Fair Work Ombudsman v Quincolli Pty Ltd & Anor
[2011] FMCA 139
•28 November 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v QUINCOLLI PTY LTD & ANOR | [2011] FMCA 139 |
| INDUSTRIAL LAW – Alleged breaches of the Workplace Relations Act 1996 (Cth) and the Fair Work Act 2009 (Cth) and a State award – issues of liability – whether the employees were covered by the State award and whether the employer had lodged Australian Workplace Agreements for them considered – allegations of a politically motivated investigation by Fair Work Australia – allegations of a flawed investigation by Fair Work Australia – relevance of the allegations considered. PRACTICE AND PROCEDURE – Jurisdiction of the Court. |
| Annual Holidays Act 1944 (NSW) Civil Procedure Act 2005 (NSW), s.56 Crimes Act 1914 (Cth), s.4AA Evidence Act 1995 (Cth), s.160 Fair Work Act 2009 (Cth), ss.12, 539, 546, 550, 557, 682, 687, 701, 712 Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 Federal Magistrates Act 1999 (Cth) Financial Management and Accountability Act 1997 (Cth) Judges Pensions Act 1968 (Cth) Judiciary Act 1903 (Cth), s.55ZF Workplace Relations Act 1996 (Cth), ss.4, 166B, 180, 182, 204, 344, 345, 347, 717, 719, 728 |
| Angus Fire Armour Australia Pty Ltd v Collector of Customs (1988) 19 FCR 477 Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | QUINCOLLI PTY LTD ACN 003 371 097 |
| Second Respondent: | JUDITH MADGE POTTER |
| File Number: | SYG 1898 of 2010 |
| Judgment of: | Driver FM |
| Hearing dates: | 7-11 March, 14 & 19 April & 24 May 2011 |
| Date of Last Submission: | 15 September 2011 |
| Delivered at: | Sydney |
| Delivered on: | 28 November 2011 |
REPRESENTATION
| Counsel for the Applicant: | Ms C Howell |
| Solicitors for the Applicant: | Fair Work Ombudsman |
| Counsel for the Respondents: | Mr McCrudden |
| Solicitors for the Respondents: | Macquarie Lawyers Burwood |
ORDERS
The Court declares that during the period 1 January 2009 to 31 December 2009, Quincolli Pty Ltd contravened the following provisions:
(a)subsection 182(1) of the Workplace Relations Act 1996 (Cth);
(b)subclause 10.3.3 of the Clerical NAPSA;
(c)subclause 10.3.6 of the Clerical NAPSA for Saturday shifts;
(d)subclause 10.3.6 of the Clerical NAPSA for Sunday shifts;
(e)subclause 10.3.6 of the Clerical NAPSA for public holiday shifts;
(f)subclause 10.4.1 of the Clerical NAPSA; and
(g)subclause 14.1.1 of the Clerical NAPSA.
The Court declares that Quincolli Pty Ltd contravened subsection 712(3) of the Fair Work Act 2009 (Cth).
The Court declares that Judith Madge Potter was involved in the contraventions by Quincolli Pty Ltd identified in orders (1) and (2) above within the meaning of s.728 of the Workplace Relations Act 1996 (Cth) and s.550 of the Fair Work Act.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 1898 of 2010
| FAIR WORK OMBUDSMAN |
Applicant
And
| QUINCOLLI PTY LTD ACN 003 371 097 |
First Respondent
| JUDITH MADGE POTTER |
Second Respondent
REASONS FOR JUDGMENT
Introduction and Background
This is an application under the Workplace Relations Act 1996 (Cth) (“the Workplace Relations Act”) and the Fair Work Act 2009 (Cth) (“the Fair Work Act”) for the imposition of penalties for breaches of the Workplace Relations Act and a NSW state award. The proceedings were commenced by way of an application filed on 27 August 2010 and an amended statement of claim filed on 9 September 2010. The orders sought are set out in the amended statement of claim.
The applicant (Fair Work Ombudsman) alleges that during the period from 1 January 2009 to 31 December 2009 (relevant period), the first respondent (Quincolli Pty Ltd[1]) breached the following:
a)section 182(1) of the Workplace Relations Act being a term of the Australian Fair Pay and Conditions Standard (AFPCS) by failing to pay 40 employees the minimum hourly rate of pay that was at least equal to the basic periodic rate of pay under the Australian Pay and Classification Scale derived from the terms of the Clerical and Administrative Employees (State) Award (Clerical APCS) for each hour worked;
b)clause 10.3.3 of the notional agreement preserving the Clerical and Administrative Employees (State) Award (Clerical NAPSA) by failing to pay employees a shift allowance of 17% for hours worked during afternoon shifts;
c)clause 10.3.6 of the Clerical NAPSA by failing to pay employees at the rate of time and one-half for work performed on a Saturday;
d)clause 10.3.6 of the Clerical NAPSA by failing to pay employees at the rate of time and three-quarters for work performed on a Sunday;
e)clause 10.3.6 of the Clerical NAPSA by failing to pay employees at the rate of double time and one-half for work performed on public holidays;
f)clause 10.4.1 of the Clerical NAPSA by failing to pay employees working in excess of 40 hours per week at the applicable overtime rate of time and one half for the first two hours and double time thereafter;
g)clause 14.1.1 of the Clerical NAPSA by failing to pay employees a loading of one twelfth of their ordinary rate in lieu of an annual leave entitlement in accordance with the terms of the notional agreement preserving the Annual Holidays Act1944 (NSW) (AHA NAPSA); and
h)section 712(3) of the Fair Work Act in that Quincolli failed to comply with a Notice to Produce Records or Documents issued by the Fair Work Ombudsman.
[1] Formerly known as Well Done Group Pty Ltd.
The Fair Work Ombudsman also alleges that the second respondent (Mrs Potter) was involved in each of the breaches by Quincolli outlined above within the meaning of s.728 of the Workplace Relations Act and s.550 of the Fair Work Act and is thereby taken to have contravened the provisions.
The following statement of background facts is derived from the submissions of the parties.
During the relevant period, Quincolli:
a)was an employer as defined in the Workplace Relations Act and the Fair Work Act[2];
b)operated the business known as Well Done Contact Centres which includes the inbound call centre located at 21-24/32 Browns Road, South Nowra, New South Wales; and
c)employed the employees named in Schedule 1 to the Amended Statement of Claim (Employees) as call centre operators. The Employees were each employed on a casual basis.
[2] Affidavit of Darren John Lang (Lang Affidavit) sworn 4 November 2010 at [6].
The Employees were paid in accordance with agreements that were purportedly lodged by Quincolli as Australian Workplace Agreements (AWAs) with the Office of the Employment Advocate (OEA) in February and March 2007.
The Fair Work Ombudsman asserts that no AWA was ever lodged by Quincolli with the OEA[3] in accordance with the Workplace Relations Act and that, by virtue of the duties performed by the Employees, the applicable industrial instrument that covered the Employees during the relevant period was the Clerical NAPSA.
[3] Lang Affidavit at [28] and affidavit of Brian Forbes affirmed on 5 November 2010 at [17]-[26].
While the respondents claim that AWAs were sent to the OEA in February and March 2007, these AWAs only relate to four out of the 40 Employees[4]. The respondents’ evidence[5] indicates that no AWAs were ever sent to the OEA in respect of the remaining 36 Employees. The Fair Work Ombudsman contends that, on any view, the applicable industrial instrument that covered those 36 Employees during the relevant period was the Clerical NAPSA.
[4] Amy Farnham, Christine Kiely, Leanne Laverty and Lynette Richardson.
[5] Affidavit of Judith Madge Potter made on 4 January 2011 (Potter Affidavit #2) at [20]-[21] and [25]-[28].
The basic rate of pay, penalties and loadings paid to the Employees during the relevant period were less than those prescribed in the Clerical NAPSA and an underpayment resulted in the amount of $202,057.06. This underpayment has not been rectified.
The application is opposed by the respondents who filed a response on 25 October 2010. That response identifies the following grounds of opposition:
1. The applicant has incorrectly stated the award (Clerical and Administrative Employees (State) Award) and provisions thereof under which the employees of the respondents worked.
2. The applicant has failed to give proper attention to the Workplace agreements which were produced to the representatives of the applicant.
3. The applicant has failed to reply upon relevant evidence in relation to the respondents’ employment of its employees.
On the final day of the trial of this matter, on 24 May 2011, I agreed to a two stage process for the resolution of the proceedings, with the first stage being a judgment on liability, and the second stage being a decision on any issue of penalty.
The evidence and submissions
The Fair Work Ombudsman relies upon two affidavits by Darren John Lang made on 4 November 2010 and 28 January 2011, the affidavits of Nigel Christian Rory Smith made on 4 November 2010 and 31 January 2011, the affidavit Brian Forbes made on 5 November 2010 and the affidavit of Peter John Schmarr made on 4 November 2010. Mr Lang, Mr Schmarr and Mr Smith were all cross-examined on their affidavits.
The respondents rely upon three affidavits by Mrs Potter made on
27 October 2010 and two made on 4 January 2011. They also rely upon one paragraph (paragraph 8) of affidavits made by 11 employees of the respondents’ business made in December 2010[6]. One of those employees (Lynette Richardson) gave oral evidence.
[6] The deponents are Leigh Williams, Kellie Maree White, Doonan Stewart, Robyn Margaret Wearn, Avis Frances Sampson, Lynette Richardson, Leanne Karen Laverty, Christine Mary Kiely, Vivien Jones, Amy Rose Farnham and Linley Dorothy Brumerskyj.
I received the following exhibits:
· A1 Affidavit of Lynette Richardson;
· A2 Affidavit of Christine Kiely;
· A3 Affidavit of Avis Sampson;
· A4 Affidavit of Amy Farnham;
· A5 FWO Document Access Policy;
·A6 Gazetted Notice – Lodging of workplace agreement documents with the Employment Advocate;
·A7 Letter from FWO to the Australian Industry (Ai) Group Legal Pty Ltd, 22/12/2009;
· A8 Printout from Well Done Contact Centres website;
· A9 “Function of Agents in Well Done”
·R1 Email from Mark Davidson to John Fleming & Others, 17/12/2009;
· R2 Email from Jeffrey Beaver to Mark Davidson, 01/09/2009;
· R3 Email from Deborah Wallace to Melanie Hately, 12/11/2009;
· R4 Email from Mark Davidson to Steven Ronson, 11/11/2009;
· R5 Letter from United Services Union to Mrs Potter, 07/01/2010;
·R6 Email from Jeffrey Beaver to Steven Ronson & Others, 28/01/2010;
· MFI R7 Incoming Call Handling Information Sheet.
The parties dispute the issues of the application of the Clerical NAPSA to the Employees and the classifications relied upon by the Fair Work Ombudsman. There is a further issue of accessorial liability in relation to Mrs Potter.
The respondents submit that the Fair Work Ombudsman has, fatally to its case, failed to bring substantial or cogent evidence to define the occupations of the workers of the respondents’ business as “clerks” and thus enliven the application of the Clerical NAPSA. Secondly, they contend that the Fair Work Ombudsman, as a best practice or model litigant, has failed to observe the tenets of such practice and caused unnecessary litigation.
Further, the respondents submit that the evidence shows that the Clerical NAPSA does not apply and that the respondents were free to negotiate an industrial agreement. Accordingly the application should be dismissed. They assert that the evidence should contain statements from the workers as to the actual work performed by all affected. Its absence is said to considerably undermine the Fair Work Ombudsman’s contentions.
It is common ground that if the Clerical NAPSA does not apply then there was no underpayment of the Employees. Mrs Potter asserts that she should not be subject to a civil penalty, even if the Clerical NAPSA does apply, due to the usual factors taken into consideration in making a finding of accessorial liability.
The respondents seek the dismissal of the application with costs awarded on an indemnity basis.
The Fair Work Ombudsman relies upon the following closing submissions which point to the hard fought nature of the these proceedings:
The respondents have submitted[7] that the applicant failed to properly plead its case on the basis that the particulars at paragraph 7(b) of the Amended Statement of Claim (ASC) filed on 10 September 2009 are insufficient. It is submitted that the particulars in paragraph 7(b) are both sufficient and accurate.
[7] Pages 16 to 22 of the respondents’ submissions.
The respondents’ submission that there was no certainty of the allegations which were to be met[8] is without foundation. The case is a simple one. The applicant’s pleadings set out the contraventions alleged[9] with clarity. If the respondents were uncertain as to the nature of the case, further and better particulars could have been sought from the applicant. No further and better particulars were sought by the respondents at any stage. This is understandable because the respondents have, since the early days of the investigation, shown a very clear understanding of the nature of the primary issue raised by the application, that is, whether the clerical NAPSA applied to the first respondent’s call centre employees.
[8] Paragraph 49, page 22 of the respondents’ submissions.
[9] Paragraph 12 to 55 of the Amended Statement of Claim.
The respondents make numerous references to the Civil Procedure Act 2005 (NSW) and the NSW UCPR[10]. Of course, that Act and Procedure has no application or relevance to the present proceedings. Further, the doctrine of estoppel by conduct has no application to the present circumstances[11].
[10] Respondents’ submission at [41], [44], [48].
[11] Respondents’ submission at [49].
As to the specific matters raised from paragraph 49 onwards in the respondents’ submissions, the applicant makes the following responses.
The general introductory words of paragraph (7) of the ASC state that the employees “receive and respond to inbound telephone calls”. This is both an accurate and a comprehensive description of the work of the employees. The particulars which follow further explain this description of the work.
Particular 7(a) of the ASC identifies the nature of the business as a Call Centre and gives context to the further particulars which follow. The particulars in 7(b) of the ASC are not exhaustive as to the work performed but demonstrate what the duties “included”. Nonetheless they are accurate and comprehensive.
It is not in dispute that the main function of the employees was to answer inbound calls as set out in particular 7(b)(i) of the ASC. It is also clear from the position descriptions that the employees were required to answer calls within specified time frames, being “within 10% of the average call times over all operators” at the relevant grade. The evidence disclosed that these timeframes related to average call times over a week or a month rather than to individual calls.
The reference to “clients” in Particulars 7(b)(i) and (ii) of the ASC is a reference those persons making incoming calls to the Call Centre. This was known and understood by the respondents, as was evident during the hearing.
Particular (b)(ii) of the ASC is a precise and accurate description of the primary work performed by the employees, being “providing information to and taking messages from clients in accordance with instructions on intranet screens”. This Particular was amply demonstrated by the evidence.
Particular 7(b)(iii) of the ASC reflects the content of the respondent’s position descriptions. It was also reflected in the evidence of the second respondent that the employees were “knowledge employees” as set out in the applicant’s evidence at various points: see paragraph 59 – 64 of the applicant’s final submissions.
Particular 7(b)(iv) of the ASC accurately describes the requirement for the employees to record details of calls which they receive.
Particular 7(b)(v) of the ASC, whilst it forms part of the respondent’s position descriptions, does not assist the Court as to whether the Clerical NAPSA applies.
It is not open to the respondents to seek, as it purports to do, to strike out particulars after the evidence has closed. That should properly have been done by notice of motion, as required under the rules, before a Defence was filed. In any event there is no basis whatsoever to strike out any particular.
Further, it is not permissible for the respondents now to seek (as they apparently do) to have struck out evidence which was admitted without objection (when the respondents were legally represented and had full knowledge of the particulars to paragraph 7, which have not changed since the pleadings were originally filed). The respondents do not even identify the evidence which they allege is not in accordance with the pleadings and the particulars[12]. In the event that this purported application were to be pressed, the relevant evidence would need to be identified with precision.
[12] See [60].
Finally, given the respondents’ approach, it is appropriate to bear in mind the proper purpose of pleadings and particulars, which is to enable the opposing party to understand, and have the opportunity to meet, the case against them[13]. There could be no doubt in the present case that the respondents’ were able to understand, and meet, the case against them. Even if, contrary to the applicant’s submissions, the evidence has travelled beyond the particulars, the respondent has not been taken by surprise and the Court is entitled to have regard to that evidence[14].
[13] See for example Dare v Pulham (1982) 148 CLR 658 at 664; McKellar v Container Terminal Management Services Ltd (1999) 165 ALR 409 at 415; Waterboard v Moustakas (1988) 180 CLR 491 at 497.
[14] See for example Fair Work Ombudsman v Centennial Financial Services FMCA [2010] 863 (15 November 2010 pars 152–162.
Application of the Clerical NAPSA
The basis on which the respondents say that the work of call centre operators was not work in a “clerical capacity” is entirely unclear.
The respondent’s fundamental opening premise[15] that the applicant must show that the employees were “clerks” is incorrect. The applicant must show that the employees were employed “in any clerical capacity whatsoever” as those words have been interpreted and applied by various decisions of the Industrial Relations Commission of NSW.
[15] Paragraph 1 and 2(b) of the respondent’s submissions.
Further, and contrary to the respondents’ submission, it is simply irrelevant whether the business of the first respondent was a “clerical enterprise”[16]. The Clerical NAPSA is an occupational award, not an industry award. This fundamental error underpins the respondents’ submissions on the Clerical NAPSA.
[16] Paragraph 2(a).
Paragraphs 66–70 of the respondents’ submissions mischaracterise the applicant’s submissions. The respondents have purported to rely upon the existence of AWAs as ousting the Clerical NAPSA (to the extent that it would otherwise apply). Accordingly the applicant had demonstrated that no AWAs applied to the employees. The applicant has never suggested that the absence of AWAs of itself demonstrates that the clerical NAPSA applies.
For the reasons advanced in the applicant’s final submissions filed on 29 April 2011[17] the work performed by the employees falls within the terms of the clerical NAPSA. There is extensive evidence of the work performed by the relevant employees, a summary of which appears in Schedule C to the applicant’s final submissions. This evidence falls within the scope of paragraph 7 of the ASC. The court’s primary task is simply to determine whether or not this work fell within the scope of the Clerical NAPSA.
[17] Paragraphs 28 to 47 of the final submissions.
The respondents submit[18] that there is little or no evidence that the indicative tasks found in the Clerical NAPSA apply to the work performed by the first respondent’s call centre employees.
[18] Paragraph 87 to 89 of the respondents’ submissions.
The respondents’ narrow focus on the indicative tasks is misplaced. As set out in the applicant’s final submissions, the indicative tasks are relevant to determining the classification level of employees within the Clerical NAPSA. They do not determine the question of coverage by the Clerical NAPSA.
In any event, the respondents’ contentions on the indicative tasks are wrong. The respondent concedes that there is “overlap” between the indicative tasks and the work performed by the employees. This concession appears contrary to the respondents’ submission elsewhere that “not a single worker” carries out the indicative tasks in the Clerical NAPSA”[19]. There is ample evidence of the employees undertaking a number of the indicative tasks[20]. The applicant refers to and maintains the position adopted in its final submissions where it sets out the indicative tasks which are undertaken by employees[21].
[19] Paragraph 63 of page 26 of the respondents’ submissions.
[20] Schedule C to applicant’s final submissions.
[21] Paragraph 39 of the final submissions in relation to indicative tasks and paragraphs 16 to 25 in relation to the grading of employees.
The respondent’s submissions on statutory interpretation[22] ignore the fact that the Clerical NAPSA is not a piece of legislation. The principles on the interpretation of industrial awards are set out in Kingsmill Australia v FCU[23] and are further discussed, most recently, by Moore J in Kanes Hire Pty Ltd v Mitchell [2010] FCA 756.
[22] Paragraph 78 to 81 of the respondents’ submissions.
[23] (2001) 106 IR 217
The respondents make the further submission[24] that the employees are award free because the tasks performed by the employees simply “overlap” with some of the functions of the Clerical NAPSA.
[24] Paragraphs 70 to 78 of the Respondents’ submissions.
This submission appears to rely upon the “principal purpose” test as discussed in Kingmill Australia Pty Ltd t/a Thrifty Car Rental v Federated Clerks Union of Australia (NSW) [2001] 106 IR 217. In Kingmill, the court emphasised the importance of looking at the “plain words” of the award before consideration of the “principal purpose” test is given:
[68] Those principles apply to a clause which established the coverage of an award in the same way as they do to other clauses in the award. It is thus appropriate to consider the scope clause of the award in the context in which it appears and, in particular, by reference to the other provisions of the award.
[69] It should be noted that the application of aids to construction, such as the 'major and substantial' or 'principal purpose' tests, should be approached with caution. The automatic adoption of such an approach may, depending on the terms of the award, have the potential for awards to be interpreted inconsistently with their plain words and, therefore, unnecessarily restrictively. This potential may be greatest when the scope of the award's coverage clause is expressed in broad and inclusive terms.
(Emphases added)
The above approach was adopted and recently applied by the Federal Court in Kanes Hire Pty Ltd v Mitchell[25]. In this decision, Moore J identified the error of decision makers focussing on the “major and substantial” or “principal purpose” tests and losing sight of the terms of the coverage clause and of the award as a whole.
[25][2010] FCA 756 at paragraph 26.
The principle purpose test does not, on any view, assist the respondents. To the contrary it supports the applicants.
In this respect, the applicant agrees with the example provided by the Respondents[26] that a nurse would not be covered by the Clerical NAPSA simply because she may undertake some clerical duties as part of her work. This example is highly telling. The primary purpose of a nurse’s employment is generally the provision of nursing care. A Nurse may receive telephone calls, and provide information to callers, as an incidental aspect of the provision of nursing care. In contrast, call centre employees receive calls and provide information to callers as the primary duty or function of their employment. That is what they are employed to do. It is virtually all that they do. The principal purpose of the employment of the call centre employees in 2009 was to answer and respond appropriately to a range of inbound telephone calls of various natures. This is a clerical purpose. On the respondent’s own argument, the employees were clearly engaged in a clerical capacity within the scope of the Clerical NAPSA.
[26] Paragraph 70 of page 29 of the respondents’ submissions.
It should also be noted that the respondents’ apparent focus on the purpose of the business in applying the principle purpose test is misplaced. The proper focus of the principle purpose test is on the purpose of the employment, not on the purpose of the business.
Assessment of Grades
The respondents at paragraphs 109 to 113 of their submissions incorrectly characterise the matters relied upon by the applicant to determine the grades to which individual employees are assigned. The applicant primarily relied upon the indicative tasks in clause 8 of the NAPSA.
Contract Call Centre Award
The respondents suggest that the making of the Contract Call Centre Award demonstrates that the first respondent’s call centre employees were “award free”[27]. This submission commences with the false assertion (subsequently repeated) that Parliament “created” the Contract Call Centres Award 2010[28] (CCCA). The respondents’ contend[29] that “the clear intention of Parliament (sic) was to include “award-less occupations....”. and that there is “no other reason for this legislation to exist”.
[27] Pages 28 to 31 of the respondents’ submissions.
[28] Respondent’s submission par. 81
[29] Respondent’s submission par. 81
In paragraph 89 the respondent repeats the error that Parliament introduced the award “scooping up” the workers who were supposedly award free. These submissions are manifestly incorrect.
To the contrary, the well known purpose of the award modernisation process which gave rise to the CCCA was to replace and modernise numerous pre-existing awards. It arose from a Ministerial request under s576C of the WR Act. Accordingly the “presumption” asserted by the respondent does not exist. To the contrary, the modern award process confirms that prior to the making of the CCCA the call centre operators were covered by the Clerical NAPSA.
The applicant again refers to the statement made by the Full Bench of the AIRC on 20 January 2009 during the award modernisation process through which the CCCA was made (unsurprisingly not touched upon by the respondents in their submission)[30]:
[30] Paragraphs 77 to 81 of the final submissions.
[91] We have included call centre operations within some draft industry awards where appropriate. Those draft awards include the drafts for the Banking Modern Award and the Telecommunications Modern Award. Currently direct, contract and hybrid call centres are covered by common rule clerical awards and NAPSAs and in some cases by the federal Contract Call Centre Award.
(emphasis added)
The respondents’ submissions show no appreciation of the modern award process as a process of rationalisation of existing award coverage. Although the Full Bench of the AIRC was initially minded to place coverage of call centres within the clerical modern award, (obviously because the work was clerical in nature) the parties to that decision preferred a specialised industry award. Through the CCCA, the AIRC has placed the clerical work performed in contract call centres into an industry award to reflect the preferences of those parties. That clerical work has then been broken up into sub-specialities within the CCCA.
The applicant generally refers to paragraphs 72 to 81 of its final submissions in response to the submission[31] made by the respondents regarding the relevance of the Contract Call Centres Award 2010 to the application of the Clerical NAPSA to the first respondent’s call centre employees during 2009.
[31] See pages 45 to 48 of the Respondents’ submissions.
Respondent’s Submissions on s.180 of the WR Act.
The respondents have asserted in their submissions that the applicant has “ignored” section 180 of the Workplace Relations Act 1996 (Cth)(WR Act)[32]. The respondents appear to submit that this is some fatal deficiency in the applicant’s case.
[32] Paragraph 161, 178, 179 and 134[sic] on pages 59 and 60 of the respondents’ submissions.
The respondents misunderstand the purpose of s.180 of the WR Act. It is a non exhaustive definition section relevant to Part 7 of the WR Act. It deals with the question of what constitutes a classification. Section 180(2) provides a non-exhaustive list of indicia by reference to which classifications may be described. The respondent refers to no authority to support the proposition that s180 has some determinative role in relation to the coverage of particular work by an Australian Pay and Classification Scale (APCS). Section 180 does not assist in determining whether the Clerical NAPSA applied (and consequently whether the APCS applied) and accordingly was not referred to in the applicant’s submissions.
As set out in s.204(1) of the WR Act, the question of whether an APCS applied is determined by reference to the coverage provisions of the APCS (ie in the present case the coverage provisions of the Clerical NAPSA). That is precisely what the applicant’s evidence and submissions have addressed.
Nonetheless, the matters set out in section 180(2) of the WR Act were considered by the applicant’s inspectors during the investigation, because those matters overlap with the matters relevant to the applicability of the Clerical NAPSA. During the record of interview with the second respondent, Inspectors Lang and Smith questioned the second respondent about the nature of the work performed[33], whether a number of employees were over the age of 21[34], and clarification regarding those employees of the first respondent who were undertaking traineeships[35]. Further, as recognised by the respondents, when identifying the appropriate grading for each employees, Inspector Lang took into account the length of service and the level of responsibility of the employees[36].
[33] Pages 38 to 44 of Tab 12 of Exhibit DL1 to the affidavit of Darren Lang sworn on 4 November 2010 (Exhibit DL1).
[34] Pages 7 to 19 of Tab 12 of Exhibit DL1.
[35] Pages 48 to 49 of Tab 12 of Exhibit DL1 .
[36] For example, the classification of Lynette Richardson as a Grade 4 as she was employed as a team leader/supervisor. See Inspector Lang’s calculation explanation at Tab X of Exhibit DL1.
Lodgement of Australian workplace agreements
The respondents have made a number of submissions on this issue. It should first be noted that the applicant has addressed this issue only because it was raised as a ‘defence’ by the respondents. If the respondents no longer press this part of the ‘defence’ then it would not be necessary for the Court to determine the issues raised.
However the respondent’s submissions do not address the basic propositions raised in the applicant’s final submissions, which included the following:
a)The AWA ‘defence’ could only affect a small number of the first respondent’s employees named in Schedule 1;
b)Having regard to s.344(2) and 344(4) of the WR Act, no purported AWAs were ever received or lodged for the purposes of the WR Act because evidence of posting is not evidence of receipt;
c)Having regard to s.344(3) of the WR Act, and exhibit 7, no purported AWAs were ever lodged for the purposes of the WR Act because on the respondents; evidence no declarations in the required form were lodged.
The submission that the second respondent believed that the AWAs had been properly lodged may be relevant to the imposition of penalty upon the second respondent but is irrelevant to the court’s determination of liability. See for example Fair Work Ombudsman v McGrath and Anor[37] at paras 10 – 14.
[37] [2010] FMCA 315 (21 May 2010)
The submission at paragraph 144 that receipt by the Office of the Employment Advocate (OEA) must be inferred once the respondents have produced all the evidence to show that the AWAs were properly sent fails to address the operation of subsection 344(4) of the WR Act and the express note that states that the postal rule and section 160 of the Evidence Act 1995 (Cth) do not apply.
The respondents claim that in order to accept the submission that the AWAs were not lodged, the Court requires evidence from those who operate the system[38]. It is assumed that the respondents are here referring to the contractor[39] who uploaded workplace agreements received by post into the OEA’s “Phoenix” database. It is the applicant’s submission that the evidence of Mr Forbes is sufficient in this respect. The respondents chose not to require Mr Forbes for cross examination.
[38] Paragraph 5 [sic] of page 70 of the respondents’ submissions.
[39] Paragraph 10 and 11 of the affidavit of Brian Forbes affirmed on 5 November 2010.
The respondents further submit that the evidence provided by Mr Forbes is hearsay. No such objection was raised during the hearing and the applicant disagrees with this submission. While Mr Forbes is currently appointed as a fair work inspector, at the time of the supposed lodgement of the first respondent’s AWAs, Mr Forbes was the Manager of “Agreement Services” at the OEA and later, the Workplace Authority[40]. “Agreement Services” was the business unit within the OEA that was responsible for the receipt and processing of workplace agreements. Mr Forbes was very much in a position to have a working knowledge of the Phoenix database and the procedures in place to deal with lodgements of workplace agreements, including those agreements which failed to meet the requirements of the WR Act[41].
[40] Paragraph 5 and 6 of the affidavit of Brian Forbes.
[41] Paragraph 15 and 16 of the affidavit of Brian Forbes.
Having criticised Mr Forbes’ sworn evidence as to the processes for which he was responsible as hearsay, the respondent purports at par. 176 to rely upon an unsworn hearsay statement allegedly made by Mr Beaver, who had no involvement in the processing of AWAs. However, even if true, the fact that thousands of AWAs were (in 2009) awaiting “processing” is irrelevant. By 2009 the so called “fairness test” for AWAs had been introduced into the WR Act. AWAs were “lodged” for the purposes of the Act if the relevant documents (including the declaration in prescribed form) were received by the Workplace Authority, regardless of whether they had been assessed under the fairness test. However once lodged, AWAs had to be assessed against the fairness test. The fairness test did not apply in January 2007. If the respondents had wished to pursue this issue they should properly have cross examined Mr Forbes about it.
Alleged failure to call relevant witnesses
The respondents generally complain that the applicant did not call witnesses. They submitted that the most important witnesses for the applicant were (or should have been) Inspector Jeffrey Beaver and the confidential complainant and that, by failing to call these two witnesses, the Court must assume that they would not have assisted the applicant’s case[42]. These submissions take no account of the nature of the case the applicant has to prove. The applicant relevantly has to prove that the nature of the work performed by call centre operators is such that the work is covered by the clerical NAPSA. There is ample evidence of the nature of the work performed by the call centre operators. The respondents admit this[43]. Indeed, the nature of the work performed by the employees is not seriously in dispute in these proceedings.
[42] Paragraph 12 of page 7 of the respondents’ submissions.
[43] Paragraph 113.
Inspector Beaver
The applicant was under no obligation to call every person involved in the investigation in this matter. This course would have involved a waste of time and money.
Whilst Inspector Beaver was involved in the early stages of the investigation[44] as Inspector Smith’s manager, he was not involved in the secondary investigation (January 2010 site visit) that followed the internal file review. Shortly after the January site visit, Inspector Beaver left the organisation. Mr Lang managed the investigation with the assistance of Inspector Smith on and from this time[45].
[44] Paragraph 8 of the affidavit of Darren Lang sworn on 5 November 2011.
[45] Paragraph 17 of the affidavit of Darren Lang sworn on 5 November 2011.
The respondents had the benefit of evidence from Inspectors Schmarr and Lang as to their observations of work performed during the January site visit. They also had the benefit of evidence from Inspector Smith as to the earlier site visit. They had the opportunity to cross examine those witnesses (and did so at length). It is difficult to see what evidence Inspector Beaver could have added, other than to duplicate other evidence already before the Court. The respondents were at liberty to subpoena Inspector Beaver to give evidence. This did not occur.
Confidential complainant
The respondent submits that the confidential complainant[46] should have been the main witness for the applicant and that there was no evidence before the court that the confidential complainant should not be called. The Court is already satisfied that the confidential complainant’s identity not be revealed during proceedings on the grounds of public policy. For completeness, the applicant sets out its position on this matter below.
[46] Paragraph 10 of page 5 and paragraph 11 of page 6 of the respondents’ submissions.
The applicant performs important functions under the Fair Work Act 2009 (Cth) (FW Act) as set out in section 682. Complaints to the applicant concerning alleged non-compliance with the FW Act (and its predecessors) are crucial to the performance of the functions set out in section 682.
In this context it is important that complainants can be assured that their complaints are made in confidence if they so choose. The situation is analogous to the ‘informer’s privilege’ at common law. A lack of confidentiality about the identity of complainants and the substance of the complaint will undermine confidence in the office of the Fair Work Ombudsman and will deter people from making complaints.
In light of the comprehensive evidence before the Court as to the nature of the work performed by the employees, the respondent was not in any way prejudiced by the fact that the confidential complainant was not called as a witness.
Other employee witnesses
The respondents have submitted[47] that it was open to the applicant to call any of the 8 witnesses who had made affidavits in support of the respondents’ case and that the applicant “stood mute on this failure”.
The respondent in paragraph 15 does not correctly characterise the facts as to the eight employee witnesses for whom the second respondent wrote affidavits. Only 4 of the 8 witnesses were named in Schedule 1 to the Amended Statement of Claim. The applicant requested that these 4 employees[48] be available for cross-examination at the hearing on 8 March 2011. The respondents advised that 3 of the 4 would be available at the hearing.
During the hearing on 8 March 2011, the respondent advised for the first time that it would not rely upon the evidence of its employees (even though the three witnesses were then present at Court). The applicant advised that, in the interests of providing the best evidence to the Court, it would call the three employees[49]. Subsequently the respondent advised the applicant that only 1 of the 3 relevant witnesses[50] was present in Court and available to give the evidence.
Accordingly only one of the employees, Ms Richardson, was able to be called by the applicant. The applicant relies on the evidence in chief of Ms Richardson, and it relies upon the cross examination of Ms Richardson by the respondents, in support of its contention that the Clerical NAPSA applies. The respondent’s suggestion that Ms Richardson’s evidence damaged the applicant’s case demonstrates its misunderstanding of the applicant’s case. However, independently of the evidence of Ms Richards, there was ample (uncontested) evidence before the Court as to the nature of the work of the employees.
Accordingly, and contrary to the respondent’s submission[51], there is no adverse inference to be drawn from the fact that other employees were not called. They would simply have duplicated evidence already before the Court as to the nature of the work performed. The respondent does not identify the nature of the evidence which could usefully have been added by these employees. The suggestion in paragraph 22 of the respondents’ submissions that the respondents were deprived of a right to be heard would be rejected out of hand given that the respondent:
a)Had filed evidence from eight employees (three of whom attended Court) but chose not to call them; and
b)Resisted (unsuccessfully) the applicant’s application to call the employee witnesses; and
c)Did not at any stage request the applicant to call any employees.
[47] Paragraph 13 of page 7 of the respondents’ submissions.
[48] Amy Farnham, Christine Kiely, Leanne Laverty and Lynette Richardson.
[49] T 8.3.11 p42.35 – 44.36
[50] The respondents advised the applicant that Ms Farnham had been ill and returned home and that Ms Laverty had left the court and was not contactable.
[51] Respondents’ submissions par. 17
Any submission that the applicant’s conduct in this regard was unfair and/or that its failure to call any further employees reflected a supposed weakness in the applicant’s case would be rejected.
Union Representative
The respondents also assert that the applicant should have called a union representative who would have been able to give “expert evidence”[52]. Such an approach would be contrary to the proper approach to construction of industrial instruments and such evidence would have been inadmissible. The respondent provides no authorities where a union representative has given evidence as to the scope of an award in the capacity of an “expert”.
[52] Respondents’ submission par. 9(b)
The Applicant’s investigation
The respondents submit[53] that they were “pursued” by the applicant following the internal file review. The applicant rejects this submission. It is irrelevant to the question of liability and could only be relevant (if at all) to questions of penalty.
[53] Paragraph 30 of page 12 and paragraph 31 of page 13 of the respondents’ submissions.
The respondents mischaracterise the process leading to the present application in numerous respects. For example, the Fleming review did not find that the original conclusion that the NAPSA applied was “wrong”[54] as alleged by the respondents. It found that there was insufficient evidence to reach a firm conclusion. For this reason the applicant conducted further inspections and collected further evidence.
Further, the respondents’ submissions at pars 31 – 34 and 44 appear to proceed on the basis that the present proceeding had already commenced when the Fleming review was conducted. This is incorrect. The review on 17 December 2009 recommended that further evidence be obtained “so that a proper determination of the application of the NAPSA can be made”. This is exactly what occurred. The further evidence obtained during the January site visit by Inspectors Schmarr and Lang supported the conclusion that the employees of the first respondent were covered by the Clerical NAPSA. Proceedings were eventually commenced on 27 August 2010. Having determined, after an exhaustive process, that the Clerical NAPSA applied, the applicant was under a statutory duty to pursue the matter so as to ensure that the employees concerned were appropriately remunerated: see Workplace Relations Act 1996 s166B(d) and (g).
Failure to act as a model litigant
The respondent has submitted that the applicant has failed to act as a model litigant throughout these proceedings and caused unnecessary litigation[55]. The applicant rejects this submission. The applicant has not concealed evidence nor has it misled the respondents in any respect[56].
Throughout the investigation, the respondents contested the determinations made by the applicant. The respondents were given the opportunity to put forward submissions on their position and discussions occurred between the parties during the January site visit. Due to the contested nature of the matter it became apparent that it was not possible to avoid litigation in this case. An assessment was made of the applicant’s prospects of success in the proposed litigation on the available evidence. A decision was then made, in accordance with the applicant’s Litigation Policy[57], to commence proceedings against the first and second respondents. The proceedings have since continued on a contested basis.
The applicant was aware that the respondents were unrepresented up until shortly before the liability hearing. During this early stage of the proceedings, the applicant provided what assistance it could appropriately provide to the respondents. The applicant consented to a number of adjournments, extensions and provided various court documents and authorities to the respondents when requested. Further, the applicant prepared volumes of documents in response to subpoenas that were issued by the respondents and by doing so produced almost every file to the Court for the respondents to access. Any submission made by the respondents that the applicant withheld or concealed evidence[58] from the respondents would be rejected.
As to the complaint that the applicant had sought the respondents’ legal advice[59], there were ample grounds to conclude that the first respondent had waived legal professional privilege[60]. However given the fact that the respondents were unrepresented at the time of the conduct which gave rise to the imputed waiver the applicant ultimately determined that it would not seek to enforce its rights in this regard.
As to the complaint[61] that a subpoena was issued by the applicant after the case had closed, the respondents’ objection was dealt with by the Court and submissions on this issue merely cavil with the Court’s ruling.
Effect of proceedings upon the Respondents
The applicant acknowledges the effects that the current proceedings may have had upon the respondents and the respondents’ business. Such a submission is however, relevant to the imposition of any penalty and not, in the applicant’s view, relevant to the determination of liability by the Court.
[54] Respondents’ submission par.30
[55] Paragraph 2 of page 1 of the respondents’ submissions.
[56] As asserted by the respondents in par. 6
[57]
[58] Paragraph 6 of page 3 of the respondents’ submissions.
[59] Respondents’ submission pars 35 and 36
[60] See DL1 Tab 31, letter second respondent to Inspector Lang
[61] Par. 41
Purported Costs Application
It is noted that the respondents purport to make a costs application by reference to s56 of the Civil Procedure Act. Section 56 of the Civil Procedure Act has no application to the present proceedings.
The respondents filed closing submissions on 22 August 2011 going to matters of procedure and pleadings, the law in relation to call centres and estoppel. These were supplemented on 15 September 2011.
Consideration
The jurisdiction of the Court
In Conlan as Trustee of two bankrupt estates[62] the Court raised an issue of jurisdiction of fundamental significance to any proceedings before the Court[63]. Relevantly, at [3]-[7] Lucev FM stated:
[62] [2011] FMCA 849
[63] In Fortron Automotive Treatments Pty Ltd v Jones & Ors (No 4) [2011] FMCA 854 the Court considered the issues further and found no jurisdictional impediment.
An issue arises concerning this Court. At the outset of the proceedings the Court raised with Counsel for the Trustee an article which had appeared in The Australian newspaper yesterday relating to issues concerning this Court.[64] It would appear that the article has its genesis in a matter raised in the Senate of the Commonwealth Parliament on 1 November 2011.[65] The matter was also raised in a judgment of this Court yesterday.[66]
The issues raised concern proceedings apparently taken by 58 federal magistrates against the Commonwealth[67] in order to seek to resolve an issue about the exclusion of federal magistrates from the application of the Judges Pensions Act 1968 (Cth).[68] The federal magistrate constituting the Court for the purposes of these proceedings is not a party to the Federal Magistrates Litigation. It would appear from the reports in The Australian and Hansard that there has been a recent exchange of correspondence between the solicitors for the parties in the Federal Magistrates Litigation, and notwithstanding that that correspondence was apparently written on a without prejudice basis, it has now become public.
[64] Chris Merritt “Suit puts ‘court’s decision at risk’”, The Australian November 2, 2011, page 3.
[65] Hansard, Senate, 1 November 2011, pages 96-98.
[66] SZQKE v Minister for Immigration & Anor [2011] FMCA 846.
[67] “the Federal Magistrates Litigation”.
[68] “JP Act”. Under s.4(1) of the JP Act a “Judge means, amongst other things, “a Justice or Judge of a federal court (other than the Federal Magistrates Court)”.
The issues which have become public raise questions about:
a)the validity of the Federal Magistrates Act 1999 (Cth);[69]
[69] “FM Act”.
b)the establishment of this Court as a Chapter III Court;[70]
[70] FM Act, s.8.
c)the validity of the commissions of appointment of all of the justices, styled federal magistrates, appointed to this Court;[71] and
[71] FM Act, s.8(4).
d)the exercise of the judicial power of the Commonwealth by federal magistrates.
As the Court indicated to Counsel it would appear, based on the Hansard report,[72] that on 11 October 2011 the Australian Government Solicitor (presumably acting on behalf of the Commonwealth) wrote to the solicitors for the 58 federal magistrates involved in the Federal Magistrates Litigation, and put forward the following view:
[72] Evidence Act 1995 (Cth), s. 154
In any event, on the applicants’ [that is the 58 federal magistrates] pleaded case, it seems to us that one of three possible outcomes may follow as a result.
(a)The structure of the Federal Magistrates Court is deficient because it does not expressly provide for a life-long guaranteed pension for federal magistrates with the consequence that the Federal Magistrates Act 1999 (Cth) is invalid.
(b)If not (a), the federal magistrates’ appointments are constitutionally infirm (and always have been) because of incompatibility with the requirements of Chapter III. This outcome assumes the Federal Magistrates Act is valid because, properly construed, it provides a mechanism either for the Remuneration Tribunal or the Governor-General to determine that federal magistrates be provided with a life-long guaranteed pension.
(c)If not (b), then although the magistrates’ appointments are not invalid, they could not (and still could not) validly exercise Commonwealth judicial power unless first provided with a life-long guaranteed judicial pension.
The Court assumes that such matters would not be raised by lawyers acting for the Commonwealth (albeit in unrelated litigation to this) unless they were matters of and with substance. That is particularly so given that under the Commonwealth’s Legal Services Directions 2005, made under s.55ZF of the Judiciary Act 1903 (Cth),[73] the Commonwealth “consistently with the Attorney-General’s responsibility for the maintenance of proper standards in litigation” has an obligation to act as a model litigant,[74] which requires the Commonwealth:
a)“to act … honestly and fairly in handling claims and litigations brought … against the Commonwealth”;[75] and
b)to “… act with complete propriety, fairly and in accordance with the highest professional standards” which is an “expectation … recognised by the Courts”.[76]
[73] “Judiciary Act”.
[74] Legal Services Direction 2005, Appendix B, cl.1.
[75] Legal Services Direction 2005, Appendix B, cl.2.
[76] Legal Services Direction 2005, Appendix B, Note 2.
The issue raised by the Australian Government Solicitor in Altobelli & Ors v Commonwealth has not been tested in those or other proceedings and the Attorney-General has gone on record as saying that the Commonwealth would defend the constitutional validity of the Federal Magistrates Act 1999 (Cth) and the commissions of appointment of Federal Magistrates. The Court’s decision in Fortron Automotive supports the conclusion that there is no constitutional impediment to the exercise of jurisdiction by the Court. While it is appropriate for me to draw the attention of the parties to the issue, I proceed on the basis that the Court has jurisdiction to make orders in the proceedings before it. I have considered whether I should relist the matter and invite submissions from the parties on the issue. I have not done so because I consider that that course would unnecessarily prolong these proceedings and because it would be open to the parties to raise the issue in any appeal, which would probably be a more appropriate forum to address the issue than this Court.
The bona fides of the proceedings
The respondents contend that these proceedings were the result of an improper (and possibly politically motivated) campaign against them by the United Services Union and that the Fair Work Ombudsman’s investigation was fatally flawed. The respondents also contend that the Fair Work Ombudsman has not maintained the proceedings consistently with his obligations as a model litigant.
The Commonwealth has issued Legal Services Directions made under s.55ZF of the Judiciary Act 1903 (Cth) setting out the obligations of agencies bound by the Financial Management and Accountability Act 1997 (Cth), and others conducting litigation on behalf of the Commonwealth, to act as a model litigant. It is the responsibility of the Attorney-General, not the courts, to impose sanctions for non-compliance with the Directions. The courts are, of course, entitled to control their own processes, and the manner in which litigation is conducted may be a factor to take into account in considering issues of costs.
The investigation by the Fair Work Ombudsman was the result of a complaint by a confidential complainant. Much was made at the hearing of this matter about the motivation of the confidential complainant and his identity. The respondents were critical of the Fair Work Ombudsman for not leading evidence from him. In my view, that criticism was not well-founded. Employees and others are entitled to make a complaint to the Fair Work Ombudsman on a confidential basis. That confidentiality is important in order to give employees confidence that they can raise employment issues with the Fair Work Ombudsman without fear of retribution. Secondly, even if the confidential complainant was motivated by malice against the respondents, that would not, in my view, matter. The essential issue in this case is not the motivation of the confidential complainant (or even if his complaint was justified) but, rather, whether the respondents breached the legislation and the NAPSA. Evidence from the confidential complainant would not have assisted the Court to resolve that issue and, indeed, that evidence would, if led, have likely to have been a distraction because the confidential complainant had unrelated concerns about his employment.
The respondents also suggest that there was a political or industrial motivation for the action taken by the Fair Work Ombudsman. Exhibited to Mrs Potter’s affidavit of 7 March 2011 is a file note of a conversation between an employee of the Fair Work Ombudsman and an official of the United Services Union (Rudy Oppitz) on 20 July 2009. The issue of underpayment of staff was discussed as was whether AWAs were in place. Mr Oppitz provided a copy of an AWA being relied upon by the respondents. Mr Oppitz apparently referred to Mr and Mrs Potter as “Liberal supporters” who were “against the new Fair Work legislation”. Mr Oppitz apparently said that “generally call centre staff are award free. However, in this case the call centre staff are administrative and are bound by the award”. The evidence discloses that the United Services Union took a close interest in the investigation by the Fair Work Ombudsman and that there was a high degree of animosity between some officials of the Union and Mr and Mrs Potter.
There is no doubt that the Fair Work Ombudsman’s investigation generated considerable “heat”. Exhibit R3 is an email apparently from the confidential complainant to the then Deputy Prime Minister and Minister for Employment and Workplace Relations dated 11 November 2009. That email is headed “Official Complaint – Attention Deputy Prime Minister’s Office” and, in its terms, is a complaint about the confidential complainant’s contact with the Minister’s Office and officers in her Department (which was probably intended to include the Office of the Fair Work Ombudsman). It is apparent from the terms of the complaint that the confidential complainant was extremely dissatisfied with the investigation into his complaint. Exhibit R1 includes draft correspondence to the General-Secretary of the United Services Union from the Chief of Staff of the then Deputy Prime Minister and Minister for Employment and Workplace Relations. That letter was a response to concerns expressed to the then Deputy Prime Minister about the investigation conducted by the Fair Work Ombudsman.
I accept that there was dissatisfaction on the part of the respondents, the confidential complainant and the United Services Union about the investigation conducted by the Fair Work Ombudsman. That investigation was the subject of a review conducted by Mr John Fleming (Deputy Director of Regional Services and Targeting NSW-ACT in the Sydney office of the Fair Work Ombudsman). Exhibit A7 is a letter from Mr Mark Davidson of the Office of the Fair Work Ombudsman to Ai Group Legal Pty Ltd dated 22 December 2009. That letter advises that the outcome of the review (which had been requested by Ai Group Legal) was that there was a need for further enquiries to be conducted by Fair Work inspectors before a reliable determination could be made. It was implicit that a determination which had been made prior to the review was not reliable. I do not rule out the possibility that there was maladministration in the Office of the Fair Work Ombudsman prior to the review conducted by Mr Fleming. If that were to be the case I do not see it as relevant to the outcome of these proceedings (except possibly in relation to penalty). The determination ultimately made by the Fair Work Ombudsman which has led to these proceedings was made after a thorough investigation as recommended by Mr Fleming. Whatever the genesis of the inquiries undertaken by the Fair Work Ombudsman and whatever pressure was brought to bear during the course of that investigation, it is now for the Court to determine whether the asserted breaches of the legislation and the NAPSA have been made out.
Legislative provisions
Standing and penalties
The Fair Work Ombudsman is a statutory appointee of the Commonwealth appointed by the Governor General by written instrument, pursuant to s.687 of the Fair Work Act and a Fair Work Inspector pursuant to s.701 of the Fair Work Act. On 1 July 2009, the Workplace Relations Act was repealed by the Fair Work Act.
In respect of breaches occurring prior to 1 July 2009, item 11(1) of Part 3 of Schedule 2 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Transitional Act) provides that the Workplace Relations Act continues to apply on and after 1 July 2009 in relation to conduct that occurred before that date.
Part 5-2 of the Fair Work Act applies to conduct that occurred prior to
1 July 2009, pursuant to sub-item 14 of Part 3 of Schedule 18 of the Transitional Act and Sub-item 13(1) of Part 3 of Schedule 18 of the Transitional Act gives Fair Work Inspectors the power to make or continue applications under the Workplace Relations Act.
Part 4-1 of the Fair Work Act applies as if items 2 to 8 and 10 to 15 of Schedule 16 of the Transitional Act were provisions of the Fair Work Act. Item 2 deals with contraventions of award-based transitional instruments (which include NAPSAs) and Item 5 deals with contraventions of section 182 of the Workplace Relations Act as it continues to apply.
On 27 March 2006 the Clerical and Administrative Employees State (Award) (Clerical Award) was taken to be replaced by an instrument called a Notional Agreement Preserving State Award (NAPSA)[77].
[77] See Part 3 of Schedule 8 to the Workplace Relations Act.
Pursuant to clause 43(1) of Part 3 to Schedule 8 of the Workplace Relations Act, a NAPSA may be enforced as if it were a collective agreement.
Section 719(1) of the Workplace Relations Act provides that the Federal Magistrates Court may impose a penalty in respect of a breach of an “applicable provision” by a person bound by the provision.
An “applicable provision” is defined in s.717 of the Workplace Relations Act to include a term of the Australian Fair Pay and Conditions Standard (AFPCS) and a collective agreement. Similarly, for breaches occurring on or after 1 July 2009, s.546(1) of the Fair Work Act provides that the Federal Magistrates Court may order a person to pay a pecuniary penalty if the Court is satisfied that the person has contravened a civil remedy provision[78].
[78] See table in s.539 of the Fair Work Act and item 16 Schedule 16 of the Transitional Act for list of civil remedy provisions.
Both the Workplace Relations Act and Fair Work Act provide that the maximum penalty that may be imposed by this court to be, in the case of an individual, 60 penalty units and in the case of a body corporate, 300 penalty units[79]. Both Acts[80] provide that “penalty unit” has the same meaning as in the Crimes Act 1914 (Cth). Section 4AA of the Crimes Act defines “penalty unit” to be $110. Therefore, the maximum penalty that may be imposed by the Court for each breach by a body corporate is $33,000 and $6,600 for an individual.
[79] Section 719(4)(a) of the Workplace Relations Act and s.546(2) of the Fair Work Act.
[80] Section 4 of the Workplace Relations Act and s.12 of the Fair Work Act.
Relevant provisions regarding workplace agreements
The respondents claim that AWAs were entered into by Quincolli and 16 of its employees in or about early February 2007[81] and that these 16 AWAs were posted to the OEA in two batches on 8 February 2007 and 27 March 2007[82]. The respondents’ evidence discloses that no response was ever received from the OEA by the respondents in relation to the purported AWAs[83]. Should the Court accept that these AWAs were posted in February and March 2007, the Fair Work Ombudsman submits that the AWAs were never actually received by the OEA and therefore were not “lodged” within the meaning of the Workplace Relations Act.
[81] Affidavit Judith Madge Potter located behind Tab B of folder of affidavits filed on 5 January 2011 (Potter Affidavit #2), at [15].
[82] Potter Affidavit #2 at [16]-[19].
[83] Potter Affidavit#2 at [22].
Further, the evidence suggests that no AWAs were ever lodged for those employees who commenced employment with Quincolli after March 2007. The evidence of the respondents indicates that only four[84] out of the 40 Employees[85] had their AWAs posted to the OEA.
[84] Amy Farnham, Christine Kiely, Leanne Laverty and Lynette Richardson.
[85] Potter Affidavit #2 at [20]-[21] and [25]-[28].
Divisions 5 and 6 of Part 8 of the Workplace Relations Act as in force from 27 March 2006 to 30 June 2007 deal with the lodgement and operation of workplace agreements.
Section 347(1) of the Workplace Relations Act as in force at the relevant time provides that a workplace agreement comes into operation on the day the agreement is lodged with the OEA.
Section 344(1) of the Workplace Relations Act provides that a workplace agreement is lodged if the employer lodges a declaration and a copy of the workplace agreement. The declaration lodged by an employer was required to be in the form published by the Employment Advocate[86]. Upon receiving a lodgement, the OEA was required to issue a receipt for the lodgement pursuant to s.345(1) of the Workplace Relations Act.
[86] Subsections 344(2) and (3) of the Workplace Relations Act.
Section 344(4) of the Workplace Relations Act provides that a declaration is lodged with the OEA only if the declaration is actually received by the OEA. The Note in s.344(4) explains that:
this means that section 29 of the Acts Interpretation Act 1901 (to the extent that it deals with the time and service of documents) and section 160 of the Evidence Act 1995 do not apply to lodgement of a declaration.
Essentially, this means that the postal acceptance rule[87] does not apply to the lodgement of workplace agreements. The legislation requires “actual receipt” of the document for lodgement to be effective. Lodgement therefore requires a degree of physical acceptance by the person to whom the thing is given and is more than the mere placing or depositing of the object with that person[88]. If sent by post, a workplace agreement is not lodged until it is received by the Employment Advocate.
[87] See the Evidence Act 1995 (Cth), s.160.
[88] Angus Fire Armour Australia Pty Ltd v Collector of Customs (1988) 19 FCR 477, 489.
The Fair Work Ombudsman submits that the absence of any record of the AWAs ever having been received or receipted[89] supports a finding that the AWAs were not in fact received by the OEA. The respondents’ contention that the AWAs were lost, mis-filed or misplaced[90] is not supported by their evidence and improbable given the lodgement systems that the OEA had in place at that time.
[89] Lang Affidavit at [28] and affidavit of Brian Forbes affirmed on 5 November 2010 at [7]-[26] (Forbes Affidavit).
[90] Potter Affidavit #2, at [22].
AWAs operate once lodged. Accordingly, the Fair Work Ombudsman submits that if the AWAs were not lodged and therefore not in operation, the Clerical NAPSA applied to the employees of Quincolli. I accept that no AWAs in respect of the Employees were lodged in accordance with the legislation.
Breaches of the Workplace Relations Act and the Fair Work Act
Breach of s. 182(1) of the Workplace Relations Act
Part 7 of the Workplace Relations Act (Part 7) is entitled the “The Australian Fair Pay and Conditions Standard”. The stated purpose of Part 7 is to set out key minimum entitlements of employment[91].
[91] Section 171(1) of the Workplace Relations Act.
The effect of s.182(1) of the Workplace Relations Act is that an employee must be paid a basic periodic rate of pay for each of his or her guaranteed hours that is at least equal to the basic periodic rate of pay that is payable to the employee under the APCS. Quincolli was allegedly required to pay the following rates contained in the Clerical APCS[92] to the Employees during the relevant period:
[92] Tab 16 of Exhibit DL1 to the Lang Affidavit.
Classification
Basic rate
Casual loading
Total
Grade 1
$15.34
20%
$18.408
Grade 2
$15.89
20%
$19.07
Grade 3
$16.78
20%
$20.136
Grade 4
$17.87
20%
$21.444
Grade 5
$19.34
20%
$23.208
The evidence[93] in this case establishes that, during the relevant period, the Employees were paid at the following casual hourly rates, which were less than those proscribed in the Clerical APCS:
[93] Document entitled “Australian Workplace Agreement” located at page 3 behind Tab 4 of Exhibit WDG1 to Affidavit of Judith Madge Potter sworn 4 January 2011 (Potter Affidavit #1); Affidavit of Judy Potter affirmed on 27 October 2010 at [8]; Affidavit of Peter John Schmarr sworn 4 November 2010 at page 24 (Schmarr Affidavit).
Classification
Basic rate
Casual loading
Total
Grade 1
$14.31
20%
$17.17
Grade 2
$14.56
20%
$17.47
Grade 3
$14.80
20%
$17.77
Grade 4
$15.06
20%
$18.07
Grade 4 -
Senior Operator$15.89
20%
$19.07
The Clerical NAPSA
The Fair Work Ombudsman submits that the Clerical NAPSA applied to the Employees on and from 27 March 2006 because the terms of the original state award determined a term or condition of employment of employees of Quincolli in that business immediately prior to 27 March 2006.
The Clerical NAPSA[94] provides relevantly as follows:
[94] Tab 15 of Exhibit DL1 to the Lang Affidavit.
34. Area, Incidence and Duration
34.1 This award shall apply in respect of all persons employed in any clerical capacity whatsoever and without limiting the generality of the foregoing shall include telephonists, receptionists, cashiers, messengers, copy boys, telephone canvassers (other than for the sale of goods), persons employed on machines designed to perform or to assist in performing any clerical work whatsoever and all classes of employees engaged in any clerical capacity in or in connection with payroll preparation, cash handling and processing in the state of New South Wales excluding the County of Yancowinna, within the jurisdiction of the Clerical and Administrative Employees (State) Industrial Committee, excepting employees covered by industry or employer specific awards.
The geographic and employer exceptions set out above do not affect Quincolli. The county of Yancowinna embraces Broken Hill and Quincolli is not bound by an employer specific award.
The evidence from both Fair Work Ombudsman[95] and respondents[96] is that Quincolli employed persons to work as call centre operators, known as “agents” to answer inbound calls from a range of clients in a 24 hour, seven days’ a week call centre environment. Some of Quincolli’s clients included local councils, State Emergency Services and after hours’ doctors surgeries.
[95] Schmarr Affidavit at [10]-[13] and the annexure marked “PS3”; Lang affidavit at [11]-[16] and documents located behind Tabs 3 to 5 of Exhibit “DL1”.
[96] Potter Affidavit #2 at [39(a)].
The duties undertaken by the Employees involved receiving inbound calls on the telephone, or occasionally short-wave radio, and responding to such calls in accordance with various procedures which were communicated to the Employee on their computed screen[97]. The response provided by an Employee was dependent upon the nature of the call received and involved, among other things, providing advice, providing product information, giving directions, assisting with emergency calls, and arranging tradesmen and security personnel[98]. The Employees were required to log the calls they received and then follow-up or escalate the call if necessary, for example by forwarding details of the call to the client or contacting the client by phone to relay a message.
[97] Annexure marked “PS-3” to the Schmarr Affidavit.
[98] Affidavit of Amy Farnham affirmed on 2 December 2010 at [8]; Affidavit of Christine Kiely affirmed on 3 December 2010 at [8]; Affidavit of Leanne Laverty affirmed on 2 December 2010 at [8]; Affidavit of Lynette Richardson affirmed on 3 December 2010 at [8].
The meaning of the phrase “employed in any clerical capacity whatsoever” expressed in the Clerical NAPSA, has been widely interpreted by the courts[99]. The Fair Work Ombudsman submits that given the broad construction of clause 34 above, the work performed by the employees at the call centre falls within the terms of the Clerical NAPSA.
[99] FCU v Kingmill Pty Ltd t/as Thrifty Car Rental (Matter no. IRC6472 of 1997, per Glynn J, 17 December 1999); Ware v O’Donnell Griffin (Television Services) Pty Ltd 1971 AR 18; Federated Clerks’ Union of Australia (NSW Branch) v Australian Workers Union [1971] AR (NSW) 419, Sheldon J; Tucker v Rising Sun Towing Service Pty Ltd 7 IR 75.
I accept that submission. While the Employees of the respondents are more properly described as call centre operators rather than clerks, their duties are fundamentally clerical in nature. The services provided by the respondents relieve their clients of the need to employ their own clerical staff to receive and respond to telephone calls, facilitating the provision of information, services and goods. I have no doubt that the respondents’ Employees, if they had been employed directly by the clients of the respondents, would have fallen within the purview of the Clerical NAPSA in the performance of their duties. They did not fall outside the coverage of the NAPSA simply because they were engaged by a company to which others chose to contract out certain of their clerical support functions.
Breaches of the Clerical NAPSA
I accept the Fair Work Ombudsman’s submissions on the breaches of the NAPSA which, on the evidence, have been established. Much was made during the trial of this matter about the allocation of grades under the NAPSA to the respondents’ Employees. It is true that the allocation of grades under the NAPSA by the Fair Work Ombudsman was somewhat arbitrary. It is also true that there is not an easy or direct correlation between the indicative tasks relating to the various grades under the NAPSA and the employment grades applied by the respondents in their business. However, the NAPSA grades applied by the Fair Work Ombudsman as a result of the lengthy investigation are, in my view, a reasonable, and probably the best available, approximation of the relevant NAPSA grades. Further, I accept that all of the Employees were properly graded above grade 1 under the NAPSA. Even if all of them had been graded at grade 2, underpayments would have been established.
Clause 10.3.3 of the Clerical NAPSA deals with payment for hours worked by employees during afternoon shifts. An “afternoon shift” is defined in subclause 10.2.1 of the Clerical NAPSA to mean any shift finishing after 7pm and at or before 11pm. Where a casual employee works shifts finishing between 7pm and 11pm, the employee must be paid a loading of 17 per cent in addition to their casual hourly rate. During the relevant period, Quincolli only paid a 10 per cent loading for all hours worked during afternoon shifts.
Clause 10.3.6 of the Clerical NAPSA deals with payment for hours worked by employees on Saturdays. Where a casual employee works ordinary hours on a Saturday, the employee must be paid at the rate of time and one-half of their casual hourly rate of pay. [100]. During the relevant period, Quincolli only paid a $1.00 loading for all hours worked on Saturdays between the hours of 7am and 8pm. Further loadings of 10 per cent and 20 per cent were paid in respect of hours worked on Saturdays between 8pm and midnight and midnight to 7am respectively.
[100] Subclause 5.5 provides that shift loadings and overtime are payable in addition to the casual hourly rate of pay.
Clause 10.3.6 of the Clerical NAPSA also deals with payment for hours worked by employees on Sundays. Where a casual employee works ordinary hours on a Sunday, the employee must be paid at the rate of time and three-quarters of their casual hourly rate of pay. During the relevant period, Quincolli paid all Employees, regardless of their classification, only a flat rate of $21 per hour for all hours worked on Sundays between the hours of 7am and 8pm. Further loadings of 10 per cent and 20 per cent were paid in respect of hours worked on Sundays between 8pm and midnight and midnight to 7am respectively.
Clause 10.3.6 of the Clerical NAPSA further deals with payment for hours worked by employees on public holidays. Where a casual employee works ordinary hours on a public holiday, the employee must be paid at the rate of double time and one-half of their casual hourly rate of pay. During the relevant period, Quincolli paid all Employees, regardless of their classification, only a flat rate of $21 per hour for all hours worked on public holidays between the hours of 7am and 8pm. Further loadings of 10 per cent and 20 per cent were paid in respect of hours worked on public holidays between 8pm and midnight and midnight to 7am respectively. All hours worked on Good Friday and Christmas Day were paid at a flat rate of $25 per hour.
Clause 10.4.1 of the Clerical NAPSA deals with overtime loadings. Where an employee works in excess of 40 hours per week, the employee must be paid at the applicable overtime rate of time and one half for the first two hours and double time thereafter. During the relevant period, Quincolli only provided those Employees who worked overtime time off in lieu at the casual hourly rate.
Clause 14.1.1 of the Clerical NAPSA deals with an employee’s entitlement to annual leave and makes reference to the Annual Holidays Act 1944 (NSW) (AHA). Clause 4(3)(b)(ii) of the AHA is a term of the Clerical NAPSA and provides that employees must be paid a loading of one twelfth of their ordinary rate in lieu of their annual leave entitlement. Quincolli failed to pay the 1/12th loading in lieu of annual leave to any Employee.
The table below provides an overview of the entitlements, expressed as an hourly rate, that Employees performing work consistent with the NAPSA classifications of Grades 2 to 4 were entitled to receive under the Clerical NAPSA compared to what they were actually paid by Quincolli under their purported agreement.
| Rate paid pursuant to Well Done Agreement | Entitlement under the Clerical NAPSA | |
| GRADE 2 | ||
| Casual hourly rate | $16.66 | $19.07 |
| Afternoon shift | $18.33 | $22.31 |
| Saturday shift | $17.66 | $28.61 |
| Sunday shift | $21.00 | $33.37 |
| Public holiday | $25.00 | $47.68 |
| Overtime | Time off in lieu @ $16.66 | $28.61 first 2 hours then $38.14 thereafter |
| Loading in lieu of Annual leave | $0 | $1.59 |
| GRADE 3 | ||
| Casual hourly rate | $17.16 | $20.14 |
| Afternoon shift | $18.88 | $23.56 |
| Saturday shift | $18.16 | $30.21 |
| Sunday shift | $21.00 | $35.25 |
| Public holiday | $25.00 | $50.35 |
| Overtime | Time off in lieu @ $17.16 | $30.21 first 2 hours then $40.28 thereafter |
| Loading in lieu of Annual leave | $0 | $1.68 |
| GRADE 4 | ||
| Casual hourly rate | $17.66 | $21.44 |
| Afternoon shift | $19.43 | $25.08 |
| Saturday shift | $18.66 | $32.16 |
| Sunday shift | $21.00 | $37.52 |
| Public holiday | $25.00 | $53.60 |
| Overtime | Time off in lieu @ $17.66 | $32.16 first 2 hours then $42.88 thereafter |
| Loading in lieu of Annual leave | $0 | $1.79 |
The involvement of Mrs Potter in the Workplace Relations Act and Clerical NAPSA contraventions
Section 719 of the Workplace Relations Act and s.546 of the Fair Work Act empower the Court to impose penalties upon persons who have contravened civil remedy provisions.
Section 728 of the Workplace Relations Act and s.550 of the Fair Work Act provide that persons “involved” in a contravention of a civil remedy provision are to be treated as having contravened those provisions, and therefore liable to the imposition of penalties pursuant to s.719 of the Workplace Relations Act and s.546 of the Fair Work Act.
The Fair Work Ombudsman submits that Mrs Potter, was involved in the contraventions within the meaning of s.728 of the Workplace Relations Act (during the period 1 January 2009 to 30 June 2009) and s.550 of the Fair Work Act (during the period 1 July 2009 to
30 December 2009) by being directly or indirectly, knowingly concerned in or party to the contraventions within the meaning of s.728(2)(c) of the Workplace Relations Act and s.550(2)(c) of the Fair Work Act.
The authorities[101] show that in order for a person to have accessorial liability under s.728 of the Workplace Relations Act (or s.550 of the Fair Work Act), he or she must be a knowing participant or in other words:
a)must have knowledge of the essential facts constituting the contravention;
b)must be knowingly concerned in the contravention;
c)must be an intentional participant in the contravention based on actual not constructive knowledge of the essential facts constituting the contravention – although constructive knowledge may be sufficient under s.728(2)(c) in cases of wilful blindness; and
d)need not know that the matters in question constituted a contravention.
[101] Yorke & Anor v Lucas [1985] HCA 65; (1985) 158 CLR 661 at pp 666 and 667; Armstrong v Bigeni Contracting Pty Ltd & Anor [2008] FMCA 485 at 23.
The Fair Work Ombudsman submits that Mrs Potter was involved in the Workplace Relations Act and Clerical NAPSA contraventions of Quincolli, because she:
a)is, and was during the relevant period, a director and sole secretary of Quincolli[102];
b)had the active day to day management and control of the Employees[103];
c)was the person responsible for determining and setting wage rates and conditions for the Employees[104];
d)was aware that the Employees were required to be covered by an award or agreement, considered the application of the Clerical NAPSA in October 2006 and formed the view that it did not apply to the Employees[105];
e)engaged in a consultation process with the Employees during the period August 2006 to January 2007 regarding the creation of workplace agreements[106];
f)was the person responsible for allegedly forwarding 16 AWAs to the Office of Employment Advocate on 8 February 2007 and 27 March 2007[107];
g)failed to follow up the lodgement of the workplace agreements even though no reply or receipt was ever received from the OEA and advised the Applicant more than two years later that “We just assumed they had been properly processed”;
h)was aware that Quincolli had unregistered agreements and contacted the Ai Group on 8 July 2009 to seek advice[108];
i)contacted the Workplace Authority on 22 July 2009 seeking advice as to the correct industrial instrument covering the Employees[109]; and
j)was first advised by the Fair Work Ombudsman on 16 October 2009 and on a number of occasions after that date, that the Clerical NAPSA applied to the Employees[110].
[102] Lang Affidavit sworn on 4 November 2010 at [6].
[103] Lang Affidavit at [25] and page 5 of record of interview located behind Tab 12 of Exhibit DL1.
[104] Lang Affidavit at [25] and page 5 of record of interview located behind Tab 12 of Exhibit DL1.
[105] Lang Affidavit at [25] and page 22 of record of interview located behind Tab 12 of Exhibit DL1.
[106] Potter Affidavit #2 Potter at [12].
[107] Potter Affidavit #2 at [16]-[21];
[108] Page 6 of documents produced by Australian Industry Group on 20 July 2010 located behind Tab 26 of Exhibit DL1 to Lang Affidavit.
[109] Lang Affidavit at [39].
[110] Affidavit of Nigel Smith affirmed on 4 November 2010 at 14 paragraph.
I accept those submissions. Mrs Potter attempted to present herself under cross-examination as confused, inexperienced in industrial matters and as a victim of a maliciously inspired investigation. She was, however, not an impressive or reliable witness in relation to the workplace agreements allegedly put in place. She did impress me as a very experienced, astute and hard nosed businessperson with an impressive grasp of her own business. She made deliberate and conscious decisions as to the payment of the Employees that would benefit the business. She sought advice as to the liabilities of the business and attempted (albeit ineffectually) to contract out of any award coverage. She was determined and tenacious in resisting the investigation of the Fair Work Ombudsman when she realised it posed a threat to the arrangements she had sought to put in place to minimise the labour costs of the business.
Breach of s.712(3) of the Fair Work Act
Part 5-2 of the Fair Work Act proscribes the extent of the compliance powers of Fair Work Inspectors to ensure adherence with the Fair Work Act and/or a fair work instrument.[111]
[111] Section 670 and 682 of the Fair Work Act.
In order for inspectors to determine whether the Fair Work Act or a fair work instrument is being complied with, s.712(1) if the Fair Work Act provides inspectors with the power to require persons to produce relevant records or documents. The exercise and enforcement of this power is essential to the efficacy of the compliance provisions.
Section 712 of the Fair Work Act provides:
Power to require persons to produce records or documents
(1)An inspector may require a person, by notice, to produce a record or document to the inspector.
(2) The notice must:
(a)be in writing; and
(b)be served on the person; and
(c)require the person to produce the record or document at a specified place within a specified period of at least 14 days.
The notice may be served by sending the notice to the person’s fax number.
(3)A person who is served with a notice to produce must not fail to comply with the notice.
Note: This subsection is a civil remedy provision (see Part 4‑1).
(4)Subsection (3) does not apply if the person has a reasonable excuse.
On 5 July 2010, Inspector Darren Lang issued a notice to produce (Notice) pursuant to s.712(1) of the Fair Work Act. The Notice required Quincolli to produce the following records or documents[112]:
Any and all records or document/s including but not limited to correspondence, notes, letters, faxes, emails, records of telephone calls, information, notices, advice (including legal advice) or alike from any and all parties whatsoever, relating to whether a Notional Agreement Preserving a State Award, namely the Clerical and Administrative Employees (State) Award, applied or should have applied to call centre operators in the workplace of Well Done Group Pty Ltd at 32 Browns Road Nowra, New South Wales, during the period 27 March 2006 to 31 December 2009 inclusive.
[112] Lang affidavit sworn on 4 November 2010 at [40]-[43].
The Fair Work Ombudsman does not press the failure to provide legal advice, but does press the failure to provide all other records or documents requested in the Notice.
The records or documents were due by 5.00pm on 19 July 2010 and Quincolli was accordingly given 14 days’ notice by which to comply, as stipulated under s.712(2)(c) of the Fair Work Act.
The penultimate paragraph of the Notice stated “Failure to comply with this Notice, without reasonable excuse, is a contravention of subsection 712(3) of the Act and may attract a maximum penalty $33,000 in respect of a body corporate of $6,600 in respect of an individual”.
No records or documents were received from Quincolli on or before
19 July 2010. On 20 July 2010, the Fair Work Ombudsman received a letter from the respondents advising that the Notice would not be complied with and then on 26 July 2010, the Fair Work Ombudsman received a letter from the respondents dated 21 July 2010 setting out the reasons for not complying with the Notice[113]. Those reasons, in summary, were that the request was onerous, the documents sought did not exist in “written form”, all relevant documents had already been provided, nothing further would alter the course that the Fair Work Ombudsman had embarked upon, the company would not be able to pay any penalty imposed and that the complaint and investigation had damaged the reputation of Mr and Mrs Potter and was vindictive.
[113] Lang affidavit sworn on 4 November 2010 at [45], [46] and [49].
The Fair Work Ombudsman disputes that the reasons provided by the respondents in their letter dated 21 July 2010 constitute a reasonable excuse under s.712(4) of the Fair Work Act and submits that Quincolli had in its possession at the time the Notice was served, documents of the kind required to be produced under the Notice.
Documents provided by the Ai Group[114] reveal that Mrs Potter, on behalf of Quincolli, was corresponding with the Ai Group throughout July 2009 in relation to the application of the Clerical NAPSA to Quincolli. The evidence also discloses that Mrs Potter contacted the Workplace Authority and Fair Work Australia in July 2009 seeking information on award coverage[115] and made file notes of these conversations[116].
[114] Lang affidavit sworn on 4 November 2010 at [47] and documents behind Tab 26 of Exhibit DL1.
[115] Lang affidavit sworn on 4 November 2010 at [39]; Potter Affidavit #2, at [22].
[116] See file notes located behind Tab 12 in Exhibit WDG1 to Potter Affidavit #1.
The Fair Work Ombudsman therefore submits that Quincolli failed without reasonable excuse to produce any records or documents (other than legal advice), relating to whether or not the Clerical NAPSA applied to the business of Quincolli.
I accept that submission. Quincolli was uncooperative in the investigation by the Fair Work Ombudsman and did its best to frustrate the investigation, both by challenging the conduct of it and withholding information that would assist it.
The involvement of Mrs Potter in the Notice to Produce contravention
The Fair Work Ombudsman further submits that Mrs Potter had an involvement in the contravention of s.712(3) by Quincolli failing to comply with the Notice to Produce, because she:
a)was the addressee of the Notice and was required, as a Director of Quincolli with access to such records, to produce the records or documents specified in the Notice;
b)was served the Notice by registered post and signed the delivery confirmation upon the receipt of the Notice;
c)wrote a letter to the Fair Work Ombudsman dated 16 July 2010 advising that the Notice would not be complied with;
d)wrote a letter to the Fair Work Ombudsman dated 21 July 2010 advising of the reasons for not complying with the Notice;
e)was the addressee of the letter dated 12 August 2010 from the Fair Work Ombudsman further requesting that the records or documents be produced by 20 August 2010; and
f)had access to the records or documents of the type requested in the Notice and has now included some of those records requested in the respondents’ evidence[117].
[117] File notes appearing at Tab 12 of Exhibit WDG1 of First Potter affidavit.
I accept that submission. Mrs Potter was the controlling mind of Quincolli, at least insofar as it dealt with the Fair Work Ombudsman’s investigation. She took a calculated decision not to comply with the Notice to Produce, which was consistent with her hostile attitude to the investigation by the Fair Work Ombudsman.
The Court’s approach to determining penalty
As was agreed at the end of the trial of this matter, I will hear the parties before ruling on the imposition of penalties. It is appropriate, however, at this stage to set out the basic principles that apply to the fixing of penalties under the legislation.
There is authority from the New South Wales Court of Appeal to the effect that in a civil penalty proceeding a Court should approach the determination of the contravention issue and penalty in a two stage process[118]. In Forge, the Court of Appeal concluded that while a person might waive the right to a separate hearing on penalty, it is incumbent upon the relevant tribunal to draw the right specifically to the person’s attention and incumbent upon an applicant in such proceedings to draw the Court’s attention to that issue[119]. The Fair Work Ombudsman did so in this case.
[118] Forge v ASIC (2004) 52 ACSR 1 at 93 [426] per McColl JA.
[119] Forge, at 92-3 [419]-[442] per McColl JA.
Bearing those issues in mind, and consistently with the submissions of the Fair Work Ombudsman, the following principles should be taken into account in determining the question of appropriate penalty.
The first step for the Court is to identify the separate contraventions involved. Each breach of each separate obligation found in the Workplace Relations Act and Fair Work Act in relation to each employee is a separate contravention[120].
[120] Gibbs v Mayor, Councillors and Citizens of City of Altona (1992) 37 FCR 216 at 223; McIver v Healey [2008] FCA 425 at [16] (unreported, Federal Court of Australia, 7 April 2008, Marshall J).
Secondly, the Court should consider whether the breaches arising in the first step constitute a single course of conduct[121].
[121] Subsection 719(2) of the Workplace Relations Act and s.557(1) of the Fair Work Act.
Thirdly, to the extent that two or more contraventions have common elements, this should be taken into account in considering what is an appropriate penalty in all the circumstances for each contravention. The Respondents should not be penalised more than once for the same conduct. The penalties imposed by the Court should be an appropriate response to what the Respondents did[122]. This task is distinct from and in addition to the final application of the “totality principle”[123].
[122] Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 at [46] (Graham J) (unreported, Full Court of the Federal Court of Australia, 20 February 2008, Gray, Graham and Buchanan JJ) (Merringtons).
[123]Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70 at [41]-[46] (Stone and Buchanan JJ) (unreported, Full Court of the Federal Court of Australia, 7 May 2008, Gyles, Stone and Buchanan JJ) (Mornington Inn).
Fourthly, the Court should consider the appropriate penalty for the single breach(es) and, if relevant, each group of contraventions, taking into account all of the relevant circumstances.
Finally, having fixed an appropriate penalty for each group of contraventions or course of conduct, the Court should take a final look at the aggregate penalty, to determine whether it is an appropriate response to the conduct which led to the breaches[124]. The Court should apply an “instinctive synthesis” in making this assessment[125]. This is what is known as an application of the “totality principle”.
[124] See Kelly v Fitzpatrick (2007) 166 IR 14 at [30] (Tracey J) (Kelly); Merringtons, supra at [23] (Gray J), [71] (Graham J) and [102] (Buchanan J).
[125] Merringtons, supra at [27] (Gray J) and [55] and [78] (Graham J).
The factors relevant to the imposition of a penalty under the Workplace Relations Act have been summarised by Mowbray FM in Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7 (Pangaea), [26]-[59], as follows:
a)the nature and extent of the conduct which led to the breaches;
b)the circumstances in which that conduct took place;
c)the nature and extent of any loss or damage sustained as a result of the breaches;
d)whether there had been similar previous conduct by the defendant;
e)whether the breaches were properly distinct or arose out of the one course of conduct;
f)the size of the business enterprise involved;
g)whether or not the breaches were deliberate;
h)whether senior management was involved in the breaches;
i)whether the party committing the breach had exhibited contrition;
j)whether the party committing the breach had taken corrective action;
k)whether the party committing the breach had cooperated with the enforcement authorities;
l)the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
m)the need for specific and general deterrence.
This summary was adopted by Tracey J in Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080, [14]. While the summary is a convenient checklist, it does not prescribe or restrict the matters which may be taken into account in the exercise of the Court’s discretion: Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550, [11]; Merringtons at [91] per Buchanan J.
Conclusion
On the evidence, Quincolli contravened the provisions outlined at [2] above. On the evidence, Mrs Potter had knowledge of the Clerical NAPSA, decided to make workplace agreements for its employees yet failed to ensure that these agreements were actually lodged with the relevant authority. Mrs Potter was advised by the Fair Work Ombudsman during its investigation that the Clerical NAPSA applied to Quincolli. Mrs Potter was at all times the controlling mind of Quincolli and was involved in the contraventions, within the meaning of s.728(2) of the Workplace Relations Act and s.550(2) of the Fair Work Act. I will make declarations reflecting the Court’s findings on liability.
I will hear the parties as to penalty and costs.
I certify that the preceding ninety-six (96) paragraphs are a true copy of the reasons for judgment of Driver FM
Date: 28 November 2011
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