New v Edition Coffee Roasters Pty Ltd
[2021] FCCA 777
•20 April 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
New v Edition Coffee Roasters Pty Ltd [2021] FCCA 777
File number(s): SYG 2622 of 2018 Judgment of: JUDGE BAIRD Date of judgment: 20 April 2021 Catchwords: INDUSTRIAL LAW – Default judgment application against second respondent – second respondent aware of proceeding and had previously participated – default judgment ordered against second respondent – application for joinder of proposed sixth respondent – no arguable case against the proposed sixth respondent – joinder refused – removal application of third, fourth, and fifth respondents – removal application granted.
COSTS – costs application brought by the third, fourth, and fifth respondents – respondents bear their own costs.
Legislation: Corporations Act 2001 (Cth) ss 58AA, 500
Fair Work Act 2009 (Cth) ss 44, 45, 62, 340, 361, 536, 550, 570
Fair Work Regulations 2009 (Cth) reg 1.07
Federal Circuit Court of Australia Act 1999 (Cth) s 45
Federal Court Rules 2011 (Cth) r 9.08
Federal Circuit Court Rules 2001 (Cth) rr 11.01, 11.04, 13.03A, 13.03B, 16.07(2)
Cases cited: Dudley (Liquidator) v RHG Construction Fitout & Maintenance Pty Ltd [2019] FCA 1355
Fair Work Ombudsman v NSW Motel Management Services Pty Ltd & Ors (No 2) [2018] FCCA 1935
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
King v Patrick Projects Pty Ltd (No 2) [2017] FCA 388
Knight v Visionstream Australia Pty Ltd [2017] FCA 1513
Lotus Development Corporation v Mayne Nickless Ltd [1991] FCA 106
Lukies v S2V Consulting Pty Ltd [2018] FCCA 1431
McCluskey v Karagiozis [2002] FCA 1137
Qualify Me Pty Ltd v Get Me Qualified Australia Pty Ltd [2016] FCA 192
RailPro Services Pty Ltd v Flavel (2015) 242 FCR 424; [2015] FCA 504
Review Australia Pty Ltd v Redberry Enterprise Pty Ltd [2003] FCA 1009
Singh v Super City Home Loans Pty Ltd [2011] FCA 646
Speedo Holdings BV v Evans (No 2) [2011] FCA 1227
Veeraragoo v Goldbreak Holdings Pty Ltd (No 2) [2018] FCA 1448Number of paragraphs: 201 Date of last submission/s: 16 September 2019 Date of hearing: 15 February 2019, 1 March 2019 and 29 March 2019 Place: Sydney Solicitor for the Applicant: Ms K Lewis No appearance by or on behalf of the First Respondent No appearance by or on behalf of the Second Respondent Counsel for the Third, Fourth, Fifth, and proposed Sixth Respondents: Ms A Campbell for the Third, Fourth, Fifth, and proposed Sixth Respondent Solicitor for the Third, Fourth, Fifth, and proposed Sixth Respondents: Gilbert + Tobin ORDERS
SYG 2622 of 2018 BETWEEN: JACK ROBERT NEW
Applicant
AND: EDITION COFFEE ROASTERS PTY LTD (IN LIQ)
First Respondent
DANIEL JACKSON
Second Respondent
EDITION COFFEE HOLDINGS PTY LTD (ACN 169 714 452) (and others named in the Schedule)
Third Respondent
ORDER MADE BY:
JUDGE BAIRD
DATE OF ORDER:
20 APRIL 2021
THE COURT:
1.DECLARES THAT the First Respondent, Edition Coffee Roasters Pty Ltd (in liq), has contravened:
(a)s.44 of the Fair Work Act 2009 (Cth) by, in breach of s.117, failing to give the Applicant, Mr Jack Robert New, two weeks’ notice of termination of his employment, or to make payment to him in lieu of notice of at least the amount of pay at the full rate of pay for the hours Mr New would have worked had the employment continued until the expiry of two weeks after termination;
(b)s.45 of the Act by contravening the Restaurant Industry Award 2010 by:
(i)failing to pay weekend penalty rates to the Applicant for work on weekends and public holidays pursuant to cl 34 of the Award;
(ii)failing to pay overtime rates to the Applicant pursuant to cl 33 of the Award;
(iii)failing to provide the Applicant with meal breaks and to give the Applicant paid meal breaks pursuant to cl 32 of the Award;
(iv)failing to provide the Applicant with the average hours of work per week, and the arrangement of ordinary hours pursuant to cl 31 of the Award;
(c)s.340(1) of the Act by taking adverse action against the Applicant for a proscribed (unlawful) reason by each of its denial of a support person, systemic demotion, removal of key responsibilities, harassment at work and outside of work through multiple social media platforms, dismissal, and withholding entitlements;
(d)s.535 of the Act by failing to make and keep employee records as required;
(e)s.536 of the Act by failing to provide payslips containing the information required by reg.3.46 of the Fair Work Regulations 2009, including by failing to record the hours the Applicant worked, the rates of pay applicable to those hours, and the amounts payable to him,
(together and separately, the contraventions).
2.DECLARES THAT the Second Respondent, Mr Daniel Jackson, pursuant to s.550(2) of the Act, is a person involved in each of the above contraventions of the Act by the First Respondent.
3.DECLARES THAT the Second Respondent has contravened each of sections 44, 45, 340, 535, and 536 of the Act by reason of being involved in, for the purposes of s.550 of the Act, each of the contraventions of the First Respondent referred to in declarations made in paragraphs 1(a), 1(b), 1(c), 1(d) and 1(e) above.
4.DECLARES THAT the Applicant has suffered:
(a)by reason of the contravention of s.44 of the Act, in relation to the payment in lieu of notice, a loss in the amount of $2,249.50;
(b)by reason of the contravention of s.45 of the Act:
(i)in relation to weekend penalty rate entitlements under cl 34 of the Award, a loss of entitlements in the amount of $8,393.00;
(ii)in relation to overtime entitlements under cl 33 of the Award, a loss of entitlements in the amount of $28,340.60;
(iii)in relation to paid meal breaks entitlements under cl 32 of the Award, a loss of entitlements in the amount of $8,277.90; and
being a total loss suffered of $47,261.00 (2,249.50 + 45,011.50).
5.PURSUANT to rule 13.03B(2)(c) of the Federal Circuit Court Rules 2001 (Cth) and section 545(1) of the Act, ORDERS default judgment be entered in favour of the Applicant against the Second Respondent.
6.PURSUANT to s.545 of the Act, ORDERS that the Second Respondent compensate the Applicant for the loss and damage suffered by the Applicant as a consequence of the contraventions referred to in paragraphs 1, 2, and 3 above, in the sums set out in paragraph 4, being a total of $47,261.00 (and in addition, pre-judgment interest in an amount to be determined).
7.DIRECTS that by 27 April 2021 the Applicant file and serve a calculation and any written submission, limited to 4 pages, in respect of the calculation of pre‑judgment interest pursuant to s.547 of the Act in the amounts specified in paragraphs 4 and 6, a draft of any proposed orders in relation to the payment of such interest, and a minute of any proposed orders to be made to give effect to these reasons of decision, limited only to matters not addressed by these orders.
8.ORDERS the Applicant serve a copy of these orders on the Second Respondent within 7 days.
9.ORDERS the Applicant’s application for leave to join Mr Andres Latorre Canon as a respondent to the proceeding be refused.
10.ORDERS the Third, Fourth and Fifth Respondents each be removed as parties to this proceeding.
11.There be no order for costs.
12.STANDS OVER the remainder of the proceeding to 30 April 2021 at 9:30am, or such other time and/or date to be fixed by the Court administratively, for case management, and to program the further conduct of the proceeding in relation to the penalties, if any, that should be imposed on the Second Respondent for the breaches of the Act referred to in these orders.
REASONS FOR JUDGMENT
JUDGE BAIRD
Introduction
The applicant, Mr Jack New, has brought this application pursuant to the general protection and other provisions of part 3-1 of the Fair Work Act 2009 (Cth), including s.340 of the Act, in relation to his former employment as a chef by the first respondent, Edition Coffee Roasters Pty Ltd (since placed in liquidation), and, he contends, the involvement of other of the corporate respondents, and proposed respondent. Mr New claims that he exercised his workplace rights, and that Edition Coffee took adverse action because of that exercise. He contends that the second respondent, Mr Daniel Jackson, the sole director and shareholder of Edition Coffee, was involved in the contraventions of the civil remedy provisions of the Act by Edition Coffee, and pursuant to s.550 of the Act is liable for those contraventions. Mr New seeks compensation for underpayment of wages and other entitlements, and compensation and pecuniary penalties for adverse action.
Mr New has joined to the proceeding the third, fourth and fifth respondents, which entities he contends are successor to, or transferees of, the business of Edition Coffee, and/or associated with Edition Coffee and Mr Jackson. As convenient, I refer to those entities collectively as the Edition Group entities. He contends they are invested in each other, and share the same controlling minds – Mr Jackson, and the proposed sixth respondent, Mr Andres Latorre Canon (also apparently known by the names Andres Latorre, and Andres Canon Latorre), a director of each of the Edition Group entities. Mr New contends that both individuals took adverse action against him, and that Mr Latorre Canon is also accessorily liable within the meaning of s.550 of the Act.
Mr New contends that he is covered by the Restaurant Industry Award 2010, a modern award within the meaning of the Act. He contends that, as a chef, he was employed at Level 6 – Grade 5 (tradesperson). Edition Coffee and Mr Jackson admit that Mr New was an employee of Edition Coffee, and covered by the Award, at Level 6 Grade 5. Whilst Mr New does not expressly plead that Edition Coffee is a National System Employer, and he a National System Employee, within the meaning of ss.14 and 13 of the Act respectively, the factual bases for finding that they are apparent in the pleadings, and confirmed by the evidence, and I so find.
THE PRESENT APPLICATIONS
This judgment is concerned with the determination of several applications:
(a)application by Mr New for judgment against Mr Jackson (Judgment application).
Judgment is sought against Mr Jackson because of his several defaults and non‑participation in the proceeding, and also (or alternatively) on the basis that there is evidence of the facts on which the claim is based, and either evidence that Mr Jackson has no answer to the claim or part, that is, default judgment pursuant to r.13.03B(2) of the Federal Circuit Court Rules 2001 (Cth). As this application was argued by Ms Lewis, solicitor for Mr New, it appears to me that in substance Mr New also seeks summary judgment on the basis that the evidence before me is sufficient to satisfy the Court that Mr Jackson has no reasonable prospect of successfully defending the claim or part, that is, pursuant to r.13.07(2) of the Rules;
(b)application for removal as parties by the Edition Group entities (Removal application).
Ms Campbell, counsel for the Edition Group entities, submits that her clients are ‘putative’ respondents on the basis that they are not properly encompassed in leave granted on 16 November 2018 (see further below), or alternatively, that they are not proper parties and should be removed as respondents. In the present case, save possibly on the question of costs, nothing of substance, however, turns on the distinction. Having been joined as respondents, I consider Ms Campbell’s oral application as a removal application.
Before me on 1 March 2019 Ms Lewis conceded that no claim had been identified against the third respondent, and I granted leave to Mr New to file a notice of discontinuance against the third respondent. No notice of discontinuance has been filed;
(c)application by Mr New to join as a sixth respondent, Mr Latorre Canon, and Mr Latorre Canon’s (and the Edition Group entities’) opposition to that joinder (Joinder application).
In order for Mr New to succeed in his application for judgment against Mr Jackson, I must be satisfied that Mr New has established the primary contraventions claimed against Edition Coffee.
Procedural background and pleadings
Mr New commenced this proceeding initially against the first and second respondents, Edition Coffee, since voluntarily placed in liquidation, and Mr Jackson. Mr New identified Edition Coffee as his former employer, and Mr Jackson as the person who directed him in the course of his employment as head chef/executive chef with Edition Coffee, and through whom the company acted in its conduct with regard to Mr New. As I have said, Mr New alleges that Mr Jackson was involved in Edition Coffee’s contraventions of the Act, within ss.550(1) and (2) of the Act.
On the first return date of the proceeding, 16 November 2018, Mr New appeared by his solicitor, Ms Lewis, and Mr Jackson appeared in person, and with leave, for Edition Coffee. Mr Jackson advised the Court that Edition Coffee was no longer trading (that is, the café and the wholesale coffee business), but that he had not yet decided to put the company into liquidation, that new companies – Edition Wholesale Pty Limited, and Edition Haymarket Pty Ltd – have arisen in its place, and have taken over the coffee roasting business and café restaurant premises at Steam Mill Lane, Haymarket, Sydney (also, known as Darling Square), and that the café restaurant at which Mr New had principally worked, in Liverpool Street, Darlinghurst, Sydney (Darlinghurst premises), had now closed.
Having regard to the matters Mr Jackson disclosed to the Court concerning additional companies he advised are or would be continuing the businesses formerly conducted by Edition Coffee, and also that Ms Lewis identified to the Court (namely, the Edition Group entities), inter alia, I granted leave to Mr New to amend his application, and to join all necessary parties. I made orders for the filing of defences, and that Mr Jackson provide discovery to Mr New. Pursuant to that leave, on 28 November 2018, by the November pleading (see below), Mr New joined the Edition Group entities: Edition Coffee Holdings Pty Ltd as third respondent, Edition Coffee Darling Square Pty Ltd (ACN 624039 532) as fourth respondent, and Edition Coffee Wholesale Pty Ltd as fifth respondent.
Mr Jackson prepared and filed a document entitled Defence on 13 December 2018 on his behalf and for Edition Coffee. I consider the Defence further at [70]-[73], [78], [91] and [105] below. In breach of my orders, Edition Coffee and Mr Jackson did not provide discovery.
The Edition Group entities filed defences in January 2019.
On 10 January 2019, Mr Jackson resolved to wind up Edition Coffee and on 11 January 2019, Edition Coffee voluntarily entered liquidation. Because of the limitation provided by s.500(2) Corporations Act 2001 (Cth), the proceeding against Edition Coffee cannot proceed any further in this Court; leave to proceed must first be sought and obtained by way of a separate proceeding, and further expense, in either the Supreme Court of New South Wales, or the Federal Court of Australia: see s.500(2) and s.58AA of the Corporations Act 2001 (Cth).
The matter came before me for further case management on 15 February 2019. Mr New, and the Edition Group entities were each represented. There was no appearance by or on behalf of Mr Jackson. Ms Campbell sought to make an oral application for removal of her clients from the proceeding – the Removal application. I made various orders, and adjourned the proceeding to 1 March 2019 for further directions, the question of continuance of the proceeding against Edition Coffee, and hearing of any application for default or summary judgment.
When the proceeding came before me on 1 March 2019, appearances were as on 15 February 2019. There was, again, no appearance by or on behalf of Mr Jackson. Ms Lewis moved for default judgment to be entered against Mr Jackson (the Judgment application). Mr New also orally sought leave to add Mr Latorre Canon as a party (the Joinder application). By their oral application the Edition Group entities sought to be removed as parties to the proceeding (Removal application). I stood over the Removal and Joinder applications.
I commenced hearing the Judgment application. It became clear, however, that I required further information, and clarification before the Court could be satisfied that it was appropriate to proceed to judgment. Specifically, as I have said at [5], the claim against Mr Jackson is made pursuant to s.550 of the Act, I was first required to be satisfied what Mr New’s claims against Edition Coffee were, and that the contraventions alleged were made out. The Court adjourned the matter part heard.
The matter next came before me for hearing of the adjourned applications on 29 March 2019. Appearances were as before. Ms Lewis appeared for Mr New. Ms Campbell also sought leave to appear for the proposed sixth respondent, Mr Latorre Canon. I heard the substance of the Joinder application and the Removal application. I considered there was utility in requiring Mr New to prepare a draft amended points of claim articulating his claim against the respondents, and the proposed sixth respondent, and that the matter be referred to Court ordered mediation. I so ordered, and stood both applications over until after the parties, and Mr Latorre Canon, attended a mediation. The mediation took place on 28 August 2019. It was unsuccessful.
Chronology of Mr New’s pleadings and forms
In the course of this proceeding, Mr New (by his solicitor) has had several opportunities to clarify and recast his claims, and has had leave to file and serve amended applications, forms, and statements of claim.
Mr New commenced this proceeding with an application (filed with Form 4) on 14 September 2018. On 28 November 2018, he filed an application (with Form 4), an application (with Form 2), a Certificate issued by the Fair Work Commission on 30 October 2018 pursuant to s.368 of the Act (relevant to his claims arising from dismissal), and a statement of claim (November pleading). This November pleading joined the Edition Group entities as respondents, further to leave to join ‘all necessary parties’ granted on 16 November 2018.
On 18 March 2019, Mr New filed amended application (with Form 4), amended application (with Form 2), and an amended statement of claim (March pleading). The March pleading, inter alia, seeks to explain the relationships among the respondents, and the basis of their liability.
The most recent emanation of Mr New’s claim is set out in a draft amended statement of claim dated 26 April 2019 and filed that day (April pleading), pursuant to orders made 29 March 2019 granting leave to file and serve a draft fourth points of claim/statement of claim stating the material facts, issues to be resolved, provisions of any statute relied on in respect of claims for relief against the Edition Group entities, and the proposed claims for relief against the proposed sixth respondent. This April pleading lists the first, second, fourth and proposed sixth respondents, and omits the third and fifth respondents. It is relevant to the Removal and Joinder applications.
Factual background
Consistently with the November pleading, Mr New’s affidavit evidence and supporting documents in evidence establish the below.
Mr New commenced employment by Edition Coffee in February 2017, in the role of head chef, with a commencement base salary of approximately $66,000 (the Defence states $66,560, which I accept), paid weekly. The first payslip in evidence records a 40 hours week, at a flat rate of $32.00 per hour, net weekly pay $1000. The payslips in evidence record a 40 hour week (save when Mr New took a rostered day off).
Mr New was employed at Edition Coffee’s eponymous restaurant/café in Liverpool Street, Darlinghurst, Sydney – the Darlinghurst premises. His immediate past employment had been as a chef at Icebergs, Bondi. Some years previously he had worked for Edition Coffee and Mr Jackson. Mr New says in early 2017 he was approached by Mr Jackson to come work with him at the Darlinghurst premises, and run the proposed expansion for Edition, which became the Darling Square project.
In around September 2017 Edition Coffee / Mr Jackson informed Mr New that Edition had been offered a space at Darling Square, and was looking for investors.
At this time Mr New was aware of Mr Latorre Canon and the company Latorre and Dutch as a supplier of green coffee beans to Edition Coffee. Mr New says that in around January 2018 Mr Jackson spoke to him about Mr Latorre Canon as the investor, and asked Mr New to look into the site at Darling Square. Mr Jackson brought up the new investor’s involvement at a staff meeting in March.
Mr New went on a cooking tour of New York in February 2018, and did an event promoting ‘Edition’ on his return in South Korea. After he returned, he commenced design meetings with Mr Jackson for the Darling Square project. He designed the kitchen and some of the dining space for the Darling Square project, whilst, on his evidence, working in excess of 50 hours per week.
On 8 February 2018, Mr New entered a written ‘intellectual property license agreement’ with Edition Coffee (executed by Mr Jackson on behalf of Edition Coffee), pursuant to which Mr New licenced for a royalty the ‘works’ defined as ‘recipe(s), food design(s) referred to as ‘dish’ or ‘dishes’, menus, culinary concepts’ and an Instagram handle ‘@chefblackjacket’, and agreed to provide certain consultancy services also for that royalty, apparently in addition to his existing employment duties (IP agreement).
On and from 6 March 2018, Mr New’s salary was increased to $75,000 per annum. Mr New says this was as discussed with Mr Jackson, and the increase was for the Executive Chef role for both venues. The Defence admits this increase was made. Mr Jackson says the discussions included a further increase to $85,000 once both venues were up and running. Payslips in evidence in this period record a weekly pay equal to an annual amount of around $75,000. Weekly payslips in evidence for the period 5 March 2018 through 8 April 2018 record a flat 40 hour week, at an hourly rate of $36.0577.
Text messages in evidence establish that when the build of Darling Square began in around the end of March 2018, Mr Jackson requested Mr New adjust the kitchen roster so that he was off shift on Wednesdays and that he attend a site meeting at Darling Square and debrief each Wednesday. Mr New states that the majority of these meetings involved walk throughs with Mr Jackson and Mr Latorre Canon.
During April 2018, Mr New’s work was focussed on building and training a team for the opening of Darling Square, and designing the menu.
On 2 May 2018, at Mr Jackson’s request, Mr New met with Mr Jackson and was introduced to Mr Latorre Canon as the new partner in Edition Coffee’s Darling Square project. At this meeting Mr New was told his wage would be reduced from $75,000 to $70,000 per annum, that he was required to work 50 plus hours per week, and he was to work additional hours. Mr Jackson and Mr Latorre Canon also told him that “we don’t accept your intellectual property agreement”.
In Mr New’s second affidavit, he states that on “Wednesday, 3 (sic) May 2018” (a typographical error), after the weekly site view of Darling Square, Mr Jackson, his partner ‘Cana’, Mr Latorre Canon and another representative from Latorre and Dutch met, and Mr Latorre Canon said he and his board did not want to continue with the current agreement Mr New had regarding his job and wages. Mr New says that after this meeting “they began to cut my responsibilities and moved my pay from 75k to 70k p/a. They also sent me an aggressive email on my birthday telling me they would not negotiate”.
Mr New had 4 days leave on Saturday, 5 May 2018, because he had just worked 3 weeks without a day off. Whilst on leave on 6 May 2018, after 10pm he received an email from Mr Jackson entitled “Recap”, copied to Mr Latorre Canon, and described by Mr Jackson as, “just a recap into the last meeting we had with Latorre and Dutch” (recap email). The recap email then set out, under 6 dot points, the following (without alteration, except as indicated in [square brackets]):
•An offer of 70k per annum + superannuation for the services of Executive Chef of the Edition Wholesale Company. This will include but not limited to: designing menus, quality control, training, costings, working as a chef in stores.
•A bonus based salary may come into effect at a later stage upon a 4 month review.
•This salary is based off but not limited to a 50hr work week.
•The confusion of the IP was discussed and clarified. [in substance, to except from Mr New’s ownership his menus, which will “fall under the job classification”. And otherwise to bring Mr New’s consulting activities under the “Edition umbrella”].
•Both stores (Darlinghurst and Haymarket) will be under the direct supervision of Executive Chef and the time allotted should be according to requirements needed to have the stores running efficiently.
•Daily reports will be done so as to complete a thorough weekly report to be sent to Accountants and investors. This is to ensure that budgets and projections are in line.
Please review these points and respond in a timely manner with your thoughts so we can move forward and are all on the same page.
I believe you have the same faith in this brand as we all do and want to see its success an [sic] growth.
I look forward to your response.
Mr Jackson signed off the email as ‘Co-founder/Captain Edition Coffee Roasters [Darlinghurst]’.
The relationship further deteriorated sharply thereafter.
On 9 May 2018, Mr New received his payslip which retrospectively had pay reduced to $70,000 (per annum). Mr New promptly sent an email advising the cut was without his consent, inviting correction, and observing that the cut was in breach of current employment law. Mr New stated his understanding from the 2 May meeting that the parties would meet again to negotiate. The pay was corrected that evening and the difference paid into his bank account.
On 11 May 2018, Mr New sent a text message to Mr Jackson reminding him that Noa, one of the staff who had worked several trial shifts, had not been paid. Mr New says that thereafter, Mr Jackson appeared hostile to Mr New, and avoided greeting him, or making eye contact.
On 15 May 2018, Mr Jackson sent an email headed “Items requested for tomorrow admin day”. In this email he demanded items including a roster for Darlinghurst for coming weeks and further [ahead], and to get kitchen staff costs back to 35%, steps to be identified to get “dropped trade” back, a menu for Darling Square, costings for both venues, invoices/reimbursements for a dining pop up, that Mr New “Reply to the ‘recap’ email to go to L&D for further discussion”, and requesting “Please ensure you are at the shop at 9am sharp and are there for the entire day until 430pm. You should have no problem arriving at that time, as it is 2 and a half hours later than your usual start time of 630am.”
On 16 May 2018, Mr New responded to the recap email by email to Messrs Jackson and Latorre Canon to the effect that given he was doing more work, and taking on another venue with extra staff he was not prepared to accept a lower salary, stating that he had put in considerable effort over an extended length of time – before he was at ‘Edition’ – to build his personal brand, and ‘Edition’ had benefited greatly, and he was affronted that they would suggest handing over his decade of work, and input for less wage and more hours. He stated that “the 50 hours you suggest is illegal at any rate, though reflective of the actual hours worked”. He remained prepared to meet and negotiate and would be bringing a support person.
On 18 May 2018, Mr New sent a follow up text about Noa’s pay, to which Mr Jackson responded with a string of messages as follows: “She can fuck off!” “I have no funds to pay her until today’s takings clear.” “Or, alternatively she can come collect it in cash?” and lastly, requesting “Can you please add up her hours and text me the total?” Mr New did so.
On 19 May 2018, Mr New sent an email, again responding to the recap email and offering a “middle ground” of $75,000 + super, his IP agreement to stay or to discuss a buyout of the agreement, and a clearer description of the bonus scheme (in lieu of increasing salary to $85,000).
On 20 May 2018, Mr Jackson and Cana came to Darlinghurst after Mr New’s shift ended at 4:30pm, and said to the effect “that they had spoken to Anders [Mr Latorre Canon] that they would not move from $70,000; they did not want to ‘bother’ with my intellectual property agreement; they would not allow me to have a support person; and wouldn’t have another meeting.” They pressed him for an immediate answer, asked if he would be staying or not, and said “that they had to know immediately”. Mr New said he had to work, and he wanted to speak with his lawyer, to which they responded “Why do you need a lawyer, you’re your own person, you should be able to decide.” Mr New was able to leave work at the end of his shift, but Cana sent chat messages to him requiring an answer.
On 22 May 2018, Mr Jackson orally told Mr New that he was demoted from executive chef to head chef, his wages would be further reduced to $66,000, and his job was redundant. On 23 May 2018, his day off, Mr New received an email from Mr Jackson about a ‘new structure for edition”, and “confirmed” requirements under headings “Regarding warnings”, “Phone procedures”, “Food supervisor certificate”, “New Darlinghurst structure” and “New roles”. Under the heading “New roles” Mr Jackson stated that the role of executive chef over Darling Square was no longer available, demoted him to head chef of Darlinghurst only, reduced his salary to $66,000, backdated 2 days to the commencement of the pay period, and required he work 46-50 hours per week plus administration time.
In the email, under the heading “Regarding warnings”, Mr Jackson complained that Mr New was once 14 minutes late because of a train delay, and stated “There are no exceptions to this rule for any staff member moving forward. Please take appropriate time management procedures in forecasting potential delays in public transport should you chose to take it.” The tenor of the rest of the email was along the same lines, requiring Mr New limit using his phone, including to speak to suppliers, demanding a food supervisor certificate be produced forthwith, directing that he was now to report to a newly appointed store manager ‘Sarah’ [Taylor] at Darlinghurst, and threatening written warnings for any breach.
As to each of these demands, Mr New’s evidence is that all of the ordering and rostering was done for Edition Coffee by Mr New on his phone as the business did not provide a work phone or computer, that the reason and date by which the food safety certificate was required was changed by the email, the certificate also required Mr Jackson’s input (and that Mr Jackson also have a food safety certificate), Mr New’s administration day had been removed and the certificate was not physically able to be completed in the time demanded: the certificate was an 8‑part course, with 6 modules and self-assessment, and was recommended to take between 3 – 5 days to complete. Further, Mr New was already working more than the hours demanded, and not being paid overtime, despite his requests.
Mr New says thereafter Mr Jackson made accusations about the hours he worked. Hours recorded in the newly operational electronic system ‘Deputy’ submitted in the period 9 May – 3 June 2018, however, demonstrate that Mr New worked, conservatively, an average of 10 hours per shift.
Around 23 May 2018, Mr New discovered that no superannuation had been paid for Mr New for the time he worked at Edition Coffee. It is unclear whether this default was ever remedied, or if so, whether it was remedied completely. Given my conclusions about Mr New’s work hours below, it follows that in any event Edition Coffee did not fully comply with its obligations to pay Mr New his superannuation entitlements.
On 24 May 2018, Mr New filed an application for general protections claim with the Fair Work Commission.
On 25 May 2018, Mr New was excluded from a staff meeting. The next day, at the end of his shift, Sarah Taylor demanded costings the same day for the new menu. Mr New explained that it usually takes weeks to get costings correct on a new menu. After his shift, however, he worked on them for several hours.
On 28 May 2018, Sarah Taylor made further demands, and threatened written warnings. At this point Mr New spoke with a lawyer, and she wrote a letter addressing identified workplace issues, and seeking to meet and mediate as set out in the IP agreement (inter alia relevant to the menus). No reply was ever received.
Mr New sought written clarification about the issue of the food safety/supervisor certificate. On 30 May 2018, Mr Jackson emailed Mr New stating his role had been changed to ‘supervisor’, and he was no longer doing rostering. Mr Jackson then sent a demand for payment of a statement of account, but did not provide source invoices. It appears this demand was pursued elsewhere.
Mr New sought his solicitor’s assistance, and on 31 May 2018 she wrote to Mr Jackson, Edition Coffee, advising of significant shortfall in wages, comprising reduced pay (to $66,000 per annum) and a failure to calculate and pay overtime, unpaid superannuation, and the adverse action of removing Mr New’s rostering responsibilities. Among other matters, Ms Lewis provided a calculation of amounts owing in overtime and penalty rates for the past week, demanded payment of the shortfall of $1,114.33, and requested advice when superannuation would be paid.
On 31 May 2018, Mr New took certified sick leave, and then used a rostered day off / leave entitlement. During this time Sarah Taylor messaged him several times, including demanding he write up all the recipes – some 33 recipes - the day he returned. It appears that during this time, on 1 June 2018, Mr New was returned to a $75,000 per annum wage, and some shortfall was paid. However, none of the overtime or penalty amounts claimed owing was paid.
Mr New returned to work on Sunday, 3 June 2018, starting at 7:17am. Within the hour of commencing his shift Sarah Taylor emailed him a purported ‘warning letter’. It combined demands I have described above in the 23 May 2018 email, and in the preceding paragraph. It required that Mr New “write up the recipes and prep guide for the chefs this Sunday June 3rd. You can take time during the shift to do this if you have not already” (emphasis added). It stated that Mr New must “work your correct amount of hours as stated in your employment agreement with Daniel Jackson (50 hours)”. It was stated to be a first warning letter, and required performance to improve by Sunday 10 June 2018. It invited a response verbally or in writing.
It is clear from the chronology I have recited above of the behaviour exhibited by Mr Jackson and Ms Taylor in the immediately preceding period, that the purported warning letter made demands that could not be practically achieved within the same day timeframe, if at all. In the circumstances, I conclude the purported warning letter was a self-serving attempt to set up the conditions to support a termination.
Upon receipt of the warning letter, Mr New spent an hour setting up and prepping, then left the second chef to do the service. Mr New then spent time doing what he could of the certificate, and spent time working on and completing the recipes, except when he went out and purchased additional ingredients requested by the other chef. He made a staff meal for everyone around 2pm. Around 3:30pm, Sarah Taylor approached him, and requested he go outside to meet with her and Mr Jackson. Mr New said he would not meet without a support person. Ms Taylor said it was not that kind of meeting. Then Mr Jackson and Ms Taylor confronted him and said “effective immediately you are terminated due to serious misconduct”. Mr New gathered his belongings, including his knives, and left.
In the evening of 3 June 2018, Ms Taylor emailed a letter, copied to Mr Jackson, reiterating the termination, described as “serious misconduct dismissal”. The letter contradicted the direction in the warning letter that Mr New write up the recipes during his shift, and instead claimed that his doing so had resulted in slow service, lost sales, and was grounds for termination. Contrary to her behaviour during the day, in the termination letter Ms Taylor requested Mr New meet with Mr Jackson and herself, and invited Mr New to bring a support person if he wished.
Mr New recounts in the November pleading, and reiterates in his affidavits, repeated incidents during May 2018 of behaviour and actions by Mr Jackson and his partner, Cana, that I am satisfied it is reasonable to characterise as bullying, harassment, and inappropriate workplace conduct. In addition, Mr New gives evidence of demands made of him by Sarah Taylor for production of tasks such as new menu, costings, recipes, and a chef’s guide within an extremely short timeframe, and at the same time as conducting his shift, and running the kitchen, which I accept are impossible demands. They also appear on their face to be inconsistent with the IP Agreement. Mr New recounts an incident of trolling on social media, and other inappropriate social media behaviour by staff. In short, Mr New claims, and evidences, a pattern of unreasonable demands and threats, and behaviour prima facie consistent with harassment and an unsafe workplace.
JUDGMENT APPLICATION
Mr New expressly moves for judgment against Mr Jackson pursuant to r.13.03B(2)(c) of the Federal Circuit Court Rules 2001 (Cth). Rule 13.03B(2)(c) relevantly provides that:
(2)If a respondent is in default, the Court may:
…
(c)if the proceeding was commenced by an application supported by a statement of claim or the Court has ordered that the proceeding continue on pleadings--give judgment against the respondent for the relief that:
(i) the applicant appears entitled to on the statement of claim; and
(ii) the Court is satisfied it has power to grant; …
Pursuant to r.13.03A(2), for the purposes of r.13.03B a respondent is in default if the respondent:
(a) has not satisfied the applicant’s claim; and
(b) fails to: …
(iii)comply with an order of the Court in the proceeding; or …
(v)produce a document as required by Part 14; …
(vii)defend the proceeding with due diligence.
In support, Mr New relies upon:
(a)statement of claim filed 28 November 2018 (that is, the November pleading);
(b)a first affidavit sworn by Mr New on 6 September 2018 and annexures;
(c)an amended schedule of amounts claimed dated 22 February 2019 (served by email, see below, and addressed by Ms Lewis in Court on 1 March 2019);
(d)a chronology, and amended chronology (emailed on 22 February 2019, and amended chronology emailed on behalf of the Edition Group entities on 27 February 2019);
(e)a second affidavit sworn by Mr New on 28 February 2019 (listed here, but not relevant on the Judgment application), and
(f)various affidavits of service, and email communications copied to the parties and my Chambers.
Mr Jackson’s defaults
As I have adverted to above, by the orders made and entered on 16 November 2018, I made a declaration, further to s.45(1) of the Federal Circuit Court of Australia Act 1999 (Cth), that it was appropriate in the administration of justice for the parties to make discovery, and ordered that the respondents (then being Edition Coffee and Mr Jackson) give certain discovery in relation to all work records kept and maintained in relation to the employment of Mr New in the period of February 2017 to 3 June 2018. This discovery comes within that required under Part 14 of the Rules (refer r.13.03A(2)(b)(v) set out above). As I have noted, Mr Jackson appeared on that occasion for himself, and with leave of the Court, for Edition Coffee. Neither Edition Coffee nor Mr Jackson complied with that order for discovery.
In the orders I made on 15 February 2019, the Court noted that Edition Coffee and Mr Jackson were in default of the above order for discovery. As I have already noted, Mr Jackson did not appear before the Court on 15 February 2019. Whilst by this time Edition Coffee had been placed in liquidation, this does not excuse the non-appearance of Mr Jackson, nor the failure to produce documents as ordered.
I am satisfied that Mr Jackson is in default of the Court’s orders by failing to provide discovery as ordered, and failing to appear before me on at least 15 February 2019 and 1 March 2019 without excuse, and that his default has continued thereafter. I am satisfied that the history of non‑compliance indicates an unwillingness to cooperate with the Court and the applicant, Mr New. It follows from this non participation and unwillingness to cooperate that Mr Jackson has failed to defend the proceeding with due diligence.
Mr Jackson has not satisfied Mr New’s claims made in the proceeding: see r.13.03A(2)(a).
I find that Mr Jackson’s conduct, and non‑participation, satisfy the criteria for default in r.13.03A(2)(a) and each of (b)(iii), (v), and (vii) of the Rules.
Mr Jackson’s awareness of the hearings before me
Mr Jackson was in Court on 16 November 2018 when I pronounced the orders. On that occasion I directed the dates for his compliance, and I stated that the matter would return before me on 15 February 2019. I am satisfied that Mr Jackson was aware of the orders, his obligations, and the next hearing date.
The evidence from Ms Lewis establishes that on 22 February 2019 she emailed to Mr Jackson and the other respondents a chronology and an updated schedule of claim (which foreshadowed the amounts sought in the March pleading) when she emailed a copy of the chronology and schedule to Chambers, and copied Mr Jackson at the email address he specified as his address for service in notice of address for service dated 20 November 2018 filed on behalf of himself and Edition Coffee. On 28 February 2019 at 1pm she emailed the draft orders Mr New would be seeking 1 March 2019 (including judgment against Mr Jackson) to Mr Jackson and to other respondents. The cover email to those draft orders stated that the matter was before me on 1 March 2019 at 9.30am. No change of address for service has been filed by Mr Jackson.
I am satisfied that all the documents I have referred to above (see at [59(a)–(d)] and [66]) have been sent by email to the notified address for service for Mr Jackson, and for Edition Coffee before it was placed in voluntary administration, and he was on notice of them. I am satisfied that Mr Jackson was aware that the matter would be before the Court on 1 March 2019, and the orders that Mr New would ask the Court to make, including for judgment against Mr Jackson.
The preconditions of default and notification relevant for the Court to consider whether to give judgment under r 13.03B(2) of the Rules are established to my satisfaction.
The relief to which the applicant appears entitled
I now turn to what relief Mr New appears entitled to on the statement of claim: see r.13.03B(2)(c). The Court should not lightly enter default judgment: see Speedo Holdings BV v Evans (No 2) [2011] FCA 1227, esp., at [18]-[20]. The standard to which Mr New must establish he is entitled to relief here is that the entitlement to relief must, at the least, be plain from the claim, accepting that some further affidavit material may be accepted by the Court in relation to the relief sought, not altering the pleaded case: Speedo Holdings at [25] –[26]. In the present case, I have accepted Mr New’s first affidavit, the chronology, and the schedule. I am satisfied that none of this material alters the pleaded case, and all of this material was brought to Mr Jackson’s attention. I have summarised that evidence and relevant chronology above.
I have had regard to the document entitled ‘Defence’ (see [9] above). In the light of the Defence, notwithstanding his defaults, I do not consider that I can simply proceed on the assumption that Edition Coffee and Mr Jackson can be taken to have admitted all relevant allegations of fact.
In the Defence Mr Jackson (for himself and the company) admits Edition Coffee employed Mr New, that he was employed under the Award, and at the classification Level 6 – Grade 5, and that Mr Jackson was the sole director and shareholder of Edition Coffee. The paragraphs of the document otherwise do not correspond to the paragraphs of the statement of claim.
I apprehend from the Defence that in substance the first and second respondents deny the allegations of adverse action not involving dismissal, say that the person who took the adverse action involving dismissal was Ms Taylor, purport to lay responsibility for those actions on Ms Taylor, and assert that Mr Jackson was merely present. They allege that Mr New was required to work 45 hours, that it was up to him to take meal breaks, and that the “agreed arrangement” was that Mr New be paid an “all inclusive salary”, which whilst not in writing and not compliant with the Award, and which they concede did not meet the requirements of s.144, they assert was an arrangement effective as if it were an individual flexibility arrangement within s.145 of the Act. However, it is immediately apparent from the Defence that there is nothing to support those assertions, specifically, no facts or matters claimed or attempting to meet the requirements of s.145(1).
The Defence admits some additional hours were worked by Mr New. Mr Jackson says that Mr New was terminated because of ‘serious misconduct’ - that he disregarded Ms Taylor’s “reasonable and lawful request of you working in the kitchen on your rostered day on service”, and that by reason of s.123(1)(b) of the Act, Edition Coffee was not required to pay any payment in lieu of termination. Mr Jackson says, nonetheless Edition Coffee paid 2 weeks’ pay on 17 August 2018, and that he has personally paid all superannuation owed to Mr New. Attached to the Defence are 3 tables (for different time periods) purporting to be a ‘standard weekly roster for the Applicant’ of days, hours, rates and amounts, although it is conceded that Mr New could have worked other combinations. I apprehend the tables purport to allocate the “all inclusive salary” on a day by day basis as if the hours he worked were 45 hours each week.
As I have said, Mr New pleads that Mr Jackson was knowingly involved in the contraventions of Edition Coffee, pursuant to s.550 of the Act. Accordingly I must first be satisfied that Edition Coffee has contravened one or more civil remedy provisions, and then that Mr Jackson is a person involved in the contravention within the meaning of sub-s.550(2) of the Act.
Contraventions of the Act alleged
I am able to discern from the November pleading - statement of claim - that Mr New alleges that Edition Coffee has contravened the following provisions of the Act, and clauses of the Award:
(a)s.44 by contravening s.117 by failing to give two weeks’ notice of termination, or make payment to him in lieu of notice of at least two weeks’ pay at the full rate of pay for the hours he would have worked had the employment continued for the notice period;
(b)s.45 by contravening the terms of the Award in relation to weekend penalty rates (clause 34), overtime hours (clause 33), and meal breaks (clause 32), and hours worked (clause 31). There was also a claim for a laundry allowance which does not appears to be pursued;
(c)s.340 by taking various forms of adverse action against him because he exercised workplace rights;
(d)s.535 by failing to make and keep employee records as required, by reason of the failure to provide discovery of records as ordered, and implicitly by operation of the presumption in s.557C(1) of the Act;
(e)s.536 by failing to provide payslips containing the information required, including by failing to record the hours Mr New worked, and the amounts payable, and
is liable for compensation / damages for the underpayments in breach of the Award, for loss of income upon unilateral reduction of wage, and further to termination, for damage to reputation, loss of opportunity, and loss of income before finding alternative employment, and pecuniary penalties.
Each of ss.44, 45, 340, 535, and 536 are civil remedy provisions: see Part 4-1.
At the hearing on 1 March 2019, Ms Lewis raised a contravention of s.62 of the Act, and thus a further contravention of s.44 of the Act. Whilst this contravention is not pleaded by reference to s.62, I consider that there are some allegations that could be construed as forming some factual basis for such a claim. In ‘particulars’ to paragraph 15, the pleading states that Mr New regularly worked over 50 and sometimes around 70 hours a week, and was underpaid, although there is no reference to the matters to be taken into account pursuant to s.62(3). Further reference is made in the claim to “unreasonable demands… the minimum 50 hour work week policy”.
I note that in the Defence the first and second respondents contend that Mr New throughout his employment was required to work 5 days a week, and 45 hours per week, excluding meal breaks, and worked another 9 additional hours per fortnight, for a salary of $66,560, increased to $75,000 on 6 March 2018, and that the attached tables concede that he worked weekends and overtime, and was not paid penalty or overtime rates.
I consider that the Defence recognises a contention in the statement of claim that Mr New was required to work and worked over 50 and up to 70 hours a week, for which he was not fully remunerated. However, as there is no pleading of facts or contentions in the November pleading to support a conclusion that those hours were unreasonable, I am not satisfied that a claim that Edition Coffee has contravened s.62 of the Act is sufficiently pleaded for the purposes of r.13.03B(2)(c) (or summary judgment).
Contravention of s.44 of the Act – failure to make payment in lieu of notice
In relation to the failure to pay the two weeks termination notice (a contravention of s.44 of the Act, further to breach of s.117), in the Defence Edition Coffee and Mr Jackson asserted that Mr New was not entitled to payment in lieu of notice because s.123(1)(b) of the Act applied, as he was terminated for “serious misconduct”. For the reasons following I reject this assertion.
The November pleading sets out the facts and circumstances leading to termination, the ‘warning letter’, and the termination. Consistently with the pleading, in his first affidavit Mr New has given evidence under oath of those circumstances, the behaviour of Mr Jackson, and the newly appointed manager, Ms Taylor, including being emailed a ‘warning letter’ at the commencement of his shift on 3 June 2018, being terminated orally by Ms Taylor and Mr Jackson at the close of his shift, and subsequently being emailed a termination letter: see above [30]-[55], see especially [40]-[55]. I accept that evidence.
I consider that the above evidence, and the conduct from 31 May to 3 June 2018 – the combination of the ‘warning letter’, being addressed by Mr Jackson and Ms Taylor, and the subsequent emailing of the termination letter give rise to a reasonable inference that Mr Jackson and Ms Taylor had decided to terminate Mr New’s employment before he returned to work on 3 June 2018, and that the events of the day were artificially constructed to engineer the occasion to terminate his employment without notice or payment in lieu. I so find.
The inconsistencies between the demands of the ‘warning letter’, and the grounds given in the termination letter are significant. In the face of those inconsistencies alone, the reasons given for termination do not withstand scrutiny. They are baseless. The claim in the termination letter of “serious misconduct” is without foundation. I accept Mr New’s explanation under oath, which is consistent with the documentary material annexed. I find that the grounds proffered as grounds for termination are not made out, and that Mr New’s conduct described in the termination letter did not amount to, and does not satisfy the definition of, serious misconduct in reg.1.07(2)(b)(ii) and (3)(c) of the Fair Work Regulations 2009 (Cth), or on its ordinary meaning.
It follows that s.123(1) of the Act does not apply. Edition Coffee terminated Mr New’s employment without notice, or payment in lieu, contrary to s.117 of the Act.
Sometime later, it appears after a conciliation conference, Mr New was paid a sum of $2560 purporting to be 2 weeks’ pay on termination. This amount was calculated based on a flat rate pay of $250 per day, and not calculated by reference to the actual hours previously worked.
As an employee having worked for more than 1 year, but less than 3 years, Mr New was entitled to a minimum 2 weeks’ notice: see s.117(3) of the Act. Pursuant to s.117(1) and (2) of the Act Edition Coffee was not entitled to terminate Mr New’s employment unless it gave him 2 weeks written notice, or in lieu, paid him at least for 2 weeks at the full rate of pay for the hours Mr New would have worked in that time. The evidence establishes that he would have worked at least 50 hours per week.
I find that the part payment made did not comprise payment of the full rate of pay for the 50 (at least) hours, overtime and weekend work I find that Mr New ordinarily worked, and would have worked had his employment continued for the prescribed period of notice. The partial payment does not satisfy the requirements of s.117(2)(b) of the Act.
I conclude that Edition Coffee has contravened s.44 of the Act on the basis of the failure to pay two weeks wages in lieu of notice as required by s.117 of the Act. For the same reasons, and additionally, as I expand upon below, including that Mr Jackson was responsible for the operations of Edition Coffee concerning Mr New’s working conditions and pay, I find that he was involved in Edition Coffee’s contravention of s.44 as per s.550 of the Act.
Mr New claims the correct amount payable, based on past usual hours worked is $4809.50, and that he was underpaid $2,249.50. In addition he claims interest.
Contravention of s.45 of the Act – breaches of clauses of the Award
In the statement of claim Mr New pleads he was not paid weekend penalty rates, he was not paid overtime for the hours he worked over the standard 38 hours per week (that is, at least 50 hours per week), and he was not provided a meal break after 5 hours.
In the Defence Edition Coffee and Mr Jackson assert that Mr New and Edition Coffee and Mr Jackson agreed to an “all inclusive” annual salary. They concede that that arrangement did not meet the requirements of cl.7 of the Award, but refer to ss.144 and 145 of the Act and say that Mr New was “better off overall” under this arrangement. This bald conclusion is unsupported by any pleaded facts and is not particularised.
I do not accept that an “all inclusive” salary was agreed, that Edition Coffee and Mr New agreed to an individual flexibility arrangement, or that Mr New was “better off overall”. Mr New’s pleading and evidence is to the contrary. Nowhere in the Defence is there any pleading of any allegations of facts which could support the contention that agreement was reached, or how it was agreed that the salary was “all inclusive” (nor what “all inclusive” means), or could satisfy the provisions of ss.144 or 145 of the Act.
Whilst the tables attached to the Defence purport to show breakdowns according to a ‘standard weekly roster’ to show Mr New was paid a salary that on a 45 hour week was more than a minimum wage (presumably under the Award), I am unable to discern from that construction any basis to conclude that he was “better off overall”. On their face, the tables demonstrate to the contrary. As Mr Jackson ceased participating in the Court process before he put Edition Coffee into liquidation, I do not have the benefit of an explanation of these calculations, or what they are intended to prove.
I have had regard to the statement of claim, and the schedule of amounts. I have had the benefit of Ms Lewis’ explanation of calculations there set out, reference to the Award rates, and the basis of the calculations. I have confidence in what she took me through.
Hours worked – Award clauses 31, 32, 33 and 34
For the above reasons, I find that Mr New was covered by, and entitled to be paid at the Award rates throughout the course of his employment for the hours he worked, and that overtime, and penalty rates should have been calculated and paid in accordance with the Award. He was entitled to meal breaks.
Overtime hours worked (more than 38 hours per week) – clauses 31 and 33 of the Award
As I have said, in the Defence (and tables) the first and second respondents concede that Mr New worked up to 9 hours a day, Monday to Friday, and 8 hours a day on Saturday and Sunday, when rostered. They admit Mr New worked up to an additional 9 hours a fortnight, though contending he was then paid in cash for these hours, which is disputed, and of which there is no evidence.
I am satisfied, having had regard to the statement of claim, Mr New’s first affidavit and the annexures, that it is a conservative calculation to calculate that Mr New worked most Saturdays and Sundays, and that he worked at least 50 hours per week, being 10 hours per week in excess of the 40 hours that were declared on those payslips provided. Further support for this conclusion is found in Mr Jackson’s correspondence to Mr New stating his salary was based “off” a 50 hour work week, but not “limited to” those hours.
For the above reasons I conclude that Mr New worked an average minimum 50 hours per week during the course of his employment from February 2017 until 3 June 2018. This amounts to 12 hours over and above the 38 hours provided under the Award, and thus 12 hours overtime unpaid per week. I am satisfied that Mr New is entitled to the overtime amount set out in the schedule.
Saturday and Sunday workdays – clause 34
In relation to weekend work, I am satisfied on the claim, and confirmed by the first affidavit, that Mr New worked at least 50 weekends of the 67 weeks of his employment. He was not paid any penalty rates for work on weekends (or public holidays), contrary to clause 34 of the Award. I note that Mr New in his first affidavit says he took only 7 weeks of leave over the course of his employment. I thus consider that the statement of claim and schedule seeking relief for 50 weekends is, again, a conservative claim and I am satisfied that Mr New is entitled to the weekend penalty rates in the amount underpaid set out in the schedule.
Breaks – clause 32
I am also satisfied that Mr New did not take breaks in his shifts, and that pursuant to clause 32 of the Award breaks should have been provided after 5 hours in each shift. The first and second respondents did not deny this and therefore can be deemed to have admitted it (see: Federal Court Rules 2011 (Cth), r 16.07(2)).
Conclusion on contraventions of s.45 of the Act by Edition Coffee
For the above reasons I am satisfied that Edition Coffee has contravened clauses 31, 32, 33 and 34 of the Award, and thereby in respect of each contravention, contravened s.45 of the Act. I am satisfied Mr New appears entitled to the corresponding relief claimed. I also find that there is evidence of the facts on which the claim of each contravention is based, namely as I have set out above in these reasons, and I am satisfied that Edition Coffee has no reasonable prospect of successfully defending the claims, to the standard required for summary judgment. For the same reasons, and additionally, as I expand upon below, including that Mr Jackson was responsible for the operations of Edition Coffee concerning Mr New’s working conditions and pay, I find that he was involved in Edition Coffee’s contraventions of s.45 as per s.550 of the Act.
Contravention of s.340 of the Act – general protections
In Part G of the Form 2 filed in November 2018, in substance repeating the content of Part G of the Form 4 filed on 14 September 2018 initiating the proceeding, both of which were served on the first and second respondents, Mr New claims the following (without alteration):
Exercise of Workplace Rights
The Applicant exercised the following workplace rights:
1.Made enquiry about payment of his entitlements
2.Enquired about the payments due to staff under his supervision
3.Sought to enter in to negotiations about his remuneration
4.Requested records important for the calculation of his remunerations
5.Requested a support person be present at meetings
6.The applicant was subject to harassment inside and outside of the work and denied a safe working environment
Adverse Action:
1.Support person denied
2.Unilateral reduction of the applicant wages
3.Systematic demotion
4.Removal of key responsibilities
5.Harassment both at work and outside of work through multiple social media platforms
6.Exclusion from team meetings and denial of information required to perform his job
7.Dismissal
8.Damage to reputation
9.Withholding entitlements
Whilst not pleaded cross-referencing the exercise of the workplace right enumerated above, with the adverse actions enumerated above, it is possible to discern in the statement of claim, that Mr New claims that:
(a)each of the above workplace rights numbered 1-5 are encompassed within the meaning of s.341(1)(c)(ii) of the Act, and are rights he exercised in the period March to June 2018. I consider item 6 is not on its face characterised as an exercise of a workplace right, but of conduct suffered by Mr New;
(b)the adverse actions enumerated above at 1-7, and 9 are actions taken by Edition Coffee within the circumstances set out in item 1 column 2 of the table in s.342(1) of the Act, and
(c)those actions were taken because of the exercise by Mr New of his workplace rights, within the meaning of s.340(1) of the Act.
The above exercises of workplace rights items 1-5 are described in the statement of claim and evidenced by Mr New’s first affidavit. I have summarised their substance in the factual background set out above (see [30]-[56]). I accept that each of enumerated items 1 to 5 was a workplace right within the meaning of the term, and that Mr New exercised it in the course of his employment.
In the Defence the first and second respondents deny each of the adverse actions enumerated above. They make the following bare assertions:
1.as to denial of a support person, that the purpose of a meeting on 20 May 2018 was to convey a message to Mr New and not hold discussions with him, and on dismissal, Mr New did not request a support person, but legal representation;
2.as to unilateral reduction of wages, this was a once off clerical error;
3.that there was no systematic demotion, although the job title was changed, and his employment ended before Darling Square opened;
4.that whilst the responsibility for rostering was removed from Mr New’s duties, this was based solely on unrelated reasons (not stated);
5.harassment is denied, and Mr New participated in communications he received;
6.as to exclusion from meetings and denial of information clarification to whether this is limited to 25 May 2018, and the names of those present is requested (I note, as Mr New was not present this is a curious statement);
7.whilst dismissal was adverse action, it was Ms Taylor (the “former store manager of [Edition Coffee”] who took the action, it could not have been because of anything done before she was employed, and was likely based solely on her own observations on the day. (I note these assertions are directly contradicted by events immediately preceding the timing and content of the warning letter, the events of the day, and the termination letter);
8.they deny damage to reputation, and say it may be a result of dismissal and not adverse action;
9.they deny withholding entitlements, although it is conceded that superannuation was paid after the due date “due to financial hardship experienced by [Edition Coffee]”.
I have previously summarised the conduct of Edition Coffee through the persons of Mr Jackson, Cana, and under his control, Ms Taylor (the later from the dates specified in the factual background above). In the light of that evidence, including the documentary evidence, excepting the correction of the unilateral reduction in wages, the explanations set out in the Defence do not survive scrutiny. I am not satisfied, however, that Mr New has evidenced that he suffered damage to reputation, or that he is entitled to that relief thereby.
Excepting those two matters, by reason of the timing of their actions, the nature of their behaviour, the content of the various emails and text messages annexed to Mr New’s first affidavit, and the substance of conversations and statements there set out, I find that the adverse actions items 1, 3, 4, 5, 7 and 9 were taken by Edition Coffee, and were taken by it for a prohibited (unlawful) reason, namely because of the exercise by Mr New of one or more of the enumerated workplace rights. In so concluding I have had the benefit of and applied her Honour Justice Perry’s consideration of the relevant principles when determining whether an employer took adverse action “because of” a proscribed reason and her discussion of the authorities in RailPro Services Pty Ltd v Flavel (2015) 242 FCR 424; [2015] FCA 504 at [81] – [93]. On the facts of this case, Mr New has established that Edition Coffee took adverse action, the operation of s.361 is enlivened (that is, the onus of proof shifts to the employer to satisfy the Court that the reason it took adverse action did not include that the employee had or exercised or threatened to exercise a workplace right), none of Edition Coffee and Mr Jackson has discharged, or has any reasonable prospect of discharging, their onus under s.361 of the Act. See also Fair Work Ombudsman v NSW Motel Management Services Pty Ltd & Ors (No 2) [2018] FCCA 1935 at [288], [303], [306]-[309] and discussion of authorities there.
Accordingly, to the standard required under r.13.03B(2)(c) I am satisfied that Edition Coffee has contravened s.340 of the Act. I consider that Mr New is entitled to the relief claimed for contraventions of s.340 of the Act.
Records and payslips – contraventions of ss.535 and 536 of the Act
In relation to records and payslips (which I consider claims arising from the pleading in the statement of claim at [19] and [25.4], and made expressly in the schedule), I accept that the payslips provided to Mr New misstated the number of hours worked, the correct rates of pay, omitted overtime, and weekend shifts, and as a consequence misstated the amounts that were due and payable and should have been paid.
Sub-section 536(1) of the Act provides that an employer must give a pay slip to each of its employees within one working day of paying an amount to the employee in relation to the performance of work. Pursuant to sub‑s.536(2) the pay slip must include certain information. These provisions are civil remedy provisions under the Act.
Mr New has alleged and I have found established that Edition Coffee by its conduct contravened ss. 44(1) and 45 of the Act. Edition Coffee was required by sub-s.535(1) and (2) to make and keep records in relation to the matters alleged, and by sub-s.536(1) and (2) to give payslips that contained the information prescribed by the regulations (reg.3.46). It has failed to comply with the requirement because the amounts on payslips did not accurately record the hours, and overtime and weekends worked, and applicable pay rates under the Award. Edition Coffee has failed to provide the discovery ordered. The presumption in s.557C(1) applies. No reasonable excuse has been provided, and none is discernible in the Defence.
Further, I have concluded that Edition Coffee did not pay Mr New as it was obliged to under the Act and Award. On basis of the above, I find that Edition Coffee provided Mr New with pay slips that were incorrect, and thus contrary to the requirements of s.536(2) of the Act, and it acted contrary to the obligation in s.536(1) of the Act. It follows that Edition Coffee did not comply with its statutory obligations required by sub-ss.536(1) and (2), in respect of Mr New throughout the period of Mr New’s employment.
It follows from the above that I find that Edition Coffee contravened sub-ss.535(1) and (2), and sub-ss.536(1) and 536(2) of the Act, and that it has contravened civil remedy provisions by reason of s.539(1) item 29. I further find, in respect of the contraventions of s.536, pursuant to, and applying s.557(1) and (2)(o), that the contraventions of each section were committed by the one person – the company - and arose out of a course of conduct by the company in respect of its obligations to provide Mr New with payslips containing the correct information of the hours, days and times he worked, and that those multiple failures may be grouped and taken to be a single contravention by Edition Coffee.
Conclusions on the contraventions of Edition Coffee
On the basis of the above, I am satisfied, for the purposes of default judgment, and also to the standard applicable for summary judgment, that Edition Coffee has contravened:
(a)s.44 of the Act by contravening s.117 of the Act by failing to pay Mr New 2 weeks’ pay for the hours and at the rates he would otherwise have worked;
(b)s.45 of the Act by contravening the provisions of the Award in relation to weekend penalty rates (cl.34 of the Award), overtime (cl.33 of the Award), meal breaks (cl.32 of the Award) and hours worked (cl.31 of the Award); and
(c)each of ss.535 and 536 of the Act by failing to maintain records and provide payslips containing the prescribed information, respectively.
I will make declarations accordingly.
Mr Jackson was involved in Edition Coffee’s contraventions within the meaning of s.550 of the Act
Section 550(1) of the Act provides that a person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision. I have found that the relevant civil remedy provisions Edition Coffee has contravened are ss.44, 45, 340, 535 and sub‑ss.536(1) and (2) of the Act.
Section 550(2) of the Act defines when a person is involved in a contravention, relevantly:
(2) A person is involved in a contravention of a civil remedy provision if, and only if, the person:
(a)has aided, abetted, counselled or procured the contravention; or
(b)has induced the contravention, whether by threats or promises or otherwise; or
(c)has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d)has conspired with others to effect the contravention.
The relevant principles for present purposes are summarised in NSW Motel Management at [344] – [349]. In short, a person is sufficiently involved in a contravention if they intentionally participated in the contravention. This requires actual knowledge of the essential factual matters that make up the contravention; it is not necessary that they knew of the relevant legal provisions.
I am satisfied from the November pleading, which is confirmed by Mr New’s first affidavit, and consistent with the admissions in the Defence, that Mr Jackson was the controlling mind, and in charge of the day-to-day business of Edition Coffee, relevantly insofar as relates to the company’s dealings with Mr New. He was the person who entered into discussions with Mr New as to his employment, who directed Mr New, and to whom he reported. He was instrumental in the various conduct of which Mr New complains. Further, the evidence before me demonstrates that Mr Jackson was responsible for paying Mr New. I note with regard to the payment of staff generally, that Mr Jackson sent expletive messages to Mr New in response to Mr New’s inquiries on behalf of other employees.
On the basis of the pleading, the Defence and the evidence of Mr New’s first affidavit summarised above I conclude that Mr Jackson by his acts and conduct was directly or indirectly knowingly concerned in or party to each of the contraventions of the Act by Edition Coffee.
It follows, and I find, Mr Jackson is a person involved in the contraventions of the civil remedy provisions by Edition Coffee within the meaning of s.550(2) of the Act, and by reason of s.550(1) of the Act, is taken to have contravened those provisions. I will make declarations to this effect.
Conclusion on the Judgment application – and compensation
For the above reasons, I am satisfied that Mr New appears entitled to the relief sought in relation to these contraventions. To the extent that I have stated above, I consider that Mr New has also established the basis for summary judgment. I am also satisfied that I have the power to award Mr New the relief he is entitled.
Pursuant to s.545 of the Act, the Court may make any order the Court considers appropriate if the Court is satisfied that a person has contravened a civil remedy provision. By s.545(2), without limitation, the orders the Court may make include an order awarding compensation for loss that a person has suffered because of the contravention.
In the schedule, which I have accepted, Ms Lewis provided a detailed calculation of the amounts that Mr New claims owed by virtue of the contraventions of s.44 and s.45 of the Act (namely breach of s.117 and clauses of the Award). The schedule provides a total amount for the “underpayments” “as per min award”. The underpayments should be calculated by reference to the Award.
On that basis, I find that Mr New’s underpayments for the contraventions that that the Court finds have been established, and compensation for adverse action, amounts to $47,261.00, comprising:
Clause 34: $8,393.00
Clause 33: $28,340.60
Clause 32: $8,277.90 and
Shortfall in termination payment: $2,249.50.(I note no separate amount is claimed for breach of clause 31 of the Award).
Pursuant to s.545 of the Act I will order Mr Jackson pay Mr New the amount of $47,261.00, together with interest. I will hear Mr New on the appropriate calculation of interest.
Should Mr New wish to proceed with seeking penalties for the contraventions of civil penalty provisions, I will set a timetable for the necessary steps.
JOINDER APPLICATION
Mr New seeks an order that Mr Andres Latorre Canon be joined as a party to the proceeding. For the purpose of determining the Joinder application I have had regard to the statement of claim dated 26 April 2019, the April pleading.
Rule 11.01 relevantly provides:
11.01 Necessary parties
(1)Subject to any order of the Court, a person whose participation is necessary for the Court to completely and finally determine all matters in dispute in a proceeding must be included as a party in the proceeding.
(2) The Court may require a person to be included as a party.
(3)A person required to be included as an applicant who does not consent to be included may be included as a respondent.
(4)The Court may decide a proceeding even if a person is incorrectly included or not included as a party.
Mr Latorre Canon opposes being joined to the proceeding.
He submits that insofar as Mr New pleads that he “began taking adverse action” against Mr New, the Court has no jurisdiction, as there is no Fair Work Commission certificate. This submission was made in relation to the March pleading. In the April pleading, however, Mr New pleads that Mr Latorre Canon is liable pursuant to s.550 of the Act for the alleged contraventions of the corporate entities, and presumably, principally Edition Coffee, as he was an “influential and controlling mind behind” and “was aware and had knowledge of” the adverse action and alleged Award breaches, which I have found to have been made out.
I am satisfied that I have jurisdiction to determine any claim against Mr Latorre Canon if he is joined (see Knight v Visionstream Australia Pty Ltd [2017] FCA 1513).
Both parties proceeded on the basis that to obtain leave to join Mr Latorre Canon, as stated in Review Australia Pty Ltd v Redberry Enterprise Pty Ltd [2003] FCA 1009, Mr New:
… needs to show an arguable case against the proposed respondents, at least to the standard of being able to resist an application for summary judgment by the proposed respondent had he or she been sued in separate proceedings.
See, more recently, and relevant to r.11.01 in this Court, the comprehensive and thorough analysis undertaken by Judge Lucev in Lukies v S2V Consulting Pty Ltd [2018] FCCA 1431.
Mr New submits that if the facts asserted by him are capable of providing Mr New the relief sought against Mr Latorre Canon, and that he could cure any deficiency of the pleading in the case against Mr Latorre Canon, the Court should join him to the proceeding.
He submits that Mr Latorre Canon, while not a director of Edition Coffee, was an investor and had a material interest in the operations, resources, and affairs of Edition Coffee. Mr New relies on the following matters to argue that Mr Latorre Canon was involved in Mr New’s employment:
(a) on or about January 2018, Mr New was informed by Mr Jackson that his contract was to be paid by a new company that would involve Mr Latorre-Canon;
(b) on or about March 2018, Mr Latorre-Canon directed Mr New to attend site inspections;
(c) on or about 14 May 2018, Mr Jackson indicated to Mr New that Mr Latorre-Canon had the power to direct the termination of his contract;
(d) on or about 2 May 2018, Mr Latorre-Canon was introduced to Mr New as the “new partner in Edition” and was involved in negotiating Mr New’s remuneration and Intellectual Property; and
(e) on or about 6 May 2018, Mr Latorre-Canon was included in emails concerning Mr New’s remuneration, employment terms and Intellectual Property Agreement.
Mr Latorre Canon’s submissions largely take issue with the lack of particulars or the insufficient particulars that Mr New has provided into how he is liable for any alleged contraventions.
A deficiency in pleadings ought not to shut out a reasonable cause of action: Qualify Me Pty Ltd v Get Me Qualified Australia Pty Ltd [2016] FCA 192. I also note I am not limited to matters arising under the pleadings: see Lukies at [67]. I have considered the materials before me to determine if there is an arguable factual basis for any claim under the Act against Mr Latorre Canon.
Consideration – Joinder Application
For the reasons I expand upon below, I am not satisfied that there is any reasonable cause of action against Mr Latorre Canon nor that he is a “necessary party” for the determination of this matter finally and completely.
None of the matters that Mr New has referred to indicate that Mr Latorre Canon was “involved in” raise any arguable basis at law that Mr Latorre Canon was involved in the contraventions within the meaning of s.550(2) of the Act. Being present, or copied in correspondence, is not sufficient.
Mr Latorre Canon was not a director, and held no shares in Edition Coffee. Even if he had any material interest in the operations, resources and affairs of Edition Coffee (which is not discernible on the material) that would not by itself mean that he was involved in Edition Coffee’s contraventions of the Act. More is needed.
I observe that the Liquidator’s Report to creditors dated 19 April 2019 concerning Edition Coffee raises a concern that the third, fourth, and fifth respondents had been using the equipment, and business name, of Edition Coffee without consideration. There is however, no connection drawn by the liquidator, nor apparent from the material, between that concern and the alleged adverse actions and breaches that took place before 3 June 2018. It is not apparent when the use of Edition Coffee’s equipment or business name was said to have commenced, nor, if established, how it impacted upon, or was any way related to, the conduct concerning Mr New’s employment that I have found contravened the Act.
The material at its highest shows that Mr Latorre Canon was arguably “involved in” matters which concerned Mr New’s potential future employment with another entity. The emails that Mr Latorre Canon was included in, and the reference to Mr Latorre Canon having the power to “direct the termination” of Mr New’s contract all arose in the context of the negotiations surrounding the offer made on 6 May 2018 to work for the fifth respondent (of which Mr Latorre Canon was a director): see [30]-[32] above. They were not in relation to Mr New’s current role or position with Edition Coffee.
No reference is made to Mr Latorre Canon in any of the alleged incidences of adverse action. I am not satisfied that there is an arguable basis that Mr Latorre Canon was involved in the adverse action decisions that were made by Edition Coffee and/or Mr Jackson relating to Mr New.
Mr New’s claim in relation to Mr Latorre Canon goes no further than allegations and conclusions. I am not satisfied that these could be “cured” by providing Mr New with another opportunity to re-plead.
Mr New has failed to satisfy me that Mr Latorre Canon is a “necessary party” to the proceeding. I dismiss the application that Mr Latorre Canon be joined to the proceeding.
REMOVAL APPLICATION
Although the Edition Group entities argue that they have not been joined to the proceeding, arguing that their joinder falls outside the terms of the leave granted on the first return date, I consider that the question whether they are proper parties can be determined by considering whether on the April pleadings they are proper parties, or should be removed.
The ‘Edition Coffee’ Businesses
It is appropriate to identify what can be ascertained of the structure and relationship of the corporate respondents. This summary has been taken from the affidavit of Ms Kaushalya Mataraaratchi affirmed 14 February 2019, employed solicitor representing the Edition Group entities, and the affidavit of Ms Kathryn Maree Lewis affirmed 16 September 2019, both of which annex corporate extracts from the Australian Securities and Investment Commission’s (ASIC) database.
The third respondent (Edition Coffee Holdings Pty Ltd) was first registered on 25 January 2018. Mr Jackson and Mr Latorre Canon are both listed as directors of the third respondent. The sole shareholder of the third respondent is the company ‘Latorre & Dutch China Pty Ltd’. Mr Latorre Canon is the sole shareholder of Latorre & Dutch China Pty Ltd.
The fourth respondent (Edition Coffee Darling Square Pty Ltd) was also first registered on 25 January 2018. Mr Jackson and Mr Latorre Canon are both listed as directors of the fourth respondent. The third respondent is the sole shareholder of the fourth respondent.
The fifth respondent (Edition Coffee Wholesale Pty Ltd) was also first registered on 25 January 2018. The second respondent and Mr Latorre Canon are both listed as directors of the fifth respondent. The third respondent is the sole shareholder of the fifth respondent. It follows that the third and fourth respondents are ‘siblings’.
Ms Mataraaratchi says that Mr Latorre Canon has informed her that the inclusion of Mr Jackson as a director to the third, fourth, and fifth respondents on the ASIC records was an “error”, that he is not and never has been a validly appointed director of those companies, the companies’ accountant brought the matter to his attention on 11 February 2019, and on 12 February 2019, he instructed them to rectify the “error” on the ASIC records.
It appears the accountants prepared resolutions and forms accordingly. The email from the companies’ accountants to Mr Latorre Canon further to those instructions stated as follows:
Dan was mistakenly appointed in January 2018, and you were added as additional director in May 2018.
These forms will correct Dan's appointment, and also effectively backdate YOUR appointment to January 2018 (the companies cannot be director-less between January and May).
Please be aware that as you are now the only director -you are legally on the hook for everything for these edition entities.
…
No affidavit has been made by Mr Latorre Canon.
The above instructions are not able to be tested. What kind of an “error” is unclear. No explanation is given. I note that the identification of the “error” only occurred after Edition Coffee was put into liquidation, which in turn was after Mr Jackson had informed the Court that two of the Edition Group entities had assumed conduct of the Edition business. If it was truly an “error” in the ASIC records that Mr Jackson was ever included as a director, the statement in the accountants’ email that Mr Latorre Canon was “now” the “only” director should not have been made. No explanation is given how it has come about that all corporate respondents use the name ‘Edition Coffee’ in their corporate names.
The draft resolutions dated 12 February 2019 prepared by the accountants for the companies’ minutes of meeting of directors Messrs Jackson and Latorre Canon resolving the corrections to be made to the ASIC records do not state that Mr Jackson is not or should not have been a director, at any time, nor contain any rational explanation. Rather, they simply resolve that a “correction” has to be made to record that Mr Canon should be director and secretary from 25 January 2018, and Mr Jackson should not have been a director from that date “in error”. They merely reflect Mr Latorre Canon’s instructions as at February 2019. It is reasonable to infer that he then sought to distance the companies in which he has an interest from Mr Jackson.
In the Liquidator’s Report (relevantly some months after these corrections were asserted to have been directed) the liquidator of Edition Coffee states:
The Director [Mr Jackson] is also a co-director ·of the following entities which are collectively referred to in this report as “related entities”:
•Edition Coffee Holdings Pty Ltd
•Edition Coffee Darling Square Pty Ltd; and
•Edition Coffee Wholesalers Pty Ltd
…
As I have noted, the Liquidator’s Report also raises a concern that the Edition Group entities were using equipment of Edition Coffee, and it appears the business name, for which Edition Coffee may not have been compensated.
I am not satisfied that Mr Jackson was not a director of each of the Edition Group entities. The “corrections” that were prepared to be provided to ASIC are ambiguous.
Legal Principles
Rule 11.04 provides that a party may apply to be removed as a party. The party must file an affidavit stating the relationship if any of the applicant to each other party, and the evidence in support of the application. Ms Mataraaratchi’s affidavit is barely sufficient. The Rules do not set out any factors for consideration.
In Dudley (Liquidator) v RHG Construction Fitout & Maintenance Pty Ltd [2019] FCA 1355, Jackson J stated as follows in determining whether two parties should be removed:
[52] The liquidators referred to authorities on r 9.08 and similar rules where the test for the operation of the rule has been stated in terms of the well known standard for summary termination of an action that was laid down in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129. However while it is true that r 9.08 and similar rules are often invoked where it is said that a plaintiff has no arguable case for relief against a defendant who has been joined, there is no reason to suppose that this confines the circumstances in which r 9.08 can be invoked.
[53] The applicants accepted, correctly, that the power to make an order under r 9.08 is discretionary. It seems to me that the discretion to remove parties is unconfined but the court should take 'whatever course seems to be most conducive to a just resolution of the disputes between the parties, but having regard to the desirability of limiting, so far as practicable, the costs and delay of the litigation': Wilcox J in Bishop v Bridgelands Securities (1990) 25 FCR 311 at 314. That is a case concerning leave to proceed against multiple parties, but it seems to me the same principle applies in the present, converse situation of the removal of parties. It is consistent with the requirement in s 37M(3) of the Federal Court of Australia Act that any power conferred by the civil practice or procedure rules be exercised in the way that best promotes the overarching purpose of facilitating the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible.
His Honour was there considering r.9.08 of the Federal Court Rules 2011 (Cth) which specifically states that a party may be removed if they have been “improperly or unnecessarily joined as a party, or has ceased to be a proper or necessary party”. Whilst r.11.04 does not replicate r.9.08 of those rules, having regard to r.1.05(2) of the Rules, and the objects set out in r.1.03 of the Rules, I am guided in my consideration by his Honour’s observations.
The issue before me is whether by the April pleading Mr New has disclosed and pleaded a reasonably arguable cause of action against the Edition Group entities, or any of them.
Consideration - The third and fifth respondent
I have referred above at [4(b)] to the concession made by Mr New, and the invitation there given to discontinue against the third respondent. The April pleading no longer names the third or fifth respondent as parties, does not make any allegations of fact against them, nor seek any relief against them. There is no identifiable cause of action against them. They are not proper parties. I will order the third and fifth respondent each be removed as parties to the proceeding.
Consideration - The fourth respondent
In written submissions dated 16 September 2019, on behalf of Mr New Ms Lewis submits:
Mr New has a reasonable cause of action against ECDS [the fourth respondent] as:
a.at some time between 25 January 2018 and 10 January 2019, unknown to Mr New, there was a transfer of business from ECR to ECDS within the meaning of s 311 of the Act;
b.ECR and ECDS are associated entities;
c.Mr New is a transferring employee within the meaning of s 311(2) of the Act;
d. Mr New’s employment was transferred to ECDS from ECR under a transferable instrument; and
e. accordingly, ECDS may be either the appropriate commercial entity which has contravened the act for some or all of the contraventions alleged in the Statement of Claim and liable pursuant to s 550 (1) of the Act; or
f. is accessorily liable for some or all of the contraventions pursuant to s 550 (2) of the Act.
In summary, Mr New has pleaded that the fourth respondent has contravened s.340 of the Act (i.e., that the fourth respondent was his “employer” and took adverse action against him). Alternatively, Mr New seems to suggest that the fourth respondent is liable under s.550 of the Act as being “involved in” the contraventions (presumably all the contraventions of the Act – and the breaches of the Award - alleged against Edition Coffee).
In the April pleading Mr New pleads that in or around February 2018, a transfer of business occurred between Edition Coffee and the fourth respondent and/or that Mr New’s employment was transferred to the fourth respondent at this time.
Mr New, for the first time in the final tranche of written submissions submits that the fourth respondent may be liable pursuant to s.550 of the Act. In circumstances where Mr New has filed 4 sets of pleadings, that such a claim is first raised so late is unsatisfactory.
The alleged adverse actions pleaded in this matter occurred in the period about May to June 2018, although the breaches of the Award as not so limited. Whilst the fourth respondent was registered before then, the Darling Square café/restaurant was not yet open for customers. That the fourth respondent was not “operational” prior to Mr New being terminated, however, is not dispositive.
Mr New’s first affidavit evidences that:
(a)the payslips recorded that Mr New was paid by ‘Edition Coffee Roasters’, identified with the ABN of the second respondent recorded in the ASIC extract. While Mr New was allegedly told in February 2018 that his pay would start coming from alternative accounts, his payslips continued to state the same employer - Edition Coffee Roasters, and the same ABN - until his employment ceased;
(b)the Intellectual Property Agreement signed on 8 February 2018 was made between Mr New and Edition Coffee only, consistent with it continuing to be his employer, and inconsistent with a transfer of business from Edition Coffee;
(c)Mr New undertook tasks in preparation for the opening of a new store in Darling Square (for which it appears the fourth respondent was to be the responsible entity), however those tasks were in addition to his existing duties at the Darlinghurst premises. Mr New remained working principally at and from Edition Coffee’s business location at all times. Site visits to view the progress of the Darling Square premises does not change this matter;
(d)on 6 May 2018, after a meeting with Mr Latorre Canon and Mr Jackson, Mr Jackson confirmed in the recap email that Mr New was offered the role of Executive Chef for the fifth respondent (not the fourth respondent);
(e)on 23 May 2018, Mr New was advised that the role of Executive Chef at the Darling Square project was no longer available, and that Edition Coffee wished to have Mr New’s “continued service” at the Darlinghurst premises; and
(f)Mr New’s written warning and dismissal letters both refer to Edition Coffee as his “employer”.
In light of the above , I am not satisfied that there is an arguable basis that there was a transfer of business between Edition Coffee and the fourth respondent as defined in s.311(1) of the Act nor that Mr New is a “transferring employee” as per s.311(2).
In particular, all documentary evidence confirms that Mr New was employed by Edition Coffee, and that Mr New’s employment with Edition Coffee ceased on 3 June 2018. There is no indication that Mr New’s employment with Edition Coffee was ever terminated by Edition Coffee prior to this date: see s.311(1)(a). This is enough to dispose of the submission that Mr New is a “transferring employee”.
While numerous submissions were made that Edition Coffee and the fourth respondent were “associated entities”, these submissions overlooked a critical part of s 311 of the Act: the need for a termination by Edition Coffee.
At the relevant times in question Mr New was employed by Edition Coffee, and Edition Coffee only. Any interaction or involvement with the fourth respondent was insufficient to amount to employment.
While there may have been a proposal that Mr New’s employment would be transferred, the proposal was never effected. The proposal was subsequently withdrawn.
I also note, given Mr New has submitted that his employment was transferred at some time without his knowledge, that a transfer of business and employment without the consent of the employee may be ineffective: McCluskey v Karagiozis [2002] FCA 1137.
On the evidence before me, it appears that Edition Coffee continued to operate for some time after Mr New’s employment was terminated.
In all of the circumstances, I do not consider that there is any arguable case that a transfer of Edition Coffee’s business or Mr New’s employment occurred.
Mr New has not pleaded s.550 of the Act against the fourth respondent, nor any material facts as to how the fourth respondent was “involved in” any contravention. It is also unclear from any of the materials how the fourth respondent could arguably have been involved in any of the claimed contraventions of the Act. That Mr Latorre Canon (a director of the fourth respondent) was present in a meeting with Mr New when Mr New was offered a position to work as the Executive Chef at the venue of the fourth respondent’s business does not raise any arguable case that the fourth respondent was “involved in” any contravention.
I have found that there is no arguable case that Mr New was employed by the fourth respondent or that a transfer of Edition Coffee’s business to the fourth respondent occurred before Mr New’s employment was terminated on 3 June 2018.
In light of the above findings, I am satisfied that there is no arguable case that the fourth respondent is liable for any of the pleaded contraventions of the Act or breaches of the Award.
Accordingly, I am not satisfied that there is any reasonably arguable basis that the fourth respondent is a proper party to the causes of action pleaded. I will order the fourth respondent be removed as a party to the proceeding.
Lastly, in relation to each of the Edition Group entities, lest I be wrong in my conclusion, and the Edition Group entities were not properly joined, then to the extent Mr New sought to have his application determined as an application for joinder of the Edition Group entities, I refuse joinder for the same reasons.
COSTS
This jurisdiction is ordinarily a no costs jurisdiction. The third, fourth, and fifth respondents and the proposed sixth respondent, however, submitted that the Court should order that Mr New pay their costs.
Section 570 of the Act relevantly provides:
(1)A party to proceedings (including an appeal) in a court (including a court of a State or Territory) in relation to a matter arising under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or section 569 or 569A.
(2) The party may be ordered to pay the costs only if:
(a)the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or
(b)the court is satisfied that the party's unreasonable act or omission caused the other party to incur the costs; or …
In King v Patrick Projects Pty Ltd (No 2) [2017] FCA 388, Gilmour J summarised relevant principles by reference to Full Court authority as follows:
[12]The particular requirements of s 570(2)(a) were the subject of a Full Court decision in Baker v Patrick Projects Pty Ltd (No 2) [2014] FCAFC 166. In that case, the Full Court considered the phrase “without reasonable cause” and, at [9], endorsed the following summary of authorities relating to the meaning and application of this phrase by Pagone J in Construction, Forestry, Mining and Energy Union v Corinthian Industries (Aust) Pty Ltd (No 2) [2014] FCA 351 at [8]:
… To exercise the discretion conferred by s 570(2)(a) of the FW Act the Court must be satisfied that the claims were, relevantly, instituted without reasonable cause. That is not established merely because a party fails in the claims: R v Moore; Ex parte Federated Miscellaneous Workers Union of Australia (1978) 140 CLR 470 at 473; [1978] HCA 51. The relevant provisions reflect “a policy of protecting a party instituting proceedings from liability for costs” and costs will rarely be awarded unless justified by exceptional circumstances: see Kangan Batman Institute of Technology and Further Education v Australian Industrial Relations Commission (2006) 156 FCR 275; 237 ALR 672; [2006] FCAFC 199 at [60]. In Kangan Batman Institute it was said by the Full Court at [60] that “a proceeding will be instituted without reasonable cause if it has no real prospects of success, or was doomed to failure”. In Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 Wilcox J indicated at 264 that one way of testing whether a proceeding was instituted “without reasonable cause” was to ask whether, upon the facts apparent to the applicant at the time of instituting the proceeding, there was no “substantial prospect of success”. His Honour went on to say that a proceeding lacks a reasonable cause where it is clear that it must fail on the applicant’s own version of the facts.
…
[15]It is worth also noting that courts have accepted that cost orders made pursuant to s 570(2)(a) of the Fair Work Act and which relate to proceedings instituted “without reasonable cause” are not restricted to exceptional cases. Although an award for costs under s 570 will generally be ‘an exceptional order’ in that it is a divergence from the usual course, it is now widely accepted that there is no need to demonstrate exceptional circumstances in order to enliven the Court’s jurisdiction to award costs: Spotless Services Australia Ltd v Marsh [2004] FCAFC 155 at [12] affirmed in Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No 2) (2015) 230 FCR 337 at [15]–[17].
I summarised the relevant principles applicable to s.570, and the Court’s approach to the exercise of its discretion in relation to orders for costs recently in Murphy v Innovoir Pty Ltd (No 2) [2021] FCCA 258, at [19]-[27], and [54], and I adopt what I there said.
The clearly intricate corporate structure of all of the corporate respondents, and the invitation extended by Mr Jackson to participate in the Darling Square project in its design phase, and the involvement of Mr Latorre Canon in that project, and thence in Edition Coffee’s business, arguably raised concerns as to what entity thereafter engaged Mr New, and what role each of the respondents and Mr Latorre Canon played. Mr Jackson’s statements to the Court on the first return date reasonably raised issues about the roles of each of the Edition Group entities, and the length of their involvement historically. The ASIC extracts did not allay those concerns, indeed in the face of the corporate structure and involvement of the directors there disclosed, I consider it was not unreasonable to join the additional respondents, and thereafter to seek to join Mr Latorre Canon.
Notwithstanding Mr Latorre Canon’s subsequent attempt to distance the Edition Group entities from Mr Jackson, by directing the application to correct the ASIC records (which attempt was not apparent on the face of the ASIC records), on the basis of what facts were known, and given Mr Jackson’s statements to the Court, I do not consider that it can be said that the proceeding was commenced (by joinder) or sought to be commenced (in the case of Mr Latorre Canon) against any of them vexatiously or without reasonable cause. In the light of these matters, I do not accept Ms Campbell’s submission that Mr New’s conduct in joinder or of the applications has been unreasonable.
Further, and in any event even were a statutory precondition in s.570(2) enlivened in the case of any of the third, fourth, fifth or proposed sixth respondents, for the following reasons, and accepting that it is not necessary that a person prove exceptional circumstances, I am not persuaded that it is appropriate in the present case to exercise the Court’s discretion to award costs in favour of any of them.
Although the third respondent was named in the November pleading, any claim against it was abandoned early, and consistently with the objects of the Rules. In these circumstances, I decline to exercise my discretion to award costs.
The fourth respondent clearly had some links to Mr New during the course of his employment given Mr New was, I accept, undertaking tasks purportedly for the business that the fourth respondent was setting up, and in which Mr Latorre Canon appeared to be involved directly, or through one or other of the Edition Group entities. As I observed at the hearing, the role of the fourth respondent required a closer examination. I therefore consider that the fourth respondent’s inclusion was not without reasonable cause, and Mr New’s conduct was not unreasonable.
I also note that the text message exchanges between Mr New and Mr Jackson, in addition to the “offer” made on 2 and 6 May 2018, raised concerns about the fifth respondent’s and proposed sixth respondent’s involvement. It certainly appears to be the case that the fifth respondent was the intended employer of Mr New had the offer (at the reduced salary) been genuinely made (which I am not able on the materials to determine) and Mr New accepted it. It appears the fifth respondent was also operating from the same premises as Edition Coffee. I therefore consider that the fifth respondent’s inclusion was not without reasonable cause, and Mr New’s conduct was not unreasonable.
As regards the proposed sixth respondent, it should be apparent from my consideration of the Joinder application, that while I have declined to permit joinder, his involvement in the Edition Coffee business, in Mr New’s employment, and in the circumstances leading to his termination, raise serious questions that it was appropriate to ventilate before the Court. I therefore consider that Mr New’s conduct in seeking to join Mr Latorre Canon was not unreasonable.
I decline to make any order for costs.
DISPOSITION
I have concluded that the applicant, Mr New has succeeded in his application for default judgment against the second respondent, Mr Jackson, and that Mr Jackson is liable to pay compensation to Mr New.
I have concluded that each of the third, fourth and fifth respondents should be removed as parties to the proceeding.
I have determined that Mr New’s application to join Mr Latorre Canon as a sixth respondent should not be granted.
I have decided that there should not be any order for costs.
I will make declarations and orders to give effect to these reasons.
I will direct the applicant within 7 days to bring in a minute of proposed orders, and supported by a short submission in relation to the calculation of interest on the amounts so ordered, and confirming, or otherwise the amounts set out in [125].
The remainder of the proceeding will be adjourned to a date to be fixed to program the further conduct of the proceeding in relation to the penalty, if any, that should be imposed on the second respondent for the contraventions of the Act identified in these reasons for decision.
I certify that the preceding one hundred and two hundred and one (201) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Baird. Associate:
Dated: 20 April 2021
SCHEDULE OF PARTIES
SYG 2622 of 2018 Respondents
Fourth Respondent:
EDITION COFFEE DARLING SQUARE PTY LTD
Fifth Respondent:
EDITION COFFEE WHOLESALE PTY LTD
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