Fair Work Ombudsman v Procraft Group Pty Ltd
[2024] FedCFamC2G 256
•20 March 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Procraft Group Pty Ltd [2024] FedCFamC2G 256
File number(s): MLG 1149 of 2023 Judgment of: JUDGE J YOUNG Date of judgment: 20 March 2024 Catchwords: INDUSTRIAL LAW – FAIR WORK – application for default judgment pursuant to rule 13.05(2)(c) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) – applicant seeking declaration of contravention of s 716(5) of the Fair Work Act 2009 (Cth) by reason of first respondent failing to comply with a compliance notice –second respondent alleged to be involved as an accessory to first respondent’s conduct – default judgment entered – declarations of contraventions and orders directed at compliance – matter listed for penalty hearing Legislation: Corporations Act 2001 (Cth)
Fair Work Act 2009 (Cth) ss 12, 14, 90(2), 539(2), 545(1), 546(1), 547(2), 550, 687(1), 701, 716(1), (2), (5).
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 rr 1.06(3), 4.03(3), 4.04(3)(a), 6.01, 13.04, 13.05(2)(c).
Federal Court Rules 2011 (Cth)
Building and Construction General On-site Award 2020
Cases cited: Arthur v Vaupotic Investments Pty Ltd [2005] FCA 433
Australian Competition and Consumer Commission v Dataline.Net.Au Pty Limited [2006] FCA 1427
Australian Competition and Consumer Commission v MSY Technology Pty Ltd [2012] FCAFC 56
Geneva Laboratories Ltd v Prestige Premium Deals Pty Ltd (No.4) [2016] FCA 867
IMF (Australia) Ltd v Sons Of Gwalia Ltd (Administrator Appointed) (2004) 211 ALR 231
Macquarie Bank Limited v Seagle [2005] FCA 1239
Rathner, in the matter of Mildura Grand Pty Ltd (in liq) v Bendigo Skyrider Pty Ltd [2011] FCA 626
Speedo Holdings B.V. v Evans (No 2) [2011] FCA 1227
Division: Division 2 General Federal Law Number of paragraphs: 50 Date of hearing: 8 March 2023 Place: Melbourne Solicitor for the Applicant: Mr Vas of Fair Work Ombudsman Solicitor for the Respondents: Did not participate ORDERS
MLG 1149 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: PROCRAFT GROUP PTY LTD AS TRUSTEE FOR BUSUTTIL TRUST
First Respondent
BRADLEY BUSUTTIL
Second Respondent
ORDER MADE BY:
JUDGE J YOUNG
DATE OF ORDER:
20 MARCH 2024
Amended pursuant to r.17.05(2)(g) of the Federal Circuit and Family Court Rules (Division 2) (General Federal Law) 2021 on 28 March 2024.
THE COURT ORDERS THAT:
1.Default judgment be entered for the Applicant against the First Respondent and Second Respondent pursuant to r 13.05(2)(c) of the Federal Circuit Court and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Rules) by reason of the First and Second Respondents’ defaults pursuant to r 13.04(2) of the Rules, by their failure to take each of the following steps:
(a)file and serve a Notice of Address for Service as required by r 6.01 of the Rules;
(b)file and serve a Response and any Defence within 28 days of service as required by rr 4.03(3) and 4.04(3)(a) of the Rules;
(c)comply with an order of the Court in the proceedings, being order 2 of the orders of the Court dated 4 December 2023, in accordance with r 13.04(2)(b)(iii) of the Rules;
(d)attend the directions hearings on 4 October 2023, 16 October 2023, and 4 December 2023; and
(e)in light of the above, defend the proceedings with due diligence in accordance with r 13.04(2)(b)(vii) of the Rules.
THE COURT DECLARES THAT:
2.Upon admissions that the Respondents are taken to have made consequent upon the Respondents’ default pursuant to r 13.04(2) of the Rules:
(a)the First Respondent contravened s 716(5) of the Fair Work Act 2009 (Cth) (FW Act) by failing to comply with a compliance notice given to it on 6 September 2022 (Compliance Notice); and
(b)the Second Respondent was involved in, within the meaning of s 550(2) of the FW Act, the First Respondent’s contravention of s 716(5) of the FW Act by failing to comply with the Compliance Notice.
THE COURT ORDERS FURTHER THAT:
3.Pursuant to s 545(1) of the FW Act, the First Respondent take the steps that were required by the Compliance Notice within 28 days of this order by:
(a)paying $4,569.88 (gross) (Underpayment Amount) to Mr Jake Kelly (Employee); and
(b)providing evidence to the Applicant that the Underpayment Amount as set out in order
2(a)3(a) above has been paid.
4.Pursuant to s 547(2) of the FW Act, within 28 days of this order, the First Respondent pay to the Employee interest calculated in accordance with the applicable pre-judgment interest rate prescribed by the Federal Court of Australia in respect of the payment required under paragraph
2(a)3(a) above.5.The matter is adjourned to 17 May 2024 at 9.00am for a further hearing in respect of the Applicant’s claim for penalties to be imposed on the First and Second Respondent pursuant to s 546(1) of the FW Act for the contraventions set out at paragraph 2(a) and (b) above.
6.The Applicant file and serve evidence and submissions relating to penalty no later than 19 April 2024.
7.The First and Second Respondents file and serve evidence and submissions relating to penalty no later than 3 May 2024
14 days prior to the date of the hearing fixed pursuant to paragraph 5 above.8.The Applicant file and serve any submissions in reply relating to penalty no later than 10 may 2024
7 days prior to the date of the hearing fixed pursuant to paragraph 5 above.9.The parties have liberty to apply.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE J YOUNG:
INTRODUCTION
Before the Court is an Application for default judgment pursuant to r 13.05(2)(c) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Rules) against the first respondent, Procraft Group Pty Ltd as the Trustee for Busuttil Trust (Procraft) and the second respondent, Bradley Busuttil (together, Respondents).
The Fair Word Ombudsman (FWO) claims that Procraft contravened s 716(5) of the Fair Work Act 2009 (Cth) (FW Act) by failing to comply with the requirements of a compliance notice issued under s 716(2) of the FW Act in respect of underpayments to Mr Jake Kelly (Employee), and that Mr Busuttil was involved in Procraft’s contravention within the meaning of s 550 of the FW Act. The FWO seeks declarations in respect of the alleged contravention, payment to the Employee with interest, and a further hearing with respect to the payment of a pecuniary penalty to the Commonwealth. service
PROCEDURAL HISTORY
The originating Application and Statement of Claim were filed in this Court on 28 June 2023 (Originating Documents).
Prior to the first return of this matter, orders were made in chambers on 2 August 2023 adjourning the matter for further directions. In correspondence to the Court, the FWO stated they had not yet been able to effect personal service on Mr Busuttil and the adjournment request was to allow further time to effect service.
On 22 September 2023, the FWO filed an Application in a Proceeding seeking orders for substituted service on Mr Busuttil (Application for Substituted Service). Due to an IT error with Registry, the Application for Substituted Service was not referred to Chambers nor accepted for filing. This was discovered at the directions hearing on 4 October 2023 and the matter was adjourned for the Application for Substituted Service and related evidence to be properly accepted for filing. No appearance was made by or on behalf of either Respondents at the directions hearing on 4 October 2023.
In support of the Application for Substituted Service the FWO filed two affidavits. The affidavit of the FWO’s solicitor evidences two company searches, service of the Originating Documents on Procraft by express post to its registered office and to the address of Mr Busuttil (dated 29 June 2023) and communication attempts made by the FWO to effect personal service on Mr Busuttil. The affidavit of the process server evidences the attempts for service made on Mr Busuttil, including six attendances on Mr Busuttil’s address and nine telephone calls. On 14 August 2023, the process server left the Originating Documents in a sealed envelope addressed to Mr Busuttil in the letterbox at his address.
Orders were made on 16 October 2023 granting the Application for Substituted Service and the Originating Documents were deemed to have been served on Mr Busuttil as at 14 August 2023. Orders were made for the FWO to file a copy of the orders on the Respondents. No appearance was made by or on behalf of either of the Respondents at the directions hearing on 16 October 2023.
On 18 October 2023, the FWO sent a letter by express post to Procraft and by express post and email to Mr Busuttil explaining the 16 October 2023 orders and notifying of the next court date on 4 December 2023.
On 22 November 2023, the FWO’s solicitor conducted a further company search which showed that the registered office of Procraft had changed. The new registered office is the same as Mr Busuttil’s address.
Orders were made on 4 December granting leave for the FWO to file an Amended Statement of Claim, procedural orders were also made for the Respondents to file and serve any Response and/or Defence by 29 January 2024, for the FWO to file and serve any Reply by 19 February 2024, and for the FWO to serve a copy of the orders on the Respondents. A further order was made that if neither respondent complies with the order to file material, the FWO has leave to file an Application for judgment against such respondent pursuant to r 13.05(2)(c) of the Rules by 19 February 2024. The matter was listed for further directions hearing on 6 March 2024. No appearance was made by or on behalf of either of the Respondents at the directions hearing on 4 December 2023.
Neither Respondent filed a Response or a Defence by 29 January 2024 or at all.
On 19 February 2024, the FWO filed an Application in a Proceeding seeking that default judgment be entered for the FWO against the Respondents by reason of Procraft and Mr Busuttil’s default pursuant to r 13.04(2) of the Rules, by their failure to:
(1)file and serve a Notice of Address for Service as required by r 6.01 of the Rules;
(2)file and serve a Response and any Defence within 28 days of service as required by rr 4.03(3) and 4.04(3)(a) of the Rules;
(3)comply with an order of the Court in the proceedings, being order 2 of the orders of the Court dated 4 December 2023, in accordance with r 13.04(2)(b)(iii) of the Rules;
(4)attend the directions hearings on 4 October 2023, 16 October 2023, and 4 December 2023; and
(5)in light of the above, defend the proceedings with due diligence in accordance with r 13.04(2)(b)(vii) of the Rules
(Application for Default Judgment).
The Application for Default Judgment was accompanied by an affidavit in support, and was listed to the 6 March 2024 directions hearing. The accompanying affidavit in support evidences service of the Amended Statement of Claim, the 4 December 2023 orders, and letters addressed to Procraft and Mr Busuttil, by way of express post to Procraft at the registered office and by express post and email to Mr Busuttil, dated 6 December 2023.
On 21 February 2024, the 6 March 2024 directions hearing was relisted to 8 March 2024. Chambers sent an email notifying of the relisted hearing date to the FWO and to an email address used by Mr Busuttil in correspondence with the FWO (Notice of Relisting). The Notice of Relisting also requested the FWO to provide a copy of the Notice of Relisting to the Respondents, noting no Notice of Address for Service was on file.
An affidavit of service filed 26 February 2024 evidences service of:
(a)a letter addressed to Procraft and Mr Busuttil;
(b)the Application for Default Judgment and affidavit in support; and
(c)the Notice of Relisting
on Procraft and Mr Busuttil to the same address, dated 22 February 2024. An attempt was made to email the letter referred to at paragraph [15](a) above however this returned as “undeliverable”.
On 8 March 2024, the Application for Default Judgment proceeded to hearing. The FWO was represented by a FWO solicitor and there was no appearance by or on behalf of the Respondents. The Court received evidence of the various steps taken by the FWO to effect service of the proceedings and various orders of the Court on the Respondents over the period June 2023 to February 2024.
Being satisfied that the Respondents were properly on notice of the Application for Default Judgment, the orders of 4 December 2024 and the hearing listed for 8 March 2024, I determined it appropriate to proceed with the hearing pursuant to r 13.05 of the Rules.
At the hearing, the FWO addressed the Court as to the steps taken in the proceedings to date and the substance of their claim. At the time of the hearing, it remained the case that neither Procraft nor Mr Busuttil had filed material in accordance with the Rules, the directions of the Court, or at all, and had failed to attend Court on all listed dates.
DEFAULT JUDGMENT
Statutory framework and legal principles
A Court may give judgment against a respondent pursuant to r 13.05 of the Rules when they are “in default”. Under r 13.04 of the Rules, a respondent is in default if they have not satisfied the applicant’s claim and has failed to do one or more of the things identified in r 13.04(2) of the Rules. This includes, relevantly, failing to give an address for service; failing to file and serve a response before the time for doing so has expired; failing to comply with a Court order made in the proceeding; and failing to defend the proceeding with due diligence.
When a respondent is in default, the Court may make orders as set out in r 13.05(2) of the Rules, which relevantly includes:
(c)if the proceeding was started by an application supported by a statement of claim or the Court has ordered that the proceeding continue on pleadings—give judgment against the respondent for the relief that:
(i) the applicant appears entitled to on the statement of claim; and
(ii) the Court is satisfied it has power to grant; or
(d) give judgment or make any other order against the respondent;…
The principles guiding the Court’s exercise of power with respect to default judgment are well settled.
Before the Court may make an order under r 13.05(2)(c) of the Rules it must be satisfied that the document filed alongside the Application is in fact a Statement of Claim, which as a pleading, complies with the rules of pleading as set out in the Federal Court Rules 2011 (Cth) (FC Rules). The FC Rules apply to general law proceedings in this Court by virtue of r 1.06(3) of the Rules. The Statement of Claim must plead at least one reasonable cause of action that supports the granting of the relief sought in the Application, and “each element of the relevant civil wrong” of which the applicant complains must be “properly and discretely pleaded in the Statement of Claim”: Macquarie Bank Limited v Seagle [2005] FCA 1239 at [24].
Rule 13.05(2)(c) of the Rules only requires that there is a claim for the relief sought on the face of the Statement of Claim – it does not require proof of the claims made by way of evidence: Arthur v Vaupotic Investments Pty Ltd [2005] FCA 433 at [3]; Rathner, in the matter of Mildura Grand Pty Ltd (in liq) v Bendigo Skyrider Pty Ltd [2011] FCA 626 at [9]. Nonetheless, it is permissible to adduce evidence relevant to the relief sought: Australian Competition and Consumer Commission v Dataline.Net.Au Pty Limited [2006] FCA 1427, at [50] and [51].
The Court retains a discretion not to make an order under r 13.05(2)(c) of the Rules, even if the preconditions for making an order are satisfied: Speedo Holdings B.V. v Evans (No 2) [2011] FCA 1227 at [20] (Flick J).
The FWO’s claim
The FWO’s allegations in the Amended Statement of Claim filed 4 December 2023 are set out in the following paragraphs.
The FWO is and was at all material times:
(a)a statutory appointee of the Commonwealth appointed by the Governor-General by written instrument pursuant to s 687(1) of the FW Act;
(b)a Fair Work Inspector (FWI) pursuant to s 701 of the FW Act; and
(c)a person with standing to bring these proceedings and to apply for orders for contraventions of civil remedy provisions pursuant to s 539(2) of the FW Act.
Procraft is and was at all material times:
(a)a company incorporated under the Corporations Act 2001 (Cth) and registered since 20 June 2018;
(b)a “constitutional corporation” within the meaning of s 12 of the FW Act;
(c)a “national system employer” within the meaning of s 14 of the FW Act;
(d)by reason of the matters at (a), (b) and (c) above, covered by the FW Act in respect of its employees; and
(e)a company that operated a residential building and construction business.
Mr Busuttil is and was at all relevant times:
(a)a natural person capable of being sued;
(b)the sole director of Procraft;
(c)the operative and controlling mind of Procraft;
(d)responsible for the overall operation, management, and control of Procraft;
(e)responsible for ensuring that Procraft complied with its legal obligations under the FW Act; and
(f)a shareholder of Procraft.
In or around March 2022, the FWO commenced an investigation into Procraft’s compliance with the FW Act.
The investigator, Fair Work Inspector Semmler, (FWO Inspector) is and was at all material times appointed under s 700 of the FW Act. The investigation included correspondence between the FWO Inspector and Mr Busuttil by way of phone and email.
Following the investigation, the FWO Inspector formed the belief that:
(1)Procraft employed the Employee;
(2)the Building and Construction General On-site Award 2020 (Award) covered and applied to Procraft in respect of the Employee;
(3)Procraft employed the Employee as a full-time Construction Worker Level 3 (Carpenter), as defined in Schedule A of the Award;
(4)Procraft terminated the Employee’s employment on 22 December 2021; and
(5)Procraft failed to pay the Employee annual leave and annual leave loading on termination of his employment.
Having formed a reasonable belief within the meaning of s 716(1) of the FW Act that Procraft contravened s 90(2) of the FW Act (Contravention), the FWO Inspector gave Procraft a compliance notice in respect of the Contravention pursuant to s 716(2) of the FW Act on 6 September 2022 (Compliance Notice).
The Compliance Notice was given to Procraft by way of express post to its registered office on 6 September 2022. A copy of the Compliance Notice was also sent by way of express post to Procraft’s principal place of business, as well as by email to Mr Busuttil on 6 September 2022. On 8 September 2022, a process server attended Procraft’s principal place of business, where Mr Busuttil’s wife accepted the Compliance Notice.
Pursuant to the Compliance Notice, Procraft was required, by 21 October 2022, to take specified action to calculate and remedy the direct effects of the Contravention and keep a record of same. The Compliance Notice further required Procraft produce reasonable evidence of compliance with the specified actions by 28 October 2022.
On 28 June 2023, the FWO commenced proceedings in this Court.
The FWO claimed that Procraft contravened s 716(5) of the FW Act by failing to take the action required by the Compliance Notice by 21 October 2022 or at all, and by failing to produce to the FWO evidence of its compliance with the Compliance Notice by 28 October 2022 or at all.
The FWO also claims Mr Busuttil had actual knowledge of the Compliance Notice given to Procraft and the requirement to comply within the timeframe specified, that he had actual knowledge Procraft had failed to comply with the Compliance Notice and that he was an intentional participant in Procraft’s failure to comply, such that he was involved within the meaning of s 550(2)(c) of the FW Act in Procraft’s contravention of s 716(5) of the FW Act.
Relief sought
By its Application for Default Judgment, the FWO seeks relief including declarations that:
(a)Procraft contravened s 716(5) of the FW Act by failing to comply with the Compliance Notice issued on 6 September 2022; and
(b)Mr Busuttil was involved, within the meaning of s 550(2) of the FW Act, in Procraft’s contravention of s 716(5) of the FW Act by failing to comply with the Compliance Notice.
The Application for Default Judgment also seeks orders that:
(1)Pursuant to s 545(1) of the FW Act that Procraft take the steps required by the Compliance Notice within 28 days of this order, by:
(a)paying the Underpayment Amount to the Employee; and
(b)providing the FWO with a record of the amount paid including interest to the Employee in accordance with these orders.
(2)Pursuant to s 547(2) of the FW Act, Procraft pay interest on the Underpayment Amount at the applicable pre-judgment interest rate to the Employee within 28 days of this order;
(3)Pursuant to s 546(1) of the FW Act within 28 days of this order:
(a)Procraft pay a pecuniary penalty to the Commonwealth for the contravention pleaded in paragraph 21(a), and
(b)Mr Busuttil pay a pecuniary penalty to the Commonwealth for the contravention pleaded in paragraph 21.
(4)The Applicant have liberty to apply on seven days’ notice in the event that any of the preceding orders are not complied with.
(5)Such further orders as the Court considers appropriate.
The FWO foreshadowed that it would seek penalties to be programmed for separate hearing at a later date.
CONSIDERATION
Are the Respondents in default?
The Respondents have respectively failed to:
(a)file a Notice of Address for Service as required by r 6.01 of the Rules;
(b)file and serve a Response and any Defence within 28 days of service as required by rr 4.03(3) and 4.04(3) of the Rules;
(c)comply with an order of the Court in the proceedings, being order 2 of the orders of the Court dated 4 December 2023 in accordance with r 13.04(2)(b)(iii) of the Rules;
(d)attend the directions hearings before Judge Young on 4 October 2023, 16 October 2023, and 4 December 2023; and
(e)defend the proceedings with due diligence as required by r 13.04(2)(b)(vii) of the Rules.
I am therefore satisfied that the Respondents are in default within the meaning of r 13.04(2) of the Rules.
Should default judgment be entered and a declaration be made against the Respondents?
I am satisfied that the Amended Statement of Claim filed on 4 December 2023 and upon which the FWO relies complies with the rules of pleading and properly pleads a cause of action that supports the granting of the relief sought. In particular, I am satisfied that the facts alleged in the Amended Statement of Claim establish Procraft contravened s 716(5) of the FW Act and that Mr Busuttil was a person involved, within the meaning of s 550(2) of the FW Act, in Procraft’s contravention.
The Court has a wide discretion to make declarations; including where, due to their default, a respondent is deemed to have made admissions. The requirement for a proper contradictor in declaratory relief proceedings can be met in a range of circumstances, including where a declaration is made by consent, where a party intends to oppose declaratory proceedings but subsequently decides not to, or where a party does not appear despite awareness that declaratory relief was sought: IMF (Australia) Ltd v Sons Of Gwalia Ltd (Administrator Appointed) (2004) 211 ALR 231 at [47]; Geneva Laboratories Ltd v Prestige Premium Deals Pty Ltd (No.4) [2016] FCA 867 at [82]. Further, it is sufficient that there exists a party who has “an interest to oppose the declaratory relief sought” to make a party a proper contradictor: Australian Competition and Consumer Commission v MSY Technology Pty Ltd [2012] FCAFC 56 at [30] per Greenwood, Logan and Yates JJ.
Appropriate caution should nevertheless be exercised, and it is important to bear in mind the particular characteristics of an application for default judgment – in particular that default judgment is given on the basis of a claim as pleaded and in the absence of a Defence or contradictory evidence. Accordingly, it is appropriate to make clear that there has been no adjudication on the merits of the FWO’s claims and that the declarations are made on the basis of deemed admissions: Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd [2006] FCA 1427 at [59]. This is done by including wording in the declaration to the effect that the declarations are made “upon admissions which the respondents in question are taken to have made consequent upon their non-compliance with the requirements of the rules of Court” as suggested by Kiefel J, as her Honour then was, in Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd [2006] FCA 1427 at [59].
I am satisfied that this is an appropriate case for declaratory relief, and in making the declarations sought, an introductory phrase shall be included so as to ensure any reader understands the circumstances in which the declarations are made.
Should orders be made requiring compliance and payment of interest?
On the basis of the admissions taken to have been made by the Respondents, compliance with the Compliance Notice remains outstanding and the Employee has not been paid the amount to which he is entitled. I am satisfied that it is appropriate to make orders of the kind sought by the FWO that require Procraft to take the steps required by the Compliance Notice within 28 Days and that Procraft pay interest on the amount of the underpayment owing, pursuant to ss 545(1) and 547(2) of the FW Act.
CONCLUSIONS
For the above reasons, I am satisfied that the respondents are in default for the purposes of the Rules and I am satisfied that the applicant is entitled to the relief it seeks. Declarations and orders will be made as against Procraft and Mr Busuttil.
I have considered the draft form of orders proposed by the applicant and, although the orders I have made depart slightly from them, they conform with the reasons set out above.
The question of what penalty (if any) be ordered will be determined following a further hearing and opportunity being given to the Respondents to address the Court.
I certify that the preceding fifty (50) numbered paragraphs are a true copy of the Reasons for Judgment of Judge J Young. Associate:
Dated: 20 March 2024
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