Workers Compensation Nominal Insurer v Jamal

The issues

1. The issues raised may be summarised as follows: 1. Ms Jamal submits she is not liable to reimburse the plaintiff as the now-deregistered company was an "exempt employer" under s 155AA of the Act and further that she is not a "culpable director" as defined in s 145A(5). She further submits that she was not in a position to influence the conduct of the company in relation to the contravention. 2. Alternatively, due to inadequacies in the notices issued to the company, Ms Jamal submits that extent of the company's liability (and thus her own) under s 145 is limited to $103,771.29. 3. The plaintiff, which seeks payment in full of the sum claimed, challenges the defences raised, not only in terms of fact-finding, but also on the basis that the District Court of New South Wales does not have jurisdiction to hear arguments as to "exempt employer" and "culpable director".
2. Although the issue of jurisdiction is one which the court should always determine at the earliest possible opportunity, it is helpful to set out the relevant factual material first.

The evidence of the parties

1. The plaintiff relied upon the following affidavits: 1. Affidavit of Michael Butcher of 23 April 2021 (CB: 35 - 37) and of Michael Butcher of 6 August 2021 (CB: 88 - 95), who was cross-examined at T 26 - 38; and 2. Affidavit of Cyndii Josephine Vincent of 11 August 2021 (CB: 96 - 282), who was cross-examined at T 40 - 47).
2. These documents include a statement made by the defendant on 1 April 2015 as well as two statements made by her brother, Mr Richerdson. There is no statement from their mother. (As to the admissibility of these documents I note the observations of Basten JA (sitting as Basten J, in an appeal from the Local Court) in Savoy v Insurance and Care NSW [2020] NSWSC 133.)
3. The defendant relied upon the following affidavits and evidence: 1. Affidavit of the defendant, Ms Noora Jamal (CB: 283 - 290; T 70 - 85); and 2. Affidavit of Mark Richerdson (CB: 291 - 297, plus exhibits at pp 298 - 464; T 50 - 68).
4. Issues of credit, particularly in relation to the cross examination of the defendant's witnesses, were of significance. I note: 1. The plaintiff asks me to draw inferences as to the defendant's failure to produce a book recording amounts of money taken from the till as well as items of stock (Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389) and to call family members who worked in the shop (notably Mr Derbas, who worked there seven days a week (Jones v Dunkel (1959) 101 CLR 298), namely that the production of these records and calling of these witnesses would not have assisted the defendant. 2. The plaintiff asks me to make findings that the defendant is not a witness of credit and, in particular, that she not only knew of the need for workers compensation insurance but also was aware of a deliberate strategy by the company not to have it (submissions, 8 November 2021, paragraphs 44 - 52). The plaintiff asks me to make similar findings in relation to Mr Richerdson (at paragraphs 53 - 55).

The evidence of Ms Jamal

1. Ms Jamal responded to a number of questions by stating that she did not remember the relevant events, in part because many of the relevant events occurred in 2014 and in part because of her lack of business acumen. As to the first of these explanations, the statement that she made in April 2015 (CB: 268 - 270) may be a more reliable guide as to the events in question, as she herself acknowledged (T 73), so it is helpful to start by noting the contents of this statement.
2. Ms Jamal states, in paragraph 6 of this statement, that she had "very little knowledge of the business" and had consulted her brother (whom she described as "the company manager") as well as "the documents in his possession for many of the answers to questions put to me in this statement".
3. Ms Jamal set out the following details about the grocery business operating from her mother's home: "Al Maamoun and Co Pty Ltd has a Mediterranean grocery business at 91 Park St, Auburn NSW. The shop opens at 6am and close at midnight, seven days per week. The following people regularly serve in the shop. They are Mark Richerdson, Abir Jamal, Maamoun Derbas and my other brother Adam Richerdson. Maamoun Derbas is the main person that serves behind the counter. Maamoun generally works 7 days per week and he works all different hours. The shop pays his expenses. He would take the expenses out of the till and that money is recorded in a book kept in the shop. That book is given to the accountant. I cannot give a figure of how much that is. Maamoun is the main person that takes money from the business. Other persons will take money as needed for minor expenses if required and if possible and family may take stock from the shop as food as required."
4. Ms Jamal described the circumstances of employment of Mr Jamal as follows: "11 Al Maamoun had opened a store at 50 Spring St, Bondi Junction and we intended to make it into a viable business. It was previously another retail outlet and we gutted and refitted it and prepared it for opening. We employed Khaled Jamal to oversee the gutting and refitting. Maamoun could not leave the shop at Auburn at a moment's notice, I took no part as I had a family with children to run. Mark was busy with his business dealings and my mother has other business to do so there was no one to go and open up the shop for tradesman and assist in other tasks such as selecting tiles and store fittings and the other tasks to set up the business for opening. 12 I think we intended to employ him for a month. At the time of the accident there was about a week to 2 week's work left to fit out the shop. It was intended that after the shop was fitted out then Khaled's job would cease and we could source staff from my mother's Bondi store. We acquired the store in March and we got out by September. Mark finished off fitting out the shop and we opened it but it was no [sic] viable so we closed again. 14 Khaled commenced working with us on 15 March 2014 and ceased on the day of injury which was 7 April 2014. He was paid $1156 gross per week from 15 March to 13 April which is a total figure of $4624. He was employed as a causal employee. The hours per week that Khaled was expected to work were open. He was working as required. It was expected that his employment would cease after the fitting out of the shop."
5. The cut-off for "exempt" status is $7,500. Ms Jamal was asked about how she knew the total amount of wages payable would be not more than $7500, to which she replied as follows: "15 I have been asked why as at 7 April 2014 did I believe that the total amount of ways payable by Al Maamoun & Co Pty Ltd during the 2013/2014 financial year would not be more than $7,500. I had no idea about that. I did not have the business experience."
6. Ms Jamal set out her knowledge of the injury Mr Jamal suffered and of the absence of workers compensation insurance as follows: "9 I am aware that Khaled Jamal was injured while at work on 7 April 2014. Khaled Jamal is a relative. We did not have any workers compensation insurance at the time of Khaled's accident as we did not have any paid employees until he started with us."
7. Ms Jamal's statement has very little information about the part she played in the shop business generally. Ms Jamal's affidavit of 17 June 2021 is similarly brief in terms of content. She sets out in paragraph 8 that she had the following discussion with her brother about becoming a director: "In or about October 2013, I had a discussion with Mark to the following effect: Mark: I need you to be the director of Al Maamoun & Co. It will make it easier for Al Maamoun & Co to obtain finance. You won't need to do anything, I will manage it. I will make arrangements with the tax agent to lodge the necessary documents. I: OK."
8. Ms Jamal said that following this appointment "I do not recall signing any documents concerning my appointment, and in particular do not recall executing a consent to act as a director" (paragraph 9). She states that she never had any involvement in the business of the company nor in its day-to-day operations. She never carried out the tasks of a director and was a director in name only (paragraph 10). In particular, she states that she was not aware that the company employed any employees, including her cousin Khaled Jamal, the worker who was injured. She goes on to state: "13 In circumstances where, as at 7 April 2014, I was not aware that Al Maamoun & Co employed any person, I was not aware that Al Maamoun & Co was required to hold a workers compensation insurance policy nor that it did not hold any such policy and, accordingly, I was never aware of any contravention by Al Maamoun & Co. 14 I did not receive any correspondence regarding Al Maamoun & Co, including that sent by the Workers Compensation Nominal Insurer. I was not aware of any notices having been issued by the Workers Compensation Nominal Insurer, I was not contact by the Workers Compensation Nominal Insurer and I have never spoken with [Cyndii] Vincent. "
9. This is one of a series of denials made by Ms Jamal which were contrary to documentary evidence.
10. In all her answers in cross-examination, Ms Jamal was emphatic about her asserted lack of knowledge of business affairs employment experience prior to becoming a company director. What she doing instead of working in the shop or family company business was, however, unclear. In her April 2015 statement, she said that she had "a family with children to run"; she told the court that she was on unemployment benefits "before" she became a director of the company (T 79). However, in response to questioning about her work history, she then acknowledged that she had been working as a clerk in an accounting office "off the books" (T 80) 2 to 3 days a week before being appointed a director of the company.
11. Although admitting to a form of employment prior to being a company director, Ms Jamal stressed the very simple nature of the work she performed. She said that the owner of the accounting business was "a family friend of ours" who knew that she needed part-time work because she had two young children at the time, so he offered her a position "just to help with filing and then invoice entries or two, three days a week for three hours each day" (T 80). It is unclear when or for how long Ms Jamal filled this position, and what her source of income was between ceasing that job and commencing her current employment (in about 2018 or 2019) as an administrator in an office (T 79). She claimed no knowledge of business or office procedures besides entering data ("simple stuff") for the accountant's own MYOB. She said she had no training and expressly denied doing any work to enter client information.
12. Mr Price submits, and I agree, that it is beyond credibility that a small accounting practice was reliant upon, or would pay, an untrained person carrying out such simple tasks as entering telephone, electricity and gas bills onto MYOB at all, let alone for up to nine hours a week (submissions, paragraph 49). In addition, I regard filling out MYOB, using computer software and working in a professional office such as an accountancy firm to be evidence that Ms Jamal had office skills and knowledge which were significant. I am satisfied that this is one of a series of occasions when Ms Jamal was being less than frank about her actual business skills, knowledge and employment history.
13. Two aspects of her work history are particularly of relevance. The first is that she acknowledges being paid by the accountancy firm "off the books", which indicates her awareness of the nature of employment and payment of wages. She would also have been well aware, in those circumstances, that the persons working in the store behind her mother's home would have been working in circumstances where the decision not to pay them a salary was a deliberate one. The second is that she was carrying out computer entry work for two to three days a week in the accountant's office. She was not performing menial work such as cleaning, or helping at the school tuck shop. She was using a computer to make data entries of the kind appropriate for accurate accounting records. Her claim of lack of business, accounting and wage/salary matters is implausible.
14. Ms Jamal was similarly vague about where she lived. Ordinarily that would be a trifling matter, but the location of the shop (being part of the premises in which her mother and brother lived) and the fact of its staffing entirely by family members, this is a significant issue. While the plaintiff claimed that she was not living with her mother behind the shop premises in 2013 - 2014 (T 77), it was unclear who she was living with, where, or when. For example, she denied ever having lived at 35 Byrnes Street (T 77) although she had signed documents as a director which gave this address (T 79). She refers to having two small children, and gives this as the reason why she could only work part time when she was helping out two to three days a week at the accounting firm, but provides no clearer picture of where she was living and with whom.
15. Ms Jamal's answers on most topics followed a pattern of blanket denial, followed by at best grudging acknowledgement, when confronted with conflicting documentary evidence or, on occasion, apology for what she called a mistake in her evidence. For example, she initially claimed that she had "absolutely no idea of what I was doing" in relation to the shop or the company, that she had "no involvement in anything at all" (T 71) and that she did not know who worked in the shop except for Mr Maamoun Derbas (T 72). She subsequently conceded that she knew her mother and her brother Mr Richerdson worked in the shop (T 72) and eventually agreed that she had worked in the shop as well, although minimising her role to standing in while Mr Derbas went to the bathroom and similar emergencies.
16. Ms Jamal was similarly evasive when asked about the practice of permitting family members working in the shop to take stock or money from the till: "Q. I suggest to you that there was a practice that the company allowed whoever was working in the shop to take money from the till. A. If so, I really do not remember. Q. I suggest to you that you told an investigator in 2015 that that was the practice of the company. Do you recall? A. If you've got it in writing, then obviously I have, but as to recollect now, I really don't remember. Q. It was also the practice, I suggest, that whoever was working could also take stock from the shop or grocery items if they needed them. That's correct too, isn't it? A. Probably. Q. What occurred, I suggest, is that there was a book kept in the shop that recorded what was taken from the till and what stock and grocery items were taken by people who were working in the shop. That's right, isn't it? A. I do remember they had a book that was next to the cash register and they took the stock list on what they needed in it. Q. I suggest to you that not only that but they also recorded - when I say, "They", I mean the people working in the shop would record in that book what money they'd taken from the till and what grocery items they'd taken from the shop. Do you agree with that? A. Maybe. Q. You don't deny that, do you? A. Well, I, I don't know exactly how - this is so many years ago. Q. You understand that you've been sued, don't you? A. Yes, I do. Q. I suggest to you that you've been asked to try to remember as much of what went on as you can. That's right, isn't it? A. Correct. Q. I suggest to you that you will have given great through to what went on in 2014, have you not? A. I'm sorry. In operating out the store itself, I really don't know much about it." (T 73 lines 8 - 46)
17. Ms Jamal's description of her knowledge (or, as she claimed, her lack of knowledge) of the employment of Mr Khaled Jamal and whether she knew there was no workers compensation insurance followed a similar pattern. She was asked about what she told the investigator in April 2015 about Mr Khaled Jamal's employment and subsequent injury, and whether or not she knew there was workers compensation insurance. She agreed that the information set out in that statement was correct and was then asked: "Q. So you were aware, weren't you, that Khalid Jamal had been injured whilst he was working for the company on 7 April 2014? A. Yes. Q. You knew at that time that the company did not have any workers compensation insurance, didn't you? A. Yes I think so. " (T 81 lines 34 - 40)
18. Mr Price then asked: "Q. I suggest that it was around or shortly after 7 April 2014 that you were aware that Mr Jamal was injured at work. Is that correct? A. Yes I was aware he was injured at work. Q. I suggest to you that you were also aware at that time that the company didn't have workers compensation insurance? A. At the time the injury occurred, no. Q. When you say "no", does that mean you were aware that the company didn't have insurance or you were not aware that the company didn't have insurance? A. I was not aware of anything in regards to insurance at the time when he got his injury. Q. When do you say that you became aware that the company didn't have workers compensation insurance? A. I'm not quite sure but it would've been a few months after the injury or a few weeks after the injury. I'm not really certain. Q. So there's no reason that you couldn't have asked your brother, this is about the time of the injury, whether the company had workers compensation insurance, is there? A. Well I really don't know how businesses operate in order to ask whether there was workers compensation insurance or not. Q. You knew though that any questions you had, you could have asked your brother about this, didn't you? A. If I had any questions, but I've never run a business before. I wouldn't know what things needed to be, to be known. Q. I suggest to you that you're assertion that you didn't become aware of the lack of workers compensation insurance until weeks later is not true. What do you say to that? A. I'm sorry I'm not sure. HER HONOUR Q. Well what do you mean by "I'm not sure"? Do you mean you're not sure how to answer the question or do you mean you're not sure whether it's true or not? A. I don't understand what the question is. Q. Well what's being put to you is that when you said that you didn't know that there was no workers compensation insurance at the time of the accident, that you're telling a lie, that you did know. So do you agree or disagree? A. I'm not quite - I really don't remember. PRICE Q. The fact is you knew at the time Khalid Jamal was injured exactly what was going on in this business, didn't you? A. No I didn't. Q. I suggest to you that it is plain that you knew what was going on because you could give Mr Lees this information when he took the statement from you in 2015. That's correct, isn't it? A. Is this the statement we're referring to that was yesterday's one?" (T 82 lines 10 - T 83 line 16)
19. Ms Jamal was taken to paragraph 13 of the statement and was asked: "Q. That makes it plain, doesn't it, that the information after paragraphs 13 you obtained from your brother, doesn't it? A. Correct. Q. I suggest to you that the information before paragraph 13 comes from your own knowledge and information. A. Of what I knew was happening in the shop itself. Q. So when you say you really didn't know anything, that's not true is it? A. My brother lived behind the shop at the time and I used to visit frequently. Besides what was put in front of me, no, I did not know. Q. I suggest to you that what is occurring here is that you are simply saying that you didn't know in order to try to avoid personal liability now. A. No I'm not. If you refer to the statement part number 10, part 10 of the statement itself, everything in that paragraph alone is what I had known at the time through Mahmoud himself. Q. I suggest to you that this statement that you made to Greg Lees in April of 2015 is an accurate statement of what you knew-- A. Of what I knew of the shop at the time, correct. Q. I suggest to you that you knew at the time Mr Jamal was injured the company did not have workers compensation insurance. A. At the time Khalid was injured I, I, I'm not quite sure if I did or I didn't, I really can't remember but I didn't know there was such a thing as workers comp back then. I've never operated a business before." (T 83 line 32 to T 84 line 8)
20. The same is the case in relation to Ms Jamal's conversations with Ms Vincent. She denied in her affidavit having been contacted by the plaintiff or its employee Ms Vincent, and, when confronted with the evidence that she had not only been contacted by Ms Vincent but sent her what she conceded were "an email or two in response" (T 84), said "I do apologise for that mistake". What those documents demonstrate is that, contrary to her claim of total lack of business experience and knowledge of the company, Ms Jamal was providing information and assistance to Ms Vincent and others on a regular basis. She may have been consulting her brother, but she was still well aware of the nature of the problem, effectively from the date of the accident, as this was the date on which her brother contacted Allianz about the company not having insurance on the basis that it was exempt.
21. Another feature of Ms Jamal's evidence was her repeated claim to be unable to remember. As the above extracts show, Ms Jamal's evidence was replete with such assertions. When she was taken to documents which showed inconsistency, she refused to make concessions, preferring grudging claims of "probably" or "maybe" (T 73).
22. Ms Jamal's evidence was unsatisfactory on every topic. I can have no confidence in her reliability as a witness. I do not accept her evidence other than where it is an admission against interest or otherwise corroborated by independent objective evidence. In particular, I do not accept her denials of knowledge about the circumstances of Mr Khaled Jamal's injury and the problems arising because the company had no workers insurance policy at the time. I am satisfied that, as her statement of April 2015 confirms, she knew of these matters at the time of Mr Jamal's accident and that she assisted her brother in his correspondence and dealings with Allianz and the plaintiff.

The evidence of Mr Richerdson

1. Despite his different surname, Mr Richerdson is the defendant Ms Jamal's brother. At all relevant times he was living with his mother in the premises behind the shop and conducting a business which consisted of a series of small shops such as the business for which the company of which his sister was a director had been created.
2. Mr Richerdsen's evidence was that he asked his sister to be a director of the company because he thought it would be easier for the company to obtain finance than would be the case if another family member was a director (T 52). The reasons for his asking her to become a director are themselves suggestive of a lack of honesty. Mr Price asked: "Q. So is it correct to say that you were prepared to mislead possible financiers by letting them think that your sister ran the company? A. No, that is not correct. Q. Why is that not correct? A. Because Maamoun [sic] had a bad credit rating but it was the company itself that was paying the bills. It wasn't an individual. So the finance was going to be by the company ..(not transcribable).. Q. Why weren't you made the director on the ASIC records? A. Because I had so many other company at the time and I didn't want to be. It was hard for me. Q. I suggest to you that it was a desire on your part to potentially mislead possible financiers by letting them think that your sister was running the company because she was the named director of the company; what do you say to that? A. In my opinion that is incorrect." (T 52 lines 9 - 26)
3. The manner in which Mr Richerdson and Ms Jamal conducted their correspondence with the Ms Vincent confirms that Ms Jamal was playing an active role. She was the person who lodged the notification (CB: 178) and she had a telephone conversation with Ms Vincent on 3 July 2014 about wage payment details and providing the information that the "entity had low wages in total for last FY" (CB: 178). Ms Jamal asked Ms Vincent to send emails to accounts@almamoun.com "for sending email to Melissa [i.e. Ms Jamal]". This email address (with an additional "au" at the end) is in fact the one used on the Allianz form (CB: 112) where the notifier name is "Melissa Cody" and a phone number for her is provided. Although the admissibility of this record was restricted under s 136 of the Evidence Act 1995 (NSW) following challenge, I am satisfied, from Ms Vincent's notes of her conversation with Ms Jamal, that she was provided with this contact email address and other relevant contact information by Ms Jamal herself. Although Mr Richerdsen and Ms Jamal both told Ms Vincent that Ms Jamal knew nothing about company matters (see the diary entries at CB 164 - 166), I am satisfied that this was not the case.
4. Mr Richerdson gave evasive answers to questions about family members working in the shop taking money from the till: "Q. Your evidence as I understand it is that none of the people who worked in the shop were paid cash wages or salary, is that correct? A. Absolutely not. Q. But despite that it was the practice of the company to allow the people working in the shop to take money from the till, that's correct, isn't it? A. Well I think rephrase that please." (T 54 lines 23 - 29)
5. He went on to add, somewhat implausibly, that "there was never any money to take" (T 54), although Ms Jamal's description of having to stand in if Mr Masmoun Derbas needed to take a toilet break (as opposed to just shutting the shop door) suggests customers were reasonably frequent.
6. Mr Richerdson was asked about a book which was kept which recorded the amount of money taken from the till. He acknowledged that there was such a book, adding that he "possibly" (T 54) may even have a copy, but did not produce it.
7. Mr Richerdson stated that the company of which his sister was a director was to be conducting business from new premises at Bondi Junction, and that Mr Khaled Jamal was employed to oversee a fitout that would last about 6 weeks (T 56), following which Mr Richerdson would step in and take over. It was put to him, however, that there was another project that had been delayed and that it was likely that he would have been unable to take over; if so, Mr Jamal's work in the Bondi Junction shop would have continued. Mr Price put to him: "Q. What was the intention of the company if the time taken to complete the fit out work took longer than six weeks? A. I, I was going to step in and take over. I was doing another project at the time in the city and, and the other project in the city was delayed, it was going to be less than six weeks, that's why I'm saying it was going to be less than that but by the time the project's finished, I was going to step in and take over. Q. I suggest to you that the real position is that if the project had run over Mr Jamal would have continued to manage it because he was the one who had the knowledge of conducting the first six weeks of the work? A. That, that is not correct. Q. What do you say to that? A. That is incorrect. The [sic] Khalid was there literally just to open the door, help the contractors, answer his phone, because I was the ..(not transcribable).. guy that does the job, I needed eyes and ears on the floor. That's all it was and he was there to assist and only assist. He's not a builder, he's not a contractor, he used to work for me in Bondi and I took him from Bondi to just be my eyes and ears on the site because I was tied up on a job in the city. I had two, I had one or two shops at the time I can't remember that I was building in Pitt Street and, and okay, the project was delayed and I had to be there." (T 56 lines 34 - T 57 line 5)
8. This is an implausible answer. The more likely scenario was that if Mr Richerdson was not available, Mr Khaled Jamal would have continued in that role. In those circumstances, the likelihood is that his employment would have continued beyond the six weeks for the fitout. Even if this was only for a period of a few weeks, that would very quickly have taken the company's salary to him to a figure of over $7,500. I note there is no employment contract with a cut-off date or anything similar. I am satisfied that all of those involved (including the defendant) would have approached Mr Khaled Jamal's employment by the company on this basis.
9. I am also satisfied that Mr Richerdsen was well aware of the cap on wages necessary to claim to be an exempt employer. Mr Richerdson acknowledged that he was aware on the day of the accident that there was an insurance issue and that he spoke to his broker about this that very day: "Q. On the day that Mr Jamal was injured after he was injured you then attempted to arrange for workers compensation insurance to be taken out, didn't you? A. I called my broker and I asked him and he told me to do that. Q. So, the answer to my question is yes you did attempt to take out workers compensation insurance after Mr Jamal was injured, correct? A. That is correct. Q. What you did I suggest was to telephone Allianz, didn't you? A. My broker telephoned Allianz. Q. Is it your evidence that your broker was the person who spoke to Allianz? A. That is correct. Q. I suggest to you that you were the person that gave the information to your broker that was provided to Allianz, do you agree with that? A. My broker had already had the information, my broker was the broker for all of my entities including this one. And he was the one that advised me about the employee exemption or I would have taken out the policy in the first place." (T 57 line 7 - 26)
10. Mr Richerdson is saying that he had already had a conversation with his insurance broker about this very topic, namely how to pay a salary without needing also to pay for workers compensation insurance. Attempting to tailor company salaries in order to avoid paying workers compensation insurance does not amount to reasonable grounds for believing that the total of wages payable for the financial year will not be more than $7,500.
11. However, conformably with what was put to him by Mr Price at T 57, a different version of these events was given by Mr Richerdson to Ms Vincent: "pc from ER Mark Richerdson. Initial contacts undertaken. Summary as follows: - ER is setting up new business which has only recently started trading - IW had worked for a previous company and was first recruit and was assisting with the set up - IW had only worked 2 weeks at the point the injury occurred - ER was present when the injury occurred and immediately phoned his financial advisor who told him to "take out a policy immediately then see where things fall" - Policy taken out with Allianz - ER has been upfront with Allianz Case Manager about the timing of the policy - ER had to keep chasing Allianz Case manager re status and when IW was going to receive any payments, three months post injury and IW still hasn't received anything - has received CO emails and phone messages and will have payslips for IW sent through tomorrow morning - will also send wages for all workers in last FY ending 30 June 2014 as requested by Co and advised it isn't much as IW only worked 2 weeks and only other workers are ER and Melissa Cody, both of whom worked without pay for the set up of the new business." [CB: 178].
12. This account corroborates the line of questioning put by Mr Price to Mr Richerdson at T 57, namely that he rang his broker and took out the policy on that basis.
13. This account is also notable for its exclusion of Mr Derbas's employment 7 days a week from 6 am to midnight and the role of Mr Richerdson and Ms Jamal's mother. It was put to Mr Richerdson that Mr Khaled Jamal was in fact one of four employees who were "on the books", which he denied, saying: "Q. That you have four unpaid employees and they're current people working and myself, Melissa Cody, Maamoun Derbas and Abir Jamal, so I again suggest to you that at the date of this injury it is entirely correct to say that there were four employees on the books for the company? A. Mr Cox called them employees, I call them family members. He told me that it was the same thing and that he said it was employees so he wrote it, I signed it. I'm not lying to you and I've never lied to him, it was his interpretation of family members. So I apologise if there's a misunderstanding." (T 58 lines 5 - 12)
14. Mr Richerdson acknowledged, in his statement of 16 April 2015, that Al Maamoun & Co Pty Ltd was "a family business" (CB: 261). He described himself as the "Operations Manager" and founder of the business and says that, while he put in "the majority part" of the money, his sister (Ms Jamal) and Mr Derbas "also put in some money" and that "we" named Mr Derbas as the initial director at the time (CB: 261). He states that Ms Jamal did not participate in the business but "does paperwork sometimes when required" and notes that their mother owns "all the shares" (CB: 261). However, he acknowledged, at paragraph 13 of his statement (CB: 261), that his sister also helped in the shop: "On the books for Al Maamoun, we have 4 unpaid employees. The current people working are myself, Melissa Cody [i.e. Ms Jamal, his sister], Maamoun Derbas and Abir Jamal. We are a family business and we all help."
15. It is clear from the documentation attached to Ms Vincent's affidavit that Ms Jamal was the point of contact, in terms of being the employer, in relation to the inquiries made by the plaintiff and Allianz following the accident. It was put to Mr Richerdson that the notification to Allianz gave the name of the contact person as being Melissa Cody, this being a name used by Ms Jamal: "Q. There is no doubt that the notification to Allianz was made on behalf of the employer, is there? A. From my broker, I told my broker, my broker told Allianz so it is from the employer. So, yes. Q. The name of the contact for the employer was Melissa Cody, that's who Allianz was told they should get in contact with, weren't they? A. I, I don't know. I am sure the first point of contact to Allianz was myself and to WorkCover was also myself. And if they had contacted Melissa it was going to be directed to myself." (T58 lines 14 - 23)
16. Mr Richerdson was asked about the statement he provided and it was put to him that, contrary to his affidavit evidence, he was aware that WorkCover was still investigating whether the company was an exempt employer in 2015, which he denied: "Q. So, by at least 1 April 2015 you were well aware weren't you that WorkCover was still investigating the circumstances in which - I'm sorry my system has just blacked out again. I'm not sure how much-- A. ..(Not transcribable).. Q. --was missed, I'll start again. What I suggest to you is that by 1 April 2015 you were aware that WorkCover was still investigating whether or not Al Maamoun and Co Pty Ltd was an exempt employer weren't you? A. That is not the case. I, I assumed that the exempt employer philosophy has gone and we became exempt employer and they were just doing their due diligence to for people to how I'd assumed that now I probably was stupid or whatever it was but I was never explained to me that we were not going to be an exempt employer, we were going to be an exempt employer ..(not transcribable).. Q. I suggest to you that that is a false answer, what do you say to that? A. Basically that's not true. Q. It was my understanding or I suggest to you furthermore I suggest to you that you are being, that you are giving deliberately false evidence, what do you say to that? A. That is not true. Why would I do that for?" (T 60 lines 9 - 30)
17. After the content of his conversation with Ms Vincent was put to him, Mr Richerdson first acknowledged this, and then denied it, and finally said he could not recall (T 61 - 64). This included denying receipt of certificates from icare (T 63). He attempted to argue whether Mr Butcher (who had sworn an affidavit to this effect and been cross-examined, although these claims had not been put to him) had merely posted these documents, and challenged the postal address, although that address turned out to be the shop address (T 64 - 65). Mr Richerdsen's explanation for these claims, when confronted with this irrefutable evidence, was that "I was just asking did it go to the accountant or to the shop" (T 65). He agreed that he had told Ms Vincent to post documents to this address (T 65).
18. At T 65 Mr Richerdson made another attempt at denial of receipt, saying "who lives at 35 Byrnes Street, South Granville? I don't know even know [sic] who - [sic] address that is". However, this address appears at CB: 84 and was, as Mr Richerdson would eventually acknowledge, his sister's address: "Q. I suggest to you that that is an absolute lie. What do you say to that? A. What, what is the lie? My apologies. Q. The lie that you do not recognise 35 Byrnes Street, South Granville, as an address. A. I honestly don't recognise it. Why do you always - why do you keep on calling me a liar? Can you respect - like, honestly, that's so rude, Mr Price. I'm not a liar, so please don't say that." (T 66 line 1 - 9)
19. It was also the ASIC address, and Mr Richerdson eventually apologised: "Q. I suggest to you that you knew that your sister lived at 35 Byrnes Street, South Granville, and that your assertion that you do not recognise the address is deliberately false. A. I disagree. My sister lives in 52 Montrose Avenue, Fairfield. I know that address off by heart. Q. When did she move there, Mr Richerdson? A. She moved there from when she was living with us in, I don't know, way back when. HER HONOUR Q. How long ago is, "Way back when", please, Mr Richerdson? A. 35 Byrnes Street - this is a 2018 letter. So this is her now address after she left - okay, that makes sense. Sorry, I apologise. That's her address now. That's different. I'm sorry. I didn't recognise it from the old - from the past. This is her new address. I don't know her new address. My apologies, Mr Price. My apologies. PRICE Q. I suggest to you that her address at 35 Byrnes Street is not something that has recently occurred. A. It's not? I honestly-- Q. I suggest to you-- A. I, I honestly don't recognise the address 35 Byrnes Street, South Granville. I, I honestly do not recognise that address. If that's where my sister lives, I didn't know. I didn't know. I know her address at 52 Montrose Avenue, Fairfield. I know she recently moved out of her home in Fairfield because of her, her husband issues, and she's living somewhere in Granville, Merrylands. I know where she lives. I don't know the address. Q. I suggest to you that she was at that address prior to January 2017. A. I, I can't recall. I don't know addresses. I'm, I'm being - I'm being honest with you, Mr Price. I do not remember that address. If you give the Google Maps then I can have a look at it and I could probably see if that's it, but I don't know. I can't remember. And what's the sticking point with the address?" (T 66 line 36 - T 67 line 23)
20. Mr Richerdson was a truculent witness who made it clear he would not accept any proposition unless presented with evidence of it, after which he frequently then claimed to be unable to remember. This was particularly the case when he was asked questions about his sister's role in the company: "Q. To the extent that your sister became aware of company issues because of her role as director then she would have contacted you to address those issues, would she not? A. That's correct. Q. If it was an issue that she was not able to deal with then she would ask and direct you to deal with it, wouldn't she? A. There was never an issue that she could do within her own capacity. All, any issues were all directed to me. She never dealt with any issues in her own capacity without my permissions. Q. The fact is she dealt with issues in relation to the investigation of the company by the Workers Compensation Nominal Insurer, didn't she? A. The investigator contacted me himself and he asked me to organise everyone to be there whilst he investigated, so he also contacted me. Q. Could you perhaps answer my question now? The fact is, isn't it, that your sister was also involved in responding to questions in the investigation of this issue by the Workers Compensation Nominal Insurer, wasn't she? A. Can you show me where she was actually investigated by-- HER HONOUR Q. You're not here to say, "Can you show me stuff?" You're here to answer questions, all right? A. Okay." (T 50 lines 11 - 36)
21. Mr Price asked again: "Q. You know, don't you, that your sister was interviewed by an investigator who was investigating the circumstances in which Mr Jamal was injured; that's correct, isn't it? A. I honestly can't recall but if there's any way that you can show me she was investigated then I could answer that question. That's what I was-- HER HONOUR Q. It's not up to you to ask counsel to show you things-- A. Okay. Q. --so you can answer. All right, so the thing is this, do you know whether or not your sister was interviewed by the investigators? Do you know that? A. Well, I presume so, yes, but I honestly can't remember. Q. You can't remember? A. No, I, I really can't. I, I know [sic] was and I know my mother was. I'm assuming my sister was but I can't remember if she actually gave evidence or not. That's what I'm saying." (T 51 lines 6 - 24)
22. Some of the claims Mr Richerdson made are hard to credit. For example, he claimed he had not read the plaintiff's affidavits (although amending this to say he had "partially" read "a bit" (T 51). He took a combative approach to answering questions generally: "Q. Is it the case that each time I ask you a question that unless I take you to a paragraph of your affidavit you're not going to accept the proposition? A. That, that is incorrect, if I know the answer to the question I will answer. I just wanted affirmation, I just wanted to make sure that I'm not saying anything incorrectly. " (T 53 lines 36 - 40)
23. Mr Richerdson gave two statements to Mr Cox, the contents of which he attempted to resile from in his oral evidence. I am satisfied that his admissions in those statements confirm that both he and his sister were well aware that there was no workers compensation insurance. I am also satisfied that his attempts from the day of the accident to claim that the company was an exempt corporation were the result of prior consideration of loopholes in the legislation, which he then proceeded to explore, despite being aware that the company did in fact have four employees who should be on its books and that there were arrangements in place with family members for payment "off the books" (to use Ms Jamal's phrase) in lieu of taxable income. He would have been well aware that those entitlements would have well exceeded the threshold for an exempt company.
24. Mr Richerdson was an unimpressive witness. I have no confidence in the reliability of any of his evidence unless it is an admission against interest or independently corroborated by reliable evidence.

Other evidence

1. Mr Vale prepared a report (CB: 255 - 258) which is headed "Claims Assessor's Record of Assessment and Decision Form". An objection was taken to its admissibility on all issues because it essentially makes the determination that I am asked to make, and its admissibility is limited under s 136 of the Evidence Act 1995 (NSW) for that reason.
2. The limitations on admissibility for this report mean that its value is solely to corroborate the fact that there was an investigation, in order to put the statements of Mr Richerdson and Ms Jamal in context. It does clarify one issue; I note that the report states that statements were obtained from "the employer" in March 2015 on the issue of employees and wages paid and that the statements set out are those of Ms Jamal (called Melissa Cody) and Mr Richerdson. I also note his reference to an Abir Jamal, their mother, as being the fourth "employee" in the shop.
3. Mr Vale's report also refers to Mr Derbas as having initially been the working directory of Al Maamoun & Co Pty Ltd and that his role working behind the counter occurred after he ceased to be director. Mr Vale's calculation of 34 weeks of work by Mr Derbas has not been challenged or the subject of evidence to the contrary. The importance of this is that, when taking into account the amount of money paid to the injured worker, Mr Khaled Jamal, Mr Derbas would have to have been paid less than $62.72 per week from Mr Vale's report, in fact should be $62.52 per week, for the 2013/2014 financial year for working seven days a week, from 6 am to midnight, for the company to have remained below the exemption limit.

Evidence not produced to the court

1. Although Mr Richerdson told the court he "may" have had a copy of the book recording items and cash taken from the till, this book was not produced to the court. There is no suggestion that the book has been lost or mislaid or is unavailable for any other cogent reason.
2. I am satisfied that, contrary to the evidence given by Ms Jamal and Mr Richerdson, items were taken from the store by the four persons working there - themselves, their mother and Mr Derbas. I am satisfied that the contents of this book, if produced, would not have assisted the defendant.
3. The company had failed to put its financial statements for the financial year ended 30 June 2014. Again, the court is entitled to expect the defendant to have adduced evidence likely to assist her and to draw the inference that this financial statement, if produced, would not have assisted her.

Conclusions concerning the evidence

1. As the above extracts from the transcript demonstrated, Mr Price put it to both Ms Jamal and her brother that the answers they gave to his questions were lies. Both witnesses denied this. The sole concession each of them was prepared to make was, on occasion, that there had been an error for which an apology would suffice.
2. When assessing the credit of a witness, especially a witness accused of lying, a proper understanding of the chronology of events is critical. It is generally acknowledged that contemporaneous documents generally furnish the most reliable source of evidence as to what occurred or, at the very least, provide a generally reliable reference point from which to assess the reliability of witness testimony: ET-China.com International Holdings Ltd v Cheung [2021] NSWCA 24 at [25].
3. In Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [31], the High Court noted the dangers of over-refinement of demeanour in the witness box as opposed to contemporary objective evidence. This warning is particularly appropriate for proceedings conducted by AVL during the pandemic. For these reasons, my assessment of the credit of Ms Jamal and Mr Richerdson is not based upon demeanour but upon the contents of their answers to questions in cross-examination and in particular from inconsistencies with their earlier statements, answers which I am satisfied were evasive, I also take into account their baseless denials of evidence that was clearly correct, such as where Ms Jamal was living and the nature and extent of contact between them and Ms Vincent.
4. A finding against a witness's credit in relation to one, or even a number, of issues does not mean that that witness's evidence should not be accepted on all issues: ET-China.com International Holdings Ltd v Cheung at [188]. A witness may give an unsatisfactory or dishonest answer, or perform a dishonest or illegal act, and still be regarded as a witness of credit: Amalgamated Television Services Pty Ltd v Marsden [2002] NSWCA 419 [780] - [789]. However, where a witness establishes a consistent pattern of evasive and argumentative answers, the court may be entitled to regard the whole of that witness's evidence as being unreliable.
5. That is the case here. I am comfortably satisfied that, contrary to her denials, Ms Jamal had considerable business expertise, arising not only from her performance of part-time work in an accountant's office before Mr Jamal's accident, but from her active participation, with her mother and brother, in the family business of setting up and running small grocery shops. I am satisfied that this included not only in her contributing funds to the business (as Mr Richerdson acknowledged in his first statement), but also assisting in the store from time to time. I am similarly satisfied that she was aware, from her own employment "off the books" for the accountant, that persons seeking to avoid tax or other liabilities could be paid in cash or in kind, and that the book kept in the store was to permit persons working in the store, including herself. I am also comfortably satisfied that, given the fact that this was a family business in which the defendant's mother and brother were playing key roles and in which (according to Mr Richerdson's evidence) she had made a financial contribution, Ms Jamal was not only actually aware of the absence of workers compensation insurance but also in a position to influence the conduct of the corporation in relation to this contravention of the legislation. Ms Jamal and her family were all in this together.
6. Further, I am comfortably satisfied that she was well aware that the hiring of an employee included obligations if that employee suffered an injury, namely the obligation to have insurance to respond to any claim by the worker for a work injury, and that she participated with her brother in the steps he took to attempt to make a claim through Allianz and claim to be an exempt company.
7. I am also satisfied that Ms Jamal, by reason of her ongoing discussions with her brother and mother, as well as visiting the premises regularly (and, it would appear, even living with them at one time), well knew that Mr Maamoun Derbas worked in the shop seven days a week from 6 am until midnight. Indeed, this is not seriously in question. Ms Jamal asks the court to accept that Mr Derbas worked either for no wages at all, or at least no more than $21.69 per week (this being the weekly salary for 6 months to arrive at a total of $694). Mr Price points out that the award wage for a shopkeeper in 2014 was $925 per week. Whether or not Ms Jamal knew what the award wage was (and I am prepared to assume she did not), I am satisfied that she knew about paying persons "off the books" from her own experience, and that she was well aware, from her position in the family as well as in the family business, that payments in kind in the form of cash and goods were taking place.
8. By reason of these factual findings, I am satisfied that Ms Jamal knew that the company should have had workers compensation insurance and that it was not an exempt company. I am satisfied that her brother knew this as well.
9. I further note that I am satisfied that the company contravened s 155 of the Act in that Ms Jamal knew at the relevant times, as she effectively admitted in her statement, that the company did not have workers compensation insurance. Her explanation was that they did not have any such insurance "as we did not have any paid employees until he started with us" (CB: 269) is indicative of her having given consideration as to the company's liability for employees. It is, however, an explanation I do not accept, as I am satisfied that Ms Jamal was well aware that Mr Derbas (and, for that matter, Ms Jamal herself, as well as her mother and brother) could take money from the till or items from the shop in lieu of a salary for the work that they were performing.
10. The practical effect of my findings of fact are that many of the legal issues upon which I am asked to make findings, such as whether the company was "exempt employer" and the degree of knowledge necessary for a "culpable director", are relatively simple to resolve. I have nevertheless set out my findings on the legal issues the subject of submissions by the defendant.

The relevant statutory provisions

1. Section 155AA(3) of the Act provides an exception to the requirement set out in s 155(1) for compulsory insurance: "155 Compulsory insurance for employers (1) An employer (other than a self-insurer) shall obtain from a licensed insurer, and maintain in force, a policy of insurance that complies with this Division for the full amount of the employer's liability under this Act in respect of all workers employed by the employer and for an unlimited amount in respect of the employer's liability independently of this Act (but not including a liability for compensation in the nature of workers compensation arising under any Act or other law of another State, a Territory or the Commonwealth or a liability arising under the law of another country) for any injury to any such worker. Maximum penalty - 500 penalty units or imprisonment for 6 months, or both."
2. Section 155AA(1) defines an "exempt employer" as follows: "155AA Exempt employers not required to obtain policy of insurance (1) An employer is an exempt employer during a financial year while the employer has reasonable grounds for believing that the total amount of wages that will be payable by the employer during the financial year to workers employed by the employer will be not more than the exemption limit for that financial year."
3. The exemption limit is defined in s 155AA(8) as $7,500. This applies to the total wages payable by an employer in the relevant financial year, and is not an amount that must be payable to each (or any) specific employee.
4. Section 174(1) requires an employer to keep records of all wages paid. "Wages" are defined in s 174(9)(a) as follows: "174 Records relating to wages, contracts etc to be kept and supplied … (9) In this section - insurer means a licensed insurer or a former licensed insurer. wages, in relation to a worker - (a) includes salary, overtime, shift and other allowances, over-award payments, bonuses, commissions, payments to working directors (including payments as directors' fees), payments for public and annual holidays (including loadings), payments for sick leave, value of board and lodging provided by the employer for the worker and any other consideration in money or money's worth given to the worker under a contract of service or a training contract,"
5. "Wages" are not, therefore, simply cash payments, but may extend to other types of benefits or consideration received by a worker in respect of his or her employment.
6. As is set out in more detail below, the unique history of workers' injury reforms has led to a compulsory scheme for the protection of employees whose employers are not insured, unable to be identified or otherwise not available to benefit the employee. The operation of the Uninsured Liability and Indemnity Scheme is set out in s 140(1)(a) as follows: "140 Persons eligible to make claims (1) A claim under this Division may be made against the Nominal Insurer by any person who considers he or she has a claim against an employer for compensation under this Act or work injury damages in respect of an injury to a worker, if - (a) the employer is uninsured, or (b) the person claiming the compensation has been unable, after due search and inquiry, to identify the relevant employer."
7. Section 145, set out at the commencement of this judgment, provides a notice procedure for the requiring of reimbursement. There is no prescribed form for any such notice.
8. Importantly for the purposes of these proceedings, s 145(3) of the Act provides that a person served with a notice under s 145(1) may apply to the Workers Compensation Commission for a determination of the person's liability. The following provisions are relevant:
9. Section 140(1)(a) provide: "140 Persons eligible to make claims (1) A claim under this Division may be made against the Nominal Insurer by any person who considers he or she has a claim against an employer for compensation under this Act or work injury damages in respect of an injury to a worker, if - (a) the employer is uninsured, …"
10. I next set out the provisions of ss 145(1), 145(3), 145(5) and 145(6): "145 Employer or insurer to reimburse Insurance Fund (1) The Nominal Insurer may serve on a person who, in the opinion of the Nominal Insurer, was - (a) in respect of an injured worker to or in respect of whom a payment has been made by the Nominal Insurer in respect of a claim under this Division, an employer at the relevant time, or (b) an insurer under this Act of such an employer, a notice requiring that person, within a period specified in the notice, to reimburse the Insurance Fund an amount (not being an amount exceeding the amount of the payment made) specified in the notice. … (3) A person on whom a notice has been served under subsection (1) in respect of an injured worker may, within the period specified in the notice, apply to the Commission for a determination as to the person's liability in respect of the payment concerned. … (5) In any proceedings under subsection (4), a certificate executed by the Nominal Insurer and certifying that - (a) the payments specified in the certificate were paid to or in respect of an injured worker named in the certificate, and (b) a person named in the certificate was, in the opinion of the Nominal Insurer, liable at the relevant time to pay to or in respect of the injured worker compensation under this Act or work injury damages, is (without proof of its execution by the Nominal Insurer) admissible in evidence in any proceedings and is evidence of the matters stated in the certificate. (6) The Nominal Insurer may recover an amount specified in a notice served under subsection (1) (being a notice in respect of which an application has not been made under subsection (3)) from the person to whom the notice was given as a debt in a court of competent jurisdiction."
11. Section 145A(1) - (3) provides: "145A Recovery from directors of corporations liable to reimburse Insurance Fund (1) If a corporation is liable to reimburse the Insurance Fund an amount for a payment made in respect of a claim under this Division and the amount is not recoverable from the corporation, the Nominal Insurer is entitled to recover the amount from a person who was a culpable director of the corporation at the relevant time. (2) A corporation is considered to be liable to reimburse the Nominal Insurer an amount for such a payment if the Nominal Insurer is entitled to recover the amount either under section 145 or under an order of the Commission made on application under that section, even if the corporation has ceased to exist. (3) An amount is considered to be not recoverable from a corporation if the Nominal Insurer certifies that it will be unable or unlikely to recover the amount from the corporation by reasonable efforts at recovery, whether because the corporation is being wound up and is unable to pay its debts, or otherwise."
12. "Culpable director" is defined in s 145A(4) as follows: "(4) A person is a culpable director of a corporation at the relevant time if - (a) the corporation contravened section 155 (Compulsory insurance for employers) in respect of a policy of insurance that would have covered the corporation for the liability to which the payment made in respect of the claim under this Division related (whether or not the corporation has been proceeded against or convicted of an offence for the contravention), and (b) at the time of the contravention the person was a director of the corporation."
13. The circumstances constituting an exception to the definitions of "culpable director" are set out in s 145A(5), and are as follows: "(5) A person is not a culpable director of a corporation if the person establishes that - (a) the corporation contravened section 155 without the person's knowledge, or (b) the person was not in a position to influence the conduct of the corporation in relation to that contravention, or (c) the person, being in such a position, used all due diligence to prevent the contravention by the corporation."

Jurisdiction

1. There is no doubt that the Workers Compensation Commission (and, in its place, the personal injury commission) has jurisdiction to determine issues of "exempt employer" and "culpable director". The question is whether this court has jurisdiction and, the defendant argues, whether the nominal insurer is required to commence proceedings in the commission before suing for debt.
2. The plaintiff's position is that the legislative intent is for the recipient of the notice to raise issues of exempt employer and/or culpable director, and to do so in the Workers Compensation Commission (or Personal Injury Commission). The plaintiff submits that issues of "exempt employer", whether the defendant was a "culpable director" and whether there is any basis to reduce the amount otherwise payable by the defendant to the plaintiff cannot be litigated by the defendant in this court, as it was necessary for her to have commenced proceedings in the Workers Compensation Commission or the Personal Injury Commission.
3. Section 105 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) ("the WIM Act") provides: "105 Jurisdiction of Commission and Compensation Court (1) Subject to this Act, the Commission has exclusive jurisdiction to examine, hear and determine all matters arising under this Act and the 1987 Act. (2) The Commission does not have that jurisdiction in respect of matters arising under Part 5 (Common law remedies) of the 1987 Act except for the purposes of and in connection with the operation of Part 6 of Chapter 7 of this Act. (3) The Commission does not have jurisdiction in respect of matters that the Compensation Court or (after the repeal of the Compensation Court Act 1984) the District Court has jurisdiction to examine, hear and determine. (4) Subject to this Act and the Compensation Court Act 1984, the Compensation Court has exclusive jurisdiction to examine, hear and determine all existing claim matters except matters arising under Part 5 of the 1987 Act. (4A) After the repeal of the Compensation Court Act 1984, the District Court has exclusive jurisdiction to examine, hear and determine all coal miner matters (except matters arising under Part 5 of the 1987 Act). (5) Despite section 17 (4) of the Compensation Court Act 1984, the Compensation Court does not have jurisdiction to reconsider a matter, or to rescind, alter or amend any decision previously made or given by the Court in relation to a matter, once the matter has become a new claim matter. (6) For the purposes of giving effect to subsections (4) and (4A), references in this Act to the Commission are to be read as references - (a) to the Compensation Court, to the extent that the reference relates to a matter that the Compensation Court has jurisdiction to examine, hear and determine, or (b) to the District Court, to the extent that the reference relates to a matter that the District Court has jurisdiction to examine, hear and determine."
4. (I note that the "Commission" referred to in the legislation has been defined as the Personal Injury Commission since 2020. Prior to that amendment, the Commission was defined as the Workers Compensation Commission.)
5. The ambit of s 105(1) of the WIM Act was explained in Coombs v Workcover Authority of NSW [2014] NSWSC 1707 at [22] - [25] (see also Teofilo v State of New South Wales [2007] NSWSC 767 at [11]). The plaintiff submits that, not only should the proceedings have been commenced in the Workers Compensation Commission pursuant to s 145(3) of the Act, but that such proceedings should have been commenced by the company and not the director: Raniere Nominees Pty Ltd v Daley [2006] 67 NSWLR 417. Similarly, any determination as to whether the defendant was a culpable director should have been made in the Workers Compensation Commission (although the plaintiff appears to concede that this application was one which could be made by the defendant).
6. The plaintiff adds that s 145A must be read in the context of the remainder of the Act and in particular in terms of the legislative regime for dealing with the circumstances where an employer does not have a workers compensation insurance policy as set out in Division 6 of Part 4. The procedure consists of the service of a notice which gives the recipient wishing to raise any issue to then commence proceedings. This is consistent with the policy of keeping liability issues arising under the Act and the WIM Act in a specialist body while leaving issues regarding recovery of compensation from employers to courts having jurisdiction to give judgment for debt.
7. Both parties referred me to earlier judgments of this court which appear to be in conflict as to the applicability of statutory interpretation issues. Neither party, however, was able to refer me to any judgments determining issues of jurisdiction.

Earlier judgments concerning "exempt employer" and "culpable director"

1. The two decisions of the District Court of New South Wales require careful consideration as to "culpable director" as they appear to be in conflict.
2. The first of these is WorkCover Authority of New South Wales v Edwin Tucker and George MacDonald [2012] NSWDC 226 ("Tucker"), which considers the question of the meaning of actual knowledge for the purposes of s 145A(5) and 156B(4)(a) of the Act. The defendants were directors of a company which owned apple orchards where, after a company restructuring, the appropriate workers compensation insurance was not transferred, and no fresh policy taken out, with the result that the workers were relevantly uninsured. A claim by an injured worker resulted in the Board becoming aware of the company's uninsured status and quickly remedying it, following which the company went into liquidation. WorkCover issued notices and then, I infer from the judgment (which does not specifically state this) commenced proceedings in the District Court of New South Wales for recovery of the sums in question (for workers compensation payments and a sum twice the unpaid premium).
3. Letherbarrow SC DCJ noted it was common ground that the defendants were liable as culpable directors "unless they can discharge their onus" (at [26]). The primary question for determination was whether the directors had "knowledge" and how this statutory term should be construed (at [27]). Letherbarrow SC DCJ went on to hold that he was comfortably satisfied that the defendants did not have actual knowledge (at [49]) and that there was no "wilful" shutting of the eyes or blindness (at [74] - [75]). However, the defendants knew that the company had, as a result of the restructure, acquired many more employees, and this was sufficient to amount to knowledge or at least put an honest and reasonable man on enquiry (at [78] - [79]).
4. Nowhere in the judgment is there any reference to any challenge to the jurisdiction of the court to determine the question.
5. It should also be noted that, as was the case in the next decision of the District Court to determine these issues, that there was no question of the company being an exempt employer; at all relevant times, there had been acknowledged employees entitled to salaries over the threshold.
6. The second of these decisions is Workers Compensation Nominal Insurer v Brasnovic [2013] NSWDC 131 ("Brasnovic"), where Taylor SC DCJ took a different (and in my view, correct) approach as to the level of knowledge required. Once again, there was no argument that the employer was an "exempt corporation" and liability of the company was accepted (at [19]). The questions were whether Mr Brasnovic had used "all due diligence" to prevent the contravention (s 145A(5)(c)) (which Taylor SC DCJ found he had not done) and whether the contravention was without knowledge. As to the latter, Taylor SC DCJ did not accept the same construction of the term "without knowledge as that employed by Leatherbarrow SC DCJ and considered that awareness was required. I accept and agree with Taylor SC DCJ's analysis of this issue, which is set out in great detail in his Honour's judgment, with the result that it is not necessary for me to repeat those issues here.
7. There remains the issue of jurisdiction. Neither of these decisions refers to WorkCover Authority of NSW v Mackley [2006] NSWCA 204, where proceedings took a different course. Mr Mackley was doing some carpentry work on a house in the country and, finding he needed assistance, asked a neighbour he sometimes called on for assistance of this kind. The two men occasionally helped each other out by way of favours, although the worker said that he was offered and accepted $15 an hour for this work, which was for a few hours. Mr Mackley had no insurance. After the neighbour fell from a ladder while helping Mr Mackley, he commenced proceedings in the Compensation Court which "followed procedures prescribed by Part 4 Division 6" (at [11]). Geraghty J found there was an employment relationship and made an award. There was then "a further hearing in the same proceedings" of WorkCover's application for reimbursement, an order Geraghty J refused to make, for what his Honour described as discretionary reasons.
8. The Court of Appeal considered that employment and lack of insurance were res judicatae but that, as the procedural course in s 145 was not followed, it remained open to WorkCover and to Mr Mackley to follow the procedures in s 145 and for the Court to exercise the powers in s 145(4) (the appeal was accordingly dismissed).
9. There are observations about the power conferred on the Compensation Court at [34] and following, but the issue of whether the Workers Compensation Commission had sole or exclusive jurisdiction is not considered.
10. More recently, in Savoy v Insurance and Care NSW, the relevant director was a woman who played little part in the business. A worker employed by a towing company (run by a husband and wife who had separated in circumstances described as "fractious" (at [65])), which did not have a workers compensation policy, suffered an injury. Approximately $87,000 was paid to the worker and a notice under s 145 was issued to the company requiring reimbursement. When that claim was not met, proceedings were commenced in the Local Court, where judgment was given in favour of the authority against the two directors, An application for leave to appeal from the finding of "culpable director" was made on the basis that the female defendant had told the accountant to "get me off being a director, I am fucking done" and thrown a telephone at her estranged husband (at [66]). Basten J, sitting on the appeal, considered there was actual knowledge of the contravention and dismissed the appeal. Once again, no issue in relation to jurisdiction was raised. I am sure that if there had been such an issue, Basten J would have identified it.
11. In all of these cases, as here, the proceedings were commenced by the statutory authority in circumstances where it is a defence to such an action pursuant to s 145A(5) on one or more of the three grounds set out therein. In such circumstances, there is no support for the argument that the onus lies on the director to commence proceedings in the Workers Compensation Commission seeking a declaration or some other form of relief setting aside the notice. It is clearly the case that it is "open" to the company or director to bring such proceedings in the Commission: Kula Systems Pty Ltd v Workers Compensation Nominal Insurer [2018] NSWSCCPD 10 at [191]. However, "open" does not amount to a denial of jurisdiction to other courts.
12. There can be no doubt that any notice in relation to a claim against a culpable director must be served on the company and not upon the director in question, as that was the reason for the Court of Appeal's order for the reinstatement of the deregistered corporation in WorkCover Authority of New South Wales v Picton Truck & Trailer Repairs Pty Ltd (De-registered) & Anor [2004] NSWCA 371. For the Court of Appeal to have made such an order (as opposed to directing that it be served on the director), the Court must have been satisfied that the company and not the director should be served with the notice in relation to any claim for reimbursement from a "culpable director" (at [2]).
13. This decision may be relevant in determining what the position is in relation to jurisdiction for a claim that the company is exempt from the requirement. However, the concept of a company director raising such an argument on behalf of the company (especially where the company is deregistered) seems counter-intuitive. I was not, however, addressed on jurisdiction on the basis that the right to bring such a challenge vests in the company and not in the director.
14. The parties also referred to Sabanyagam v St George Bank Limited [2016] NSWCA 145, but I consider it to be of limited assistance. The court did not consider whether the Nominal Insurer was required to commence proceedings in the Commission before proceeding to sue for debt in the court. Instead, the court considered whether the Commission had jurisdiction to hear and determine the worker's application for review of an insurer's decision to terminate weekly payments of compensation.
15. In conclusion, there is no authority to support the challenge to this court having jurisdiction to determine "exempt employer" and "culpable director".

"Exempt employer"

1. An exempt employer is an employer who, during a financial year, has reasonable grounds for believing that the total amount of wages payable will be payable will not be more than the financial exemption list which was, relevantly for these proceedings, $7,500. The test is directed at whether the grounds are reasonable, not the employer's actual belief. In Kula Systems Pty Ltd v Workers Compensation Nominal Insurer, Keating DCJ stated at [106] - [108]: "The proper construction of s 155AA of the 1987 Act turns on the use of the expression "wages that will be payable" which determines the content of the belief. Wages are defined in s 174 of the 1987 Act and include a number of categories. For there to be "wages" there must be an underlying existing contract of service, legal arrangement or statutory entitlement which creates in the employer a legal obligation. A full-time employee is to be contrasted with an employee who is engaged on an ad hoc casual basis where the legal obligation to pay wages is not ongoing and intermediate in terms of the future obligation. Pursuant to s 174(1) of the 1987 Act, it is submitted that records are required to be kept in respect of wages and that those records relate to accrued legal obligations and not future or contingent liabilities that may or may not eventuate. On this construction, the status of an employer as exempt or otherwise is objectively ascertainable by reference to and adopting the expression "known" wages. This construction is fortified having regard to the ordinary meaning of the terms "will" and "payable" in the Macquarie Online Dictionary. It is submitted that the word "will" in s 155AA of the 1987 Act denotes a future likelihood or inevitability about the payment which in respect of the "wages payable that likelihood will be determined by the legal obligation to make the payments." The term "payable" means something "that must be paid". It is further submitted that, for the purposes of s 155AA in determining "total wages", consideration is to be given to the likelihood of the payments during the financial year which are to be assessed by reference to known legal obligations arising from verifiable legal obligations under existing contracts arrangements and other statutory entitlements."
2. At [113], citing George v Rockett [1990] HCA 26; 170 CLR 104 at [8], Keating DCJ stated: "The phrase "reasonable grounds for believing" requires an objective test.[18] It does not matter whether the employer has the actual belief or not - what is relevant is whether objectively, in the sense that the belief on the facts and/or evidence is capable of being held by a third party. This, it is submitted, is consistent with the overall scheme of the legislation."
3. Keating DCJ concluded at [194]: "Having correctly dealt with the question of onus, the Arbitrator drew an inference on the available evidence that the appellant, at the relevant time, did not have reasonable grounds for believing that the total amount of wages that would have been payable to the worker during the financial year would not exceed the exemption limit. That inference was drawn on the basis of the evidence before him. Such a finding can only be interfered with in an appeal under s 352 of the 1998 Act in limited circumstances, as explained in Whiteley Muir and Zwanenberg Ltd v Kerr."
4. Adopting the same careful analysis of the test as applied to the factual material here, I am satisfied that the appellant did not, at the relevant time, have reasonable grounds for believing that the wages paid even to Mr Khaled alone would not have exceeded the limit of $7,500. As Mr Price put to Mr Richerdson, the likelihood of his becoming available to supervise the fitout of the Bondi Junction store was an uncertainty in itself.
5. Any payment for any of the many hours of work put in by Mr Derbas would have merely contributed to this situation. I am satisfied that in fact Mr Derbas, Ms Jamal, Mr Richerdson and their mother were all using the "account book" system to record cash and items taken and that this also functioned as payment for employment. As indicated above, I have not accepted Ms Jamal's claims of business ignorance.
6. In those circumstances, I am satisfied that the employer (and also Ms Jamal) did not have reasonable grounds for believing the total amount of wages payable during the financial year would not be more than $7,500.

"Culpable director"

1. The key question is what amounts to "knowledge" in s 145 and whether this requires actual or constructive knowledge.
2. I have found that Ms Jamal had actual knowledge and make the following observations as to constructive knowledge, reckless blindness and other degrees of knowledge only as alternative findings.
3. The principles for statutory interpretation are set out in CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 and, more recently, in SAS Corporation v Miles (2018) 265 CLR 137. These are helpfully set out in the judgments of Keating DCJ in Kula Systems Pty Ltd v Workers Compensation Nominal Insurer and by Taylor SC DCJ in Brasnovic and do not require repetition.
4. The first issue is whether it is a basic premise underlying the Act that employers must protect their employees by having compulsory workers compensation insurance and that, to ensure employers cannot readily escape that obligation, there is a regime for payments made to an injured worker to be recovered so that the liability does not fall upon other members of the community, in circumstances where the exceptions to this requirement are very specific. There is a statement to this effect at point 2 of the summary of findings made by the Court of Appeal in WorkCover Authority of New South Wales v Picton Truck & Trailer Repairs Pty Ltd (De-Registered) & Anor (2004) 22 ACLC 1517; 51 ACSR 1517, namely that it was "clearly in the public interest that employers maintain the insurance contemplated by s 155 of the Act and that an employer who fails to do so, or in the case of a corporate employer, its culpable director" should reimburse WorkCover for the payments made in consequence of the employer's non-compliance with this provision.
5. However, to what extent should a director actually be aware of this obligation? Is a director entitled to say that nobody informed them and that thus they do not know? Mr Bateman submits that Brasnovic is authority for the proposition that knowledge must be actual and not constructive (submissions, 12 November 2021, paragraphs 17 - 23). Mr Price submits that "knowledge", when construed in terms of the statute and the relevant rules of statutory construction, still permits constructive knowledge (submissions, 30 November 2021, paragraphs - 39). In view of my finding that I am satisfied Ms Jamal had actual knowledge, I do not propose to set out these submissions further, beyond noting that I accept Mr Price's interpretation of the proper construction of the Act in terms of knowledge requirements.
6. In addition to the issues listed by Mr Price, I make two further observations. The first is that, at common law and in equity, directors owe fiduciary-style duties to the company. The second is that employers owe fiduciary duties to their employees. These statutorily-imposed duties do not fall away merely because there is a breach of statutory obligations under other legislation. Australia's industrial safety laws, which are comprehensive as well as compulsory, are the product of legislation during the nineteenth century such as the Factories Act 1833 (UK), which followed the invention of complex machinery such as the steam engine and the explosive growth of production that followed, which created profit and prosperity for manufacturers, but squalor and unsafe working conditions for the majority of workers. These work safety reforms arose because there were so many maimed and disfigured workers that the young Friedrich Engels (sent to England by his wealthy family to manage their textile mill) described Manchester street scenes as being so full of cripples and persons with missing or deformed limbs that it was "like living in the midst of an army just returned from a campaign" (Engels, "The Condition of the Working Class in England", 1845, p. 165). (Although accurate statistics are not available, it is thought that as many as 50% of factory children experienced some degree of industrial injury, according to Neil Gunningham in "Safeguarding the Worker", Law Book Co, 1984, p. 48. Industrial development in Australia came later than the United Kingdom but, when the same kind of work system abuses began to emerge, there was less tolerance of what the Age newspaper called "the industrial evils of the old world" (The Age, 16 June 1879). The combined impact of an active press, the growth of the trade union movement and formation of the Labor Party were key factors in this now largely forgotten fight for legislative protections that Australian workers now take for granted. Those reforms included comprehensive legislation (in New South Wales, the Workers Compensation Act (1987) (NSW)) and specialist courts focussed on worker injuries.
7. It was for reasons of this kind that the observations set out at point 2 of the judgment of the Court of Appeal in WorkCover Authority of New South Wales v Picton Truck & Trailer Repairs Pty Ltd (De-Registered) & Anor were made. The social and moral factors underlying this framework of legislation protecting workers has become part of a nationwide understanding of the relationship between employer and employee. This in turn forms part of an Australia-wide consciousness of the rights and obligations that are understood as applying to every employed worker, without exception. This is one of the reasons for safeguards in the Workers Compensation Act such as s 155(1), namely the compulsory requirement for an employer to obtain and maintain workers compensation insurance. Australian company directors and employers have constructive knowledge of the fundamental obligations they owe to their employees both to pay them a salary and to have insurance in the event of workplace injury.
8. However, I repeat that I have not accepted Ms Jamal's claim that she had no knowledge of the Company's contravention or of the need to hold a workers compensation policy. I am satisfied, from their evidence, that both she and her brother knew that their employees Mr Khaled Jamal and Mr Derbas were individually entitled to sums which would have been in excess of the statutory limit for exempt companies and I have rejected Mr Richerdson's claim that if not for his broker's advice he would have taken out the policy.
9. Ms Jamal was working part-time in an accountant's office using computer software. She presented as an educated and informed person in terms of her dealings with Ms Vincent. I am satisfied that she not only knew the only difference between being paid "on the books" and "off the books" (namely that both are still payment for work) was the taxation implication, and that the response of herself and her brother, on the day of the accident, demonstrates that they were immediately aware that the risk they had taken by not having workers compensation insurance had come to fruition.
10. If, however, I have erred in my finding as to actual knowledge, then I would accept that Ms Jamal was wilfully shutting her eyes to the obvious, in that it would have been evident that any injury suffered by not only Mr Khaled but even herself would have had to respond to an insurance policy for the protection of those working for the company.

Was Ms Jamal not in a position to influence the conduct of the company in relation to the contravention?

1. Critical to Ms Jamal's defence is that she was not in a position to influence the conduct of the company, which was in fact being managed by her brother, and for which she was a mere cipher (defendant's written submissions, 12 November 2021, paragraphs 75 - 82). Mr Bateman points to three areas of the evidence to support this: 1. It was Mr Richerdson, not Ms Jamal, who employed their cousin Mr Khaled Jamal as a worker. 2. Family members working in the business, including Ms Jamal, could not take any money from the till or goods without Mr Richerdson's permission. 3. Mr Richerdson claimed he was the person who dealt with the company's insurance broker (to whom he referred as "my broker" (T 57, line 10), whereas Ms Jamal was not even aware that there was such a thing as "workers comp" (T 57, T 84).
2. Mr Price submits that the evidence pointed to the defendant's relationship with Mr Richerdson not only as enabling her to give direction to him, but that she did in fact carry out a number of company tasks, including dealing with Ms Vincent. The nature of the agreement between them, at best, was that he would perform her obligations and that if she became aware of anything, she could direct him to carry it out. At its highest, this is an assertion that Ms Jamal was not managing the company, which is very different from not being in a position to influence the company. There is no suggestion that her brother ignored or insulted her, or failed to refer relevant matters to her when necessary; to the contrary, he included her in discussions about the workers compensation issues from the day of the accident.
3. A similar argument failed in Savoy v Insurance and Care NSW (at [78] ff). Ms Savoy's evidence, like Ms Jamal's, was rejected by the first instance judge (at [84]). Basten J noted at [87] that it was not necessary to deal with this ground other than to note that Ms Savoy was the officer directly involved in inquiries about workers compensation and that as a result "the available inference was that she was herself in part responsible for the contravention". There was also other evidence as to her knowledge of and involvement in the activities of the company (at [88]).
4. Ms Jamal has failed to demonstrate that she was not in a position to influence the corporation. No submission was made to the effect that if she were in a position to influence the company, she had used all due diligence to prevent it contravening its obligation.

Quantum

1. The defendant submits that, to the extent that she is found to be a culpable director of a company that is not exempt, the quantum of her liability should be limited to $103,771.29, this being the amount specified in the notice under s 145(1) of the Act issued by the plaintiff on 25 August 2015. That notice contained two schedules, for which the amount claimed under heading "Schedule B" was the sum claimed (CB: 59). There was a separate certification under s 145(5) for this sum (CB: 59).
2. The plaintiff issued a second notice under s 145(1) of the Act on 20 October 2016 (CB: 71) which required reimbursement of "the amount specified in Schedule B" and which contained a certification pursuant to s 145(5) for the sum of $258, 565.75.
3. The defendant submits that, "critically" (submissions, paragraph 101), the second of these two Notices did not include a Schedule B setting out this revised sum, nor any document containing a reference to a "Schedule B" Accordingly, it is submitted, the 2016 notice is invalid, unenforceable, or both.
4. The defendant devotes some time in the submissions to setting up, and then demolishing, an argument that the second notice cannot "pick up" the first notice, as the second of these notices does not refer to the first notice and the fact that a s 145(5) certificate is provided does not mean that it forms part of either notice. Mr Bateman submits that the critical question as to whether this has happened is determined by a construction of the documents and intention, which can be gleaned from the documents themselves. Mr Bateman puts forward seven reasons for asserting that the s 145(5) notice attached to the 2016 notice cannot form part of the notice. These are as follows: 1. The notice under s 145(1) and the s 145(5) certificates are matters provided for separately under the Act. The s 145(1) notice sets in train the procedure, while the s 145(5) certificate is for evidence of the amount in subsequent proceedings. However, if this is a "limit of one notice per customer" argument, on the basis that the plaintiff only has one chance to "get it right" about the sum of money owed for s 145(5), such an argument must fail. There is nothing in the legislation to require that this is a once-only certificate. 2. Mr Bateman next points to the failure of the 2016 notice and the s 145(5) certificate to refer to each other (although these were, he acknowledges, served together in the same document). He points to a similar failure in the covering letter to these documents (CB: 70). 3. Mr Bateman next argues that there is evidence as to the actual intention of the plaintiff (CB: 56 - 58), and that it cannot have been the intention of the plaintiff to incorporate the amount in the s 145(5) certificate in the 2016 notice when the reason why this notice did not contain the same Schedules A and B was because the plaintiff had changed its claim systems, rather than making an active decision (T 32). 4. The problem for the plaintiff, if the s 145(1) notice it purported to serve in October 2016 is invalid due to the failure to include a reference to "Schedule B", is that the company was deregistered on 22 January 2017. If a third s 145(1) notice is required, the plaintiff would have to make an application seeking the company's reinstatement so that it can issue it with a certificate.
5. The plaintiff points out (submissions, paragraph 15) that there is no prescribed form for a notice under s 145(1). All that is necessary for the plaintiff to bring this claim is compliance with s 145A(1), which is not in dispute. Nor is it in dispute that the company was served with a notice on 20 October 2016 requiring it to pay $258,565.75 to the plaintiff (CB: 71 - 82). There is no special requirement for the contents of that notice of the kind claimed by the defendant, either in terms of cross-referencing to other documents or other provisions of the legislation, or in terms of any formal restatement of the contents of the first notice. In addition, the company has taken no steps to contest the notice and is therefore liable to reimburse the plaintiff for this full sum. If the defendant is found to be a culpable director at the time of the worker's injury, the plaintiff is thus entitled to claim this full sum.
6. Mr Bateman's reliance upon WorkCover Authority (NSW) v Picton Truck & Trailer Repairs Pty Ltd (where reinstatement of the deregistered company was required) is misconceived. No notice had been served prior to the company being deregistered. That is not the case here; Mr Bateman's argument is that the October 2016 notice is defective because of asserted failures to include cross-referencing and if that claim fails (which it must, given the absence of any prescribed form), then the October 2016 notice is valid.
7. For the above reasons, Ms Jamal's challenge to the quantum of the claim fails.

Concluding remarks and orders

1. I have not been addressed as costs or interest (including interest on costs and/or a gross sum costs order) and I grant liberty to apply.

Order: 1. Judgment for the plaintiff for $258,565.75 with liberty to apply in relation to interest and/or costs. 2. Exhibits retained until further order.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 23 February 2022