were not paid anything at all.
That is also a distinguishing feature with reference to the decision in Potter, where the employees were at all times paid, but on a basis different from the award which was found to apply. On the other hand, and as the respondents are at pains to point out, the contracts of employment of the employees in this case entitled them to substantially more than their award or statutory entitlements. When they were paid before the contravention period, they were paid more than those entitlements and, as further discussed below, the non payment of those entitlements during the contravention period were ultimately made good.
Contraventions claimed as against the Directors
The Fair Work Ombudsman claims that the Directors are accessorily liable in different respects, and while the contraventions by each Corporate Respondent differ (as identified in Annexure A to these reasons) the contraventions for which the Directors are alleged to be accessorily liable are, in summary form, of:
a)section 323 of the Fair Work Act for failure to pay employees in full;
b)section 44(1) of the Fair Work Act for contravening a provision of the National Employment Standards, namely:
i)failure to pay paid public holidays under s.116 of the Fair Work Act;
ii)failure to pay untaken annual leave on termination under s.90(2) of the Fair Work Act;
iii)failure to pay the minimum notice period under s.117(2) of the Fair Work Act;
iv)failure to pay annual leave taken under s.90(1) of the Fair Work Act;
v)failure to pay periods of personal leave taken under s.99 of the Fair Work Act;
vi)failure to pay redundancy pay under s.119 of the Fair Work Act;
c)section 45 of the Fair Work Act for contravening a term of a modern award, namely:
i)failure to pay minimum rates of pay under the applicable modern awards;
ii)failure to pay casual loading under the applicable casual awards;
iii)failure to pay the minimum period of notice under the applicable modern awards;
iv)failure to pay redundancy pay under the applicable modern awards;
d)section 293 of the Fair Work Act by contravening a term of a national minimum wage order;
e)section 542 of the Fair Work Act for failing to pay the safety net contractual entitlements; and
f)section 328 of the Fair Work Act for failing to comply with the guarantee of annual earnings.
The Fair Work Ombudsman submits that this Court should find that the Directors were liable for the contraventions by the Corporate Respondents either on the basis that they had the requisite intent or knowledge or were wilfully blind to their obligations.
An issue of pleading
The respondents submit that the Fair Work Ombudsman must be held to her pleadings. Accordingly, they contend that the Fair Work Ombudsman must prove (to the comfortable satisfaction level demanded by the Briginshaw standard) that:
a)Mr Silverbrook had knowledge of the essential elements constituting each of the Corporate Respondents’ contraventions;
b)Ms Lee had knowledge of the essential elements constituting each of Silverbrook Research’s contraventions;
c)the Directors were intentional participants in each contravention and intended each employer to commit each of the contraventions; and
d)the Directors were aware of each contravention period pleaded.
The Fair Work Ombudsman responds that the purpose of pleading is to put one’s opponent on notice of the claim at its highest and a pleading cannot supplant the law. I agree. To the extent that the Fair Work Ombudsman’s pleadings suggest a test for accessorial liability higher than that established by the authorities, I defer to the authorities. Further, by pleading actual knowledge of facts and circumstances leading to the infringements by the Corporate Respondents, the Fair Work Ombudsman is not barred from relying upon wilful blindness to those facts and circumstances.
Payments made to the employees by the respondents
In their submissions, the respondents place emphasis on the over award payment made to the employees, in accordance with their employment contracts, prior to the contravention period, some significant payments made during the contravention period, and the payments made to make good the underpayments following the contravention period.
I accept that $2,182,348.87 was paid to employees of Mpowa (including at least $103,844.23 during the contravention period). I also accept that those employees of Mpowa received in excess of their award and statutory entitlements between 21 August 2013 and 31 October 2014. Those payments should have received closer attention by the Fair Work Ombudsman and are consistent with Mr Silverbrook attempting to meet his obligations under the employment contracts rather than the award or statutory entitlements.
I also accept that the non payment of employee entitlements was made good as follows:[43]
a)$452,997.98 was paid on 18 October 2016 to rectify the underpayments to the Priority Matters employees;
b)$55,969.11 was paid on 18 October 2016 to rectify the underpayments to the Superlattice employees; and
c)$649,840.20 was paid on 20 October 2016 to rectify the underpayments to the Mpowa employees.
[43] Transcript 21 August 2018, T124.33-125.6
The respondents contend that all underpayments would have been rectified earlier (and further that there would have been no underpayments at all) if a sum approaching $4 million had not been retained by the Australian Taxation Office for around three years after that sum had been assessed as due to Geneasys and Mpowa. That is, in my view, irrelevant. The relevant fact is that the Corporate Respondents had no funds to pay their employees for an extended period. The reasons they were without funds are only relevant, if at all, to the issue of penalties.
The respondents also content that, because the ATO was deducting withholding tax from the funds it held which were due to Geneasys and Mpowa, the benefit employees would ultimately derive (presumably from personal tax refunds) should be taken into account. I reject that contention. The personal taxation liabilities of employees of the Corporate Respondents are beyond the scope of these proceedings.
I also reject the proposition put by the respondents that there was something artificial about the contravention periods identified by the Fair Work Ombudsman. These were periods of between 22 weeks and 44 weeks during which employees were not paid their entitlements. The contravention periods are a natural consequence of the fact of non payment or underpayment of those entitlements. The fact that employees received their entitlements after those periods, and may have received payments in excess of those entitlements before those periods, does not bear on the contraventions, although it may bear on penalty.
I agree in general terms with the submissions of the Fair Work Ombudsman on the factual issues going to accessorial liability.
Relevant facts giving rise to liability
Controlling minds
A corporate entity can only act through individuals.[44] When a company acts through a particular person, then that person will be, in the absence of contrary evidence, accessorily liable. In Fair Work Ombudsman v Ramsey Food Processing Pty Ltd[45] Buchanan J stated at [126]:
Not only was Mr Ramsey involved in any contravention committed by Ramsey Food Processing, he was its guiding mind. He is wholly concerned in and responsible for the contraventions by Ramsey Food Processing. He is liable in his own right as an accessory.
[44] Lennard's Carrying Co Ltd v Asiatic Petroleum Co Ltd[1915] AC 705.
[45] (2011) 198 FCR 174.
Here, on the findings of this Court (undisturbed on appeal), the Directors were the controlling minds of the companies, including being in control of the allocation of the financial resources of the companies, or the termination of employment contracts, or the continuation of the companies as going concerns.[46]
[46] primary judgment at [130]-[132], [136] and [138]. The finding at [132] that the Directors “applied and exhausted their own personal funds in their endeavours to ensure that the entitlements of employees were paid” demonstrates that each knew of the essential facts and had more to do with the subject matter of the complaint constituting the contravention than simply having some knowledge of the matter: cf Yorke v Lucas at 670.
Consistent with the findings already made by this Court, Mr Silverbrook was a director of each of the Corporate Respondents at the relevant time.[47] Ms Lee was a director of Silverbrook Research,[48] and part of the management team of the company.[49] This Court has already found that the five companies the subject of these proceedings were controlled by Mr Silverbrook at the time of the contraventions.[50] The Court further found that Mr Silverbrook was at all times the corporate mind of Superlattice.[51]
[47] primary judgment at [4].
[48] primary judgment at [8].
[49] third affidavit of Ms Lee made on 5 February 2016 at [92], CB vol 3 tab 44.
[50] primary judgment at [4].
[51] primary judgment at [93].
Practical connection
The Directors had a practical connection to the contraventions in that they:
a)knew that the companies had run out of cash assets to pay wages;[52]
b)knew the employees were not being paid their wages and entitlements as and when they fell due;[53]
c)intended the companies to keep operating through their omission to take steps to wind them up when the employees were not paid;[54]
d)required the employees to continue to attend for work despite not paying them their entitlements, rather than make them redundant or otherwise terminate their employment contracts.[55] In fact, Mr Silverbrook offered future bonuses in some instances as an incentive to employees to continue attending work without payment;[56] and
e)in addition (and relevantly to s.550(2)(b) of the Fair Work Act), intentionally participated in the contravention through positive acts, such as offering inducements or bonuses to stay,[57] repeatedly telling the employees that payment was imminent and allocating funds that did come in to creditors of the companies such as third party contractors rather than the payment of wages.[58]
[52] see primary judgment at [132] and affidavit of Ashley Hurrell 24 July 2015 CB tab 48, sub-tab 9 page 103-105; affidavit of Mr Hurrell 30 July 2015 CB tab 51 volume 1 sub-tab 11 pages 80-94; Transcript 15 March 2016 T551.40- 552.11-12; T551.40- 552.11-12.
[53] see footnote 52 above.
[54] see footnote 52 above and affidavit of Mr Hurrell 30 July 2015 CB tab 51 volume 1 sub-tab 11 pages 80-94, 149, 151, 213-214; Affidavit of Christopher Wooldridge 30 July 2015 Ex CW-1 CB tab 56 sub-tab 44 page 90 and sub-tab 51 page 107.
[55] see affidavit of Julie Pavlovski 24 July 2015 CB volume 2 tab 29 Annexure JP-8 page 42
[56] affidavit of Mr Wooldridge 30 July 2015 Ex CW-1 CB tab 56 sub-tab 27 pages 42-44.
[57] affidavit of Mr Wooldridge 30 July 2015 Ex CW-1 CB tab 56 sub-tab 27 pages 42-44.
[58] affidavit of Wooldridge 30 July 2015 Ex CW-1 CB tab 56 sub-tabs 11-41.
On appeal the Federal Court observed:[59]
[59] at [124]
Given the admissions made, it is respectfully considered that it is difficult to resist a conclusion (for example) that Mr Silverbrook and Ms Lee by their “act[s] or omission[s] [were] ... directly or indirectly, knowingly concerned in” the contraventions of the corporate employers arising from the non-payment of wages and entitlements.
…
Even if it be accepted that the non-payment by the corporate employers was due to circumstances beyond the control of Mr Silverbrook and (where relevant) Ms Lee and that they were taking reasonable steps to secure payment, the fact of non-payment remains. Employees were not being paid their wages and entitlements in the normal monthly manner for a considerable period of time. And Mr Silverbrook and Ms Lee knew that the employees were not being paid. So much is inherent in the finding at para [132] of the primary judgment that “both Mr Silverbrook and Ms Lee applied and exhausted their own personal funds in their endeavours to ensure that the entitlements of employees were paid”. They were actively involved in continuing the payments owing to the employees of one or other of the corporate employers for as long as possible. [applicant’s emphasis retained]
At [125]:
Just as Mr Silverbrook and Ms Lee were “actively involved” in the continuation of payments for as long as possible, they were equally “involved” in the non-payments when that occurred.
At [127]:
The conclusions reached by the Federal Circuit Court Judge seem to focus attention upon the “reasonableness” of the “belief” on the part of Mr Silverbrook and Ms Lee that wages and entitlements would soon be paid and fail to focus any real attention upon whether either were “in truth implicate[d] or involve[d]” (cf. Ashbury v Reid [1961] WAR 49 at 51) in the corporate contraventions. The degree of “control” exercised by Mr Silverbrook over the corporate employers would tend to suggest that he was in fact “implicate[d]” in the corporate non-payments. The role played by Ms Lee would also tend to suggested that she is “implicate[d]” in the contraventions by Silverbrook Research. The findings of the primary Judge tend to suggest a “practical connection” (cf. Leighton Contractors v CFMEU [2006] WASC 144, (2006) 154 IR 228; Qantas Airways v TWU [2011] FCA 470, (2011) 280 ALR 503) between the corporate non-payments and the Individual Respondents, even if it were to be accepted that the particular outcome was unavoidable. Such focus as was placed upon “knowledge” was also impermissibly poisoned, with respect, by the consideration given by the primary Judge to the “reasonableness” of the conduct being pursued.
[applicant’s emphasis retained]
As the respondents are at pains to point out, Flick J in the appeal judgment emphasised at [129] that on remittal, this Court must make its own findings of fact. It follows that I cannot simply adopt the observations of Flick J. I can, however, refer to those observations where my own findings are consistent with them.
By choosing to continue to operate the companies and attempt to source funds while declining to make the employees redundant or otherwise bring an end to their employment, the Directors were exercising control over the situation, demonstrating knowing involvement and thus, intentional participation in the contraventions found by the Court.
Whether the Directors were trying to source funds and believed that payment to the employees would be imminent requires contemplation of the starting premise, namely that the Directors knew payment of wages and entitlements was not occurring on an ongoing basis. This was not a case of mistake as to payment or entitlement.
In the appeal judgment, Flick J recorded that:[60]
[60] appeal judgment at [122]
For the purposes of testing the case being advanced on behalf of Mr Silverbrook and Ms Lee, it was accepted that the following admissions could be made in respect to the Individual Respondent’s potential liability pursuant to s550 for the corporate contraventions of (for example) s 323 of the Fair Work Act:
· prior to the relevant period of non-payment, Mr Silverbrook and Ms Lee had knowledge – or knew – that persons were receiving wages and other entitlements due to them from one or other of the corporate employers;
· that those persons were “employees” of the corporate employers and were being paid wages and other entitlements monthly;
· that during a period of 10 months from February to December 2014, [61] there were a number of employees who were not receiving monthly payment in the normal course into their bank accounts for wages and entitlements as they had previously been receiving them; and
· that during that period of time, there were some employees who had not received any wages and entitlements for some months and some employees who had not received any wages and entitlements for the entire 10 month period.
[61] it is submitted that the reference to 2014 is inadvertently erroneous and that should be 2013.
Such admissions, it may be observed, were correctly made and were consistent with the evidence.
I accept that such admissions arise from the following.
Regular dealings, directions to and interactions with the employees
Mr Silverbrook knew roughly how many employees the Corporate Respondents had as at March 2013. His evidence in cross-examination was that there were not many employees left at that time, about 60, and that he probably spoke with about 30 or 40 of those when he spoke to them about the non-payment of their wages in March 2013.[62] The evidence discloses that Mr Silverbrook had regular interactions with the employees of the five companies.
[62] Transcript 11 March 2016, T390.35 – 391.25.
Mr Silverbrook was the person who gave employees directions, and to whom employees reported. In respect of Priority Matters, Mr Bolton’s evidence was that his directions came from Mr Silverbrook, as did those of the other patent attorneys.[63] Mr Bolton’s evidence was that Mr Silverbrook would email, telephone or meet with the patent attorneys face to face to give directions.[64] Ms News reported to the Directors while employed by Priority Matters.[65]
[63] Kenneth Bolton’s affidavit at CB vol 2 tab 28 at [10].
[64] Mr Bolton’s affidavit CB vol 2 tab 28 at [10].
[65] Leonie News’s affidavit CB vol 2 tab 30 at [8].
In respect of Superlattice, Dr Wohlthat gave evidence that Mr Silverbrook provided initial directions as to his work, and although he worked with little direct supervision, received directions from Mr Silverbrook from time to time.[66]
[66] Dr Soren Wohlthat’s first affidavit CB vol 2 tab 31 at [9]; Dr Wohlthat’s second affidavit CB vol 2 tab 32 at [9].
In respect of Silverbrook Research, Mr McCarthy gave evidence that he reported to the Directors during his employment with Silverbrook Research,[67] and that he had ongoing and regular direct contact with both Directors throughout his employment.[68] He observed that both Directors were heavily involved in the management of Silverbrook Research, including recruitment and employment decisions and allocation of funds.[69] Mr Silverbrook denied this evidence in his second affidavit,[70] but Mr McCarthy’s evidence on these matters was not challenged in cross-examination. I accept it.
[67] John McCarthy’s affidavit CB vol 2 tab 34 at [4].
[68] Mr McCarthy’s affidavit CB vol 2 tab 34 at [36].
[69] Mr McCarthy’s affidavit CB vol 2 tab 34 at [38].
[70] Mr Silverbrook’s second affidavit CB vol 3 tab 41 at [370]-[371].
Did Mr Silverbrook know of the requirement to pay minimum wages and entitlements?
Mr Silverbrook’s affidavit evidence is replete with references to the fact that the Corporate Respondents were required to pay entitlements to its employees. That shows that Mr Silverbrook knew, when he prepared those affidavits, of the requirement to pay minimum wages and entitlements to each of the Corporate Respondents’ employees, and that they were entitled to be paid in full. The question is, however, whether he knew during the contravention periods.
In Mr Silverbrook’s first affidavit, he deposes that until March 2012, all of the five Corporate Respondents “had been operating without missing a salary payment to employees…”.[71] He deposed that “during 2012 we managed to realise sufficient assets to pay the full entitlements of around 400 employees…”.[72] He deposed in respect of these five proceedings that “The Five Matters relate to the remaining handful of employees in respect of whose entitlements I was continuing every effort to source funds until the FWO intervened and thwarted my efforts”,[73] and, “I stress that at all material times we had a reasonable and objectively sound belief that the KIC[74] would be able to pay staff entitlements as and when they fell due…”.[75]
[71] Mr Silverbrook’s first affidavit CB vol 2 tab 40 at [46].
[72] Mr Silverbrook’s first affidavit CB vol 2 tab 40 at [48].
[73] Mr Silverbrook’s first affidavit CB vol 2 tab 40 at [50].
[74] Knowledge Industry Companies, the Corporate Respondents.
[75] Mr Silverbrook’s first affidavit CB vol 2 tab 40 at [50].
Mr Silverbrook deposed: “In short I did everything within my power to ensure staff would be paid”.[76] He referred to “amounts more than sufficient to pay all employee entitlements in each of the KIC”.[77] He further deposed: “I have done everything humanly possible under the most extenuating circumstances to ensure all employees of all KICs received their lawful entitlements”,[78] and “At all material times we have made extensive efforts trying to realise amounts owing to the KIC and ourselves in an attempt to pay every last employee’s entitlements in full… I cannot think of anything I could have done to have avoided the non-payment in a timely way of any statutory entitlements of KIC employees.”[79]
[76] Mr Silverbrook’s first affidavit CB vol 2 tab 40 at [421].
[77] Mr Silverbrook’s first affidavit CB vol 2 tab 40 at [486].
[78] Mr Silverbrook’s first affidavit CB vol 2 tab 40 at [506].
[79] Mr Silverbrook’s first affidavit CB vol 2 tab 40 at [507].
While Mr Silverbrook had numerous interactions with employees, he stopped reading emails from employees after a while, as the following extract from his cross-examination demonstrates:[80]
You got to the point where you chose not to even look at the emails of the employees; do you agree with that?‑‑‑Look, I think I would have to agree with that. There wasn’t anything I could do personally about each email, so – so – so, yes, I chose – it was something I had to triage out. Yes. I think I thought it was actually in the best interests of the employees that I do so, right. Not – rather than get bogged down in the details, that I concentrate on actually getting the money in.
[80] Transcript 11 March 2016, T422.30 – 423.20.
This evidence demonstrates Mr Silverbrook chose not to engage with specific circumstances of each employee.
In his third and final affidavit made on 16 March 2018, Mr Silverbrook stresses that he relied on others to take care of day to day management, including human resources issues.[81] However, in the same affidavit, Mr Silverbrook deposes that he assumed substantial personal responsibility for payment of staff salaries from around June 2012 because of the increasing cash flow problems facing the companies. Other evidence establishes that staff increasingly came to him to enquire about their wages, perhaps due to other managers having left, or due to the seriousness of the problem.
[81] [12]-[16].
In any event, Mr Silverbrook undoubtedly knew that staff were being completely unpaid for significant periods. He must have known that staff were not receiving their entitlements, whatever those were. His focus may well have been on contracts of employment, but the complete non payment of wages necessarily carried with it the failure to pay whatever award or statutory entitlements that were applicable.
Mr Silverbrook probably chose not to enquire about particular entitlements due to particular employees. In those circumstances I find that he was willfully blind to those details of minimum wages and entitlements.
Mr Silverbrook (and in respect of Silverbrook Research, Ms Lee) knew that the employees were not being paid their wages in full, and participated in that failure
The essential facts of which the Directors were required to have knowledge in order to establish accessorial liability in this case is that the Corporate Respondents had employees who continued to work during the relevant contravention period for each Corporate Respondent, and those employees were not being paid their wages or salaries. The evidence discloses that Mr Silverbrook possessed that knowledge in respect of each of the Corporate Respondents, and Ms Lee possessed that knowledge with respect to Silverbrook Research.
Mr Silverbrook (and in respect of Silverbrook Research, Ms Lee) knew of, and participated in, the Corporate Respondents’ failure to pay the employees their wages in full during the relevant period. It is recorded in the appeal judgment that the Directors admitted that they knew that employees were not being paid their entitlements throughout the relevant periods.[82] The primary judgment at [132] records his Honour’s finding that the Directors took all reasonable steps to try and effect payment of the employees’ entitlements throughout the relevant period, and that they applied and exhausted their own personal funds in their endeavours to ensure that the entitlements of employees were paid. I adopt that finding.
[82] appeal judgment at [122].
Mr Silverbrook conceded in cross-examination that he knew, in March 2013, that the employees across the Corporate Respondents were not going to be paid when their wages were due.[83] He agreed that in March 2013, the Corporate Respondents ran out of money to pay their employees.[84] Mr Silverbrook stated in cross-examination in respect of the employees of the Corporate Respondents generally that: [85]
I believe that I was honest in painting the picture to the staff that this was a very dangerous time, in terms of being able to pay their wages, and that there was a high probability – I think, on the…Priority Matters stuff I specifically told them that they should go out and get jobs…so this was a time when…the sources of funds were at a bit of a nadir for short term. There was a lot owing, right, but – but extracting it from the various sources was proving to be very difficult.
[83] Transcript 11 March 2016, T387.39-41.
[84] Transcript 11 March 2016, T389.34-35.
[85] Transcript 11 March 2016, T396.16-22.
Direct dealings with the Priority Matters employees regarding non-payment of entitlements
The evidence reveals an extensive number of communications between Mr Silverbrook and Priority Matters employees directly and collectively regarding the non-payment of their entitlements during the contravention period.
By way of example:
a)Mr Silverbrook sent an email to Mr Bolton and Mr van Rensburg, among other Priority Matters employees, on 10 April 2013 in which he stated that “the pay situation continues to drag out” and that “we have, temporarily, run out of buffer” and “in the meantime, we’ll get you paid absolutely ASAP”.[86] He agreed, in cross-examination, that this email communicated to the employees his knowledge that they had not been paid.[87] He sent a further email on 19 April 2013 to the same recipients in which he stated, “My sincere apologies that we simply do not have the cash for wages again this fortnight”.[88] He sent a third email to the same recipients on 20 May 2013 in which he stated “we are looking to make payroll today”.[89] Mr Silverbrook’s evidence under cross-examination was that by that stage, Priority Matters had no income at all;[90]
b)Mr van Rensburg sent emails to Mr Silverbrook on 14 June 2013 and 19 June 2013 regarding non-payment of his salary;[91]
c)Ms News emailed Mr Silverbrook on 24 April 2013 and asked him to meet with the “patent support team” to explain Priority Matters’ situation, which he did.[92] At that meeting, Mr Silverbrook stated that the company was experiencing funding problems, and that salaries would be paid when funds became available, and that they could not be paid at the moment;[93]
d)Ms Pavlovski sent an email to Mr Silverbrook on 24 April 2013 in which she stated that she was missing four weeks’ pay.[94] In his response to her email, Mr Silverbrook stated “we are working incredibly hard to resolve the situation” and “I may have time to talk to the Priority Matters staff this afternoon”.[95] Ms Pavlovski sent a further email to Mr Silverbrook the following day in which she stated that she had been advised that Mr Silverbrook came to see the Priority Matters staff and explained the situation.[96] Mr Silverbrook responded to that email and confirmed the matters set out in her email.[97] Ms Pavlovski sent further emails to Ms Jemima Harris, to which Ms Harris responded. Some of these emails were copied to Mr Silverbrook;[98] and
e)Ms News emailed Mr Silverbrook on 4 July 2013 and again on 8 July 2013, in the latter email stating that she was currently owed 10 weeks’ salary and was reaching a stage where she did not have sufficient funds to continue.[99] Mr Silverbrook responded to the latter email on 8 July 2013, stating that “we have been tied up chasing money to resolve this situation, which is very close now”.[100]
[86] Mr Bolton’s affidavit, annexure KWB-2 CB volume 2 tab 28 page 9.
[87] Transcript 14 March 2016, T504.6-7.
[88] Mr Bolton’s affidavit, annexure KWB-4 CB volume 2 tab 28 page14; transcript 14 March 2016, T504.19-30.
[89] Mr Bolton’s affidavit, annexure KWB-5 CB volume 2 tab 28 page16.
[90] Transcript 14 March 2016, T505.42.
[91] Mr Hurrell’s first affidavit, Exhibit AKH-1 CB tab 48, sub-tab 9, pages 106 and 108.
[92] Ms News’ affidavit CB volume 2 tab 30 at [11].
[93] Ms News’ affidavit CB vol 2 tab 30 at [11].
[94] Ms Pavlovski’s affidavit Annexure JP-7, CB volume 2 tab 29 page 40 at [25].
[95] Ms Pavlovski’s affidavit annexure JP-7 CB volume 2 tab 29 page 40.
[96] Ms Pavlovski’s affidavit annexure JP-8 CB volume 2 tab 29 page 42.
[97] Ms Pavlovski’s affidavit annexure JP-8 CB volume 2 tab 29 page 42.
[98] Ms Pavlovski’s affidavit annexure JP-11 CB volume 2 tab 29 pages 60, 62 at [34].
[99] Ms News’ affidavit annexure LN-2 CB volume 2 tab 30, pages 8-9 at [14].
[100] Ms News’ affidavit annexure LN-2 CB volume 2 tab 30 page 8 at [34].
The specific knowledge Mr Silverbrook had with regard to the Superlattice employee Dr Wohlthat
The contraventions relating to Superlattice concern one employee Dr Wohlthat. At issue is whether Mr Silverbrook knew that Dr Wohlthat (who was Superlattice’s only employee in the lead-up to the audit period),[101] was an employee of Superlattice during the contravention period (11 March 2013 to 19 August 2013).
[101] Mr Silverbrook’s second affidavit CB volume 3 tab 41 at [261], [279].
The primary judge found in his judgment that Dr Wohlthat was employed at Superlattice until 19 August 2013.[102] His Honour found that there was a communication between Dr Wohlthat and Mr Silverbrook in March 2013 about the absence of payment but there was not any termination of his employment at that time.[103] His Honour found that although the letter effecting the termination of Dr Wohlthat’s employment on 19 August 2013 was not signed by Mr Silverbrook, it was signed by a person authorised to do so on behalf of Superlattice.[104] For the reasons set out below, I find that Mr Silverbrook knew that Dr Wohlthat was still employed by Superlattice until 19 August 2013, or alternatively, was wilfully blind to that fact (which amounts to knowledge for the purposes of s.550).
[102] primary judgment at [214].
[103] primary judgment at [87].
[104] primary judgment at [221].
Mr Silverbrook’s evidence was that he told Dr Wohlthat on about 8 March 2013 that the Superlattice Project would cease and the activities of the company would not be continuing.[105] Dr Wohlthat’s evidence is that he was not told this.[106] This evidence was not challenged squarely in cross-examination, but Dr Wohlthat was asked whether there was any communication with him on or around 8 March which conveyed to him that it was up to him whether or not he kept working. His answer was that he could not recall any one-on-one conversation with Mr Silverbrook on 8 March.[107]
[105] Mr Silverbrook’s second affidavit CB volume 3 tab 41 at [285].
[106] Dr Wohlthat’s second affidavit CB volume 2 tab 32 at [15].
[107] Transcript 7 March 2016, T31.41 - 43.
Dr Wohlthat’s evidence is that on 22 March 2013, Mr Silverbrook told him not to be surprised if no money came in that day, but that it would be paid in the next two or three weeks.[108] Mr Silverbrook’s evidence in cross-examination was that he made those comments to the Mpowa staff, and that Dr Wohlthat was listening in and mistakenly thought Mr Silverbrook was addressing him.[109] When Dr Wohlthat had not received any further pay, he emailed Ms Harris on 5 June 2013.[110] He sent emails to Ms Harris on three further occasions over the following weeks. In one of those emails, he stated “Kia just spoke to us and explained the financial situation a bit more”.[111]
[108] Dr Wohlthat’s first affidavit CB volume 2 tab 31 at [13].
[109] Transcript 11 March 2016, T397.36 - 398.3.
[110] Dr Wohlthat’s first affidavit CB volume 2 tab 31 at [15], annexure SW-4, CB volume 2 tab 31 page 32.
[111] annexure SW-4 CB volume 2 tab 31 page 32.
Dr Wohlthat was cross-examined as to whether he understood from his conversation with Mr Silverbrook on 22 March that if he wanted to, he could cease working for Superlattice, and he gave a negative answer.[112] Mr Silverbrook’s evidence in cross-examination as to whether he told Dr Wohlthat that his employment was terminated was vague, and expressed in terms of what he “would have” said rather than what he recalled saying. Mr Silverbrook said:[113]
I terminated the project, right? And I may have- and I – I – what I – to make a – a fairly – to – to give as precise a recollection as I can now from here, I would say – would have said that I said to – to Soren, Soren, this – got to close down this project. I can’t afford to pay you. You can stay on here to – to, you know, use these facilities to get another job. I know I pay – I owe you some termination pay. I will sort that out as soon as I can.
[112] Transcript 7 March 2016, T32.7 - 11; Transcript 7 March 2016, T31.41-43.
[113] Transcript 11 March 2016, T398.16 - 21.
When asked what he meant by termination pay, Mr Silverbrook said, “There would have been a few thousand dollars that was – that – because I know that when you – when someone is terminated there are some payments there. You know, like leave without pay, that kind of stuff.”[114] He then agreed with the cross-examiner that by “termination pay” he meant whatever entitlements Dr Wohlthat had that were unresolved at that time, 8 March 2013.[115]
[114] Transcript 11 March 2016, T398.30 - 32.
[115] Transcript 11 March 2016, T398.45 - T399.8.
Mr Silverbrook accepted in cross-examination that his memory of the above could be wrong.[116]
[116] Transcript 11 March 2016, T399.10 - 11.
In circumstances where:
a)Dr Wohlthat’s employment was not terminated in March 2013 (by a finding of the Court which has not been overturned on appeal);
b)Mr Silverbrook’s evidence as to his conversation with Dr Wohlthat in March 2013 was uncertain in contrast to Dr Wohlthat’s clear evidence that he was not told in March 2013 that the Superlattice Project would cease or that his employment was terminated at that time;[117] and
c)a letter was sent under Mr Silverbrook’s name, purportedly on his behalf, on 19 August 2013 providing Dr Wohlthat with notice of termination and stating “your last day at Superlattice will be today”[118] by a person authorised to do so on behalf of Superlattice[119] when Mr Silverbrook was the corporate mind of Superlattice;[120]
I find that Mr Silverbrook positively knew that Dr Wohlthat was still employed by Superlattice until 19 August 2013, or alternatively, was wilfully blind to that fact.
[117] Dr Wohlthat’s second affidavit CB volume 2 tab 32 at [15].
[118] Dr Wohlthat’s first affidavit annexure SW-6CB volume 2 tab 31 page 40.
[119] primary judgment at [221].
[120] primary judgment at [93].
Further, Mr Silverbrook knew that Dr Wohlthat was not being paid his entitlements, as Mr Silverbrook sent an email to Dr Wohlthat on 26 August 2013 which stated in part:[121]
This letter is to confirm our verbal agreement where we have mutually and amicably agreed to delay payment of outstanding wage entitlements and superannuation until the company, or myself as director, can raise the funding. As you are aware, Superlattice Solar has no income. These funds will most likely be provided personally by myself, so please acknowledge our verbal agreement that you will accept payment when I am able to provide it…
[121] Dr Wohlthat’s first affidavit annexure SW-7 CB volume 2 tab 31 page 44.
On 2 September 2013, Dr Wohlthat responded to that email and stated in part:[122]
As you are aware, I have not been paid any wages since 8.3.2013 and during this time have continued working and been understanding of the financial situation of the company.
[122] Dr Wohlthat’s first affidavit annexure SW-7 CB volume 2 tab 31 page 44.
Mr Silverbrook’s evidence is that he sent that email and that he received Dr Wohlthat’s email.[123] He did not respond to Dr Wohlthat’s email.[124] He accepted, in cross-examination, that he was “closing his eyes” to the issue of payment of Dr Wohlthat’s entitlements.[125] He also accepted that he knew that Dr Wohlthat was not being paid.[126]
Evidence of Mr Silverbrook’s knowledge of the fact that Geneasys employees were not being paid in full (or at all)
[123] Mr Silverbrook’s second affidavit CB volume 3 tab 41 at [301], [305].
[124] Transcript 11 March, T418.4 - 5.
[125] Transcript 11 March, T418.35 - 47.
[126] Transcript 11 March, T419.1 - 3.
The evidence has revealed Mr Silverbrook knew that Geneasys had a maximum of six employees.[127] He knew, during the contravention period, that the Geneasys employees were not being paid their wages in full (or at all). Mr Geoffrey Facer had a number of communications with Mr Silverbrook regarding the Geneasys employees’ unpaid entitlements throughout the audit period, set out in a log kept by Mr Facer since about March 2013 in tab 7 of exhibit GRF-1.[128] These included:
a)on 8 April 2013, Mr Facer wrote to Mr Silverbrook in which he asked “Is there any information you can pass along regard pays, or is it a case of asking people to stay patient?”[129] Mr Silverbrook responded that same day by stating “The money is not in yet, but it may come in tomorrow, or possibly Wednesday. It will then take a day or two to clear”;[130]
b)in an email dated 25 April 2013 from Mr Facer to Mr Alireza Moini, another Geneasys employee, Mr Facer referred to information from Mr Silverbrook, and stated “Kia asked how long we’d gone without pay: we reminded him that the last three paychecks were unpaid, as well as super from the last few quarters”;[131] and
c)on 13 May 2013, Mr Facer sent an email to Mr Silverbrook and Mr Moini, on his own and Mr Moini’s behalf, in which he stated “…we are also under financial pressure since our salaries have not been paid since 7th of March…”.[132] Mr Silverbrook acknowledged that Geneasys owed payments to its employees, though disputed the amount, stating on 20 May 2013, “…the current obligations in Geneasys are only a few hundred thousand, and we expect to be able to clear them up in July.”[133]
[127] Mr Silverbrook’s second affidavit CB volume 3 tab 41 at [189].
[128] Geoffrey Facer’s affidavit CB volume 2 tab 33 at [15].
[129] Mr Facer’s affidavit exhibit GRF-1 tab 7 page 40 CB tab 54.
[130] Mr Facer’s affidavit exhibit GRF-1 tab 7 page 40 CB tab 54.
[131] Mr Facer’s affidavit exhibit GRF-1 tab 7 page 42 CB tab 54.
[132] Mr Facer’s affidavit exhibit GRF-1 tab 7 page 46 CB tab 54.
[133] Mr Facer’s affidavit exhibit GRF-1 tab 7 page 47 CB tab 54.
The evidence includes emails from other non-witness employees of Geneasys to Mr Silverbrook and his responses, including an email from Dr Mehdi Azimi to Mr Silverbrook on 8 July 2013 which stated “currently I am owed eighteen weeks of back salary payment by the company”.[134] Mr Silverbrook replied to a subsequent email sent by Dr Azimi which forwarded that email, without answering the question.[135]
[134] Mr Hurrell’s affidavit, annexure AKH-1 tab 50 subtab 13 page 198.
[135] Mr Hurrell’s affidavit, annexure AKH-1 tab 50 subtab 13 page 199. See also Dr Azimi’s letter referring to the termination of his employment and referring to his unpaid entitlements at page 209.
Mr Silverbrook was candid in his evidence that he knew that the employees were not being paid, deposing that “I had an open and frank discussions [sic] regarding Geneasys’ finances with Facer on many occasions” and “Facer was the only employee of Geneasys that had this obsession with the day-to-day delays in payments, which I had already informed all employees about, and invited them to resign if they could not tolerate an indefinite delay in payment.”[136] He acknowledged that, “at no stage did Geneasys have any income. It was always fully funded by us until it was forced into liquidation on 4 February 2014…”.[137]
[136] Mr Silverbrook’s second affidavit CB volume 3 tab 41 at [219]-[220].
[137] Mr Silverbrook’s first affidavit CB volume 2 tab 40 at [81].
Mr Silverbrook’s and Ms Lee’s awareness that Silverbrook Research employees were not being paid
Mr Silverbrook accepted in cross-examination that as at April 2013, he was well aware that Silverbrook Research had not paid wages to its employees.[138] Ms Lee stated positively that it was undeniable that Silverbrook Research employees were not paid as at April 2013, and that she did not take any steps to investigate the nature of any entitlements payable to Silverbrook Research employees because she had other people responsible for that, she did not have time to do that, and people more competent than herself were involved in doing that, and she relied on them.[139] Ms Lee agreed that where an employee was employed by one of the Corporate Respondents, that employee was entitled to be paid wages in accordance with their contract.[140]
[138] Transcript 14 March 2016, T516.19 - 20.
[139] Transcript 14 March 2016, T552.38 - 45.
[140] Transcript 14 March 2016, T541.32 - 46.
Mr McCarthy’s evidence is that in mid-April 2013, he said to Mr Silverbrook, “You owe people too much. I can’t carry on working for nothing. My rent is close to $1000 a week and I haven’t been paid since December last year” and Mr Silverbrook replied, “I know that. You’re in the same position as all the Silverbrook employees, and employees of the other companies. We don’t have the money. But Janette and I are working on it.”[141]Mr Silverbrook denied that this conversation occurred.[142]
[141] Mr McCarthy’s affidavit CB volume 2 tab 34 at [53].
[142] Mr Silverbrook’s second affidavit CB volume 3 tab 41 at [380].
Mr Harrison’s evidence is that in around June 2013, Mr Silverbrook came into the office and met with several employees of Silverbrook Research and Mpowa, including him, and apologised for the delay in salary payments, and said that salaries would be paid at some point in the future when funds became available. Mr Harrison’s evidence was that he spoke with Mr Silverbrook after the meeting in which he explained that he was on a 457 visa sponsored by Silverbrook Research, Mr Silverbrook said that he would give them all regular updates about outstanding payments, and Mr Harrison said “we want to get paid”.[143] Mr Silverbrook’s evidence was that he could not recall the private conversation he had with Mr Harrison, but did not dispute that a conversation of some kind may have occurred.[144]
[143] Glenn Harrison’s affidavit CB volume 2 tab 35 at [46]–[47].
[144] Mr Silverbrook’s second affidavit CB volume 3 tab 41 at [342].
Ms Nguyen sent an email to the Directors regarding outstanding entitlements on 19 August 2013.[145]
[145] Mr Hurrell’s affidavit, exhibit AKH-1 tab 52 sub-tab 12 page 104.
In her fourth and final affidavit made on 23 March 2018, Ms Lee demonstrates an exceptionally detailed knowledge of the terms and conditions of employment (and their entitlements at particular times) of individual employees, not just those of Silverbrook Research. Her evidence may have been intended to attempt to re-open findings made in the primary judgment about the liability of the Corporate Respondents. To that extent, the evidence is irrelevant as those findings cannot be revisited. The affidavit does, however, demonstrate a far more detailed knowledge by Ms Lee of the employee entitlements of employees of all of the Corporate Respondents than Mr Silverbrook has ever demonstrated. It is impossible to accept that, where Mr Silverbrook had knowledge of relevant facts leading to the infringements by Silverbrook Research, Ms Lee did not.
I find that both Mr Silverbrook and Ms Lee were aware that Silverbrook Research employees were not being paid.
Mr Silverbrook was aware that the Mpowa employees were not being paid
Mr Silverbrook agreed in cross-examination that he spoke to employees of Mpowa in March 2013 about the non-payment of their wages.[146] He stated in his second affidavit in respect of Mpowa staff that, “I was trying everything I could to pay wages, including paying wages from my own funds when I had any.”[147] He stated in that affidavit that “…my updates to staff were simply in response to Chris’ express request that I provide an update of the efforts that I was making to secure funds to pay salaries”.[148] Mr Silverbrook sent a number of emails to an email address received by members of Mpowa’s staff[149] in the period 22 March to 7 September 2013 in which he referred to the non-payment of wages of Mpowa employees.[150] Mr Silverbrook did not deny in his second affidavit that he sent those emails.
[146] Transcript 11 March 2016, T390.43 - 44.
[147] Mr Silverbrook’s affidavit CB volume 3 tab 41 at [45].
[148] Mr Silverbrook’s second affidavit CB volume 3 tab 41 at [60].
[149] Mr Wooldridge’s affidavit CB volume 2 tab 37 at [22].
[150] Mr Wooldridge’s affidavit CB volume 2 tab 37 at [29]-[35]; exhibit CW-1 CB tab 56 sub-tabs 2-17.
Mr Silverbrook was informed by email throughout 2013 of Mpowa employees complaining that they had not been paid their wages, or that they would be resigning or going on unpaid leave.[151]
[151] Mr Wooldridge’s affidavit CB volume 2 tab 37 at [78]–[94] and exhibit CW-1, CB tab 56, sub-tabs 42-56.
There can be no doubt that Mr Silverbrook knew that Mpowa employees were not being paid their wages during the audit period.
Lack of necessity to have personal knowledge of each employee, their entitlements and circumstances
It is unnecessary for the Directors to have personal knowledge of each employee and the amount of their entitlements in circumstances where they each knew that there were insufficient funds to pay the employees of the companies on time at all.
As stated in Mobilegate Ltd (No 8), per Logan J at [172]:
There was debate before me in submissions as to the level of detail of knowledge of contravening conduct which the Authority must prove. As I understood it, the submission made on behalf of Mr Phillips was that the Authority needed to go so far as to prove that he was aware that particular profiles were fictitious and that particular deceptive messages were being sent using that particular fictitious profile. That would involve proof of detailed knowledge of the deceptive quality attending each and every of many thousands of messages. I reject this submission. It is not, in my opinion, supported by Yorke. It will be sufficient to prove accessorial liability in respect of the corporate contraventions if the Authority proves that Mr Phillips was aware that IMP and on its behalf Jobspy were employing a system of operations whereby fictitious profiles were being created to the end that each third party consent to the use of the premium shortcode would be procured by a message which was deceptive because of the employment of a fictitious profile. Proof of knowledge at a more detailed level of abstraction is not, in my opinion, essential.
This principle has been applied in the context of the Fair Work Act by the Federal Court, finding that where an alleged accessory is aware of a system producing certain outcomes, and those outcomes constitute contraventions of the Fair Work Act, it is unnecessary to show that the alleged accessory knew the details of each particular instance of those outcomes in order to prove the requisite knowledge.[152]
[152] Grouped Property Services Pty Ltd per Katzmann J at [954] to [963] but with particular reference to [957]; EZY Accounting 123 Pty Ltd at [34].
The situation here was not so much a system as a fait accompli. The Corporate Respondents ran out of money to pay their staff but they permitted those staff who remained to stay on in the hope that the Directors would ultimately be able to pay the staff their entitlements. That proved not to be possible within the contravention periods. Mr Silverbrook and Ms Lee undoubtedly knew that the staff were not being paid and it necessarily followed that the staff were not receiving whatever their employment entitlements were. To the extent that Mr Silverbrook and Ms Lee did not know the detail of the entitlements of individual employees, that was because they chose not to enquire and were wilfully blind to those details.
The circumstances of the plight the Directors found themselves in tend to evoke some sympathy. These were hardworking and apparently honest people caught up in adverse events beyond their control. However, they made conscious choices which led to the contraventions by the Corporate Respondents and they were knowingly concerned in those contraventions.
Accordingly, by reason of what has been set out above, I am comfortably satisfied that the Directors are liable for the pleaded contraventions.
Conclusion
For the above reasons, I find that Mr Silverbrook was involved, within the meaning of s.550(1) of the Fair Work Act, in the contraventions of the Fair Work Act alleged by the Fair Work Ombudsman and that Ms Lee was involved, within the meaning of s.550(1) of the Fair Work Act, in the contraventions of the Fair Work Act alleged against her.
I will make the declarations sought by the Fair Work Ombudsman.
I certify that the preceding one hundred and seventeen paragraphs are a true copy of the reasons for judgment of Judge Driver
Date: 22 February 2019
ANNEXURE A
Summary of proceedings
“Priority Matters” – Fair Work Ombudsman v Priority Matters Pty Ltd & Kia Silverbrook SYG 3209/2013
| Overview | Contraventions Found | Issues on remitter |
| Proceedings filed 20 December 2013. 15 employees Underpayment - $452,997.98 Audit period: 11 March 2013 – 9 August 2013 | See primary judgment at [200] –[211] 1. Section 323(1) - failure to pay in full (all 15 employees) 2. Section 44(1) - failure to pay paid public holidays (section 116) (12 employees: Bolton, Dalton, Lee, Nair, Fitzgerald, Nget, News, Tang, Teh, van Rensburg, Zhang and Zou) 3. Section 44(1) - failure to pay untaken annual leave on termination (s.90(2)) (3 employees: Bolton, Lee and van Rensburg) 4. Section 45 – failure to pay minimum rates of pay (clause A.2.5 of the Clerks Private Sector Award 2010) (8 employees: Dalton, Fitzgerald, Marsh, Nair, Netana, News, Pavlovski and Nget) 5. Section 45 – failure to pay casual loading (clause A.5.4 of the Clerks Private Sector Award 2010) (1 employee: Marsh) 6. Section 293 - failing to pay national minimum wage (7 employees: Bolton, van Rensburg, Lee, Zou, Tang, Teh, and Zhang) 7. Section 542 - failure to pay safety net contractual entitlements (all 15 employees) | 1. Liability of Kia Silverbrook under s.550 of the Fair Work Act 2. Declaration and penalty in respect of Priority Matters Pty Ltd 3. Subject to liability, declaration and penalty in respect of Kia Silverbrook |
“Superlattice” - Fair Work Ombudsman v Superlattice Solar Pty Ltd & Kia Silverbrook SYG 3210/ 2013
| Overview | Contraventions Found | Issues on remitter |
| Proceedings filed 20 December 2013. One employee – Dr Wohlthat Underpayment - $55,969.11 Audit period: 11 March 2013 – 19 August 2013 | See primary judgment at [214] – [224] 1. Section 323(1) – failure to pay in full 2. Section 44(1) - failure to pay paid public holidays (s.116) 3. Section 44(1) - failure to pay untaken annual leave on termination (s.90(2)) 4. Section 45 – failure to pay minimum rates of pay (clause A.2.5 Professional Employees Award 2010) 5. Section 44(1) – failure to pay minimum notice period (s.117(2)) 6. Section 45 - failure to pay minimum period of notice (clause 12.2 of the Professional Employees Award) 7. Section 542 - failure to pay safety net contractual entitlements | 1. Liability of Kia Silverbrook under s.550 of the Fair Work Act 2. Declaration and penalty in respect of Superlattice Solar Pty Ltd 3. Subject to liability, declaration and penalty in respect of Kia Silverbrook |
“Geneasys” - Fair Work Ombudsman v Geneasys Pty Ltd (in liq) & Silverbrook SYG 3228/2013
| Overview | Contraventions Found | Issues on remitter |
| Proceedings filed 23 December 2013. Five employees Underpayment - $362,972.97 Audit period: 25 February 2013 – 9 August 2013 | See primary judgment at [226] – [234] 1. Section 323(1) – failure to pay in full (all five employees) 2. Section 44(1) - failure to pay paid public holidays (s.116) (all five employees) 3. Section 44(1) - failure to pay periods of annual leave (s.90(1)) (one employee: Boulter) 4. Section 44(1) - failure to pay untaken annual leave on termination (s.90(2)) (all five employees) 5. Section 44(1) – failure to pay minimum notice period (s.117(2)) (one employee: Worsman) 6. Section 45 - failure to pay minimum period of notice (clause 12.2 of the Professional Employees Award) (1 employee: Worsman) 7. Section 542 - failure to pay safety net contractual entitlements (two employees: Worsman and Boulter) 8. Section 293 – failure to pay national minimum wage (three employees: Azimi, Moini and Facer) 9. Section 328 – guarantee of annual earnings (three employees: Azimi, Moini and Facer) | 1. Liability of Kia Silverbrook under s.550 of the Fair Work Act 2. Subject to liability, declaration and penalty in respect of Kia Silverbrook |
“Silverbrook Research” - Fair Work Ombudsman v Kia Silverbrook & Janette Lee – formerly re Silverbrook Research Pty Ltd (in liq) - SYG1743/2014
| Overview | Contraventions Found | Issues on remitter |
| Proceedings filed 25 June 2014. Five employees Underpayment - $390,894.62 Audit period: 7 February 2013 – 12 December 2013 | See primary judgment at [238] – [249] 1. Section 323(1) – failure to pay in full (all five employees) 2. Section 44(1) – failure to pay annual leave taken (s.90(1)) (two employees: Chan and Harrison) 3. Section 44(1) - failure to pay untaken annual leave on termination (s.90(2)) (four employees: Harrison, McCarthy, Mohamad and Nguyen) 4. Section 44(1) – failure to pay periods of personal leave taken (s.99) (one employee: Chan) 5. Section 44(1) - failure to pay paid public holidays (s.116) (all five employees) 6. Section 44(1) - failure to make payment in lieu of notice of termination (s.117(2)) (one employee: McCarthy) 7. Section 44(1) – failure to pay redundancy pay (s.119) (one employee: McCarthy) 8. Section 45 – failure to pay minimum rates of pay (clause A.2.5 of the Clerks Private Sector Award) (two employees: Chan and Nguyen) 9. Section 45 - failure to pay minimum rates (clause A.3.6 of the Professional Employees Award 2010) (one employee: Harrison) 10. Section 293 – failure to pay national minimum wage (two employees: McCarthy and Mohamad) 11. Section 542 – failure to pay safety net contractual entitlements (all five employees) | 1. Liability of Kia Silverbrook under s.550 of the Fair Work Act 2. Liability of Janette Lee under s.550 of the Fair Work Act 3. Subject to liability, declaration and penalty in respect of Kia Silverbrook and Janette Lee |
“Mpowa” - Fair Work Ombudsman v Mpowa Pty Ltd & Kia Silverbrook (SYG 1780/2014)
| Overview | Contraventions Found | Issues on remitter |
| Proceedings filed 27 June 2014. 17 employees Underpayment - $608,433.26 Audit period: 25 February 2013 – 13 December 2013 | See primary judgment at [255] – [267] 1. Section 323(1) – failure to pay in full (all 17 employees) 2. Section 44(1) – failure to pay periods of annual leave taken (s.90(1)) (11 employees: Childs, Dumbrell, Jones, Kelly, Lai, Maier, Newman, Shepanski, Toth, Whittaker and Whitlock) 3. Section 44(1) - failure to pay untaken annual leave on termination (s.90(2)) (three employees: Kalsi, Shepanski and Yourlo) 4. Section 44(1) – failure to pay periods of personal leave taken (s.99) (seven employees: Childs, Dumbrell, Lai, Newman, Ramani, Shepanski and Whittaker) 5. Section 44(1) - failure to pay paid public holidays (s.116) (15 employees: Childs, Dumbrell, Jones, Kalsi, Kelly, Lai, Long, Maier, Newman, Ramani, Shepanski, Toth, Whitlock, Whittaker and Yourlo) 6. Section 44(1) - failure to make payment in lieu of notice of termination (s.117(2)) (one employee: Yourlo) 7. Section 44(1) – failure to pay redundancy pay (s.119) (one employee: Yourlo) 8. Section 45 – failure to pay redundancy pay (clause 13.5 Professional Employees Award 2010) (one employee: Yourlo) 9. Section 45 – breach of modern award by failing to pay minimum rates (clauses 15 and A.3.6 Professional Employeess Award 2010) (16 employees: Toth, Yourlo, Childs, Dumbrell, Jones, Kalsi, Kelly, Lai, Long, Maier, Newman, Ramani, Shepanski, Tucker, Whitlock and Whittaker) 10. Section 293 – failure to pay national minimum wage (one employee: Herceg) 11. Section 542 – failure to pay safety net contractual entitlements (all 17 employees) | 1. Liability of Kia Silverbrook under s.550 of the Fair Work Act 2. Declaration and penalty in respect of Mpowa Pty Ltd 3. Subject to liability, declaration and penalty in respect of Kia Silverbrook |
ANNEXURE B
Applicant’s evidence
Evidence of Ashley Hurrell
affidavit of Ashley Hurrell (without Exhibit AKH-1); Priority proceedings; affirmed 24 July 2015;
affidavit of Ashley Hurrell (without Exhibit AKH-1), Superlattice proceedings; affirmed 24 July 2015;
affidavit of Ashley Hurrell (without Exhibit AKH-1), Geneasys proceedings; affirmed 24 July 2015;
affidavit of Ashley Hurrell (without Exhibit AKH-1), Mpowa proceedings; affirmed 30 July 2015;
affidavit of Ashley Hurrell (without Exhibit AKH-1), Silverbrook and Lee proceedings; affirmed 19 October 2015; and
affidavit of Ashley Hurrell (without Exhibit AKH-1), multiple proceedings; affirmed 15 January 2016.
Evidence of other witnesses
affidavit of Kenneth Bolton (with annexures), Priority proceedings; affirmed 24 July 2015;
affidavit of Julie Pavlovski (with annexures), Priority proceedings; affirmed 24 July 2015;
affidavit of Leonie News (with annexures), Priority proceedings; affirmed 24 July 2015;
affidavit of Soren Wohlthat (with annexures), Superlattice proceedings; affirmed 24 July 2015;
affidavit of Soren Wohlthat (with annexures), Superlattice proceedings; affirmed 15 January 2016;
affidavit of Geoffrey Facer (without Exhibit GRF-1), Geneasys proceedings; affirmed 24 July 2015;
affidavit of John McCarthy (with annexures), Silverbrook and Lee proceedings; affirmed 22 October 2015;
affidavit of Glenn Harrison (with annexures), Silverbrook and Lee proceedings; affirmed 22 October 2015;
affidavit of Jane Childs (without Exhibit JLC-1), Mpowa proceedings; affirmed 16 July 2015;
affidavit of Christopher Wooldridge (without Exhibit CW-1), Mpowa proceedings; affirmed 30 July 2015;
affidavit of Michael Shepanski (reply to Silverbrook Mpowa affidavit) (without Exhibit MS-1), Mpowa proceedings; affirmed 17 November 2015; and
affidavit of Anthony Whitlock (Reply to Silverbrook Mpowa affidavit) (with annexures), Mpowa proceedings; affirmed 18 November 2015.
Respondents’ evidence
Evidence of Kia Silverbrook
first affidavit of Kia Silverbrook (without Exhibit KS-1); multiple proceedings; affirmed 5 February 2016; and
second affidavit of Kia Silverbrook (without Exhibit KS-2); multiple proceedings; affirmed 5 February 2016.
Evidence of Janette Lee
affidavit of Janette Lee (without Exhibit JL-3); Superlattice proceedings; sworn 20 August 2015;
affidavit of Janette Lee (without Exhibit JL-2); Geneasys proceedings; sworn 20 August 2015; and
affidavit of Janette Lee (without Exhibit JL-1); multiple proceedings; affirmed 5 February 2016.
Exhibits
Applicant’s exhibits
Exhibit AKH-1 to affidavit of Ashley Hurrell; Priority proceedings; affirmed 24 July 2015;
Exhibit AKH-1 to affidavit of Ashley Hurrell; Superlattice proceedings; affirmed 24 July 2015;
Exhibit AKH-1 to affidavit of Ashley Hurrell; Geneasys proceedings; affirmed 24 July 2015;
Exhibit AKH-1 to affidavit of Ashley Hurrell; Mpowa proceedings; affirmed 30 July 2015;
Exhibit AKH-1 to affidavit of Ashley Hurrell; Silverbrook and Lee proceedings; affirmed 19 October 2015;
Exhibit AKH-2 to affidavit of Ashley Hurrell; multiple proceedings; affirmed 15 January 2016;
Exhibit GRF-1 to affidavit of Geoffrey Fracer; Geneasys proceedings; affirmed 25 July 2015;
Exhibit JLC-1 to affidavit of Jane Childs; Mpowa proceedings; affirmed 16 July 2015;
Exhibit CW-1 to affidavit of Christopher Wooldridge;Mpowa proceedings; affirmed 30 July 2015; and
Exhibit MS-1 to affidavit of Michael Shepanski; Mpowa proceedings; affirmed 17 November 2015.
Respondents’ exhibits
Exhibit KS-1 to first affidavit of Kia Silverbrook; multiple proceedings; affirmed 5 February 2016;
Exhibit KS-2 to second affidavit of Kia Silverbrook; multiple proceedings; affirmed 5 February 2016;
Exhibit JL-3 to affidavit of Janette Lee; Superlattice proceedings; sworn 20 August 2015;
Exhibit JL-2 to affidavit of Janette Lee; Geneasys proceedings; sworn 20 August 2015; and
Exhibit JL-1 to affidavit of Janette Lee; multiple proceedings; affirmed 5 February 2016.
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