Fair Work Ombudsman v Upper East Side Bondi Pty Ltd
[2021] FCCA 555
•29 March 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v UPPER EAST SIDE BONDI PTY LTD & ANOR | [2021] FCCA 555 |
| Catchwords: INDUSTRIAL LAW – Fair Work – contravention of the Fair Work Act 2009 – failure to comply with s.716 compliance notice – director’s liability for company breach –liability established. |
| Legislation: Fair Work Act 2009 (Cth), ss.550, 712, 716, 717. |
| Cases cited: Fair Work Ombudsman v Devine Marine Group Pty Ltd [2014] FCA 136 Fair Work Ombudsman v Joys Child Care Limited & Anor [2019] FCCA 3356 Fair Work Ombudsman v Nobrace Centre Pty Ltd & Anor [2019] FCCA 1148 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | UPPER EAST SIDE BONDI PTY LTD |
| Second Respondent: | JULIA ROSE GELONESE |
| File Number: | SYG 479 of 2020 |
| Judgment of: | Judge Obradovic |
| Hearing date: | 22 October 2020 |
| Date of Last Submission: | 5 November 2020 |
| Delivered at: | Parramatta |
| Delivered on: | 29 March 2021 |
REPRESENTATION
| Solicitors for the Applicant: | Office of the Fairwork Ombudsman |
| Appearing for the Applicant: | Ms Thirukumar |
| Appearing for the First Respondent: | Ms Gelonese |
| Appearing for the Second Respondent: | In person |
THE COURT DECLARES THAT:
The first respondent contravened section 716(5) of the Fair Work Act 2009 (Cth) (“the Act”) by failing to comply with a compliance notice dated 15 October 2019 relating to full-time employees (“Full-time Compliance Notice”).
The first respondent contravened section 716(5) of the Act by failing to comply with a compliance notice dated 15 October 2019 relating to casual employees (“Casual Compliance Notice”).
The second respondent was involved, within the meaning of subsection 550(2) of the Act, in the first respondent’s contraventions of section 716(5) of the Act by failing to comply with the Full-time Compliance Notice and the Casual Compliance Notice.
THE COURT ORDERS THAT:
Pursuant to section 545(1) of the Act, the first respondent take the following steps with reference to the Full-time Compliance Notice and Casual Compliance Notice, within 28 days of this order:
(a)prepare a revised schedule for each of the Employees (except for Mr Janosev and Ms Semercioglu) in accordance with Step 5(a) of the Full-time Compliance Notice and Casual Compliance Notice respectively, detailing any payments already made to Employees in respect of the Compliance Notices;
(b)pay all Employees (except for Mr Janosev and Ms Semercioglu) the identified underpayments based on the revised schedule;
(c)calculate and pay any superannuation owed to the Employees on underpayments paid as a result of the Compliance Notices (except for Mr Janosev); and
(d)provide to the Fair Work Ombudsman, evidence of the gross and net payments paid to each of the Employees as a result of orders 4(a) to 4(c) (except for Mr Janosev and Ms Semercioglu).
The matter is listed for directions in respect of penalty at 10.15am on 7 May 2021.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PARRAMATTA |
SYG 479 of 2020
| FAIR WORK OMBUDSMAN |
Applicant
And
| UPPER EAST SIDE BONDI PTY LTD |
First Respondent
| JULIA ROSE GELONESE |
Second Respondent
REASONS FOR JUDGMENT
Introduction
These are the reasons for judgment in respect of certain alleged contraventions of the Fair Work Act 2009 (“the Act”).
The applicant is the Fair Work Ombudsman. The first respondent, Upper East Side Bondi Pty Ltd, is the operator of a Sydney restaurant based in Bondi. The second respondent (“Ms Gelonese”) is the sole director of the first respondent and the general manager of the business.
On 28 February 2020, the applicant commenced proceedings against the respondents by way of Statement of Claim alleging that the first respondent failed to comply with two compliance notices (“the Compliance Notices”), issued by the applicant on 15 October 2019. The Compliance Notices required the first respondent to calculate and pay any underpayments and superannuation in respect of 11 Employees by 5 November 2019 and to provide these calculations and evidence of the payments made to the Employees by 12 November 2020.
On 6 August 2020, the matter was set down for liability hearing.
The respondents were self-represented at the hearing on 22 October 2020.
The applicant relied upon the Application and Statement of Claim, the Affidavit of Fair Work inspector Lauren Jacqueline Cowell, affirmed on 28 August 2020, the Affidavit of Antonia Lara Neal, affirmed on 28 August 2020, and the applicant’s submissions on liability filed 31 August 2020.
The respondents relied upon the Response and Defence filed on 4 June 2020 and the Affidavit of Julia Rose Gelonese affirmed on 21 October 2020, leave being granted to the respondents to rely on that affidavit at hearing.
At the conclusion of the hearing, leave was granted to the applicant to file a further Affidavit and submissions in respect of payslips provided by Ms Gelonese to Inspector Cowell (which were documents attached to various emails sent by Ms Gelonese to Inspector Cowell, however not produced in her Affidavit affirmed on 28 August 2020). The respondents were also granted leave to file further material in reply.
On 5 November 2020, the applicant caused to be filed a second Affidavit of Lauren Jacqueline Cowell, affirmed on 5 November 2020, and further submissions. The Court has had regard to these documents.
The respondents did not file any further material.
Relevant Legal Principles
A contravention of s.716(5) is established by a finding that the notice was given in accordance with s.716 and that the recipient did not comply with the notice by the due date.[1]
[1]Fair Work Ombudsman v Joys Child Care Limited & Anor [2019] FCCA 3356 (“Joys Child Care”)
Therefore, in order to find that the contraventions of s.716(5) have been proven, the Court must find that:[2]
a)Each of the Compliance Notices was a compliance notice given to the first respondent in accordance with sub.ss 716(2) and (3) of the Act;
b)Each of the Compliance Notices required the first respondent to take specified action by 5 November 2019 and 12 November 2019; and
c)The first respondent did not take the specified action required by each of the Compliance Notices by 5 November 2019 and 12 November 2019.
[2]See Fair Work Ombudsman v Nobrace Centre Pty Ltd & Anor [2019] FCCA 1148 at [42] – [49]
A person seeking to rely on a “reasonable excuse” in respect of a contravention has the onus of proof.[3]
[3]Fair Work Ombudsman v Devine Marine Group Pty Ltd [2014] FCA 1365 (“Devine”)
What constitutes a reasonable excuse has been summarised as follows:[4]
11. White J considered a number of authorities in Fair Work Ombudsman v Devine Marine Group Pty Ltd [2014] FCA 1365. These are set out at [154] -[155]
[154] Many authorities concerning the concept of “reasonable excuse” as a ground of exculpation were reviewed by Hely J in Bank of the Valletta PLC v National Crime Authority [1999] FCA 791. Hely j referred to the observation of the plurality in Takiato v The Queen [1996] HCA 28; (1986) 186 CLR 454 at 464 that decisions on other statutes provide no guidance because what is a reasonable excuse depends not only on the circumstances of the individual case but also on the purpose of the provision to which the defence of “reasonable excuse” is an exception. Hely J also referred to the observation of Dawson J is Takiato at 470, a reasonable excuse is no more or less than an excuse which would be accepted by a reasonable person. It is different from a lawful excuse.
[155] In Australian Securities and Investment Commission v Albarran [2008] FCA 147, Jacobson J summarised three propositions emerging from the Bank of Valletta:
[81] First, the question of what constitutes “reasonable excuse” is to be determined from the terms and structure of the particular statute and the circumstances of each particular case” Valletta [39], [47]
[82] Second, reasonable excuse is not confined to physical or practical difficulties in complying with the statutory prescription. It includes any excuse which would be accepted by a reasonable person as sufficient to justify non-compliance, but it is necessary to bear in mind the importance of the particular statutory prescription to the overall statutory regime: Valletta at [42].
[83] Third, the question of what constitutes reasonable excuse involves an objective determination in all the circumstances. These include the adverse consequences to an individual of being compelled to answer the adverse consequences to an inquiry if the questions are not answered: Valetta at [44]. [47].
[4]Joys Child Care [2019] FCCA 3356 at [11]-[12]. See also, Devine [2014] FCA 1365
12. A little later in the Judgment White J said:
[165] The expense and inconvenience (and perhaps oppression) in complying, will not usually provide a “reasonable excuse” for non-compliance with the notice. It is to be expected that compliance will usually occasion a respondent some inconvenience and expense but, unless the circumstances are out of the ordinary this is to be taken to be a necessary incidence of compliance, and will not relieve the respondent from complying with the notice.
The respondents have not made any application for a review of the Compliance Notices pursuant to s.717 of the Act. The applicant does not need to establish the underlying contraventions of the Act nor the award as listed on the Compliance Notices.
Relevant Findings
Ms Gelonese became the sole director of the first respondent on 1 September 2019.
Between 19 February 2019 and 12 August 2019, the applicant received a number of requests for assistance from the following 11 individuals about their employment with the first respondent: Patricia Alarcon, Anita Poric, Kim Rosner, Herbert Mastelari, Rochi Barua, Zeynep Semercioglu, Christina Haan, Mark Janosev, Susan Munikar, Catalina Berrios and Suman Katwal (collectively, “Employees”).
In or about March 2019, the applicant commenced an investigation into the allegations made by the Employees. Inspector Cowell had carriage of the investigation.
During the investigation, Inspector Cowell corresponded with Ms Gelonese about the Employees’ allegations and their employment.[5] The first respondent was issued with two notices to produce records or documents (“Notices to Produce”) pursuant to s.712 of the Act on 4 April 2019 and 14 May 2019.
[5] Although initial correspondence was with a person named Charlotte.
The first Notice to Produce was in respect to the employment of Anita Poric and Patricia Alarcon, and requested documents relating to their employment to be produced by 5pm on 29 April 2019. The second Notice to Produce was in respect of Herbert Mastelari, Kim Rosner and Rochi Barua requesting same, however to be produced by 5pm on 29 May 2019.
The Notices to Produce both provided the addresses to which the documents could be produced in person, by post and/or by email. It also provided the following:
Production of the above records and/or documents via email must be in a form satisfactory to the FWO and production via email will not be effective unless and until the FWO confirms receipt.
On 29 April 2019 at 11:35am, Ms Gelonese sent Inspector Cowell an email with information about the employment records of Anita Poric and Patricia Alarcon. The email sent by Ms Gelonese appeared to attach three PDF documents.
On 30 May 2019, the first respondent was issued with a Failure to comply with a Notice to Produce Records or Documents in respect of the Notice to Produce issued on 14 May 2019. The first respondent was provided 7 days to provide a reasonable excuse for failing to comply with the notice. Inspector Cowell emailed Ms Gelonese on 11 June 2019 about these matters and was advised to respond to both the Failure to Comply Notice and the second Notice to Produce by 17 June 2019. Ms Gelonese provided a response by email on 18 June 2019, which provided information about the employment records of Herbert Mastelari, Kim Rosner and Rochi Barua.
From the period after 17 June 2019, there was a number of email and telephone exchanges between Ms Gelonese and Inspector Cowell relating to employment records of the Employees and organising the payments of unpaid work.
The Compliance Notices
On 15 October 2019, Inspector Cowell served by hand two Compliance Notices to Ms Gelonese at the registered address of the first respondent.
The first Compliance Notice issued on 15 October 2019 was in relation to the Employees who were engaged on a casual basis, namely Kim Rosner, Zeynep Semercioglu, Mark Janosev, Susan Munikar and Catalina Berrios.
The second Compliance Notice issued on 15 October 2019 was in relation to the Employees who were engaged on a full-time basis, namely Patricia Alarcon, Anita Poric, Herbert Mastelari, Christina Haan, Suman Katwal and Rochi Barua.
The Compliance Notices outlined the time periods the contraventions related to and the details of the alleged contraventions. Notably, it also required the first respondent to take specified action: to calculate and rectify any underpayments and superannuation owed to the Employees by 5 November 2019 and to provide a schedule of such calculations and amounts paid to the Employees as well as evidence of such payments to the applicant by 12 November 2019.
Compliance with the Notices
On 5 November 2019, Ms Gelonese sent an email to Inspector Cowell attaching a remittance advice and pay slip for Mark Janosev to which Inspector Cowell responded confirming that the evidence provided in respect to Mr Janosev was accepted and no further action was required in respect to him.[6] The applicant does not seek any declaration in respect of Mr Janosev.
[6] See Annexure LJC-4 of the Affidavit of Lauren Jacqueline Cowell filed 31 August 2020.
From the period between 5 November 2019 and 12 November 2019, Inspector Cowell did not receive any correspondence from the respondents in respect of the Compliance Notices.
On 12 November 2019, Inspector Cowell contacted Ms Gelonese by phone in relation to the Compliance Notices and Ms Gelonese said words to the effect of “all calculations have been performed and payment will be made at the end of the week when we have money to pay them”. Ms Gelonese says that after that telephone conversation she intended to send an email with the information requested on the Compliance Notices, however forgot to hit send.
The applicant did not receive from the first respondent any evidence of compliance with the Notices by 12 November 2019, apart from that which related to Mark Janosev.
On 14 November 2019, Inspector Cowell sent an email to the first respondent attaching two letters titled Failure to Comply with a Compliance Notice in respect of the Compliance Notices. The letters invited the first respondent to provide a reasonable excuse for the failure to comply with the Notices.
On 15 November 2019, the first respondent sent an email to Inspector Cowell providing a schedule of calculations in respect of 8 Employees.
Between 19 November 2019 to 3 December 2019, the first respondent sent three emails to Inspector Cowell advising:
a)That some of the Employees had their payments processed;
b)That two of the Employees outstanding payments would be finalised every Monday; and
c)That outstanding payments would be made on the weekend of 3 December 2019.
On 23 January 2020, Inspector Cowell contacted the Employees, except for Mr Janosev and Ms Rosner, to confirm whether they had received payment from the first respondent. Each of the Employees, apart from one (who did not reply at all), confirmed that they did not receive payment.
On 29 and 30 January 2020, Senior Fair Work Inspector Omar sent a further three emails to the first respondent requesting evidence of payments made to the Employees. Between 30 January and 8 March 2020, the applicant did not receive any communication from the first respondent or indeed Ms Gelonese in relation to Compliance with the Notices issued on 15 October 2019.
The applicant commenced these proceedings on 28 February 2020. On 11 March 2020, Ms Neal, solicitor for the applicant with carriage of the matter, received a telephone call from Ms Gelonese and was advised that she would send a list of everyone who had not been paid to date, those who will be paid that day and evidence of such payments. On that same day, Ms Neal received an email from the first respondent attaching remittance advices for payments made to some of the Employees, namely for Anita Poric, Catalina Berrios, Christina Haan, Herbert Mastelari, Patricia Alarcon, Zeynap Semercioglu, Kim Rosner and Mark Janosev.[7] Ms Neal further received another telephone call from Ms Gelonese requesting the bank details of Rochi Barua.
[7] Annexure ALN-3 of the Affidavit of Antonia Lara Neal filed 31 August 2020.
On 12 March 2020, Ms Neal emailed the first respondent advising of the following:
a)Mr Barua’s bank details as requested;
b)That no further action was required for Mark Janosev; and
c)That there were remaining steps to be completed in order for the first respondent to comply with Compliance Notices. The steps were also explained in that same correspondence.
On 16 March 2020, the first respondent provided a remittance advice for Rochi Barua.
On 26 May 2020, Ms Neal emailed the first respondent advising, amongst other things, that the specified action noted in the email sent on 12 March 2020 had not been complied with.
Further, Ms Gelonese attended a videoconference discussion with Ms Neal and Ms Thirukumar on 19 June 2020.
On 22 June 2020, Ms Neal sent an email to the first respondent summarising the applicant’s position in respect of outstanding specified action required pursuant to the Compliance Notices.
Between 23 June 2020 and 15 July 2020, Ms Thirukumar exchanged emails with the first respondent regarding outstanding specified action.
On 21 July 2020, the first respondent, by way of email, provided to Ms Neal a schedule of calculations in respect of 8 Employees. She further said the following:
“Hi Antonia,
I would like to make it very clear in this email that this table, was basically sent to Lauren last year prior to any legal proceedings. There was absolutely no mention of needing any extra information in relation to this table whilst working along side Lauren.
I will be in touch tomorrow with an update in terms of legal representation.”
On 4 August 2020, Ms Gelonese was advised, among other things, that the schedule provided in July did not meet the specified action required by the Compliance Notices.
On 6 August 2020, orders were made in Chambers by consent for the timetabling of this matter for hearing on liability.
Determination
The Compliance Notices were issued in accordance with the relevant provisions of the Act and they required the first respondent to undertake specified action by a specified date. Ms Gelonese admits that she was responsible for ensuring that the first respondent complied with the Complaince Notices, that she had actual knowledge of the Compliance Notices and that if the first respondent is found to have contravened s.716(5) then she is also taken to have contravened that provision.
Ms Gelonese however says that it was her honest belief that she complied with the Compliance Notices by 5 November 2019.
Did the Respondent undertake the specified action by the specified date?
The Compliance Notices required the first respondent to:[8]
[8] Applicant submissions filed 31 August 2020 at p.6. See also the Compliance Notices marked Annexure LJC-3 of the Affidavit of Antonia Lara Neal filed 31 August 2020.
(a) create a schedule, by 5 November 2019, detailing the calculations of the underpayments to each of the Employees:
(a) identifying their hours of work in their respective employment periods;
(b) identifying their entitlements with reference to the identified provisions within the Compliance Notices and how much they should have been paid;
(c) identifying the amounts paid in respect of each hour of work and any entitlement;
(d) calculating the difference between amounts owed and amounts paid; and
(e) calculating the superannuation owed on the underpayment;
(b) pay the resulting underpayment and superannuation amounts to the Employees by 5 November 2019; and
(c) provide the schedule of calculations and evidence of payment to the Employees to the FWO by 12 November 2019.
Apart from Mr Janosev, the first respondent did not take the action of calculating and paying any resulting underpayments to the Employees by 5 November 2019.
The first respondent did not provide a schedule of calculations and evidence of payment by 12 November 2019 to the applicant.
Information provided or action taken prior to the issuing of Compliance Notices cannot constitute compliance with the Compliance Notices. The obligation to comply arose when the Compliance Notices were issued to the first respondent.
Therefore, there was a failure by the fist respondent to comply with the Compliance Notices.
Was the 2nd Respondent involved, within the meaning of s.550 in the contravention?
The second respondent:[9]
[9] Applicant submissions filed 31 August 2020 at p.8-9
(a) was the sole director of Upper East Side Bondi during the period when the Compliance Notices were served and were required to be complied with;
(b) was responsible for the management of Upper East Side Bondi’s business and the primary person with authority and responsibility to comply with the Compliance Notices on its behalf;
(c) was personally served with the Compliance Notices on 15 October 2019;
(d) had knowledge of the contents of the Compliance Notices;
(e) knew of Upper East Side Bondi’s obligation to comply with the Compliance Notices by 5 November 2019 and 12 November 2019 respectively.22 In the period 15 October 2019 to 30 January 2020, Ms Gelonese had advised the FWO that she had arranged payments to be made to the Employees but had failed to make any payments (other than to Mr Janosev on 5 November 2019); and
(f) did not take any action to comply with the Compliance Notices on behalf of Upper East Side Bondi by 5 November 2019 or 12 November 2019 other than in respect of the payment made to Mr Janosev.
The matters referred to at paragraphs [55] above, mean that the second respondent, after the dates for compliance, continued to advise that she was taking steps to complete the actions specified in the Compliance Notices. Furthermore, it was not until March 2020 that some payments were made to some Employees by the first respondent.
As such, the second respondent was involved in the first respondent’s contravention of s.716(5) within the meaning of s.550(2) of the Act.
Relief
The first respondent made payments to most of the Employees after the date for compliance had passed.
Without being provided with detail as to the entitlements and calculations, as required by the Compliance Notices, the applicant is unable to determine whether the Employees have received their full entitlements, including in respect of superannuation.
The information provided by the first respondent in the schedule sent on 15 November 2019, did not:
a)Break down the amounts calculated to be owed to each Employee, with the exception of Ms Semerciuglu;
b)Identify any superannuation calculated to be payable to any of the Employees; and
c)Substantiate the reasons as to why the first respondent asserts that three of the Employees are not owed wages.
The schedule provided by the first respondent on 21 July 2020, still failed to:
a)Provide calculations of the underpayments relating to specific entitlements; and
b)Identify any superannuation calculated to be payable to any of the Employees.
It is imperative that that applicant is provided with the information sought so that it can undertake its tasks of ensuring that the Employees have received all of their entitlements.
For those reasons, declarations and orders as sought by the applicant will be made.
I certify that the preceding sixty-three (63) paragraphs are a true copy of the reasons for judgment of Judge Obradovic
Associate:
Date: 29 March 2021
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