Tsang v Mediatronic International Pty Ltd (No 2)
[2021] FedCFamC2G 342
•10 December 2021
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Tsang v Mediatronic International Pty Ltd (No 2) [2021] FedCFamC2G 342
File number(s): SYG 849 of 2021 Judgment of: JUDGE MANOUSARIDIS Date of judgment: 10 December 2021 Catchwords: PRACTICE AND PROCEDURE – Industrial Law – application for default judgment including the imposition of pecuniary penalties based on alleged contraventions of s 44, s 45, and s 536 of the Fair Work Act 2009 (Cth) – whether affidavit read in support of application for default judgment inconsistent with allegations made in the statement of claim – whether if inconsistent orders for default judgment should nevertheless be made on the basis of the allegations made in the statement of claim – application for default judgment dismissed. Legislation: Fair Work Act 2009 (Cth) ss 44, 45, 536, 545(2)(b)
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) r 13.05(2)(c)
Cases cited: Clayton v Thomas C Denton & Co Pty Ltd [1972] VR 46
Speedo Holdings BV v Evans (No 2) [2011] FCA 1227
Tsang v Mediatronic International Pty Ltd [2021] FedCFamC2G 120
Division: Fair Work Number of paragraphs: 24 Date of hearing: 9 and 30 November 2021 Place: Sydney Counsel for the Applicant: Ms J Gatland, by telephone Solicitor for the Applicant: Adams & Partners Lawyers The Respondents: No appearance by, or on behalf of, the respondents ORDERS
SYG 849 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MICHAEL TSANG
Applicant
AND: MEDIATRONIC INTERNATIONAL PTY LTD ACN 058 806 787
First Respondent
KEIJIAN XU
Second Respondent
ORDER MADE BY:
JUDGE MANOUSARIDIS
DATE OF ORDER:
10 DECEMBER 2021
THE COURT ORDERS THAT:
1.The applicant’s application for orders under r 13.05(2)(c) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth), including orders for the payment of pecuniary penalties, is dismissed.
2.The proceeding be listed for a directions hearing at 9:30 am on 2 February 2022.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
INTRODUCTION
On 8 October 2021 I published reasons for judgment (earlier reasons) in relation to an application the applicant, Mr Tsang, made under r 13.05(2)(c) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (GFL Rules) for default judgment.[1]
[1] Tsang v Mediatronic International Pty Ltd [2021] FedCFamC2G 120
In the earlier reasons I concluded that, on the basis of the matters alleged in the statement of claim, Mr Tsang appears to be entitled to the following relief:
(a)declarations that the first respondent (MIPL) engaged in what in the earlier reasons I described as the “annual leave contraventions”, the “industry allowance contraventions”, the “superannuation contraventions”, and the “payslip contraventions”, and that the second respondent, Mr Xu, was involved in those contraventions;
(b)an order under s 545(2)(b) of the Fair Work Act 2009 (Cth) (FW Act) that MIPL and Mr Xu pay to Mr Tsang $20,608.65 (together with interest), being the loss Mr Tsang suffered because of the annual leave contraventions; and
(c)an order under s 545(2)(b) of the FW Act that MIPL and Mr Xu pay to Mr Tsang $12,778.22 (together with interest), being the loss Mr Tsang suffered because of the industry allowance contraventions.
I also concluded, however, that I was not satisfied that it appears from the statement of claim that Mr Tsang is entitled to compensation in relation to what in the earlier reasons I described as the “overtime contraventions” and the “personal leave contraventions”, or whether Mr Tsang is entitled to default judgment in relation to the “superannuation contraventions” requiring MIPL and Mr Xu to pay an amount to a superannuation fund nominated by Mr Tsang. After noting that this was not fatal to Mr Tsang’s application for orders under r 13.05(2)(c) of the GFL Rules, I ordered that Mr Tsang’s application for such orders, including his application for the payment of pecuniary penalties, be set down for further hearing on 9 November 2021, and I directed Mr Tsang to file affidavits and submissions.
On 9 November 2021 I heard Mr Tsang’s application for default judgment. Mr Tsang, who was represented by Ms Gatland, barrister, relied on an affidavit Mr Tsang made on 29 October 2021; and Mr Tsang relied on a number of documents that summarised the effect of documents that were annexed to Mr Tsang’s affidavit. I granted Mr Tsang leave to provide to my associate by 12 November 2021 interest calculations. I also heard submissions on the question of penalties.
On 15 November 2021 Mr Tsang’s lawyer, Ms Hatton, sent the following email to my associate:
We note His Honour’s orders to provide interest calculations on Friday 12 November 2021.
We note that information and documents have just come to light which materially impact upon our client’s claim (including the calculations requested).
We respectfully ask for an extension of time to Wednesday 17 November 2021.
On 15 November 2021, at my direction, my associate sent an email to Ms Hatton stating that I would proceed on the basis that the extension Ms Hatton sought had been granted.
On 18 November 2021 Ms Hatton sent an email to my associate attaching an affidavit Ms Hatton made on 18 November 2021. On reading Ms Hatton’s affidavit, it became apparent that the affidavit went beyond providing interest calculations. The affidavit purported to calculate losses on the basis of different factual premises to those alleged in the statement of claim. That led me to instruct my associate to send to Ms Hatton the following email:
The above mentioned matter is currently listed for judgment before his Honour at 9:30 am on 26 November 2021.
His Honour does not propose to give judgment at that time, and he does not proposes [sic] to give judgment until after his Honour hears submissions in relation to whether Mr Tsang can rely on the matters to which Ms Hatton made on 18 November 2021, given the matters alleged in the statement of claim, and given the absence in the affidavit Mr Tsang made on 29 October 2021 of any evidence about the amounts Mr Tsang says he was paid, and the absence of any documents to support the income declared in Mr Tsang’s income tax returns which are annexed to Ms Hatton’s affidavit.
His Honour would be in a position to hear such submissions at 9:30 am on 26 November 2021, or at such other time as may be convenient to the Court and to you.
The matter was again listed before me on 30 November 2021. Ms Gatland appeared for Mr Tsang. Ms Gatland read Ms Hatton’s affidavit of 18 November 2021. Ms Gatland made submissions on two topics. The first is whether it is open to the Court to make orders on the basis of the facts to which Ms Hatton deposes in her affidavit. The second is whether the material on which Ms Hatton relied was sufficient to support the facts to which she deposed.
In these reasons for judgment, therefore, I consider the following questions:
(a)Is it open to the Court to make orders on the basis of the facts to which Ms Hatton deposes?
(b)Assuming (a) is answered in the affirmative, does the evidence on which Ms Hatton relies support the facts to which she deposes or, if it does not, should I make findings to the effect of the facts Ms Hatton deposes?
(c)However (a) and (b) are answered, what orders, if any, should I make?
To be in a position to consider these questions, it will be necessary to describe the matters to which Ms Hatton deposes in her affidavit.
MS HATTON’S AFFIDAVIT
In her affidavit Ms Hatton says as follows:
(a)On or around 22 January 2019 Mr Wilkinson, a solicitor previously employed by the firm of solicitors that employs Ms Hatton, issued a demand on the respondents that they pay $102,060.54 to Mr Tsang. This demand was predicated on Mr Tsang having been paid a total of $210,500 over the course of his employment with MIPL.
(b)The flat hourly rate of $25 on the basis of which Mr Tsang in the statement of claim alleges he was paid was calculated on the assumption that MIPL paid Mr Tsang $210,500 over the course of his employment.
(c)It had come to Ms Hatton’s attention that the $210,500 on which the demand was made “may be inaccurate”. The basis of that statement is Ms Hatton’s review of tax returns Mr Tsang provided Ms Hatton for the years ended 30 June 2014 to 30 June 2019.
Ms Hatton has annexed to her affidavit what purport to be tax returns Mr Tsang lodged for each of the years ended 30 June 2014, 2015, 2016, 2017, 2018, and 2019. I make the following observations:
(a)The tax return for each of the years ended 30 June 2014 and 30 June 2018 record no income from any activities the tax returns describe as construction work.
(b)In a spreadsheet Ms Hatton annexes to her affidavit,[2] it is claimed that Mr Tsang earned no income from January 2014, being the month in which the statement of claim alleges Mr Tsang commenced his employment with MIPL, to 30 June 2014.
[2] Affidavit of A Hatton 18.11.2021, annexure “AH-2”, first table
(c)The tax returns for each of the years ended 30 June 2015 and 30 June 2016 describe Mr Tsang’s “salary and wage occupation” as “Sales Assistant – Building and Plumbing Supplies”, and the tax returns for each of the years ended 30 June 2017 and 30 June 2019 describe Mr Tsang’s “salary and wage occupation” as “Sales Representative – Building and Plumbing Supplies”. These descriptions do not accord with Mr Tsang having been employed as a “general construction worker”. Nor do the descriptions accord with what Mr Tsang said in his affidavit made on 29 October 2021, namely, that MIPL employed him as “a labourer and construction worker”.
(d)The first page of each of the tax returns records the following:
Agent NEXUS TAX ACCOUNTANTS
Client TSANG, MICHAEL
ABN 74 826 269 326
This does not appear to be consistent with the allegation Mr Tsang makes in the statement of claim that he was an employee of MIPL.
(e)The tax return for the year ended 30 June 2015 identifies a “Payer’s Australian business number”, and it also identifies $4,284 as having been withheld from salary and wages. In a spreadsheet Ms Hatton annexes to her affidavit, it is claimed that Mr Tsang earned no income for the year ended 30 June 2015.[3] Ms Gatland gave the following explanation for this:
In the tax return for 2015, there are wages which are disclosed by the taxpayer. However, the payer’s ABN in that return is not that of the first respondent. And I don’t believe Mr Xu, the second respondent, was registered as an ABN employer. And in that regard, no credit is given for the wages that are disclosed in that return of $28,900 although, your Honour, when one looks at the 2015 return as filed by Mr Tsang, it does suggest that he was – his salary and occupation code and description are the same as in earlier years. But the key difference is that the payer number is a completely different ABN from that which is disclosed in the other return. So for that reason no credit is given to the first respondent with respect to wages identified in Mr Tsang’s return for that year and for that year only.
[3] Affidavit of A Hatton 18.11.2021, annexure “AH-2”, first table
OPEN TO GIVE JUDGMENT ON BASIS OF MS HATTON’S AFFIDAVIT?
In my earlier reasons I noted that although r 13.05(2)(c) of the GFL Rules does not require proof of the claim by evidence, it is permissible for an applicant to adduce evidence that is relevant to the relief sought. The question is whether Ms Hatton’s affidavit goes beyond questions of relief, but would instead “alter the case as pleaded”.[4]
[4] Speedo Holdings BV v Evans (No 2) [2011] FCA 1227, at [25]
Ms Gatland submitted Ms Hatton’s affidavit is relevant to proving the damages alleged in paragraph 37 of the statement of claim, which provides:
As a result of each of the Contraventions and Xu Contraventions, Mr Tsang has suffered loss and damage.
Particulars
Full particulars will be provided after discovery. Mr Tsang presently estimates his loss at $102,060.54 in unpaid wages.
Ms Gatland submitted that paragraph 37 of the statement of claim is sufficient to permit the Court to consider Ms Hatton’s affidavit because the particulars only record an estimate of damages which was made in circumstances where MIPL had not provided payslips to Mr Tsang, and Mr Tsang had timesheets for only part of the period for which he was employed by MIPL.
I do not accept this submission. The statement of claim pleads that MIPL paid Mr Tsang for the work he performed as a general construction worker throughout his employment at a flat hourly rate of $25; and the contraventions of the FW Act consisted in MIPL paying amounts to Mr Tsang calculated on this basis that were less than the amounts he was entitled to be paid under the Building and Construction General On-Site Award 2010 (Award). Ms Hatton’s affidavit, however, purports to show something very different.
First, Ms Hatton’s affidavit purports to claim that Mr Tsang was not paid any amount from January 2014 to 30 June 2015 and that, for the period after 30 June 2015 Mr Tsang was not paid at a flat hourly rate of $25. Second, the tax returns, to the extent they can be taken as intending to evidence Mr Tsang receiving income from MIPL, suggest that Mr Tsang purported to provide his labour on a basis other than as an employee or, if as an employee, other than as a labourer and construction worker. These matters are apparent from the tax returns including an ABN number; and also from the tax returns describing Mr Tsang’s occupation either as a “Sales Assistant – Building and Plumbing Supplies”, or as a “Sales Representative – Building and Plumbing Supplies”. In those circumstances, to permit Mr Tsang to rely on Ms Hatton’s affidavit to obtain orders under r 13.05(2)(c) of the GFL Rules “would alter the case as pleaded”.[5]
[5] Speedo Holdings BV v Evans (No 2) [2011] FCA 1227, at [25]
WEIGHT TO BE GIVEN TO MS HATTON’S AFFIDAVIT
The only findings that can reasonably be made on the basis of the tax returns that are annexed to the affidavit of Ms Hatton is that, at least in relation to the years ended 30 June 2015, 2016, 2017, and 2019, Mr Tsang lodged income tax returns to the effect of those annexed to Ms Hatton’s affidavit, and that, by so lodging those tax returns, Mr Tsang represented that he earned income in his capacity as a sales assistant or sales representative in relation to building and plumbing supplies, and that he did so by use of the ABN number recorded in each tax return. The income tax returns are incapable of affording a rational basis for finding that the income recorded in them represent income Mr Tsang earned as a general construction worker employed by MIPL.
SHOULD DEFAULT ORDERS BE MADE?
Mr Tsang has filed sufficient material on the basis of which it would be possible to assess the total hours he claims to have worked, the days on which he worked those hours, and, assuming, as the statement of claim pleads, Mr Tsang was paid at a flat hourly rate of $25, assess the extent to which Mr Tsang was underpaid. The question is whether I should proceed to assess Mr Tsang’s underpayment, and also assess penalties on the basis of the allegations made in the statement of claim.
This Court’s power to make an order under r 13.05(2)(c) of the GFL Rules is discretionary. As Flick J noted in Speedo Holdings BV v Evans (No 2), “[o]ther than necessarily recognising that the power must be exercised with caution, there is little detailed consideration as to how the discretion must otherwise be exercised”.[6] It has been said, however, that the right of a plaintiff to enter judgment without proof of his or her claim “upon non-compliance with a time limit is a measure giving a special privilege to the plaintiff and operating to the drastic disadvantage of the defendant”;[7] and the same may be said of an applicant who applies for default judgment under r 13.05(2)(c) of the GFL Rules. That rule, when exercised, grants an applicant the privilege of obtaining a judgment on a claim without having to prove the claim. Such privilege, however, does not extend to an applicant who seeks judgment on a claim where there is material before the Court that is inconsistent with the claims the applicant makes. That is the case with Mr Tsang’s application for orders under r 13.05(2)(c) of the GFL Rules.
[6] Speedo Holdings BV v Evans (No 2) [2011] FCA 1227, at [21]. His Honour was speaking of r 5.23 of the Federal Court Rules 2011 (Cth), the equivalent rule to r 13.05(2) of the GFL Rules.
[7] Clayton v Thomas C Denton & Co Pty Ltd [1972] VR 46, at page 49
The tax returns annexed to Ms Hatton’s affidavit suggest, and Mr Tsang now in terms claims, that, contrary to the allegations made in the statement of claim, MIPL did not pay Mr Tsang at a flat hourly rate of $25, and that MIPL did not pay him at all for the first 18 months of his engagement. In those circumstances, it would not be a proper exercise of the power conferred by r 13.05(2)(c) of the GFL Rules to make any order on the basis of facts alleged in the statement of claim which Mr Tsang appears to have abandoned. That applies to the declarations and orders I found in my earlier reasons it was open to make on the basis of the facts alleged in the statement of claim.
Further, the tax returns suggest MIPL might have engaged, or purportedly might have engaged, Mr Tsang as an independent contractor, rather than as an employee. It is true that, even if MIPL had engaged Mr Tsang purportedly as an independent contractor, MIPL and Mr Tsang could nevertheless have been in an employment relationship that was covered by the Award. The point, however, is that if, notwithstanding that which the contents of the tax returns suggest, the true relationship between MIPL and Mr Tsang was one of employer and employee and, moreover, it was a relationship covered by the Award, these are not matters I would be prepared to relieve Mr Tsang from having to prove by my making an order under r 13.05(2)(c) of the GFL Rules on the basis of the allegations made in the statement of claim.
For these reasons I would not be prepared to make any order under r 13.05(2)(c) of the GFL Rules on the basis of the allegations contained in the statement of claim, including the declarations and orders I found in my earlier reasons it was open to me to make on the basis of the facts alleged in the statement of claim.
DISPOSITON
I propose to order that Mr Tsang’s application for orders under r 13.05(2)(c) of the GFL Rules be dismissed, and order that the proceeding be listed for directions at 9:30 am on 2 February 2022.
I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Manousaridis. Associate:
Dated: 10 December 2021
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