Larosa v Number 100 Pty Ltd
[2018] FCCA 1312
•8 June 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| LAROSA v NUMBER 100 PTY LTD & ANOR | [2018] FCCA 1312 |
| Catchwords: INDUSTRIAL LAW – Wholly extraordinary case – turning on one central point – was applicant as he asserts a long-standing employee, or was he, as respondent asserts, an extortionist – evidence of all primary witnesses almost wholly unbelievable – all parties fully prepared to concoct misleading documentation to advance their interests – court not satisfied it is more probable than not the applicant was ever an employee – court unable to ascertain the true position – applicant failing on burden of proof if not otherwise. |
| Legislation: Disorderly Houses Amendment Act (New South Wales) 1995 Evidence Act 1995, s.140 |
| Cases cited: Australian Building and Construction Commissioner v Construction, Forestry and Energy Union (The Cup of Tea Case) [2018] FCA 402 |
| Applicant: | JOE (GIUSEPPE) LAROSA |
| First Respondent: | BENZCORP PTY LTD TRADING AS NUMBER 100 PTY LTD (ACN 143 409 296) |
| Second Respondent: | STEFANOS FOTOPOULOS |
| File Number: | MLG 1644 of 2014 |
| Judgment of: | Judge Burchardt |
| Hearing dates: | 13 & 14 March and 3, 4, 5 & 6 April 2018 |
| Date of Last Submission: | 6 April 2018 |
| Delivered at: | Dandenong |
| Delivered on: | 8 June 2018 |
REPRESENTATION
| Counsel for the Applicant: | Mr Biviano |
| Solicitors for the Applicant: | MDM Lawyers |
| Counsel for the Respondent: | Ms Preston |
| Solicitors for the Respondent: | NWA Legal Services |
ORDERS
The application is dismissed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT DANDENONG |
MLG 1644 of 2014
| JOE (GIUSEPPE) LAROSA |
Applicant
And
| BENZCORP PTY LTD TRADING AS NUMBER 100 PTY LTD (ACN 143 409 296) |
First Respondent
| STEFANOS FOTOPOULOS |
Second Respondent
REASONS FOR JUDGMENT
Introductory
This is an extraordinary case which ultimately turns on one central critical question. Was the applicant, Joe Larosa, as he says he was,
a longstanding employee of a brothel situated at 100 Johnston Street, Collingwood who is owed substantial amounts in respect of unpaid entitlements, or not? The respondents say he was never an employee of theirs and suggest that Mr Larosa was instead a man who extorted substantial amounts of money out of them over a lengthy period of time.
There is one aspect of the matter that, most unusually, it is appropriate to put right at the beginning of this judgment. I have heard Mr Larosa give evidence over a protracted period of time and have had the opportunity to observe his demeanour while in Court over the six days of hearing that this trial occupied. Based upon what Mr Larosa said and the way that he said it I simply do not believe him. This is so notwithstanding the mass of otherwise contradictory and unsatisfactory evidence put forward not only by Mr Larosa but also by the respondents themselves.
Since I do not believe Mr Larosa it follows that his case must fail because I am not more satisfied than otherwise that the matters he asserts are true. He fails comprehensively at the barrier of the burden of proof.
Agreed or Uncontroversial Facts
Mr Larosa was born on 10 March 1968. According to his first affidavit he has worked in adult clubs and brothels for many years having commenced when he was 18. He worked for approximately 10 years in Sydney in a number of clubs and brothels. Given that Mr Larosa was 18 in 1986 and that the Disorderly Houses Amendment Act (New South Wales) 1995, as I understand the matter, first legalised the operation of brothels in 1996, it is apparent that he is no stranger to unlawful activity.
In about 1996 Mr Larosa moved back to Victoria and resided at a property apparently formerly owned solely by his parents but of which Mr Larosa now has a one-third share. He commenced activity as a breeder of greyhounds at that property.
Mr Larosa has deposed, and there does not seem to be any material challenge, that in 2001 in the course of his greyhound breeding activities he met Arthur Tsonis. Mr Tsonis attended with a friend of
Mr Larosa’s named Raymond Sagesse who effected the introduction. It appears that while the three were together Mr Sagesse told Mr Tsonis that Mr Larosa had worked at strip clubs and massage parlours in Sydney which then led Mr Tsonis to say that he owned a licenced brothel in Melbourne. Quite why Mr Sagesse would have felt it necessary to introduce this aspect of Mr Larosa to Mr Tsonis is not clear but one may infer it was because Mr Tsonis himself was known to be a brothel owner.
According to Mr Larosa Mr Tsonis told him that his brothel was struggling and in the course of 2001 and early 2002 Mr Tsonis and
Mr Larosa spoke about the business, then known as Barabings, which operated at 100 Johnston Street. Mr Larosa deposes to refusing to assist in trying to turn around the business initially.
In 2002 Mr Larosa relocated to Preston because his father was unwell and according to Mr Larosa he started in a fairly casual way to involve himself with the affairs of the brothel. He gave Mr Tsonis “management advice” regarding the running of shifts, rostering the girls (I use the description adopted by all the parties) and running the premises. He also deposes to having used his contacts in the industry to assist in locating girls who wanted to work in the business. Given that Mr Larosa had been out of the business between 1996 and 2002, I approach that assertion with a measure of caution. I suspect that Mr Larosa was not as completely devoid of continuing involvement in the industry in the intervening period as he now asserts.
Mr Larosa appears to have commenced employment with the brothel as he puts it “essentially as a manager/advisor/ancillary support for the Brothel”. He deposes having generally looked after the night shift and Mr Tsonis taking care of the day shift. The brothel was owned by ATSO Pty Ltd which was Mr Larosa’s employer.
Mr Larosa deposes at paragraph 15 of his first affidavit (CB68) as to what his “role” was. This was the phrase he used in paragraph 14
(“I took up a role with the Brothel”). The role describes a number of activities, some of which might be described as managerial
or supervisory (attending to rosters and ensuring that the sex workers turned up for their shifts) and some were really more those of
a factotum (steam cleaning the carpets, counting towels and the like). Noteworthily, Mr Larosa deposed:
“In my role, I would often pop in and out of the premises. In my first 18 months on night shift, I would often drive the girls home to ensure that they felt safe. I was employed initially being paid under a few hundred dollars per week for my work.”
I approach this evidence with a measure of caution. It is not inherently probable to my mind that somebody who is acting in charge of
a brothel for a night shift on a routine basis would be paid under a few hundred dollars per week. Mr Larosa did not impress me as a man who would give his services at an under-value.
I note that one of Mr Larosa’s duties as put in his affidavit was “make the environment safe for the girls and ensure there was no trouble between the girls”. I further note that Mr Larosa referred to being
a member of a motorcycle club, but it is clear from the materials as
a whole that he is a member of the Hells Angels.
It is common cause that in 2010 Mr Tsonis entered into a contract with Mr Fotopolous to sell the brothel business. I will return to some of the surprising aspects of the evidence about that transaction in due course. It is plain that Mr Larosa, as Mr Fotopolous put it, came with the business. The evidence of Mr Tsonis was that in the financial year ending 2010 Mr Larosa was being paid $1,800 per week in net wages together with other benefits including “travel and accommodation expenses for Joe and his family (one per year)”.
On 14 May 2010 Mr Tsonis signed what has been described as a power of attorney (CB797) in favour of Mr Fotopolous and also his sister.
It seems reasonably clear that at about the same time Mr Tsonis and
Mr Fotopolous entered into a contract of sale for the business albeit that the vendor was ASTO Pty Ltd (Mr Tsonis’ company) and the purchaser was Benzcorp Pty Ltd which was Mr Fotopolous’ company. The purchase price was $650,000 (CB803-816).
By clause 6 it was provided inter alia that:
“6.1 Vendor and the Purchaser agree as from the Settlement Date that the Employees (as defined) shall cease employment to and of the Vendor.
6.2 The parties agree that the Purchaser is not bound to employ any of the Vendor’s employees as and from the Settlement Date and the Vendor shall attend to all matters necessary to terminate the employees employment with the least disruption to the conduct of the business PROVIDED HOWEVER the Purchaser may elect the employ and engage all or some selected employees.” [sic]
Inconsistently (arguably) with the terms of the agreement itself, employee entitlements were defined in ITEM 12 of the Schedule as:
“As employees are casual there are no entitlements to be transferred.”
Employees were supposed to be defined in ITEM 11 but were defined “as defined in annexure B” but there is no annexure B.
According to Mr Tsonis he was throughout 2010 and afterwards in an institution undergoing drug detoxification, but it is clear that from May 2010 until July 2011, when Mr Fotopolous received his licence to own a brothel, the brothel operated without a necessary licenced owner who had the relevant licence from the authorities, and the brothel was therefore run unlawfully.
I note that at paragraph 25 of his first affidavit (CB779) Mr Fotopolous refers to “at the time I held the power of attorney for ATSO” but as is apparent from the terms of the purported power of attorney this was only ever on its face given as a power over Mr Tsonis’ personal affairs not those of any company that he might control. This is all part of the murky pattern of events that so permeates this case.
As time went by Benzcorp replaced ATSO according to the records tendered and this is consistent with the purchase having been completed in 2011 following an unlawful period of operation nominally by ATSO/Mr Tsonis. It is agreed that at some point in 2010, (albeit nowhere precisely indicated), Mr Fotopoulos and Mr Larosa met, together with Nick Kyriopoulos, Mr Fotopoulos’ accountant,
as a result of which it was agreed that Mr Larosa would be paid $1,520 per week. This continued in the ultimate until payments ceased on
30 June 2014.
Some Points Arising from the Affidavit Evidence
The parties have supplied affidavits and annexures running to many hundreds of pages. It is of no utility to endeavour to paraphrase them. Given the particular circumstances of the case what I propose to do is highlight some of the more noteworthy and curious matters in the parties affidavits.
Mr Larosa’s First Affidavit Filed 13 August 2015
According to Mr Larosa he commenced work with Barabings
(the previous business name of the brothel) at an unstated date in 2003. His asserted employer was ATSO Pty Ltd, a company owned by
Mr Tsonis. He was initially paid under a few hundred dollars per week for his work. He generally looked after the night shift and Mr Tsonis the day shift. By 27 October 2014 he was sending out guidelines for the sex workers to follow and describing himself as “Joe Barabings Management”. He nonetheless asserts in the same affidavit that it was in 2005 he became a full-time employee. I would not understand
a part-time employee who may have been paid less than several hundred dollars a week (paragraph 15 of his affidavit is ambiguous) as being likely to be formulating guidelines for all employees whether working on a shift he supervised or not.
At paragraph 22 of his affidavit Mr Larosa described his asserted earnings from the 2006/2007 tax year until 2010/2011. The pay increased ostensibly from $44,000 in 2007 to $130,000 in 2011. It is asserted “the payments were made by ATSO, or other companies or businesses associated with Arthur, such as TMC Maintenance Pty Ltd and TMC Industries”. These latter two businesses have nothing to do with the operation of the brothel and it is curious to see the pay being diffused in this fashion.
Furthermore, at paragraph 24 (CB70) Mr Larosa says that in 2006 his role expanded (and he gives details) and that his pay increased to a total of $1,500 per week plus $300 in car allowance. The car allowance would not ordinarily be taxable and the pay of $1,500 a week equates to just over $75,000 a year. Not only is that not the figure given for any of the years set out in paragraph 22, being inconsistent with the variations described therein, but it is also inconsistent with even a grossed up version of any of those figures, assuming that the $1,500 a week was said to be net of tax.
According to Mr Larosa in 2006, 2008, 2011 and 2012 he travelled to Thailand on business to try and recruit Thai girls with proper work visas to work in the business (paragraph 28 CB71). He deposed to a (small) degree of success. For an employer to fund Mr Larosa’s relatively extensive travel on these trips (his phone records are voluminously annexed to the affidavit and before the Court) would not make any obvious economic sense and is, in my view, not consistent with the activities of an employee but rather more likely to be somebody who has an active share in the business.
Annexure JLR4 is a letter from Mr Tsonis to the Australian Taxation Office dated 13 August 2012. It purports to confirm that Mr Larosa was employed by ATSO during the income tax year ended 30 June 2011 and continued his employment until August 2012 when the business was transferred to Benzcorp Pty Ltd. The letter purported to confirm that during the income tax year ended
30 June 2011 Mr Larosa earned and was paid $130,000 income a year of which $50,000 was held as PAYG withholding.
It is apparent that Mr Larosa was not employed by ATSO in the 2011 and 2012 tax years. On any conceivable version of the events all parties agree that the business was fully taken over by Benzcorp in 2011. Furthermore the PAYG tax on $130,000 is nowhere near as much as $50,000. It is also inconsistent with Mr Larosa’s version of his salary in his affidavit.
Annexure JLR5 is a set of bank records for Mr Larosa’s personal bank account with the National Australia Bank. This shows that by no later than October 2011 wages were being paid for by “Benzcorp Pty Ltd” or alternatively “Benzcorp wages”.
Although Mr Larosa, like Mr Fotopolous, does not give a date for the meeting with Mr Kyriopoulos and the applicant, (he described it in paragraph 47 of his affidavit as “once the Contract of Sale was signed”) his pay per week net dropped to $1,520 a week. It is clear that from JLR3 that by no later than 17 December 2010 this had occurred although at that stage Mr Larosa’s bank accounts recorded the payer as ATSO (CB96).
Mr Larosa deposed (paragraph 55 CB77) that he occasionally received payslips from Benzcorp. Annexure JLR6 is the alleged payslips purportedly covering the weeks of 27 October 2011 and 3 and 10 November 2011. They are all described as being for “Period Ending 18/11/2011”. They purport to show payment of superannuation. No superannuation of this amount has emerged from any point of vantage of this extraordinary case. Annexure JLR7 (CB147) is
a PAYG Summary dated 3 September 2012. Although the document bears the printed signature of Mr Fotopoulos there is no indication as to who prepared it on its face.
I note that at paragraph 58 of his affidavit Mr Larosa says that he chased up Benzcorp’s accountants chasing up PAYG summaries for the years ending June 2013 and June 2014. He instructed his accountant, Mr Brosnan, to follow it up and had been informed by Mr Brosnan that he had spoken to Mr Kyriopoulos and “he was told that the wages should be based on the previous year’s statement”. It is immediately obvious therefore that the document prepared was prepared in the hope, and no more, that the two years would be identical.
Mr Larosa deposes at paragraph 73 (CB79) that:
“In late 2013, there were subtle changes made at work. Stefanos hired cleaners to do the cleaning in the morning relieving me of that duty. He also collected the takings personally also relieving me of that duty. Stefanos decided to stop advertising our services again relieving me of that duty of dealing with the advertisers.”
On 31 January 2014 the former partner of Mr Larosa, Stephanie Bell, who was also a former employee of the brothel until she was dismissed in October 2013, died in a motor vehicle collision. Thereafter
Mr Larosa deposes to having contacted Mr Fotopolous about her superannuation. According to him, the matter was not satisfactorily resolved. Thereafter he says he raised matters going to his own entitlements and I note further that he deposes he took no annual leave apart from two short trips to Europe very early on. He caused his accountant, Mr Brosnan, to prepare a spreadsheet purporting to show his entitlements (CB149) which suggests inter alia that the grossed up figure of $1,720 per week if tax were to be included would be $125,892. That is on even the most casual acquaintance with tax rates in this country a grossly inflated figure. The calculation also included “plus Fringe Benefits $50,000”, a curious insertion given that no fringe benefits have been described by anyone. The fact that Mr Brosnan is in jail for embezzlement from his former employer perhaps goes to explain this laxity.
Mr Larosa’s assertion in this affidavit that he never took any annual leave or was paid out any leave is striking given that according to
Mr Tsonis his pay package included an annual trip with his family.
Whatever else happened it is plain that on 29 April 2014
Mr Fotopoulos emailed Mr Larosa (annexure JLR9 CB151). It is written by Mr Fotopolous as director of Benzcorp Pty Ltd as trustee for the Benzcorp Trust and relevantly states:
“I am writing in regard to the termination of your employment with Benzcorp Pty Ltd as the trustee for Benzcorp Trust.
Pursuant to having sought independent legal advice, your employment with Benzcorp is deemed to have commenced on 2 June 2011.
Benzcorp has no obligation to recognise any service prior to this date between the previous business owner and yourself, as the sale of the business was not deemed to be a transfer of business.
Based on this information and the length of your service, you are entitled to a notice period of three weeks prior to your termination. In lieu of notice however, we will continue to pay your wage and entitlements up to and including the week of 30 June 2014. This places you in a considerably better financial position than if you were to be paid only the required notice period of three weeks and your accrued entitlements, up to and including 29 April, 2014 which is to be taken as the date of termination of your employment.”
Given the position of the respondents in this case that Mr Larosa was never an employee, that letter is quite astounding. It is just another of the extraordinary anomalies and largely incomprehensible quirks of this particular case.
The Affidavit of Mr Tsonis Filed 17 August 2015
Mr Tsonis deposed that he was a director of ATSO Pty Ltd which formerly traded as Barabings and operated the brothel. He deposed that in 2003 ATSO employed Mr Larosa. Mr Larosa was primarily responsible for night shifts and filled in when Mr Tsonis was on leave. As earlier indicated Mr Tsonis deposed (CB162) that in the financial year ending 2010 Mr Larosa’s salary included $1,800 per week in net wages, payment of mobile phone usage, car finance payments, car expenses, Christmas bonus up to $5,000 and travel and accommodation expenses for Joe and his family (one per year). I note in paragraph 9 of his affidavit (CB163) Mr Tsonis deposed:
“As of the 5th May 2010, I ceased to have any involvement in the running of “Barabings”. All matters pertaining to “Barabings”, including financial control were now the responsibility of
Mr Fotopoulos.”
This makes annexure JLR4, namely Mr Tsonis’ letter to the Australian Tax Office in 2012 all the more strange.
The Affidavit of Tim Brosnan
Mr Brosnan’s affidavit commences with his name, (then) business address and occupation, which is given as “Accountant”. Mr Brosnan in paragraph 1 of his affidavit deposed “I am an accountant retained by Ridge Accountants and Advisors Pty Ltd as Principal Consultant”. He deposed to knowing Mr Larosa and to being his accountant since about 2006 to 2007. Mr Brosnan deposed to receiving payslips on behalf of Mr Larosa from Penny Kyriopoulos of the Peterson Group and these are annexed as TB 1. These are the emails all showing the same week of issue notwithstanding they purported to show different weeks in October and November 2011.
Annexure TB2 (CB174) is an email to both Mr Larosa and Mr Brosnan from Ms Kyriopoulos dated 4 September 2012 which says “Please find attached Joes group certificate as requested”. This is almost certainly the document already referred to at paragraph 31. Ms Kyriopoulos was not called to give evidence and it is therefore not possible to say how or why this document was created.
I note that Mr Brosnan confirms that he prepared Mr Larosa’s tax return for 2013 on the basis of the 2012 figures as earlier mentioned. He did the same thing for his 2014 return.
Mr Brosnan confirmed his authorship of the somewhat ludicrously inflated spreadsheet purporting to show Mr Larosa’s entitlements.
The Affidavit of Mr Fotopoulos Filed 8 September 2015
Mr Fotopoulos deposed to buying 100 Johnston Street on 2 July 2011 from ATSO. He deposed to meeting Mr Tsonis in 2005 to 2006 when he was doing an electrical job for Mr Tsonis’ uncle.
Mr Tsonis told Mr Fotopoulos that he had a maintenance company (TMC Maintenance Pty Ltd (“TMC”)) and he started doing work for that company in about 2006 which is how their relationship progressed. Through Mr Tsonis he met Mr Larosa.
Mr Fotopoulos went on to say in paragraph 12 (CB778):
“As to my relationship with Arthur, I have supported him in difficult times. That includes lending him tens of thousands of dollars, and standing by him in the depths of drug addiction.”
While it is clear from the execution of the purported power of attorney that Mr Fotopoulos came to be trusted by Mr Tsonis, there is no obvious immediate reason to explain why Mr Fotopoulos was prepared to lend Mr Tsonis tens of thousands of dollars.
At paragraph 19 Mr Fotopoulos deposes that:
“In 2008 Arthur asked to borrow $50,000, which later led
to other debts owed to me. He could not pay me back and said that I should assume ownership of the Business at 100 Johnston St in lieu of repayment. The debts were deducted from
the purchase price. That is how I became involved in the Business.”
I do not find this a believable assertion. There is no explanation as
to why Mr Fotopoulos would lend such very large sums of money to Mr Tsonis. Albeit that Mr Tsonis came to trust Mr Fotopoulos it would appear, on the face of it, he was simply a business acquaintance. There is nothing in the sale agreement that suggests there has been any adjustment for prior debt. The (large) purchase price was simply $650,000. I say large because this was not in any way for the freehold of the business which always has been owned by a third party. This was ostensibly a payment of $650,000 for goodwill and presumably some small stock in trade for a business that Mr Fotopoulos says he knew nothing whatever about. Yet again this is another part of the narrative that just simply does not make sense.
As earlier indicated the power of attorney at CB797 was issued jointly with Mr Tsonis’ sister who does not appear to have done anything at any stage.
At paragraph 20 (CB778-779) Mr Fotopoulos deposes:
“From around March 2010 I had an enduring power of attorney for Arthur to run the financial aspects of the Business. I was responsible for running the finances of the Business. Initially my role was mainly to oversee that the bills were paid. My level of involvement increased once I took ownership of the Business.”
Mr Fotopoulos has annexed a copy of the purchase agreement as annexure SF 3. I note amongst other things at CB815 under the heading “Assets” Part One is described as “The plant and equipment detailed in annexure “A”” (which is not annexed). The settlement date was to take place “only when Stefano Fotopoulos obtains his Prostitution Service Providers Licence, and the lease is transferred to Benzcorp Pty Ltd”.
It should be noted that much of the affidavit constitutes a disagreement with various matters asserted in Mr Larosa’s affidavit, including as to how they met and matters of that order. I note that Ms Bell was dismissed on 8 August 2013. I note that Mr Fotopoulos deposes at paragraphs 110 to 111 (CB792) that he asserts that he gave in to Mr Larosa’s demand for a PAYG Statement and that this is what led to the document created for the year 30 June 2012. I note the initial position of Ms Kyriopoulos was that this was inappropriate because Peterson Group were not the accountants for ATSO and never had been (CB902).
I note that at paragraph 131 (CB794) Mr Fotopoulos deposed that he engaged solicitors to assist him with a termination letter to Joe and that “I had never dealt with the solicitors before”.
The Responding Affidavit of Mr Larosa
I note that at paragraph 4a. (CB179) Mr Larosa deposes:
“The First Respondent purchased the brothel/escort agency which is located at 100 Johnson Street Collingwood from ATSO Pty Ltd in mid-2010, and Stefanos Fotopoulos (Stefanos) took over the business in 2010, when Arthur Tsonis went into rehabilitation.”
I also note at paragraph 4c. Mr Larosa’s prior coyness about his motorcycle club dissipated. It is made clear when it is asserted that:
“… At that time, he also did a small job at the Hell’s Angels Clubhouse in Thomastown where he put a switch in the kitchen to fix one that was unsafe and he installed a ceiling fan.”
At paragraph 4j. (CB180) Mr Larosa deposed that he was the person who prepared rosters once the respondents took over the business in 2010. He annexed as JLR 13 a copy of the rosters he prepared for October 2012 and November 2012. I note that while the October documents (CB200-202) appear to have been sent by Mr Larosa to someone identified at “[email protected]”, the November roster was sent by Stephanie Bell to Mr Larosa (CB203-204). This is not prima facie consistent with his authorship.
The affidavit also annexes correspondence relating to the placement of advertisements by Mr Larosa on behalf of the brothel which continue through until about September 2013. It is clear that Mr Larosa was
a point of contact for Leader Newspapers over a protracted period of time. I note that even in 2011, for example, the bills were being sent by Leader Newspapers to Joe Larosa, billed to Barabings (see CB231) at a time when on any view of the matter Mr Fotopoulos had well and truly taken over.
I note that in the context of his denials of Mr Fotopoulos’ assertions about his role in the business Mr Larosa says at paragraph 4m. (CB181):
“… At the time of settlement I was an integral part of the management of the Business. I was a member of a motorcycle club. I deny ever saying words to the effect that my “services” guaranteed that the Business and premises were “safe and secure at all times”. As part of my management role, I attended to negotiations with suppliers and referring the accounts of the Business to the accountants for payment.”
He annexed as annexure JLR 17 various emails to this effect. I note that even in July 2012 Leader Classifieds were still contacting Joe Larosa as billed to Barabings (CB507).
At paragraph 4n. (CB181-182) Mr Larosa repeated the details of his reduction in salary. He said:
“… Stefanos and I had discussions with his accountant about reducing my remuneration and handing back the Holden Captiva. Those discussions occurred in 2010 and my net wages were reduced from $1800 per week including the car to $1520 per week”.
I note the surprising obscurity as to the date of this meeting from all concerned given its relative significance.
At paragraph 4s. (CB182) Mr Larosa deposed to having had keys to the safe of the business from the time Mr Fotopoulos took it over until June 2014. He deposed:
“… On or about 10 or 11 June 2014, I left a package for Stefanos which included the safe key, paintings and other keys in a bin out the front of the hotel opposite the Brunswick Police Station for him to collect.”
This seems a wholly extraordinary way to do business.
At paragraph 4jj. (CB184) Mr Larosa deposed that from mid-2010 to mid-2011 he rarely saw Mr Fotopoulos at the business. I accept that this is likely the case because Mr Fotopoulos was getting his licence, but he was still plainly in control of the business as he was paying the bills.
At paragraph 4aaa. (CB186) Mr Larosa says that it was the practice of the business to arrange for its accountants, the Peterson Group, to pay his wages and provide payslips to his accountants, Ridge Accountants & Advisors Pty Ltd by email. Annexure JLR 20 is copies of such payslips. It is immediately apparent that there is no obvious purpose in the business providing the payslips to Mr Larosa’s accountant. If they were really payslips they would have been provided to Mr Larosa. The payslips themselves appear to cover the period from 19 August 2011 (CB544) to 14 June 2012. They purport to show a base salary of $2,107 a week which after removal of tax and the addition of the $20 alleged telephone allowance asserted by Mr Larosa produced the $1,520 net pay figure.
There are a number of anomalies in the documentation. It is plain that some of the payslips were sent to Mr Larosa at the behest of Nick Kyriopoulos (see CB537). It is also plain that at CB540,
Ms Kyriopoulos emailed Mr Larosa stating:
“Hey Joe,
I have just paid last week’s wages now. There isn’t enough funds to pay todays. I spoke to Stef and he said we will try to catch up with the payments over the weekend.”
This email is itself equivocal. It is not clear whether or not it was
Mr Larosa’s wages that were inadequate or whether the wages of the staff, more generally, had fallen behind.
Mr Larosa emailed Ms Kyriopoulos also on 14 June 2012 (CB541) and stated:
“Penny hi I just spoke to Stef and he said you are going to bring everything up to date today. Please let me know if this is not correct.”
Once again it is not clear as to the extent to which this was Mr Larosa or an overall picture as to employees generally.
On 15 June 2012 Mr Larosa emailed Ms Kyripoulos (CB543):
“Hi Penny. Will my wages be brought up to date today? Please let me know.”
On 15 June 2012, Ms Kyriopoulos wrote to Mr Larosa (CB542) saying:
“As discussed with Stef I have paid your wages today in the amount of $650.00 which was last week's pay and the $1,520 that was paid yesterday is for this weeks pay.” [sic]
To which Mr Larosa replied:
“If you paid $650 than im still owed $870 to bring me up to date as I paid receptionist wages with $870 I had. Sorry about the miscommunication.” [sic]
From this, although it is clear that the payments were referred to as wages, the matter is dealt with by Mr Larosa in a surprisingly loose way for somebody who was ostensibly an employee reliant upon that income alone to make ends meet.
Finally, I note that the pay advices which are annexed as JLR 20 start off as pay advices from “Benzcorp Trust” and then in October 2011 change to “Benzcorp Pty Ltd”. I note that the payslips all record PAYG withholding and superannuation, but it is clear that no such deductions were made.
At CB186, Mr Larosa also details correspondence sent to
Mr Fotopoulos by the Fair Work Ombudsman. Annexure JLR 21
is a copy of an email exchange between Mr Larosa and
Ms Kyriopoulos and the letter from the Fair Work Ombudsman to
Mr Fotopoulos.The letter from the Fair Work Ombudsman to Mr Fotopoulos is at CB560-561. It explains that the Fair Work Ombudsman was currently conducting an audit of employee records and wage rates within the sex industry, specifically in regard to clerical workers employed in Victoria. The letter advised that the business, Barabings, had been selected for audit. Mr Fotopoulos was required to forward various information.
Mr Larosa emailed Ms Kyriopoulos on 30 August 2012 (CB559):
“Hi penny nicks got a letter for u to email me. Urgent please. Thanks”
Ms Kyriopoulos sent the letter to him shortly thereafter.
There is absolutely no obvious reason why if Mr Larosa was merely an employee he would have been involved in the response to the Fair Work Ombudsman.
Mr Larosa also annexes as JLR 22 a copy of his tax returns for the years ending 30 June 2011 to 2014. At CB564, the 2011 return purports to show an income of $130,000 with $50,000 withheld. That round figure is all too pat It is not anything remotely like the amount of tax payable under Australian law (see ATO website), which would be $35,732, plus $2,567 Medicare.
The 2011-2012 tax return records at CB593 tax withheld from two employer entities. It purports to be tax on a combined income of $116,000, but the tax withheld ($37,000) is roughly the applicable tax for $130,000, as I have just indicated. I further note that 52 times $2,107, Mr Larosa's ostensible salary, would produce a salary of $109,564.
I also note in passing that Mr Larosa is one of the most unsuccessful landlords imaginable. His deductions and maintenance always vastly exceeded any rent he achieved.
At CB606-607, the 2012 to 2013 tax year records an income of $108,524 with $30,521 tax. This figure is replicated in the figures for the tax year 2013 to 2014, this doubtless being because of the advice earlier referred to.
It is sufficient to say that the tax returns that Mr Larosa relies on raise as many questions as they answer.
The Responding Affidavit of Mr Tsonis
Mr Tsonis' responding affidavit sworn 19 August 2016 confirms at CB653 that he entered a residential treatment facility for severe substance dependence and deteriorating mental health on 5 May 2010 and remained in treatment for 14 months. He deposed the financial control of the business was handed to Mr Fotopoulos and
Mr Kyriopoulos of the offices of the Peterson Group.On the same page, Mr Tsonis confirms that Mr Fotopoulos did lend him substantial amounts of money (up to $50,000) in an attempt to help him save his business. No explanation whatever for this considerable largesse is given. Mr Tsonis further confirmed that in the period that Mr Fotopoulos and Peterson Group ran the business, no company tax, company GST or PAYG were paid in relation to Barabings. Mr Tsonis makes glancing reference to having been bankrupt.
At CB654, subparagraph f., Mr Tsonis asserts that when Mr Fotopoulos got his licence on 2 July 2011, he failed to honour his antecedent agreement with Mr Tsonis to make the final payment for the purchase of Barabings. This left $180,000 outstanding. Mr Tsonis asserts that Mr Fotopoulos said he had applied those funds to pay outstanding debts, both personal and business. Mr Tsonis takes issue with that assertion, but I note that it is not clear whose debts were said to be paid, whether they were those of Mr Fotopoulos or whether they were those of Mr Tsonis.
Mr Tsonis went on to assert that large numbers of debts that should have been paid for the operation of the business, more particularly the bills of ATSO, had not been paid. What happened to these debts is wholly unclear. It is clear however that the implication that Peterson Group should have been paying bills for ATSO (see paragraph i. CB655-656), is one that the Peterson Group has always denied.
The Affidavit of Mr Greg Tsambos
Mr Tsambos is a licensed building practitioner who deposed to doing work at 100 Johnston Street in about October 2013. He said that the works were arranged by Joe Larosa, who arranged for payment of the invoice. The invoice is at CB662 and is plainly addressed to Joe Larosa personally. If I accept Mr Tsambos' evidence, this means that Mr Larosa had the capacity to order cabinetry work at 100 Johnston Street.
The Affidavit of Mr Joe Larosa Junior
This affidavit is essentially to the effect that Mr Larosa Junior had met Mr Fotopoulos on a large number of occasions, contrary to
Mr Fotopoulos' denials.
The Affidavit of Mr Peter McAuliffe
Mr McAuliffe is a licensed plumber and gasfitter. He deposed to doing work from time to time at 100 Johnston Street between January 2012 and January 2014. He deposed that Mr Larosa arranged for the work to be done and arranged for payment of invoices. He did not provide any such invoices.
The Affidavit of Mr Bill Zogogiannis
Mr Zogogiannis is an electrician. He deposed to doing work at 100 Johnston Street from time to time between 2011 to 2014. The invoices he provides are all addressed to Barabings.
The Affidavit of Hannah
Hannah, in her affidavit affirmed 7 September 2015, deposed to not providing her legal name out of fear of Mr Larosa (it emerged during the hearing that he well knew her legal name, in any event). She deposed to threats made by Mr Larosa. Having initially commenced work as a sex worker, by 2014, Hannah was a manager. She detailed her initiatives as a manager and her role. She deposed to having virtually no contact with Mr Larosa, whom she deposed never worked in any management capacity or otherwise contributed to the business. She denied that Mr Larosa had performed the work that he had alleged in his materials.
The Supplementary Affidavit of Mr Fotopoulos
At CB980, Mr Fotopoulos analysed the phone records obtained in relation to Mr Larosa. Without condescending to great detail, the purport of his affidavit is to the effect that not only did Mr Larosa make an astounding number of phone calls (which he clearly did), on multiple different phones, but that he was frequently far from the brothel, being, for example, in Seymour (where, of course, Mr Larosa now lives). At CB982-984, Mr Fotopoulos details numerous telephone calls made by Mr Larosa in places in Victoria distant from Melbourne, such as Echuca, Ballarat, Shepparton and Bendigo.
He further records calls in Darwin, in both July to August 2010 and April 2014, with a number of phone calls from Sydney, Adelaide,
New South Wales and Queensland and at CB984 phone records showing calls in Thailand in 2011, Thailand and Malaysia 2012 and Europe in May 2012 (this being the one holiday that
Mr Larosa has conceded).
Mr Larosa's Tax Returns and Bank Accounts
Mr Larosa's tax returns are in volume 4 of the Court Book (“CB”).
At CB1134, I note that in his notice of amended assessment for the year ended 30 June 2011, his amended taxable income was held to be $152,258, with tax of $44,285.46, but that he obtained credit for PAYG of $50,000. This is the anomaly to which I have already referred elsewhere.At CB1146, Mr Larosa's tax return for the financial year 2007 shows payment by TMC Maintenance Pty Ltd (“TMC”) in the sum of $23,625. Given that Mr Larosa said he always worked for Barabings, this payment is surprising.
At CB1147, there is a payment summary for the financial year 2006, which shows that Mr Larosa was in receipt of Centrelink payments from 1 July 2004 until 21 February 2006. While Mr Larosa's evidence puts his introduction to the business as gradual (but rapidly achieving significant responsibilities), this series of payments sits uneasily with his narrative.
At CB1185, Mr Larosa's tax return for the year ended 30 June 2008 shows payments from three employers of whom one, with a business number ending in 422 is TMC. TMC appears to have taxed
Mr Larosa's $40,500 earnings at 50 per cent.At CB1230, being Mr Larosa's bank records, the last payment by Benzcorp is shown as the 19 June 2014, in the sum of $3,040.
Mr Larosa's bank accounts show striking amounts of cash deposits. In June 2014 he was in receipt of Centrelink payments (CB1227), which went on until 23 June 2015. In June 2014, he deposited $4,250 in cash. In July 2014, he deposited $7,930 in cash, plus several substantial cheques. At CB1242, it is apparent that he deposited just over $12,000 in May 2014. Going back to May 2012, he deposited over $4,000 at CB1358-1360. These substantial amounts of cash payments go back, as far as I can see, to around about November 2010, increasing significantly by 2011.
These very substantial amounts of cash are not otherwise explained in Mr Larosa's evidence, and while they might be susceptible of innocent explanation, they seem extraordinarily high, particularly during the periods when he was in receipt of Centrelink in 2014 onwards, bearing in mind the disastrous position he had as a landlord, as shown in his tax returns. I note that the bank records show at CB1464 ATSO paying
Mr Larosa $1,500 in wages. This was prior to the takeover of the business by Mr Fotopoulos and is inconsistent with Mr Larosa's asserted high wage, which was subsequently reduced.Mr Larosa's bank accounts also show extraordinary amounts of money being spent in gambling. At CB1469_126, records for January 2016, when Mr Larosa was in receipt of Centrelink benefits, show that he spent $8,900 on 4 January. These dates relate to withdrawals at the end of 2015 and the beginning of January 2016, but they are certainly extraordinary amounts for somebody on Centrelink. CB1469_583 shows that Mr Larosa spent $10,000 at the TAB on 5 November 2013, a single day. On 7 to 8 November 2013, he spent $13,200 in like fashion.
The Text Messages behind Tab 37
These messages, in my view, show Mr Larosa being involved in the brothel business. At CB1478, Mr Larosa is seeking to put
Mr Fotopoulos in touch with someone called Wendy who “has girls to bring” and who was a friend of Mr Larosa's. Mr Larosa chases
Mr Fotopoulos up.CB1484, Mr Larosa is sending a demand for payment. He seeks $173,000 into his mortgage account, and various other matters.
Mr Fotopoulos replied:“Ok can I spoke to my solicitor. Can I send you offer which he thinks is more than fare snd every one saves in legal costs and know one gets involved and all settled.” [sic]
At CB1486, Mr Fotopoulos texts Mr Larosa saying:
“I spoke to an accountant and he told me that i was not responsible for anything from the previous owner as there was nothing on contract of sale nor any documentation regarding previous employees. The position was not made redundant as the duties are still being done by somebody else. Since the day
I spoke to you i owe 4 weeks and one week for you being over the age of 45.”I note that records from the Business Licensing Authority at CB1506 confirm that Mr Larosa’s license to act in the capacity of an approved brothel manager ceased on 28 October 2012. It would seem that his son, Vince Larosa, also applied for such a licence in August 2012. In the course of response to a query by the agency, Mr Larosa made
a declaration, CB1511, in which he asserted relevantly:“However in regards to not stating a family member as being involved in the sex work service providing business I did not see the relevance as he is employed as a cleaning and maintenance worker, not as a manager or sex worker.”
No submissions have been made as to whether that document operates as a concession against interest. On any view, however, this is part of the generally cloudy nature of the evidence in this case.
At CB1530-1532, Mr Larosa emails Ms Kyriopoulos on 11 November 2011, requesting three recent pay slips for "bank of Melbourne".
Ms Kyriopoulos replied with the three payslips, having clearly been asked to do so. By December 2011, Mr Larosa was contacting
Ms Kyriopoulos seeking new payslips straight away, because the bank had noted that the dates on payslips previously provided were all the same.At CB1537, I note that the historical extract from the ASIC snapshot in relation to Benzcorp Pty Ltd shows its registration on 30 April 2010. This is entirely consistent with Benzcorp effectively taking over the brothel at that time.
At CB1545, I note a record from the Australian Taxation Office dated 15 January 2018, which records a payment of superannuation by the trustee for Benzcorp Trust on 31 March 2013 in the sum of $860. This was said to be a quarterly contribution, but it is hard to see what it might be 9 per cent of.
At CB1623, there is a set of text messages. This shows that in October 2013, Mr Larosa was involved with arrangements to reconfigure the rooms at the brothel. The tenor of the text messages suggests an involvement at a level rather greater to my way of reading than that of an employee.
The phone records, which go on and on from volume 7 of the Court Book onwards, show a huge number of texts and an enormous number of mobile phone calls. At CB2389-2390, there are what seem to me
at least to be very considerable numbers of phone calls made while
Mr Larosa was in Thailand in 2011. I note that he was there twice in 2011 (see CB2450).
Materials Exhibited During the Currency of the Proceeding
Exhibit A6 is inter alia a letter from the Australian Taxation Office to The Trustee for Benzcorp Trust dated 22 February 2018 (CB1546). Relevantly, the letter states:
“Our investigations have found an error has resulted in the ATO incorrectly issuing correspondence on 15 January 2018 to individual Joe La Rosa with a notification and payment of a superannuation contribution.
We can confirm that The Trustee for Benzcorp Trust does not have an obligation for superannuation guarantee contributions for Joe La Rosa as it was determined by the ATO he was not an employee for the purpose of the Superannuation Guarantee (Administration) Act 1992.”
Finally, I note exhibit R3, which is a series of rosters for 2013 allegedly by Mr Fotopoulos in his own hand.
A Point about the Materials Referred To
It should be noted that I have trawled at some length through the parties' voluminous materials filed in the Court Book. In my opinion, they all go to confirm the very murky picture that the evidence in this case has presented. However, it should be noted that as a matter of reasoning, I did not commence with the Court Book materials and work back to the oral evidence given. Rather, it was because of the very firm conclusions that the oral evidence engendered in me, that I sought to see if the written documentation would provide any greater light.
The Evidence Given at Court
Introductory
The evidence in this case went for days. Any endeavour to paraphrase it in any sort of detail would lead to a judgment of inordinate length. Given the conclusions I have reached about the veracity, or more accurately lack of veracity, of the primary witnesses, I propose simply to detail their evidence and my impressions of it in a somewhat general way.
Mr Larosa adopted his two affidavits as true and correct. In evidence-in-chief he confirmed details of various phone numbers and explained a number of the documents in the Court Book, all to the effect that he was heavily involved in the brothel and was an employee.
Mr Larosa was cross-examined about his lengthy history of work in the sex industry. He gave details of how he came to return to Victoria in 1996 and his eventual contact with Mr Tsonis. He gave details of his Seymour property and its occupation from time to time by tenants and/or by his son. He was also cross-examined about his involvement within the greyhound industry. His answers as to how he supported himself between 1997 to 2002 struck me as being marked by their absence of detail. On his evidence, the farm where he and his parents lived is something of a hobby farm, and the business with racing dogs was unprofitable.
Mr Larosa gave evidence of his commencement of employment, as he put it, in 2002 at the brothel. He would give girls a lift home after their shift. He said he would shut the premises at the end of the night shift and was driving the girl’s home. His hours were from 7:00 pm until 4:00 am, although less on some days. And he said that once Mr Tsonis was in rehabilitation, he opened and shut the premises. I interpolate and observe that if this was so then his spread of hours of work would have been very substantial. He confirmed that he was told he was not required for duties in 2014 and received a letter of dismissal.
He was stood down in February 2014, but was still opening and closing the premises until May 2014. He described what he said was a process whereby his duties were slowly taken off him in 2014. He said everything was okay with Mr Fotopoulos until his matter went to the Fair Work Commission. He thought Mr Fotopoulos was a good friend who treated him well when he was working for him. Mr Larosa said that he put the takings from the brothel in envelopes outside
Mr Fotopoulos' house. He said that Mr Fotopoulos started to be more hands-on in about 2012 to 2013 and had cut down on advertisements. Mr Larosa said that he prepared rosters and it was hard to get girls
to work in the brothel.Mr Larosa was cross-examined about his pay in the period from 2002 to 2005. Mr Larosa said that he was not paid much money until 2005, but after that time, it had increased and he got a car. Mr Larosa’s answers about this aspect of his evidence were evasive and unresponsive. When it was put to him that his pay in 2006 was $1,500 per week plus $300 for a car, and that this was not $1,800 per week pay, he did not answer the question.
Mr Larosa confirmed that he was not given any payslips, but they were given at random. He said his accountant has asked for them. He professed not to know if he asked for payslips to present to the Bank of Melbourne, and once again his answers were evasive and unresponsive. He said he did need the payslips to refinance. He asked Mr Fotopoulos to authorise three payslips, and he asked him to ring the Peterson Group.
Mr Larosa confirmed that he knew about the company ATSO. This paid him for his work at Barabings. He had done no more work for
Mr Tsonis after the transfer of the brothel. When Mr Fotopoulos got the power of attorney, Mr Larosa just kept going. Mr Larosa said he was running the company and giving the money to Mr Fotopoulos. He said that his employment with Benzcorp was in mid-2011. The only change was that the payslips changed from ATSO to Benzcorp.Mr Larosa confirmed that exhibit R3 was the roster for 2013. He said that the handwriting looked like Stephanie (Ms Bell), and then Anna.
Mr Larosa was extensively cross-examined about his phone records and the numerous places shown at them, which were not Number 100. In my view, his answers were self-serving and prevaricating. This is so, even though I accept that such phone records may have occasionally been distorted by the phone attaching to a tower which is not in the physical proximity of the caller. Ultimately, Mr Larosa had to concede that the records of his travels interstate were substantially correct.
Mr Larosa was adamant that he had done work cutting down shrubs for the business and had cleaned a shower when somebody defecated in it, and otherwise done whatever jobs were necessary to assist the operation of the brothel. When cross-examined about work done by Active Data Solutions to the doorbell and panic buttons and the like, Mr Larosa's answers were in the form of questions to counsel, rather than directly responsive. I note that he did not supervise the work himself, but only organised it.
When cross-examined about the texts at CB912 ($173,000 into my mortgage account, etc.), Mr Larosa's answers were rambling and incomprehensible.
The above is only a fleeting skate across the totality of the evidence that Mr Larosa gave. As I say, he was in the witness box for some time. Indeed, I specifically limited the time for cross-examination as it seemed to me we were rather going round in circles. I note, as indeed the applicant's written final submissions point out, that counsel for the respondents never expressly put a number of important matters to
Mr Larosa. The respondents' case is that Mr Larosa is a standover man who extorted money from them. One might have expected this assertion to have been at the core of the questions put to Mr Larosa, but it was never put.Notwithstanding these omissions, Mr Larosa was one of those unfortunate persons whose evidence is unbelievable almost from the moment that it starts. Mr Larosa, it is true, generally tried to stick to his story, but every word he said almost from the inception of his evidence onwards and the way that he said it convinced me that I did not believe him. I have been listening to sworn oral evidence since 1975, and cannot recall a witness who impressed me more strongly as being patently unbelievable.
The Evidence of Mr Tsambos
Mr Tsambos was called and adopted his affidavit as true and correct. He confirmed that the invoice at CB662 was his invoice. His evidence struck me as being truthful.
The Evidence of Joe Larosa Junior
Mr Larosa adopted his affidavit as true and correct.
Mr Larosa's evidence was mainly about the greyhound business, but his evidence struck me as being unremarkable.
The Evidence of Mr Bill Zogogiannis
Mr Zogogiannis adopted his affidavit as true and correct. He gave evidence as to the work done by Active Data Solutions at the brothel. Although Mr Zogogiannis was not in every sense a good witness
(he first said he did work on the front door 10 years ago, but when challenged with his invoice from 2012 had to change the date), I accept that he clearly did install panic button and do other work, as he said he did.
The Evidence of Tim Brosnan
Mr Brosnan gave evidence from jail. He is in jail for what is presumably a reasonably lengthy time for embezzling moneys from his former employer.
Mr Brosnan adopted his affidavit as true and correct.
In cross-examination, he conceded he was in jail for 42 charges of theft, involving 55 offences between 2004 and 2009. Most of these offences related to his employment. The sentencing Judge said he was a poor prospect for rehabilitation. He has been before the courts more recently and faces further dishonesty charges. He stole $2 million from his employer between August 2010 to 2011. He was a part-time contractor.
Although he worked for Ridge & Company from 2009 onwards, he is not a registered accountant and never was. He was involved with
Mr Larosa socially and had bought a car from him.He had been involved in the termination of Mr Larosa's employment, and has prepared the spreadsheet showing the allegedly huge amounts owing, which is annexure TB3 to his affidavit.
It was put to him that he knew Benzcorp thought that Mr Larosa was not an employee in 2011 to 2012. Mr Brosnan's answer was at first indistinct, but he then denied that this was the case and asked why payslips had been provided.
I do not once again propose to traverse Mr Brosnan's answers in any great detail. His answers were generally clear and crisp, but I simply did not believe him. He was combative and argumentative in his answers and I formed the impression, once again, from what he said and the way that he said it that he was simply not honest. His present circumstances only go to support that conclusion.
The Evidence of Mr Tsonis
Mr Tsonis adopted his affidavits as true and correct.
Under cross-examination, Mr Tsonis said he had started a business (not Barabings) in 2001 to 2002. He bought the freehold and got a surveyor/solicitor to re-permit it as a brothel. Mr Larosa was working in demolition with a friend of his (Mr Larosa did not suggest any such evidence at any such stage).
Mr Tsonis expressed long experience in the sex industry and sought to present himself as a reformed character. He said that the business was lucrative when he sold it, generating $8,000-$10,000 per week net. He said Mr Larosa was involved with TMC odds and ends (not
a suggestion commensurate with the amounts Mr Larosa was paid by TMC). It emerged that Mr Brosnan was Mr Tsonis' chief financial officer. The clear picture that emerged for me from Mr Tsonis' evidence is that Mr Tsonis, Mr Larosa and Mr Brosnan were all close associates.Mr Tsonis said that following his removal as a result of his major drug use in 2010, he gave Mr Larosa the office key and he would do things that a manager could not do. He had the key to the safe. I note that
Mr Tsonis expressed outrage at the thought that Mr Larosa might have gone to Thailand to recruit staff. He confirmed that he held the licence to operate the brothel, which is different to a manager's licence. He said that the business was run under ATSO when he was not present, Mr Fotopoulos was in charge, but he did not have a licence.It should be noted that as with the other witnesses, I am skating over this evidence, because I formed such a clear picture. Mr Tsonis was combative, aggressive and, in my opinion, clearly untruthful in some of the answers that he gave. I simply do not believe him as a witness of truth, having seen him and heard him give his evidence.
Noteworthily, however, Mr Tsonis did say that the letter at CB109 from ATSO was not his signature and not his document. This is the letter ostensibly signed by Mr Tsonis to the Australian Tax Office confirming Mr Larosa's employment in 2011 to 2012 and an income of $130,000 a year, of which $50,000 was withheld as PAYG.
That is one aspect of his evidence I was minded to accept, as it was given with conviction. It does, however, only go yet again to show the difficulties that the evidence in this case presents.
The Further Evidence of Mr Larosa
In the light of Mr Tsonis' answer, permission was given for Mr Larosa to be recalled and further cross-examined. Mr Larosa said he was never given the letter to which reference has just been made. It was not given to him by email. He just grabbed his file when he left and this document was not fabricated by him. Mr Larosa also denied fabricating the invoices from Mr Zogogiannis.
The Evidence of Mr Fotopoulos
So far anyone reading this judgment would form the view, correctly, that I take a very poor view of the primary witnesses called on behalf of the applicant. They were all manifestly unbelievable. This depressing tendency did not alter in the evidence of Mr Fotopoulos.
Mr Fotopolous gave his occupation as an electrician. He adopted his affidavits as true and correct. Once again, I propose to skate relatively lightly over his evidence. He denied all material differences that arose from the evidence of Mr Larosa and Mr Tsonis. He asserted that there were no discussions about Mr Larosa’s duties before he started employment. He said there were never any discussions to do with work in the business. This is plainly untruthful as the text messages
to which I have already referred show Mr Larosa’s involvement.
He sought to explain away Mr Larosa’s transporting the bushes that had been chopped down and said that this was done by Mr Larosa
of his own accord using his own vehicle.Mr Fotopoulos was adamant that it was his handwriting in exhibit R3, the roster for 2013. In July Stephanie Bell, who was the manageress, did the roster for the month. Mr Fotopolous took issue with every aspect of the case against him. He denied that Mr Zogogiannis had done any work at the premises. He complained that Mr McAuliffe was engaged only because he was the first available plumber and made
a mess of the job. He denied Mr Larosa’s involvement with the purchase of wallpaper and said that this had been arranged by Ms Bell. These answers are merely illustrative. He was cross-examined for
a very lengthy period of time and as with Mr Larosa, Mr Tsonis and
Mr Brosnan he was at no point a credible witness. I found particularly unbelievable his endeavours to explain away his numerous calls to
Mr Larosa. It should be noted that these aspects of his evidence were in evidence-in-chief.When cross-examined Mr Fotopolous went from bad to worse. His evidence that he only obtained control over the business when he obtained his licence and that his accountants had been threatened by Mr Larosa had all the hallmarks of being made up on the run. His evidence was at all times aggressive and combative and he had
a pronounced tendency to answer questions with rhetorical questions of his own.Mr Fotopolous did concede that he called Mr Larosa some 340 times during 2011 to 2014 and he said that some of these calls were pretty aggressive, but were not about Number 100. He said the phone records showed harassment of him by Mr Larosa. I would simply say that the numbers of phone calls involved by Mr Fotopoulos to Mr Larosa are scarcely indicative of the non-relationship that Mr Fotopoulos was trying to suggest. I do accept, however, that Mr Larosa made over 990 calls to Mr Fotopoulos and numerous other calls to other numbers.
An area of evidence I had particular difficulty with concerned the purchase of the business. Mr Fotopoulos was adamant Mr Larosa had no involvement. A meeting took place. As he put it, there was no discussion of the sale price of $650,000. It was suggested that
Mr Perkins, the landlord, would be paid unpaid rent out of the purchase price. Mr Fotopoulos said his accountant prepared the contract of sale and this may well be correct given its deficiencies. Mr Fotopoulos’ suggestions that after the contract was signed he was not involved in the business until he obtained his licence is plainly wrong. He had
Mr Tsonis’ power of attorney and arranged, whether directly or through the Peterson Group, to have bills paid on behalf of the business.
He had the keys to the safe to look after the finances.Mr Fotopoulos’ evidence seeking to suggest that Mr Larosa had not managed the premises in his absence in the United States in late 2010 was completely incredible. A further area of difficulty in
Mr Fotopoulos’ evidence was his continuation of payments to
Mr Larosa once he obtained his licence. He said that Mr Larosa made it difficult for him to stop the payments. This evidence was given in a fashion that I find wholly unbelievable. Similarly, Mr Fotopoulos was unable to explain why there had been one superannuation payment made to Mr Larosa, (even though the ATO correspondence suggests it was made in error).Mr Fotopoulos denied being in constant contact with Mr Larosa as he was always busy. He said he was focused on electrical work. He denied that Mr Larosa was running the business. He further denied, contrary to the obvious evidence, that Mr Larosa had ordered and obtained advertising contracts. When confronted with some of
Mr Larosa’s interaction with the advertisers Mr Fotopoulos answered sneering, “Good bloke, isn’t he?”, before saying that the work was not done for him. Mr Fotopoulos, who is a large man (Mr Larosa is also very heavily built and obviously strong, albeit not so tall) was at all times aggressive and threatening in his demeanour when responding to counsel. The only aspect of his evidence that I contemporaneously regarded as being particularly believable was his explanation that the tin to be ready for the back fence referred to at CB1474 was spare tin that Mr Larosa wanted for his dog fences in Seymour.I should make it clear that while I formed the most negative view of
Mr Fotopoulos as a witness, it should be noted that he also impressed me as sharp and quick-witted in the witness box.Mr Fotopoulos was cross-examined about the PAYG summary at CB147, which shows Mr Larosa as an employee with a 2012 tax year salary of $96,002 and tax of $27,002. Mr Fotopoulos said his accountant prepared this and he authorised it. He accepted that it indicated employment. He said the document was produced as a result of Mr Larosa’s harassment and which itself followed an audit by the Australian Tax Office on Mr Larosa. Mr Larosa was not an employee despite the document indicating that he was.
It should be noted that even taking Mr Fotopolous’ evidence at its best, the document he prepared or caused to be prepared was plainly misleading the Australian Tax Office.
When taxed with a letter at CB151 dated 29 April 2014 by which
Mr Larosa’s employment was terminated, Mr Fotopoulos said he did not write it. His accountant prepared this letter based on the spreadsheet at CB149 (Mr Brosnan’s ludicrously inflated document). He says he had no input into the letter, but had read it before he signed it. He agreed to pay Mr Larosa until the end of June 2014 because Mr Larosa requested it. The letter was based on Mr Brosnan’s spreadsheet and his accountant had sought legal advice. He had never had a solicitor.When taken to CB1486, his text to Mr Larosa referring to the denial of existing pay obligations, Mr Fotopoulos said this was what he was advised. He did not know the full story. He had not paid Mr Larosa annual leave or long service leave.
Mr Fotopoulos was adamant that Mr Larosa had threatened him in June 2014. Mr Fotopoulos made the gesture attributed to Mr Larosa referred to in Mr Fotopoulos’ police statement at CB825 and repeated the gesture in Court. This is one part of his evidence I accept.
It should be noted that in the relatively extensive re-examination that followed the cessation of Mr Fotopoulos’ evidence his answers were, in my view, circumlocutory and largely self-serving.
The Evidence of Hannah
Hannah adopted her affidavit as true and correct. In-chief she said that the renovations in 2013 were undertaken while she was there and that she and Ms Bell were the driving force. She said the wallpaper was hard to hang, but she had bought it. She maintained that she is paid $180 for nine hours work and night shift of $150 for seven hours work. She sought to clarify this the following day as being net figures.
I should say straightaway that I do not believe that somebody would be working at night for seven hours for $150 net.In cross-examination it emerged that Mr Larosa, in fact, knew the witness’ name (there is no need for me to set it out in this decision). She conceded she had been a sex worker in 2008 when she started. Essentially, her evidence was consistent with her affidavit and her general assertions that Mr Larosa was not involved in the business.
Hannah was a slightly better witness than all the others, but she is clearly closely aligned with Mr Fotopoulos for whom she continues to work.
Findings about the Facts
In circumstances where the quality of the evidence is as unbelievable as it is in this case, working out what actually happened becomes extremely difficult. I have already made it plain, perhaps more than once, that I did not believe Mr Larosa at any stage. Likewise,
Mr Tsonis and Mr Fotopoulos.Mr Larosa plainly had some sort of involvement with the business at Number 100 Johnston Street for an extended period of time. The years when Mr Tsonis was in charge are shrouded necessarily in some measure of mystery. Apart from anything else, they predate 2010, which is a long time ago. Whatever role Mr Larosa played it is plain that he, as Mr Fotopoulos put it, came with the business.
Mr Fotopoulos was at pains to say that he knew nothing about the brothel industry when he got into it. Given that he had paid $650,000 (if you assume he actually paid it) for what was no more than goodwill and some minor stock and trade, this assertion is wholly unbelievable.
It is plain that a combination of Mr Fotopoulos and Mr Larosa ran the brothel illegally from the time of its purchase until the time
Mr Fotopoulos got his licence in July 2011. This speaks equally poorly of both of them.While from time to time Mr Fotopoulos has caused documentation to be prepared which is wholly inconsistent with his denials that
Mr Larosa was ever an employee of his, these are not in any way decisive. I accept that the three payslips provided to Mr Larosa for the bank were prepared in a fashion typically insouciant to any kind of proper responsibility by The Peterson Group. They gave the same week’s date and had to be re-doctored to fit the purpose.In fairness to The Peterson Group, however, they were as I find operating at something of a distance (I note their rapid denial of ever having acted for ATSO when the matter was raised) and may, indeed, have been under the impression that Mr Larosa was an employee being paid $1,520 a week.
In a landscape in which even the one external witness called,
Mr Brosnan, turns out to be a thief on a large scale who misrepresented his position as an accountant even in his affidavit (where as noted his profession is given as an accountant) one is hard put to find any tufts of objective evidence to satisfy the Court that any kind of firm conclusion can be reached. As I find Mr Larosa, Mr Brosnan and Mr Fotopoulos and for that matter, Mr Tsonis are all people well-prepared to produce fraudulent documentation. This is a serious finding to make and one that brings into play the operation of s.140 of the Evidence Act 1995, but I have no hesitation in making it.What is equally clear is that Mr Larosa was never an employee. The level of his involvement with the business from time to time would be wholly extraordinary for a person who was merely a manager on a relatively modest salary of $1,500 per week net (and there is no suggestion that tax was ever deducted from some larger gross figure nor, with the exception of the one superannuation payment, any superannuation ever paid). Such little objective evidence as there is (for example, from the Australian Tax Office) supports the proposition that Mr Larosa was not an employee. I note that he was, apparently, subject to an audit.
Mr Larosa’s all too numerous phone calls, even when he was in another country or at a considerable distance from Melbourne, suggest an involvement with the business wholly inconsistent with his being an employee. True it is he may have done things from time to time to assist, such as arranging for advertising, arranging for some repairs and so on. These are equally consistent with his having some sort of proprietary interest in the brothel.
In the end my conclusion can be stated as shortly as I think it was at the commencement of these all too lengthy reasons for judgment.
Mr Larosa was a totally unbelievable witness as were the primary other witnesses that he called. He simply does not satisfy me that he was ever in truth an employee. It is not more probable than otherwise that he was.Quite what he really was remains open to conjecture, not least because of the transparent dishonesty of Mr Fotopoulos who was prepared whatever his misgivings to produce documents to be given to responsible third parties that he knew himself were untrue. Was
Mr Larosa some sort of silent partner? Was he an enforcer (he is certainly strong enough to be one and gave this as part of his duties)? Was there a gradual falling out with between Mr Larosa and
Mr Fotopoulos that led to the ending of whatever their relationship was? I am quite unable to say. What I am certain of, however, and I say it again, is that Mr Larosa has not satisfied me that it is more probable than otherwise that he was ever an employee.
How do these findings operate on the case as put
Given the rolled up nature of the statement of claim it is not easy to disaggregate the various claims.
The first set of complaints asserted in the applicant’s statement of claim relate to events from February 2014 onwards following the tragic death of Ms Bell. At paragraph 22 it is pleaded that the applicant asked Mr Fotopoulos about the superannuation entitlements of Ms Bell, which is pleaded as being the exercise of a workplace right. (In fact, it is pleaded as being on behalf of all employees). It is pleaded that this gave Mr Larosa a workplace right within the meaning of s.341(1)(c)(i) of the Fair Work Act 2009 (“the Act”). It is next pleaded that in February 2014 Mr Larosa was suspended. It is pleaded that Mr Larosa queried this suspension between February and April 2014 and thus exercised a workplace right within the meaning of s.341(1)(c)(ii) of the Act.
It is next pleaded that in late April 2014 Mr Larosa and Mr Fotopoulos had a conversation during the course of which Mr Fotopoulos said that the applicant’s position with Benzcorp was to be made redundant and that the applicant said that his employment commenced in 2002 and his redundancy payments should be paid from that date. It is pleaded that Mr Fotopoulos said that the applicant would be paid his ordinary wages up until the end of June but would receive no other payments. This was pleaded, once again, as constituting the exercise of a workplace right within s.341(1)(c)(ii) of the Act.
The statement of claim goes on to plead the termination of employment by the letter dated 29 April 2014.
It is pleaded that the termination letter represented, inter alia, that
Mr Larosa’s employment with Benzcorp commenced on 2 June 2011 and that he was entitled to only three weeks’ notice of termination. It is then pleaded that these representations were false, and that Mr Larosa by his solicitors notified Benzcorp of various employment entitlements owing to the applicant. This is pleaded as an exercise of a workplace right within s.341(1)(c)(ii). Finally, it is pleaded that
Mr Fotopoulos refused to pay Mr Larosa any employment entitlements and, if he wanted any, he would have to take him to Court. This is described as “entitlements refusal”.”The pleading then details the asserted contraventions to s.340 of the Act. The suspension is asserted to constitute the adverse action within the meaning of s.342(1)(b) of the Act because the applicant was wrongly prevented from performing work in his employment and/or denied the ordinary usual instance of his employment.
The redundancy threat is asserted to have constituted adverse action within the meaning of s.342(1)(b) or s.342(1)(c) and the applicant was subjected to improper conduct that caused him fear, distress, anxiety and worry and had the effect in making his employment less secure.
Termination is asserted to constitute adverse action within the meaning of s.342(1) of the Act in that the applicant was dismissed in his employment.
The entitlements refusal is asserted to constitute adverse action within the meaning of s.342(1)(b) and/or s.342(1)(c) of the Act in that the applicant was subjected to improper conduct that caused him fear, distress, anxiety and worry and had the effect of denying him his employment entitlements.
It was then pleaded that these actions were taken because of or for reasons including the applicant’s exercise of workplace rights.
It is next put that the respondent Benzcorp contravened s.345 of the Act by knowingly or recklessly making a misleading representation about the applicant’s workplace right to the benefit of s.117 of the Act and his continuous service within the meaning of s.22 of the Act.
There is next a claim of failure to pay annual leave and failure to provide payslips, failure to provide Long Service Leave payments.
Finally, it is pleaded that in any event Notice of Termination of the Employment Contract was six months at common law and that this had been breached.
Section 341(1) of the Act relevantly asserts:
“(1) A person has a workplace right if the person:
(a) is entitled to the benefit of, or has a role or responsibility under, a workplace law, workplace instrument or order made by an industrial body; or
(b) is able to initiate, or participate in, a process or proceedings under a workplace law or workplace instrument; or
(c) is able to make a complaint or inquiry:
(i) to a person or body having the capacity under a workplace law to seek compliance with that law or a workplace instrument; or
(ii) if the person is an employee--in relation to his or her employment.”
Workplace Law is defined in the dictionary of the Act relevantly as meaning:
“(d) any other law of the Commonwealth, Estate or Territory that regulates relationships between employers and an employees is (including by dealing with occupational health and safety matters).”
The first complaint appears to me to be to the effect that as a result of Mr Larosa exercising his workplace right in querying Ms Bell and others employee’s superannuation this gave rise to his suspension.
It is immediately apparent that because Mr Larosa was never an employee he cannot have exercised a workplace right within the meaning of s.341(1)(c)(ii) of the Act.
I accept that a complaint of this character has the capacity to involve the exercise of a workplace right within the meaning of s.341(1)(c)(i) if the facts are made out. It should be noted that the case as pleaded in respect of employees other than Ms Bell and Mr Larosa is not made out by Mr Larosa’s evidence. At paragraph 81 of his first affidavit
Mr Larosa deposed to asking Mr Fotopoulos whether he had paid
Ms Bell’s superannuation contributions to which he replied that he had not because she was on Centrelink entitlements. At paragraphs 83-84 he deposed at CB81:“83. I quickly came to the realisation that Stefanos and Benzcorp were not properly paying staff and was not properly paying withholding tax or paying superannuation contributions to their employees. I know Benzcorp employed me and the receptionists. It appears they had not withheld tax and paid superannuation contributions for any staff member.
84. From time to time during February to April 2014, I would again raise with Stefanos the issue of Stephanie’s and my superannuation contributions in discussions, but Stefanos would refuse to be drawn on the matter and refused to make any contributions.”
Given that this is the only evidence that touches on this matter so far as I can see, it is plain that Mr Larosa never made any complaints about the collection of superannuation for anybody other than himself and Ms Bell.
The statement of claim does not in terms plead that the suspension, which is given as the contravention of s.340 of the Act, was a response to Mr Larosa’s raising of his and Ms Bell’s superannuation entitlements. It might be inferred that this is the case albeit the rolled up nature of the pleading makes it hard to be sure. Assuming in Mr Larosa’s favour that the matter has been sufficiently clearly articulated for it to be fair to be pressed in this fashion, I do not think that Mr Fotopoulos suspended Mr Larosa because of his query about Ms Bell’s superannuation entitlements. Indeed, even if he raised his own entitlements, which is far from clear, this was not the reason for any of the action that flowed. What had clearly happened was that
Mr Fotopoulos had arrived at a point where he no longer wished to retain whatever services it was that Mr Larosa was providing for him.Mr Fotopoulos was undoubtedly fed up with having Mr Larosa in the business. The all too frequent harassing phone calls, which I accept occurred, took place against a backdrop where, as I find, Mr Larosa was getting paid $1,520 a week for performing only the most negligible duties, bearing in mind that these were not being performed as an employee. It was not the prospect of the complaint to a third party (presumably the regulatory superannuation authorities and/or the Australian Taxation Office) that caused Mr Fotopoulos to do what he did. Rather, it was his dissatisfaction with the ongoing relationship in which he was still finding himself with Mr Larosa. This leaves to one side the question whether superannuation of tax legislation are laws that regulate relations between employers and employees.
All the other workplace rights asserted are pleaded as arising under s.341(1)(c)(ii) of the Act. Put shortly, they must fail because
Mr Larosa was never an employee.The next matters pleaded are contraventions of s.345 of the Act. These rely upon the matters in paragraphs 31 to 33 of the statement of claim. Paragraph 31 pleads the letter dated 29 April 2014 which purported to terminate the employment of Mr Larosa. The letter represented to
Mr Larosa that Benzcorp had taken independent legal advice, that his continuity of employment with Benzcorp stated on 2 June 2011 and that he was only entitled to three weeks’ notice of the termination of his employment. He has pleaded that each of these representations were false because the applicant’s continuity of service with Benzcorp started in June 2002. His minimum statutory period of notice was four weeks and common law notice was six months.There is no doubt that the termination letter was false. Mr Fotopoulos sought to explain it away as having been prepared by his accountant on legal advice (and it would be spectacularly incompetent legal advice in the circumstances). He was, on any view, reckless in sending a letter that he himself must have known was untrue. Mr Larosa was never an employee and for these purposes the notice of termination was, therefore, plainly false as a result as it purported to terminate his employment as an employee.
It is pleaded that the termination letter knowingly or recklessly made a false or misleading representation about the applicant’s right to the benefit of s.117 of the Act and the applicant’s continuous service within the meaning of s.22 of the Act. Since the applicant, Mr Larosa, was never an employee he was never entitled to the benefit of s.117 of the Act. Furthermore, his continuous service did not attract the operation of s.22 as he was not an employee. Accordingly, while the letter was undoubtedly knowingly or recklessly false, it did not in my opinion actually contravene s.345 because it was not a false or misleading representation about the workplace rights of Mr Larosa as he did not have any for these purposes.
Even if I was wrong as to this, egregious as I find the termination letter to be on any view, this is an extraordinary case in which I would nonetheless not be minded to give Mr Larosa any remedy pursuant to s.545 of the Act in any event. The entire starting point of his case is that he was an employee. I have found that he has not made out his case. This is not a case in which Mr Larosa should have any reward.
The next matters pleaded are contraventions of s.44 of the Act in relation to annual leave.
Mr Larosa was never an employee so s.44 cannot apply. Neither Benzcorp or Mr Fotopoulos was ever the employer of Mr Larosa.
Similarly, the assertion that Benzcorp did not provide the applicant with payslips at any time during his employment (something in part different to the case and evidence actually presented) cannot involve contravention of s.536 of the Act because Mr Larosa was not an employee.
Similarly, the contraventions alleged of the Long Service Leave Act cannot be established because Mr Larosa was never an employee who could have accrued long service leave.
Finally, it is put that reasonable notice of termination of the contract was six months. As it transpired Mr Larosa was given just over two months’ notice by virtue of the letter dated 29 April, which ultimately took effect at the end of June 2014.
This was not a contract of employment, so principles relating to common law employment contracts are not directly applicable. The facts as I have found or, more accurately, been unable to find them do not lend themselves very readily to any assessment of what would be reasonable notice in respect to a contract of this sort in any event.
I accept the general proposition that where parties are in a business relationship which has no fixed term it may be appropriate for the Court to infer that reasonable notice should be given and that reasonable notice would be assessed according to the relevant circumstances and the indicia of the relationship. Here, however, whatever the relationship between Mr Larosa and Benzcorp was,
it found its expression in what by and large seemed to have been weekly payments. I would interpolate and say, if I have not said so before, the fact that Mr Larosa on at least one occasion paid an employee out of his own funds is not consistent, in my view, with his being an employee, but rather somebody with some more significant interest in the business. Nonetheless, in circumstances where the parties felt it appropriate that the payment be weekly this would be in the particular circumstances of the case, in my view, an appropriate period of notice. It was the established periodicity of payment which governed the parties’ relationship for some four years or so of its existence.If I was wrong in this regard, taking Mr Larosa’s pay as the only indication I have, and assuming that it was taxable in Mr Larosa’s hands as I think it was (notwithstanding that I have no doubt tax has not been paid on it) a period of two months would, in any event, be an adequate period of notice to discharge the contract at common law, in any event.
Conclusion
This has been a very off-putting case from start to finish. I came into the case with no preconceptions as to the nature of the industry, which is not unlawful after all, although it was obvious that it was not possible given the enormous difference in the parties’ positions that both of the primary parties could have been entirely truthful. Almost from the start, however, I was overborne by a feeling of active disbelief in the evidence I was hearing. I have done my best to review some of the salient points of the objective evidence which only go to support my suspension of belief in the truthfulness of the primary witnesses. As I said right at the beginning, Mr Larosa falls, if nowhere else, at the hurdle of the burden of proof.
I refer to the decision of North J in Australian Building and Construction Commissioner v Construction, Forestry and Energy Union (The Cup of Tea Case) [2018] FCA 402 at [79]-[80]:
“79. In Millar v Minister of Pensions [1947] 2 All ER 372, Lord Denning explained at 374B:
If the evidence is such that the tribunal can say: “We think it more probable than not,” the burden is discharged, but, if the probabilities are equal, it is not. [Emphasis added.]
80. In Carney v Newton [2006] TASSC 4 the Full Court of Tasmanian Supreme Court (Underwood CJ, Evans and Blow JJ) at [61] said that if, in a civil case the evidence was “exactly balanced” the jury must return a verdict for the defendant.”
This is a case in which in the ultimate I have done the best I can to approach the sea of materials and the morass of dishonest evidence in as organised a way as has been within my powers. I remain keenly conscious that whatever the true story is I have not been told it. The only order the Court will make is that the application be dismissed.
I certify that the preceding two hundred and ten (210) paragraphs are a true copy of the reasons for judgment of Judge Burchardt
Associate:
Date: 8 June 2018
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