Potter v Fair Work Ombudsman

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 249 of 2013

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

JUDGE: COWDROY J DATE: 7 MARCH 2014 PLACE: SYDNEY

REASONS FOR JUDGMENT 1 This appeal arises from three decisions of Driver FM (as his Honour then was) in the Federal Magistrates Court of Australia ('the FMCA') (now the Federal Circuit Court of Australia). The proceedings in the court below concerned the alleged underpayment of wages and other entitlements by Quincolli Pty Ltd ('Quincolli') to its employees in the role of call centre operators at a Nowra call centre during 2009.

BACKGROUND 2 By virtue of the nature of the appeal, only a brief background of the facts giving rise to the proceedings need be set out. From 1 January 2009 to 31 December 2009 ('the relevant period'), 33 employees of Quincolli at its Nowra call centre ('the Employees') were paid in accordance with agreements that were purportedly lodged as Australian Workplace Agreements ('AWAs') by Quincolli with the Office of the Employment Advocate. Quincolli and Mrs Judith Potter, a director and secretary of Quincolli during the relevant period and the appellant to this appeal ('Mrs Potter'), claimed that such lodgment occurred by post sometime in February and March 2007. 3 If AWAs had been lodged in accordance with the Workplace Relations Act 1996 (Cth) ('the WR Act') for each of the Employees, then the Employees would have been properly paid at the rate prescribed by those agreements. However, based upon the evidence of Quincolli and Mrs Potter, AWAs were only lodged in respect of three of the 33 employees. The Fair Work Ombudsman, being the respondent to this appeal ('the FWO'), submitted that the three AWAs that were purportedly lodged had, on all of the available evidence, not been received by the Office of the Employment Advocate ('OEA') or in the alternative had not been lodged in accordance with the Fair Work Act 2009 (Cth) ('FW Act') and were therefore of no effect. As a result, the respondent submitted that each of the Employees was entitled to be remunerated under the applicable industrial award, namely the Clerical and Administrative Employees (State) Award ('the Clerical NAPSA'). 4 On 5 July 2010, Quincolli was issued with a notice to produce by an inspector of the FWO in accordance with s 712 of the FW Act ('the notice to produce'). Such notice in effect required Quincolli to produce to the FWO any and all documents in relation to whether the Clerical NAPSA applied or should have applied to the employees of the Nowra call centre from March 2006 to December 2009. Compliance was required by s 712(2)(c) of the FW Act within 14 days, being 19 July 2010. On 20 July 2010, the respondent received a letter from Quincolli and Mrs Potter stating that the notice to produce would not be complied with. The respondent received another letter from Quincolli and Mrs Potter on 26 July 2010 setting out the reasons for their non-compliance with the notice to produce. 5 The FWO instituted proceedings in the FMCA against Quincolli and Mrs Potter due to the alleged underpayment of the Employees. The first decision of Driver FM was delivered on 28 November 2011: Fair Work Ombudsman v Quincolli Pty Ltd [2011] FMCA 139. The primary judge determined that during the relevant period: a) Quincolli (then known as Well Done Group Pty Ltd) had underpaid wages and entitlements to the Employees in contravention of s 182(1) of the WR Act; b) Quincolli breached various subclauses of the applicable industrial award, namely the Clerical and Administrative Employees (State) Award ('the Clerical NAPSA'); c) Quincolli breached s 712(3) of the FW Act by failing to comply with the notice to produce; d) Mrs Potter was involved in each of the contraventions of Quincolli within the meaning of s 728 of the WR Act and s 550 of the FW Act. 6 The second decision of Driver FM was delivered on 29 August 2012: Fair Work Ombudsman v Quincolli Pty Ltd [2012] FMCA 712 ('the second decision'). It concerned an application by Quincolli and Mrs Potter to reopen the issue of liability determined by the first decision on the basis of new evidence. The new evidence consisted of an electronic record reflecting that an account with the OEA had been created by or for Well Done Group Pty Ltd on or before 7 February 2007. Such application was refused. 7 The third decision was delivered on 18 February 2013: Fair Work Ombudsman v Quincolli Pty Ltd (No 2) [2013] FMCA 17. It assessed the penalties to be paid by Quincolli and Mrs Potter in respect of the contraventions established in the first judgment, as well as the amount of money to be paid to employees of Quincolli in accordance with the underpayment of wages and other entitlements during the relevant period. The primary judge ordered that: a) in total, approximately $190,000 be paid to the Employees; b) penalties totalling $81,000 be imposed on Quincolli for its various contraventions of the WR Act, FW Act and Clerical NAPSA; and c) penalties totalling $26,500 be imposed on Mrs Potter for her involvement in various contraventions of the WR Act, FW Act and Clerical NAPSA. 8 On 28 February 2013 Quincolli and Mrs Potter sought a stay of the orders made in connection with the third decision. Yates J of this Court granted that stay pending, inter alia, the resolution of this appeal.

THE APPEAL 9 Quincolli was the first named appellant to the original notice of appeal, which was filed on 19 February 2013. Quincolli was subsequently placed in voluntary liquidation, with the liquidator being appointed on 18 April 2013. As the liquidator indicated that he was not prepared to proceed with the funding of the appeal, a notice of discontinuance was filed on behalf of Quincolli on 9 August 2013. Accordingly, Mrs Potter has been the sole appellant to this appeal since that date. 10 By amended notice of appeal, Mrs Potter in effect raises the following five grounds of appeal: a) The Federal Magistrate erred in finding that the Clerical NAPSA applied to the Quincolli employees; b) The Federal Magistrate failed to apply his own reasoning in relation to the first decision, and in the alternative adopted the submissions of the applicant without providing reasons for doing so; c) The Federal Magistrate erred in refusing to reopen the issue of liability determined in the first decision; d) The Federal Magistrate erred in failing to apply the ordinary and standard procedures of the Court; and e) The Federal Magistrate erred in failing to find that Quincolli had a reasonable excuse in refusing to comply with the notice to produce. 11 A further issue arose during the hearing, namely Mrs Potter's accessorial liability to the contraventions of Quincolli. Mrs Potter raised such issue in her written submissions under the third ground of appeal. This appears to have been done on the basis that the new evidence upon which Quincolli and Mrs Potter sought to reopen the liability issue was also relevant to the credit of Mrs Potter, and therefore toward the finding of the primary judge that Mrs Potter was involved in the contraventions of Quincolli. As is set out hereunder, the issue of Mrs Potter's accessorial liability was discussed more broadly in oral submissions at the hearing, and will be considered as the sixth ground of appeal. 12 Mrs Potter represented herself at the hearing of the appeal, but had assistance from a person with legal training in preparing her written submissions. Mrs Potter also relied upon additional material which was said to supplement her oral submissions.

CONSIDERATION 13 Each of the six grounds of appeal will be considered in turn.

Ground 1: Application of the Clerical NAPSA 14 The principal dispute between the parties is whether the Clerical NAPSA applied to the relevant employees of Quincolli during the relevant period. This involves three issues: a) Whether Quincolli had properly lodged AWA's in respect of each of its relevant employees; b) If not, whether the Clerical NAPSA applied to those employees; and c) If so, which grade of the Clerical NAPSA was applicable? 15 The legislative background to these issues was succinctly stated by the primary judge at [31]-[35] of the first decision as follows: In respect of breaches occurring prior to 1 July 2009, item 11(1) of Part 3 of Schedule 2 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Transitional Act) provides that the Workplace Relations Act continues to apply on and after 1 July 2009 in relation to conduct that occurred before that date. Part 5-2 of the Fair Work Act applies to conduct that occurred prior to 1 July 2009, pursuant to sub-item 14 of Part 3 of Schedule 18 of the Transitional Act and Sub-item 13(1) of Part 3 of Schedule 18 of the Transitional Act gives Fair Work Inspectors the power to make or continue applications under the Workplace Relations Act. Part 4-1 of the Fair Work Act applies as if items 2 to 8 and 10 to 15 of Schedule 16 of the Transitional Act were provisions of the Fair Work Act. Item 2 deals with contraventions of award-based transitional instruments (which include NAPSAs) and Item 5 deals with contraventions of section 182 of the Workplace Relations Act as it continues to apply. On 27 March 2006 the Clerical and Administrative Employees State (Award) (Clerical Award) was taken to be replaced by an instrument called a Notional Agreement Preserving State Award (NAPSA)]. Pursuant to clause 43(1) of Part 3 to Schedule 8 of the Workplace Relations Act, a NAPSA may be enforced as if it were a collective agreement. [Footnote omitted]

Purported lodgment of AWAs 16 Quincolli claimed that it had entered into Australian Workplace Agreements ('AWAs') in February and March 2007 with respect to 16 of its employees. The effect of such agreements under the relevant industrial legislation would, if valid, have determined the working conditions of those employees. As referred to above at [3], it appears that only three of the 16 employees who had signed AWAs remained employed by Quincolli by 1 January 2009. 17 Putting to one side the fact that the remaining 30 of the relevant employees could not in any event have been covered by AWAs, Mrs Potter claimed that she had endeavoured to effect registration of the agreements online. As she found it was difficult to use such service she posted the AWAs to the OEA. Mrs Potter stated before the primary judge that she assumed that the 16 AWAs had been properly processed. 18 Two issues of legislative compliance arose relating to the purported lodgment of the AWAs. First, Mrs Potter acknowledged that a declaration in the form required by the legislation did not accompany any of the AWAs. Unless an AWA was correctly 'lodged' (as required by s 342 of the WR Act), it was of no effect. The requirements for 'lodgment' were contained in s 344 of the WR Act as follows: Lodging of workplace agreement documents with the Employment Advocate (1) The employer in relation to a workplace agreement lodges the workplace agreement with the Employment Advocate if: (a) the employer lodges a declaration under subsection (2); and (b) a copy of the workplace agreement is annexed to the declaration. (2) An employer lodges a declaration with the Employment Advocate if: (a) the employer gives it to the Employment Advocate; and (b) it meets the form requirements mentioned in subsection (3). Note: Sections 137.1 and 137.2 of the Criminal Code create offences for providing false or misleading information or documents. (3) The Employment Advocate may, by notice published in the Gazette, set out requirements for the form of a declaration for the purposes of paragraph (2)(b). (4) A declaration is given to the Employment Advocate for the purposes of subsection (2) only if the declaration is actually received by the Employment Advocate. Note: This means that section 29 of the Acts Interpretation Act 1901 (to the extent that it deals with the time of service of documents) and section 160 of the Evidence Act 1995 do not apply to lodgment of a declaration. (5) The Employment Advocate is not required to consider or determine whether any of the requirements of this Part have been met in relation to the making or content of anything annexed to a declaration lodged in accordance with subsection (2). 19 Accordingly, even if the 16 AWAs had been sent by post, in the absence of the declaration in the form prescribed under s 344(3), they were not 'lodged'. Such prescribed declaration sought numerous details concerning the employer, the employee and the nature of the work of the employee. Mrs Potter, when forwarding the 3 AWAs, merely declared that she had 'followed the correct procedure for making an Australian Workplace Agreement and that all employees who have signed this agreement have received the full copy'. Such statement clearly did not comply with the statutory requirements. It follows that none of the 16 AWAs had any legal effect, even if such agreements had been received by the Employment Advocate. 20 The second issue is that it is common ground that neither Quincolli nor Mrs Potter received a receipt from the OEA of the AWAs, and nor did the OEA produce any record of their receipt. Section 344(4), reproduced above at [18], displaces the effect of the postal acceptance rule such that a declaration is only given to the Employment Advocate if it is actually received by the Employment Advocate. 21 His Honour found that 'no AWAs in respect of the [relevant employees] were lodged in accordance with the legislation'. Based upon the facts that there is no record of any properly completed AWAs having been 'lodged' pursuant to ss 344 and 345 of the WR Act, his Honour's conclusion is correct.

Application of the Clerical NAPSA 22 The primary judge was required to determine whether the tasks undertaken by the relevant employees fell within the scope of the Clerical NAPSA. Clause 34.1 outlined the intended application of the award as follows: This award shall apply in respect of all persons employed in any clerical capacity whatsoever and without limiting the generality of the foregoing shall include telephonists, receptionists, cashiers, messengers, copy boys, telephone canvassers (other than for the sale of goods), persons employed on machines designed to perform or to assist in performing any clerical work whatsoever and all classes of employees engaged in any clerical capacity in or in connection with payroll preparation, cash handling and processing in the state of New South Wales excluding the County of Yancowinna, within the jurisdiction of the Clerical and Administrative Employees (State) Industrial Committee, excepting employees covered by industry or employer specific awards. [Emphasis added] 23 The primary judge set out his findings in relation to the duties undertaken by the relevant employees at [54] of the first decision: The duties undertaken by the Employees involved receiving inbound calls on the telephone, or occasionally short-wave radio, and responding to such calls in accordance with various procedures which were communicated to the Employee on their computed [sic] screen. The response provided by an Employee was dependent upon the nature of the call received and involved, among other things, providing advice, providing product information, giving directions, assisting with emergency calls, and arranging tradesmen and security personnel. The Employees were required to log the calls they received and then follow-up or escalate the call if necessary, for example by forwarding details of the call to the client or contacting the client by phone to relay a message. [Footnotes removed] 24 The primary judge continued at [56]: While the Employees of the respondents are more properly described as call centre operators rather than clerks, their duties are fundamentally clerical in nature. The services provided by the respondents relieve their clients of the need to employ their own clerical staff to receive and respond to telephone calls, facilitating the provision of information, services and goods. I have no doubt that the respondents' Employees, if they had been employed directly by the clients of the respondents, would have fallen within the purview of the Clerical NAPSA in the performance of their duties. They did not fall outside the coverage of the NAPSA simply because they were engaged by a company to which others chose to contract out certain of their clerical support functions. 25 Mrs Potter challenges his Honour's characterisation of the Employees' duties. She submitted as follows: A contract call centre or contract contact centre differs markedly from a simple call centre as its principal function is supplying customer contact and support services to a number of clients on a contract basis and whose business is independent of the client. The purpose of a modern contract call centre agent is to act on his or her own initiative after training and function as a decision maker, director, manager, communicator, information agent, marketer or specialist as required and determined by variable contracts. Agents perform clerical activity only and simply as an adjunct and subsidiary to their primary purpose of resolving issues and performing the tasks on behalf of their non-clerical customers. 26 Mrs Potter also explained that the Employees did not simply answer the telephone to take messages. Rather, she claimed such employees 'triage' the callers. In effect, Mrs Potter maintained that the Employees, in answering the telephone, were fulfilling a greater role than merely clerical duties. This was said to be due to the fact that the Employees would provide 'technical advice' and assess information that was communicated to them. Mrs Potter provided an analogy based upon the work of a nurse who will make and receive telephone calls in the course of his or her employment, but is primarily engaged in non-clerical duties. 27 Ultimately, the evidence made clear that the Employees' fundamental duties were to answer telephone calls and liaise with the callers. There was no suggestion that the 'technical advice' Employees provided to callers was in fact based on their technical or industry experience. Rather, the Employees were provided with a computer screen that would display information to be read to certain callers. This is exemplified by the evidence of Ms Richardson, an employee of Quincolli. In cross-examination, Ms Richardson was asked the following question: You've said that it's part of your duties to provide advice. Is that a reference to providing advice to callers? 28 Ms Richardson responded: It's advising the advice that the clients have given us to pass onto the callers. 29 The cross-examination continued as follows: SOLICITOR: Now each screen in relation to each client, be it a counsel or a doctor has standing instructions and those instructions tell you how to respond in a particular circumstance? RICHARDSON: That's correct. SOLICITOR: Sometimes the circumstance goes beyond that which is on the screen and you have to have a bit of a listen to and work out which response you will use? RICHARDSON: Yes. SOLICITOR: And after you've had a bit of a listen and worked out the response, you then give advice according to what you think should be given? RICHARDSON: That's correct. SOLICITOR: But importantly, that that's always based on what you see on the screen? RICHARDSON: That's correct. … SOLICITOR: The advice which you provide is advice which you already have on the screen? RICHARDSON: That's correct. SOLICITOR: So you don't give your own opinion? RICHARDSON: No. 30 Furthermore, documents entitled 'Position Description' were tendered before the primary judge which set out the roles of call centre operators. There was a separate document for each grade of operator, from 1 through to 4. Although Mrs Potter claimed that such documents were not job advertisements, she acknowledged they contained sets of skills that the Employees were required to have. The scope of the position of a grade 1 operator required them to: … answer calls to all Clients [sic] identified by management in a timely manner (within 10% of the average call times over all Grade 1 operators on these calls) and with professional, accurate and complete message taking, according to the client intranet screens'. 31 Such description was the same for grade 2, 3 and 4 operators, save for their call times being compared to operators of the same level. The key performance indicators for a grade 1 operator, which are again similar to the other grades, are stated as follows: Key Performance Indicators: Measurement of times taken on calls - must be within 10% of the average for all operators on this Grade level Accuracy of message taking - spelling, address verification, completeness and expression of messages Ensuring ALL calls are logged, even if no further action required Willingness to ask for assistance if in doubt of any client procedure Attendance at all mandatory training sessions 32 The key phrase in cl 34.1 of the Clerical NAPSA is the employment of persons 'in any clerical capacity'. In Federated Clerks' Union of Australia (NSW Branch) v Australian Workers Union [1971] AR (NSW) 419, Sheldon J observed that such words formed a wide definition and one which was 'of indefinite meaning'. It is clear that an employee will not cease to be engaged in a clerical capacity merely because they undertake some activities in the course of their employment that do not constitute clerical duties. Such was the case in Kingmill Australia Pty Ltd t/a Thrifty Car Rental v Federated Clerks' Union of Australia, New South Wales Branch (2001) 106 IR 217. In that decision, the Full Bench of the Industrial Relations Commission dismissed an appeal against a decision which found employees in a car rental business working at the appellant's national call centre to be employed in a clerical capacity despite engaging in some 'sales' work when communicating with customers over the phone. Similarly to the Clerical NAPSA, the award which was found to cover the employees applied to 'all persons employed in any clerical capacity whatsoever and without limiting the generality of the foregoing, shall include telephonists, receptionists, [and] cashiers…'. 33 The Court is not persuaded that the Employees were engaged in any activities beyond clerical duties which would be sufficient to take their employment outside the operation of the Clerical NAPSA. The evidence overwhelmingly indicates that the Employees were primarily engaged as telephonists. Mrs Potter's submission that the duties of the Employees, being part of a 'contract call centre', were markedly different to those in a regular call centre was unconvincing for the reasons outlined above. The Clerical NAPSA plainly applied to the Employees during the relevant period. Any suggestion that the Employees were award free must be rejected.

Applicable grade of the Clerical NAPSA 34 The final aspect of the first ground of appeal concerns the grade prescribed by cl 8 of the Clerical NAPSA which best applied to the Employees. Although the primary judge noted that the indicative tasks contained within the Clerical NAPSA grades were somewhat different to the employment grades used by Quincolli, his Honour considered that the Clerical NAPSA grades allocated to the Employees by the FWO were appropriate. His Honour said at [57] of the first decision: I accept the Fair Work Ombudsman's submissions on the breaches of the NAPSA which, on the evidence, have been established. Much was made during the trial of this matter about the allocation of grades under the NAPSA to the respondents' Employees. It is true that the allocation of grades under the NAPSA by the Fair Work Ombudsman was somewhat arbitrary. It is also true that there is not an easy or direct correlation between the indicative tasks relating to the various grades under the NAPSA and the employment grades applied by the respondents in their business. However, the NAPSA grades applied by the Fair Work Ombudsman as a result of the lengthy investigation are, in my view, a reasonable, and probably the best available, approximation of the relevant NAPSA grades. Further, I accept that all of the Employees were properly graded above grade 1 under the NAPSA. Even if all of them had been graded at grade 2, underpayments would have been established. 35 Mrs Potter claims that his Honour erred in classifying the Employees under grade 2 in the Clerical NAPSA classification. This is said to be because neither the grade 2 position description, nor the majority of the indicative tasks thereunder, applied to the Employees. 36 The descriptors for a grade 2 position under the Clerical NAPSA are as follows: a) The employee may work under routine supervision with intermittent checking; b) An employee at this grade applies knowledge and skills to a range of tasks. The choice of actions required is usually clear, with limited complexity in choice. c) Work will be performed within established routines, methods and procedures, which involve the exercise of some discretion and minor decision making. 37 There are 23 indicative tasks under grade 2, and it is unnecessary to state each of them. By way of example, an employee under such grade may be expected to 'operate equipment', 'respond to incoming telephone calls' and 'edit and save information'. 38 There are two main problems with Mrs Potter's submission. The first is that it is clear that grade 2 was not applied to each of the Employees. For instance, Ms Richardson was classified as a grade 4 employee: see FN 36 of the first decision. His Honour only found that each of the Employees were at least a grade 2 employee. On appeal, the Court was not taken to the evidence of the grading of each of the Employees, or why from Mrs Potter's perspective each grading was inappropriate. 39 The second problem is that the thrust of Mrs Potter's argument is that the Clerical NAPSA does not apply to the Employees because the grade descriptors and indicative tasks are not reflective of the duties of the Employees. This misunderstands the operation of the Clerical NAPSA, the scope of which is defined by cl 34.1: see above at [22]. An employee will be covered by the Clerical NAPSA where they are: … employed in any clerical capacity whatsoever…in the state of New South Wales excluding the County of Yancowinna, within the jurisdiction of the Clerical and Administrative Employees (State) Industrial Committee, excepting employees covered by industry or employer specific awards. 40 The purpose of the grade descriptors and indicative tasks are only to assist in determining the appropriate grade under which an employee will be covered by the Clerical NAPSA. This was explained by Glynn J in Clerical & Administrative Employees (Classification Structure) State Award [1996] NSWIRComm 190, where her Honour said: The range of indicate duties which have been included at each grade of the [Clerical NAPSA] structure are not intended to be relied upon to define the grade. Nor are they intended to be exhaustive. The indicative tasks provide a method by which the person inexperienced in classifying employees might view their "best fit" in the structure. The question of whether an employee is required to be fully skilled at all the indicative tasks does not apply. The test is whether the descriptors are fulfilled. The descriptors should be completely satisfied at each level for the employee to be graded at that level. 41 To challenge the grading of the Employees under the Clerical NAPSA, Mrs Potter, at a minimum, would have been required to identify the grading which had been allocated to each of the Employees and then show why the descriptors, and to a lesser extent the indicative tasks, of another grading would have been a more accurate reflection of the duties of each employee. 42 As each aspect of the first ground of appeal has failed, it follows that such ground is rejected.

Ground 2: The primary judge's reasoning 43 This ground of appeal arises in consequence of the first decision. The primary judge is said to have quoted verbatim over 15 pages of the respondent's final submissions compared with only three paragraphs from over 90 pages of the initial and final submissions of Mrs Potter and Quincolli. Mrs Potter submits that the primary judge accepted the submissions of the respondent without providing clear and cogent reasons for doing so. Further, where reasons were provided, it is alleged that they were inadequate to assist in understanding how his Honour arrived at such decision. Numerous authorities were cited in support of the proposition that reasons must be provided by a trial judge that disclose the reasoning process used to arrive at the decision. 44 Mrs Potter also submits that the primary judge improperly relied upon both the evidence of two inspectors employed by the respondent, and the submissions of counsel for the FWO. One of the inspectors is said to have acknowledged that he had no experience with contact call centres. Mrs Potter submits that this at least in part caused his Honour to reach the mistaken conclusion that the employees in question were subject to the Clerical NAPSA.

Provision of reasons 45 An examination of the first decision shows that his Honour, having stated the essential facts, and summarised the claims of the FWO grounds of opposition by Quincolli and Mrs Potter, then referred to the evidence relied upon by each party. He noted that the FWO relied upon two affidavits of Darren John Lang, two affidavits of Nigel Christian Rory Smith, an affidavit of Brian Forbes and an affidavit of Peter John Schmarr. His Honour referred to the affidavits of Mrs Potter and of numerous affidavits by employees of Quincolli and exhibits. His Honour then summarised at [15]-[18] the issues before him as follows: The parties dispute the issues of the application of the Clerical NAPSA to the Employees and the classifications relied upon by the Fair Work Ombudsman. There is a further issue of accessorial liability in relation to Mrs Potter. The respondents submit that the Fair Work Ombudsman has, fatally to its case, failed to bring substantial or cogent evidence to define the occupations of the workers of the respondents' business as "clerks" and thus enliven the application of the Clerical NAPSA. Secondly, they contend that the Fair Work Ombudsman, as a best practice or model litigant, has failed to observe the tenets of such practice and caused unnecessary litigation. Further, the respondents submit that the evidence shows that the Clerical NAPSA does not apply and that the respondents were free to negotiate an industrial agreement. Accordingly the application should be dismissed. They assert that the evidence should contain statements from the workers as to the actual work performed by all affected. Its absence is said to considerably undermine the Fair Work Ombudsman's contentions. It is common ground that if the Clerical NAPSA does not apply then there was no underpayment of the Employees. Mrs Potter asserts that she should not be subject to a civil penalty, even if the Clerical NAPSA does apply, due to the usual factors taken into consideration in making a finding of accessorial liability. 46 At [20], his Honour set out the closing submissions of the FWO at length. Mrs Potter takes particular umbrage with this paragraph due to it quoting the FWO's submissions verbatim. 47 From [22] to [64] of the first decision, his Honour provided his reasons for concluding that breaches of the FW Act had occurred. Thereafter he considered the failure of Quincolli to respond to the notice to produce which had been issued by the FWO and also considered the access or liability of Mrs Potter. 48 The reasons provided in such paragraphs demonstrate that his Honour considered the issues of the application of the Clerical NAPSA and also the competing claims brought by Quincolli and Mrs Potter. In summary, his Honour considered matters including: whether the Court had jurisdiction to hear the dispute (see first decision at [22]-[23]); the challenge by Quincolli that the proceedings had not been issued bona fide by the FWO ([24]-[29]); the applicable legislative provisions ([30]-[37]); the relevant provisions regarding workplace agreements ([38]-[46]); the alleged breaches of the WR Act and the FW Act (which included an examination of the provisions of the WR Act, the application of the Clerical NAPSA and breaches thereof) (see [47]-[64]); the involvement of Mrs Potter in the contraventions of the Clerical NAPSA ([65]-[70]); and the breaches of the FW Act ([71]-[82]). Thereafter his Honour referred at [83]-[84] to the accessorial liability of Mrs Potter in relation to failure to comply with the notice to produce. 49 Had there been no consideration of these issues, and had the primary judge simply repeated the submissions of the FWO, then his Honour's reasons would plainly be inadequate. This is not however the case. The Court considers that there is no deficiency in his Honour's reasons as claimed. They are detailed, concise and cogent. A reading of them clearly discloses the precise basis for his Honour's decision. Accordingly the Court rejects the first aspect of the second ground of appeal.

Acceptance of FWO witnesses 50 Mrs Potter submits that his Honour relied 'entirely' on the FWO witnesses when no evidence was given as to their qualifications. 51 It is difficult to comprehend the basis for such submission. Both witnesses were the subject of extensive cross-examination by Quincolli and Mrs Potter during which the experience of the witnesses could have been tested. The submission may be part of the apparent conspiracy which Mrs Potter believed existed in respect of the launching of the proceeding against Quincolli. This issue was considered by his Honour and rejected. 52 His Honour at [53] of the decision accepted the nature of the duties undertaken by the respective personnel which was not seriously in dispute. At [54] his Honour stated such findings as to the duties as follows: The duties undertaken by the Employees involved receiving inbound calls on the telephone, or occasionally short-wave radio, and responding to such calls in accordance with various procedures which were communicated to the Employee on their computed screen. The response provided by an Employee was dependent upon the nature of the call received and involved, among other things, providing advice, providing product information, giving directions, assisting with emergency calls, and arranging tradesmen and security personnel. The Employees were required to log the calls they received and then follow-up or escalate the call if necessary, for example by forwarding details of the call to the client or contacting the client by phone to relay a message. [Footnotes omitted] 53 The evidence of the witnesses concerning the duties of the relevant Quincolli employees was significant evidence in view of the fact that it was not in dispute that the employees were not being paid at the rate prescribed by the Clerical NAPSA. On this basis, it is impossible to discern any error by his Honour in accepting the evidence of the inspectors.

Ground 3: Refusal to reopen 54 Approximately six months after the first decision was delivered on 28 November 2011, and before the penalty hearing had taken place, Quincolli and Mrs Potter sought to reopen the matter in relation to the findings on their respective liability. The application to reopen was filed on 6 August 2012, the basis for which was summarised by the primary judge at [8] of the second decision as follows: The additional evidence said to warrant a reopening of the case on liability is Annex A to the two affidavits of Mrs Potter. That is a printout of an electronic record of an account being created by or for the first respondent, in its former name, with the Office of the Employment Advocate, apparently on or before 7 February 2007. Mr Parnell deposes that a unique indexing number for the account could be retrieved which might hypothetically produce other records relating to the company's account The basis of the application was the fact that records had been produced by Fair Work Australia under a freedom of information application which demonstrated that an attempt had been made by Quincolli to open an internet account with Fair Work Australia. 55 Put broadly, it appears that Quincolli and Mrs Potter submitted that the additional evidence shows that the incomplete lodgment of the AWA's was due to administrative error or delay on the part of the OEA. Mrs Potter has maintained this argument on appeal, and also submits that the issue caused the primary judge to make adverse credibility findings against her. 56 His Honour considered the evidence and the principles relating to the reopening of a matter and concluded that the interests of justice would not be served by allowing the application, especially in view of the significant delay since the date of delivery of the first decision. His Honour emphasised that the evidence relied upon by Quincolli and Mrs Potter did not address a critical finding in his first decision that the AWA's purportedly lodged for the employees of Quincolli did not meet the applicable statutory requirements. Even if his Honour was wrong in that regard, the evidence could only possibly cast doubt on the status for three of the 33 employees concerned. 57 It is clear that Mrs Potter has misinterpreted the primary judge's findings. She appears to believe that if the FWO conducted a proper review of its records, the AWAs that she purports to have lodged would be found. Putting to one side again that the AWAs could only possibly cover 3 of the Employees, Mrs Potter stated in written submissions: His Honour's conclusion that AWAs were not lodged for the employees of [Quincolli] in accordance with the legislation - [sic] only meant they had not been "discovered" or "found" by searching; and no proper "receipt" was returned to [Quincolli or Mrs Potter]. 58 Critically, the primary judge did not make a finding as to whether Mrs Potter or another employee of Quincolli did indeed attempt to lodge the 16 AWAs. Rather, his Honour merely found that, as is explained from [16] to [21] above, no AWAs were lodged in accordance with relevant legislation: first decision at [46]; third decision at [9]. Put another way, because the requisite declaration was not lodged in accordance with s 344 of the WR Act, the AWAs would not have been correctly lodged even if they were received by the FWO. 59 It follows that the primary judge's discretion to refuse to reopen the matter did not miscarry. The evidence upon which Quincolli and Mrs Potter relied could not have affected his Honour's finding that no AWAs had been correctly lodged.

Ground 4: Failure to follow standard practices and procedures 60 Mrs Potter relied upon a written version of her oral submissions under this ground of appeal. The Court read the submissions. In exceptionally broad terms, the submissions allege that the primary judge failed to follow standard practices and procedures in three ways. First, it is alleged that the primary judge did not consider that some of the FWO's particulars were insufficient whilst others improperly expanded the issues in the proceeding. Secondly, it is submitted that evidence of the FWO was inadmissible. Thirdly, it is alleged that standard of evidence was not applied properly by the primary judge. Finally, it is alleged that the primary judge erred by permitting the FWO to act in a manner inconsistent with that of a model litigant. 61 With regard to the first and second arguments, it does not appear that any proper objection was taken in relation to those issues in the court below. There was an allegation in the written submissions of Quincolli and Mrs Potter that the evidence of Mr Forbes was hearsay, but such allegation was not substantiated and appears not to have been taken when his evidence was admitted. Furthermore, the evidence of Mr Lang and Mr Schmarr, which is referred to as being inadmissible in the written submissions tendered in this appeal, was admitted into evidence without objection. In this regard, it is of note that Quincolli and Mrs Potter were legally represented in the court below. Mrs Potter's submissions in this regard reveal no error on the part of the primary judge. 62 The third argument refers specifically to the evidence of Mr Schmarr. Such evidence pertains to the indicative tasks set out in the Clerical NAPSA and the extent to which they were being undertaken by the Employees. The standard of evidence that the primary judge is alleged not to have applied is not specified. Presuming that it is on the balance of probabilities, Mrs Potter's submission amounts to no more than suggesting that some of the evidence of Mr Schmarr should have been rejected or given less weight by the primary judge. Although the Court is far from convinced that this is the case, the critical issue with this submission is that Mrs Potter does not identify what the effect of giving less weight to Mr Schmarr's evidence in relation to the indicative tasks would be. It appears that Mrs Potter has advanced this argument to once again assert that the Clerical NAPSA did not apply to the Employees. Such assertion is incorrect for the reasons at [22] to [42] above. 63 Finally, the Court assumes that Mrs Potter's reference to the need for the FWO to act as a model litigant is a reference to the model litigant provisions of the Legal Services Directions 2005 (Cth). In the Court's experience, it is increasingly common for self-represented litigants to allege that Commonwealth bodies with whom they are engaged in litigation have failed to comply with the model litigant provisions. Such allegations cannot be raised for two reasons. First, compliance with a Legal Services Direction is not enforceable except by, or upon the application of, the Attorney-General: s 55ZG(2) of the Judiciary Act 1903 (Cth). Secondly, the issue of non-compliance with a Legal Services Direction may not be raised in any proceeding (whether in a court, tribunal or other body) except by, or on behalf of, the Commonwealth: s 55ZG(3) of the Judiciary Act 1903 (Cth). 64 It follows that Mrs Potter's fourth ground of appeal fails.

Ground 5: Error with regard to notice to produce documents 65 Section 712 of the FW Act empowers a FWO inspector to issue a notice to produce to a person requiring the production of documents. Subsection 712(3) provides that a person who is served with a notice to produce must not fail to comply with the notice. However the effect of s 712(4) is that a person does not have to comply with a notice if they have a reasonable excuse 66 A notice to produce in accordance with s 712(1) of the FW Act was served upon Quincolli requiring production by 19 July 2010. The requisite 14 days notice was given. The description of documents required to be produced was clearly defined, and in a narrow compass as follows: Any and all records or document/s including but not limited to correspondence, notes, letters, faxes, emails, records of telephone calls, information, notices, advice (including legal advice) or alike from any and all parties whatsoever, relating to whether a Notional Agreement Preserving a State Award, namely the Clerical and Administrative Employees (State) Award, applied or should have applied to call centre operators in the workplace of Well Done Group Pty Ltd at 32 Browns Road Nowra, New South Wales, during the period 27 March 2006 to 31 December 2009 inclusive. 67 On 20 July 2010 the FWO received a letter from Quincolli and Mrs Potter advising that the notice would not be complied with. On 21 July 2010 a further letter was received from the respondents describing the reasons for non-compliance. The primary judge summarised those reasons at [78] of the first decision as follows: Those reasons, in summary, were that the request was onerous, the documents sought did not exist in "written form", all relevant documents had already been provided, nothing further would alter the course that the Fair Work Ombudsman had embarked upon, the company would not be able to pay any penalty imposed and that the complaint and investigation had damaged the reputation of Mr and Mrs Potter and was vindictive. 68 His Honour found that the documents of the kind required to be produced by the notice were in the possession of Quincolli at the time the notice was served and that Quincolli failed without reasonable excuse to produce any records or documents. At [82] of the first decision, his Honour said: Quincolli was uncooperative in the investigation by the Fair Work Ombudsman and did its best to frustrate the investigation, both by challenging the conduct of it and withholding information that would assist it. 69 Before this Court, Mrs Potter reiterated that Quincolli was only a small company and neither she nor the other director of the company, namely her husband Mr Potter, had the time or resources to comply with the notice to produce. 70 What constitutes a reasonable excuse in failing to comply with a notice to produce will depend upon the objects and purposes of the relevant statute and the factual circumstances of the case: Fair Work Ombudsman v Nerd Group Australia Pty Ltd (No 2) (2012) 262 FLR 315 ('Nerd Group') at [99]. In Nerd Group, Lucev FM, as his Honour then was, also considered a failure to comply with a notice to produce under the FW Act. At [118], his Honour highlighted the importance of the FWO's ability to issue a notice to produce: It is clear that, subject to any reasonable excuse, Parliament intended that the FW Ombudsman be able to require a person, particularly an employer, to produce documents and records, for without them the FW Ombudsman may not be able to properly fulfil the statutory remit to ensure compliance with guaranteed minimum standards by means of inquiry, investigation and the commencing of court proceedings. It is, therefore, abundantly clear that the requirement to produce records or documents is critical to the effectiveness of the means of ensuring one of the FW Act's most important objects. 71 It is difficult to reconcile some of the excuses put forward by Mrs Potter. On one hand, she submits that the notice to produce was 'over onerous' and that Quincolli did not have the 'financial or manpower resources' to comply with the request. On the other hand, Mrs Potter stated in her letter of 21 July 2010 that 'virtually none of the documentation' that the FWO requested existed, and that she assumed that all relevant documents were already in the possession of the FWO. More importantly, Mrs Potter conceded in cross-examination in the court below that she had done very little, if any, relevant searches to determine whether Quincolli was in possession of documents within the scope of the notice to produce. 72 It was for Quincolli and Mrs Potter to establish that there was a reasonable excuse for failing to comply with the notice to produce. The reasons they proffered were by and large unsubstantiated and inadequate. This is especially so in light of the fact that Mrs Potter did not expend much, if any, effort in searching for relevant documents because she believed the notice to be too onerous. Rather than simply refuse to comply with the notice to produce, the more prudent course would have been to seek to set it aside. 73 The primary judge was correct to reject the argument that Mrs Potter and her husband were too busy and under resourced to look through the records of Quincolli. This ground of appeal must be rejected.

Ground 6: Accessorial liability of Mrs Potter 74 The primary judge determined in his first decision that Mrs Potter was involved during the relevant period in the contraventions of Quincolli in relation to both the underpayment of the Employees ('the underpayment contraventions') and the failure to comply with the notice to produce. Mrs Potter only sought to challenge the finding that she was involved in the underpayment contraventions. 75 Both s 728 of the WR Act and s 550 of the FW Act provide that a person is involved in the contravention of a civil remedy if the person has either: a) aided, abetted, counselled or procured the contravention; b) induced the contravention, whether by threats or promises or otherwise; c) been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or d) conspired with others to effect the contravention. 76 At [69] of the first decision, the primary judge outlined the facts upon which he found Mrs Potter to be involved in the underpayment contraventions. Those facts were that Mrs Potter: a) was a director and sole secretary of Quincolli during the relevant period; b) had the active day to day management and control of the Employees; c) was the person responsible for determining and setting wage rates and conditions for the Employees; d) was aware that the Employees were required to be covered by an award or agreement, considered the application of the Clerical NAPSA in October 2006 and formed the view that it did not apply to the Employees; e) engaged in a consultation process with the Employees during the period August 2006 to January 2007 regarding the creation of workplace agreements; f) was the person responsible for allegedly forwarding 16 AWAs to the OEA on 8 February 2007 and 27 March 2007; g) failed to follow up the lodgment of the workplace agreements even though no reply or receipt was ever received from the OEA and advised the FWO more than two years later that "[w]e just assumed they had been properly processed"; h) was aware that Quincolli had unregistered agreements and contacted the Australian Industry Group on 8 July 2009 to seek advice; i) contacted the Workplace Authority on 22 July 2009 seeking advice as to the correct industrial instrument covering the Employee; and j) was first advised by the Fair Work Ombudsman on 16 October 2009 and on a number of occasions after that date, that the Clerical NAPSA applied to the Employees. 77 His Honour then stated at [70]: Mrs Potter attempted to present herself under cross-examination as confused, inexperienced in industrial matters and as a victim of a maliciously inspired investigation. She was, however, not an impressive or reliable witness in relation to the workplace agreements allegedly put in place. She did impress me as a very experienced, astute and hard nosed businessperson with an impressive grasp of her own business. She made deliberate and conscious decisions as to the payment of the Employees that would benefit the business. She sought advice as to the liabilities of the business and attempted (albeit ineffectually) to contract out of any award coverage. She was determined and tenacious in resisting the investigation of the Fair Work Ombudsman when she realised it posed a threat to the arrangements she had sought to put in place to minimise the labour costs of the business. 78 Mrs Potter claims that there is very little evidence to support the conclusions that the primary judge came to, and that the submission of the FWO that Mrs Potter 'wilfully closed her eyes' to the coverage of the Clerical NAPSA was 'nonsense'. 79 To be 'knowingly concerned' in a contravention, the alleged accessory must have actual knowledge of the essential facts that constitute the contravention: Yorke v Lucas (1985) 158 CLR 661 at 670. The difficulty in the present case is whether Mrs Potter was required to have actual knowledge of, or be wilfully blind to, the fact that Clerical NAPSA applied to the Employees. 80 The primary submission of the FWO is that Mrs Potter did not need to know that the Clerical NAPSA applied; rather, the only essential fact was that the Employees were not remunerated at the rate set under the provisions of the Clerical NAPSA. This is said to be because it is not necessary that an accessory know that an offence has been committed: Giorgianni v The Queen (1985) 156 CLR 473 at 506. 81 Knowledge that the Clerical NAPSA applied to the Employees is not identical to knowledge that a failure to pay the Employees in accordance with the Clerical NAPSA constitutes a breach of a civil remedy provision, although it is undeniable that the difference is a small one. The Court finds that, to be an accessory to the underpayment contraventions, Mrs Potter must have known the Clerical NAPSA applied to the Employees. It is not difficult to imagine a situation in which directors of a company honestly but mistakenly arrange for the company's employees to be paid under an incorrect award. There would be no doubt that the company had underpaid its employees, and by virtue of that fact, contravened the FW Act. If the position were as the FWO submits however, the directors would be liable as accessories to those contraventions simply because they knew how much the employees were being paid and because they had knowledge of the existence of the applicable award, even though they honestly believed that such award did not apply. 82 The FWO's alternative submission is that Mrs Potter was, at least from July 2009, wilfully blind to the fact that the Clerical NAPSA applied to the Employees. For a person to be liable as an accessory to a contravention on the basis that they are wilfully blind to a certain fact, it still must be shown, albeit by inference, that the person had actual knowledge of such fact. As was stated extra-curially by Dawson J in 'Recent Common Law Developments in Criminal Law', in (1991) 15 Crim LJ 5 at 15, and cited with approval by Burchett J in Richardson & Wrench (Holdings) Pty Ltd v Ligon No 174 Pty Ltd (1994) 123 ALR 681 at 694: … whilst knowledge as an ingredient of an offence may be established by inference, it must be established as a fact. If the term "wilful blindness" is used merely as a shorthand expression to indicate circumstances which warrant the drawing of the necessary inference, then it is acceptable. But it is unacceptable if it is used as a basis for imputing knowledge where actual knowledge is not proved. 83 The inference that Mrs Potter knew that the Clerical NAPSA applied to the Employees is clearly established from July 2009 onwards. Quincolli was a member of the Australian Industry Group ('AIG'), and the evidence shows that a series of conversations occurred between the two bodies. The first conversation occurred on 8 July 2009. AIG records reveal that advice was provided to Mrs Potter by an AIG operator, namely Mr Witty, in relation to a claim by disgruntled employees alleging the underpayment of wages over the course of 96 minutes. Notes were made, including the following: We have had our own workplace agreement. The last one was never registered. Advised should be paid under the award. 84 Further relevant conversations between AIG operators and Quincolli employees took place on 9, 10 and 14 July 2009. The following notes, inter alia, were made by the AIG operators in relation to the conversations: a) 'Clerical and admin NSW forwarded payscale [sic] to …@welldone.com.au'; and b) 'Apply NSW 14.51… apply NSW Clerical NAPSA'; and c) 'nsw clerical napsa casusals get 1/12th hol pay added onto casual rate'. 85 In cross-examination before the primary judge the following exchange took place: COUNSEL: What I want to suggest to you, Ms Potter, is that you told Mr Witty that you had your own workplace agreement? MRS POTTER: Yes. COUNSEL: And the last one was never registered? MRS POTTER: It seems so. COUNSEL: And Mr Witty advised you that the call centre operators should be paid under the award? MRS POTTER: Yes. COUNSEL: And when Mr Witty told you that the call centre operators should be paid under the award, you understood, didn't you, that it was a reference to the Clerical NAPSA? MRS POTTER: No. This is a purely a phone in. This is not a legal line. This is not a detailed advice line. This is purely a phone in to the AIG. 86 Although Mrs Potter was not a participant in each of the conversations with the AIG referred to, it is evident that she was provided with advice that the Clerical NAPSA applied to the Employees. 87 The only evidence relating to Mrs Potter's knowledge of the Clerical NAPSA prior to 8 July 2009 however is referred to in an interview of Mrs Potter conducted by Mr Lang on 25 March 2010. When asked when and how it was decided that Quincolli would attempt to engage its employees under AWAs, Mrs Potter replied: … I couldn't tell you the exact dates, but somewhere around October 2006. We understood that we needed to go under an award or have an agreement of some sort for our staff so that we could formalise the payment process. And my then supervisor and I did a lot of research and particularly looked at the New South Wales NAPSA and what other options were available. And we decided that the NAPSA bore no resemblance to the work that we performed. … We decided that the NAPSA bore no resemblance to the work that we performed and therefore we were eligible to and should create a collective agreement. We did ask advice of the Fair Work Authority I think it was, and the Local Chamber of Commerce, anyone we could find, I have to say that all our dealings with government departments have been circuitous and we have never been given a clear guideline… 88 As is referred to at [76 d)] above, the primary judge, in finding Mrs Potter to be an accessory to the underpayment contraventions, relied on this interview as evidence that she had considered the Clerical NAPSA in October 2006 and formed the view that it did not apply to the Employees. However, this falls short of the requirement that Mrs Potter be shown to have had actual knowledge at that time that the Clerical NAPSA applied to the Employees. The FWO did not submit otherwise on appeal. 89 It follows that, on the evidence, it can only be proven that Mrs Potter was accessorily liable for the underpayment contraventions from 8 July 2009 onwards. As the primary judge found Mrs Potter to be involved in such contraventions for the entire relevant period, this ground of appeal is successful in part. Orders and declarations will be made accordingly.

FURTHER ISSUE 90 As referred to above at [8], Yates J granted a stay on 28 February 2013 of the orders made in connection with the third decision: Quincolli Pty Ltd v Fair Work Ombudsman [2013] FCA 321. The orders of his Honour stated in full: 1. Orders 1-39 inclusive (in respect of the first appellant) and orders 40-45 inclusive (in respect of the second appellant) made by the Federal Magistrates Court of Australia in proceeding no SYG1898 of 2010 on 18 February 2013 be stayed pending the final determination of the appellants' appeal, on condition that the first appellant pays into court the sum of $20,762 on or before 19 April 2013. 2. Within 3 days of the sum being paid into court, the Registrar notify each party in writing that the sum has been received. 3. The stay take effect on and from the date that the said sum is paid into court. 4. Subject to further or other order, the said sum be paid into the Litigants' Fund pursuant to r 2.42(1)(b) of the Federal Court Rules 2011. 91 An order was sought at the hearing of the appeal that, provided that the findings in relation to the liability of Quincolli were not disturbed, the sum of approximately $20,000 be released to the FWO. The Court raised the issue of whether the liquidator of Quincolli would need to be given notice of the proposed release of the funds and an opportunity to oppose such release. Mrs Potter subsequently advised the Court that the sum had been paid out of her personal money as Quincolli did not have the requisite funds. 92 These issues were not raised until the end of the closing submissions before this Court and they have not been expanded upon since that time. It is a matter for the parties to apply to the Court should they seek orders in respect of the sum paid into the Court. If no such application is made within 28 days of the date of this judgment, the sum will be released to the liquidator of Quincolli. This is on the basis that the orders of Yates J required the sum to be paid into the Court by Quincolli. The submission of Mrs Potter that the sum was paid from her personal funds is, at this stage, an unsubstantiated assertion from the Bar table. I certify that the preceding ninety-two (92) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Cowdroy.