LAL v BIBER
[2019] FCCA 3653
•13 December 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| LAL v BIBER & ANOR | [2019] FCCA 3653 |
| Catchwords: INDUSTRIAL LAW – Interlocutory application – underpayment of entitlements – failing to make payments – penalties – claim against second respondent on basis they were ‘knowingly involved’ in underpayments – second respondent in liquidation – applicant did not seek leave to proceed against the second respondent – proceedings stayed by operation of ss.471B or 500(2) of the Corporations Act 2001 (Cth) – open to applicant to proceed against first respondent – leave sought to join third respondent – joinder of proposed third respondent allowed. |
| Legislation: Corporations Act 2001 (Cth), ss.471B, 500(2) |
| Cases cited: WorkCover Authority of NSW (Inspector Maltby) v Josef & Sons Contracting Pty Ltd (In Liq) [2002] NSWIRComm 226 |
| Applicant: | JEEVAN LAL |
| First Respondent: | ERDENIZ BIBER |
| Second Respondent: | BIBER FOODS GROUP PTY LTD (ACN 147 008 946) AS TRUSTEE FOR THE BIBER TRUST T/A NEW GENERATION FOODS (ABN 71 760 858 529) |
| File Number: | MLG 422 of 2017 |
| Judgment of: | Judge Riethmuller |
| Hearing date: | 3 December 2019 |
| Date of Last Submission: | 11 December 2019 |
| Delivered at: | Melbourne |
| Delivered on: | 13 December 2019 |
REPRESENTATION
| Counsel for the Applicant: | Mr White |
| Solicitors for the Applicant: | McDonald Murholme Solicitors |
| Counsel for the First & Second Respondents: | Mr Rollnik |
| Solicitors for the First & Second Respondents: | Sewell & Kettle |
| Counsel for the Proposed Third Respondent: | Mr Landross |
ORDERS
Mandi Bacon be joined in the proceedings as the Third Respondent.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 422 of 2017
| JEEVAN LAL |
Applicant
And
| ERDENIZ BIBER |
First Respondent
| BIBER FOODS GROUP PTY LTD (ACN 147 008 946) AS TRUSTEE FOR THE BIBER TRUST T/A NEW GENERATION FOODS (ABN 71 760 858 529) |
Second Respondent
REASONS FOR JUDGMENT
The applicant filed a Statement of Claim on 1 March 2017 in the Federal Circuit Court of Australia to bring proceedings for underpayment of entitlements under the relevant award and for the imposition of penalties upon the second respondent for failing to make the payments, in breach of the Fair Work Act2009 (Cth). The applicant’s primary claim is against the second respondent, who was the employer. The applicant makes a claim against the first respondent (the sole director and shareholder of the second respondent) on the basis that he was ‘knowingly involved’ in the underpayments of the second respondent.
After the proceedings were commenced the second respondent was placed in liquidation. The proceedings, in so far as they are, ‘against the company or in relation to property of the company’ are therefore stayed as a result of the operation of the Corporations Act 2001 (Cth). The applicant has not sought leave to proceed against the second respondent: thus, the proceedings against the second respondent remain stayed by operation of s.471B of the Corporations Act (or s.500(2), if it is a voluntary liquidation): see WorkCover Authority of NSW (Inspector Maltby) v Josef & Sons Contracting Pty Ltd (In Liq) [2002] NSWIRComm 226.
Whilst it appears that the underpayment could be proved as a debt of the company with the liquidator, no penalty can be obtained from the company without pursuing proceedings in a court, nor even the under-payment amount, if the liquidator declines to accept the proof of the debt.
The first respondent argues that the proceedings against him cannot continue if they are stayed against the second respondent, as the second respondent is a ‘necessary party’. There are a number of case examples where the courts have permitted a claimant to proceed against accessories when proceedings against the principle (the actual employer) are stayed by operation of the Corporations Act: see, for example, Fair Work Ombudsman v Tiger Telco Pty Ltd (in liq) [2012] FCA 479 (per Bromberg J); Fair Work Ombudsman v Fed Up Deli & Catering Pty Ltd (in Liquidation) (ACN 118 143 972) & Anor [2012] FMCA 738 (per Jarrett FM, as his Honour then was); Construction, Forestry, Maritime, Mining and Energy Union v Asbestos Removalist Pty Ltd & Anor [2019] FCCA 529 (per Hartnett J); and SDAEA v Arora Markets Pty Ltd & Ors [2018] FCCA 85 (per Driver J). However, this issue has not been specifically addressed.
If the claimant were one of a number of joint contractors, all of the joint contractors would be necessary parties to the proceedings. This flows from the fact that there is only one cause of action available to joint contractors: see Kendall v Hamilton (1879) 4 App Cas 504. If a joint contractor refuses to join in bringing the claim they can be added as a defendant to ensure that the proceedings are not stayed due to the absence of a necessary party: see Cullen v Knowles and Birks [1898] 2 QB 380; Ioannou v Baroda (Holdings) Pty Ltd [1983] VicRp 95; [1983] 2 VR 348. In the present proceedings the claimant is not a joint contractor, and thus these principles do not apply.
In tort cases, a plaintiff had only one cause of action against joint or concurrent tortfeasors, which merged in judgment: see Brinsmead v Harrison (1872) LR 7 CP 547. The effect of the rule was not to prevent a plaintiff proceeding against only one of the tortfeasors, but meant that a plaintiff could not later pursue the other tortfeasors. Since the abolition of this common law rule (see, for example the Wrongs Act 1958 (Vic), s.24) separate judgments can be given, or even a settlement reached with one tortfeasor and proceedings continued against a joint tortfeasor: see Baxter v Obacelo Pty Ltd [2001] HCA 66; (2001) 205 CLR 635. Most importantly, a plaintiff is not compelled to pursue all of the joint or concurrent tortfeasors. By analogy, with the common law there is no general principle that those jointly or concurrently liable for a tort or statutory wrong or breach must necessarily be pursued in the one action.
It remains open for a defendant to apply to the court to have another defendant joined to the proceedings if it is just and convenient to do so: see generally Cairns, Australian Civil Procedure (Thomson Reuters 2009, eighth edition) at page 292. In the present proceedings the second respondent has already been joined, but the proceedings stayed by operation of statute. If the first respondent claims that it is ‘just and convenient’ that the proceedings continue against the second respondent, it would be necessary to show that the second respondent’s interests may be affected. In these proceedings, the first respondent makes no claim against the second respondent and does not articulate how his interests are prejudiced by the applicant not proceeding against the second respondent. The liquidator of the second respondent is aware of the proceedings and does not seek to participate, indicating that the liquidator is not concerned that the current proceedings may prejudice the second respondent.
If one were to consider criminal law procedure by way of analogy (despite the fact that this is a civil penalty case dealt with as civil proceedings), the first respondent’s argument gains no assistance. An accessory may be prosecuted where the Crown decides not to prosecute the principle offender (even where the principle offender has a good defence): see Osland v R [1998] HCA 75; (1998) 197 CLR 316, and the subsequent discussion of an array of cases in IL v The Queen [2017] HCA 27; (2017) 262 CLR 268 at [26] and following.
The relevant provision upon which the applicant relies in the case put against the first respondent is s.550 of the Fair Work Act, which provides that:
(1) A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.
This section creates a primary liability on the part of the person ‘involved’ by stating that they are “taken to have contravened” the provision that creates the primary liability. This enables the accessory to be pursued as one who is primarily liable: the same effect as the criminal law with respect to an accessory. The clear words of s.500(1) are consistent with a significant underlying purpose of the Fair Work legislative scheme, that is, ensuring that employees receive appropriate minimum entitlements.
I therefore find that it is open to a claimant to proceed against a person on the basis of a claim that they were knowingly involved in a contravention, without pursuing the principal contravention. Of course, the claimant will still need to prove all of the necessary elements of the action, which includes proof that the principal breached a civil remedy provision. As the proceeding against the principal (the second respondent in this case) are stayed, the findings as between the applicant and first respondent will not bind the second respondent and there will therefore be no apparent prejudice to the second respondent’s rights. The first respondent has not articulated any prejudice he may suffer if the applicant does not proceed against the principal contravener, thus there is no basis to stay the applicant’s proceeding against the first respondent.
At the hearing of the interlocutory application, leave was sought by the applicant to join a third respondent pursuant to rule 11.02(2) of the Federal Circuit Court Rules 2001 to the proceedings and accordingly have leave to file and serve an Amended Statement of Claim. The proposed third respondent was an employee of the second respondent at the relevant time. It is alleged that she was knowingly concerned in the contraventions alleged to have been committed by the second respondent.
The applicant alleges a prima facie case against her as being a person directly involved in the actions that constitute the alleged contraventions by the corporate second respondent, based in part upon recordings of telephone conversations between her and the Office of the Fair Work Ombudsman relating to the relevant award payments. Whilst the proposed third respondent no longer works for the second respondent, she continues in the employ of entities related to or controlled by the first respondent.
In the circumstances of this particular case, I am persuaded that it is appropriate to allow the applicant to join the proposed third respondent as:
a)the employer is now in liquidation;
b)the case against the first respondent rests largely upon his role as company director and shareholder, and
c)it is alleged that the proposed third respondent was actively involved in discussions with the Fair Work Ombudsman concerning matters related to the alleged contraventions.
The proposed pleading sets out an arguable case against the proposed third respondent. The first respondent also argues that the Statement of Claim is defective in that it pleads that the second respondent breached the Fair Work Act. It is a necessary element of the case against the first and third respondents to prove actions of the second respondent that amounted to a breach of the Fair Work Act. The fact that the pleading describes the second respondent as such, and not by name, does not alter the current basis of the action being pursued against the first and third respondents. I am not persuaded that the applicant should be required to redraw his Statement of Claim.
Whilst at first blush it may appear onerous for another employee of the second respondent to be facing claims for underpayments and penalties it is important to note, as Bromwich J said in Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301 at [171] that it is:
“a matter of public policy [to require] individuals to put compliance with the law ahead of their personal interests”.
Of course, depending upon the circumstances of the case, the proposed third respondent may have a cross-claim against another person if that person instructed her to undertake the actions that amounted to a contravention (at least for the underpayment amounts), however, this is a matter for her to raise (if she so chooses) in her defence. I also note that her role and the overall circumstances of the case would be important factors in determining the amount of any penalty that would be imposed, should she be found to be ‘knowingly involved’ in the alleged contraventions.
As a result I make orders for the proposed third respondent to be joined to the proceedings and will hear the parties on appropriate timetabling orders for the proper preparation for trial in the matter. I will proceed to hear submissions on the timetabling of the matter for trial.
I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of Judge Riethmuller
Associate:
Date: 13 December 2019
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