Fair Work Ombudsman v DTF World Square Pty Ltd

1. Pursuant to s 500(2) of the Corporations Act 2001 (Cth), leave be granted to the applicant to proceed against the first respondent and the second respondent on the condition that the applicant not seek to enforce any pecuniary relief that might be granted, including by way of pecuniary penalty, against the first respondent or the second respondent without first obtaining the further leave of the Court.
2. The name of the first respondent be amended to read "DTF (World Square) Pty Ltd (ACN 124 624 111) (in liquidation)".
3. The name of the second respondent be amended to read "Selden Farlane Lachlan Investments Pty Ltd (ACN 164 883 809) (in liquidation)". Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

YATES J: 1 By interlocutory application dated 3 June 2022, the applicant, the Fair Work Ombudsman, sought leave, pursuant to s 500(2) of the Corporations Act 2001 (Cth) (the Corporations Act), to proceed against the first respondent and the second respondent in this proceeding. On 9 June 2022, I granted that leave. These are my reasons. 2 The principal proceeding was commenced by the applicant on 17 June 2020 against five respondents after an investigation that commenced in November 2017. 3 The applicant alleges that 17 employees of the first respondent and the second respondent were underpaid a total of $157,025.79 ($118,260.05 in respect of the first respondent's employees, and $38,765.74 in respect of the second respondent's employees). The applicant alleges that the first respondent and the second respondent committed serious contraventions within the meaning of s 557A of the Fair Work Act 2009 (Cth) (the Fair Work Act), as well as contraventions of ss 535(4) and 536(3) of that Act. These provisions were introduced by the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 (Cth), which commenced operation on 15 September 2017. 4 On 23 April 2021, the applicant discontinued the proceeding against the third respondent, who was unable to be served. 5 The fourth respondent was the General Manager of the DTF Group, which included the first respondent and the second respondent. The fifth respondent was the Human Resources Coordinator of the DTF Group. The applicant alleges that the fourth respondent and the fifth respondent were "involved in" the first respondent's and the second respondent's respective contraventions within the meaning of s 550 of the Fair Work Act. 6 The applicant seeks declaratory relief, orders by way of rectification of underpayments, orders for payment of superannuation contributions, civil penalties, and interest. 7 The principal proceeding has been listed for final hearing before another Judge of the Court for two weeks, commencing on 11 July 2022. Evidence has been prepared and filed by the applicant, and by the first respondent and the second respondent. 8 The applicant's intended evidence includes an affidavit by Anthony Tandra, who worked in the first respondent's and second respondent's businesses, alongside the fourth respondent and the fifth respondent. Mr Tandra's evidence will be that he was instructed to prepare accurate records regarding the hours worked and amounts paid to employees, and to prepare other records which did not set out the correct hours worked and rates and/or total amounts paid to employees. I was taken to Mr Tandra's affidavit. It indicates that the proceeding raises a serious question to be tried. 9 The applicant's intended evidence also includes the affidavits of: two former employees of the first respondent; four inspectors employed by the applicant who were involved in the investigation; and an employee in the applicant's Calculations Team. 10 On 18 May 2022, a liquidator was appointed to the first respondent (Mr Kassem) and two liquidators were appointed to the second respondent (Mr Kassem and Mr Kaso). Each administration is a creditors' voluntary winding up. 11 Section 500(2) of the Corporations Act provides: After the passing of the resolution for voluntary winding up, no action or other civil proceeding is to be proceeded with or commenced against the company except by leave of the Court and subject to such terms as the Court imposes. 12 The liquidators were informed of the applicant's application for leave brought under this section, as were the solicitors on the record for the fourth respondent and the fifth respondent (Dixon Holmes who, until recently, were also the solicitors on the record for the first respondent and the second respondent), and the known creditors of the first respondent and the second respondent. The known creditors of the first respondent and the second respondent are the Australian Taxation Office, Dixon Holmes, and Mr Wei (the sole director of the first respondent and the second respondent). 13 In response, the liquidators advised that they neither consented to nor opposed the application for leave. The Australian Taxation Office advised that it did not seek to join or actively participate in the proceeding. The solicitors for the fourth respondent and the fifth respondent reserved their position, but did not appear at the hearing of the application for leave. Mr Wei did not respond and did not appear at the hearing of the application for leave. From these responses, or lack thereof, it can be seen that there was no active or substantive opposition to leave being granted. 14 I was assisted in my consideration of this matter by detailed written submissions, which are on the court file. 15 In summary, the applicant submitted that the claims in the principal proceeding have a solid foundation giving rise to a serious question to be tried; it is in the public interest that leave be granted; important relief is being sought in the proceeding which will not be provable in the winding up of the first respondent and the second respondent; the proceeding is at a very advanced stage; and it would be incongruous not to proceed against the first respondent and the second respondent when the case to be advanced against the fourth respondent and the fifth respondent requires proof, in any event, of the contraventions alleged against the first respondent and the second respondent. 16 As to the last-mentioned consideration, the applicant says that no final judgments as to liability on the alleged serious contraventions under s 557A of the Fair Work Act have been given by the Court where liability has been contested. 17 As to the proof of claims in the winding up of the first respondent and the second respondent, the applicant pointed, additionally, to the fact that the underpayment and record-keeping contraventions in suit arise out of false and misleading employment records in relation to the amounts paid and time worked by the employees. On that basis, the applicant submitted that it is likely that it will be difficult for employees to prove that they were underpaid through the proof of debt procedure. 18 I accepted the applicant's submissions. Those submissions do not require greater elaboration in these reasons. 19 The applicant drew my attention to relevant case law, most notably the summary of principles in Rushleigh Services Pty Ltd v Forge Group Ltd (in liq) (receivers and managers appointed) [2016] FCA 1471 at [15] - [16] and in Australian Competition and Consumer Commission v Australian Institute of Professional Education Pty Ltd (in liq) [2017] FCA 521 at [22] - [26]. The applicant also drew my attention to similar statements in Fair Work Ombudsman v Foot & Thai Massage Pty Ltd (in liquidation) [2019] FCA 1601 at [14] - [15] and [45], and Fair Work Ombudsman v Blue Sky Kids Land Pty Ltd (in liquidation) [2020] FCA 718 at [9] - [11] and [19]. 20 Having regard to the principles discussed in those cases, and the evidence given in two affidavits by Nicholas Martin Kelly, who is employed as a Senior Lawyer in the Office of the Fair Work Ombudsman, I was satisfied that the leave sought should be granted subject to the usual proviso that any pecuniary relief granted after a final hearing not be enforced without further leave being granted. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Yates.