Jin v Premium Travel Pty Ltd
[2023] FedCFamC2G 22
Federal Circuit and Family Court of Australia
(DIVISION 2)
Jin v Premium Travel Solutions Pty Ltd [2023] FedCFamC2G 22
File number(s): SYG 891 of 2021 Judgment of: JUDGE HUMPHREYS Date of judgment: 24 January 2023 Catchwords: INDUSTRIAL LAW – Fair Work Act – Passenger Vehicle Transportation Award – whether employee or independent contractor – whether second respondent accessorily liable. Legislation: Fair Work Act 2009 (Cth) ss 45, 536, 545, 546, 550.
Passenger Vehicle Transportation Award 2010
Cases cited: Ace Insurance Limited v Trifunovski (2013) 209 FCR 146
Australian Building and Construction Commissioner v Parker [2017] FCA 564
Australian Securities and Investments Commission v ActiveSuper Pty Ltd(in liq) [2015] FCA 342
Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1
Dafallah v Fair Work Commission [2014] FCA 328
Ezy Accounting 123 Pty Ltd v Fair Work Ombudsman [2018] FCAFC 134
Fair Work Ombudsman v A to Z Catering Solution Pty Ltd and Anor (No 2)
Fair Work Ombudsman v Blue Impression Pty Ltd [2017] FCCA 810
Fair Work Ombudsman v Chatime Australia Pty Ltd [2022] FedCFamC2G 934
Fair Work Ombudsman v Grouped Property Services Pty Ltd (2016) 152 ALD 209
Fair Work Ombudsman v Northcoast Security Services Group Pty Ltd and Ors (No 3) [2020] FCCA 521
Fair Work Ombudsman v Step Ahead Security Services Pty Ltd [2016] FCCA 1482
Hollis v Vabu Pty Ltd (2001) 207 CLR 21
Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 13
Division: Division 2 General Federal Law Number of paragraphs: 56 Date of last submission/s: 20 December 2022 Date of hearing: 6 December 2022 Place: Parramatta Counsel for the Applicant: Mr Furlan Counsel for the Second Respondent: In person ORDERS
SYG 891 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: ZHENG HUI JIN
Applicant
AND: PREMIUM TRAVEL SOLUTIONS PTY LTD
First Respondent
CHANGXIN FEI
Second Respondent
YE ZHAO
Third Respondent
order made by:
JUDGE HUMPHREYS
DATE OF ORDER:
24 January 2023
THE COURT ORDERS THAT:
1.A declaration be made that, by operation of s 550 of the Fair Work Act 2009 (Cth) (“Act”), the Second Respondent, Changxin (Richard) Fei is taken to have contravened s 45 of the Act by reason of his being involved in the following contraventions of s 45 of the Act by the First Respondent.
(a)Failure to pay the minimum ordinary time rate of pay to the Applicant in breach of clause 14.1 of the Passenger Vehicle Transportation Award 2010 (“Award”) in respect of any of the Applicant’s work for the First Respondent at any time between January 2016 and June 2018 (“Work Period”);
(b)Failure to apply casual loading to the Applicant’s pay in breach of clause 10.5(c) of the Award in respect of any of the Applicant’s work for the First Respondent during the Work Period.
(c)failure to pay early and late work penalty rates in breach of clause 23.5 of the Award in respect of any of the Applicant’s work for the First Respondent during the Work Period;
(d)failure to pay overtime rate to the Applicant for hours worked in excess of 10 hours and less than 13 hours in breach of clauses 21.3 and 23.1 of the Award in respect of any of the Applicant’s work for the First Respondent during the Work Period;
(e)failure to pay overtime rate to the Applicant for hours worked in excess of 13 hours in breach of clause 23.2 of the Award in respect of any of the Applicant’s work for the First Respondent during the Work Period;
(f)failure to pay penalty rates for Saturday work in breach of clause 23.2 of the Award in respect of any of the Applicant’s work for the First Respondent during the Work Period;
(g)failure to pay penalty rates for Sunday work in breach of clause 23.2 of the Award in respect of any of the Applicant’s work for the First Respondent during the Work Period;
(h)failure to pay penalty rates for Public Holiday work in breach of clause 23.4 of the Award in respect of any of the Applicant’s work for the First Respondent during the Work Period;
(i)failure to make superannuation contributions on behalf of the Applicant in breach of cluse 20 of the Award in respect of any of the Applicant’s work for the First Respondent during the Work Period.
2.The Court orders, pursuant to s 545(1) of the Act, that the Second Respondent, Changxin (Richard) Fei, pay compensation to the Applicant in the sum of $92,386.09 within 28 days of the date of these orders.
3.The Applicant to file any evidence and written submission on penalty, of no more than 10 pages, on or before 14 February 2023.
4.The Second Respondent to file any evidence written submission on penalty, of no more than 10 pages, on or before 7 March 2023.
5.The matter be listed for Directions at 9:30am on 10 March 2023.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE HUMPHREYS
Introduction
The applicant, Mr Jin, is a bus driver. During the period 1 January 2016 to 30 June 2018, the applicant claims that he was employed by the first respondent, Premium Travel Pty Ltd (“Premium”), as a tour bus driver for parties of Chinese tourists visiting Sydney. The second respondent, Mr Changxin Fei and the third respondent, Mr Ye Zhao, were the Directors of the first respondent during the relevant period. It was a small company, consisting of the second and third respondents, plus an accountant, Ms Winne Wu.
The applicant contends that he was substantially underpaid as a result of the Premium renumerating him on the false premise that he was an independent contractor and not an employee. The applicant alleges that his employee entitlements were covered by the Passenger Transportation Award 2010. The amount the applicant claims he was underpaid by Premium is the amount of at $92,386.09. In so doing, the applicant contends Premium breached s 45 of the Fair Work Act 2009 (Cth) (“the Act”).
That compensation was initially claimed against Premium, with the second and third respondents being named as accessories to the alleged breach of s 45 of the Act, pursuant to
s 550 of the Act.
On 16 December 2021, Premium was deregistered as a company. Accordingly, on 5 December 2022, the Court, with the consent of the applicant, dismissed the claim against Premium. On the same day, the applicant and the third respondent, Mr Zhao, settled the proceedings between them. The Court has been advised that the settlement between the applicant and Mr Zhao involved a payment to the applicant, said to be in respect of legal fees. The amount paid is not known to the Court. No further particulars of the settlement have been provided nor were they requested.
The proceedings then continued with only the third respondent, Mr Fei. Mr Fei was self-represented. He had been legally represented initially, but his legal representation withdrew very early in the proceedings after filing a Response to the applicant’s Initiating Application.
The Evidence
While he spoke reasonable English, Mr Fei was assisted by an Interpreter at times. Critically, Mr Fei failed to file any Affidavit material or other material upon which he sought to rely as evidence to defend the claims made by the applicant. He cross examined the applicant and was invited to give oral evidence, but declined to do so. Mr Fei did not seek to tender in Court any other documentary material upon which he relied. Thus, the Affidavit evidence before the Court consisted of the following (including attachments):
1. Affidavit of Mr Jin sworn 16 Dec 2021;
2. Affidavit of Mr Jin sworn 21 Mar 2022;
3. Affidavit Mr Fan Bu, Solicitor, sworn 5 December 2022.
Other documentary evidence included a copy of the relevant award, various extracts from ASIC regarding Premium, and translations of some records, including time sheets kept by the applicant.
According to the ASIC documentation, Premium was founded by Mr Fei and Mr Zhao on 9 May 2009. Each were appointed as a Director and held 50% of the shares of the company until 1 July 2011. Mr Fei was a Director of the company at all times from its incorporation until 22 June 2018, and also remained a shareholder from its incorporation until 25 October 2018. Again, it is common ground that part of Mr Fei’s role and duties was to arrange and allocate work to Premium’s drivers, including the applicant.
Was the applicant an independent contractor or an employee?
It is common ground that the applicant did not enter into any written employment contract with Premium. It is thus necessary to look at the parties conduct to determine the nature and terms of the contact the applicant entered into: (see; Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1 at [83] (“Personnel Contracting”)).
The applicant gave evidence that after operating a cleaning business, he decided to sell that business and work as a bus driver. During driver training, he met a man who told him that he worked as a bus driver for “Richard Fei’s” company. The applicant then rang Mr Fei who told him that there were opportunities within the company. The applicant deposes that he asked what the salary was and was told the following:
a. $130 per day for a city tour;
b. $140 per day for a Blue Mountains tour;
c. $40 for airport transfers; and
d. an additional $20-$30 per day for longer distances.
The applicant states that Mr Fei told him that he could work as many or as few days per month as he wanted to. During 2015, the applicant did some driving for Premium but also worked as a school bus driver. In late 2015, he states that he asked Mr Fei if he could come and work at the company for a long time. The applicant then began working full-time for Premium as a tour bus driver from 1 January 2016 to 30 June 2018.
Again, the uncontested evidence is that the applicant only drove a bus that was supplied by Premium. The applicant kept the company’s tour bus at home overnight. He did not do any work for any other company or entity. Premium paid for fuel and maintenance for the bus the applicant drove. Each evening, he would receive from Mr Fei an itinerary for the following days’ work. The applicant would be required to fill in a form indicating the tours he completed and provide that to Premium so that the applicant could be paid. Any amounts calculated as being payable were paid into a Commonwealth bank account in the name of “Jin Hui Zheng a franchisee of VIP Home and Office Cleaning”, this apparently being the bank account that the applicant operated when he had his cleaning business.
Again, it is not disputed by the applicant that he was paid on the basis of the amounts set out above for each tour. No payslips were provided, nor was any superannuation paid in addition to the amounts claimed by the applicant. There is some evidence as to the deduction of income tax by Premium in evidence given by Mr Zhou to the Fair Work Commission, however the Court gives this little weight. No Pay As You Earn (“PAYE”) amounts appear to be included in income tax returns submitted by the applicant in the relevant tax years. The Court is satisfied that no PAYE tax was deducted from the amounts paid to the applicant by Premium.
The applicant deposed that a city and Blue Mountains tour took on average 10 to 12 hours, with a half-hour meal break. He was paid the same amount of money, being $130 for a city tour and $140 for a Blue Mountains tour regardless of the time worked. A Port Stephens or Jervis Bay tour lasted 12 to 14 hours, with a half-hour meal break. The applicant was paid $160 per tour again, regardless of how many hours he worked. An airport transfer generally took three hours, with no break. The applicant was paid a flat rate of $40 for each airport transfer. The amounts indicated were paid notwithstanding the applicant worked on weekends and on public holidays. He was paid the same fixed rates.
It was submitted to the Court that the applicant should be characterised as a casual employee of Premium, not as alleged by Mr Fei, as an independent contractor.
In a case such as the present in which the parties did not reduce their agreement to written form, it was submitted that its terms must be ascertained objectively from the parties conduct which requires an analysis of “the totality of the relationship between the parties” by reference to the indicia identified in the authorities, most notably Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 13 (“Stevens”), Hollis v Vabu Pty Ltd (2001) 207 CLR 21 and Personnel Contracting at [61] and [56] – [57].
In Stevens at [24], Mason J said that a prominent factor in determining the nature of the relationship between a person who engages another to perform work and the person so engaged is the degree of control which the former can exercise over the latter. The importance of control lies not so much in its actual exercise, as in the right of the employer to exercise it. Other indicia include, but are not limited to, the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and the provision for holidays, the deduction of income tax and the delegation work by the putative employee.
Wilson and Dawson JJ in Stevens at [36] stated that it was appropriate to apply the control test in the first instance because it is the surest guide to whether person is contracting independently or serving as an employee. Other indicia which need to be considered include in relation to a contract of service, rather than a contract for service, the right to have a particular person to do the work, the right to suspend or dismiss the person engaged, the right to the exclusive services of the person engaged, the right to dictate the place of work, hours of work and the like. Those which indicate a contract for services include work involving a profession, trade or distinct calling on the part of the person engaged, the provision by him/her of their own place of work or own equipment, the creation by them of goodwill or saleable assets in the course of their work, the payment by them from their remuneration of business expenses of any significant proportion and the payment to them of remuneration without the deduction for income tax.
The applicant also relied upon Ace Insurance Limited v Trifunovski (2013) 209 FCR 146 at [37] where Buchanan J observed:
It is also difficult, in my view, to give much independent weight to arrangements about taxation, or even matters such as insurance cover or superannuation. These are reflections of a view by one party (or both) that the relationship is, or is not, one of employment. For that reason, in my view, those matters are in the same category as declarations by the parties in their contract (from which they often proceed). They may be taken into account but are not conclusive. These matters are less important than the adoption by the parties (where this occurs) of rights and obligations which are fundamentally inconsistent with basic requirements of a contract of employment, such as the ability to delegate the discharge of obligations under a contract to another person, or where there is a lack of control over how work is done.
With these matters in mind, on the basis of the evidence presented by the applicant, the Court is reasonably satisfied that the applicant was employed by Premium and was not an independent contractor.
The equipment, being the bus used by the applicant, was owned by Premium. It paid for the bus’s ongoing maintenance and fuel. Any repairs were either paid for directly by Premium or were arranged by the applicant for which he was reimbursed. The applicant was directed as to what work he would perform the following day. Whilst it is conceded that he was free to reject that work and ask for it to be performed by another driver, this is not inconsistent with the nature of a casual employee who has no fixed hours or working schedule.
Evidence contained in the applicant’s Affidavit included emails in which he was given approval to buy parts for the bus that were defective, for example a broken mirror. His itinerary could be changed on short notice from that which he had previously been provided. For example, he could be directed not to do an airport drop off and rather take another group on a different tour. It was submitted that there was nothing in the correspondence that indicated the applicant was being offered a choice as to whether he would work, when he would work or that he had any say as to how he performed the work.
While the applicant was free to reject the work if he chose to, if he undertook it, it was in accordance with the instructions provided to him including by Mr Fei. It was submitted that while the applicant did not wear a Premium uniform, but there was no livery on the bus suggesting he was operating an independent business operated by him or that he was in any way independent from the business of Premium.
There is no evidence the applicant could delegate the performance of any work to another person. He was required to perform the work in the hours dictated to him by Premium.
During cross examination, the applicant admitted he on occasions provided additional bus services using the bus belonging to Premium, for example a night tour additional to those contained in the itinerary provided to him by Premium. In these cases he was paid $300 cash directly by the tour guide. If he received any gratuities he did not have to account for them to Premium. The Court does not consider this inconsistent with or fatal to the applicant being in a contract of employment. This practice appeared to be known to Premium.
It was submitted the applicant was required to follow the company’s work practices with respect to work allocation, documenting when he had worked and submitting a record of his shifts on a monthly basis, parking the company’s bus at his home overnight and making expense reimbursement claims. At no time did he bill the Premium using tax invoices quoting an ABN in respect of his work. Nor did the applicant collect Goods and Services Tax (“GST”) from Premium.
Taking into account all of the evidence, the Court is satisfied that the relationship between the applicant and Premium was that of employer and employee, not that of an independent contractor providing services to Premium. The Court is satisfied that the level of control exercised by Premium was more consistent with that of an employer. The provision of the equipment, being the bus and the payment of its fuel and maintenance expenses by Premium was consistent with an employer-employee relationship not that of an independent contractor.
The fact that payments were made into what appears to be a business bank account operated by the applicant is not sufficient to rebut the finding that the applicant was an employee not an independent contractor. The bank account was a personal account but included a business name. The fact that income tax was not deducted on a PAYE basis is also not conclusive of the applicant being an independent contractor, noting that the applicant did not invoice Premium on any business letterhead containing an ABN, nor was any claim made for GST.
What is clear is that the taxation arrangements of Premium and indeed the applicant show a remarkably casual attitude towards the responsibility for correctly paying both income and other tax liabilities, including GST.
Award Coverage and Entitlements
Having determined that the applicant was an employee, the Court is satisfied that the applicant was covered by the Passenger Vehicle Transportation Award 2010 (“the Award”). Under this Award, the applicant was entitled to full ordinary hours worked, at 1/38 of the minimum weekly wage per hour prescribed by clause 14 of the Award as varied from time to time, plus a 25% casual loading. In addition, he was entitled to penalty rates and superannuation.
Given that the applicant was paid on a fixed rate basis, no matter how long the tour shift took, this is evidence of a breach of the relevant Award provisions. He was not paid any penalty rates, if work took place on a weekend or public holiday and he was not paid superannuation. For example, if a city tour shift commenced at 8:00AM and lasted 10 hours, the applicant was paid $130 or $13 per hour, under the award, where in early 2016 the applicant was entitled to be paid at least $25.25 per hour (leaving aside any applicable penalty rates).
The Court received into evidence an Affidavit sworn by the applicant’s solicitor that made reference to a number of Microsoft Excel spreadsheets which were in evidence before the Court. These spreadsheets were based upon handwritten notes made by the applicant, which he had retained, detailing the hours worked which he had submitted to Premium. By reference to the Award, the amount that should have been paid was ascertained together with the difference between what was actually paid and what should have been paid.
Attached to the Affidavit was a Schedule of Loss and Damage covering the periods April to August 2016, May to December 2017 and January to July 2018. The underpayment to the applicant is calculated, as being not less than $92,386.09. Mr Fei did not object to the tender of this Affidavit and no rebuttal evidence was produced that contradicted the calculations which led to the total amount of loss set out above. In these circumstances, the Court is satisfied that the underpayment to the applicant was in the amount claimed of $92,386.09.
Accessorial Liability of Mr Fei
Section 550 of the Act is in the following terms:
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.
In Fair Work Ombudsman v Blue Impression Pty Ltd [2017] FCCA 810 at [25] (“Blue Impression”) Judge O’Sullivan held that:
The authorities established that, in order for a person have accessorial liability, he or she must be a knowing participant or, in other words:
a)have knowledge of the essential facts constituting the contravention;
b)must be knowingly involved in the contravention;
c)must be an intentional participant in the contravention based on actual not constructive knowledge of the essential facts constituting the contravention – although constructive knowledge may be sufficient under s550(2)(c) of the FW Act in cases of wilful blindness; and
d)need not know the matters in question constituted a contravention.
In relation to the requirement of knowledge, the applicant relied upon Australian Securities and Investments Commission v ActiveSuper Pty Ltd(in liq) [2015] FCA 342 at [400] per White J, where the following was said:
Proof that a person had actual knowledge of each of the essential elements making up the contravention may be derived from direct evidence but more commonly will be a matter of inference from all the circumstances found to be proved. In some cases, actual knowledge can be inferred from the combination of a defendant’s knowledge of suspicious circumstances and the decision by the defendant not to make inquiries to remove those suspicions. The High Court referred to knowledge in these circumstances in Pereira v Director of Public Prosecutions (1988) 82 ALR 217 at 220:
[A] combination of suspicious circumstances and failure to make inquiry may sustain an inference of knowledge of the actual or likely existence of the relevant matter. In a case where a jury is invited to draw such an inference, a failure to make inquiry may sometimes, as a matter of lawyer’s shorthand, be referred to as “wilful blindness”. Where that expression is used, care should be taken to ensure that a jury is not distracted by it from a consideration of the matter in issue as a matter of fact to be proved beyond reasonable doubt.
It was submitted that in underpayment cases, the better view is that it is not necessary that the accessory knew of the existence of the applicable Award or what its terms were or that what was being paid was below award rates, knowledge of what was in fact being paid is sufficient: (see; Fair Work Ombudsman v Grouped Property Services Pty Ltd (2016) 152 ALD 209 at [1019] (“Grouped”); Australian Building and Construction Commissioner v Parker [2017] FCA 564 at [128] (“Parker”)).
In Fair Work Ombudsman v Chatime Australia Pty Ltd [2022] FedCFamC2G 934 at [90] (“Chatime”) Judge Manousaridis had the following to say as to knowledge (citations omitted):
Mr Zhao submits that the view expressed by Katzmann J in Grouped Property Services is obiter, whereas in Potter, Cowdroy J relied on the view that it was necessary to prove knowledge of an award before a person could be held to be involved in a contravention of the award; and, for that reason, this Court is bound to follow Potter.[151] On a strict application of the principles of precedent, Mr Zhao is correct.
The above should be compared with what his Honour said in Fair Work Ombudsman v A to Z Catering Solution Pty Ltd and Anor (No 2) [2018] FCCA 2299 at [267]-[282].
It was submitted that the Court should not follow Chatime, but rather follow the line of authority that commences with Grouped and Parker as the Full Federal Court endorsed the view of Flick J in Ezy Accounting 123 Pty Ltd v Fair Work Ombudsman [2018] FCAFC 134 at [14]. In Parker, Flick J concluded at [128]:
… Where the contravention in question is a contravention of s 50, that section does not require the person contravening a term of an enterprise agreement to have any knowledge of the existence of an enterprise agreement and does not require knowledge of the term being contravened or the fact that the act of contravention is in fact contravening conduct. If the “elements” of s 50 do not encompass those matters, it is – with respect – difficult to see why an accessory need have any greater knowledge. For a person to contravene s 50, it is sufficient to prove that conduct took place which was in fact a contravention of a term of an enterprise agreement. For the purposes of accessorial liability, all that need be proved is that the accessory had knowledge of the conduct. (emphasis added).
In the Courts view, the view of Flick J in Parker is the better view and that it is not necessary for the accessory to be shown to have knowledge of the relevant award.
In applying the above law to the facts in this matter, the Court is reasonably satisfied, as a result of the initial conversation between the applicant and Mr Fei, that Mr Fei was aware that the applicant would be paid a set daily rate for his work, regardless of the number of hours he worked on a particular day, the time of day that he worked, and whether or not work occurred on a Saturday Sunday or public holiday. Mr Fei was also aware that the company would not be making any superannuation contributions in respect of the applicant.
The Court is also satisfied that Mr Fei was knowingly concerned in the contravention. He was one of only two Directors of the company. As a result, he had intimate knowledge of all of the operations of the company. He was the person that engaged the applicant by the company. The Court is satisfied that Mr Fei had knowledge of the directions given to the applicant as to the hours and days the applicant was to work. This conclusion is based on the daily schedules issued to the applicant by Mr Fei and text conversations between the applicant and Mr Fei where schedules were changed at short notice. The Court is satisfied that Mr Fei was well aware that the company was not paying the applicant as an employee with regard to any of his award entitlements in contravention of s 45 of the Act.
The Court is also satisfied that Mr Fei was an accessory as to the obligation to provide payslips in contravention of s 536 of the Act. The clear evidence of the applicant is that he was simply paid the amounts he claimed based on the trips he performed. No payslips were provided.
The Court is satisfied that each of the necessary elements described in Blue Impression is made out, noting that no evidence has been provided to the Court on behalf of Mr Fei to show a contrary situation exists.
Liability of accessories to pay compensation for underpayments
Having determined that Mr Fei was an accessory, the Court is satisfied that Mr Fei is a “person involved” in an underpayment, and is therefore jointly and severally liable for any underpayment determined by the Court to be outstanding and appropriate: (see; Fair Work Ombudsman v Step Ahead Security Services Pty Ltd [2016] FCCA 1482 at [56]).
It was submitted that the principles to be applied in determining the quantum of compensation were summarised in Dafallah v Fair Work Commission [2014] FCA 328 at [148]-[161].
On behalf of the applicant, it was submitted the Mr Fei should pay compensation that reflects the underpayment of the applicant for the following reasons:
a. the large amount of underpayments, just over $92,000;
b. the applicant has no hope of recovering the underpayments from Premium;
c. Mr Fei personally benefit from the underpayments as a shareholder of the company where Mr Jin was an employee;
d. Mr Fei was intimately involved in the company’s contraventions, and was not at the periphery of the conduct that gave rise to those contraventions;
e. Mr Fei was a major figure in the establishment of the company and its business operations, being one of two foundational directors and shareholders. It should be inferred that the payment arrangements concerning the bus drivers, that they would be paid a set daily rate only and not any employee entitlements, was either his idea or a scheme to which he agreed and in which he acquiesced;
f. Mr Fei was a director of Premium during the entire time that the applicant was its employee and should be taken to be familiar with all of its affairs during that period, including its arrangements with Mr Jin and it’s other drivers.
In determining what is appropriate, the Court notes that the applicant arrived at a confidential settlement with the other Director of the company, Mr Zhao. The basis of that confidential settlement has not been disclosed to the Court other than a statement from Counsel for the applicant that amount of money has been agreed to be paid in respect of “legal fees” only. The amount of “legal fees” has not been disclosed.
The term appropriate seems to suggest that there is a discretion within the Court not to order the full amount of underpayment determined to be paid by Mr Fei alone. However, no authority has been provided to the Court which would support the notion that the Court has the power to, or that it would be appropriate to, apportion the loss occasioned by the underpayment to Mr Jin between the two Directors of the company, Mr Fei and Mr Zhao, in circumstances where one party has settled and the other has gone to trial.
The Court has considered whether or not it is appropriate to order less than the full amount of the underpayment to be paid by Mr Fei, but in the unusual circumstances of this case, where one party has elected to continue with the proceedings, the Court is of the view that in so doing, the party continuing with the proceedings open themselves to the possibility that they would be found liable for the full extent of the underpayment.
Further, in the absence of any evidence, the Court is unable to determine the appropriate contribution by Mr Fei as against Mr Zhao. Further, the Court was referred to Fair Work Ombudsman v Northcoast Security Services Group Pty Ltd and Ors (No 3) [2020] FCCA 521 at [121]. In this regard, the Court found compensation was payable where there was a causal nexus between the respondents conduct and the contraventions. Where this is established, compensation is payable.
Mr Fei may have rights in equity to seek a contribution from Mr Zhao, however that is a matter for him: (see; Burke v Lfot Pty Ltd [2002] HCA 17 at [22]; Friend v Booker [2009] HCA 21).
In the Courts view, pursuant to s 550 of the Act, Mr Fei should be liable for the full amount of the underpayment as found by the Court in the sum of $92,386.09. This amount should be paid pursuant to s 545(1) of the Act to the applicant within 28 days of the date of the orders of the Court set out the beginning of this judgement.
Pecuniary Penalties
Having concluded the contraventions outlined above, the Court is satisfied that in addition to the payment of compensation consideration should be given to the payment pecuniary penalties by Mr Fei pursuant to s 546 of the Act.
A separate hearing will be required to determine the appropriate penalties.
I certify that the preceding fifty-six (56) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Humphreys. Deputy Associate:
Dated: 24 January 2023
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