Fair Work Ombudsman v Rachael Louise Medispa Pty Ltd

[2021] FedCFamC2G 362

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Fair Work Ombudsman v Rachael Louise Medispa Pty Ltd [2021] FedCFamC2G 362

File number(s):	SYG 1898 of 2021
Judgment of:	JUDGE MANOUSARIDIS
Date of judgment:	17 December 2021
Catchwords:	INDUSTRIAL LAW – PRACTICE AND PROCEDURE – Application for default judgment based on statement of claim alleging contraventions of s 716(5) of the Fair Work Act2009 (Cth) – whether on the face of the statement of claim the applicant has established an entitlement for declaratory and other relief and relief for penalty – declaratory relief granted and orders made.
Legislation:	Fair Work Act 2009 (Cth), ss 12, 545(1), 545(2), 546, 547(2), 550(2), 700, 701, 716(1), 716(2), 716(5) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth), rr 1.06(2), 13.04(2), 13.05(1), 13.05(2), 13.05(4) 13.06(2) Federal Court Rules 1979 (Cth), rr 35A, 3(2)(c) Federal Court Rules 2011 (Cth), r 5.23(2)(c)
Cases cited:	Macquarie Bank Limited v Seagle [2005] FCA 1239 Macquarie Bank Limited v Seagle [2008] FCA 1417 Phonographic Performance Ltd v Maitra (1998) 41 IPR 225 Rathner, in the matter of Mildura Grand Pty Ltd (in liq) v Bendigo Skyrider Pty Ltd [2011] FCA 626 Speedo Holdings B.V. v Evans (No 2) [2011] FCA 1227
Division:	Fair Work
Number of paragraphs:	15
Date of hearing:	8 December 2021
Place:	Sydney
Solicitor for the Applicant:	Ms G Banister of the Office of the Fair Work Ombudsman, by telephone
The Respondents:	No appearance by, or on behalf of, the respondents

ORDERS

SYG 1898 of 2021

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

BETWEEN:

FAIR WORK OMBUDSMAN

Applicant

AND:

RACHAEL LOUISE MEDISPA PTY LTD ACN 625 563 340

First Respondent

RACHAEL LOUISE BIRCH

Second Respondent

ORDER MADE BY:	JUDGE MANOUSARIDIS
DATE OF ORDER:	17 DECEMBER 2021

THE COURT DECLARES THAT:

1.The first respondent contravened s 716(5) of the Fair Work Act 2009 (Cth) (FW Act) by failing to comply with the requirements of a compliance notice issued on 14 July 2021 pursuant to s 716(2) of the FW Act (Compliance Notice).

2.The second respondent was involved, within the meaning of s 550(2) of the FW Act, in the first respondent’s contraventions referred to in declaration 1.

THE COURT ORDERS THAT:

3.Pursuant to s 545(2) of the FW Act, within 28 days after the date of this order the first respondent take the steps the Compliance Notice requires the first respondent to take by:

(a)identifying the number of hours Ms Jasmine Laredo worked between 8 December 2020 and 25 December 2020 (Contravention Period);

(b)identifying the amount the first respondent paid to Ms Jasmine Laredo during the Contravention Period in respect of wages owed upon termination of employment (Entitlement);

(c)calculating the amount the first respondent should have paid to Ms Jasmine Laredo under the Nurses Award 2010 (Award) during the Contravention Period for the Entitlement;

(d)making full payment to Ms Jasmine Laredo of the difference between the amount paid to Ms Jasmine Laredo and the amount that should have been paid to Ms Jasmine Laredo under the Award;

(e)making a record of the information and amounts referred to in (a) to (c), and the amount of the payment referred to in (d);

(f)calculating and paying any additional superannuation contributions required by clause 20.2 of the Award in respect of the amounts owed to Ms Jasmine Laredo; and

(g)producing evidence to the applicant of compliance with the Compliance Notice in the form of the schedule of calculations and payments, and evidence that the amounts owed had been paid to Ms Jasmine Laredo.

4.The applicant file and serve any affidavit evidence in respect of penalty by no later than 21 January 2022.

5.The respondents to file and serve any affidavit evidence in respect of penalty by no later than 4 February 2022.

6.The applicant file and serve any affidavit evidence in reply and submissions in respect of penalty by 11 February 2022.

7.The respondents file and serve submissions in respect of penalty by 25 February 2022.

8.The application for orders under s 546(1) of the FW Act be set down for hearing at 10:15 am on 23 March 2022.

9.The parties have liberty to apply on 3 days’ notice.

Note: The form of the order is subject to the entry in the Court’s records.

Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).

REASONS FOR JUDGMENT

INTRODUCTION

1. The applicant (FWO) applies under r 13.05(2)(c) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (GFL Rules) for default judgment against the respondents in a proceeding the FWO has brought under the Fair Work Act 2009 (Cth) (FW Act).

2. The FWO claims the first respondent (RLM) contravened s 716(5) of the FW Act by failing to comply with the requirements of a compliance notice issued under s 716(2) of the FW Act, and that the second respondent, Ms Birch, was involved in RLM’s contravention.

   PROCEDURAL HISTORY

3. The FWO commenced the proceeding on 14 October 2021 by filing an application and a statement of claim. The FWO served the application and statement of claim on each of RLM and Ms Birch on 19 October 2021.

4. The matter came before me for a first court date on 9 November 2021. The respondents, however, did not appear. I made the following orders:

   1.The first and second respondents are to file and serve a notice of address for service by 4:00 pm on 10 November 2021.

   2.The first and second respondents are to file and serve a response and a defence by 16 November 2021.

   3.The applicant is to file and serve any reply on or before 30 November 2021.

   4.The matter is listed for a directions hearing before Judge Manousaridis at 9:30 am on 8 December 2021, such directions hearing to proceed by telephone.

   5.The parties have liberty to apply on such notice as the circumstances warrant.

5. The matter came before me again on 8 December 2021, but, again, there was no appearance by the respondents. Ms Banister, who appeared for the FWO, applied for orders under r 13.05(2)(c) of the GFL Rules in terms of the orders the FWO seeks in the statement of claim, other than penalty.

   PARAGRAPH 13.05(2)(c) OF GFL RULES

6. Subrule 13.05(2) of the GFL Rules applies to a respondent who “is in default”. Under r 13.04(2) of the GFL Rules a respondent is in default if the respondent has not satisfied the applicant’s claims, and the respondent has failed to do one or more of the things identified in r 13.04(2)(b) of the GFL Rules. The things identified in r 13.04(2)(b) that are relevant to the application before me are the failure to give an address for service before the time for doing so has expired, the failure to file a response or defence before the time for doing so has expired, the failure to comply with an order of the Court in the proceeding, and the failure to defend the proceeding with due diligence. Also relevant is r 13.06(2) of the GFL Rules which provides that the Court may make an order of the kind mentioned in r 13.05(1), (2) or (4) if a party to a proceeding is absent from a hearing.

7. When a respondent is in default, or when a respondent is absent from a hearing, the Court may make one of the orders set out in r 13.05(2) of the GFL Rules. Relevant to the application before me is r 13.05(2)(c) which provides that the Court may:

   if the proceeding was started by an application supported by a statement of claim or the Court has ordered that the proceeding continue on pleadings – give judgment against the respondent for the relief that:

   (i)       the applicant appears entitled to on the statement of claim; and

   (ii)      the Court is satisfied it has power to grant . . .

   ARE THE RESPONDENTS IN DEFAULT?

8. The respondents have not filed a notice of address for service. Nor have they filed a reply or defence. By not filing any defence the respondents failed to comply with the orders of 9 November 2021. Further, the respondents have failed to defend the proceeding with due diligence. I am therefore satisfied the respondents are in default within the meaning of r 13.04(2) of the GFL Rules.

   PRINCIPLES

9. Rules 13.04 and 13.05 of the GFL Rules were adapted from, and are substantially similar to, the rules contained in O 35A of the now repealed Federal Court Rules 1979 (Cth);[1] and r 13.05(2)(c) of the GFL Rules is almost identical to O 35A r 3(2)(c). There are a number of principles that have been formulated in relation to O 35A r (3)(2) which apply to r 13.05 of the GFL Rules. These include the following:

   (a)First r 13.05(2)(c) of the GFL Rules “does not require proof of the claim by evidence, but only requires that – on the face of the statement of claim – there is a claim for the relief sought”.[2]

   (b)Second, before the Court may make an order under r 13.05(2)(c) of the GFL Rules it must be satisfied that the document, which the applicant has filed with the application, is in fact a “statement of claim”. A statement of claim is a pleading, which means it must comply with the rules of pleading.[3]

   (c)Third, it follows from (b) that the statement of claim must plead at least one reasonable cause of action that supports the granting of the relief the applicant seeks in the application. More particularly, “each element of the relevant civil wrong” of which the applicant complains must be “properly and discretely pleaded in the statement of claim”.[4]

   (d)Fourth, although r 13.05(2)(c) of the GFL Rules does not require proof of the claim by evidence, it is permissible for the applicant to adduce evidence that is relevant to the relief sought.[5]

   (e)Finally, the Court retains a discretion not to make an order under r 13.05(2)(c) of the GFL Rules, even if the preconditions for making an order are satisfied.[6]

   [1] The equivalent current rule is r 5.23(2)(c) of the Federal Court Rules 2011 (Cth)

   [2] Rathner, in the matter of Mildura Grand Pty Ltd (in liq) v Bendigo Skyrider Pty Ltd [2011] FCA 626, at [9] (Gordon J)

   [3] Under r 1.06(2) of the GFL Rules, the rules of the Federal Court Rules 2011 (Cth) (FC Rules) identified in Schedule 1 to the GFL Rules apply, with necessary changes, to general federal law proceedings. The FC Rules there identified include the rules of pleading.

   [4] Macquarie Bank Limited v Seagle [2005] FCA 1239, at [24] (Conti J); Macquarie Bank Limited v Seagle [2008] FCA 1417, at [20] (Jagot J)

   [5] Phonographic Performance Ltd v Maitra (1998) 41 IPR 225, at page 230

   [6] See the authorities decided under O 35A Federal Court Rules 1979 (Cth) referred to by Flick J in Speedo Holdings B.V. v Evans (No 2) [2011] FCA 1227, at [20]

   THE FWO PLEADED CASE AND CLAIMS FOR RELIEF

10. In her statement of claim the FWO alleges as follows:

    (a)RLM operated and continues to operate a beauty medical business (Business) under the name “Rachael Louise Medispa” in Drummoyne, New South Wales.

    (b)Ms Birch was and continues to be the sole director and secretary of RLM; was and continues to be responsible for the overall operation, management, and control of RLM; and was and continues to be responsible for ensuring RLM complies with its legal obligations under the FW Act.

    (c)In around January 2021 Mr Keene (FWI), a Fair Work Inspector appointed under s 700 of the FW Act, conducted an investigation into RLM in respect of the employment of Ms Jasmine Laredo (Ms Laredo), after which the FWI formed a belief that at all relevant times between 8 December 2020 and 25 December 2020 (Contravention Period):

    (i)RLM employed Ms Laredo at the Business;

    (ii)The Nurses Award 2010 (Award), a modern award under the FW Act, covered and applied to RLM in respect of the employment of Ms Laredo;

    (iii)Ms Laredo was paid an hourly rate of approximately $65 during the Contravention Period;

    (iv)Ms Laredo was not paid for hours worked between 8 December 2020 and 11 December 2020 during her final week of employment.

    (d)By reason of the matters in (c) the FWI formed a reasonable belief, pursuant to s 716(1) of the FW Act, that during the Contravention Period RLM contravened cl 18.3(a) of the Award by failing to pay Ms Laredo, no later than 7 days after the end of her employment with RLM, the full wages owing for any complete or incomplete pay period up to the end of the day of termination (Contravention).

    (e)On 14 July 2021 the FWI gave RLM a compliance notice in respect of the Contravention pursuant to s 716(2) of the FW Act (Compliance Notice) which required RLM to take the following actions to remedy the direct effects of the Contravention by 16 August 2021 (Specified Action):

    (i)identify the number of hours worked by Ms Laredo during the Contravention Period;

    (ii)identify the amount RLM paid to Ms Laredo during the Contravention Period in respect of wages owed upon termination of employment (Entitlement);

    (iii)calculate the amount RLM should have paid to Ms Laredo during the Contravention Period for the Entitlement;

    (iv)make full payment to Ms Laredo of the difference between the amount paid to Ms Laredo and the amount that should have been paid to Ms Laredo;

    (v)make a record of the information and amounts referred to in (i) to (iii), and the amount of the payment referred to in (iv) immediately above;

    (vi)calculate and pay any additional superannuation contributions required by cl 20.2 of the Award in respect of the amounts owed to Ms Laredo; and

    (vii)produce reasonable evidence to the FWO of compliance with the Compliance Notice by 23 August 2021, by producing a copy of the schedule of calculations and payments, and evidence that the amounts owed had been paid to Ms Laredo.

    (f)RLM failed to take the Specified Action by 16 August 2021, and failed to produce evidence of compliance with the Compliance Notice by 23 August 2021. For these reasons, RLM contravened s 716(5) of the FW Act.

    (g)Given the matters referred to in (b), Ms Birch had knowledge of the Compliance Notice and of RLM’s failure to comply with the Compliance Notice, and was an intentional participant in RLM’s failure to comply with the Compliance Notice; and, for those reasons, Ms Birch was a person involved, within the meaning of s 550(2) of the FW Act, in RLM’s contravention of s 716(5) of the FW Act.

11. The FWO seeks the following relief:

    (a)Declarations that RLM contravened s 716(5) of the FW Act and that Ms Birch was a person involved in RLM’s contravention of s 716(5) of the FW Act.

    (b)Orders pursuant to s 545(1) of the FW Act that RLM take the steps the Compliance Notice required it to undertake; and

    (c)An order under s 546 of the FW Act that each respondent pay a pecuniary penalty.

    TO WHAT RELIEF IS THE FWO ENTITLED?

12. The statement of claim alleges a cause of action based on a contravention of s 716(5) of the FW Act, which provides that a “person must not fail to comply with a notice given under this section”. The “notice” referred to in s 716(5) is the notice which s 716(2) of the FW Act authorises the “inspector” to issue. “Inspector” is defined in s 12 of the FW Act as a “Fair Work Inspector” which, in turn, is defined in s 12 of the FW Act to mean a person appointed as a Fair Work Inspector under s 700 of the FW Act, or the FWO in his or her capacity as a Fair Work Inspector under s 701 of the FW Act. Subsection 716(2) provides for the giving of a notice in the circumstances identified in s 716(1) of the FW Act, namely, where an inspector reasonably believes that a person has contravened, among other things, a provision of the National Employment Standards (NES). The notice s 716(2) of the FW Act authorises an inspector to give is one which requires the person whom the inspector reasonably believes has contravened (among other things) a provision of the NES to take specified action “to remedy the direct effects of the contraventions referred to in subsection (1)”.

13. I am satisfied that the facts alleged in the statement of claim establish RLM contravened s 716(5) of the FW Act; that Ms Birch was a person involved, within the meaning of s 550(2) of the FW Act, in RLM’s contraventions; and that declarations to this effect should be made. I am also satisfied that an order should be made which compels RLM to comply with the requirements of the Compliance Notice, and, with one exception, I propose to make orders substantially to the effect the FWO claims.

14. The first exception relates to the claim for the payment of interest. The FWO claims an order for interest pursuant to s 547(2) of the FW Act. It provides that the Court must, on application, include “an amount of interest”. An order that interest be paid without specifying the amount is not an order that is authorised by s 547(2) of the FW Act.

    DISPOSITION

15. I will make declarations and orders substantially to the effect the FWO claims, and make directions for the filing of evidence and submissions on the question of penalty. I will also order that the FWO’s application for orders under s 546(1) of the FW Act be set down for hearing at 10:15 am on 23 March 2022.

I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Manousaridis.

Associate:

Dated:       17 December 2021