Scotto v Scala Bros Pty Ltd
[2014] FCCA 2374
•17 October 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| SCOTTO v SCALA BROS PTY LTD & ANOR | [2014] FCCA 2374 |
| Catchwords: INDUSTRIAL LAW – Limitation period – whether events occurring outside the limitation period, which were part of a course of conduct concluding within the limitation period, ground a cause of action which is within time. |
| Legislation: Workplace Relations Regulations 2006, ch.2, regs.1.2, 14.3, 19.9, 19.12, 19.20, 19.22, 19.24 |
| Cases cited: Heydon v NRMA Ltd (2000) 51 NSWLR 1 Commonwealth Trading Bank of Australia v Sidney Raper Pty Ltd (1975) 25 FLR 217 |
| Applicant: | PAUL SCOTTO |
| First Respondent: | SCALA BROS PTY LTD (ABN 66 000 104 870) |
| Second Respondent: | GIUSEPPINA BOSSI |
| File Number: | SYG 2333 of 2010 |
| Judgment of: | Judge Cameron |
| Hearing dates: | 16-18 April 2012, 20-21 June 2012, 6-9 August 2012, 18-19 September 2012, 20 November 2012 |
| Date of Last Submission: | 20 November 2012 |
| Delivered at: | Sydney |
| Delivered on: | 17 October 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr M. Seck |
| Solicitors for the Applicant: | Thomsons |
| Counsel for the Respondents: | Mr B. Cross |
| Solicitors for the Respondents: | Australian Business Lawyers |
ORDERS
Within twenty-eight days the parties file a draft short minute of orders giving effect to the Court’s findings on the question of compensation.
The cross claim be dismissed.
The matter be listed for directions on 14 November 2014 at 9.30am.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 2333 of 2010
| PAUL SCOTTO |
Applicant
And
| SCALA BROS PTY LTD (ABN 66 000 104 870) |
First Respondent
| GIUSEPPINA BOSSI |
Second Respondent
REASONS FOR JUDGMENT
INTRODUCTION................................................................................................ [1]
APPLICANT’S ALLEGATIONS........................................................................ [4]
Employment benefits..................................................................................... [6]
Wages, allowances, loadings and overtime.............................................. [10]Leave.............................................................................................................. [12]
Superannuation............................................................................................ [14]Pay slips......................................................................................................... [15]
Quantum claimed......................................................................................... [16]
Penalties........................................................................................................ [17]
Liability of the respondents....................................................................... [19]
RESPONDENTS’ RESPONSE AND CROSS CLAIM................................... [22]
APPLICANT’S RESPONSE TO CROSS CLAIM.......................................... [26]
LEGISLATIVE BACKGROUND..................................................................... [28]
RELEVANT LEGISLATION
Prior to 27 March 2006............................................................................... [29]
Wages, allowances, loadings and overtime......................................... [31]
Annual leave............................................................................................ [33]
Pay slips.................................................................................................... [34]
Superannuation........................................................................................ [36]
Accessorial liability................................................................................ [37]
Penalties and compensation.................................................................. [38]
Limitation period..................................................................................... [40]
Other.......................................................................................................... [42]27 March 2006 – 30 June 2009 – Workplace Relations Act................. [43]
Wages, allowances, loadings and overtime......................................... [44]
Annual leave............................................................................................ [47]
Pay slips.................................................................................................... [50]
Employer obligations in relation to employee records..................... [53]
Superannuation........................................................................................ [55]
Penalties and compensation.................................................................. [56]
Accessorial liability................................................................................ [61]
Limitation period..................................................................................... [62]
Other.......................................................................................................... [64]Fair Work Act
1 July 2009 onwards
Limitation period................................................................................ [65]
Pay slips............................................................................................... [66]
Employer obligations in relation to employee records................. [68]
Accessorial liability........................................................................... [70]
1 July 2009 – 31 December 2009, FW Act transitional period........ [71]
Wages, allowances, loadings and overtime.................................... [72]
Annual leave....................................................................................... [73]
Penalties and compensation.............................................................. [75]
1 January 2010 onwards
Wages, allowances, loadings and overtime.................................... [79]
Annual leave....................................................................................... [81]
Penalties and compensation.............................................................. [84]
Other..................................................................................................... [89]
Course of conduct........................................................................................ [90]
Long service leave....................................................................................... [92]
Shop Employees (State) Award................................................................. [97]
General Retail Industry Award 2010...................................................... [109]
APPLICANT’S EVIDENCE
Paul Scotto
Background............................................................................................ [113]
Hours of work and duties..................................................................... [115]
Wages, deductions and loans.............................................................. [124]
Leave and holiday pay......................................................................... [138]
Events from June 2009......................................................................... [150]Angela Scotto
Hours of work........................................................................................ [154]
Wages and loans.................................................................................... [159]
Leave and holiday pay......................................................................... [166]
Events from June 2009......................................................................... [172]Suzanne Scotto........................................................................................... [173]
Oriana Ciano............................................................................................... [176]
Ross Cicco.................................................................................................. [191]
Hugh Molloy............................................................................................... [197]
Joseph Currao............................................................................................. [201]
Norm Moses................................................................................................ [204]
Cosimo Cremona........................................................................................ [207]
Giuseppe Cimino....................................................................................... [210]
RESPONDENTS’ EVIDENCE
Giuseppina Bossi
Background............................................................................................ [215]
Mr Scotto’s “first period of employment” –
4 May 1984 to 24 October 1986......................................................... [221]
Mr Scotto’s “second period of employment” –
28 November 1986 to 24 December 1986........................................ [225]
Mr Scotto’s “third period of employment” –
3 April 1987 to 9 April 1992............................................................... [226]
Mr Scotto’s “fourth period of employment” –
30 May 1994 to 19 March 2004......................................................... [228]
Mr Scotto’s “fifth period of employment” –
7 June 2004 to 5 May 2010................................................................. [231]
Mr Scotto’s duties................................................................................. [233]
Opening hours after Mr Carrano’s death........................................... [235]
Business relationship with Mr Scotto................................................ [236]
Mr Scotto’s departure........................................................................... [238]
Mr Scotto’s loan.................................................................................... [239]John-Paul Bossi.......................................................................................... [243]
Silvana Mace.............................................................................................. [248]
Benito Ferlazzo.......................................................................................... [264]
Giovanna Ferlazzo..................................................................................... [277]
Josephine Schultz...................................................................................... [284]
OTHER EVIDENCE....................................................................................... [288]
CONSIDERATION
Introductory Submissions
Applicant................................................................................................ [292]
Respondents........................................................................................... [296]Limitation period
Submissions........................................................................................... [299]
ConsiderationPre-27 March 2006 – NSW law...................................................... [307]
27 March 2006 – 30 June 2009 – Workplace Relations Act..... [313]
1 July 2009 – onwards – Fair Work Act........................................ [315]
Wages books
Submissions........................................................................................... [316]
Consideration........................................................................................ [320]General ledger
Submissions........................................................................................... [324]
Consideration........................................................................................ [327]The Red Book
Submissions........................................................................................... [332]
Consideration........................................................................................ [335]Pay slips and proper records.................................................................... [340]
Consideration........................................................................................ [342]
Credit of witnesses.................................................................................... [343]
Mr Scotto’s classification......................................................................... [350]Consideration........................................................................................ [359]
Award underpayments............................................................................... [362]
Submissions
Wages................................................................................................. [364]
Overtime and Saturday penalty rate claims................................. [366]
Breakfast allowance......................................................................... [376]
Consideration
Wages................................................................................................. [378]
Overtime and Saturday penalty ratesMr Scotto’s start and finish times............................................. [382]
Construction of Shop Award...................................................... [390]
Operation of overtime clause and application of the Saturday penalty rate [398]Breakfast allowance......................................................................... [403]
“Set-off” of entitlements and payments................................................. [405]
Consideration........................................................................................ [413]
Long service leave
Submissions
Breaks in employment..................................................................... [422]
Final termination of employment.................................................. [434]
Consideration........................................................................................ [436]
Commencement of employment.............................................................. [442]
Consideration........................................................................................ [447]
Annual leave............................................................................................... [448]
Consideration........................................................................................ [450]
Superannuation.......................................................................................... [457]
Consideration........................................................................................ [460]
Pecuniary penalties – Scala Bros............................................................ [462]
Consideration........................................................................................ [466]
Accessorial liability – Giuseppina Bossi............................................... [471]
Consideration........................................................................................ [481]
Before 14 June 2009........................................................................ [483]
14 June 2009 to 5 May 2010Generally...................................................................................... [489]
Contraventions of federal statutes............................................ [490]
Compensation under federal statutes....................................... [495]Long service leave........................................................................... [499]
Loan – cross claim and defence of set-off............................................. [502]
Consideration........................................................................................ [509]
CONCLUSION
Compensation............................................................................................. [517]
PenaltiesScala Bros............................................................................................... [521]
Giuseppina Bossi.................................................................................. [526]Costs............................................................................................................ [528]
Further conduct.......................................................................................... [529]
INTRODUCTION
The first respondent (“Scala Bros”) operated a combined delicatessen and café (“shop”) at the Flemington Markets in Sydney. The second respondent, Giuseppina Bossi, became the sole director of Scala Bros in June 2009 upon the death of her father, the other director and proprietor of the business, Andrea Carrano. The applicant, Paul Scotto, was employed by Scala Bros to work at the shop for much of the period from the early/mid-1980s to 2010. Mr Carrano was Mr Scotto’s step-grandfather and so, although they are very close in age, Mr Scotto is also Mrs Bossi’s nephew.
Mr Scotto alleged that during his employment with Scala Bros the latter failed to pay him minimum wages, as well as allowances, loadings and overtime. He alleged that Scala Bros failed to make superannuation contributions on his behalf or to provide him with pay slips. He also alleged that after his employment ended Scala Bros failed to pay him his accrued annual leave and long service leave.
On 28 October 2010 Mr Scotto commenced this proceeding seeking payment of the amounts allegedly unpaid or underpaid, interest on those amounts and the imposition of pecuniary penalties.
APPLICANT’S ALLEGATIONS
In his further amended points of claim Mr Scotto alleged that he was employed by Scala Bros from about January 1981 until 5 May 2010. He alleged that from January 1981 to January 1988 he held the position of shop assistant and from February 1988 he held the position of “shop assistant with the duty of buying – in charge of 5 to 12 assistants”. He alleged that he was responsible for the day-to-day management of the shop.
Mr Scotto alleged that his employment with Scala Bros was subject to an oral contract of employment between him and Mr Carrano.
Employment benefits
Mr Scotto alleged that the terms and conditions of his employment were governed by the following instruments:
a)between 1 July 1981 and 26 March 2006, the Shop Employees (State) Award (“Shop Award”);
b)between 27 March 2006 and 30 June 2009 and pursuant to the Workplace Relations Act 1996 (“WR Act”), the Notional Agreement Preserving the Shop Employees (State) Award (NSW) (“Shop NAPSA”) and the preserved Australian Pay and Classification Scale (“Preserved APCS”);
c)between 1 July 2009 and 31 December 2009, the Shop NAPSA and the Preserved APCS pursuant to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (“FW (TPCA) Act”); and
d)between 1 January 2010 and 5 May 2010, the General Retail Industry Award 2010 (“Retail Award”) pursuant to the Fair Work Act 2009 (“FW Act”).
Mr Scotto alleged that during his employment with Scala Bros he was entitled to receive (leave) benefits and to accrue (leave) entitlements:
a)between 1 July 1981 and 26 March 2006, under s.3 of the Annual Holidays Act 1944 (NSW);
b)between 27 March 2006 and 31 December 2009, under s.232 of the Australian Fair Pay and Conditions Standard (“AFPCS”) of the WR Act;
c)between 1 January 2010 and 5 May 2010, under s.87 of the National Employment Standards (“NES”) of the FW Act; and
d)under s.4 of the Long Service Leave Act 1955 (NSW) (“LSL Act”).
Mr Scotto also alleged that his contract of employment contained an implied term enforceable under ss.139(1)(i) and 542(1) of the FW Act that Scala Bros would make minimum superannuation contributions on his behalf to a complying superannuation fund to avoid a charge under the Superannuation Guarantee Administration Act 1992.
Mr Scotto also alleged that during his employment Scala Bros had an obligation to provide him with pay slips:
a)between 2 September 1996 and 26 March 2006, in accordance with s.123(1) of the Industrial Relations Act 1996 (NSW) (“IR Act”) and relevant regulations;
b)between 27 March 2006 and 30 June 2009, in accordance with s.836(2) of the WR Act and div.6 of pt.19 of ch.2 of the Workplace Relations Regulations 2006 (“WR Regulations”); and
c)between 1 July 2009 and 5 May 2010, in accordance with s.535(1) of the FW Act and subdiv.2 of div.3 of pt.3-6 of ch.3 of the Fair Work Regulations 2009 (“FW Regulations”).
Wages, allowances, loadings and overtime
Mr Scotto alleged that Scala Bros failed to pay him his wages, allowances, loadings and overtime:
a)between 1 July 1981 and 26 March 2006, in accordance with the Shop Award;
b)between 27 March 2006 and 31 December 2009, in accordance with the Shop NAPSA and the Preserved APCS; and
c)between 1 January 2010 and 5 May 2010, in accordance with the Retail Award.
He alleged that by failing to pay him his minimum wages, allowances, loadings and overtime, Scala Bros contravened the IR Act, the WR Act and the FW Act.
Leave
Mr Scotto alleged that he did not take or receive long service leave during his employment with Scala Bros. He alleged that upon termination of his employment, Scala Bros did not pay him long service leave and thereby contravened the LSL Act.
Mr Scotto alleged that apart for two weeks paid leave in January 2010, he did not take or receive paid annual leave during his employment with Scala Bros. He alleged that upon termination of his employment, Scala Bros failed to pay him his annual leave entitlements thereby contravening the FW Act.
Superannuation
Mr Scotto also alleged that Scala Bros did not make sufficient superannuation contributions into a complying superannuation fund on his behalf. He alleged that by failing to do so, Scala Bros breached a term of his contract, being a safety net contractual entitlement.
Pay slips
Mr Scotto alleged that during or after his employment, Scala Bros failed to provide him with pay slips and therefore contravened the IR Act, the WR Act and the FW Act and their relevant regulations.
Quantum claimed
Mr Scotto claimed the difference between the amounts he alleged he was entitled to receive under the relevant industrial instruments and industrial laws and the amounts he actually received, being a total of $1,558,789.95 comprised of:
a)$1,420,832.33 in respect of unpaid wages;
b)$32,347.15 in respect of unpaid breakfast allowances;
c)$87,934.33 in respect of unpaid sick, annual and long service leave; and
d)$17,676.14 in respect of unpaid superannuation.
Penalties
Mr Scotto also sought the imposition of civil penalties on the respondents under:
a)s.719(1) of the WR Act;
b)s.546(1) of the FW Act; and
c)sub-ss.10(1),(2) and (3) of the LSL Act.
Mr Scotto also alleged that Mrs Bossi failed to correct the underpayments he claimed and that that made her liable as an accessory for Scala Bros’ conduct such that she was liable to compensate him for underpayments, and also liable to the imposition of pecuniary penalties, pursuant to:
a)ss.357(7), 358 and 400(1) of the IR Act;
b)ss.727(1) and 728(1) of the WR Act; and
c)ss.545(1), 546(1) and 550(1) of the FW Act.
Liability of the respondents
Mr Scotto alleged that after his employment was terminated he wrote to Scala Bros demanding that they rectify the claimed underpayments. He alleged that Scala Bros refused to make good those underpayments thereby continuing the contraventions.
Mr Scotto alleged that the contraventions committed by Scala Bros arose out of the same course of conduct and ought to be treated as a single contravention. He alleged that Scala Bros was therefore liable to make good the underpayments over the entire period of his employment.
Mr Scotto alleged that as a director and manager of Scala Bros and/or as a consequence of Mrs Bossi’s knowledge of the demand and her capacity to authorise or take actions to ensure that Scala Bros made good the underpayments, Mrs Bossi:
a)knowingly authorised and permitted the contraventions;
b)aided and abetted the contraventions; and/or
c)had been knowingly concerned in, or party to, the contraventions;
and was therefore involved in the contraventions and so liable for the underpayments.
RESPONDENTS’ RESPONSE AND CROSS CLAIM
The respondents denied the allegations that Mr Scotto had been underpaid his wage entitlements, had been entitled to long service leave, had never taken annual leave, had not had adequate superannuation contributions made for him and not been given pay slips. Further, they alleged that between May 2010, when Mr Scotto left his employment with Scala Bros, and 30 June 2010, Scala Bros continued to make payments to him by drawing on his accrued annual leave entitlements. The respondents sought the offsetting of those amounts against any unpaid annual leave owing to Mr Scotto. Later, in their written submissions, the respondents conceded that Mr Scotto was entitled to a payment of $12,490.36 for annual leave.
The respondents alleged that Scala Bros had extended an employee loan facility to Mr Scotto which he had breached by failing to repay the $30,430 loan principal when his employment with Scala Bros ceased. They sought a set-off of the amount Scala Bros claimed against Mr Scotto with the amounts he claimed against them. They phrased the claimed set-off in the following way:
Further or in the alternative, that the Respondents were entitled at the date of filing of the claim and are entitled to claim the sum of $30,870.20 [sic] as an offset against any sum claimed to be owed to the Applicant by them.
The respondents also alleged that any of Mr Scotto’s claims based on causes of action alleged to have accrued more than six years before the commencement of this proceeding were statute barred because they were out of time.
In their cross claim the respondents alleged that Mr Scotto’s failure to repay the loan caused Scala Bros loss and damage. In written submissions Scala Bros abandoned a claim for interest and so, although the cross claim was not amended to reflect that abandonment of the claim for interest, I take the amount sought to be $30,430.
APPLICANT’S RESPONSE TO CROSS CLAIM
Mr Scotto denied the existence of a loan facility, saying that any sums beyond his wages were paid in lieu of annual leave and that in any event the claim was out of time.
Mr Scotto also alleged that the Court did not have jurisdiction to entertain the cross claim because it did not concern any matter arising under Commonwealth law and did not fall within the Court’s accrued jurisdiction.
LEGISLATIVE BACKGROUND
Mr Scotto’s claims span nearly thirty years and four distinct periods of industrial law:
a)from 1981 to 26 March 2006, the law of New South Wales (“NSW”);
b)on and from 27 March 2006 to 30 June 2009, the WR Act;
c)on and from 1 July 2009 to 31 December 2009, the FW Act transitional period pending the commencement of modern awards and the NES; and
d)on and from 1 January 2010, the FW Act including modern awards and the NES.
RELEVANT LEGISLATION
Prior to 27 March 2006
Before the commencement of the Workplace Relations Amendment (Work Choices) Act 2005 on 27 March 2006, Mr Scotto’s employment was governed by the law of NSW. The Acts which successively regulated industrial relations in NSW during the period in issue were the Industrial Arbitration Act 1940 (NSW), the Industrial Relations Act 1991 (NSW) and the IR Act (of 1996). Mr Scotto only pressed claims under the IR Act.
Section 16(2) of the WR Act and reg.1.2 of ch.2 of the WR Regulations provided that Acts such as the IR Act would continue to apply on and after 27 March 2006 in relation to conduct which occurred before that date. Consequently, subject to the consequences of the subsequent repeal of the WR Act and the WR Regulations, the IR Act continues to apply to the causes of action arising under that Act alleged in these proceedings.
Wages, allowances, loadings and overtime
Section 365 of the IR Act provides:
365 Order for recovery of remuneration and other amounts payable under industrial instrument
An industrial court may, on application, order an employer to pay any amount payable under an industrial instrument that remains unpaid to the person to whom it is payable.
Section 8 of that Act defines “industrial instrument” as including an award. Although this Court is not amongst the courts defined in the IR Act as an “industrial court”, that is no impediment to the Court having accrued jurisdiction in this case: Browne v S Smith & Son Pty Ltd (1985) 8 FCR 206 at 210.
Annual leave
The Annual Holidays Act 1944 (NSW) relevantly provides:
3 Annual holidays with pay
(1)Except as otherwise provided in this Act, every worker shall at the end of each year of the worker’s employment by an employer become entitled to an annual holiday on ordinary pay.
Such annual holiday shall:
…
(b)where any such year of employment ends after 30 November 1974, be of four weeks.
...
(5)Except as provided in section 4 or section 4A, payment shall not be made by an employer to a worker in lieu of any annual holiday or part thereof to which the worker is entitled under this Act nor shall any such payment be accepted by the worker.
Pay slips
Section 123 of the IR Act relevantly provides:
123 Particulars of remuneration to be supplied to employees
(1)An employer must, when paying remuneration to an employee, supply the employee with such written particulars regarding the payment as are prescribed by the regulations.
Maximum penalty: 20 penalty units.
Regulation 7 of the Industrial Relations (General) Regulation 2001 (NSW) provides:
7Particulars of remuneration to be supplied to employees
(1)For the purposes of section 123 (1) of the Act, the following written particulars are to be supplied by the employer to an employee when remuneration is paid to the employee:
(a)the name and Australian Business Number of the employer,
(b) the name of the employee,
(c)if the remuneration of the employee is set by an industrial instrument – the classification of the employee under that instrument,
(d) the date on which the payment was made,
(e)the period of employment to which the payment relates,
(f)the gross amount of remuneration (including overtime and other payments),
(g)the amount paid as overtime or such information as will enable the employee to calculate the amount paid as overtime,
(h) the amount deducted for taxation purposes,
(i)the amount deducted as employee contributions for superannuation purposes,
(j) the particulars of all other deductions,
(k) the net amount paid. …
Superannuation
Section 368 of the IR Act relevantly provides:
368 Order for recovery of unpaid superannuation
(1)An industrial court may, on application, order an employer, who employs any person to do any work for which the employer is required under an industrial instrument to make a contribution to a superannuation fund on behalf of the person, to make a payment to or in respect of that person for the purpose of restoring the person, as far as practicable, to the position that the person would have been in had the employer not failed to make the contribution.
Accessorial liability
Section 400 of the IR Act relevantly provides:
400 Offences by corporation
(1)If a corporation contravenes, whether by act or omission, any provision of this Act or the regulations, each person who is a director of the corporation or who is concerned in the management of the corporation is taken to have contravened the same provision if the person knowingly authorised or permitted the contravention.
Penalties and compensation
Section 357 of the IR Act relevantly provides:
357 Civil penalty for breach of industrial instruments
(1)If an industrial court is satisfied that a person has contravened a provision of an industrial instrument, it may order the person to pay a pecuniary penalty not exceeding $10,000 (a civil penalty).
(2)Proceedings for a civil penalty may be instituted:
(a)by an inspector or any other person authorised by this Act to institute proceedings for offences, or
(b)by an employer bound by the industrial instrument concerned, or
(c)by an industrial organisation concerned in the industry to which the proceedings relate.
…
Section 358 of the IR Act relevantly provides:
358 Related proceedings for recovery of remuneration and other money
(1)An industrial court dealing with proceedings for a civil penalty under this Part that relate to the failure of the defendant to pay any money that may be recovered under Part 2 [ss.364-380] may, in the same proceedings, also make under that Part any order for the payment of money that it is authorised to make in proceedings under that Part.
Limitation period
Section 357 of the IR Act relevantly provides:
(3)Proceedings for a civil penalty may be instituted within 6 years after the contravention.
Section 369 of the IR Act relevantly provides:
369 Application for order
(1)An application for an order under this Part for the payment of money may be made:
(a) by the person to whom the money is payable …
(3)An application for an order may only be made if the money became due within the period of 6 years immediately before the application was made.
Other
Section 372 of the IR Act provides that interest up to judgment may be awarded on sums for which an order is made or judgment given under that Act.
27 March 2006 - 30 June 2009 – Workplace Relations Act
The provisions of the WR Act relevant to these proceedings were repealed by sch.1 to the FW (TPCA) Act effective 1 July 2009. Nevertheless, item 11 of sch.2 to the FW (TPCA) Act provides that the WR Act continues to apply on and after its repeal in relation to conduct which occurred before the repeal. Consequently, the WR Act continues to apply to the causes of action arising under that Act alleged in these proceedings. It also operates to preserve the operation of the IR Act to the extent that that Act is relevant to this proceeding.
Wages, allowances, loadings and overtime
Clause 31 of sch.8 to the WR Act preserved the Shop Award as the Shop NAPSA. Clause 32 of sch.8 to the WR Act had the effect that Scala Bros was bound to observe the terms of the Shop NAPSA.
To the extent that the Shop NAPSA provided for wage rates, by virtue of s.208 of the WR Act, it was also a preserved APCS (“Shop APCS”). At the relevant time s.182(1) of the WR Act provided:
(1) If:
(a)the employment of an employee is covered by an APCS; and
(b)the employee is not an APCS piece rate employee;
the employee must be paid a basic periodic rate of pay for each of the employee’s guaranteed hours (pro-rated for part hours) that is at least equal to the basic periodic rate of pay (the guaranteed basic periodic rate of pay) that is payable to the employee under the APCS.
The Shop APCS was part of the AFPCS: s.171(3) of the WR Act.
Annual leave
Sub-division B of div.4 of pt.7 of the WR Act, which was entitled “Guarantee of annual leave”, was part of the AFPCS. It contained s.232 which relevantly provided:
(2)An employee is entitled to accrue an amount of paid annual leave, for each completed 4 week period of continuous service with an employer, of 1/13 of the number of nominal hours worked by the employee for the employer during that 4 week period.
Clause 15E(1) of sch.8 to the WR Act provided:
15E Relationship between preserved State agreements and Australian Fair Pay and Conditions Standard
(1)The Australian Fair Pay and Conditions Standard does not apply to an employee in relation to a matter if the employee’s employment is subject to a preserved State agreement that deals with that matter in relation to the employee
Clause 34 of sch.8 to the WR Act preserved the Annual Holidays Act as a notional agreement preserving state award (“Annual Holidays NAPSA”). Clauses 15E(1) and 32 of sch.8 to the WR Act had the effect that Scala Bros was bound to observe the terms of the Annual Holidays NAPSA, rather than s.232 of that Act.
Pay slips
From 31 March 2006 to 26 March 2007 reg.19.22 of ch.2 of the WR Regulations dealt with the giving of pay slips. It provided:
19.22 Pay slips - subsection 836 (2) of the Act
(1)An employer who employs an employee must issue to the employee a written pay slip relating to each payment by the employer of an amount to the employee as remuneration.
(2)The pay slip must be issued within 1 day of the payment to which the pay slip relates being made to the employee.
(3)The employer must include on a pay slip particulars specified in regulation 19.23.
(4)Strict liability applies to the physical elements in subregulations (1) and (2).
(5)Subregulations (1) and (2) are civil remedy provisions.
From 27 March 2007, reg.19.20 of ch.2 of the WR Regulations dealt with the giving of pay slips. It was in terms relevantly identical to the previous reg.19.22.
Regulation 19.24 and later reg.14.3 of ch.2 of the WR Regulations provided that only a workplace inspector (now the Fair Work Ombudsman) might apply for an order based on, respectively, a breach of reg.19.22 or reg.19.20.
Employer obligations in relation to employee records
Section 836 of the WR Act provided:
836 Records relating to employees
(1) The regulations may make provision in relation to:
(a)the making and retention by employers of records relating to the employment of employees; and
(b)the inspection of such records.
(2)The regulations may require employers of employees to issue pay slips to those employees at such times, and containing such particulars, as are prescribed.
Part 19 of ch.2 of the WR Regulations prescribed matters for the purpose of s.836 of the WR Act. Of particular relevance for this matter, the WR Regulations provided:
19.9 Contents of records — hours worked
(1)The record relating to the employee must contain the following:
(a)the employee’s daily starting and finishing times;
(b)the total number of hours worked by the employee during each day;
(c)the employee’s nominal hours and any variations to those hours.
…
19.12 Contents of records — annual leave
(1)The employee’s record must contain the following matters relating to annual leave:
(a)the rate of the employee’s accrual of annual leave;
(b)the date on which the employee was credited with annual leave;
(c)the balance of the employee’s entitlement to that annual leave from time to time;
(d)the amount of annual leave taken by the employee;
(e)the amount paid to the employee while on annual leave.
Superannuation
The WR Act did not itself provide for an entitlement to superannuation contributions.
Penalties and compensation
As noted earlier, Scala Bros was bound to observe the terms of the Shop NAPSA and the Annual Holidays NAPSA. Clause 43 of sch.8 to the WR Act provided that a NAPSA might be enforced as if it were a collective agreement.
Section 719 was the provision of the WR Act relevant to the breaches of that Act alleged in these proceedings and it relevantly provided:
719 Imposition and recovery of penalties
(1)An eligible court may impose a penalty in accordance with this Division on a person if:
(a) the person is bound by an applicable provision; and
(b) the person breaches the provision.
…
(4)The maximum penalty that may be imposed under subsection (1) for a breach of an applicable provision is:
(a) 60 penalty units for an individual; or
(b) 300 penalty units for a body corporate.
…
(6)Where, in a proceeding against an employer under this section, it appears to the eligible court that an employee of the employer has not been paid an amount that the employer was required to pay under an applicable provision … , the court may order the employer to pay to the employee the amount of the underpayment.
(7)Where, in a proceeding against an employer under this section, it appears to the eligible court that the employer has not paid an amount to a superannuation fund that the employer was required, under an applicable provision … , to pay on behalf of a person, the court may order the employer to make a payment to or in respect of that person for the purpose of restoring the person, as far as practicable, to the position that the person would have been in had the employer not failed to pay the amount to the superannuation fund.
Section 717 of the WR Act relevantly provided:
In this Part:
applicable provision, in relation to a person, means:
(a) a term of one of these that applies to the person:
…
(iv)a collective agreement…
Section 718(1) and (2) of the WR Act empowered Mr Scotto to seek relief under that Act.
At the time of the alleged breaches of the WR Act a penalty unit was worth $110: s.4AA Crimes Act 1914.
Accessorial liability
Section 728 of the WR Act provided:
(1)A person who is involved in a contravention of a civil remedy provision is treated as having contravened that provision.
(2)For this purpose, 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.
Limitation period
Section 719 of the WR Act also relevantly provided:
…
(9)An order must not be made under subsection (6) or (7) in relation to so much of an underpayment as relates to any period more than 6 years before the commencement of the proceeding.
(10)A proceeding under this section in relation to a breach of an applicable provision must be commenced not later than 6 years after the commission of the breach.
Section 720 of the WR Act provided:
720 Recovery of wages etc.
If an employer is required by an applicable provision … to pay an amount to an employee or to pay an amount to a superannuation fund on behalf of an employee, the employee, or an inspector on behalf of the employee, may, not later than 6 years after the employer was required to make the payment to the employee or fund, sue for the amount of the payment in an eligible court.
Other
Section 722 of the WR Act provided that interest up to judgment might be awarded on sums for which an order was made or judgment given under that Act.
Fair Work Act
1 July 2009 onwards
Limitation period
The FW Act relevantly provides:
544 Time limit on applications
A person may apply for an order under this Division in relation to a contravention of one of the following only if the application is made within 6 years after the day on which the contravention occurred:
(a) a civil remedy provision;
(b) a safety net contractual entitlement;
(c) an entitlement arising under subsection 542(1).
545 Orders that can be made by particular courts
Federal Court and Federal Circuit Court
(1)The Federal Court or the Federal Circuit Court may make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision.
(2)Without limiting subsection (1), orders the Federal Court or Federal Circuit Court may make include the following:
…
(b)an order awarding compensation for loss that a person has suffered because of the contravention;
…
Time limit for orders in relation to underpayments
(5)A court must not make an order under this section in relation to an underpayment that relates to a period that is more than 6 years before the proceedings concerned commenced.
Pay slips
Section 536(1) provides that an employer must give a pay slip to each of its employees within one working day of a wage or salary payment.
Regulation 3.46 of the FW Regulations sets out the required content of pay slips and relevantly provides:
3.46 Pay slips — content
(1) For paragraph 536(2)(b) of the Act, a pay slip must specify:
(a)the employer’s name; and
(b)the employee’s name; and
(c)the period to which the pay slip relates; and
(d)the date on which the payment to which the pay slip relates was made; and
(e)the gross amount of the payment; and
(f)the net amount of the payment; and
(g)any amount paid to the employee that is a bonus, loading, allowance, penalty rate, incentive-based payment or other separately identifiable entitlement; and
(h)on and after 1 January 2010 — the Australian Business Number (if any) of the employer.
(2)If an amount is deducted from the gross amount of the payment, the pay slip must also include the name, or the name and number, of the fund or account into which the deduction was paid.
(3)If the employee is paid at an hourly rate of pay, the pay slip must also include:
(a)the rate of pay for the employee’s ordinary hours (however described); and
(b)the number of hours in that period for which the employee was employed at that rate; and
(c) the amount of the payment made at that rate.
…
(5)If the employer is required to make superannuation contributions for the benefit of the employee, the pay slip must also include:
(a)the amount of each contribution that the employer made during the period to which the pay slip relates, and the name, or the name and number, of any fund to which the contribution was made; or
(b)the amounts of contributions that the employer is liable to make in relation to the period to which the pay slip relates, and the name, or the name and number, of any fund to which the contributions will be made.
Employer obligations in relation to employee records
Section 535 of the FW Act provides:
535 Employer obligations in relation to employee records
(1)An employer must make, and keep for 7 years, employee records of the kind prescribed by the regulations in relation to each of its employees.
(2)The records must:
(a)if a form is prescribed by the regulations—be in that form; and
(b)include any information prescribed by the regulations.
(3)The regulations may provide for the inspection of those records.
Part 3-6 of the FW Regulations sets out employer obligations in relation to employee records. Of that part, regs.3.34 and 3.36 are of particular relevance to this matter:
3.34 Records — overtime
For subsection 535(1) of the Act, if a penalty rate or loading (however described) must be paid for overtime hours actually worked by an employee, a kind of employee record that the employer must make and keep is a record that specifies:
(a)the number of overtime hours worked by the employee during each day; or
(b)when the employee started and ceased working overtime hours.
3.36 Records — leave
(1)For subsection 535 (1) of the Act, if an employee is entitled to leave, a kind of employee record that the employer must make and keep is a record that sets out:
(a)any leave that the employee takes; and
(b)the balance (if any) of the employee’s entitlement to that leave from time to time.
Accessorial liability
Section 550 of the FW Act states:
550Involvement in contravention treated in same way as actual contravention
(1)A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.
(2)A person is involved in a contravention of a civil remedy provision if, and only if, the person:
(a)has aided, abetted, counselled or procured the contravention; or
(b)has induced the contravention, whether by threats or promises or otherwise; or
(c)has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d)has conspired with others to effect the contravention.
1 July 2009 – 31 December 2009, FW Act transitional period
The FW Act commenced on 1 July 2009 but modern awards and the NES did not commence until 1 January 2010, the “FW (safety net provisions) commencement day”. While many provisions of the FW Act applied on and from 1 July 2009, as far as minimum employment standards and industrial instruments were concerned, the first six months of the FW Act’s operation were also a transitional period during which pre-FW Act provisions continued to apply.
Wages, allowances, loadings and overtime
Upon the repeal of the WR Act on 1 July 2009, the Shop NAPSA became a transitional instrument referred to in item 2 of sch.3 to the FW (TPCA) Act and continued in force until the commencement of the Retail Award on 1 January 2010: item 29 of sch.3 to the FW (TPCA) Act.
Annual leave
The Annual Holidays NAPSA also became a transitional instrument in force until 1 January 2010.
Item 6 of sch.4 to the FW (TPCA) Act provides:
6 Accruing entitlements: leave accrued immediately before the FW (safety net provisions) commencement day
(1)This item applies if, immediately before the FW (safety net provisions) commencement day, an employee has an accrued entitlement to an amount of paid annual leave or paid personal/carer’s leave, whether the leave accrued under Part 7 of the WR Act, a transitional instrument or otherwise.
(2)The provisions of the National Employment Standards relating to taking that kind of leave (including rates of pay while taking leave), or cashing-out that kind of leave, apply, as a minimum standard, to the accrued leave as if it had accrued under the National Employment Standards.
Penalties and compensation
Item 2(1) of sch.16 to the FW (TPCA) Act provides that a person must not contravene the terms of an award-based transitional instrument, such as the Shop and the Annual Holidays NAPSAs, which applies to that person. Item 16 of sch.16 to the FW (TPCA) Act provides that pt.4-1 of the FW Act, which includes ss.539, 545, 550 and 557, applies to item 2 of sch.16 to the FW (TPCA) Act as if that item were part of the FW Act.
In combination, ss.539(2) and 546(2) of the FW Act, as affected by item 16 of sch.16 of the FW (TPCA) Act, provide that the maximum pecuniary penalty for a contravention of item 2(1) of sch.16 to the FW (TPCA) Act is 60 penalty units for an individual and 300 penalty units for a corporation. At the time of the alleged breaches a penalty unit was worth $110: s.4AA Crimes Act.
Section 545(2)(b) of the FW Act provides that the Court may award compensation for loss suffered because of a contravention of item 2(1) of sch.16 to the FW (TPCA) Act. Section 547 provides that interest up to judgment may be awarded on such sums.
Section 540 of the FW Act empowers Mr Scotto to seek relief under that Act.
1 January 2010 onwards
Wages, allowances, loadings and overtime
The Retail Award is a modern award. Section 45 of the FW Act provides that a person must not contravene a term of a modern award.
Division 2 of pt.2-9 of FW Act contains provisions dealing with the payment of wages. Relevantly, s.323 provides:
323 Method and frequency of payment
(1)An employer must pay an employee amounts payable to the employee in relation to the performance of work:
(a) in full (except as provided by section 324); and
(b)in money by one, or a combination, of the methods referred to in subsection (2); and
(c) at least monthly.
…
Annual leave
Section 87 of the FW Act relevantly provides:
87 Entitlement to annual leave
Amount of leave
(1)For each year of service with his or her employer, an employee is entitled to:
(a) 4 weeks of paid annual leave; …
Section 90(2) of the FW Act provides:
90 Payment for annual leave
….
(2)If, when the employment of an employee ends, the employee has a period of untaken paid annual leave, the employer must pay the employee the amount that would have been payable to the employee had the employee taken that period of leave.
By virtue of s.61(3), ss.87 and 90 are provision of the NES. Section 44(1) provides that an employer must not contravene a provision of the NES.
Penalties and compensation
Section 539 of the FW Act provides that ss.44(1) 45, 323(1) and 536(1) are civil remedy provisions.
Sections 539(2) and 546(2) of the FW Act provide that the maximum pecuniary penalty for a contravention of ss.44(1) and 323(1) of the FW Act and, by virtue of s.45, of individual clauses of the Retail Award is 60 penalty units for an individual and 300 penalty units for a corporation. For a contravention of s.536(1), ss.539(2) and 546(2) provide for maximum penalties of 30 penalty units for an individual and 150 penalty units for a corporation.
In the period 1 July 2009 to 27 December 2012 a penalty unit was worth $110: s.4AA Crimes Act.
Section 545(2)(b) of the FW Act provides that the Court may award compensation for loss suffered because of a contravention of any of the civil remedy provisions referred to above at [84].
Section 539(2) of the FW Act empowered Mr Scotto to seek relief under that Act.
Other
Section 547 of the FW Act provides that, unless good cause is shown to the contrary, if an order for interest is sought the Court must include interest up to judgment on any sum for compensation ordered to be paid under that Act.
Course of conduct
The WR Act and the FW Act each made similar provision in relation to contraventions occurring as part of a course of conduct. Section 719 of the WR Act relevantly provided:
719 Imposition and recovery of penalties
…
(2) Subject to subsection (3), where:
(a)2 or more breaches of an applicable provision are committed by the same person; and
(b)the breaches arose out of a course of conduct by the person;
the breaches shall, for the purposes of this section, be taken to constitute a single breach of the term. …
Section 557 of the FW Act, as affected by item 16 of sch.16 to the FW (TPCA) Act, relevantly provides:
557 Course of conduct
(1)For the purposes of this Part, 2 or more contraventions of a civil remedy provision referred to in subsection (2) are, subject to subsection (3), taken to constitute a single contravention if:
(a)the contraventions are committed by the same person; and
(b)the contraventions arose out of a course of conduct by the person.
(2) The civil remedy provisions are the following:
(a)subsection 44(1) (which deals with contraventions of the National Employment Standards);
(b)section 45 (which deals with contraventions of modern awards);
…
(g)subsection 323(1) (which deals with methods and frequency of payment);
…
(o)subsections 536(1) and (2) (which deal with employer obligations in relation to pay slips);
…
[item 2 of sch.16 to the FW (TPCA) Act]
Long service leave
The LSL Act relevantly provided:
4 Long service leave
(1)Except as otherwise provided in this Act, every worker shall be entitled to long service leave on ordinary pay in respect of the service of the worker with an employer. Service with the employer before the commencement of this Act as well as service with the employer after such commencement shall be taken into account for the purposes of this section.
(2)(a) Subject to paragraph (a2) and subsection (13) the amount of long service leave to which a worker shall be so entitled shall:
(i) in the case of a worker who has completed at least 10 years service with an employer be:
(A)in respect of 10 years service so completed, 2 months, and
(B)in respect of each 5 years service with the employer completed since the worker last became entitled to long service leave, 1 month, and
(C)on the termination of the worker’s services after the completion of 15 years service, in respect of the number of years service with the employer completed since the worker last became entitled to an amount of long service leave, a proportionate amount on the basis of 2 months for 10 years service, and
(ii) in the case of a worker who has completed at least 10 years service but less than 15 years with an employer and whose services with the employer are terminated or cease for any reason, be a proportionate amount on the basis of 3 months for 15 years service, and
(iii) in the case of a worker who has completed with an employer at least five years service, and whose services are terminated by the employer for any reason other than the worker’s serious and wilful misconduct, or by the worker on account of illness, incapacity or domestic or other pressing necessity, or by reason of the death of the worker, be a proportionate amount on the basis of 2 months for 10 years service.
…
(a3)For the purposes of subsections (2), (3) and (3A), month means 4 and one-third weeks.
…
(5)(a) Where the services of a worker are terminated otherwise than by the worker’s death and any long service leave:
(i) to which the worker was entitled has not been taken, or
(ii) accrues to the worker upon such termination and has not been taken,
the worker shall, subject to subsection (13), be deemed to have entered upon the leave from the date of such termination and the employer shall forthwith pay to the worker in full the worker’s ordinary pay for the leave less any amount already paid to the worker in respect of that leave.
…
(11)For the purposes of this section:
(a)service of a worker with an employer means continuous service, whether on a permanent, casual, part-time or any other basis, under one or more contracts of employment.
(a1)the service of a worker with an employer shall be deemed to be continuous notwithstanding that the service has been broken by reason only of an interruption or determination thereof:
(i) caused by the absence of the worker under the terms of the worker’s employment,
…
(vi) arising from the absence of the worker for any cause by leave of the employer, or
(vii) caused by the employer … where the worker returns to the service of, or is re-employed by, the employer within 2 months of the date on which the service was interrupted or determined, …
but the period during which the service is so interrupted or determined shall not in the circumstances referred to in subparagraphs (iii)–(vii), by reason only of this paragraph, be taken into account in calculating the period of service,
…
Section 10 of the LSL relevantly provided:
10 Penalties and offences
(1)Every person who contravenes or fails to comply in any respect with any provision of this Act shall be liable to a penalty not exceeding 20 penalty units.
(2) Every person who:
(a)makes any false or misleading statement in, or any material omission from, any long service leave record which the person is required to keep, or
(b)obstructs any inspector in the exercise of the inspector’s powers under this Act, or
(c)fails to comply with any requirement or direction lawfully given by an inspector under this Act or to furnish any information lawfully demanded under this Act by an inspector,
shall be liable to a penalty not exceeding 20 penalty units.
(3)Any employer who does any act or thing for the purpose of or which has the effect of in any way whether directly or indirectly:
(a)avoiding or evading any obligation imposed on the employer by this Act, or
(b)defeating, evading, avoiding or preventing the operation of this Act in any respect,
shall be liable to a penalty not exceeding 20 penalty units.
(4)Where a person convicted of an offence against this Act is a body corporate, every person who at the time of the commission of the offence was a director or officer of the body corporate shall be deemed to have committed the like offence and be liable to the penalty provided by this Act for such offence accordingly, unless any such person proves that the offence was committed without the person’s knowledge or that the person used all due diligence to prevent the commission of the offence.
…
Section 11 of the LSL Act relevantly provided:
11 Recovery of penalties
(1)Proceedings for the recovery of a penalty under this Act are to be taken before the Local Court and may be taken by:
…
(c) a person whose rights are impaired.
(2) In any such proceedings the Local Court may, in addition to the imposition of any penalty, make such an order with respect to any payment due to a worker under this Act as might have been made in proceedings taken under section 12. Such order may be made without motion and shall be a bar to further proceedings under section 12 in respect of such payment.
(3)In any proceedings under this section the Local Court before whom such proceedings are taken may award costs to either party and assess the amount of such costs.
…
In relation to limitation periods, the LSL Act provided:
12 Recovery of long service leave pay
(1)Any worker may apply to the Local Court, or to the Industrial Relations Commission in Court Session, for an order directing the employer to pay to the worker the full amount of any payment which has become due to the worker under this Act at any time during the period of 6 years immediately preceding the date of the application but not earlier than 2 years before the date of assent to the Long Service Leave (Amendment) Act 1980.
The Local Court or Industrial Relations Commission in Court Session may make any order it thinks just in the matter and may award costs to either party, and assess the amount of such costs.
…
As at 5 May 2010 s.17 of the Crimes (Sentencing Procedure) Act 1999 (NSW) provided that a penalty unit was worth $110.
Shop Employees (State) Award
The version of the Shop Award quoted in these reasons dates from 7 March 2001. The terms of the Shop Award were amended from time to time but none of the amendments is material to the outcome of this proceeding.
Clause 2 of the Shop Award relevantly provided:
(i)“General Shops” means and includes all shops other than special shops, and confection shops as defined in this award.
(ii)“Special Shops” means and includes audio shops, book shops, video shops, cake and pastry shops, cooked provisions shops, take-away food shops, fish shops, flower shops, garden plant shops, hairdressers’ shop, newsagencies, pet shops, souvenir and gift shops, tobacconists’ shops (each as defined in Schedule 2 to the Shop (Registration and Opening and Closing Hours) Regulations to the Factories, Shops and Industries Act 1962), … and retail liquor shops.
(iii)“Confection Shops” means and includes confectioners’ shops, refreshment shops and fruit and vegetable shops as defined in Schedule 2 of the Shop (Registration and Opening and Closing Hours) Regulations to the Factories, Shops and Industries Act 1962), …
Clause 3(iii) of the Shop Award relevantly provided:
Time and Payment of Wages - All wages shall be paid weekly in addition to any commission, bonus or premium to which the employee is entitled. …
Notwithstanding the foregoing:
…
(2)Where employment is terminated an employee shall be paid forthwith all ordinary wages due and shall be paid all overtime and other moneys due within seven days of the date of the termination of employment. …
From 2 June 1995 the ordinary hours of work in special and confection shops were set out in cl.10 of the Shop Award. The ordinary hours of work fell within the following times:
a)Cooked provisions shops:
Monday to Sunday 7am to 10.30pm
b)Refreshment shops:
Monday to Sunday 7am to 11.30pm
Clause 14 of the Shop Award relevantly provided in relation to penalty rates for work on Saturdays:
(i)All ordinary hours worked by full-time and part-time employees on Saturday shall be paid for at the rate of time and one-quarter.
…
Clause 23 of the Shop Award provided for a 17.5% annual leave loading.
Until a variation effective from 8 June 1988, the Shop Award provided for a forty hour working week in special and confection shops. Thereafter it provided for a thirty-eight hour week.
Clause 15 of the Shop Award relevantly provided in relation to overtime:
The rate of overtime shall be time and one-half for the first two hours on any one day and at the rate of double time thereafter, except on a Sunday which shall be paid for at the rate of double time.
(i) An employee shall be paid overtime for all work as follows:
(a) In excess of:
(1) 38 hours per week; or
…
(2) five days per week … ;
(3) nine hours on any one day, provided that on one day per week up to 11 hours may be worked without the payment of overtime …;
…
(b)before an employee’s regular commencing time on any one day;
(c)after the prescribed ceasing time on any one day;
(d) outside the ordinary hours of work.
…
(iii)Any portion of an hour less than 30 minutes shall be reckoned as 30 minutes and any portion of an hour over 30 minutes shall be reckoned as one hour …
Clause 16 of the Shop Award relevantly provided in relation to a breakfast allowance:
…
(vii)Confection Shops - An employee commencing before 7.00 am … shall be allowed not less than 30 minutes nor more than one hour off for breakfast before 9.00 am. If, through distance of residence, the employee cannot return home for breakfast, the employee shall be paid the sum set out in subclause (ii) of clause 6, Meal Allowances, for breakfast each morning the employee starts work before 7.00 am.
…
Regulation 4 of the Shops (Trading Hours) Regulation 1992 (NSW) (made under the Factories, Shops and Industries Act 1962 (NSW)) relevantly provided:
In respect of each class of shop specified in Schedule 1:
(a)the trade that consists primarily of the sale of goods of a kind specified in that Schedule in respect of that class of shops is, for the purposes of Part 4 of the Act, to be taken to be the trade usually carried on in that class of shops; …
Part 4 of the Factories, Shops and Industries Act was relevantly concerned with shops’ trading hours.
Schedule 1 to the Shops (Trading Hours) Regulation 1992 (NSW) relevantly provided the following definitions of shops which were not general shops:
…
Confectioners’ shops
Cooked food shops, being:
Confectionery.
(a) Cake and pastry shops ……...
Cakes, pastries or pies.
(b) Cooked provision shops ……
Cooked or other processed meats, poultry or preserves.
(c) Refreshment shops ………….
Light refreshments, milk, soft drinks, hot beverages or confectionery.
(d) Restaurants …………………
Meals, snacks or hot or cold beverages, where those goods are sold for consumption on the premises.
(e)Take-away food shops ………
Meals, snacks or hot or cold beverages, where those goods are sold for consumption elsewhere than on the premises.
…
Those provisions were carried over into the Shops (Trading Hours) Regulation 1997 (NSW), the Shops and Industries (Trading) Regulation 2002 (NSW) and the Shops and Industries Regulation 2007 (NSW) which was impliedly repealed with effect from 1 July 2008 upon repeal of the Shops and Industries Act 1962 (NSW) (formerly the Factories, Shops and Industries Act 1962 (NSW)) and apparently not replaced.
General Retail Industry Award 2010
Clause 3.1 of the Retail Award relevantly provided:
3. Definitions and interpretation
3.1 In this award, unless the contrary intention appears:
general retail industry means the sale or hire of goods or services to final consumers for personal or household consumption including:
· food retailing, supermarkets, grocery stores; …
Clause 26 of the Retail Award relevantly provided:
Part 5 – Ordinary Hours of Work
26. Hours of work
…
26.2 Ordinary hours
(a)Except as provided in clause 26.2(b), ordinary hours may be worked, within the following spread of hours:
Days
Spread of hours
Monday to Friday, inclusive
7.00 am–9.00 pm
Saturday
7.00 am–6.00 pm
Clause 27 of the Retail Award provided for a thirty-eight hour week.
The effect of the transitional provisions found in sch.A to the Retail Award was that the wage rates and loadings applicable to Mr Scotto under the Shop Award continued to apply to him until his employment with Scala Bros finally ceased in May 2010.
APPLICANT’S EVIDENCE
Paul Scotto
Background
Mr Scotto deposed that Scala Bros was the company which ran the Scala Bros business at the Flemington Markets in Sydney. He deposed that his late step-grandfather, Andrea Carrano, and Mrs Bossi were the two directors of Scala Bros until the former’s death in June 2009 following which Mrs Bossi became the sole director. He deposed that Mr Carrano was his late grandmother’s second husband.
Mr Scotto deposed that the Scala Bros business consisted of a coffee lounge, liquor store, delicatessen and sandwich bar. The upper, mezzanine level of the shop was an office and storage area.
Hours of work and duties
Mr Scotto deposed that in early January 1981, when he was eighteen years-old, he started working at the shop with Mr Carrano. He had moved from Brisbane to Sydney and into his grandparents’ home in Seaforth in about December 1980. He deposed that he worked six days a week, Mondays to Saturdays, and would typically arrive at work between 4am and 4.30am, at which point he and Mr Carrano would get the shop ready for the start of the day’s trade at 5am. He deposed that on Fridays and Saturdays they would get to work at 4am because those were their busiest days. Mr Scotto said that in about 1993, after he had moved to Cremorne, Mr Carrano would pick him up from there and they would arrive at the shop at about 4.30am. He said that they arrived earlier on Mondays, Fridays and Saturdays.Mr Scotto deposed that although the authorised hours of trade specified in Scala Bros’ liquor licence were 5am to 5pm, the licence conditions did not prohibit staff from opening the shop earlier for the purpose of setting it up or from selling coffee and food. In this affidavit sworn 18 July 2011 he deposed that they started serving customers at 5am but in cross-examination he said that they sold coffee and breakfast before 5am. He said that he did not work on public holidays.
Mr Scotto deposed that getting the shop ready for opening involved hosing the front, preparing the sandwich bar, cooking food, setting up the seating area and preparing the coffee bar. He deposed that it was necessary to get to work early in order to be well-prepared because the shop would generally be frantic from the start of trade at 5am, until about 2.30pm to 3pm. Mr Scotto’s evidence was that the work was non-stop and he did not have time to take lunch breaks or have meals with people who came to the shop but he did say that he would stop to drink coffee with friends as part of the business because he had to socialise with people in order to sell them things. He deposed that from about 3pm he and Mr Carrano would start cleaning the shop. They closed up at about 4pm each day, returning home together at around 5pm.
Mr Scotto deposed that shortly after he started working at the shop Mr Carrano asked him to stay and work in the business permanently. He agreed to do so.
Mr Scotto deposed that his duties at Scala Bros included:
a)helping Mr Carrano open the shop each morning;
b)pricing the stock at the percentage mark-up;
c)stacking the shelves with products;
d)making coffees and sandwiches;
e)working in the delicatessen, which included cutting up the delicatessen items and serving customers;
f)using a forklift to unload delivery trucks;
g)serving customers by, for example, taking and actioning their orders and using the cash register;
h)liaising and placing orders with representatives. An agent would come in with a book with pictures of their products and he would order based on his knowledge of what was missing from the shelves. Mr Scotto said that he and Mr Carrano had never filled out forms when ordering goods but instead would have a discussion with the representatives who would then fill out the relevant forms;
i)cleaning the shop, a large ongoing task because the markets were dusty and the shop was not fully enclosed;
j)helping Mr Carrano in his dealings with the market authority; and
k)helping Mr Carrano close the shop at the end of the day which would take anywhere from thirty minutes to an hour. It included packing away the outside tables and chairs, packing away the sandwich bar items, cleaning the coffee bar and mopping the shop.
Mr Scotto deposed that from about the beginning of 1988, after he had been working at the shop for seven years, he took on additional duties while Mr Carrano began to occupy a lesser role. He became responsible for ordering stock and supervising staff. He deposed that Mr Carrano would sit inside the shop at the front till, read newspapers, watch the news or sit outside at one of the shop’s tables and talk to his friends.
Mr Scotto deposed that the only aspect of the Scala Bros business for which he did not have responsibility was its finances and bookkeeping. He deposed that that side of the business was always done by Mr Carrano. However, from about the early 1990s Mr Carrano was assisted by a part-time bookkeeper, Oriana Ciano, who was also aunt to Mrs Bossi’s husband. From about 2006, Mr Carrano was assisted by Silvana Mace, Mr Carrano’s niece and thus Mrs Bossi’s cousin. Mr Scotto said that when Mr Carrano went on holiday, his sister and her husband, Mr and Mrs Ferlazzo, would be in charge of the till and money and he would be in charge of the ordering and everything else.
Mr Scotto deposed that Mr Carrano had built relationships with his customers over the years, looked after them and tried to accommodate them, which was reflected in the long opening hours.
Mr Scotto deposed that Mrs Bossi could not have known the daily routine at the shop because, prior to Mr Carrano’s death, she had hardly worked there. Mr Scotto deposed that although the wages books recorded that Mrs Bossi worked at Scala Bros from 5 February 1988 to 25 November 1988 from 5am to 7am on Mondays, Wednesdays and Fridays and from 6am to 2pm on Saturdays, this was incorrect. He deposed that he never saw Mrs Bossi start work at 5am or 6am and she did not work during the week. He deposed that she occasionally worked on Saturdays and during busy Christmas and Easter periods.
Mr Scotto also deposed that the wages books were not an accurate record of his employment at Scala Bros, stating that the entries relating to his days and hours of work were incorrect as were entries relating to his leave.
Wages, deductions and loans
Mr Scotto deposed that he and the other staff were paid their wages in cash every Saturday and that this money came from large cash sales which were not put through the till or recorded. He deposed that except for a fourteen month period during his first marriage to Josephine Schultz between late 1986 to early 1988, for the ten years between 1981 and 1991 Mr Carrano paid him $100 net every week. He deposed that Mr Carrano referred to this as his “pocket money” and explained to him that he would record the balance of his wage in a book called the “Red Book”. He deposed that Mr Carrano said to him words to the effect of:
Paul I will pay you $100 cash and record the balance of your wage. If I give you all of your wage, you will waste it. I will keep a record of the money owing to you.
Mr Scotto deposed that he could not recall Mr Carrano ever telling him what wage he was recording in the Red Book but, because they were family, he trusted that Mr Carrano was doing so correctly and would eventually pay him what he was owed. He also deposed that, at the time, $100 was sufficient for his needs as he worked long hours, did not have time to spend money, lived board-free with his grandparents and had few expenses. In his oral evidence Mr Scotto accepted that Scala Bros had made a number of payments to third parties on his behalf and that he had earned more than $100 a week because many of his living expenses were paid for him.
Mr Scotto deposed that when Mr Carrano gave him additional money, for example to buy clothes, or when he requested it, it would be recorded in the Red Book as a deduction from the money owing to him. He deposed that on the few occasions Mr Carrano showed him the Red Book he did not pay attention to it or check the figures it contained as he trusted Mr Carrano to look after him. In his oral evidence he said that although he asked a few times what the balance in the Red Book was, he was never told.
Mr Scotto deposed that during his marriage to Ms Schultz, Mr Carrano gave him more than $100 every week, although he could not recall how much he had been given, and that it was his understanding that during that period Mr Carrano was not recording amounts in the Red Book. Mr Scotto deposed that after his marriage to Ms Schultz ended in early 1988 he moved back to live with his grandparents and Mr Carrano resumed paying him $100 a week.
Mr Scotto deposed that in February 1992 he married his second wife, Angela (“his wife”). They initially moved into his wife’s parents’ house in Concord and later in 1992 purchased a unit in Cremorne. Mr Scotto deposed that before purchasing that unit he told Mr Carrano that he needed more money and Mr Carrano handed him a bank passbook with instructions to take what he needed. He deposed that all the money in the account, about $20,000 to $25,000, went towards the purchase of his unit in Cremorne. He deposed that he did not know whether this had been a gift from Mr Carrano or whether it was money owing to him from his work at Scala Bros.
Mr Scotto deposed that from about early 1992 Scala Bros began to pay him “a decent regular weekly wage” although he could not recall what it was. He deposed that from 1992 until Mr Carrano’s death in 2009 he continued to receive his wages in cash on Saturdays, without a pay slip. He never counted what he was given and just handed his pay to his wife. She would count it and if there was any missing he would tell Mr Carrano who would say “okay”. Mr Scotto deposed that when he handed his wife his wages she often got angry about the amount he was being paid relative to the number of hours he worked. He deposed that they argued about this regularly. Mr Scotto said that during his employment he was not aware of how much he was earning.
I am also satisfied that following the termination of his employment in 2010, Mr Scotto was not paid:
a)accrued annual leave and leave loading; and
b)long service leave.
The first failure was a breach of ss.90(1) and 45 of the FW Act and the second was a breach of s.4(5) of the LSL Act. I accept that Scala Bros did continue to pay Mr Scotto weekly amounts following his departure, however, they were not sufficient to satisfy Scala Bros’ annual leave and long service leave obligations or either of them.
The question of what, if any, penalties should be imposed as a result of those contraventions was not the subject of evidence or submissions and will be determined separately.
Accessorial liability – Giuseppina Bossi
Mr Scotto alleged that Mrs Bossi was liable as an accessory for Scala Bros’ contraventions because she knowingly authorised or permitted them, aided or abetted them, was knowingly concerned in or a party to them and failed to correct the underpayments he alleged had occurred. Mr Scotto alleged that under the IR Act, the WR Act, the FW Act and the LSL Act, these matters made Mrs Bossi liable as an accessory for Scala Bros’ conduct.
Although it is not necessary to consider the question of pecuniary penalties under the IR Act because those claims were not pressed, Mr Scotto did press his claim that, as an accessory to Scala Bros’ breaches of that Act, Mrs Bossi was liable pursuant to its ss.365 and 400(1) to compensate him for the company’s underpayments of his entitlements prior to 27 March 2006. In deciding that question, it is not necessary to consider Mr Scotto’s submissions which addressed Mrs Bossi’s alleged liability to compensate him for underpayments before 28 October 2004 which were outside the limitation period because Mrs Bossi would not be liable for such amounts for the same reasons that Scala Bros would not be liable for them.
As to his claims within the limitation period, Mr Scotto alleged that pursuant to:
a)ss.719 (1), 727(1) and 728(1) of the WR Act;
b)ss.545(1), 546(1) and 550(1) of the FW Act; and
c)sub-ss.10(1),(2) and (3) of the LSL Act,
Mrs Bossi was liable to the imposition of pecuniary penalties and to compensate him for underpayments which occurred under those Acts during their periods of operation.
Mr Scotto submitted that there was a sufficient basis to infer that Mrs Bossi had had knowledge of Scala Bros’ contraventions because:
a)she had been a director of Scala Bros for the duration of his employment with attendant duties in relation to corporate governance and statutory compliance generally;
b)in her capacity as a director, she had participated in the management and control of the affairs of Scala Bros, including signing Scala Bros’ cheques and signing and approving the annual accounts which identified wages, leave liabilities and employee loans;
c)she claimed to have witnessed the day-to-day operations of Scala Bros, including the negotiation and payment of staff wages and superannuation entitlements;
d)she had worked as an employee at Scala Bros and would have acquired first-hand knowledge of Scala Bros’ employment practices including the making of cash payments to employees, the failure to issue pay slips and the absence of any reliable method of recording hours and wages paid;
e)she made direct observations of his employment including his duties, responsibilities and working hours, such as his work before 6am and on Saturdays; and
f)she had knowledge of her own employment arrangements and that of other family members (such as her mother and husband), demonstrating that Scala Bros adopted a cavalier if not wilfully ignorant approach to making payments and record keeping.
In relation to the allegation that she had known of the situation at Scala Bros, Mr Scotto asserted that it was implausible that Mrs Bossi would have signed documents without asking questions about them and that her claimed ignorance of the contents of the company accounts, even though she signed the records, reflected a retrospective wish to distance herself from their preparation.
Mr Scotto submitted that Mrs Bossi’s knowledge of these “suspicious circumstances” would have been heightened upon her taking over the business after Mr Carrano’s death. Mr Scotto submitted that Mrs Bossi made a number of significant changes to Scala Bros’ operations which he said demonstrated an awareness of the inadequacies of past practices, for example:
a)for the first time he was recorded in the wages books as working from 5am and on Saturdays;
b)Mrs Bossi modified the payment of his wages by making part a direct deposit and part a cash payment;
c)Mrs Bossi directed him not to come to work before 5am as he had done before Mr Carrano’s death;
d)Mrs Bossi paid him annual leave pay by cheque which, for the first time, appeared accurately in the wages books; and
e)Mrs Bossi claimed that she continued to pay him after he ceased employment, as long service leave, on the understanding that long service leave was owed to him.
Mr Scotto submitted that each of these changes supported an inference that Mrs Bossi had known or suspected that her father’s record keeping and payment practices “did not accord with reality”. He submitted that the Court should infer that she had deliberately refrained from making enquiries when her father was alive.
Mr Scotto submitted that Mrs Bossi should have made enquiries because she was a director and would have been aware from her own professional life that Scala Bros’ practices were highly irregular and not compliant with industrial laws. He submitted that she need not have known the law, just the facts constituting the contraventions, or have suspected the existence of the facts constituting the contraventions, and he asked the Court to infer from the overall circumstances of the case that Mrs Bossi’s denial that she had deliberately failed to make enquiries was untrue.
Mr Scotto also submitted that Mrs Bossi could be liable as an accessory if she had been wilfully blind to Scala Bros’ contraventions. He argued that the test for whether Mrs Bossi had been wilfully blind was whether she had reasonably suspected that contraventions were occurring, realised the probability that her suspicions were true and had made a deliberate decision to refrain from making enquiries.
Mr Scotto submitted that, in any event, Mrs Bossi became aware of his specific claims after he ceased employment but she did nothing to make good the underpayments. Mr Scotto submitted that as Mrs Bossi did not rectify the continuing contraventions once she became aware of them, she was taken to have been involved in the contraventions for the whole period of his employment.
The respondents submitted that prior to Mr Carrano’s death on 13 June 2009, Mrs Bossi’s involvement was limited and she had deferred to him, which included signing company documents when he asked her to. The respondents submitted that the changes Mrs Bossi had introduced did not imply that she had known or had had strong suspicions about deficiencies in her father’s record-keeping.
Consideration
For a person to have accessorial liability under s.400 of the IR Act, he or she has to have “knowingly authorised or permitted” the contravention in question. One of the tests for accessorial liability under the WR Act and the FW Act is that a person has been “knowingly concerned” in a contravention. Mr Scotto submitted, and I am willing to accept, that these tests are largely the same and require the person who is alleged to have been involved in another’s contravention to have known the essential facts constituting the contravention in question. Those tests require the person to have been an intentional participant in the contravention, the necessary intent being based on knowledge of the essential elements of the contravention: Yorke v Lucas (1985) 158 CLR 661; Australian Competition & Consumer Commission v Giraffe World AustraliaPty Ltd (No 2) (1999) 95 FCR 302; Rural Press Ltd v Australian Competition & Consumer Commission (2002) 118 FCR 236; Heydon v NRMA Ltd (2000) 51 NSWLR 1. The accessory need not know that the conduct constituted a contravention: ACCC v Giraffe World at 346 [186]; Rural Press v ACCC at 282, 283 [159], [160]; Heydon v NRMA at 109 [334].
The other bases upon which Mr Scotto submitted Mrs Bossi was liable under the FW Act, and presumably under the WR Act too, was that she had aided or abetted Scala Bros’ contraventions of those Acts.
Before 14 June 2009
I am not persuaded by Mr Scotto’s arguments concerning Mrs Bossi’s involvement in the Scala Bros business when Mr Carrano was alive. Although, as Mr Scotto submitted, by signing the company’s annual documents she had been representing that she had read them, understood their contents and that they were truthful, too much should not be made of that in the circumstances. In particular, I conclude that Mrs Bossi’s signature was no more than a favour done for her father and consider that it would be a mistake to impute to her much knowledge of the operation of the business during that period. Indeed, the early reliance which Mrs Bossi placed on Mr Scotto, upon assuming conduct of the business after her father died, points to her initially having had only a general knowledge of its operations.
The changes which Mrs Bossi introduced after she assumed control of the business do indicate that she did things differently from Mr Carrano, however, that does not prove that she knew how the business ran before his death, at least in the areas the subject of this proceeding. But even if she had had such knowledge, she was not, in any meaningful sense, part of the management of the business and it has not been demonstrated that she was knowingly involved in any way in any of the managerial decisions taken by Mr Carrano. The fact that Mrs Bossi, who had her own family and career, was a director of this very small company run by her father is an insufficient basis to conclude that she was concerned with its operations in a way which would satisfy the statutory test of a person “involved in a contravention”.
Nor am I persuaded that Mrs Bossi was wilfully blind to Scala Bros’ contraventions in such a way as to impute to her knowledge of them. In R v Crabbe (1985) 156 CLR 464 the High Court said:
… When a person deliberately refrains from making inquiries because he prefers not to have the result, when he wilfully shuts his eyes for fear that he may learn the truth, he may for some purposes be treated as having the knowledge which he deliberately abstained from acquiring. According to Professor Glanville Williams, Criminal Law: The General Part, 2nd ed. (1961), p. 159:
“A court can properly find wilful blindness only where it can almost be said that the defendant actually knew. He suspected the fact; he realised its probability; but he refrained from obtaining the final confirmation because he wanted in the event to be able to deny knowledge. This, and this alone, is wilful blindness. It requires in effect a finding that the defendant intended to cheat the administration of justice.”
Again, in his Textbook of Criminal Law (1978), p. 79, Professor Glanville Williams said, in a passage cited by Lord Edmund·Davies in Reg. v. Caldwell:
“A person cannot, in any intelligible meaning of the words, close his mind to a risk unless he first realises that there is a risk; and if he realises that there is a risk, that is the end of the matter.”
(at 470-471) (footnote omitted)
I find that when her father ran the business Mrs Bossi had no particular responsibility for, or duties in, Scala Bros, other than to sign company documents as requested. What I find to have been Mrs Bossi’s lack of real responsibility for, or duties in, the business during that time satisfies me that she would have had no motivation to close her eyes to any particular conduct and, in respect of each of the contraventions of the WR Act which I have found occurred in the time of her father’s management, a lack of awareness of all of the matters going to make up the contraventions in question.
For these reasons, I also find that Mrs Bossi did not aid or abet Scala Bros’ contraventions of the WR Act in the period prior to her assumption of control of the business.
Consequently, the allegations of accessorial liability made against Mrs Bossi in respect of the period before 14 June 2009 are not made out.
14 June 2009 to 5 May 2010
Generally
Different considerations apply to the period when Mrs Bossi was the proprietor of Scala Bros. I find that upon Mrs Bossi’s assumption of control of the business following Mr Carrano’s death on 13 June 2009, all decisions of any importance at Scala Bros were taken by her.
Contraventions of federal statutes
I am willing to assume that Mrs Bossi was not aware that the failure to provide proper pay slips, overtime or a breakfast allowance were breaches of the Shop NAPSA and then the transitional provisions of the Retail Award, and thus of the WR Act and then the FW (TPCA) Act and the FW Act. I also assume that Mrs Bossi was not aware that Mr Scotto’s pay for the weeks ending 20 and 27 June 2009 was insufficient to satisfy his ordinary time wage entitlements, or his Saturday penalty rate entitlement. However, I find that she did know the essential facts constituting the contraventions and was an intentional participant in the relevant acts or omissions.
Similar considerations also apply to the failure by Scala Bros, in contravention of the FW Act, to pay Mr Scotto his accrued annual leave following the termination of his employment on 5 May 2010. Mrs Bossi knew the essential facts constituting the contravention and was an intentional participant in the failure by Scala Bros to pay Mr Scotto’s accrued annual leave once his employment ended.
I therefore find that Mrs Bossi was knowingly involved in the contraventions represented by Scala Bros’ failure under her management to:
a)pay Mr Scotto:
i)ordinary time wages and Saturday penalty rates prior to 28 June 2009;
ii)overtime;
iii)a breakfast allowance; or
iv)accrued annual leave; and to
b)provide him with pay slips which complied with the FW Regulations.
Mrs Bossi is therefore taken to have contravened:
a)cl.32 of sch.8 to the WR Act in respect of the failure to pay Mr Scotto ordinary time wages in full and Saturday penalty rates from 14 June 2009 to 27 June 2009;
b)cl.32 of sch.8 to the WR Act and item 2(1) of sch.16 to the FW (TPCA) Act in respect of the failure to pay Mr Scotto overtime and a breakfast allowance from 14 June 2009 to 31 December 2009;
c)s.45 of the FW Act in respect of the failure to pay Mr Scotto overtime from 1 January 2010;
d)s.90(2) of the FW Act in respect of the failure, upon the termination of Mr Scotto’s employment, to pay him his accrued annual leave entitlements; and
e)s.45 of the FW Act in respect of the failure to pay Mr Scotto his annual leave loading.
As noted earlier, the breakfast allowance was abolished by the Retail Award and so its non-payment was not a breach of that award or s.45 of the FW Act.
Again, the question of what, if any, penalties should be imposed will be determined separately.
Compensation under federal statutes
Mr Scotto contended that if Mrs Bossi were found to have been involved in any of the contraventions found against Scala Bros, she would be liable not only to pecuniary penalties but also to pay compensation to him for any related underpayments by Scala Bros. For the following reasons, I have concluded that the WR Act did not permit an order of the latter sort but that the FW Act does.
The provisions in each of the WR Act and the FW Act concerning persons involved in contraventions committed by another, state that such a person is, respectively, “treated as having contravened” and “taken to have contravened” the relevant provision, expressions which mean the same thing. Under the WR Act, the relevant right to recover underpayments was expressed in the following terms:
719 Imposition and recovery of penalties
(1)An eligible court may impose a penalty in accordance with this Division on a person if:
(a) the person is bound by an applicable provision; and
(b) the person breaches the provision.
…
(6)Where, in a proceeding against an employer under this section, it appears to the eligible court that an employee of the employer has not been paid an amount that the employer was required to pay under an applicable provision … the court may order the employer to pay to the employee the amount of the underpayment.
720Recovery of wages etc.
If an employer is required by an applicable provision … to pay an amount to an employee or to pay an amount to a superannuation fund on behalf of an employee, the employee, or an inspector on behalf of the employee, may, not later than 6 years after the employer was required to make the payment to the employee or fund, sue for the amount of the payment in an eligible court.
Those provisions do not accommodate the idea that anybody other than the employer in question will be liable for underpayments.
However, the relevant provision in the FW Act is materially different. It relevantly provides:
545 Orders that can be made by particular courts
Federal Court and Federal Circuit Court
(1)The Federal Court or the Federal Circuit Court may make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision.
(2)Without limiting subsection (1), orders the Federal Court or Federal Circuit Court may make include the following:
…
(b)an order awarding compensation for loss that a person has suffered because of the contravention …
Mrs Bossi is taken to have contravened item 2(1) of sch.16 to the FW (TPCA) Act and ss.45 and 90 of the FW Act. As noted earlier in these reasons, item 16 of sch.16 to the FW (TPCA) Act provides that pt.4-1 of the FW Act, which includes s.545, applies to item 2 of sch.16 to the FW (TPCA) Act as if that item were part of the FW Act.
In summary, under the FW Act Mrs Bossi is taken to have been involved in Scala Bros’ failures from 1 July 2009 to pay Mr Scotto overtime, accrued annual leave including loading, and, until 31 December 2009, a breakfast allowance. For the reasons given earlier in relation to Scala Bros, in the exercise of discretion no compensation order will be made in respect of the breakfast allowance but Mrs Bossi will be ordered to compensate Mr Scotto by sharing Scala Bros’ liability to pay him his unpaid overtime from 1 July 2009 to 5 May 2010 and his accrued annual leave entitlement with loading.
Long service leave
Section 10 of the LSL Act provides in the case of a company which has breached that Act that a director or officer of the company will be deemed to have committed the same offence unless they prove that the breach occurred without their knowledge or that they used “all due diligence to prevent the commission of the offence”. In light of her control of Scala Bros at the time Mr Scotto left Scala Bros and afterwards, I find that Mrs Bossi has not discharged that onus. I appreciate that Scala Bros and Mrs Bossi contested Mr Scotto’s entitlement to long service leave but, albeit mistakenly believing that no long service leave was owed, Mrs Bossi did not seek to prevent the commission of the offence against the LSL Act. Whether the breach occurred without her knowledge raises questions similar to the ones raised by the expression “knowingly concerned” in s.728 of the WR Act and s.550 of the FW Act. I find that Mrs Bossi knew all the essential facts constituting the breach and should be taken to have had knowledge of it even if she did not appreciate that the conduct in question amounted to a breach of the LSL Act. As a result of these findings, Mrs Bossi is deemed to have breached s.4(5) of the LSL Act in that Mr Scotto’s full long service leave entitlement was not paid upon the termination of his employment.
As with the question of civil penalties under the applicable federal statutes the question of question of what, if any, penalty should be imposed as a result of Mrs Bossi’s deemed breach of the LSL Act will be determined separately.
Mr Scotto also sought an order that Mrs Bossi compensate him for the underpayment of his long service leave. The LSL Act does not provide for such a liability to be imposed on a director or officer of an offending company and so this claim is not made out.
Loan - cross claim and defence of set-off
The respondents submitted that Scala Bros had lent sums to Mr Scotto and maintained an ongoing loan account which Mr Scotto had last drawn down on 15 November 2004. They submitted that Mr Scotto owed $30,430 under the loan. As noted earlier, a claim for interest was not pressed. In a letter dated 23 March 2011 providing further and better particulars, the respondents’ solicitors stated that the loan agreement was partly oral and partly written and that Mr Scotto, Mr Carrano and Mr Samios had been involved in making it. The respondents asserted that the repayments were due when Mr Scotto had the necessary funds and that Scotto Bros had had the right to demand full repayment at the end of each financial year.
The respondents submitted that the annual reports were contemporaneous records of the loan and that they corresponded with the available ledger books. In this connection they referred to Mr Scotto’s evidence that he had repaid an amount to Mr Carrano once. The respondents also submitted that although in his pleadings Mr Scotto had denied the existence of the loan, in his evidence he equated the loan account to the Red Book and had recognised some of the entries which they alleged were sums lent.
Mr Scotto denied the loan(s) alleged by the respondents. He submitted that while the respondents asserted that the loan agreement was partly written and party oral and had been made on 1 December 1993, no evidence had been adduced demonstrating a contractual discussion or agreement. He observed that Mr Samios had not given evidence and said that it should be inferred that his evidence would not have assisted the respondents on these points.
Mr Scotto also submitted that although the respondents had produced an MYOB document which ostensibly recorded amounts owing, the document did not purport to be a loan agreement. He further submitted that although Scotto Bros’ annual reports set out amounts which referred to him and used the word “advance”, there was no evidence that he had agreed to repay those amounts or that he had even received them.Mr Scotto submitted that, in any case, Scala Bros’ records could not be relied upon to prove the existence of a loan account given that Scala Bros’ financial statements recorded loans to and from Mrs Bossi of which she had no recollection.
Mr Scotto observed that although the respondents had characterised various amounts allegedly set out in the Scala Bros accounts as loans, they also relied on many of the same items as payments made in the form of wages and annual leave. He argued that the Court should not allow the respondents’ case to progress on inconsistent bases.
Mr Scotto submitted that even if the respondents could prove the loan agreement and the loan amounts alleged, s.14(1) of the Limitation Act barred the respondents’ cross-claim and s.63(1) extinguished it. The last alleged loan was made on 15 November 2004 and the cross claim was first filed on 8 March 2011, more than six years later. He submitted that as the loans had been made more than six years earlier, the debts had been extinguished and the loan was statute barred.
Mr Scotto also alleged that the cross claim did not fall within the Court’s associated or accrued jurisdiction because it did not concern transactions and facts common to the relevant federal matter. He submitted that all matters in dispute between the parties could be resolved and all relief could be granted without reference to the cross claim.
Consideration
I reject Mr Scotto’s allegation and submission that the Court does not have authority by way of its accrued jurisdiction to entertain the cross claim. It was said in Re Wakim; Ex parte McNally (1999) 198 CLR 511 that:
There is but a single matter if different claims arise out of “common transactions and facts” or “a common substratum of facts”, notwithstanding that the facts upon which the claims depend “do not wholly coincide”. So, too, there is but one matter where different claims are so related that the determination of one is essential to the determination of the other … (at 585 [140], per Gummow and Hayne JJ, Gleeson CJ and Gaudron J agreeing) (footnotes omitted)
Although the determination of the cross claim did not depend on the outcome of Mr Scotto’s claims, the issues raised by the cross claim did arise out of a sub-stratum of facts which Mr Scotto’s claims shared. The question is one of substance: whether the cross claim forms a part of a single justiciable controversy or whether, in truth, it is a separate and distinct matter: Obacelo Pty Ltd v Taveraft Pty Ltd (1985) 5 FCR 210 at 217. I conclude that Mr Scotto’s claims and the cross-claim formed the same matter and that the cross claim attracted the Court’s accrued jurisdiction: see also Keldote Pty Ltd v Riteway Transport Pty Ltd (2010) 195 IR 423 at 444 - 458 [77] – [136].
It should be noted that Mr Scotto did not suggest that the defence by way of set-off, which raised the same issues as the cross claim raised, was beyond the Court’s jurisdiction to determine. Nor did he address what effect entertaining the defence by way of set-off might have on the cross claim’s justiciability in this proceeding. However, as I have concluded that the cross claim does attract the Court’s accrued jurisdiction, it is not necessary to consider these issues.
In the absence of any evidence as to the terms of the purported loan agreement, and noting the lack of evidence that Mr Scotto had entered into any agreement of the sort postulated by the respondents, I conclude that the terms propounded by the respondents were no more than speculation on their part. I suspect that what was described as a loan account was really just a mechanism for Mr Carrano to balance the books by keeping track of sums he had given Mr Scotto but on which PAYE or PAYG tax had not been paid and which might have been written off at some future date. I accept Mrs Ciano’s evidence that Mr Scotto received more than his award entitlements and I infer that the amounts recorded as loans were, largely, the mechanism by which this outcome was achieved. Even so, at least one amount truly was a loan, namely the $35,000 appearing in the MYOB document cited in Mrs Bossi’s affidavit which was recorded as lent and then repaid. Consequently, I find that there was no loan account of the sort propounded by the respondents and that the sums which they alleged were owed by Mr Scotto to Scala Bros were not owed by him because they had not been lent to him.
But in any event, the cross claim is as out of time as is a large part of Mr Scotto’s claim for wages dating back over twenty years. Assuming that there was a cause of action for advances not repaid, in the absence of any evidence as to the terms of the supposed loans it is appropriate to infer that they were repayable on demand: Ogilvie v Adams [1981] VR 1041; Re Hayvio Pty Ltd – Ottavio v Hayvio Pty Ltd [2011] NSWSC 1125. A loan of that sort creates an immediate debt: Young v Queensland Trustees Ltd (1956) 99 CLR 560; Ogilvie v Adams. The evidence is that the last sum recorded as an advance was paid to Mr Scotto on 15 November 2004. As the cross claim was not filed until 2011, any claim based on that payment, as well as on any of the earlier ones, was, by virtue of the Limitation Act, out of time
I note that the respondents argued that the loan was one which was repayable at the end of each financial year, however, the evidence did not support that assertion.
I further note that Mr Scotto did not raise the question of what, if any, time-bar applied to the defence by way of set-off: cf Commonwealth Trading Bank of Australia v Sidney Raper Pty Ltd (1975) 25 FLR 217, but that omission is of no consequence in light of my finding that there was no loan account of the sort alleged.
I find that the defence by way of set-off is not made out and that the cross claim should be dismissed.
CONCLUSION
Compensation
Scala Bros is to compensate Mr Scotto:
a)pursuant to s.365 of the IR Act by paying him his underpaid or unpaid Saturday penalty rates, overtime and breakfast allowance entitlements in respect of the period 28 October 2004 to 26 March 2006, plus interest at the prescribed rate pursuant to 372 of the IR Act;
b)pursuant to s.719(6) of the WR Act by paying him his underpaid or unpaid Saturday penalty rates, overtime and breakfast allowance entitlements in respect of the period 27 March 2006 to 30 November 2006, plus interest pursuant to s.722 of the WR Act calculated in accordance with r.26.01 of the Federal Circuit Court Rules 2001;
c)pursuant to s.719(6) of the WR Act by paying him his underpaid or unpaid hours worked at ordinary time rates, Saturday penalty rates, overtime and breakfast allowance entitlements in respect of the period 1 December 2006 to 27 June 2009, plus interest pursuant to s.722 of the WR Act calculated in accordance with r.26.01 of the Federal Circuit Court Rules; and
d)pursuant to s.719(6) of the WR Act by paying him his underpaid or unpaid overtime entitlements in respect of the period 28 June 2009 to 30 June 2009, plus interest pursuant to s.722 of the WR Act calculated in accordance with r.26.01 of the Federal Circuit Court Rules.
Scala Bros and Mrs Bossi (pursuant to s.550 of the FW Act) are to compensate Mr Scotto:
a)pursuant to s.545(2)(b) of the FW Act by paying him his underpaid or unpaid overtime entitlements in respect of the period 1 July 2009 to 5 May 2010, plus interest pursuant to s.547 of the FW Act calculated in accordance with r.26.01 of the Federal Circuit Court Rules;
b)pursuant to s.545(2)(b) of the FW Act by paying him his unpaid accrued annual leave and 17.5% leave loading (as prescribed by cl.23 of the Shop NAPSA and sch.A to the Retail Award) in respect of the period 30 May 1994 to 5 May 2010, plus interest pursuant to s.547 of the FW Act calculated in accordance with r.26.01 of the Federal Circuit Court Rules; and
c)pursuant to s.545(2)(b) of the FW Act by paying him his unpaid 17.5% leave loading (pursuant to cl.23 of the Shop NAPSA and sch.A to the Retail Award) in respect of the annual leave taken in the period December 2008 to January 2009, plus interest pursuant to s.547 of the FW Act calculated in accordance with r.26.01 of the Federal Circuit Court Rules.
Scala Bros is to compensate Mr Scotto pursuant to s.12(1) of the LSL Act by paying him his underpaid long service leave entitlement plus interest pursuant to s.76 of the Federal Circuit Court of Australia Act 1999 calculated in accordance with r.26.01 of the Federal Circuit Court Rules.
The parties are to quantify each of the above amounts by reference to these reasons and file an agreed draft short minute of orders setting out those amounts, and giving effect to this aspect of these reasons, within twenty-eight days.
Penalties
Scala Bros
In the period 27 March 2006 to 30 June 2009, Scala Bros failed to pay Mr Scotto any or the entirety of his:
a)ordinary time wages;
b)overtime;
c)penalty rates for working on Saturdays;
d)a breakfast allowance; and
e)annual leave loading.
Each failure was a breach by Scala Bros of cl.3 of the Shop NAPSA and thus of cl.32 of sch.8 to the WR Act.
In the period 1 July 2009 until 31 December 2009, Scala Bros failed to pay Mr Scotto a breakfast allowance. That failure was a breach of item 2(1) of sch.16 to the FW (TPCA) Act.
In the period 1 July 2009 until the termination of his employment, Scala Bros failed to pay Mr Scotto overtime. That failure was, in the relevant periods, a breach of item 2(1) of sch.16 to the FW (TPCA) Act or a breach of s.45 of the FW Act.
In the period from 1 July 2009 until the termination of his employment, Scala Bros failed to provide Mr Scotto with pay slips which met the requirements of the FW Act and Regulations and so breached s.536(1) of the FW Act.
Following the termination of his employment on 5 May 2010, Mr Scotto was not paid:
a)accrued annual leave and leave loading; and
b)the entirety of his long service leave.
The first failure was a breach of ss.90(2) and 45 of the FW Act and the second was a breach of s.4(5) of the LSL Act.
Giuseppina Bossi
For reasons already given, Mrs Bossi is taken to have contravened:
a)cl.32 of sch.8 to the WR Act in respect of Scala Bros’ failure to pay Mr Scotto’s ordinary time wages in full and his Saturday penalty rates in the period 14 June 2009 to 27 June 2009;
b)cl.32 of sch.8 to the WR Act and item 2(1) of sch.16 to the FW (TPCA) Act in respect of Scala Bros’ failure to pay Mr Scotto’s overtime and a breakfast allowance in the period 14 June 2009 to 31 December 2009;
c)s.45 of the FW Act in respect of Scala Bros’ failure to pay Mr Scotto overtime from 1 January 2010 to 5 May 2010;
d)s.90(2) of the FW Act in respect of Scala Bros’ failure, upon the termination of Mr Scotto’s employment, to pay him his accrued annual leave entitlements;
e)s.45 of the FW Act in respect of Scala Bros’ failure to pay Mr Scotto annual leave loading; and
f)s.4(5) of the LSL Act in respect of Scala Bros’ failure to pay Mr Scotto the entirety of his long service leave entitlement.
The matter will stand over to a date to be fixed for a hearing on what, if any, penalties should be imposed.
Costs
Mr Scotto sought costs. That issue will also stand over to a date to be fixed.
Further conduct
The matter will be listed for further directions on 14 November 2014 at 9.30am.
I certify that the preceding five hundred and twenty-nine (529) paragraphs are a true copy of the reasons for judgment of Judge Cameron
Associate:
Date: 17 October 2014
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