Fair Work Ombudsman v Soma Kitchen Pty Ltd & Anor
[2020] FCCA 2358
•26 August 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v SOMA KITCHEN PTY LTD & ANOR | [2020] FCCA 2358 |
| Catchwords: INDUSTRIAL LAW – Application for default judgment – whether respondents in default – whether respondents on notice of application – whether default judgment should be awarded – default judgment ordered. |
| Legislation: Fair Work Act 2009 (Cth), ss.550, 716 Federal Circuit Court Rules 2001 (Cth), rr.9.04, 13.03A, 13.03B |
| Cases cited: Bell v Steele (No 2) [2012] FCA 62 Speedo Holdings BV v Evans (No 2) [2011] FCA 1227 Walker v Government of the Republic of Vanuatu [2015] FCA 490 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | SOMA KITCHEN PTY LTDACN 632 395 558 |
| Second Respondent: | GIANCARLO DANIELE |
| File Number: | PEG 467 of 2019 |
| Judgment of: | Judge Kendall |
| Hearing date: | 25 August 2020 |
| Date of Last Submission: | 25 August 2020 |
| Delivered at: | Perth |
| Orders Pronounced: | 25 August 2020 |
| Delivered on: | 26 August 2020 |
REPRESENTATION
| Counsel for the Applicant: | Ms M Sears |
| Solicitors for the Applicant: | Fair Work Ombudsman |
| Respondents: | No appearance by or for the respondents |
ORDERS
Default judgment is entered for the applicant against the respondents pursuant to r.13.03B(2)(d) of the Federal Circuit Court Rules 2001 (Cth).
UPON THE ADMISSIONS WHICH THE RESPONDENTS ARE TAKEN TO HAVE MADE, CONSEQUENT UPON DEFAULT BY THE RESPONDENTS PURSUANT TO RULE 13.03A(1) OF THE FEDERAL CIRCUIT COURT RULES 2001 (CTH), THE COURT DECLARES THAT:
A. The first respondent contravened s.716(5) of the Fair Work Act 2009 (Cth) by failing to comply with the Compliance Notice dated 9 September 2019 (Notice).
B. The second respondent was involved, within the meaning of s.550(2) of the Fair Work Act 2009 (Cth), in the first respondent’s contravention of s.716(5) of the Fair Work Act 2009 (Cth) by failing to comply with the Notice.
THE COURT FURTHER ORDERS THAT:
Pursuant to r.9.04 of the Federal Circuit Court Rules 2001 (Cth), the second respondent have leave to appear on behalf of the first respondent until further order of the Court.
Pursuant to section 545(1) of the Fair Work Act 2009 (Cth) the first respondent, within 28 days of these orders, take the steps that were required to comply with the Notice by:
(a)calculating the outstanding entitlements it was required to pay to Mr Girbal;
(b)paying the outstanding entitlements referred to in subparagraph (a) above to the Commonwealth Consolidated Revenue Fund (on behalf of Mr Girbal);
(c)calculating and paying into Mr Girbal’s nominated superannuation fund the additional superannuation contributions it was required to pay on the outstanding entitlements referred to in subparagraph (a) above; and
(d)preparing and producing to the applicant, a schedule outlining its calculation of the outstanding entitlements it was required to pay Mr Girbal, referred to in subparagraph (a) above, and providing proof that the outstanding entitlements were rectified as set out in subparagraphs (b) and (c) above.
Pursuant to s.547(2) of Fair Work Act 2009 (Cth) the first respondent pay interest on the amounts referred to in order 3 above.
The applicant distribute to Mr Girbal the amounts paid pursuant to order 3 above within 180 days of the payment being made, or in the event that Mr Girbal cannot be located within this timeframe, these amounts to be retained by the Commonwealth of Australia pursuant to s.559 of the Fair Work Act 2009 (Cth).
The matter remain listed for a penalty hearing on 14 September 2020 at 10.00am.
The respondents file and serve any affidavit evidence and an outline of submissions on penalty by 1 September 2020.
The applicant file and serve any affidavit evidence and/or submissions in reply by 8 September 2020.
Each party to notify the other parties of any witnesses required for cross-examination, and any proposed objections to evidence on or before 10 September 2020.
Written reasons for judgment be published from Chambers at a later date
There be liberty to apply on 7 days’ notice.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PERTH |
PEG 467 of 2019
| FAIR WORK OMBUDSMAN |
Applicant
And
| SOMA KITCHEN PTY LTD ACN 632 395 558 |
First Respondent
| GIANCARLO DANIELE |
Second Respondent
REASONS FOR JUDGMENT
Introduction
On 29 November 2019, the Fair Work Ombudsman (the “applicant”) filed an application in this Court alleging that the first respondent, Soma Kitchen Pty Ltd, had failed to comply with a notice issued under s.716 of the Fair Work Act 2009 (Cth) (the “Act”). The applicant also alleges that the second respondent (Giancarlo Daniele) was “involved” in the contraventions and is thus liable pursuant to s.550 of the Act.
The respondents obtained legal representation and, on 12 February 2020, the Court made orders programming the matter for a penalty hearing. A notation on those orders indicated that the respondent had agreed to make admissions to the matters in the application.
The respondents’ lawyers ceased acting for the respondents on 24 March 2020. No notice of address for service has been filed by the respondents since that date.
The Court made orders by consent on 22 April 2020 providing for the filing of a statement of agreed facts and materials in support of the penalty hearing.
At the request of the applicant, the matter was listed for directions on 25 June 2020. There was no appearance by or for the respondents at that hearing. The Court was advised that the applicant had “had difficulty” contacting the second respondent in relation to finalising a statement of agreed facts.
The Court made orders which, relevantly, included:
2. The parties are to file a Statement of Agreed Facts on or before 3 July 2020.
3. In the event that the parties do not file a Statement of Agreed Facts in accordance with order 2, the respondents are to file and serve a Defence and Response in accordance with the requirements of the Federal Circuit Court Rules 2001 (Cth) and Federal Court Rules 2011 (Cth) on or before 17 July 2020.
4. If orders 2 and 3 are not complied with, the applicant is to file an application in a case and affidavit in support seeking default judgment in accordance with rules 13.01A and 13.03B of the Federal Circuit Court Rules 2001 (Cth) on or before 21 July 2020.
No Statement of Agreed Facts was filed on 3 July 2020 and no Defence and Response was filed on 17 July 2020.
On 21 July 2020, the applicant filed an application in a case seeking orders for default judgment and other ancillary matters.
The application in a case was heard on 25 August 2020. The applicant was represented by Ms Sears (who appeared by video-link). There was no appearance by or for the respondents.
The materials before the Court include the Statement of Claim filed on 29 November 2019, the application in a case seeking default judgment filed 21 July 2020 and an affidavit of Maddison Grace Sears affirmed 21 July 2020, correspondence confirming the date and time of the hearing (marked as Exhibit 1) and an unfiled affidavit of Maddison Grace Sears affirmed 24 August 2020 (marked as Exhibit 2).
Exhibit 1 contains correspondence sent from the Court confirming the date and time of the hearing on 25 August 2020. Exhibit 2 confirms that Ms Sears had advised the respondents by email on 18 August 2020 of the date and time of the hearing and had attempted to contact the second respondent by telephone on 21 August 2020. A voice message was left that confirmed the hearing date and time.
At the interlocutory hearing, the Court was satisfied that the respondents were on notice that the application in a case had been listed for hearing on 25 August 2020 at 10.00am. Prior to the matter commencing, two attempts were made to contact the second respondent by telephone. Both calls “rang through” to the second respondent’s voicemail. It was also confirmed that the second respondent had not attempted to contact the Registry.
There was no explanation for the respondents’ non-appearance. The Court was satisfied that the respondents were aware of the hearing and proceeded to hear the application in a case.
The Court made orders as follows:
THE COURT ORDERS THAT:
1. Default judgment is entered for the applicant against the respondents pursuant to r.13.03B(2)(d) of the Federal Circuit Court Rules 2001 (Cth).
UPON THE ADMISSIONS WHICH THE RESPONDENTS ARE TAKEN TO HAVE MADE, CONSEQUENT UPON DEFAULT BY THE RESPONDENTS PURSUANT TO RULE 13.03A(1) OF THE FEDERAL CIRCUIT COURT RULES 2001 (CTH), THE COURT DECLARES THAT:
A. The first respondent contravened s.716(5) of the Fair Work Act 2009 (Cth) by failing to comply with the Compliance Notice dated 9 September 2019 (Notice).
B. The second respondent was involved, within the meaning of s.550(2) of the Fair Work Act 2009 (Cth), in the first respondent’s contravention of s.716(5) of the Fair Work Act 2009 (Cth) by failing to comply with the Notice.
THE COURT FURTHER ORDERS THAT:
2.Pursuant to r.9.04 of the Federal Circuit Court Rules 2001 (Cth), the second respondent have leave to appear on behalf of the first respondent until further order of the Court.
3. Pursuant to section 545(1) of the Fair Work Act 2009 (Cth) the first respondent, within 28 days of these orders, take the steps that were required to comply with the Notice by:
a) calculating the outstanding entitlements it was required to pay to Mr Girbal;
b) paying the outstanding entitlements referred to in subparagraph (a) above to the Commonwealth Consolidated Revenue Fund (on behalf of Mr Girbal);
c) calculating and paying into Mr Girbal’s nominated superannuation fund the additional superannuation contributions it was required to pay on the outstanding entitlements referred to in subparagraph (a) above; and
d) preparing and producing to the applicant, a schedule outlining its calculation of the outstanding entitlements it was required to pay Mr Girbal, referred to in subparagraph (a) above, and providing proof that the outstanding entitlements were rectified as set out in subparagraphs (b) and (c) above.
4. Pursuant to s.547(2) of Fair Work Act 2009 (Cth) the first respondent pay interest on the amounts referred to in order 3 above.
5. The applicant distribute to Mr Girbal the amounts paid pursuant to order 3 above within 180 days of the payment being made, or in the event that Mr Girbal cannot be located within this timeframe, these amounts to be retained by the Commonwealth of Australia pursuant to s.559 of the Fair Work Act 2009 (Cth).
6. The matter remain listed for a penalty hearing on 14 September 2020 at 10.00am.
7. The respondents file and serve any affidavit evidence and an outline of submissions on penalty by 1 September 2020.
8. The applicant to file and serve any affidavit evidence and/or submissions in reply by 8 September 2020.
9. Each party to notify the other parties of any witnesses required for cross-examination, and any proposed objections to evidence on or before 10 September 2020.
10. Written reasons for judgment be published from Chambers at a later date
11. There be liberty to apply on 7 days’ notice.
These are the reasons for judgment referred to in Order 10 above.
Legal Principles
Rule 13.03B(2)(d) of the Federal Circuit Court Rules 2001 (Cth) (the “Rules”) provides that:
…
(2) If a respondent is in default, the Court may:
…
(d) give judgment or make any other order against the respondent; or …
Rule 13.03A(2) of the Rules provides that a respondent is in default as when the following occurs:
For rule 13.03B, a respondent is in default if the respondent:
(a) has not satisfied the applicant’s claim; and
(b) fails to:
(i) give an address for service before the time for the respondent to give an address has expired; or
(ii) file a response before the time for the respondent to file a response has expired; or
(iii) comply with an order of the Court in the proceeding; or
(iv) file and serve a document required under these Rules; or
(v) produce a document as required by Part 14; or
(vi) do any act required to be done by these Rules; or
(vii)defend the proceeding with due diligence.
As can be seen from the use of the word “may” in r.13.03B(2), the power to award default judgment is discretionary.
In this regard, the Court notes that the power to award default judgment should be exercised with caution: Speedo Holdings BV v Evans (No 2) [2011] FCA 1227 at [20]. However, the discretion is unfettered save for the requirement that the party be in default.
Preliminary Issue – Legal Representation
Rule 9.04 of the Rules requires that a corporation be represented by a lawyer. The first respondent is not represented by a lawyer. The applicant appears to have sent correspondence to the second respondent on the basis that he is acting on behalf of the first respondent.
At the interlocutory hearing on 25 August 2020, the Court asked Ms Sears if the applicant opposed leave being granted for the second respondent to act on behalf of the first respondent until further order of the Court. Ms Sears indicated that the applicant did not oppose the second respondent being given leave to act on behalf of the first respondent.
Bearing in mind the matters stated in Wong v Dong Lai Sun Massage Pty Ltd (2016) 305 FLR 423, the Court made an order granting the second respondent leave to appear on behalf of the first respondent.
The Court’s reasons for doing so were as follows:
a)the applicant did not oppose leave being granted;
b)from the materials before the Court, the second respondent was a Director, Secretary and shareholder of the first respondent and it could be assumed that he had the authority to represent the first respondent and was aware of the substance of the matter;
c)the applicant was a model litigant and this, together with the Court’s duty to assist self-represented litigants, would substantially mitigate any prejudice that would arise from the second respondent appearing on behalf of the first respondent or on his own behalf;
d)there would be no need for cross-examination in this matter. Hence, the second applicant would not be required to assume the role of advocate and witness; and
e)the Court did not consider the nature of the interlocutory application or the substantive application complex.
Accordingly, until further order of the Court the second respondent will have leave to represent the first applicant.
Consideration
Has a “default” occurred?
For ease of reference a “default” occurs when the respondent in a proceeding:
(a) has not satisfied the applicant’s claim; and
(b) fails to:
(i) give an address for service before the time for the respondent to give an address has expired; or
(ii) file a response before the time for the respondent to file a response has expired; or
(iii) comply with an order of the Court in the proceeding; or
(iv) file and serve a document required under these Rules; or
(v) produce a document as required by Part 14; or
(vi) do any act required to be done by these Rules; or
(vii)defend the proceeding with due diligence.
In reference to the first “element” of r.13.03A(2) (ie, whether the first respondent has failed to satisfy the applicant’s claim), the first respondent in these proceedings has failed to file any defence or response to the application. There is also no evidence that the first respondent has taken any steps to satisfy what are called the “compliance orders” in the statement of claim. As for the second respondent, no response or defence has been filed on his behalf.
In the circumstances, the respondents have failed to satisfy the applicant’s claim.
As to the second element, the Court notes the following:
a)the respondents have not filed a notice of address for service (notwithstanding that the “Notice of Intention to Withdraw as a Lawyer” served on the respondents on 16 March 2020 clearly stated that the respondents must file a notice of address for service within seven days): the Rules, r.13.03A(2)(b)(i);
b)the Court’s orders dated 25 June 2020 stated that the respondents were required to file a Response and Defence on or before 17 July 2020. They have not done so: the Rules, r.13.03A(2)(b)(ii) and (iv);
c)the respondents failed to comply with, or caused non-compliance with, the Court’s orders of 22 April 2020 and 25 June 2020 to file a Statement of Agreed Facts or a Defence and Response. Ms Sear’s affidavit outlines numerous efforts on the part of the applicant to enable compliance with the Court’s orders. The respondents failed to do anything that would allow compliance with those orders: the Rules, r.13.03A(2)(b)(iii);
d)only two documents have been filed in this Court on behalf of the respondents: a notice of address appointing a lawyer and evidence of that lawyer’s subsequent withdrawal. The respondents have otherwise not engaged in the proceedings and have hindered the applicant’s attempts to progress the matter. This demonstrates a failure to defend the proceedings with “due diligence”: the Rules, r.13.03A(2)(b)(vii); and
e)the respondents failed to appear, or cause an appearance to be entered on their behalf, on 25 August 2020 at the interlocutory hearing in circumstances where default judgment was being considered. This, again, demonstrates a failure to defend the proceedings with “due diligence”: the Rules, r.13.03A(2)(b)(vii).
On the basis of the above, the Court is satisfied that a “default” has occurred.
Are the Respondents on notice of the Default Judgment Application?
In Walker v Government of the Republic of Vanuatu [2015] FCA 490, it was explained that if the Court enters default judgment where the individual against whom it would be made was not put on notice of the application, this does not constitute the proper exercise of the discretion (at [55]).
Here:
a)in correspondence dated 20 January 2020 addressed to the respondents it was made clear that a failure to file a response or a defence might result in the Court giving judgment and making orders against the respondents: Ms Sears’ Affidavit, Annexure MGS – 1;
b)the Court’s orders dated 25 June 2020 expressly stated that an application for default judgment could be made if the respondents did not comply with orders 1 or 2. Those orders were sent by Chambers to the respondents last known email address that same day – notwithstanding that no address for service had been filed;
c)on 3 July 2020, the applicant emailed the second respondent attaching the Court’s orders dated 25 July 2020: Ms Sears’ Affidavit, Annexure MGS – 7; and
d)on 10 July 2020, the applicant emailed the second respondent advising that it had the right to file an application for default judgment if the respondents failed to file a response and defence by 17 July 2020: Ms Sears’ Affidavit, Annexure MGS – 7; and
e)all parties were advised by email from Chambers on 12 August 2020 that an interlocutory hearing was listed for 25 August 2020 at 10.00am: Exhibit 1.
In this matter, the Court is satisfied that the respondents were aware of the applicant’s intention to seek default judgment if there was non-compliance with the orders dated 25 June 2020. Ultimately, they were also aware that the application for default judgment had been filed and were advised of the date and time of the hearing of the interlocutory application: Exhibit 2.
Should the Court exercise the discretion?
In BJ International Limited v Ashgar (No 2) [2013] FCA 580 it was explained, with reference to r.5.23(2)(d) of the Federal Court Rules 2011 (Cth) (which, relevantly, is in the same terms as r.13.03B(2)(d) of the Rules), that:
[13] Where a party is in default – be it an applicant or a respondent – the opposing party need not make an application for an order pursuant to r 5.23(1) or (2). And if an application is made, the Court retains a discretion as to whether or not to make any order or an order of a particular kind. Whether that discretion should be exercised would depend upon (inter alia) the nature of the default itself, any explanation provided for the default, the manner in which the party in default has conducted the proceeding to-date and whether the Court could have any confidence that a proceeding would henceforth be conducted in an orderly and proper manner.
[14] Without being exhaustive, an order may be made entering judgment against a respondent pursuant to r 5.23(2)(d) in those circumstances where the default which has occurred is such as to manifest an intention on the part of a respondent not to comply with orders which have been made with a view to preparing a case for hearing. A single act of default may be sufficient; in other circumstances a single act of default may not warrant an order being made. Much may also depend upon whether a respondent has been given adequate notice of an intention to make an application for judgment to be given and an opportunity for the respondent to remedy a past act of default.
It is noted that in Bell v Steele (No 2) [2012] FCA 62, default judgment was granted in circumstances where the respondent was aware of the proceedings and had chosen not to file a Defence.
Here, the respondents were aware of the proceedings, they were advised by the applicant on 10 July 2020 that they were required to file a Response and Defence and they have not done so.
Furthermore, in this matter:
a)the nature of the defaults is continuing. The respondents have not complied with any orders of the Court thus far. They have not filed any documents in these proceedings;
b)the respondents have offered no explanation for these defaults. While the Court understands that they lack legal representation, Ms Sears’ evidence clearly shows that the applicant has made every endeavour to ensure that the respondents can participate in these proceedings;
c)it is not clear what the respondents’ intention is by failing to comply with the orders and file the appropriate documents. The evidence indicates that they agreed to filing the Statement of Facts but they have not taken any steps to execute this (despite numerous prompts to do so). Whether this be evidence of avoidance or indolence, the non-compliance to date has hampered the preparation of this matter for hearing – be that on liability or penalty; and
d)the respondents have been given three opportunities to file the necessary documents in order to progress these proceedings and have failed to take any steps to do so.
All of these matters weigh heavily in favour of the Court entering default judgment against the respondents.
The Court also observes that the evidence indicates that the second respondent does not disagree with, or oppose, the orders that are sought in this default judgment application. Annexure MGS-6 of Ms Sears’ Affidavit contains a file note of a conversation with the second respondent as follows:
Received call from Giancarlo Daniele on [omitted].
Informed him it was Maddison from FWO calling in relation to the Soma Kitchen matter.
Identified himself as Giancarlo.
Said that I had sent him a number of emails in relation to the matter. It was listed in court this coming Thursday. I asked him whether he knew how he was going to proceed.
He said that he wanted to “agree to liability”. He also stated that he just wanted to “get this over with”.
I asked whether he still intended to enter a Statement of Agreed Facts with the FWO?
He said yes.
I said that we had previously sent him copies of this document via email which he would need to review and sign. I asked him if it would assist if I sent him another copy of the Statement of Agreed Facts for him to look at?
He said yes, send them through again and he will look at it.
I said I will send through another copy of the Statement of Agreed Facts to his email.
He said he will go look at it and sign it.
In light of the above, the Court is satisfied that it is appropriate for default judgment to be entered for the applicant against the respondents. Order 1-2 of the orders sought in the applicant’s application in a case dated 21 July 2020 will be allowed.
Other matters
In effect, orders 3-6 of the application in a case dated 21 July 2020 seek an order that the respondents comply with the compliance notice that was issued under s.716 of the Act.
These orders are appropriate given the conduct to date.
The penalty hearing in this matter is listed for hearing on 14 September 2020. It is noted that the respondents have not complied with orders for the filing of any evidence or submissions. The Court will grant the respondents a further extension to provide any documents upon which they intend to rely.
The Court will make further orders that:
a)allow the respondents to file and serve any affidavit evidence and an outline of submissions on penalty by 1 September 2020;
b)allow the applicant to file and serve any affidavit evidence and/or submissions in reply by 8 September 2020; and
c)require each party to notify the other parties of any witnesses required for cross-examination, and any proposed objections to evidence on or before 10 September 2020.
The matter will remain listed for a hearing on penalty on 14 September 2020.
Conclusion
The application in a case dated 21 July 2020 is allowed. The Court is satisfied that it is appropriate for judgment to be entered for the applicant against the respondents.
I certify that the preceding forty-five (45) paragraphs are a true copy of the reasons for judgment of Judge Kendall
Associate:
Date: 26 August 2020
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