Fair Work Ombudsman v South Jin Pty Ltd
[2013] FCCA 1057
•15 August 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v SOUTH JIN PTY LTD & ORS | [2013] FCCA 1057 |
| Catchwords: INDUSTRIAL LAW – Alleged contraventions of civil penalty provisions of the Fair Work Act and Workplace Relations Act – trolley collectors at various supermarket sites underpaid and their statutory and award entitlements not met – first respondent admits contraventions – other respondents bring applications to summarily dismiss claim – legal requirements for summary dismissal – respondents said to be liable as being knowingly concerned or party to the contraventions – what constitutes being knowingly concerned with contraventions. |
| Legislation: Evidence Act 1995 (Cth) |
| Dey v Victorian Railways Commissioners (1949) 78 CLR 62 General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HAS 69 Howard v Australian Fisheries Management Authority [2006] FMCA 975 Spencer v The Commonwealth [2010] 241 CLR 118 Three Rivers District Council v Bank of England (No.3) [2003] 2AC1 Jefferson Ford Pty Ltd v Ford Motor Company of Australia Limited & Ors (2008) 167 FCR 732 Boston Commercial Services Pty Ltd & GE Finance Australasia Pty Ltd [2006] FCA 1352 Yorke & Anor v Lucas (1983-1984) 158 CLR 661 Giorgianni v The Queen (1985) 156 CLR 473 R v Tennous (1987) 10 NSWLR 303 Rural Press Ltd v ACCC (2003) 216 CLR 53 Rafferty v Madgwicks (2012) 287 ALR 437 Fair Work Ombudsman v Al Hilfi [2012] FCA 1166 ABCC v Abbott (No.4) (2011) 211 IR 267 Dowling v Kirk [2007] FMCA 2106 ACCI v IMB Group Pty Ltd [2003] FCAFC 17 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | SOUTH JIN PTY LTD (ACN 133 198 099) |
| Second Respondent: | KI BOK JIN |
| Third Respondent: | COASTAL TROLLEY SERVICES PTY LTD (ACN 100 786 909) |
| Fourth Respondent: | EDWARD STROOP |
| File Number: | ADG 159 of 2011 |
| Judgment of: | Judge Lindsay |
| Hearing date: | 17 December 2012 |
| Date of Last Submission: | 18 December 2012 |
| Delivered at: | Adelaide |
| Delivered on: | 15 August 2013 |
REPRESENTATION
| Counsel for the Applicant: | Ms Richards of Counsel |
| Solicitors for the Applicant: | Office of the Fair Work Ombudsman |
| Counsel for the First Respondent: | No Appearance |
| Counsel for the Second Respondent: | Mr Manuel of Counsel |
| Solicitor for the Second Respondent: | WBH Legal Solicitors |
| Counsel for the Third and Fourth Respondents: | Mr Lazarevich of Counsel |
| Solicitor for the Third and Fourth Respondents: | Camatta Lempens Pty Ltd Lawyers |
ORDERS
The applications of the second, third and fourth respondents for summary dismissal of the applicant’s claim is refused.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ADELAIDE |
ADG 159 of 2011
| FAIR WORK OMBUDSMAN |
Applicant
And
| SOUTH JIN PTY LTD (ACN 133 198 099) |
First Respondent
| KI BOK JIN |
Second Respondent
| COASTAL TROLLEY SERVICES PTY LTD (ACN 100 786 909) |
Third respondent
| EDWARD STROOP |
Fourth Respondent
REASONS FOR JUDGMENT
These proceedings involve an application by the Fair Work Ombudsman (herein after “the applicant”) in which orders are sought by way of declaration that the respondents have contravened certain clauses of the Federal Minimum Wages Provisions of the Workplace Relations Act 1996 and the Cleaning Services Award 2010 and by so doing have contravened s.45 of the Fair Work Act 2009. That section is a civil remedy provision. Pecuniary penalty orders pursuant to s.546 of the Fair Work Act 2009 are sought as well as orders compensating a range of employees in respect of underpayments pursuant to s.545 of the Fair Work Act 2009 and s.719 of the Workplace Relations Act 1996.
The application is now contained in a Third Amended Statement of Claim (herein after TASOC).
The Court entered default judgment against the first respondent on the 9 July 2012.
On 5 July 2012 the second respondent file an application for summary dismissal of the application. On 9 July 2012 the third and fourth respondents filed an application for summary dismissal of the application.
I heard argument in relation to the applications for summary judgment on 18 December 2012.
The second respondent is a director of the first respondent. The fourth respondent is a director of the third respondent.
Orders are sought against the second, third and fourth respondents in reliance upon s.550 of the Fair Work Act 2009. That section provides:
(1)A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.
(2)A person is involved in a contravention of a civil remedy provision if, and only if, the person:
(a) has aided, abetted, counselled or procured the contravention; or
(b) has induced the contravention, whether by threats or promises or otherwise; or
(c) has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d) has conspired with others to effect the contravention.
During the course of argument issues arose as to whether the application of the second respondent also involved an application that the Statement of Claim should be struck out as distinct from summarily dismissed. I will deal with that aspect of the matter hereafter. A suggestion was also raised in the argument that the claim of the third and fourth respondents involved a submission of no case to answer and I will also deal with that hereafter. I will deal firstly, however, with the applications for summary dismissal sensu stricto.
The applications were determined in the context of the applicant having filed and served all affidavits constitutive of the evidence-in‑chief of their witnesses. I made an order requiring this on 24 April 2012 (para 4 of those orders).
The first respondent was the employer of all of the employees who are said to have been underpaid their wages or not paid their leave or other entitlements at all.
Various supermarkets throughout Australia including Coles and Woolworths engaged the services of various companies to collect trolleys. One of those companies is Integrated Trolley Management (“ITM”). In South Australia ITM subcontracts its services to the third respondent. In turn the third respondent subcontracted services at various supermarkets at Kurralta Park, Fairview Park, Elizabeth, Marion and West Lakes (hereinafter referred to as “the supermarket sites”) to the first respondent. The first respondent employed staff to carry out the trolley collection services at the supermarket sites.
Section 17A of the Federal Circuit Court of Australia Act 1999 provides
17A Summary judgment
(1) The Federal Circuit Court of Australia may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a) the first party is prosecuting the proceeding or that part of the proceeding; and
(b) the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding.
(2) The Federal Circuit Court of Australia may give judgment
for one party against another in relation to the whole or any part of a proceeding if:
(a) the first party is defending the proceeding or that part of the proceeding; and
(b) the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.
(3) For the purposes of this section, a defence or a proceeding or
part of a proceeding need not be:
(a) hopeless; or
(b) bound to fail;
for it to have no reasonable prospect of success.
(4) This section does not limit any powers that the Federal Circuit Court of Australia has apart from this section.
This section is in identical terms to s.31A of the Federal Court of Australia Act 1976, save for the fact that the Act creating this Court has no subsection (5) – a reference to criminal proceedings.
It will be noted that subsection (4) provides that the powers given by the section do not limit any powers that the Court otherwise has. This is why the older High Court authorities, dealing with the inherent jurisdiction of the Court, are still relevant. I will return to this in a moment by reference to older High Court authority.
The powers given by s.17(A) are reflected in the Rules of Court. Specifically, Rule 13.10 of the Rules of Court provide in relation to disposal by summary dismissal as follows:
The Court may order that a proceeding be stayed, or dismissed generally or in relation to any claim for relief in the proceeding, if the Court is satisfied that:
(a)the party prosecuting the proceeding or claim for relief has no reasonable prospect of successfully prosecuting the proceeding or claim; or
(b)the proceeding or claim for relief is frivolous or vexatious; or
(c)the proceeding or claim for relief is an abuse of the process of the Court.
In Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91 Dixon J (as he then was) said in relation to summary dismissal generally as follows at:
The application is really made to the inherent jurisdiction of the court to stop the abuse of its process when it is employed for groundless claims. The principles upon which that jurisdiction is exercisable are well settled. A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury. The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or is vexatious. But once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process.
Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HAS 69 at [8]–[10] had this to say in relation to the exercise of a power to summarily dismiss:
8. The plaintiff rightly points out that the jurisdiction summarily to terminate an action is to be sparingly employed and is not to be used except in a clear case where the Court is satisfied that it has the requisite material and the necessary assistance from the parties to reach a definite and certain conclusion. I have examined the case law on the subject, to some of which I was referred in argument and to which I append a list of references. There is no need for me to discuss in any detail the various decisions, some of which were given in cases in which the inherent jurisdiction of a court was invoked and others in cases in which counterpart rules to Order 26, r. 18, were the suggested source of authority to deal summarily with the claim in question. It is sufficient for me to say that these cases uniformly adhere to the view that the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action - if that be the ground on which the court is invited, as in this case, to exercise its powers of summary dismissal - is clearly demonstrated. The test to be applied has been variously expressed; "so obviously untenable that it cannot possibly succeed"; "manifestly groundless"; "so manifestly faulty that it does not admit of argument"; "discloses a case which the Court is satisfied cannot succeed"; "under no possibility can there be a good cause of action"; "be manifest that to allow them" (the pleadings) "to stand would involve useless expense". (at p129)
9. At times the test has been put as high as saying that the case must be so plain and obvious that the court can say at once that the statement of claim, even if proved, cannot succeed; or "so manifest on the view of the pleadings, merely reading through them, that it is a case that does not admit of reasonable argument"; "so to speak apparent at a glance". (at p129)
10. As I have said, some of these expressions occur in cases in which the inherent jurisdiction was invoked and others in cases founded on statutory rules of court but although the material available to the court in either type of case may be different the need for exceptional caution in exercising the power whether it be inherent or under statutory rules is the same. Dixon J. (as he then was) sums up a number of authorities in Dey v. Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62 VOL CXII-9 where he says (1949) 78 CLR, at p 91 : "A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury. The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or is vexatious. But once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process." Although I can agree with Latham C.J. in the same case when he said that the defendant should be saved from the vexation of the continuance of useless and futile proceedings (1949) 78 CLR, at p 84, in my opinion great care must be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal. On the other hand, I do not think that the exercise of the jurisdiction should be reserved for those cases where argument is unnecessary to evoke the futility of the plaintiff's claim. Argument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed. (at p130)
The case before the High Court was one involving the exercise of the inherent jurisdiction of the Court (see [11]. So was Dey.
I specifically relied upon that decision in dealing with an application for summary dismissal under the Rules of Court in Howard v Australian Fisheries Management Authority [2006] FMCA 975.
That was a decision made not long after the Migration Litigation Reform Act 2005 introduced the changes to the summary dismissal powers of the Court that are now reflected by s.17A of the Federal Circuit Court of Australia Act 1999. It was a case where the information available to me at the time of the determination of the claim for summary dismissal was insufficient for me to come to a conclusion as to whether or not the proceedings should be summarily determined. I said this at [38] and [39]
Having given anxious consideration to these submissions and having attempted to acquire an understanding of circumstances within the SSF and the industry and Mr Howard’s own circumstances on the basis of the decisions referred to above, I am unable to come to a conclusion as to whether or not the proceedings have any utility. I simply do not have a sufficient understanding of the factual issues involved to comprehend adequately the submission as to futility. It will be borne in mind that such knowledge as the Court has of these circumstances, has been gleaned by its consideration of determinations of other Courts and Tribunals and especially of the decision of the Administrative Appeals Tribunal in the instance case. Fearnley’s case (supra) is of little assistance, turning as it does on the loss of standing consequent upon a disposal of the licence.
It is self evident that the Court should not act so as to summarily terminate an action if it is in such a state of uncertainty. Insufficient factual material was put to me to enable me to comprehend the complex issues associated with the management of the fishery and Mr Howard’s utilisation of permits to fish within it over the last 10 years. I am very far from being able to reach the “definite and certain conclusion referred to by Barwick CJ in General Steel Industries (above). I do not have the “requisite material and the necessary assistance from the parties” to do so. I have not been presented with any factual basis on which I can predict the impact or lack of it on Mr Howard’s circumstances of a refusal to reconsider the decision of 1 June 2005. To enable me to evaluate whether such a decision would have any material impact upon Mr Howard’s circumstances I would either have to have an agreed set of facts put before me (which was not the case), or evidence presented to me from which such an inference could be safely drawn. I was not provided with evidence of any description, but instead invited by counsel to proceed upon the basis of such information as may be gleaned about the fishery and Mr Howard’s circumstances from the decisions referred to above. That has proved to be most unsatisfactory.
The summary dismissal power of the Federal Court has received recent consideration by the High Court of Australia in Spencer v The Commonwealth [2010] 241 CLR 118. Three separate judgments were delivered by the Court.
French CJ and Gummow J traced the criterion for summary dismissal under s.31A introduced by the Migration Litigation Reform Act 2005 to the British Reforms of the Civil Procedure Rules following the Woolf Report in England Wales. They said at [22]:
The section authorises summary disposition of proceedings on a variety of bases under its general rubric. It will apply to the case in which the pleadings disclose no reasonable cause of action and their deficiency is incurable. It will include the case in which there is unanswerable or unanswered evidence of a fact fatal to the pleaded case and any case which might be propounded by permissible amendment. It will include a class of case in the long standing category of cases which are “frivolous or vexatious or an abuse of process”. The application of s.31A is not, in terms, limited to those categories.
They said further at [25]-[26]:
Section 31A(2) requires a practical judgment by the Federal Court as to whether the applicant has more than a “fanciful” prospect of success. That may be a judgment of law or of fact, or of mixed law and fact. Where there are factual issues capable of being disputed and in dispute, summary dismissal should not be awarded to the respondent simply because the Court has formed the view that the applicant is unlikely to succeed on the factual issue. Where the success of a proceeding depends upon propositions of law apparently precluded by existing authority, that may not always be the end of the matter. Existing authority may be overruled, qualified or further explained. Summary processes must not be used to stultify the development of the law. But where the success of proceedings is critically dependent upon a proposition of law which would contradict a binding decision of this Court, the court hearing the application under s 31A could justifiably conclude that the proceedings had no reasonable prospect of success.
Where an application under s 31A requires consideration of apparently complex questions of fact, then the caution uttered by Lord Hope is relevant (58). The importance of those considerations is amplified if the case involves resolution of issues of law and fact, or mixed law and fact.
The reference to Lord Hope in [26] is a reference to the decision of Lord Hope of Craighead in Three Rivers District Council v Bank of England (No.3) [2003] 2AC1 at 260;
… it may be clear as a matter of law at the outset that even if a party were to succeed in proving all the facts that he offers to prove he will not be entitled to the remedy he seeks. In that event a trial of the facts would be a waste of time and money, and it is proper that the action should be taken out of Court as soon as possible. In other cases it may be possible to say with confidence before trial that the factual basis for the claim is fanciful because it is entirely without substance. It may be clear without question that a statement of facts is contradicted by all the documents or other material on which it is based. The simpler the case the easier it is likely to be to take that view and resort to what is properly called summary judgment. But more complex cases are unlikely to be capable of being resolved in that way without conducting a mini-trial on the documents without discovery and without oral evidence …
The judgment of Hayne, Krennan, Kiefel and Bell JJ included a discussion of Dey and General Steel Industries. Their Honours said at [52] and [53]:
… it is important to begin by recognising that the combined effect of sub-ss (2) and (3) is that the enquiry required in this case is whether there is a “reasonable” prospect of prosecuting the proceeding, not an enquiry directed to whether a certain and concluded determination could be made that the proceeding would necessarily fail.
In this respect, s31A departs radically from the basis upon which earlier forms of provision permitting the entry of summary judgment have been understood and administered. Those earlier provisions were understood as requiring formation of a certain and concluded determination that a proceeding would necessarily fail. That this was the basis of earlier decisions may be illustrated by reference to two decision of this Court often cited in connection with questions of summary judgment (their Honours then refer to Dey and General Steel Industries).
Their Honours also say at [56]:
Because s 31A(3) provides that certainty of failure (“hopeless” or “bound to fail”) need not be demonstrated in order to show that a plaintiff has no reasonable prospect of prosecuting an action, it is evident that s 31A is to be understood as requiring a different inquiry from that which had to be made under earlier procedural regimes. It follows, of course, that it is dangerous to seek to elucidate the meaning of the statutory expression “no reasonable prospect of successfully prosecuting the proceeding” by reference to what is said in those earlier cases.
Finally, Heydon J in a separate judgment found it unnecessary to deal with matters relating to the construction of s.31A.
There is a particularly helpful discussion of the principles associated with the summary procedure involved in s.31A of the Federal Court Rules by Gordon J in the Full Court decision of Jefferson Ford Pty Ltd v Ford Motor Company of Australia Limited & Ors (2008) 167 FCR 732 (His Honour was part of the majority). He describes the following principles at [124]-[134].
a)The words of the Rule, following the Migration Litigation Reform Bill, impose a less stringent test than that described in cases such as General Steel Industries (it is also a less stringent test than that which existed under the former manifestation of the Rule and of the analogous rule of this Court). The rationale for the Rule is to assist the Court in the management of proceedings and the avoidance of unnecessary cost and delay;
b)The assessment of whether a proceeding has no reasonable prospect of success will necessarily require:
(i) identification of the cause of action
(ii) identification of the fact said to give rise to the action ,
(iii) a review of the evidence filed and supported the claim;
(iv)identification of the defence,
(v) identification of the facts said to give rise to the defence,
(vi)a review of the evidence filed in support of the defence.
The method by which the claim will be assessed will vary according to the identification and review of these matters
c)The moving party carries the onus of establishing that the other has no reasonable prospect of success; once the moving party has established a prima facie case that the other party has no reasonable prospect of success that latter party is obliged to point to specific factual or evidentiary disputes that render a trial necessary – general denials are insufficient. A claim for summary determination cannot be met by merely putting the claimant to proof.
d)Whilst the Rule uses the word “may” that word is used in an empowering and not a discretionary sense. If the Court finds there is no reasonable prospect of success the claim must be brought to an end – the Court does not have a discretion to allow a hopeless case to proceed.
e)If there is real issue of fact relevant to the action it is unlikely that the proceeding has no prospect of success. In other words, if a factual dispute must be resolved to determine whether or not the claim succeeds then the applicant will not establish that the claim has no reasonable prospect of success. On the other hand, the fact that there is live issue of law does not itself preclude summary judgment being entered. If there is no relevant factual dispute a point of law can be resolved without an evidentiary hearing.
f)In determining whether a real issue of fact exists which will preclude summary judgment the Court must draw all reasonable inferences in favour of the party against whom summary judgment is sought. A plausible inference, as distinct from a reasonable inference, is insufficient.
Rares J in Boston Commercial Services Pty Ltd & GE Finance Australasia Pty Ltd [2006] FCA 1352 rejected an argument that s.31A required the Court to dismiss a claim or defence based on a predictive assessment of its prospects even though it may be possible that had the matter gone to trial it would have succeeded. His Honour said at [47]:
I am of the opinion that this is not how the section operates. It is engaged only to determine summarily a claim or defence which has no reasonable prospect of success. The purpose of the enactment is to enable the Court to deal with matters which should not be litigated because there is no reasonable prospect of any outcome but one. If there is a reasonable danger that a claim or defence could be dismissed under s.31A, which could succeed at trial, the provision could create miscarriages of justice. It is a key feature of the judicial power under Ch III of the Constitution that the Court be in a position to, and in fact does, quell a controversy. The exercise of the judicial power to prevent the substantiative agitation of a controversy in which each side has a reasonable prospect of success would defeat, not advance, the ends of justice.
His Honour then, at [48], makes this observation which I have found to be particularly apposite in the circumstances in which the current application was brought before the Court:
It could not have been the intention of the Parliament in introducing s.31A to the Federal Court Act to require the Court to engage in lengthy and elaborate trials on an interlocutory basis for the purpose of determining whether or not a proceeding had no reasonable prospect of success. Obviously, there will be cases in which, because of their nature it is necessary to undergo detailed analysis. However, the assessment of whether there is a reasonable prospect of successfully prosecuting the proceeding must depend upon the evidence and pleading the subject of the application.
That is my understanding of the statutory and jurisprudential criteria by which this application must be adjudicated.
The summary dismissal was promoted by the second respondent in a number of ways different from that in which it was promoted by the third and fourth respondents but at the heart of all of those respondents’ claims was their contention that the applicant’s case against them for accessorial liability had not been made out.
It is the case of the applicant that the second, third and fourth respondents were knowingly concerned in the contraventions of the first respondent in terms of s.550 of the Fair Work Act 2009 (and s.728 of the Work Place Relations Act, which was in identical terms).
Section 550 of the Fair Work Act 2009 provides :
(1) A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.
(2) A person is involved in a contravention of a civil remedy provision if, and only if, the person:
(a) has aided, abetted, counselled or procured the contravention; or
(b) has induced the contravention, whether by threats or promises or otherwise; or
(c) has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d) has conspired with others to effect the contravention.
The case against the second, third and fourth respondents is specifically based upon s.550 (2)(c).
I will begin by dealing with the application of the second respondent for summary dismissal.
It will be recalled that the second respondent, Mr Ki Bok Jin, was the sole director and sole share holder of the first respondent. He was also the sole manager of the first respondent’s operations.
The nature of the case against the second respondent is set out at para 109 of the TASOC. It relies essentially upon his knowledge of all of the aspects of the trolley collection enterprise conducted by the first respondent; his knowledge of the first respondent’s obligations to pay minimum rates of pay and pay other entitlements; his knowledge of the fact that those entitlements were not paid by the first respondent; his failure to make enquires about minimum entitlements of employees and whether they were paid; and his failure to make any enquiries about the first respondent’s record‑keeping obligations.
Paragraph 51 of the Third Amended Statement of Claim says that the second respondent:
Jin on behalf of South Jin:
(a) recruited and managed the Employees;
(b) engaged the Employees on a casual basis;
(c)set and adjusted rosters for the Employees to meet the Roster Hours required by CTS for each site;
(d) set and adjusted pay rates for the Employees;
(e) administered the payment of wages to the Employees;
(f)managed the record keeping of South Jin, including keeping records of hours worked by and wages paid to the Employees; and
(g) from time to time provided pay slips to the Employees.
The second respondent contends that the claim for accessorial liability cannot be made out. I will deal with the legal principles associated with accessorial liability under the Fair Work Act 2009 shortly hereafter. The third and fourth respondents base their summary dismissal applications on this ground.
But the second respondent has a miscellany of other grounds on which it is maintained that summary judgment should be entered against the applicant.
The first is that the proceedings are an abuse of process.
It is said that the claim is set forth in a prolix fashion. Certainly the TASOC is 117 paragraphs and 32 pages in length (not including the annexures which were attached to earlier versions of the Statement of Claim and the use of which is also said by the second respondent to be an abuse of process).
It must be recalled that the contraventions relates to 49 separate employees, employed over 5 sites, and relate to a variety of work-place obligations. The particulars of the contravention are necessarily detailed.
The commercial arrangements between the various entities (including ITM, which is not a respondent) are of some (limited) complexity. It is necessary for the claim to explicate what those arrangements were.
The proceedings cover a period of time when the FWA superseded the WRA. Those legislative changes needed to be identified in the claim.
All of these matters suggest that the claim needed to be set out at some length. The TASOC is a lengthy document. Whether it is prolix is another matter. “Prolix” means, according to the Merriam Webster online dictionary, “unduly prolonged or drawn out; too long; marked by or using an excess of words”.
Given its subject matter I do not think that such is a fair description of the TASOC.
Neither do I apprehend any irregularity, let alone an irregularity amounting to an abuse of process, arising from the incorporation by reference in the TASOC to annexure or annexures included in an earlier version of the claim. It would be a needless expense and inconvenience for the applicant to refile them. Filing them afresh would provide no tangible benefit for any respondent.
The fact that the proceedings are before the Federal Circuit Court, where the procedures are intended to be as informal as possible consistent with the exercise of judicial power (see section 3 of the Federal Circuit Court Act 1999) and Rule 1.03(1) and (2) of the Rules of Court) is no justification for the authorising of or encouragement of a claim to be prepared in an unnecessarily truncated or abbreviated form. The pleaded claim is as simplified as the nature of the application itself permits.
The TASOC refers to 3 annexures, all of which are attached to the original statement of claim filed on the 22 June 2011. Annexure A is a list of the 49 employees to whom the proceedings relate. There is a summary of the underpayments of those employees at annexure B. Annexure C – which is the focus of the complaint by the second respondent in this regard – sets out what each employee ought to have been paid and what they were paid. It is a massive document no doubt, with an intimidating amount of detail.
It is not a document that one customarily associates with a pleading. It is a series of material facts, and not simply a body of particulars. The application alleges breaches of an Act (s) and an award(s). The detail of this annexure describes how it is said that those breaches arise. It was appropriate to include the annexure in the Statement of Claim.
The format of the document reflects the level of particularity. The font size is not material. There are miscellaneous explications of some of the particulars as well but their effect is to clarify rather than to obscure the nature of the claim.
The document does not constitute an abuse of the process of the Court.
I turn to the application as it relates to accessorial liability.
Yorke & Anor v Lucas (1983-1984) 158 CLR 661 was a High Court case dealing with accessorial liability under the TPA. S.75B of the TPA was in the same terms as s.550 of the FWA, save for the absence of the words “act or omission” which appear in subsec 2a of the FWA.
The plurality, in reliance upon an earlier High Court decision of Giorgianni v The Queen (1985) 156 CLR 473, held that even though the section was an adjunct to the imposition of civil liability, the origins of accessorial liability lay in the criminal law where such notions had a settled meaning and that there was no basis for assuming that the TPA intended to introduce a new or special meaning (though this analysis, at 668-669, is in a strict sense confined to a discussion of sub-para (a) – “aiding, abetting, counselling or procuring”.
In relation to sub-para ( c) the plurality said that the word “knowingly” pertained to the expression “concerned in” and not “party to”; the latter expression could only be used, in any event, in the:
context of knowledge of the essential facts constituting the particular contravention in question (670.)
But the observation of the plurality which has been fastened upon in subsequent decisions is that which appears earlier in 670:
There can be no question that a person cannot be knowingly concerned in a contravention unless he has knowledge of the essential facts constituting the contravention.
Brennan J agreed with the plurality about the matter referred to at [58] herein. He said:
As s.75B transports the criteria of the criminal law into the definition of the parties who are civilly liable for contraventions of Pts IV and V, the criminal law definition of parties to an offence furnishes the definition of those who are civilly liable as a party to a contravention under s75B(c ). The requirement of knowledge para.(a) is no less stringent under the para.(c ).
If I proceed upon the basis of the recognition of the importation of the criminal definition of accessorial liability to cases involving civil liability, as I think I should, R v Tannous, ((1987) 10 NSWLR 303) a case involving whether a person was “knowingly concerned” with drug importation, being a judgment of the Court of Criminal Appeal of New South Wales, is helpful in recognising that to be “knowingly concerned” is to be more than simply mentally associated with an act or a course of conduct; there must be some objectively demonstrable association between the accessory and the criminal act:
I agree with counsel for the appellant when he submits that a mere state of mind which merely amounted to the appellant being interested in or concerned “about” the venture, for whatever reason, would not be sufficient to constitute the concern of which the section speaks. The “concern” to which the section speaks is not a concern personal to the appellant in the sense of being in his mind, but it is a concern which can be demonstrated objectively by reference to his association, whatever it may be, with the importation. It must show that he is “concerned in” not just “concerned about the importing”. A father learning that his son had made arrangements to import narcotic drugs into this country might well be anxious about, interested I or concerned about that fact and he might evince that anxiety, interest or concern to others. But he would not be guilty of the offence of being knowingly concerned merely from his knowledge of the importation and his state of mind arising therefrom. Before he could be convicted under the section he would have to do something to connect himself with or involve himself in the importation.
The High Court decision of Rural Press Ltd v ACCC (2003) 216 CLR 53 was a case involving alleged contraventions of the TPA by corporate defendants on account of the inclusion of an “exclusionary provision” as defined by s.4D(1) of that Act in commercial arrangements between them. The directors of the relevant corporations were charged with those contraventions as accessories in that they were “knowingly concerned in” (vide s.75B(1) of the TPA) the contraventions. S.45(2)(a)(II) made it clear that the provision was aimed at arrangements which had the purpose or effect or would be likely to have the effect of substantially lessening competition. The High Court approved of the trial judge holding that it was necessary to find that the accessories participated in the contraventions with actual knowledge of the “essential elements constituting the contraventions”, but expressly rejected an argument that the accessories needed to know that the conduct of the corporation would have the likely effect of “lessening competition in the market defined”. At [48] Gummow, Hayne and Heydon JJ, with whom Gleeson CJ and Callinan J agreed, said:
It is wholly unrealistic to seek to characterise knowledge of circumstances in that way. Only a handful of lawyers think or speak in that fashion, and then only at a late stage of analysis of any particular problem. In order to know the essential facts, and thus satisfy s.75B(1) of the Act and like provisions, it is not necessary to know that those facts are capable of characterisation in the language of the statute.
That point was also made by the Full Court of the Federal Court in Rafferty v Madgwicks (2012) 287 ALR 437 at [254]. After referring to the passage from Rural Press set out in the preceding paragraph hearing the Court said:
This is another aspect of the long standing principle that it is not necessary for a person to “recognise” the contravention as such, or explicitly to think about the relevant legislation that their actions may contravene …
In Fair Work Ombudsman v Al Hilfi [2012] FCA 1166 Besanko J was dealing with a summary dismissal and strike out application by Coles Supermarkets in respect of allegations that it was liable pursuant to s. 550 of the FWA for breaches of a modern award relating to trolley collectors. It had no contractual relations with the trolley collectors; it had a contractual relationship with a company who contracted another company who hired the trolley collectors. The application for summary dismissal as it related to that part of that case which was reliant upon s.550(2)(c ) failed. No positive acts were alleged to have been carried out by Coles in relation to that aspect of the case against them. But His Honour was not troubled by that. He said at [48]-[49]:
The Ombudsman submits that under paragraph 550(2)(c) the necessary intent can be established by knowledge and he referred to the observations of Gilmour J in Australian Building and Construction Commissioner v Abbott (No 4) at 300 [184]. Those observations suggest, he submits, that the necessary intention may be established by knowledge of the constituent elements of the contraventions. The Ombudsman refers to the fact that liability under paragraph 550(2)(c) may arise by omission and he refers to the plea of control by Coles in paragraph 54 of the FASOC.
I am not satisfied at this stage that the Ombudsman has no reasonable prospect of succeeding on this aspect of his case. The Ombudsman pleads an element of control by Coles (paragraph 54), certain knowledge by Coles (paragraphs 55, 56 and 57) and non action by Coles (paragraph 58). The evidence with respect to those matters may inform the conclusions to be reached and I do not think it can be said at this stage that the Ombudsman has no reasonable prospect of success with respect to this aspect of his case.
The summary dismissal application as it related to those parts of the claim reliant on s.550 (2)(a) and (b), however, was successful, relating as it did to a case where, again, no positive acts by Coles were alleged. His Honour said at [55]:
I reject the Ombudsman’s contention. I do not think that, in the absence of a plea of a positive act by Coles, the Ombudsman’s case in relation to paragraphs 550(2)(a) and (b) discloses a reasonable cause of action and I think the pleading of those paragraphs should be struck out. The fact that the case will proceed in relation to paragraph 550(2)(c) is insufficient reason to allow it to proceed in relation to claims which I think are untenable.
In ABCC v Abbott (No.4) (2011) 211 IR 267 Gilmour J was dealing with the accessorial liability of certain employees and union members under the Building and Construction Industry Improvement Act 2005 (Cth). S.48 of that Act was in identical terms to s.550 of the FWA. His Honour says this at 193:
An accessory must not only have actual knowledge of the misleading conduct but in addition should, in some positive way be associated with the primary contravention through the commission of positive acts. The mere fact of awareness of impending misconduct does not, of itself, raise a case of involvement in that misconduct. An exception is where a duty arises to do something positive: Sent v Jet Corp of Australia Pty Ltd at 207-208.
The claim for Mr Jin’s liability as an accessory is set out at [11], [51], [109] and [111] of the TSOC. He is said, by the applicant, to be the “hand and brain” of the company. [11] deals with what is said to be his practical day to day management of the first respondent and the employees. [109] particularises what is said to be the state of his knowledge of the first respondent’s contraventions and what is said to be his failure to enquire about employee entitlements.
The second respondent says that the claim is absent any allegation of intention to be knowingly involved in the contraventions, the assumption being that an overlying intention to be an accessory – in addition to having knowledge of and participating in the contravention – is required. I do not accept that. The conduct of the accessory must of course be intentional in the sense of deliberate and voluntary but that a specific mental element must be added to the knowledge of the conduct and the fact of association or participation must be doubted; an intention to be knowingly concerned is otiose. To be knowingly concerned is to have the intention already.
The second respondent’s contention that it is not enough for the applicant to show that he was a director and shareholder of the first respondent is correct. But more than that is alleged in relation to Mr Jin’s involvement. The interviews conducted by Fair Work Inspector Peters with the second respondent (annexed to that witnesses’ affidavit material) establishes more than that. Whether the transcript of the interviews are admissible is a matter I will deal with shortly.
Again, it can be accepted that accessorial liability can only arise if the contraventions against the principle contravener are proven. The first respondent has pleaded guilty to the contraventions but that in itself is not proof. The proof is said to be furnished by a range of material. The trial affidavit of Peters describe how the calculations which appear in Annexure C to the Claim were made. They were based upon records produced by the first respondent (except for one employee, and there is no discrete application to summarily dismiss that aspect of the Claim). The calculation themselves are not the subject of challenge for the purposes of this application.
It is said by the second respondent that he laboured under language difficulties and that both he and CTS may have misunderstood their obligations under the FWA and WRA, or that CTS may have made certain assumptions as to the level of his understanding of them. That may well turn out to be something which is substantiated by the evidence at trial. If so, it may support a submission that he was not knowingly concerned in the contraventions. But I cannot proceed upon the basis of an assumption that such will be established. Mere ignorance of the precise content of his legal obligations will not itself negate his being knowingly concerned if he knew that he was underpaying the employees or otherwise not fulfilling his award and statutory obligations; when the evidence of the second respondent is in and has been tested it may be appropriate to characterise the state of his knowledge of the extent to which he was not fulfilling his obligations, in that way. But by merely asserting that such is the case at this stage the first respondent is not entitled to summary determination of the claim.
Of course, subsection (1) of s.550 uses the expression “involved in” to describe those who are taken to have contravened a civil remedy provision; subsection(2) describes the only circumstances in which a person can be said to have been involved in such a contravention. They include the inducing of the contravention; aiding, abetting or procuring it; and conspiracy. But the applicant specifically eschews reliance on subsections (2)(a),(b) or (d).
In the light of the contentions in Ms Peter’s affidavit (if they are admissible), and taking into account his sole directorship and membership of the first respondent and his management role in it, it cannot be said, in my view, that the applicant has no reasonable prospect of success in establishing accessorial liability.
To the extent (and it may be taken, I think, to be a significant extent) that the case against the second respondent relies upon admissions in the interviews with Ms Peters of the 17th August 2010 and 4th November 2010, the second respondent says that the admissions in the interviews are inadmissible. It is said that they are hearsay; it is said that the transcript of the interviews were not read to Mr Jin; it is said that he did not sign them or adopt them.
The interpreter of each interview have listened to the audio recording and verified their interpreting by affidavit. The applicant relies upon s.81 of the Commonwealth Evidence Act 1995 which provides that the hearsay rule does not apply to admissions. S.86(2) of the Evidence Act 1995, which provides for the exclusion of the oral admissions if the person making them has not acknowledged that the document containing the admissions is a true record of his responses, applies only in relation to “criminal proceedings”. Are these criminal proceedings? The Dictionary to the Evidence Act says that a criminal proceeding means “a prosecution for an offence” and then instances committal and bail proceedings.
The proceedings under the FWA seek orders in relation to the contravention of civil remedy provisions of that Act. S.549 of the FWA provides:
The contravention of a civil remedy provision is not an offence
Section 551 of the FWA provides:
A court must apply the rules of evidence and procedure for civil matters when hearing proceedings relating to a contravention, or proposed contravention, of a civil remedy provision.
Section 729 of the WRA provides:
A Court hearing a proceeding under a civil remedy provision must apply the rules of evidence and procedure for civil matters.
I have been unable to find an equivalent section to s.549 of the FWA in the WRA.
Section 549 is conclusive that s.86 of Evidence Act 1995 has no applicability to the proceedings under the FWA; insofar as the proceedings relate to the WRA, I am not satisfied in any event that the proceedings for breach of a civil remedy provision are proceedings for the prosecution of an offence; if they were, the rules of evidence and procedure relating to civil proceedings (e.g. standard of proof) could not possibly apply.
Prima facie, the transcript containing the admissions is admissible in these proceedings.
The second respondent’s application for summary dismissal is refused.
The claim for summary dismissal by the third and fourth respondent is based exclusively on the contention that with neither of them is there a reasonable prospect of the applicant successfully prosecuting the cause of action against them, based as they are on accessorial liability pursuant to s.550(2)(c ) of the Act.
It is truly a summary dismissal application. No point is taken that the pleading per se is incapable of sustaining a successful prosecution if all of the contentions within that pleading is made out. It is not a strike out application. The application for summary dismissal is promoted on the basis of assuming that the contentions will be made out. What the respondents say is that the evidence adduced in support of the pleaded case is insufficient to sustain a reasonable prospect of success.
It is not, and was never promoted as a no case to answer submission. No question of putting the respondents to their election arises.
No discrete application is made on behalf of Mr Stroop, in the sense that both respondents rely upon the same arguments.
ITM had a long association with both CTS and Stroop. The affidavits of the two directors of ITM – that of Mr Vickery sworn 30 May 2012 and Mr Hills sworn 12 June 2012 – go into considerable detail in relation to the history of that association.
I have described the relationship between CTS and ITM earlier in these reasons as one between contractor and sub-contractor but that is not wholly the case.
For each of the Coles Supermarket sites at which ITM is engaged to provide trolley services and which are part of the subject matter of these proceedings, the contractor/subcontractor description is an accurate one. In respect of the Woolworth’s sites which form part of the subject matter of these proceedings (and that includes Big W) the directors of ITM maintain that they considered themselves as providing management services only in relation to those sites. It is not entirely clear what the difference is between their perception of the nature of the relationship and the legal reality of the relationship at those sites. With respect to Foodland at Fairview Park, they say without any qualification that they regard themselves as having provided management services to CTS.
From the point of view of the applicant and the pleaded claim, whatever the form of the arrangement between them it is said that it should be regarded as a “Head Contract” as that term is defined at [15] of the TASOC.
ITM and CTS worked very closely on the tender processes engaged in by ITM in relation to trolley collection services. As Vickery puts it at [37] of his affidavit:
Existing clients and sub-contractors are also involved in the detailed modelling of costs and labour. In relation to sites that we subcontract to CTS, for example, Mr Stroop will usually come to ITM’s Sydney’s offices during the tender process and work through in detail with Mr Hills and me the costings and estimated labour hours for each site. Sometimes Mr Stroop prepares his own estimates prior to these meetings which we review and discuss.
Both directors of ITM emphasised the importance of the concept of “coverage hours” in their arrangements with the supermarkets notwithstanding the extent to which “labour hours” are factored in to the tender process. Vickery, when discussing the Coles 2005 contract for example, describes coverage hours at [44] of his affidavit thus:
… Coles specified the “coverage hours” required under the contract. Coverage hours are the starting and finishing times between which trolley services were required each day.
Labour hours are described in the next paragraph in the affidavit as follows:
Coles did not stipulate the total number of labour hours required for the site (ie (sic), the total number of hours that would be worked by all trolley collection operatives). This was for the individual tenderers to assess.
The agreement entered into by ITM and CTS in August 2005 in relation to Marion Coles and Kmart is typical of the arrangements that existed between the 2 companies.
It is described by Vickery at [131] of his affidavit as follows:
The agreement provided for CTS to undertake all of the trolley services required under the 2005 Coles contract. ITM would invoice Coles for the work, retain its 5% margin of the total invoice amount and pay the balance to CTS. CTS also agreed to be covered by ITM’s Master Public Liability policy. The premiums were also to be deducted by ITM before the balance of the payment from Coles was remitted to CTS.
But as far as the labour hours (or roster hours as I will hereinafter call them) is concerned ITM had the view described by Vickery at [152]:
As noted earlier, it was my view that the Coles and Woolworths contracts required a set number of coverage hours but the actual roster or labour hours were a matter for the contractor – in the case of the relevant stores in these proceedings, therefore, a matter for CTS and Mr Jin to determine.
Hills agrees with Vickery about these matters and adds the following at [16] and [17] of his affidavit.
16. Once a contract is awarded, it is coverage hours rather than roster hours that are sacrosanct. Roster hours are usually only raised by the retailers if there are problems with service delivery levels.
17. That said, the indicative rosters were the basis on which we developed our prices for each site. Mr Vickery and I, together with our staff and major sub-contactor, such as Mr Stroop, always undertook careful analysis of sites to make sure that our estimates of required roster service hours were as accurate as possible.
The distinction between roster hours and coverage hours is the principle plank upon which these respondents mount their summary dismissal application. It is important, of course, in evaluating the argument based upon this distinction to focus upon the specific arrangements that South Jin made with its employees and upon the third and fourth respondents’ knowledge of these arrangements and association with or participation in them whatever might have been the basis on which tenders were made. That is the exercise to be carried out, whatever the specific arrangements were that existed between ITM and CTS.
It is against the background of this evidence (all of which is evidence adduced by the applicant, it must be borne in mind), that the claim of accessorial liability of CTS and Stroop is made. The critical allegations against them are that:
(1).The Head Contracts between ITM and CTS obliged CTS to abide by award rates and conditions and entitlements;
(2).From November 2008 CTS subcontracted to South Jin its obligations under the Head Contract to provide a trolley collection service;
(3).CPS stipulated the contract price offered to and paid to South Jin;
(4).CTS provided South Jin with a schedule of roster hours for each of the sites that were the subject of the arrangements between them;
(5).CTS paid South Jin “an effective hourly rate” at each site calculated by dividing the contract price (on a weekly basis) by the roster hours (on a weekly basis) at each site;
(6).CTS had knowledge of the employees engaged by South Jin and the rates of pay applicable to all of them;
(7).CTS knew that South Jin paid its employees a flat hourly rate of pay or made no enquiries to ascertain the rate of pay paid by South Jin to those employees.
That is not an exhaustive account of the allegations against CTS, but it does describe the key allegations sufficiently for the purposes of adjudicating this application.
As far as Stroop is concerned, the allegations against CTS are repeated in support of the claim as to his accessorial liability and, in addition, reliance placed upon his personal negotiations with South Jin, and his personal knowledge of South Jin adherence (or non-adherence as the case may be) to award terms and conditions and his personal reporting to ITM (pursuant to the Head Contracts themselves and in response to ITM’s enquiries) as to the results of the checks required to be carried out in relation to South Jin’s compliance with those terms and conditions.
The heart of the claim for accessorial liability of the third and fourth respondents is twofold: firstly, the calculation of the hourly rate for employees based upon the roster hours which roster hours were so carefully explicated by ITM at the tender stage for each site (with Mr Stroop’s considerable assistance); and secondly, the level of invigilation required of South Jin by CTS, pursuant to the latter’s obligations to ITM. There is a third key factor too: the concinnicity, if I may use that expression, between CTS’s role in implementing ITM’s contractual obligations and South Jin’s own functions as a trolley provider i.e. the extent to which CTS and Stroop stipulated the manner in which Mr Jin conducted his business.
I should note an important matter that is only referred to briefly by Mr Vickery. The contractual arrangements between ITM and CTS contained no detailed provisions for the subcontracting of the latter’s obligations. The agreement between the parties relating to Coles and Kmart Kurralta Park of March 2009, for example, which is to be found as Annexure DRV 22 to the affidavit of Vickery, provides in clause 6 (ff) when providing for CTS’s obligations, the following:
To maintain direct control over the Work at all times and not to delegate the management of that Work, or subcontract or assign it to any other party without the prior and express permission of ITM which can be withheld at ITM’s sole discretion
That looks as if it is the source of CTS’s capacity to subcontract to Mr Jin.
Mr Vickery then says at [148] and [149] of his affidavit simply this:
148 I was aware that for all of the contracts discussed above, Mr Stroop subcontractor the work to a further subcontractor who then engaged employees to perform the actual services.
149 Mr Stroop was considered by Coles and Woolworths to be a “super subcontractor” which is a contractor to whom ITM and the supermarkets had given permission to further subcontract the work.
Quite how the supermarkets gave such permission in these circumstances is not clear on the evidence.
The third and fourth respondents say, then, that their obligations to ITM are mirrored in South Jin’s obligations to them and in particular the obligations to ensure award and statutory compliance with wage rates and employment conditions. South Jin’s obligations are to be found, for example, in the agreement with CTS dated 10 November 2008 in relation to Woolworths, Coles, Kmart, Target and Dan Murphy’s Marion branches (see annexure AP15 to Peter’s affidavit). That agreement refers (inaccurately) to CTS having a “Principle Contract” of an exclusive nature with the stores concerned. That is simply not right. The stores concerned had an arrangement of such kind with ITM, not CTS.
Another matter that should be noted is the problem associated with “service hours” in both the agreements between ITM and CTS and the agreement between CTS and South Jin. Some reliance is placed by the third and fourth respondents in promoting this application to the reference to such hours in these agreements and the distinction between them and roster hours. In the agreement between CTS and South Jin referred to in the previous paragraph, for example, the preamble, after referring to the Principal Contract, says at recital B:
The Principal Contract include inter alia, the terms and conditions and hours of service (hereafter “the service hours”) set out herein and in Schedule Two appended hereto.
The problem is Schedule Two includes no reference at all to service hours.
A similar problem attends the agreement between ITM and CTS referred to in para 103 hereof. Paragraph 6 dd, in describing CTS’s obligations to ITM includes the following:
to adequately supervise the Work at the Centre and to make certain that the service commences and finishes at the agreed times per the Schedule Two Minimum Service Hours and that car parks and all parts of the Centre are kept free (etc) …
No such schedule appears to the agreement and that does not appear to be a problem associated with the preparation of the affidavit material, for example, because the execution clause follows on immediately after Schedule One. In other words, it does not appear to be the case that it simply has not been attached to the annexures.
These difficulties to which I have drawn attention might well be cleared up in the evidence at trial or during the course of the conduct of the trial generally but they demonstrate the difficulty in promoting an application for summary judgment against the background of such relatively complicated factual material. I am not suggesting that summary dismissal applications can only succeed where the factual background is simplified but it is difficult for me to invest a great of significance in the distinction between service hours and roster hours as those expressions are used in the agreements when there is a lack of clarity about such matters in the agreements themselves.
I should summarise at this point the arguments promoted by these respondents in support of the summary dismissal application:
(1)CTS was under no obligation to ITM to provide a specific number of labour hours and so neither was South Jin obliged to CTS in that respect; this entails, it is said, the conclusion that the calculation by the applicant of an “effective hourly rate” is of little assistance in that it provides no basis for drawing an inference that CTS must have known that South Jin was, inevitably, so to speak, underpaying its employees;
(2)That CTS required South Jin to meet its award and statutory pay rates and conditions and obligations. The insistence by them on such a requirement is said to be inconsistent with being knowingly concerned in South Jin’s breaches of these obligations;
(3)CTS actually provided South Jin with details of the award and statutory obligations aforesaid. Certainly Mr Jin made this clear in his interviews and there is no suggestion anywhere in the applicant’s case that any of the information provided to him by CTS was inaccurate or at least, there was no suggestion that it was provided to him on the basis of it being known to be inaccurate, which must be taken to be an essential requirement of being knowingly concerned.
(4)The absence of any evidence that CTS encouraged or advised South Jin not to meet its obligations to its employees.
(5)The extent to which CTS required South Jin to certify through its accountant that it was meeting its obligations toward its employees (though the evidence before the Court indicates that such a request was only made of the accountant as a result of concerns expressed in writing to CTS by ITM.
All of these matters are matters that the Court is asked to take into account in aggregate of course but there is no doubting that the contention that CTS had no basis for knowing that the money it provided to South Jin, when divided by the number of roster hours, left an amount that was below award requirements, is the key contention. It is a contention that may well be made out when all the evidence is in and in particular when cross examination of the applicant’s witnesses has clarified the ambiguities in the use of the “service hours” expression, the “roster hours” expression, and “labour hours” expression. The thrust of all of this, of course, is directed at the question of the knowledge which CTS must be taken to have had of the incapacity of South Jin to meet its award and statutory obligations given the money it had been provided by CTS to do so. I accept that such knowledge is a vital ingredient of the applicant’s case but I am not satisfied that the applicant can be taken to have no reasonable prospect of making out that state of knowledge on the part of the respondents. It may well be that there is no correlation between the detailed calculations (with which Mr Stroop himself assisted) of labour hours in the tender process and the actual amount of labour required to meet the obligations relating to service hours. But I am not prepared to exclude the reasonable possibility of such a correlation being made out at this stage of the evidence.
Whatever the formal position with respect to roster hours – in other words whether CTS and Stroop had a precise or working knowledge that the roster hours required to meet the service hours requirements were in accordance with the calculations made in the tender process – it remains a reasonable possibility on the applicant’s case that these two respondents would be well aware that the roster hours required were broadly equivalent to the hours calculated during the tender process. This awareness may well have arisen from their level of involvement in South Jin’s operations. That reasonable possibility amounts to a reasonable prospect of success on the application.
There is ample evidence of CTS and Stroop having mandated a number of the ways in which South Jin’s operations were conducted. The introduction of modern awards and the restructuring of the pay rates for trolley collectors and the change in their award coverage led to an increase in pay rates in 2010. ITM and consequently CTS managed the introduction of these pay rates at the sites the subject of these proceedings for a number of subcontractors, including South Jin. That circumstance and a number of other occasions on which CTS involved itself in South Jin’s operations and sought information from South Jin about its operations is suggestive of the reasonable possibility of some reasonable level of acquaintance with South Jin’s business.
The evidence put up in affidavit form by the applicant suggests that both knowledge of the contraventions and a level of association with there having been committed are matters which can be said to have reasonable prospects of being established at trial even if the association aspect might be said to be a structural or a functional association with South Jin and its operations.
It needs to be borne in mind that the principal allegations against Stroop and CTS go to their knowledge of South Jin’s operations; however, they include allegations as to what enquiries they ought to have made in relation to minimum and other entitlements of employees, the casual status of employees and the inadequacy of the monies made available to South Jin to pay the employees. The allegation against them is in fact that they made no enquiries about these matters but the corollary of that is that they ought to have. That amounts to an allegation of constructive knowledge. Is that sufficient? Section 550(2)(c) speaks of an Act or omission and therefore contemplates the compatibility of knowledge of a breach and a failure to do an act (the 2 together then constituting involvement in a contravention). But here what is alleged (in the alternative) is a failure to acquire the knowledge of the breach. So we are not in reality dealing with the association aspect of the breach so much as still dealing with the knowledge aspect. The question is whether knowledge which ought to have been acquired is knowledge for the purposes of culpability under the section.
Whether CTS or Stroop ought to have known of these matters will depend upon my findings at trial of the level and extent of their involvement in South Jin’s operations. There is enough in the affidavits of the applicant’s witnesses to suggest that such involvement may have been extensive but it is only when such findings have been made that the Court will know whether the failure to know of these matters amounted to wilful blindness.
I have used the expression wilful blindness because I consider that the failure to enquire must amount to wilful blindness in order to satisfy the knowledge requirement of the section. That was the view of Cameron FM (as he then was) in Dowling v Kirk [2007] FMCA 2106 at [33], based upon His Honour’s understanding of the view of the Full Court of the Federal Court in ACCI v IMB Group Pty Ltd [2003] FCAFC 17 at [33]-[35]. I share his understanding.
If I am expressing a view of the evidence in somewhat aggregated terms at the moment I think I am entitled to some latitude in that respect at this stage of the proceedings. I am not fact finding. I am evaluating the evidence of the applicant from the perspective of reasonable prospects of success.
Whether the extent to which CTS and Stroop insisted, both in terms of their contractual arrangements and also via personal communications, that South Jin meet its award and statutory obligations to its employees was a matter that was a bona fide effort on its part to ensure that those obligations were met or whether they were an ostensible indication only of such a genuine intent is a matter that can only be determined at the end of all the evidence. It is not possible to infer either the genuiness, on the one hand, or the calculatedness, on the other of the insistence by these respondents that South Jin do this, until all the evidence is in. Only then will I know whether this matter is a matter that can properly ground or assist in grounding a finding that the requisite knowledge on the part of these respondents was absent.
I think it is safe to accept even at this stage that there was no encouragement or incitement by these respondents to have South Jin not meet its obligations to its employees. That may have been telling if the other subsections of s.550(2) of the FWA were in play but I am not satisfied that it necessarily a significant matter in the context of a “knowingly concerned” or “party to” accessorial liability dispute.
I am unable to be satisfied that there is no reasonable prospect of successfully prosecuting the claim for accessorial liability against the third and fourth respondents.
The application for summary dismissal by them is also refused.
I certify that the preceding one hundred and twenty-four (124) paragraphs are a true copy of the reasons for judgment of Judge Lindsay
Associate:
Date: 19 August 2013
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