Moulder v Jeffreys
[2024] FedCFamC2G 1026
•11 October 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Moulder v Jeffreys [2024] FedCFamC2G 1026
File number(s): SYG 1545 of 2023 Judgment of: JUDGE MANOUSARIDIS Date of judgment: 11 October 2024 Catchwords: INDUSTRIAL LAW – where employee of deregistered company alleges that sole director of the company was involved in the company’s failure to make payments in accordance with an award – whether award covered the employee’s employment – whether company failed to make payments it was required to make under the award – whether sole director of the company was a person involved in company’s failure to pay amounts it was required to pay under the award – employee establishes that he was covered by the award and the company had failed to make payments to the employee it was required to make under the award but employee fails to establish that the sole director was involved in the company’s failure to comply with the award – application dismissed. Legislation: Corporations Act 2001 (Cth), ss 588G(1), 588M(2), 588R
Fair Work Act 2009 (Cth), ss 45, 550(1), (2)
Educational Services (Post-Secondary Education) Award 2020, cl 4.1, 4.2, 15.1, 16.1, 18.2, 19.2, 20.2, 21.2, 22.3, 23.3, Schedule C
Cases cited: Director of the Fair Work Building Industry Inspectorate v Bavco Pty Ltd & Ors (No.2) [2014] FCCA 2712
Fair Work Ombudsman v Chatime Australia Pty Ltd [2022] FedCFamC2G 934
Fair Work Ombudsman v Chatime Australia Pty Ltd (No 2) [2023] FedCFamC2G 712
Fair Work Ombudsman v Priority Matters Pty Ltd [2017] FCA 833
Giorgianni v R (1985) 58 ALR 641
Richardson and Wrench (Holdings) Pty Ltd and Richardson and Wrench Limited v Ligon [1994] FCA 1222
Division: Fair Work Number of paragraphs: 36 Date of hearing: 1 October 2024 Place: Sydney The Applicant: Appeared in person, by video Counsel for the Respondent: Mr S Reidy, by video Solicitor for the Respondent: Blossom Lawyers ORDERS
SYG 1545 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: CHRISTOPHER MOULDER
Applicant
AND: BRUCE MICHAEL JEFFREYS
Respondent
ORDER MADE BY:
JUDGE MANOUSARIDIS
DATE OF ORDER:
11 OCTOBER 2024
THE COURT ORDERS THAT:
1.The application is dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
INTRODUCTION
From 30 August 2021 to 13 February 2023 the applicant, Mr Moulder, was employed by a company called Makerspace & Company Pty Ltd (MCPL) as a “Facilities Manager”.[1] The respondent, Mr Jeffreys, was initially one of three directors of MCPL but, during Mr Moulder’s employment, was the sole director of MCPL. On 14 February 2023 MCPL went into voluntary liquidation.
[1] Applicant’s Application at [7]– [9]
Mr Moulder, who is not legally represented, alleges that MCPL contravened s 45 of the Fair Work Act 2009 (Cth) (FW Act) by failing to pay him three classes of amounts (claimed amounts) to which he says he was entitled under the Educational Services (Post-Secondary Education) Award 2020 (Award). These are afternoon shift penalty rates totalling $2,568.66; annual leave loading of $606.27; and superannuation contributions totalling $7,912.54. Mr Moulder further alleges that Mr Jeffreys was involved, within the meaning of s 550 of the FW Act, in MCPL’s contraventions of s 45 of the FW Act, and seeks orders that Mr Jeffreys pay to him the claimed amounts. Mr Moulder also alleges that MCPL incurred the obligations to pay the claimed amounts when MCPL was trading insolvent; and, for that reason, Mr Jeffreys, as the sole director of MCPL, is liable under s 588G(1) of the Corporations Act 2001 (Cth) (Corporations Act) to pay the claimed amounts to Mr Moulder.
In these reasons for judgment, therefore, I consider whether Mr Moulder is entitled to succeed on any of the claims he makes against Mr Jeffreys under the FW Act. I also consider whether this Court has jurisdiction to determine Mr Moulder’s claim under s 588G(1) of the Corporations Act.
BACKGROUND
MCPL’s business
According to the report MCPL’s liquidator prepared on 28 February 2023,[2] MCPL had traded as a multi-disciplinary workshop facility and education provider from leased premises situated in Marrickville, New South Wales. MCPL also subleased part of the premises it leased to individual and businesses. MCPL was originally funded through a related company, Makerspace & Company Foundation Limited (MCFL), which held deductible gift recipient status, and obtained donations which it provided to MCPL.
[2] MFI1- Exhibit A.
According to Mr Jeffreys, MCPL was a not-for-profit organisation with a “Charitable DGR status” (that is, a “deductible gift recipient”), which was established to provide public access to maker space facilities, and provide a comprehensive creative education program and studios for makers of all types.[3] This statement is not entirely correct, because it was MCFL, not MCPL, that held the “Charitable DGR” status.
[3] Affidavit of B M Jeffreys, 27.04.2024, [2].
In the report he prepared on 28 February 2023, MCPL’s liquidator recorded his preliminary view that MCPL may have traded whilst insolvent since 30 June 2019. The liquidator based his view on MCPL’s balance sheet showing net liabilities from 2019 onwards; ongoing trading losses; a “[c]urrent ratio less than 1 from June 2019 and onwards”; the loss of related party funding; and accruing GST, PAYG, and superannuation liabilities. The liquidator estimated that MCPL incurred debts totalling $285,096 “since the estimated date of insolvency”. [4]
[4] MFI1- Exhibit A, p.11
MCPL’s management structure and Mr Jeffrey’s role
Mr Jeffreys was appointed a director of MCPL on 26 October 2018. At that time there were two other directors, these being Ms Anna Lise De Lorenzo, and Mr Kris Spann. Those two directors resigned in April 2019, and Mr Jeffreys remained the sole director of MCPL until 14 August 2023, when MCPL was deregistered. Although Mr Jeffreys was the sole director, the business of MCPL was managed by a general manager. Ms De Lorenzo was the general manager until April 2019, when she was replaced by Mr Spann. Some time before 28 August 2021 Ms Sharp replaced Mr Spann as general manager; and Ms Sharp was the general manager while Mr Moulder was employed by MCPL.
In his affidavit Mr Jeffreys describes his role in the management of MCPL’s business. Mr Jeffreys deposed that:[5]
[5] Affidavit of B M Jeffreys, 27.04.2024, [3]-[13].
(a)he was not a member of MCPL’s staff; he received no payment for his role as director; and he donated over $300,000 to MCPL over a 10 year period;
(b)he had no official duties, responsibilities, or role in the day to day running or operations of MCPL;
(c)he did not work at MCPL’s premises, and was not based there, his usual occupation being a managing director of a manufacturer, wholesaler, and retailer of prescription optical glasses, and a director of a car sharing business;
(d)his role as a director was to support the concept of MCPL’s business by performing decision making at “the governance level”, which included providing input on business strategy, and advice and guidance as sought;
(e)he was involved in MCPL because of his business experience;
(f)he met with MCPL’s staff approximately six times a year to listen to what they had to say, and to provide his views on the long term strategy for MCPL;
(g)he did not provide advice on operational matters;
(h)he was not involved in recruiting employees, the writing of job descriptions, calculating wages, setting terms of employment, interviewing persons applying for positions, processing or paying wages, transferring funds from MCPL’s bank account for wages, calculating superannuation payments, or MCPL’s payroll system; and Mr Jeffreys was not a signatory to any offers of employment to employees including Mr Moulder;
(i)he had no knowledge of what Mr Moulder was being paid, or the basis of the calculation of the amounts he was being paid; and
(j)he does not have and never had access to employment documents, files, employee payroll systems, or any management platform.
Mr Moulder cross-examined Mr Jeffreys about the extent of his involvement in MCPL’s business and in particular about his knowledge of the solvency or insolvency of MCPL.
The Employment Contract
By letter dated 28 August 2021, MCPL offered to Mr Moulder employment with MCPL in the position of “Facilities Manager” on the terms of an employment contract that accompanied the letter (Employment Contract). The letter of offer was on MCPL’s letter head; and it was signed by Ms Sharp as “general manager”. Mr Moulder accepted the offer by signing the Employment Contract on 10 September 2021, although, as provided by the Employment Contract, Mr Moulder commenced his employment on 31 August 2021.[6] In evidence given under cross-examination, Mr Jeffreys denied he had interviewed Mr Moulder in connection with MCPL’s offering employment to him.[7] Mr Moulder did not in his affidavit give any evidence about the circumstances in which MCPL decided to offer him employment. I am therefore not prepared to find that Mr Jeffreys interviewed Mr Moulder, although nothing turns on whether Mr Jeffreys did or did not interview Mr Moulder.
[6] MFI1- Exhibit D
[7] T39.20-30
The recitals to the Employment Contract stated that MCPL wished to employ Mr Moulder as a “facilities manager”, and provided that Mr Moulder must carry out the duties set out in the schedule to the Employment Contract. The schedule defined the duties in detail. These included “general management of wood, metal, and digital workshop facilities” which in turn included the following:[8]
[8] MFI1- Exhibit D, p.10- p.11
-Develop and maintain systems to Increase efficiency and easy hand-over of work in all of the following:
•Managing work-flow of student and member work - including storage systems, waste management (including recycling and reuse), sourcing and maintaining levels of consumables within budget, and any other impacting systems or needs not otherwise mentioned in the Schedule.
•Manage workflow of any external client fabrication services including client communications and prototyping services.
•Develop and maintain Operations Manual for Wood, Metal and Digital workshop (including but not limited to: start of day, end of day, recycling, services, stock levels, etc.) ensuring easy handover to other staff.
•Develop, [i]mplement and maintain and safety measures [i]ncluding but not limited to machinery, arrangement of space, first aid, incident reporting and signage.
-Facilities:
•Source, repair and maintain equipment and fitout.
•Maintain a clean, healthy, safe and beautiful Wood, Metal and Digital workshop and any areas used by students or members.
•Facilitate and maintain Loan Agreements for equipment on loan from the community.
•Maintain t[i]dy toilets and kitchen (share role with other staff).
-Client Interactions:
•Develop and deliver induction process to train new students, members, staff and teachers on safe use of the space and introduce them to the culture of MakerSpace &company.
•Meet and greet any interested passers-by - give everyone a wonderful first impression.
•Manage Membership enquiries pertaining to Wood, Metal and Digital workshop
•Actively seek out new students, teachers and members, and contribute to marketing efforts with the whole team.
Another duty came under the heading “Education Program”, and included the following particular tasks:
-Liaise with the General Manager/Educational Program Manager and contracted teachers for smooth running of classes and student communications.
-Source new teachers and develop new courses and programs in consultation with the General Manager/Educational Program Manager, to
•Ensure a rich, varied and exciting education program.
•Showcase and make the most of the facilities and expertise of the teaching staff.
•Ensure consistent and growing revenue from classes in your department.
•Facilitate and promote the culture and values of MakerSpace &company.
- Welcome and support contracting teachers AND students.
The schedule to the Employment Contract provided that Mr Moulder’s hours of work would be 30 hours a week “to be worked between 8am and 9pm Monday to Sunday in accordance with the roster which is to be established (and personally reviewed) between the staff and the Board”. The schedule also provided the following under the heading “Salary”:
30 hours per week at $32.13 per hour. This rate aligns with the Educational Services Post Secondary Award level 6.1 A 1.5% first aid allowance will be added to your ordinary hours rate on completion of First Aid Certificate..
An additional 17.5% annual leave loading rate applies to the allocated 4 weeks annual leave and also a 10% superannuation contribution.
The Award
As at 30 August 2021, when Mr Moulder commenced his employment, cl 4.1 of the Award provided as follows:
This industry award covers employers throughout Australia in the post-secondary educational services industry and their employees (other than trades, cleaning or maintenance staff) employed in the classifications listed in Schedule A—Classifications—Academic Teachers, Schedule B—Classifications—Teachers and Tutor/Instructors and Schedule C—Classifications—General Staff, to the exclusion of any other modern award.
Clause 4.2 defines “post-secondary educational services industry” to mean:
the provision of education and training to persons over the age of 16 years who have exited the school education system; and includes:
(a)vocational education and training (VET) teaching leading to qualifications recognised within the Australian Qualifications Framework (AQF);
(b)English Language Intensive Courses for Overseas Students (ELICOS) and Teaching English to Speakers of Other Languages (TESOL) teaching;
(c)Languages Other Than English (LOTE) teaching;
(d)English language, literacy and numeracy teaching;
(e)English language teaching in migrant education programmes;
(f)community and adult education teaching not leading to qualifications recognised by the AQF;
(g)undergraduate and postgraduate teaching leading to the conferring of accredited degrees or other higher education qualifications recognised within the AQF, except teaching in a university approved to operate in Australia;
(h)foundation studies programmes or bridging course teaching where the programme or course is preparatory to or articulates with programmes of teaching leading to higher education qualifications recognised within the AQF; and
(i)the employees of any student unions established for students in institutions providing post-secondary educational services.
Relevant to this proceeding are the classifications provided for in schedule C to the Award, which is headed “Classifications – General Staff”. Schedule C identifies 9 levels, each level being differentiated according to training and skill, occupational equivalents, the degree of supervision, tasks performed, judgment independence and problem solving, and typical activities.
The following clauses are relevant:[9]
(a)Clause 15.1 (now cl 16.1) specified the minimum rates for ordinary hours work for each classification.
(b)Clause 18.2 (now cl 19.2) requires the employer to make such superannuation contributions to a superannuation fund for the benefit of an employee as will avoid the employer being required to pay the superannuation guarantee charge under superannuation legislation with respect to the employee. [10]
(c)Clause 20.2(a) (now cl 21.2(a)) entitles an employee to be paid an “afternoon and non-permanent night shift” of 115% of minimum hourly rates. Clause 20.1(a) defines “afternoon shift” to mean “any shift finishing after 7.00 pm and at or before midnight”.
(d)Clause 22.3(a) (now 23.3(a)) which entitles an employee to be paid an annual leave loading of 17.5%.
[9] These clauses have subsequently been renumbered, without altering their substance
[10] I explain what the superannuation guarantee fund is in Fair Work Ombudsman v A to Z Catering Solution Pty Limited & Anor (No.2) [2018] FCCA 2299, at [165]
Course of Mr Moulder’s employment
According to Mr Moulder, whose evidence I accept, he worked 30 hours per week – from 1 pm to 9 pm on Mondays, from 9 to 5 on Wednesdays, from 1 to 9 on Thursday; and from 9 to 4 on alternating Friday and Saturday shifts. There is little evidence of the tasks Mr Moulder in fact performed, although, in evidence he gave under cross-examination, Mr Moulder said he gave classes. I am satisfied that Mr Moulder did teach, and that at the very least the work he performed consisted of at least a substantial proportion of the duties listed in the Schedule to the Employment Contract.
November 2022 conversation
According to Mr Moulder, in November 2022 he and the general manager, Ms Sharp, met with Mr Jeffreys “to discuss the non-payment of wages, reimbursements and Superannuation”.[11] Mr Jeffreys told Ms Sharp and Mr Moulder that they would not be paid; and that if either were to push the issue, Mr Jeffreys would have no choice but to close the business. Mr Jeffreys further said that the alternative and only way for Ms Sharp and Mr Moulder could recoup their losses was to take over the lease and business, and become the new directors.
[11] Affidavit of C Moulder, 15.04.2024, [28]
Mr Jeffreys accepts he had a meeting with Mr Moulder and Ms Sharp in November 2022; but he denies he had a conversation to the effect Mr Moulder recalls. Mr Jeffreys has deposed as follows:[12]
In about November 2022, I had a meeting with the Applicant and the General Manager to discuss the options for re-structuring the Employer to secure its ongoing viability. The discussion described by the Applicant at paragraph 28 of his affidavit did not occur. At no time has the Applicant directly informed me or put me on notice of any unpaid or underpayment of wages or entitlements or superannuation. At no time during this discussion did I attempt to discourage any employee from ‘pushing’ the issue of unpaid wages and entitlements.
At the meeting in November 2022, the Employer had made an application for funding with the NSW Government which, if successful, would have made a material difference to the financial viability of the Employer. I did all that I could as a director to work with the General Manager and the Applicant to ensure the continuity of the Employer as I was acutely aware that it was a valued place of employment for its employees. Subsequent to the meeting in November 2022 I was informed in December 2022 that the Employer was not successful in gaining the grant funding applied for
[12] Affidavit of B M Jeffreys, 27.04.2024, [29]- [30]
This evidence must be considered in the light of two other items of evidence. One is the following passage from Mr Jeffrey’s affidavit:[13]
If there has been an underpayment of wages or entitlements, I had no involvement in or knowledge of this, aside from the issue being raised by the General Manager in October [sic] in October 2022 when I advised that it had to be addressed.
[13] Affidavit of B M Jeffreys, 27.04.2024, [36]
The second item of evidence is a document dated 6 October 2021 the Australian Taxation Officer (ATO) issued to MCPL titled “Superannuation Guarantee Employer Statement of Account”.[14] The document records that as at 1 October 2021 MCPL owed $40,014.33; that, as at 1 July 2021 MCPL had a debit balance of $39,384.22, and that MCPL made no payments for the quarter ended 30 September 2021. It is open to find, and I do find that these amounts represent the superannuation guarantee charge the ATO had imposed on MCPL.[15]
[14] Exhibit H
[15] I explain what the superannuation guarantee fund is in Fair Work Ombudsman v A to Z Catering Solution Pty Limited & Anor (No.2) [2018] FCCA 2299, at [165]
I find that Mr Moulder had a conversation with Mr Jeffreys to the effect Mr Moulder recalls. In evidence given under cross-examination, Mr Jeffreys says he had been aware since the middle of 2019 that the ATO had imposed a superannuation guarantee charge; on his own evidence, Mr Jeffreys says that “the issue”, namely, wages not being paid, had been raised by “the General Manager in October 2022”; and, again on his own evidence, the meeting of November 2022 concerned the options for re-structuring of MCPL. The matters Mr Moulder says were discussed, namely, Mr Moulder and Ms Sharp taking over MCPL’s business, are matters relating to “the restructuring” of MCPL.
CLAIMS UNDER FW ACT
Whether MCPL failed to pay amounts under Award
On the basis of Mr Moulder’s affidavit, I make the following findings:
(a)Mr Moulder’s employment was covered by the Award. The activities of MCPL, as identified by the duties Mr Moulder was required to perform, fell within cl 4.2(f) of the Award, namely, “community and adult education teaching not leading to qualifications recognised by the AQF”.
(b)Mr Moulder was classified as a general staff, level 6. That is because the schedule to the Employment Contract provides that Mr Moulder would be paid at the hourly rate of $32.13; and that is the hourly general staff rate for “level 6.1” provided for in cl 15.1(d) (now cl 16.1(d)) at the time Mr Moulder commenced his employment.[16] That is a basis for inferring that both Mr Moulder and MCPL were of the view that the work Mr Moulder had been engaged to perform was work covered by general staff, level 6.
(c)Each of the hours Mr Moulder worked from 1 to 9 pm constituted an “afternoon . . . shift” within the meaning of cl 20.2(a) (now 21.2(a)) of the Award, and that Mr Moulder was entitled to an afternoon shift penalty equal to 115% of his hourly rates for that work pursuant to cl 20.2(a) (now 21.2(a)) of the Award.
(d)Mr Moulder was paid some, but not all of the afternoon shift penalty; and he has not been paid $2,568.66 of the afternoon shift penalty to which he became entitled.
(e)Mr Moulder had taken 106.4 hours’ worth of leave, but MCPL had not paid him the 17.5% loading, as it was required to do under cl 22.3(a) (now 23.3(a)) of the Award, that amount being $606.27. I do not accept Mr Jeffrey’s submission that Mr Moulder lost his entitlement to the 17.5% loading because he and MCPL had agreed that Mr Moulder could take annual leave before it had accrued.
(f)MPLC made only four payments into Mr Moulder’s superannuation fund; and MCPL had issued payslips which falsely represented that more had been paid. The superannuation contributions MCPL failed to pay pursuant to cl 18.2 (now cl 19.2) of the Award totals $7,912.53.
[16] Clause 15.1(d) (now 16.1(d)) provides two “pay points” for a general staff level 6 classification. The notion of a “pay point”, and its significance, is stated in cl C.2.1 of Schedule C: “Where there is more than one pay point for a classification level an employee will be eligible for movement to the next pay point within the classification level after each 12 month period, following a performance review that the employer will complete before the end of the 12 month period.” The amounts payable under the Award increased during Ms Moulder’s employment with MCPL.
Given these findings I further find that MCPL contravened s 45 of the FW Act by failing to:
(a)make superannuation contributions, contrary to cl 18.2 (now cl 19.2) of the Award;
(b)pay afternoon shift penalties, contrary to cl 20.2 (now cl 21.2(a)) of the Award; and
(c)pay a 17.5% loading on the annual leave Mr Moulder had taken, contrary to cl 22.3(a) (now cl 23.3(a)) of the Award.
Whether Mr Jeffreys involved in MCPL’s contraventions
That MCPL has contravened s 45 of the FW Act does not necessarily mean that Mr Jeffreys himself contravened s 45. Whether Mr Jeffreys is to be taken to have contravened s 45 of the FW Act turns on whether Mr Jeffreys was “involved” in MCPL’s contraventions of s 45. That follows from s 45 being a “civil remedy provision”, and from s 550(1) of the FW Act, which provides that a “person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision”. A person’s being “involved in a contravention” for the purposes of s 550(1) of the FW Act is defined in s 550(2) as follows:
A person is involved in a contravention of a civil remedy provision if, and only if, the person:
(a)has aided, abetted, counselled or procured the contravention; or
(b)has induced the contravention, whether by threats or promises or otherwise; or
(c)has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d)has conspired with others to effect the contravention.
For a person (accessory) to be involved in another’s contravention of a provision of the FW Act, two conditions must be satisfied.[17] The first is that the accessory must have committed an act or omission that links the accessory with the conduct that constitutes the contravention. As Flick J stated in Fair Work Ombudsman v Priority Matters Pty Ltd:[18]
Underlying the authorities is the proposition that a person cannot become “involved in” an act merely by reason of his knowledge of the conduct being pursued; to be “involved in” conduct, there has to be some conduct which “implicates” a person in the offending conduct such that they become “involved in” or “associated with” that conduct.
[17] See my discussion of the relevant principles in Fair Work Ombudsman v Chatime Australia Pty Ltd [2022] FedCFamC2G 934, at [74]-[84]
[18] Fair Work Ombudsman v Priority Matters Pty Ltd [2017] FCA 833 at [116]
The second condition that must be satisfied before an accessory will be found to be involved in another person’s contravention of a civil remedy provision of the FW Act is that he or she has knowledge of the essential facts that constituted the contravention. What is required is actual knowledge, which “is a question of the actual condition of the defendant's consciousness”.[19] Constructive knowledge is not enough. Thus, although the “fact of exposure to the obvious may warrant the inference of knowledge”, the “shutting of one’s eyes to the obvious is not, however, an alternative to the actual knowledge which is required as the basis of intent to aid, abet, counsel or procure”.[20] It is not necessary, however, that a person have knowledge, both of the facts that constitute an offence, and that those facts constitute a contravention.
[19] These are the words of Holmes J quoted by Burchett J in Richardson and Wrench (Holdings) Pty Ltd and Richardson and Wrench Limited v Ligon [1994] FCA 1222 at [31]. For a more elaborate discussion of “knowledge” see Director of the Fair Work Building Industry Inspectorate v Bavco Pty Ltd & Ors (No.2) [2014] FCCA 2712 at [43]
[20] Giorgianni v R (1985) 58 ALR 641, at page 666
There is some uncertainty in the Federal Court about the matters of which a person who is sought to be made liable as a person involved under s 550(1) of the FW Act must have knowledge where the contravention consists of a failure to pay amounts that an award requires an employer pay; and the uncertainty is whether the accessory must have knowledge, not only of the facts that constitute the failure to pay the required amounts under an award, but that the award applied to the employee. I last considered the position in Fair Work Ombudsman v Chatime Australia Pty Ltd (No 2), where I concluded as follows:[21]
[Section 45 of the FW Act], which provides that a “person must not contravene a term of a modern award”, contains two essential elements: the existence of a term of a modern award; and conduct (by commission or omission or both) that is contrary to the term of the modern award. Knowledge of the essential elements of a contravention of s 45 of the FW Act, therefore, requires knowledge of the conduct that constitutes the contravention of the term of a modern award; and knowledge of the term of the modern award such conduct contravened. This analysis reflects the views Besanko J expressed in Al Hilfi. Knowledge of the two elements of a contravention of an award, however, does not require knowledge or a belief that the conduct contravened s 45, or that such conduct was otherwise unlawful.
[21] Fair Work Ombudsman v Chatime Australia Pty Ltd (No 2) [2023] FedCFamC2G 712, at [36]
Whether these two conditions for determining whether Mr Jeffreys is an accessory to MCPL’s contraventions of s 45 have been satisfied turns on whether I should accept Mr Jeffreys’s evidence; and whether I should accept Mr Jeffreys’s evidence turns on a number of matters. First, it is not disputed that throughout Moulder’s employment, MCPL had a general manager, Ms Sharp. The title of “general manager” implies that the person who occupied that position was responsible for the day to day management and administration of MCPL’s business, including payroll. Second, in evidence given under cross-examination, Mr Moulder referred to payments having been made to him after he had discussions with Ms Sharp.[22] That indicates that Ms Sharp was the person responsible for matters relating to payroll. Third, Mr Moulder did not seriously challenge the evidence Mr Jeffreys gave about his involvement in and knowledge of MCPL’s business operations.
[22] T18.30-40
It is the case that under cross-examination Mr Jeffreys said that he was made aware in the middle of 2019 that MCPL had incurred superannuation guarantee charges, and that it had not paid those charges; and that it would be open to find from this knowledge that Mr Jeffreys was aware that MCPL was not making the superannuation contributions to its employees, including to Mr Moulder.[23] It is also the case that it is open to find that, as the sole director of MCPL Mr Jeffreys knew more about the financial position of MCPL than he has disclosed in his affidavit. These matters, however, are incapable of supporting a finding that Mr Jeffreys had any involvement in the conduct that constituted MCPL’s contraventions of s 45 of the FW Act; or that Mr Jeffreys was aware that Mr Moulder’s employment was covered by the Award, or by any other award; or that he knew of the amounts MCPL paid or did not pay to Mr Moulder, or of the basis on which MCPL calculated the amounts it did pay to Mr Moulder; or that he knew MCPL was bound under the term of the Award or of any other award to make superannuation contributions.
[23] T44.20-45
INSOLVENT TRADING
In his affidavit, under the heading “Applicant’s Claim”, Mr Moulder asserts:[24]
due to the Respondent knowingly allowing [MCPL] to trade while insolvent, OR due to the Respondent’s lack of knowledge of [MCPL’s] financial predicament and therefore negligence as his role as Director, he may be held personally responsible for the Applicant’s claim.
[24] Affidavit of C Moulder, 15.04.2024, at [29]
Mr Moulder relies on s 588G of the Corporation Act, which imposes a duty on a director of a company to prevent the company from incurring debts while insolvent. Section 588M(2) of the Corporations Act confers on the liquidator of a company a right to recover as a debt due from a director the amount debts the company incurred while insolvent; and s 588R permits a creditor to commence such action with the consent of the liquidator.
This Court does not have jurisdiction to entertain claims under s 588M or s 588R of the Corporations Act in relation to debts a company has incurred in breach of s 588G. Even if the Court did have jurisdiction, Mr Moulder would have no standing to bring such action because he is not the liquidator of MCPL, or a creditor who has obtained the consent of the liquidator of MCPL to commence the proceeding.
CONCLUSION AND DETERMINATION
Although Mr Moulder has established that MCPL contravened s 45 of the FW Act, he has not proved that Mr Jeffreys is a person who was involved in MCPL’s contraventions of that section.
I propose, therefore, to order that the application be dismissed.
I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Manousaridis. Associate:
Dated: 11 October 2024
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