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Scotto v Scala Bros Pty Ltd & Anor [2014] FCCA 2374 (17 October 2014)

Last Updated: 20 October 2014

FEDERAL CIRCUIT COURT OF AUSTRALIA

SCOTTO v SCALA BROS PTY LTD & ANOR


Catchwords:
INDUSTRIAL LAW – Underpayment of wages and entitlements, compensation, pecuniary penalties, accessorial liability.

INDUSTRIAL LAW – Limitation period – whether events occurring outside the limitation period, which were part of a course of conduct concluding within the limitation period, ground a cause of action which is within time.


Legislation:
Workplace Relations Act 1996, ss.16, 171, 182, 208, 232, 717, 718, 719, 720, 722, 727, 728, 836, cls.15,31, 32, 34, 43 of sch.8
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009, item 11 of sch.2, item 2, 29 of sch.3, item 6 of sch.4, item 2, 16 of sch.16
Fair Work Act 2009, ss.44, 45, 61, 87, 90, 139, 323, 535, 536, 539, 540, 542, 544, 545, 546, 547, 550, 557
 Annual Holidays Act 1944  ( NSW ),  s.3 
 Long Service Leave Act 1955  ( NSW ),  ss.4 ,  10 ,  11 ,  12 
Industrial Relations Act 1996 ( NSW ),  ss.8 ,  123 ,  357 ,  358 ,  365 ,  368 ,  369 ,  372 ,  376 ,  400 
Crimes Act 1914, s.4AA
 Crimes (Sentencing Procedure) Act 1999  ( NSW ),  s.17 
 Limitation Act 1969  ( NSW ),  ss.14 ,  63 
Conciliation and Arbitration Act 1904, s.119
Acts Interpretation Act 1901, ss.15AA, 46
Federal Circuit Court of Australia Act 1999, s.76

Workplace Relations Regulations 2006, ch.2, regs.1.2, 14.3, 19.9, 19.12, 19.20, 19.22, 19.24
Fair Work Regulations 2009, regs.3.34, 3.36, 3.46
 Industrial Relations (General) Regulation 2001  ( NSW ), reg.7
Shops (Trading Hours) Regulation 1992 ( NSW ), reg.4, sch.1
Federal Circuit Court Rules 2001, r.26.01

Cases cited:
Browne v S Smith & Son Pty Ltd [1985] FCA 204; (1985) 8 FCR 206
Brammer v Deery Hotels Pty Ltd (1974) 22 FLR 276
Armory v Delamirie [1722] EWHC KB J94; (1722) 93 ER 664
McCartney v Orica Investments Pty Ltd  [2011] NSWCA 337 
Printing Industry Employees Union of Australia v Besley & Pike Pty Ltd (1960) 4 FLR 169
NKS Enterprises Pty Ltd v Mekary (2004) 135 IR 301
Ansett Australia Ltd v Australian Licenced Aircraft Engineers’ Association [2003] FCAFC 209
Kucks v CSR Ltd (1996) 66 IR 182
United Firefighters’ Union of Australia v Metropolitan Fire and Emergency Services Board [2006] FCAFC 84; (2006) 152 IR 106
Kenoss Contractors Pty Ltd v Warren (2005) 147 IR 390
Bell v Gillen Motors Pty Ltd [1989] FCA 108; (1989) 24 FCR 77
Warramunda Village Inc v Pryde (2002) 116 FCR 58
Byrne v Australian Airlines Ltd (1995) 185 CLR 410
Re Bank Officials’ (Federal) Award 1955 (1959) 1 FLR 305
Poletti v Ecob (No 2) (1989) 31 IR 321
Re Shipping Officers Award 1963 (1964) 8 FLR 262
Textile, Clothing & Footwear Union of Australia v Givoni Pty Ltd [2002] FCA 1406; (2002) 121 IR 250
Printing & Kindred Industries Union v Vista Paper Products Pty Ltd (1994) 57 IR 414
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266
Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596
Codelfa Construction Pty Ltd v State Rail Authority of  NSW  [1982] HCA 24; (1982) 149 CLR 337
Commonwealth Bank of Australia v Barker [2014] HCA 32; (2014) 88 ALJR 814
Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661
Australian Competition & Consumer Commission v Giraffe World Australia Pty Ltd (No 2) [1999] FCA 1161; (1999) 95 FCR 302
Rural Press Ltd v Australian Competition & Consumer Commission [2002] FCAFC 213; (2002) 118 FCR 236
Heydon v NRMA Ltd  [2000] NSWCA 374 ; (2000) 51 NSWLR 1
R v Crabbe [1985] HCA 22; (1985) 156 CLR 464
Re Wakim; Ex parte McNally [1999] HCA 27; (1999) 198 CLR 511
Obacelo Pty Ltd v Taveraft Pty Ltd (1985) 5 FCR 210
Keldote Pty Ltd v Riteway Transport Pty Ltd [2010] FMCA 394; (2010) 195 IR 423
Ogilvie v Adams [1981] VicRp 92; [1981] VR 1041
Re Hayvio Pty Ltd – Ottavio v Hayvio Pty Ltd  [2011] NSWSC 1125 
Young v Queensland Trustees Ltd [1956] HCA 51; (1956) 99 CLR 560
Commonwealth Trading Bank of Australia v Sidney Raper Pty Ltd (1975) 25 FLR 217









Applicant:
PAUL SCOTTO

First Respondent:
SCALA BROS PTY LTD
(ABN 66 000 104 870)

Second Respondent:
GIUSEPPINA BOSSI

File Number:
SYG 2333 of 2010

Judgment of:
Judge Cameron

Hearing dates:
16-18 April 2012, 20-21 June 2012, 6-9 August 2012, 18-19 September 2012, 20 November 2012

Date of Last Submission:
20 November 2012

Delivered at:
Sydney

Delivered on:
17 October 2014


REPRESENTATION

Counsel for the Applicant:
Mr M. Seck

Solicitors for the Applicant:
Thomsons

Counsel for the Respondents:
Mr B. Cross

Solicitors for the Respondents:
Australian Business Lawyers


ORDERS

(1) Within twenty-eight days the parties file a draft short minute of orders giving effect to the Court’s findings on the question of compensation.
(2) The cross claim be dismissed.
(3) The matter be listed for directions on 14 November 2014 at 9.30am.
FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 2333 of 2010

PAUL SCOTTO

Applicant

And

SCALA BROS PTY LTD (ABN 66 000 104 870)

First Respondent

GIUSEPPINA BOSSI

Second Respondent

REASONS FOR JUDGMENT

RELEVANT LEGISLATION

INTRODUCTION

  1. The first respondent (“Scala Bros”) operated a combined delicatessen and café (“shop”) at the Flemington Markets in Sydney. The second respondent, Giuseppina Bossi, became the sole director of Scala Bros in June 2009 upon the death of her father, the other director and proprietor of the business, Andrea Carrano. The applicant, Paul Scotto, was employed by Scala Bros to work at the shop for much of the period from the early/mid-1980s to 2010. Mr Carrano was Mr Scotto’s step-grandfather and so, although they are very close in age, Mr Scotto is also Mrs Bossi’s nephew.
  2. Mr Scotto alleged that during his employment with Scala Bros the latter failed to pay him minimum wages, as well as allowances, loadings and overtime. He alleged that Scala Bros failed to make superannuation contributions on his behalf or to provide him with pay slips. He also alleged that after his employment ended Scala Bros failed to pay him his accrued annual leave and long service leave.
  3. On 28 October 2010 Mr Scotto commenced this proceeding seeking payment of the amounts allegedly unpaid or underpaid, interest on those amounts and the imposition of pecuniary penalties.

APPLICANT’S ALLEGATIONS

  1. In his further amended points of claim Mr Scotto alleged that he was employed by Scala Bros from about January 1981 until 5 May 2010. He alleged that from January 1981 to January 1988 he held the position of shop assistant and from February 1988 he held the position of “shop assistant with the duty of buying – in charge of 5 to 12 assistants”. He alleged that he was responsible for the day-to-day management of the shop.
  2. Mr Scotto alleged that his employment with Scala Bros was subject to an oral contract of employment between him and Mr Carrano.

Employment benefits

  1. Mr Scotto alleged that the terms and conditions of his employment were governed by the following instruments:
    1. between 1 July 1981 and 26 March 2006, the Shop Employees (State) Award (“Shop Award”);
    2. between 27 March 2006 and 30 June 2009 and pursuant to the Workplace Relations Act 1996 (“WR Act”), the Notional Agreement Preserving the Shop Employees (State) Award ( NSW ) (“Shop NAPSA”) and the preserved Australian Pay and Classification Scale (“Preserved APCS”);
    1. between 1 July 2009 and 31 December 2009, the Shop NAPSA and the Preserved APCS pursuant to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (“FW (TPCA) Act”); and
    1. between 1 January 2010 and 5 May 2010, the General Retail Industry Award 2010 (“Retail Award”) pursuant to the Fair Work Act 2009 (“FW Act”).
  2. Mr Scotto alleged that during his employment with Scala Bros he was entitled to receive (leave) benefits and to accrue (leave) entitlements:
    1. between 1 July 1981 and 26 March 2006, under  s.3  of the  Annual Holidays Act 1944  ( NSW );
    2. between 27 March 2006 and 31 December 2009, under s.232 of the Australian Fair Pay and Conditions Standard (“AFPCS”) of the WR Act;
    1. between 1 January 2010 and 5 May 2010, under s.87 of the National Employment Standards (“NES”) of the FW Act; and
    1. under  s.4  of the  Long Service Leave Act 1955  ( NSW ) (“LSL Act”).
  3. Mr Scotto also alleged that his contract of employment contained an implied term enforceable under ss.139(1)(i) and 542(1) of the FW Act that Scala Bros would make minimum superannuation contributions on his behalf to a complying superannuation fund to avoid a charge under the Superannuation Guarantee Administration Act 1992.
  4. Mr Scotto also alleged that during his employment Scala Bros had an obligation to provide him with pay slips:
    1. between 2 September 1996 and 26 March 2006, in accordance with  s.123(1)  of the Industrial Relations Act 1996 ( NSW ) (“IR Act”) and relevant regulations;
    2. between 27 March 2006 and 30 June 2009, in accordance with s.836(2) of the WR Act and div.6 of pt.19 of ch.2 of the Workplace Relations Regulations 2006 (“WR Regulations”); and
    1. between 1 July 2009 and 5 May 2010, in accordance with s.535(1) of the FW Act and subdiv.2 of div.3 of pt.3-6 of ch.3 of the Fair Work Regulations 2009 (“FW Regulations”).

Wages, allowances, loadings and overtime

  1. Mr Scotto alleged that Scala Bros failed to pay him his wages, allowances, loadings and overtime:
    1. between 1 July 1981 and 26 March 2006, in accordance with the Shop Award;
    2. between 27 March 2006 and 31 December 2009, in accordance with the Shop NAPSA and the Preserved APCS; and
    1. between 1 January 2010 and 5 May 2010, in accordance with the Retail Award.
  2. He alleged that by failing to pay him his minimum wages, allowances, loadings and overtime, Scala Bros contravened the IR Act, the WR Act and the FW Act.

Leave

  1. Mr Scotto alleged that he did not take or receive long service leave during his employment with Scala Bros. He alleged that upon termination of his employment, Scala Bros did not pay him long service leave and thereby contravened the LSL Act.
  2. Mr Scotto alleged that apart for two weeks paid leave in January 2010, he did not take or receive paid annual leave during his employment with Scala Bros. He alleged that upon termination of his employment, Scala Bros failed to pay him his annual leave entitlements thereby contravening the FW Act.

Superannuation

  1. Mr Scotto also alleged that Scala Bros did not make sufficient superannuation contributions into a complying superannuation fund on his behalf. He alleged that by failing to do so, Scala Bros breached a term of his contract, being a safety net contractual entitlement.

Pay slips

  1. Mr Scotto alleged that during or after his employment, Scala Bros failed to provide him with pay slips and therefore contravened the IR Act, the WR Act and the FW Act and their relevant regulations.

Quantum claimed

  1. Mr Scotto claimed the difference between the amounts he alleged he was entitled to receive under the relevant industrial instruments and industrial laws and the amounts he actually received, being a total of $1,558,789.95 comprised of:
    1. $1,420,832.33 in respect of unpaid wages;
    2. $32,347.15 in respect of unpaid breakfast allowances;
    1. $87,934.33 in respect of unpaid sick, annual and long service leave; and
    1. $17,676.14 in respect of unpaid superannuation.

Penalties

  1. Mr Scotto also sought the imposition of civil penalties on the respondents under:
    1. s.719(1) of the WR Act;
    2. s.546(1) of the FW Act; and
    1. sub-ss.10(1),(2) and (3) of the LSL Act.
  2. Mr Scotto also alleged that Mrs Bossi failed to correct the underpayments he claimed and that that made her liable as an accessory for Scala Bros’ conduct such that she was liable to compensate him for underpayments, and also liable to the imposition of pecuniary penalties, pursuant to:
    1. ss.357(7), 358 and 400(1) of the IR Act;
    2. ss.727(1) and 728(1) of the WR Act; and
    1. ss.545(1), 546(1) and 550(1) of the FW Act.

Liability of the respondents

  1. Mr Scotto alleged that after his employment was terminated he wrote to Scala Bros demanding that they rectify the claimed underpayments. He alleged that Scala Bros refused to make good those underpayments thereby continuing the contraventions.
  2. Mr Scotto alleged that the contraventions committed by Scala Bros arose out of the same course of conduct and ought to be treated as a single contravention. He alleged that Scala Bros was therefore liable to make good the underpayments over the entire period of his employment.
  3. Mr Scotto alleged that as a director and manager of Scala Bros and/or as a consequence of Mrs Bossi’s knowledge of the demand and her capacity to authorise or take actions to ensure that Scala Bros made good the underpayments, Mrs Bossi:
    1. knowingly authorised and permitted the contraventions;
    2. aided and abetted the contraventions; and/or
    1. had been knowingly concerned in, or party to, the contraventions;

and was therefore involved in the contraventions and so liable for the underpayments.

RESPONDENTS’ RESPONSE AND CROSS CLAIM

  1. The respondents denied the allegations that Mr Scotto had been underpaid his wage entitlements, had been entitled to long service leave, had never taken annual leave, had not had adequate superannuation contributions made for him and not been given pay slips. Further, they alleged that between May 2010, when Mr Scotto left his employment with Scala Bros, and 30 June 2010, Scala Bros continued to make payments to him by drawing on his accrued annual leave entitlements. The respondents sought the offsetting of those amounts against any unpaid annual leave owing to Mr Scotto. Later, in their written submissions, the respondents conceded that Mr Scotto was entitled to a payment of $12,490.36 for annual leave.
  2. The respondents alleged that Scala Bros had extended an employee loan facility to Mr Scotto which he had breached by failing to repay the $30,430 loan principal when his employment with Scala Bros ceased. They sought a set-off of the amount Scala Bros claimed against Mr Scotto with the amounts he claimed against them. They phrased the claimed set-off in the following way:
  3. The respondents also alleged that any of Mr Scotto’s claims based on causes of action alleged to have accrued more than six years before the commencement of this proceeding were statute barred because they were out of time.
  4. In their cross claim the respondents alleged that Mr Scotto’s failure to repay the loan caused Scala Bros loss and damage. In written submissions Scala Bros abandoned a claim for interest and so, although the cross claim was not amended to reflect that abandonment of the claim for interest, I take the amount sought to be $30,430.

APPLICANT’S RESPONSE TO CROSS CLAIM

  1. Mr Scotto denied the existence of a loan facility, saying that any sums beyond his wages were paid in lieu of annual leave and that in any event the claim was out of time.
  2. Mr Scotto also alleged that the Court did not have jurisdiction to entertain the cross claim because it did not concern any matter arising under Commonwealth law and did not fall within the Court’s accrued jurisdiction.

LEGISLATIVE BACKGROUND

  1. Mr Scotto’s claims span nearly thirty years and four distinct periods of industrial law:
    1. from 1981 to 26 March 2006, the law of New South Wales (“ NSW ”);
    2. on and from 27 March 2006 to 30 June 2009, the WR Act;
    1. on and from 1 July 2009 to 31 December 2009, the FW Act transitional period pending the commencement of modern awards and the NES; and
    1. on and from 1 January 2010, the FW Act including modern awards and the NES.

RELEVANT LEGISLATION

Prior to 27 March 2006

  1. Before the commencement of the Workplace Relations Amendment (Work Choices) Act 2005 on 27 March 2006, Mr Scotto’s employment was governed by the law of  NSW . The Acts which successively regulated industrial relations in  NSW  during the period in issue were the Industrial Arbitration Act 1940 ( NSW ), the Industrial Relations Act 1991 ( NSW ) and the IR Act (of 1996). Mr Scotto only pressed claims under the IR Act.
  2. Section 16(2) of the WR Act and reg.1.2 of ch.2 of the WR Regulations provided that Acts such as the IR Act would continue to apply on and after 27 March 2006 in relation to conduct which occurred before that date. Consequently, subject to the consequences of the subsequent repeal of the WR Act and the WR Regulations, the IR Act continues to apply to the causes of action arising under that Act alleged in these proceedings.

Wages, allowances, loadings and overtime

  1. Section 365 of the IR Act provides:
  2. Section 8 of that Act defines “industrial instrument” as including an award. Although this Court is not amongst the courts defined in the IR Act as an “industrial court”, that is no impediment to the Court having accrued jurisdiction in this case: Browne v S Smith & Son Pty Ltd [1985] FCA 204; (1985) 8 FCR 206 at 210.

Annual leave

  1. The  Annual Holidays Act 1944  ( NSW ) relevantly provides:

Pay slips

  1. Section 123 of the IR Act relevantly provides:

Maximum penalty: 20 penalty units.

  1.  Regulation 7  of the  Industrial Relations (General) Regulation 2001  ( NSW ) provides:

Superannuation

  1. Section 368 of the IR Act relevantly provides:

Accessorial liability

  1. Section 400 of the IR Act relevantly provides:

Penalties and compensation

  1. Section 357 of the IR Act relevantly provides:
  2. Section 358 of the IR Act relevantly provides:

Limitation period

  1. Section 357 of the IR Act relevantly provides:
  2. Section 369 of the IR Act relevantly provides:

Other

  1. Section 372 of the IR Act provides that interest up to judgment may be awarded on sums for which an order is made or judgment given under that Act.

27 March 2006 - 30 June 2009 – Workplace Relations Act

  1. The provisions of the WR Act relevant to these proceedings were repealed by sch.1 to the FW (TPCA) Act effective 1 July 2009. Nevertheless, item 11 of sch.2 to the FW (TPCA) Act provides that the WR Act continues to apply on and after its repeal in relation to conduct which occurred before the repeal. Consequently, the WR Act continues to apply to the causes of action arising under that Act alleged in these proceedings. It also operates to preserve the operation of the IR Act to the extent that that Act is relevant to this proceeding.

Wages, allowances, loadings and overtime

  1. Clause 31 of sch.8 to the WR Act preserved the Shop Award as the Shop NAPSA. Clause 32 of sch.8 to the WR Act had the effect that Scala Bros was bound to observe the terms of the Shop NAPSA.
  2. To the extent that the Shop NAPSA provided for wage rates, by virtue of s.208 of the WR Act, it was also a preserved APCS (“Shop APCS”). At the relevant time s.182(1) of the WR Act provided:
  3. The Shop APCS was part of the AFPCS: s.171(3) of the WR Act.

Annual leave

  1. Sub-division B of div.4 of pt.7 of the WR Act, which was entitled “Guarantee of annual leave”, was part of the AFPCS. It contained s.232 which relevantly provided:
  2. Clause 15E(1) of sch.8 to the WR Act provided:
  3. Clause 34 of sch.8 to the WR Act preserved the  Annual Holidays Act  as a notional agreement preserving state award (“Annual Holidays NAPSA”). Clauses 15E(1) and 32 of sch.8 to the WR Act had the effect that Scala Bros was bound to observe the terms of the Annual Holidays NAPSA, rather than s.232 of that Act.

Pay slips

  1. From 31 March 2006 to 26 March 2007 reg.19.22 of ch.2 of the WR Regulations dealt with the giving of pay slips. It provided:
  2. From 27 March 2007, reg.19.20 of ch.2 of the WR Regulations dealt with the giving of pay slips. It was in terms relevantly identical to the previous reg.19.22.
  3. Regulation 19.24 and later reg.14.3 of ch.2 of the WR Regulations provided that only a workplace inspector (now the Fair Work Ombudsman) might apply for an order based on, respectively, a breach of reg.19.22 or reg.19.20.

Employer obligations in relation to employee records

  1. Section 836 of the WR Act provided:
  2. Part 19 of ch.2 of the WR Regulations prescribed matters for the purpose of s.836 of the WR Act. Of particular relevance for this matter, the WR Regulations provided:

Superannuation

  1. The WR Act did not itself provide for an entitlement to superannuation contributions.

Penalties and compensation

  1. As noted earlier, Scala Bros was bound to observe the terms of the Shop NAPSA and the Annual Holidays NAPSA. Clause 43 of sch.8 to the WR Act provided that a NAPSA might be enforced as if it were a collective agreement.
  2. Section 719 was the provision of the WR Act relevant to the breaches of that Act alleged in these proceedings and it relevantly provided:
  3. Section 717 of the WR Act relevantly provided:
  4. Section 718(1) and (2) of the WR Act empowered Mr Scotto to seek relief under that Act.
  5. At the time of the alleged breaches of the WR Act a penalty unit was worth $110: s.4AA Crimes Act 1914.

Accessorial liability

  1. Section 728 of the WR Act provided:

Limitation period

  1. Section 719 of the WR Act also relevantly provided:
  2. Section 720 of the WR Act provided:

Other

  1. Section 722 of the WR Act provided that interest up to judgment might be awarded on sums for which an order was made or judgment given under that Act.

Fair Work Act

1 July 2009 onwards

Limitation period

  1. The FW Act relevantly provides:

...

Time limit for orders in relation to underpayments

Pay slips

  1. Section 536(1) provides that an employer must give a pay slip to each of its employees within one working day of a wage or salary payment.
  2. Regulation 3.46 of the FW Regulations sets out the required content of pay slips and relevantly provides:
...

Employer obligations in relation to employee records

  1. Section 535 of the FW Act provides:
  2. Part 3-6 of the FW Regulations sets out employer obligations in relation to employee records. Of that part, regs.3.34 and 3.36 are of particular relevance to this matter:

Accessorial liability

  1. Section 550 of the FW Act states:

1 July 2009 – 31 December 2009, FW Act transitional period

  1. The FW Act commenced on 1 July 2009 but modern awards and the NES did not commence until 1 January 2010, the “FW (safety net provisions) commencement day”. While many provisions of the FW Act applied on and from 1 July 2009, as far as minimum employment standards and industrial instruments were concerned, the first six months of the FW Act’s operation were also a transitional period during which pre-FW Act provisions continued to apply.

Wages, allowances, loadings and overtime

  1. Upon the repeal of the WR Act on 1 July 2009, the Shop NAPSA became a transitional instrument referred to in item 2 of sch.3 to the FW (TPCA) Act and continued in force until the commencement of the Retail Award on 1 January 2010: item 29 of sch.3 to the FW (TPCA) Act.

Annual leave

  1. The Annual Holidays NAPSA also became a transitional instrument in force until 1 January 2010.
  2. Item 6 of sch.4 to the FW (TPCA) Act provides:

Penalties and compensation

  1. Item 2(1) of sch.16 to the FW (TPCA) Act provides that a person must not contravene the terms of an award-based transitional instrument, such as the Shop and the Annual Holidays NAPSAs, which applies to that person. Item 16 of sch.16 to the FW (TPCA) Act provides that pt.4-1 of the FW Act, which includes ss.539, 545, 550 and 557, applies to item 2 of sch.16 to the FW (TPCA) Act as if that item were part of the FW Act.
  2. In combination, ss.539(2) and 546(2) of the FW Act, as affected by item 16 of sch.16 of the FW (TPCA) Act, provide that the maximum pecuniary penalty for a contravention of item 2(1) of sch.16 to the FW (TPCA) Act is 60 penalty units for an individual and 300 penalty units for a corporation. At the time of the alleged breaches a penalty unit was worth $110: s.4AA Crimes Act.
  3. Section 545(2)(b) of the FW Act provides that the Court may award compensation for loss suffered because of a contravention of item 2(1) of sch.16 to the FW (TPCA) Act. Section 547 provides that interest up to judgment may be awarded on such sums.
  4. Section 540 of the FW Act empowers Mr Scotto to seek relief under that Act.

1 January 2010 onwards

Wages, allowances, loadings and overtime

  1. The Retail Award is a modern award. Section 45 of the FW Act provides that a person must not contravene a term of a modern award.
  2. Division 2 of pt.2-9 of FW Act contains provisions dealing with the payment of wages. Relevantly, s.323 provides:

Annual leave

  1. Section 87 of the FW Act relevantly provides:
  2. Section 90(2) of the FW Act provides:
  3. By virtue of s.61(3), ss.87 and 90 are provision of the NES. Section 44(1) provides that an employer must not contravene a provision of the NES.

Penalties and compensation

  1. Section 539 of the FW Act provides that ss.44(1) 45, 323(1) and 536(1) are civil remedy provisions.
  2. Sections 539(2) and 546(2) of the FW Act provide that the maximum pecuniary penalty for a contravention of ss.44(1) and 323(1) of the FW Act and, by virtue of s.45, of individual clauses of the Retail Award is 60 penalty units for an individual and 300 penalty units for a corporation. For a contravention of s.536(1), ss.539(2) and 546(2) provide for maximum penalties of 30 penalty units for an individual and 150 penalty units for a corporation.
  3. In the period 1 July 2009 to 27 December 2012 a penalty unit was worth $110: s.4AA Crimes Act.
  4. Section 545(2)(b) of the FW Act provides that the Court may award compensation for loss suffered because of a contravention of any of the civil remedy provisions referred to above at [84].
  5. Section 539(2) of the FW Act empowered Mr Scotto to seek relief under that Act.

Other

  1. Section 547 of the FW Act provides that, unless good cause is shown to the contrary, if an order for interest is sought the Court must include interest up to judgment on any sum for compensation ordered to be paid under that Act.

Course of conduct

  1. The WR Act and the FW Act each made similar provision in relation to contraventions occurring as part of a course of conduct. Section 719 of the WR Act relevantly provided:

719 Imposition and recovery of penalties

...
(2) Subject to subsection (3), where:
  1. Section 557 of the FW Act, as affected by item 16 of sch.16 to the FW (TPCA) Act, relevantly provides:

Long service leave

  1. The LSL Act relevantly provided:

(2) (a) Subject to paragraph (a2) and subsection (13) the amount of long service leave to which a worker shall be so entitled shall:

(i) in the case of a worker who has completed at least 10 years service with an employer be:
(ii) in the case of a worker who has completed at least 10 years service but less than 15 years with an employer and whose services with the employer are terminated or cease for any reason, be a proportionate amount on the basis of 3 months for 15 years service, and
(iii) in the case of a worker who has completed with an employer at least five years service, and whose services are terminated by the employer for any reason other than the worker’s serious and wilful misconduct, or by the worker on account of illness, incapacity or domestic or other pressing necessity, or by reason of the death of the worker, be a proportionate amount on the basis of 2 months for 10 years service.
...
(a3) For the purposes of subsections (2), (3) and (3A), month means 4 and one-third weeks.

...

(5) (a) Where the services of a worker are terminated otherwise than by the worker’s death and any long service leave:

(i) to which the worker was entitled has not been taken, or
(ii) accrues to the worker upon such termination and has not been taken,
the worker shall, subject to subsection (13), be deemed to have entered upon the leave from the date of such termination and the employer shall forthwith pay to the worker in full the worker’s ordinary pay for the leave less any amount already paid to the worker in respect of that leave.
...
(11) For the purposes of this section:
93. Section 10 of the LSL relevantly provided:
10 Penalties and offences
(2) Every person who:
(3) Any employer who does any act or thing for the purpose of or which has the effect of in any way whether directly or indirectly:
(4) Where a person convicted of an offence against this Act is a body corporate, every person who at the time of the commission of the offence was a director or officer of the body corporate shall be deemed to have committed the like offence and be liable to the penalty provided by this Act for such offence accordingly, unless any such person proves that the offence was committed without the person’s knowledge or that the person used all due diligence to prevent the commission of the offence.
...
  1. Section 11 of the LSL Act relevantly provided:
  2. In relation to limitation periods, the LSL Act provided:
  3. As at 5 May 2010  s.17  of the  Crimes (Sentencing Procedure) Act 1999  ( NSW ) provided that a penalty unit was worth $110.

Shop Employees (State) Award

  1. The version of the Shop Award quoted in these reasons dates from 7 March 2001. The terms of the Shop Award were amended from time to time but none of the amendments is material to the outcome of this proceeding.
  2. Clause 2 of the Shop Award relevantly provided:
  3. Clause 3(iii) of the Shop Award relevantly provided:
  4. From 2 June 1995 the ordinary hours of work in special and confection shops were set out in cl.10 of the Shop Award. The ordinary hours of work fell within the following times:
    1. Cooked provisions shops:
Monday to Sunday 7am to 10.30pm
  1. Refreshment shops:
Monday to Sunday 7am to 11.30pm
  1. Clause 14 of the Shop Award relevantly provided in relation to penalty rates for work on Saturdays:
  2. Clause 23 of the Shop Award provided for a 17.5% annual leave loading.
  3. Until a variation effective from 8 June 1988, the Shop Award provided for a forty hour working week in special and confection shops. Thereafter it provided for a thirty-eight hour week.
  4. Clause 15 of the Shop Award relevantly provided in relation to overtime:

...

(2) five days per week ... ;
(3) nine hours on any one day, provided that on one day per week up to 11 hours may be worked without the payment of overtime ...;

...

(b) before an employee’s regular commencing time on any one day;
(c) after the prescribed ceasing time on any one day;
(d) outside the ordinary hours of work.
...
(iii) Any portion of an hour less than 30 minutes shall be reckoned as 30 minutes and any portion of an hour over 30 minutes shall be reckoned as one hour ...
  1. Clause 16 of the Shop Award relevantly provided in relation to a breakfast allowance:
...
106. Regulation 4 of the Shops (Trading Hours) Regulation 1992 ( NSW ) (made under the Factories,  Shops and Industries Act 1962  ( NSW )) relevantly provided:
In respect of each class of shop specified in Schedule 1:
Part 4 of the Factories,  Shops and Industries Act  was relevantly concerned with shops’ trading hours.
  1. Schedule 1 to the Shops (Trading Hours) Regulation 1992 ( NSW ) relevantly provided the following definitions of shops which were not general shops:
...
Confectioners’ shops
Cooked food shops, being:

Confectionery.
(a) Cake and pastry shops .........
Cakes, pastries or pies.
(b) Cooked provision shops ......
Cooked or other processed meats, poultry or preserves.
(c) Refreshment shops .............
Light refreshments, milk, soft drinks, hot beverages or confectionery.
(d) Restaurants .....................
Meals, snacks or hot or cold beverages, where those goods are sold for consumption on the premises.
(e)Take-away food shops .........
Meals, snacks or hot or cold beverages, where those goods are sold for consumption elsewhere than on the premises.
...
  1. Those provisions were carried over into the Shops (Trading Hours) Regulation 1997 ( NSW ), the  Shops and Industries (Trading) Regulation 2002  ( NSW ) and the  Shops and Industries Regulation 2007  ( NSW ) which was impliedly repealed with effect from 1 July 2008 upon repeal of the  Shops and Industries Act 1962  ( NSW ) (formerly the Factories,  Shops and Industries Act 1962  ( NSW )) and apparently not replaced.

General Retail Industry Award 2010

  1. Clause 3.1 of the Retail Award relevantly provided:
  2. Clause 26 of the Retail Award relevantly provided:
Days
Spread of hours
Monday to Friday, inclusive
7.00 am–9.00 pm
Saturday
7.00 am–6.00 pm
  1. Clause 27 of the Retail Award provided for a thirty-eight hour week.
  2. The effect of the transitional provisions found in sch.A to the Retail Award was that the wage rates and loadings applicable to Mr Scotto under the Shop Award continued to apply to him until his employment with Scala Bros finally ceased in May 2010.

APPLICANT’S EVIDENCE

Paul Scotto

Background

  1. Mr Scotto deposed that Scala Bros was the company which ran the Scala Bros business at the Flemington Markets in Sydney. He deposed that his late step-grandfather, Andrea Carrano, and Mrs Bossi were the two directors of Scala Bros until the former’s death in June 2009 following which Mrs Bossi became the sole director. He deposed that Mr Carrano was his late grandmother’s second husband.
  2. Mr Scotto deposed that the Scala Bros business consisted of a coffee lounge, liquor store, delicatessen and sandwich bar. The upper, mezzanine level of the shop was an office and storage area.

Hours of work and duties

  1. Mr Scotto deposed that in early January 1981, when he was eighteen years-old, he started working at the shop with Mr Carrano. He had moved from Brisbane to Sydney and into his grandparents’ home in Seaforth in about December 1980. He deposed that he worked six days a week, Mondays to Saturdays, and would typically arrive at work between 4am and 4.30am, at which point he and Mr Carrano would get the shop ready for the start of the day’s trade at 5am. He deposed that on Fridays and Saturdays they would get to work at 4am because those were their busiest days. Mr Scotto said that in about 1993, after he had moved to Cremorne, Mr Carrano would pick him up from there and they would arrive at the shop at about 4.30am. He said that they arrived earlier on Mondays, Fridays and Saturdays. Mr Scotto deposed that although the authorised hours of trade specified in Scala Bros’ liquor licence were 5am to 5pm, the licence conditions did not prohibit staff from opening the shop earlier for the purpose of setting it up or from selling coffee and food. In this affidavit sworn 18 July 2011 he deposed that they started serving customers at 5am but in cross-examination he said that they sold coffee and breakfast before 5am. He said that he did not work on public holidays.
  2. Mr Scotto deposed that getting the shop ready for opening involved hosing the front, preparing the sandwich bar, cooking food, setting up the seating area and preparing the coffee bar. He deposed that it was necessary to get to work early in order to be well-prepared because the shop would generally be frantic from the start of trade at 5am, until about 2.30pm to 3pm. Mr Scotto’s evidence was that the work was non-stop and he did not have time to take lunch breaks or have meals with people who came to the shop but he did say that he would stop to drink coffee with friends as part of the business because he had to socialise with people in order to sell them things. He deposed that from about 3pm he and Mr Carrano would start cleaning the shop. They closed up at about 4pm each day, returning home together at around 5pm.
  3. Mr Scotto deposed that shortly after he started working at the shop Mr Carrano asked him to stay and work in the business permanently. He agreed to do so.
  4. Mr Scotto deposed that his duties at Scala Bros included:
    1. helping Mr Carrano open the shop each morning;
    2. pricing the stock at the percentage mark-up;
    1. stacking the shelves with products;
    1. making coffees and sandwiches;
    2. working in the delicatessen, which included cutting up the delicatessen items and serving customers;
    3. using a forklift to unload delivery trucks;
    4. serving customers by, for example, taking and actioning their orders and using the cash register;
    5. liaising and placing orders with representatives. An agent would come in with a book with pictures of their products and he would order based on his knowledge of what was missing from the shelves. Mr Scotto said that he and Mr Carrano had never filled out forms when ordering goods but instead would have a discussion with the representatives who would then fill out the relevant forms;
    6. cleaning the shop, a large ongoing task because the markets were dusty and the shop was not fully enclosed;
    7. helping Mr Carrano in his dealings with the market authority; and
    8. helping Mr Carrano close the shop at the end of the day which would take anywhere from thirty minutes to an hour. It included packing away the outside tables and chairs, packing away the sandwich bar items, cleaning the coffee bar and mopping the shop.
  5. Mr Scotto deposed that from about the beginning of 1988, after he had been working at the shop for seven years, he took on additional duties while Mr Carrano began to occupy a lesser role. He became responsible for ordering stock and supervising staff. He deposed that Mr Carrano would sit inside the shop at the front till, read newspapers, watch the news or sit outside at one of the shop’s tables and talk to his friends.
  6. Mr Scotto deposed that the only aspect of the Scala Bros business for which he did not have responsibility was its finances and bookkeeping. He deposed that that side of the business was always done by Mr Carrano. However, from about the early 1990s Mr Carrano was assisted by a part-time bookkeeper, Oriana Ciano, who was also aunt to Mrs Bossi’s husband. From about 2006, Mr Carrano was assisted by Silvana Mace, Mr Carrano’s niece and thus Mrs Bossi’s cousin. Mr Scotto said that when Mr Carrano went on holiday, his sister and her husband, Mr and Mrs Ferlazzo, would be in charge of the till and money and he would be in charge of the ordering and everything else.
  7. Mr Scotto deposed that Mr Carrano had built relationships with his customers over the years, looked after them and tried to accommodate them, which was reflected in the long opening hours.
  8. Mr Scotto deposed that Mrs Bossi could not have known the daily routine at the shop because, prior to Mr Carrano’s death, she had hardly worked there. Mr Scotto deposed that although the wages books recorded that Mrs Bossi worked at Scala Bros from 5 February 1988 to 25 November 1988 from 5am to 7am on Mondays, Wednesdays and Fridays and from 6am to 2pm on Saturdays, this was incorrect. He deposed that he never saw Mrs Bossi start work at 5am or 6am and she did not work during the week. He deposed that she occasionally worked on Saturdays and during busy Christmas and Easter periods.
  9. Mr Scotto also deposed that the wages books were not an accurate record of his employment at Scala Bros, stating that the entries relating to his days and hours of work were incorrect as were entries relating to his leave.

Wages, deductions and loans

  1. Mr Scotto deposed that he and the other staff were paid their wages in cash every Saturday and that this money came from large cash sales which were not put through the till or recorded. He deposed that except for a fourteen month period during his first marriage to Josephine Schultz between late 1986 to early 1988, for the ten years between 1981 and 1991 Mr Carrano paid him $100 net every week. He deposed that Mr Carrano referred to this as his “pocket money” and explained to him that he would record the balance of his wage in a book called the “Red Book”. He deposed that Mr Carrano said to him words to the effect of:
  2. Mr Scotto deposed that he could not recall Mr Carrano ever telling him what wage he was recording in the Red Book but, because they were family, he trusted that Mr Carrano was doing so correctly and would eventually pay him what he was owed. He also deposed that, at the time, $100 was sufficient for his needs as he worked long hours, did not have time to spend money, lived board-free with his grandparents and had few expenses. In his oral evidence Mr Scotto accepted that Scala Bros had made a number of payments to third parties on his behalf and that he had earned more than $100 a week because many of his living expenses were paid for him.
  3. Mr Scotto deposed that when Mr Carrano gave him additional money, for example to buy clothes, or when he requested it, it would be recorded in the Red Book as a deduction from the money owing to him. He deposed that on the few occasions Mr Carrano showed him the Red Book he did not pay attention to it or check the figures it contained as he trusted Mr Carrano to look after him. In his oral evidence he said that although he asked a few times what the balance in the Red Book was, he was never told.
  4. Mr Scotto deposed that during his marriage to Ms Schultz, Mr Carrano gave him more than $100 every week, although he could not recall how much he had been given, and that it was his understanding that during that period Mr Carrano was not recording amounts in the Red Book. Mr Scotto deposed that after his marriage to Ms Schultz ended in early 1988 he moved back to live with his grandparents and Mr Carrano resumed paying him $100 a week.
  5. Mr Scotto deposed that in February 1992 he married his second wife, Angela (“his wife”). They initially moved into his wife’s parents’ house in Concord and later in 1992 purchased a unit in Cremorne. Mr Scotto deposed that before purchasing that unit he told Mr Carrano that he needed more money and Mr Carrano handed him a bank passbook with instructions to take what he needed. He deposed that all the money in the account, about $20,000 to $25,000, went towards the purchase of his unit in Cremorne. He deposed that he did not know whether this had been a gift from Mr Carrano or whether it was money owing to him from his work at Scala Bros.
  6. Mr Scotto deposed that from about early 1992 Scala Bros began to pay him “a decent regular weekly wage” although he could not recall what it was. He deposed that from 1992 until Mr Carrano’s death in 2009 he continued to receive his wages in cash on Saturdays, without a pay slip. He never counted what he was given and just handed his pay to his wife. She would count it and if there was any missing he would tell Mr Carrano who would say “okay”. Mr Scotto deposed that when he handed his wife his wages she often got angry about the amount he was being paid relative to the number of hours he worked. He deposed that they argued about this regularly. Mr Scotto said that during his employment he was not aware of how much he was earning.
  7. Mr Scotto deposed that between 1992 until shortly before Mr Carrano’s death in June 2009, his weekly cash payments had increased slowly. He assumed during this period that entries were being made in the Red Book in the usual way and that both his wages and his annual leave entitlements were being recorded.
  8. Mr Scotto deposed that in about 2004 he and his wife, together with one of their friends, Peter Panas, started a restaurant business in Homebush called La Scala café (“La Scala”). The business was open six days a week from 7am to 11pm, excluding Sundays. Mr Scotto deposed that when La Scala opened there was a period of about two weeks where, in addition to his full-time work at Scala Bros, he also worked at the café part-time at night.
  9. Mr Scotto deposed that he then for a period of about two months worked reduced hours at Scala Bros, from 4am to 10am, and then worked at La Scala from about 5pm or 6pm to 11pm. He spent the intervening hours resting. He deposed that during this two month period, Mr Carrano paid him less than he was normally paid to take into account his reduced hours at Scala Bros, although he could not recall the amount he was paid. He later took about four weeks unpaid leave from Scala Bros to work full-time at La Scala. Mr Scotto said when working at La Scala he had been paid a wage and that his 2003/2004 tax return was wrong as it did not show the income he had earned at La Scala. He said that he told the accountant about his income from La Scala but had signed the declaration on the tax return without reading it.
  10. Mr Scotto deposed that before Mr Carrano died in June 2009 he was being paid $600 cash each week on Saturdays. He deposed that after Mr Carrano’s death, Mrs Bossi increased his wage to $800 cash every week. However, from February 2010 Mrs Bossi paid him $311 in cash and deposited $489 directly into the bank account he shared with his wife.
  11. Mr Scotto deposed that after he left Scala Bros in May 2010 Mrs Bossi continued to make weekly deposits of $489 into his bank account.
  12. Mr Scotto deposed that he did not receive any pay slips while working for Scala Bros. He later acknowledged in oral evidence that he had received a handwritten pay slip during the first couple of weeks after Ms Bossi took over the business. He deposed that between 1981 and 1991 Mr Carrano organised for his tax returns to be prepared by Scala Bros’ external accountant and Mrs Ciano would send his group certificate to that accountant. Following his second marriage in 1992, his tax returns were prepared by his wife’s accountant. He deposed that Mrs Ciano would hand him his group certificates in an envelope and he did not check them because he trusted Mr Carrano and assumed that they were correct. He said that he would just hand his group certificate to his wife. Mr Scotto said that for his 2004, 2005 and 2006 tax returns, he gave his group certificates to his wife who then sent them to their accountant. He said that the accountant then came to his home, told him that the tax returns were correct and he just signed them without reading them.
  13. Mr Scotto referred to Mrs Bossi’s evidence that he was a company director of Scala Bros from 1 July 1988 to 15 December 1992. He deposed that, until informed by his solicitors before the commencement of this proceeding, he had not been aware that the company records named him as a director. He deposed that he had never attended any board meetings, carried out any director’s duties or received any director’s fees.
  14. Mr Scotto deposed that he never had an ongoing loan facility with Scala Bros. He deposed that apart from $35,000, which he received from Mr Carrano in November 1994 as a loan to purchase his home in Concord and which he repaid in 1995, he did not take out or receive as a loan any of the amounts recorded in exhibit JB-31 to Mrs Bossi’s affidavit. Mr Scotto said that the “loan account” maintained by Scala Bros was his money from the Red Book. He denied that Mr Carrano had been lending him money with an expectation that it would be repaid.

Leave and holiday pay

  1. Mr Scotto deposed that when he married Ms Schultz in late 1986, he took two weeks unpaid leave from Scala Bros for his honeymoon and a further two weeks unpaid leave to move house. He deposed that he did this with Mr Carrano’s permission and denied that his employment was terminated or that he had received a termination payment. Mr Scotto deposed, contrary to Mrs Bossi’s assertions, that he did not spend this period of unpaid leave working full-time at Ms Schultz’s family’s florist business in Chatswood. He deposed that it was not until he had returned from leave on 28 November 1986 that he started to assist them in their florist business. Mr Scotto said that with his former father-in-law he had operated a pots business which was part of the florist and nursery business operated by Ms Schultz’s family. He deposed that he continued to work at Scala Bros’ shop until 4pm and would only go to the florist business afterwards. He said that he worked at the florist business on Sundays from about 7am to 4pm or 5pm and had also worked there on a full-time basis for about two weeks when the business initially opened.
  2. Mr Scotto deposed that in about June 1990 he went to Melbourne for a wedding. He took one and half days off work to attend, being the Saturday afternoon and the Monday.
  3. Mr Scotto deposed that when he married his second wife, Angela, in February 1992 he took two weeks unpaid leave for his honeymoon.
  4. Mr Scotto deposed that in June 1992 he and Angela, together with her cousin, started a cleaning business called Meridien Cleaning Services. He deposed that they operated this business for about six months during which time he and his wife did cleaning work two nights a week. He deposed that during this period he continued to work the same hours at Scala Bros and did not terminate his employment.
  5. Mr Scotto deposed that he took about five days leave when his daughter was born in July 1993 and one day’s leave when his son was born in November 1997.
  6. Mr Scotto deposed that in 2004, following a period of about two months when he worked reduced hours at Scala Bros, he took four weeks unpaid leave from Scala Bros to work full-time at La Scala. He deposed that he did not abandon his position at the shop or walk out without notice. Mr Scotto said that he initially worked at La Scala in the afternoons and at night and then worked full-time after a couple of months. He denied that during that period he had been absent from Scala Bros for ten weeks or that he had had no intention of returning to Scala Bros. He said that he never left Scala Bros and that Mr Carrano had asked him to take holidays
  7. In about May 2004 Mr and Mrs Scotto sold their share of the business to Mr Panas. Mr Scotto said that even though Scala Bros’ records showed that he was not an employee during the periods when he had his own businesses, he had been there.
  8. Mr Scotto deposed that from about 2008 he started to take a couple of days off around the Easter and Christmas public holidays. He deposed that from 25 December 2008 to 19 January 2009 he took fourteen days leave without pay for Christmas and the New Year.
  9. Mr Scotto deposed that when he did take holidays from Scala Bros it was always unpaid leave. He deposed that he would approach Mr Carrano to ask for time off and Mr Carrano would reply in words to the effect of:

which he understood to mean that an entry would go into the Red Book to record the money that was owing to him for his unpaid leave.

  1. Mr Scotto deposed that when he made a comment about the money owing to him, Mr Carrano would defer the conversation and give him reassurances. Mr Scotto deposed that while they never discussed a time frame for when they would work out the money due to him, he always thought that Mr Carrano would do the right thing by him because they were family.
  2. Mr Scotto deposed that in or about January 2010 he went to Fiji for a two week holiday. He deposed that this was the first extended holiday he had had since his honeymoon in 1992. It was also the first time he received holiday pay from Scala Bros. Mr Scotto deposed that until January 2010 he rarely took holidays from Scala Bros. Other than the holidays for his two honeymoons, generally the only days he had off from work were Sundays and public holidays when the shop was closed.
  3. In relation to the specific periods of annual leave recorded in the wages books and set out below, Mr Scotto deposed that he did not take annual leave on those days for the following reasons:
    1. 17 August 2004 – this was Market Picnic Day. The markets were closed and so was the shop;
    2. 23 to 26 August 2004 – the shop was closed for his grandmother’s funeral;
    1. 19 June 2005 – this was a Sunday [he worked Mondays to Saturdays];
    1. 19 August 2005 – the wages book records that he was at work on this day. However, on 16 August 2005 the shop was closed for Market Picnic Day;
    2. 3 to 6 June 2006 – the wages book records that he was at work (except Sunday 4 June 2006 when the shop was closed);
    3. 15 August 2006 – the markets were closed for Market Picnic Day;
    4. 7 September 2007 – the wages book records that this was a holiday;
    5. 6 November 2007 – this was Melbourne Cup day and also Market Picnic Day. The markets were closed and so was the shop; and
    6. 25 December 2008 to 19 January 2009 – he took a fortnight’s leave without pay.

Events from June 2009

  1. Mr Scotto deposed that after Mr Carrano’s death Mrs Bossi and her husband, Dr John-Paul Bossi, together with Mrs Bossi’s cousins, Benito Ferlazzo and Ms Mace (who are brother and sister), took over the running of the shop. He deposed that he continued to arrive at the shop at between 4am and 4.30am, Mondays to Thursdays, and at 4am on Fridays and Saturdays and that he performed his normal duties. He deposed that pursuant to Mrs Bossi’s instructions, however, the shop closed earlier four days a week, usually at between 2.30pm and 3pm rather than at 4pm. He deposed that during that period:
    1. Dr Bossi worked at the shop from about 5am to 7.30am and then went to his dental surgery;
    2. Mrs Bossi worked from about 10am to 2.30pm and did the banking and stock control on her computer;
    1. Mr Ferlazzo worked in the shop from 5am to 11am and also had bookkeeping responsibilities;
    1. Ms Mace worked twice a week as bookkeeper from about 9.30am to 2pm; and
    2. there were also about four or five other permanent casual workers.
  2. Mr Scotto deposed that after Mrs Bossi took over the shop she made it very difficult for him to continue working there. He deposed that she did not want to listen to his opinion, even though he had been working at the shop for almost thirty years while she had barely worked there at all. He deposed that on 5 May 2010 he and Mrs Bossi had a disagreement which resulted in him walking out of the shop and ending his employment. Mr Scotto said that he walked out of Scala Bros because he was forced out. He admitted that he did not mention the Red Book to Mrs Bossi until the day he left Scala Bros.
  3. Mr Scotto deposed that shortly after he left Scala Bros he went back to the shop and asked Mrs Bossi to work out what was owing to him. He deposed that he and his wife also asked their accountant to work out what Scala Bros owed him. Subsequently, their accountant gave them a document setting out his “draft workings” of Mr Scotto’s entitlements.
  4. On 12 August 2010 his wife took the accountant’s figures to Mrs Bossi who then told her of the alleged loan from Scala Bros to Mr Scotto.

Angela Scotto

Hours of work

  1. Mrs Scotto deposed that after she and Mr Scotto married in February 1992, they moved into her parents’ house in Concord. She deposed that her husband continued to work the same days and hours he had worked since they started dating in late 1987 or 1988, namely, Mondays to Saturdays from about 4am to 4.30pm or 5.30pm. Mrs Scotto agreed that she had never seen her husband arrive at or leave work.
  2. Mrs Scotto deposed that in about September 1993 she, her husband and their newborn daughter moved out of her parents’ home in Concord and into a unit at Cremorne. She deposed that her husband continued to work at the shop from Mondays to Saturdays and would leave home for work at about 3.30am.
  3. Mrs Scotto deposed that she returned to work approximately four months after their daughter was born in July 1993. She deposed that during this period her husband’s grandmother, Mrs Carrano, looked after their daughter two days a week in Seaforth. On those days, she would go to Seaforth straight after work, arriving at about 4.30pm, and her husband and Mr Carrano would arrive later, usually by about 5pm, except on Fridays when they closed the shop a little later and would get home at about 5.30pm. Mrs Scotto deposed that her mother looked after their daughter three days a week in Concord. She deposed that on those occasions she would pick up her daughter after work and then return to their unit at Cremorne at around 6.30pm. She deposed that her husband would already be at home when she arrived.
  4. In November 1994 Mr and Mrs Scotto purchased a home in Concord. Mrs Scotto deposed that her husband would leave their home to go to work six days a week at about 3.50am and return home at about 4.30pm. She deposed that until 2004 she was usually at home by 4pm so she would see when her husband returned from the shop.
  5. Mrs Scotto said that Mr Carrano had been in charge of the shop. She said she never saw any of his relatives there when he was on holiday because she only visited occasionally.

Wages and loans

  1. Mrs Scotto deposed that she managed the family’s finances because her husband had no interest in doing so, or in their finances generally. She deposed that from the time they were married in 1992 until Mr Carrano’s death in June 2009, every Saturday her husband would hand her his cash wages from Scala Bros. She deposed that the amount would increase by $50 every couple of years except in December 2004 and June 2009 when her husband’s wage was increased by $100 and $200 respectively. Mrs Scotto deposed that, to the best of her recollection, her husband handed her the following cash amounts each week:
    1. $350 from February 1992 to November 1993;
    2. $400 from December 1993 to November 1996;
    1. $450 from December 1996 to November 2001;
    1. $500 from December 2001 to November 2004;
    2. $600 from December 2004 to May 2009; and
    3. $800 from June 2009 to 31 January 2010.
  2. Mrs Scotto deposed that from 1 February 2010 to 1 May 2010, her husband handed her $311 cash each week and a further $489 was paid into their joint bank account. She agreed that she was never there when Mr Scotto was paid and that she did not know what he received.
  3. Mrs Scotto deposed that she was angry and frustrated by her husband’s financial arrangement with Scala Bros. She deposed that they often argued about what she perceived to be her husband’s small wage relative to the hours that he worked as well as his lack of holiday pay. She deposed that her husband would invariably respond by saying words to the effect of:
  4. Mrs Scotto deposed that some time after her husband left Scala Bros she noticed that the company had been making regular deposits of $489 into their account. She deposed that for the period 17 May 2010 to 28 June 2010 the deposits from Scala Bros totalled $3,423.
  5. Mrs Scotto deposed that the only financial contribution that she could recall receiving from Mr Carrano was the $35,000 he lent them so they could purchase their home in Concord in 1994. She deposed that this amount was repaid to Mr Carrano in 1995 when she and her husband sold their property in Cremorne.
  6. Mrs Scotto deposed that as far as she was aware her husband did not borrow any money from Scala Bros during their marriage.
  7. Mrs Scotto said that she was aware that a superannuation fund wrote annually to Mr Scotto advising him about his superannuation because she was the one who opened their mail. She said that she had shown Mr Scotto the superannuation statements and that he was aware of the superannuation contributions made on his behalf by Scala Bros.

Leave and holiday pay

  1. Mrs Scotto deposed that when she and her husband married in February 1992 they went to Vanuatu for ten days for their honeymoon.
  2. Mrs Scotto deposed that in mid-1992, to earn some extra income, she and her husband, together with one of her cousins, started a cleaning business called Le Meridien Cleaning Services. Mrs Scotto deposed that she and her husband continued to work at their respective day jobs but for two nights a week they would also do some cleaning work. She deposed that they sold the business after four or five months because the income they earned was only sufficient to cover the business’s expenses. She deposed that during this period her husband continued to give her his weekly wage to bank.
  3. Mrs Scotto deposed that she could list the few times that she and her husband went on a holiday with their children. These were:
    1. two to three days in Mona Vale in about 1994 with Mr and Mrs Carrano and other family members;
    2. four days in Terrigal in about January 1999;
    1. three to four days on a house boat on the Hawkesbury River on two occasions;
    1. a one week holiday to Lemon Tree Passage in about 2005 or 2006;
    2. a ten day holiday in Brisbane in January 2009; and
    3. a ten day holiday in Fiji in January 2010.
  4. Mrs Scotto deposed that with the exception of the ten days in January 2010, her husband told her that he did not receive any holiday pay for these breaks. She said that throughout his employment with Scala Bros she never saw any cheques for her husband’s holiday pay other than one in 2010.
  5. Mrs Scotto deposed that in February 2004 she and her husband and Mr Panas and his wife Ria opened a business in Homebush called La Scala café, which was a combined café, delicatessen, supermarket and bottle shop. She deposed that La Scala was open six days a week (Tuesdays to Sundays) from 7am to 10pm. She deposed that during its first three or four weeks of operation, her husband would go to work at Scala Bros and then from about 4pm to about 7pm or 8pm would work at La Scala. She deposed that when La Scala started to get busy she told her husband that she needed his help as she was having difficulties working with Mrs Panas. After this conversation, her husband took two months leave from Scala Bros in March and April 2004 to work full-time at La Scala.
  6. Mrs Scotto deposed that her husband told her that he had not been paid for March and April 2004. She deposed that in about May 2004 she and her husband sold their share in La Scala to Mr and Mrs Panas. Afterwards, her husband went back to work at the Scala Bros shop full-time.

Events from June 2009

  1. Mrs Scotto deposed that Mrs Bossi took over the running of the shop after Mr Carrano’s death in June 2009. She deposed that her husband’s relationship with Mrs Bossi deteriorated in the following months and in May 2010 he decided to leave Scala Bros.

Suzanne Scotto

  1. Suzanne Scotto is Mr Scotto’s step-mother and lives interstate. She deposed that she married Mr Scotto’s father in 1994 and had been to Sydney at least six times since then. She deposed that she and her husband visited the shop on each occasion and that, each time, Mr Scotto was working. She deposed that saw Mr Scotto serving customers, stacking shelves and moving stock.
  2. Annexed to Suzanne Scotto’s affidavit were two photographs of Mr Scotto behind the counter at Scala Bros, holding his infant daughter. Suzanne Scotto described the photographs as being of Mr Scotto “working at Scala Bros in early 1994. Paul’s daughter Claira is only a few months old in the photograph”.
  3. Suzanne Scotto deposed that when they visited Sydney she and her husband sometimes stayed with Mr and Mrs Carrano and sometimes with Mr and Mrs Scotto. She deposed that on the occasions when they stayed with Mr and Mrs Carrano, her husband would go to the shop early in the morning to assist. On the occasions when they stayed with Mr and Mrs Scotto, she heard Mr Scotto getting up at about 3am to go to work.

Oriana Ciano

  1. Mrs Ciano deposed that she had been Scala Bros’ bookkeeper between 1985 and January 2008, working in the office above the shop. From the early 1990s she generally only worked on Wednesdays.
  2. Mrs Ciano deposed that her usual hours at Scala Bros were between 10am and 2pm but they varied depending on the amount of work she had to do. She deposed that she had occasionally worked until 3pm or until the shop closed at 4pm.
  3. Mrs Ciano deposed that under the direction of Mr Carrano she was responsible for:
    1. recording in the wages books staff members’ hours of work, wages, sick leave and holiday leave;
    2. writing cheques to pay suppliers, bills and other expenses; and
    1. recording cheque payments in the general ledger books.
  4. Mrs Ciano deposed that when recording staff members’ hours of work, she filled in the hours for the whole week by copying each employee’s hours from the previous week. She deposed that she did not change the times and assumed they were correct unless Mr Carrano instructed her otherwise. Mrs Ciano deposed that Mr Carrano had not given her any time sheets, bundy cards or other records setting out Scala Bros’ employees’ hours of work. She did not record any employee lunch breaks.
  5. Mrs Ciano deposed that even though she was aware of the penalty and overtime rates to which employees were entitled, she did not record them because Mr Carrano told her that he did not want to pay the rates. She deposed that she had never prepared any employee pay slips.
  6. Mrs Ciano deposed that she recorded in the wages books that Mr Scotto worked eight hours a day, five days a week, which she knew was incorrect because she knew from her own observations that Mr Scotto worked from opening to closing six days a week including Saturdays. Mrs Ciano said that although she had not observed Mr Scotto working on Saturdays, Mr Carrano had told her that he had no-one other than Mr Scotto he could rely on or who could help him and she assumed that this was also the case on Saturdays. Mrs Ciano deposed that she recorded that Mr Scotto worked eight hours a day because that was how Mr Carrano wanted it. She deposed that the wages books recorded Mr Scotto’s starting and finishing times changing over time but always that he worked eight hours a day, five days a week, even though this was incorrect.
  7. Mrs Ciano deposed that Mr Carrano would tell her the weekly amount to pay Mr Scotto, an amount which did not change until Mr Carrano told her to increase it. Mrs Ciano deposed that if the award pay rates were increased, Mr Carrano would initially tell her to keep Mr Scotto’s wages the same but after a period Mr Carrano would tell her to give Mr Scotto an amount greater than his award rate.
  8. Mrs Ciano deposed that she recorded Mr and Mrs Carrano, Mrs Ferlazzo and Mr Scotto in the wages books because they worked full-time at the shop for many years and that other members of the family were not recorded in the wages books because, apart from Mrs Bossi in 1998, they were hardly ever there.
  9. Mrs Ciano said that when Mr Carrano employed a new employee, he would give them a trial period of about a week or two before putting them in the wages book. She deposed that when a staff member went away for an extended period of time she would record them in the wages books as “terminated”. If they came back or Mr Carrano re-employed them, she would record them in the wages books as “re-commenced”. Mrs Ciano deposed that this occurred even when an employee was away for a short period. She said that if Mr Scotto was away for an extended period of time, when he returned, it might have been two weeks before Mr Carrano put him back in the wages book.
  10. Mrs Ciano said that her practice at Scala Bros in relation to holiday pay was to calculate how much holiday pay employees were entitled to at the end of a twelve month period of employment and to issue them cheques for the amounts to which they were entitled. She said that if an employee left before they had worked a year, she would calculate their holiday pay and pay them their entitlement. Mrs Ciano recorded holidays and holiday pay payments in the wages books and identified the cheque number relevant to such payments.
  11. Mrs Ciano deposed that, as far as she could recall, Mr Scotto rarely took any holiday leave from Scala Bros. She deposed that the entries “terminated” and “recommenced” were made in respect of Mr Scotto when he married and when he went on leave but she did not recall writing him any cheques for holiday pay. She later agreed that, according to Scala Bros’ records reproduced in exhibit J, a number of cheque payments had been made to Mr Scotto for holiday pay. Mrs Ciano also agreed that Scala Bros’ wages records for 1986-1987 recorded that Mr Scotto’s employment was terminated in October 1986, that he was paid ten weeks’ holiday pay and that he did not return to Scala Bros until April 1987.
  12. Mrs Ciano deposed that Mr Carrano paid the staff’s wages in cash – which she never handled – and as far as she was aware he also did all the banking and counting of the till. Mrs Ciano said that she had calculated what was owed to employees and recorded it in the wages books but had not been involved in paying employees. She deposed that she created the general ledger books from the details recorded in the company cheque butts and from bank statements showing that the cheques had been presented. At the end of each financial year, the ledgers were given to Mr Samios, Scala Bros’ external accountant, to prepare the company’s annual financial reports and tax returns. Mrs Ciano said that it had been her responsibility to balance the books and to deal with Mr Samios and to communicate with him to ensure that Scala Bros’ ledgers and audited accounts were accurate. She deposed that Mr Samios would come to the shop at the end of every financial year to write out the staff’s group certificates.
  13. Mrs Ciano agreed that it had been common practice for Scala Bros to pay for goods and services for Mr Scotto. She accepted that she had listed in the ledger, as wages, various expenses which Scala Bros paid to third parties on behalf of Mr Scotto. She said that he received payment in the form of expenses paid on his behalf, cash given to him and ordinary wages which increased over time in accordance with the award. Mrs Ciano said that Mr Carrano aimed to pay Mr Scotto an amount that was $200 more than the amount he was entitled to under the award. Mrs Ciano said that Mr Scotto was the only employee who received above award wages, monetary benefits and had expenses paid on his behalf.
  14. Mrs Ciano said she could not recall the Red Book. After being taken to some ledger entries, Mrs Ciano agreed that there was a loan account in relation to Mr Scotto but said that she was unaware of any loans. She said that she could not remember why she had written “loan” next to ledger entries for payments made to Mr Scotto.
  15. Mrs Ciano agreed that her ability to give evidence about what happened at Scala Bros was limited because she worked in the upstairs office. She however said that she would go downstairs many times and when she finished work at 2pm she would observe Mr Scotto cutting, serving, making coffee and instructing other staff. She admitted that even from her limited observation, Mr Carrano was in charge. She said that Mr Carrano, not Mr Scotto, was the supervisor.

Ross Cicco

  1. Mr Cicco was the director of a transport company called Pony Express which, he deposed, had been delivering fruit and vegetables to Harris Farm Markets since 1973. He deposed that from 1975 to 1989 the Harris Farm Markets’ warehouse where he worked was located opposite Scala Bros.
  2. Mr Cicco recalled that when he was working at the warehouse opposite Scala Bros, he would say goodbye to Mr Carrano and Mr Scotto at the end of the day before he went home at about 3pm or 3.30pm. At the time, they would be packing up and cleaning the shop for closing. He said that Scala Bros may have closed at 4pm occasionally but not every day and that it rarely closed before 3pm or 3.30pm.
  3. Mr Cicco deposed that he observed that Mr Scotto did many things: he was a manager and labourer, he rang representatives and ordered products, he made coffees and sandwiches and supervised and gave instructions to other staff. He said that Mr Scotto had been the one to order things, such as wine, for him.
  4. Mr Cicco said that Mr Carrano was the boss. He gave evidence that when Mr Carrano was away Mr and Mrs Ferlazzo ran and supervised the shop, utilising Mr Scotto’s knowledge of the representatives.
  5. Mr Cicco said that he had learnt from Mr Carrano that Mr Scotto had wanted to fix up Scala Bros but Mr Carrano would not let him so Mr Scotto decided to set up La Scala. He said that Mr Carrano missed Mr Scotto when he was gone and was not happy that he had left. He said that Mr Carrano was happy when Mr Scotto returned after three months.
  6. Mr Cicco deposed that he occasionally saw Mrs Bossi at Scala Bros but she did not work there regularly until after her father died in 2009. Mr Cicco gave evidence that Mrs Bossi closed Scala Bros at 2pm and sometimes earlier.

Hugh Molloy

  1. Mr Molloy deposed that since February 1988 he had worked at Antico International Pty Ltd which was based at the Flemington Markets near, but not within sight of, Scala Bros.
  2. Mr Molloy deposed that he regularly saw Mr Scotto opening the shop between 4am and 5am and closing at around 3pm. He deposed that, based on his observations, Mr Scotto was the first person at the shop in the morning and last person to leave at the end of the day.
  3. Mr Molloy deposed that he had been a regular customer of the shop since 1988. He used to go to the shop for coffee every day, sometimes up to three times a day, and always saw Mr Scotto there. Mr Molloy said that he rarely had coffee with Mr Scotto who was usually very busy but deposed that prior to the birth of his son in February 1994, they did discuss their wives’ concurrent pregnancies.
  4. Mr Molloy said he also used to go for a coffee just before 3pm because he knew the shop shut at 3pm. He deposed that he saw Mr Scotto doing many different things at the shop such as making coffees and sandwiches, stacking the fridge, cleaning and dusting, cooking, serving customers, unloading trucks, using the forklift, supervising staff and ordering products.

Joseph Currao

  1. Mr Currao was the director of Evergreen Technologies Pty Ltd which had been trading as J&D Provedore at the Flemington Markets since 2003. He deposed that, until 2010, his business had been located in the same building as the Scala Bros shop, although not within sight of it.
  2. Mr Currao deposed that he had known Mr Carrano for about thirty years and considered him a close friend. He deposed that from 2003 until Mr Carrano’s death in June 2009, he would go to Scala Bros at about 4am or 4.30am every Monday to Saturday for a coffee from Mr Scotto. It was also his routine to go there after his work finished and socialise with other regulars, including Mr Carrano and sometimes Mr Scotto. Mr Currao deposed that when he left at about 1.30pm to 2.30pm, the shop was open but getting ready to close. He said that he understood that Scala Bros usually closed at 3pm and seldom before that.
  3. Mr Currao deposed that when he was at the shop he saw Mr Scotto making coffees and sandwiches, filling shelves, supervising staff and ordering products. He deposed that from what he saw, Mr Carrano could not have run the business without Mr Scotto. Mr Currao said that, based on his observations of Mr Scotto always being at the shop, managing the shop, directing the staff and signing for deliveries, he believed that Mr Scotto was the boss when Mr Carrano was away. He said that during the periods Mr Carrano was away, when he went to Scala Bros in the early morning Mr and Mrs Ferlazzo would not be at the shop and would arrive later.

Norm Moses

  1. Mr Moses deposed that he had been working at the markets since 1975. He deposed that he met Mr Scotto while the latter was working at Scala Bros and had known him for about twenty years.
  2. Mr Moses deposed that he had been a regular customer at Scala Bros. He deposed that, based on his observations, Mr Scotto opened the shop at around 4am and closed it by about 3pm. He said that when he finished work at about 3pm, the shutters at Scala Bros would sometimes be down but sometimes when he finished after 3pm the shutters would still be up. However, he said that Scala Bros was not open until 4pm every day. He deposed that he saw Mr Scotto doing a little bit of everything: he made coffees and sandwiches, stacked shelves, ordered products, served customers and supervised the other staff.
  3. Mr Moses deposed that about five years earlier Mr Scotto had been away from the shop for about two to three months. He understood from Mr Carrano at that time that Mr Scotto was working on another venture in Homebush. Mr Moses deposed that apart from that period and except for some long weekends, Mr Scotto was always at the shop. He said that when Mr Scotto left Scala Bros for those two months, it was a source of sadness to Mr Carrano but not friction.

Cosimo Cremona

  1. Mr Cremona was a wholesale fruit merchant who deposed that until 2009 his business’s warehouse had been located opposite Scala Bros. He first met Mr Scotto there in the early 1980s.
  2. Mr Cremona deposed that he used to go to Scala Bros two to three times a week for a coffee or for lunch. On Saturdays, he would go there for a coffee between 4.30am and 5am and would see Mr Scotto preparing the delicatessen and the coffee machine. On other occasions, he would see Mr Scotto making coffees and sandwiches, cleaning the shop floor and serving customers. He deposed that if he went to the shop in the afternoon at around 2.30pm, he would see Mr Scotto cleaning up the shop after lunch and getting it ready for closing but he was unsure whether the shop closed at 3pm or 3.30pm.
  3. Mr Cremona deposed that he occasionally saw Mrs Bossi at the shop when she came to visit her father. He deposed that she started working at Scala Bros after her father’s death in June 2009.

Giuseppe Cimino

  1. Mr Cimino was the owner of a business called Avocado Tree Fruit Market at Newport.
  2. Mr Cimino deposed that he first met Mr Scotto when, at the age of sixteen, he started going with his father to Flemington Markets to buy produce for their business. He deposed that he and his father had gone to the markets about three times a week in summer and once a week in winter and that during those visits they would go to the Scala Bros shop for a coffee between about 4am and 6am.
  3. Mr Cimino deposed that for the previous ten years he had been going to Flemington Markets at 4am from Monday to Friday in summer and at 4am on Mondays, Wednesdays and Fridays in winter. He deposed that his routine when going to Flemington Markets was to go to the Scala Bros shop between 4am and 5.30am for his first coffee which he would sometimes have with Mr Scotto. When he had finished buying produce for his business, he would go back to Scala Bros between 7am and 8am for his second coffee.
  4. Mr Cimino deposed that he had been going to the shop from 1986 until Mr Scotto left in May 2010 and during that period he could not recall Mr Scotto being away for any significant period of time. He said that as far as he could remember from the time he started going to Scala Bros with his father, Mr Scotto was there. He said that he only remembered Mr Scotto being away from Scotto Bros for weekends and a week or two.
  5. Mr Cimino deposed that when he was at Scala Bros he would see Mr Scotto washing the front of the shop, getting the coffee machine ready, taking orders, stacking shelves, cleaning, ordering stock, using the cash register and making coffees and sandwiches. He said that Mr Carrano was the boss. Mr Cimino said that when Mr Carrano was away, Mr and Mrs Ferlazzo would work at Scala Bros making sandwiches and coffee but Mr Scotto would be the one giving directions to staff.

RESPONDENTS’ EVIDENCE

Giuseppina Bossi

Background

  1. Mrs Bossi deposed that she was the sole director of Scala Bros which operated as a continental grocery, delicatessen, liquor store and coffee and sandwich bar. She deposed that her father, Andrea Carrano, had been the owner, manager and proprietor of Scala Bros from 1979 until his death in 2009. She deposed that Scala Bros traded six days a week from Monday to Saturday and that the busiest period was after 7am with the shop closing at around 2pm. Mrs Bossi said that the shop had a standard closing time and would close at “more or less the same time”. She said that most of the weekday trading at the markets was finished by 10am.
  2. Between 1988 and 1993, Mr Carrano travelled to Italy for periods of up to two months at a time. Mrs Bossi deposed that during those periods her mother and her uncle and aunt, Mr and Mrs Ferlazzo, were solely responsible for the cash sales, banking and payments to staff and suppliers.
  3. Mrs Bossi deposed that in the 1980s her father gave her the power to sign cheques but said that she had rarely exercised it. She deposed that Mr Scotto had never had the power to sign cheques, nor was he responsible for staff payments or the banking of daily takings. Mrs Bossi deposed that Mr Scotto had not been privy to any financial records, bank statements or bookkeeping of Scala Bros.
  4. Mrs Bossi deposed that over various periods from 1967 whilst she was at school, university and employed full-time elsewhere, she had assisted at the shop. Mrs Bossi said that from 1980 to 1984 when she worked at the shop, possibly one morning a week, she received pocket money from her father. She said that she did not receive any pay slips or regular group certificates and did not remember lodging a tax return.
  5. Mrs Bossi said that in 1981 she had not known that she had been appointed a director of Scala Bros and only became aware of this when she was first given a document to sign in that capacity. She said that when she signed documents for Scala Bros her father would tell her where to sign. Mrs Bossi said that she did not remember participating in anything described as a board meeting or resolution when she signed the directors’ statement forming part of Scala Bros’ financial statements from 1994. Mrs Bossi said that she remembered Mr Carrano asking her to attend the shop to sign documents but she could not remember reading them. Mrs Bossi’s evidence was to the effect that at that time her appreciation of the need to read and understand documents she was signing was not sophisticated. She also said that she did not remember questioning her father about what she was signing because she trusted that he would not put her at risk. Mrs Bossi said that she had not understood that a director had to oversee the affairs of a company. She said she had only had one share in a business that belonged to her father and it was he who ran it.
  6. According to Scala Bros’ wages books, Mr Scotto initially commenced work with Scala Bros during the week of 4 May 1984. Mrs Bossi deposed to her belief that Mr Scotto moved to Sydney and started working at Scala Bros around that time, not in 1981.

Mr Scotto’s “first period of employment” – 4 May 1984 to 24 October 1986

  1. According to Mrs Bossi, Scala Bros’ records indicated that Mr Scotto was first employed from 4 May 1984 to 24 October 1986. Mrs Bossi deposed that she also worked at the shop between 1984 and 1986, including on Saturdays. She said that she generally remembered Mr Scotto working on the Saturdays she was working except during the Easter period when he used to take a break. Mrs Bossi said that she would usually arrive at about 9am. When she was there at opening time, the shop opened at 5am.
  2. Mrs Bossi deposed that she observed Mr Scotto undertaking the following duties:
    1. serving customers, making sandwiches and coffees, stacking shelves and cleaning;
    2. ordering stock under her father’s direction;
    1. making deliveries around the markets;
    1. slicing goods;
    2. serving behind the delicatessen;
    3. cutting the cheese wheel;
    4. filling the fridge; and
    5. rotating the stock.
  3. Mrs Bossi deposed that whilst Mr Scotto trained other staff and directed them to do certain tasks such as stocking shelves, he was not a supervisor and was not responsible for paying wages, rostering or paying the rent. Mrs Bossi deposed that Mr Scotto took a day off during the week but was unsure whether this occurred throughout his employment with Scala Bros.
  4. In 1986 Mr Scotto went to work for Ms Schultz’s family’s florist business.

Mr Scotto’s “second period of employment” – 28 November 1986 to 24 December 1986

  1. Mrs Bossi deposed that Scala Bros’ wages books recorded that Mr Scotto returned to work at the shop on 28 November 1986 for a period of approximately four weeks. Mrs Bossi deposed that this was one of the busiest periods for the shop.

Mr Scotto’s “third period of employment” – 3 April 1987 to 9 April 1992

  1. Exhibited to Mrs Bossi’s affidavit were Scala Bros’ wages books which showed that Mr Scotto had been employed from 3 April 1987 until the week ending 9 April 1992. The general ledger and/or the wages books indicated that Mr Scotto took the following periods of leave:
    1. one week annual leave on 8 June 1990. He received a payment in lieu of three weeks annual leave on 29 June 1990;
    2. annual leave during the period between 8 August 1991 and 15 September 1991; and
    1. a payment on 15 April 1992 for three weeks’ holiday.
  2. In February 1992 Mr Scotto married his second wife, Angela. Mrs Bossi deposed that between 1 July 1992 and 30 May 1994 the Scala Bros wages books had no records for Mr Scotto and that no group certificate was issued to him for the year ending 30 June 1993. Mrs Bossi said that Mr Scotto talked about his cleaning business and may have told her when he started it. She said that even though she was not as Scala Bros at the time, she was aware from discussions with her parents that Mr Scotto was gone from Scala Bros.

Mr Scotto’s “fourth period of employment” – 30 May 1994 to 19 March 2004

  1. Mrs Bossi deposed that around 19 March 2004 her father told her that Mr Scotto had left Scala Bros without notice to start his own business, La Scala. She said that Mr Carrano was upset because Mr Scotto had not told him about his new business and had left suddenly.
  2. Mrs Bossi said she did not understand the words “time off”, which appeared in the wages book for May 2004, to mean that Mr Scotto was still working for Scala Bros at that time and was simply having some time off. Mrs Bossi said that based on the fact that on the page in question the word “left” had been rubbed out, on the further fact that a superannuation form in relation to Mr Scotto was marked “terminated” and also on her own experience, she knew that Mr Scotto had left to open his own business. She believed that a change had been made to the wages book and concluded that there had been some form of agreement or discussion between her father and Mr Scotto about the latter’s absence during that period.
  3. Mrs Bossi deposed that between November 2003 and 20 August 2004 her father would close the shop at 2pm. She deposed that she helped her father in the shop during the 2004 Easter period, along with three employees.

Mr Scotto’s “fifth period of employment” – 7 June 2004 to 5 May 2010

  1. Mrs Bossi deposed that Mr Scotto returned to Scala Bros on or around 6 June 2004.
  2. Mrs Bossi deposed that after her father’s death she took over the running of Scala Bros with the help of her husband, and received financial guidance and assistance from her cousin, Mr Ferlazzo, and bookkeeping and accounting assistance from her other cousin, Ms Mace. She deposed that she re-opened the shop on 20 June 2009. Mrs Bossi deposed that her responsibilities as the owner/manager included hiring staff, paying wages, ordering stock, banking takings and liaising with Mr Samios.

Mr Scotto’s duties

  1. Mrs Bossi said that after the dispute with Mr Scotto started, she noticed that he was classified as a shop assistant grade 1 in the wages books. She said that she observed him performing the role of a shop assistant grade 1: serving customers, slicing delicatessen goods, stocking shelves, making coffee and cleaning. Mrs Bossi agreed that senior employees, including Mr Scotto, would train new employees. She said that Mr Scotto would tell new employees how to perform their job, give them direction on what to do and teach them how to make coffee and sandwiches. Mrs Bossi said that it was Mr Scotto’s practice to instruct other employees to slice the “sandwich deli goods” in the afternoon so that they would be ready for the morning.
  2. Mrs Bossi said that as part of setting up the shop in the morning, tables and chairs had to be set up outside. She said that there was no need to cook food when the shop opened as people did not want to have breakfast at that time, just coffee and perhaps a slice of toast. They started serving breakfast at about 6am or 7am. She also said that they did not fry any vegetables in the mornings.

Opening hours after Mr Carrano’s death

  1. Mrs Bossi deposed that in June 2009 she instructed all the staff at the shop that it was to open at 5am. Mrs Bossi deposed that Mr Scotto opened the shop every morning, helped on different mornings by her, Dr Bossi or Mr Ferlazzo. Mrs Bossi deposed that on Mondays, Wednesdays and Fridays she would arrive at the shop by 9am and leave when the shop closed at 2pm; on Tuesdays she did not work at the shop, on Thursdays she arrived at 11am and left at 2pm and on Saturdays she arrived by 5am and left when the shop closed at 2pm.

Business relationship with Mr Scotto

  1. Mrs Bossi said that after she took over the business Mr Scotto was the only full-time employee. She said that until she understood the routine and the running of the business, she relied on his familiarity with it and followed his advice on the ordering of stock.
  2. Mrs Bossi deposed that on 20 June 2009 Mr Scotto told her that her father had paid him $800 per week, which she understood to be his net wage. She said that she initially paid Mr Scotto $800 in cash per week but after some time began paying him partly in cash and partly by electronic funds transfer. She said that although the business had started paying wages online, Mr Scotto had wanted to be paid in cash. Mrs Bossi said that she told Ms Mace to continue recording Mr Scotto’s wages as the same so Ms Mace paid Mr Scotto $550 online and she (Mrs Bossi) paid him the rest in cash. She said they realised their error when they were compiling the group certificates in July 2010 and made the necessary adjustments and paid the outstanding tax. Mrs Bossi said that she gave Mr Scotto her version of a pay slip which included the amount he was paid, the denominations given to him and the date he received the money. She said that she had not engaged a payroll service to do the wages at Scala Bros but had carried on with Mr Carrano’s methods. Mrs Bossi said that she had instructed Ms Mace to start recording Mr Scotto in the wages books as working on Saturdays. Previously, he had attended on Saturdays, and presumably worked, but not been recorded as having done so.

Mr Scotto’s departure

  1. Mrs Bossi deposed that when she was the owner of Scala Bros, Mr Scotto left his employment twice, once in September 2009 and again in May 2010. She deposed that in the week commencing 3 May 2010 she had a discussion with Mr Scotto after he had ordered some supplies without her approval. Mrs Bossi deposed that on 5 May 2010 she and Mr Scotto had a disagreement and Mr Scotto left the shop. She deposed that on 11 May 2010 Mr Scotto returned and she told him that it would be best if he looked for other employment as the shop was going to be sold. On 21 August 2010 the Scala Bros shop had its final trading day and on 26 August 2010 its sale settled.

Mr Scotto’s loan

  1. Mrs Bossi deposed that she first questioned Mr Scotto about the loan on 31 August 2009. He denied owing Scala Bros any money and appeared agitated. Mrs Bossi deposed that after receiving emails from Mr Samios in October 2009, she realised that the $30,430 owed by Mr Scotto was an aggregate figure made up of a number of smaller loans.
  2. Mrs Bossi deposed that she and Ms Mace assumed that long service leave was owed to Mr Scotto and thus continued to pay him after he left until they could work out his entitlements. Mrs Bossi deposed that on 10 August 2010 Mr Scotto came to the shop and asked if she had worked out his final entitlements. Mrs Bossi deposed that she showed Mr Scotto an Excel work sheet which Ms Mace had been working on showing that he owed Scala Bros money.
  3. Mrs Bossi deposed that on 12 August 2010, Mrs Scotto came to the shop with an Excel sheet entitled “Paul Scotto draft working of entitlements” showing that Mr Scotto had been underpaid $470,875.46. Mrs Scotto was then presented with a copy of Mr Scotto’s loan account and Mrs Bossi deposed that she said:
  4. Mrs Bossi said that she had not found any document which expressly recorded the loan agreement between Scala Bros and Mr Scotto or set out any loan repayment details.

John-Paul Bossi

  1. Dr Bossi is Mrs Bossi’s husband. Dr Bossi deposed that he had regularly visited the shop and, when he did, had observed Mr Carrano to be in charge. He deposed that he observed Mr Carrano ordering goods, dealing with sales representatives, organising staff rosters and pay, settling ledgers with the bookkeeper and doing the banking. Dr Bossi deposed that he also observed Mr Scotto making coffees, serving customers and loading stock onto shelves. He deposed that Mr Scotto did not perform any of the duties which Mr Carrano undertook.
  2. Dr Bossi deposed that in April 2004, just prior to Easter, he became aware that Mr Scotto had left the employment of Scala Bros and opened a new shop, La Scala, in Homebush. He said in oral evidence that Mr Carrano employed John Sergi to replace Mr Scotto. Dr Bossi said that when Mr Scotto left to run La Scala, Mrs Bossi helped to open the shop until Mr Carrano employed Mr Sergi. Dr Bossi deposed to his understanding that Mr Scotto returned to Scala Bros after a couple of months.
  3. Dr Bossi deposed that in the week commencing 20 June 2009, following Mr Carrano’s death, he had a meeting with Mrs Bossi, Mr Samios, Mr Ferlazzo, Ms Mace and a solicitor about possibly selling Scala Bros. He deposed that as the business was not as profitable as it had been previously, Mrs Bossi decided to work there to try to turn it around before sale. Dr Bossi deposed that the running of the shop was shared between him and Mr Ferlazzo in the early mornings and Mrs Bossi from mid-morning whilst Ms Mace provided bookkeeping assistance. Dr Bossi deposed that during that period, three to four days a week he would arrive at the shop at 4.45am to open at 5am before leaving at 7.30am to prepare for his own work. He deposed that on most occasions Mr Scotto would be at the shop before him but that at times he would arrive late.
  4. Dr Bossi said that when he opened the shop the only thing that required cutting up was the lettuce. He said that they did not prepare any food before opening the shop as this was done when other staff started arriving at 6am in preparation for the customers who came to eat at 7am. He said that as they would cook according to customers’ orders, there was no real cooking beforehand.
  5. Dr Bossi said that he did not receive any payments from Scala Bros but he took groceries. He said that he and Mr Ferlazzo had priced stock when it was delivered but he had no role in preparing the accounts or books.

Silvana Mace

  1. Ms Mace (née Ferlazzo), who is Mrs Bossi’s cousin, said that she started going to Scala Bros on a regular basis in 1984. She deposed that during the late 1980s and the early 1990s she worked at Scala Bros on Saturdays, some school holidays and during the Easter and Christmas trading periods. She deposed that during the lead up to Christmas and Easter she would help to open the shop at 5am on weekdays. Ms Mace said that as she grew older Mr Carrano taught her how to make coffees and count the takings. She said that on weekdays when she arrived at work between 7am and 8am, the shop would already be open and Mr Scotto would be there. She said that Thursdays and Fridays were the busiest days for the shop and deposed that on weekdays the shop’s busiest trading occurred between 5am and 11am or 12pm. Ms Mace said that the shop opened at 6am on Saturdays and closed at 2pm. She deposed that there were different sections in the shop: the delicatessen, the coffee bar and the general shop, with all staff being responsible for cleaning their section of the shop.
  2. Ms Mace said that as she grew older she received pocket money from Mr Carrano as a reward for helping at the shop. She said that she had never witnessed Mr Carrano making payments to other people. Ms Mace said that she never received a pay slip or group certificate from Scala Bros because what she received was pocket money.
  3. Ms Mace deposed that she did not remember when Mr Scotto arrived in Sydney but he was definitely not in Sydney in 1981. She said that when Mr Carrano went on holiday one or both of her parents and Mrs Carrano would open the shop. Ms Mace said that after Mr Scotto arrived in Sydney, Mrs Bossi and Mrs Carrano would no longer stay with her family when Mr Carrano went overseas.
  4. Ms Mace deposed that Mr Scotto worked at the shop as a shop assistant and she had observed him making coffees and sandwiches, serving customers, packing shelves and doing general cleaning duties. She deposed to her recollection of Mr Scotto leaving Scala Bros on three occasions: to join Ms Schultz and her father in their florist business, to run a cleaning business and to open a business similar to Scala Bros called La Scala. Ms Mace said that Mr Scotto had not been at the shop on the Saturdays that she went in following his first marriage. She said that she knew from conversations she had with other people that he had set up a florist business. Ms Mace also said that Mr Scotto had told her when he was leaving to set up his cleaning business and he had not been at the shop during the September school holidays and Christmas trade in 1992.
  5. Ms Mace deposed that Mr Scotto left to run La Scala at around Easter 2004. She deposed that Mr Carrano felt betrayed by Mr Scotto and was devastated. Mr Carrano was very angry that Mr Scotto had not told him that he was setting up his own business and that he left in the lead-up to the busy Easter period. She said that although the wages book recorded that Mr Scotto had taken “time off” during the period he operated La Scala, she had not understood it to mean that he was still employed at Scala Bros because she knew from conversations with Mr Carrano that he had left. She further said that Mr Carrano had employed someone else to replace Mr Scotto during that period.
  6. Ms Mace deposed that in December 2007 Mr Carrano asked her to take over the bookkeeping duties at Scala Bros which she did in January 2008. Ms Mace deposed that she undertook the bookkeeping for Scala Bros on the days she was not working at her part-time job. She deposed that she commenced work at 9.30am and finished close to the shop’s closing time at around 2pm. Her duties included accounts payable, payroll, sales, bank reconciliations, BAS preparations and reconciling daily takings. Ms Mace deposed that until Mr Carrano’s death, all the bookkeeping was conducted manually with all payments made by cheque and wages recorded in handwritten wages books.
  7. Ms Mace said that when she took over the bookkeeping duties for the shop, Mrs Ciano had told her that Mr Scotto and Mr Carrano’s times were always the same. She said that everyone’s roster was the same each week but she had to check with Mr Carrano whether the wages were the same. She said that if they were the same, she just copied the previous week’s information into the new week. Ms Mace said that she had not prepared any pay slips for employees during that period. She said that she had not paid the employees or put together the pays, that was done by Mr Carrano. Ms Mace said that at the beginning of the financial year, she would ask the accountant whether there had been any changes to the award. She said that the accountant would give her direction about the award and then she would ask Mr Carrano about each employee’s classification. She said that it was Mr Carrano who made the decision about each employee’s classification.
  8. Ms Mace deposed that while Mr Carrano was alive, she took direction from him only and only ever discussed queries with him. Following his death, she continued as the bookkeeper, assisting Mrs Bossi. Ms Mace deposed that in July or August 2009 Mrs Bossi added her as a second signatory to the bank cheque account and, after introducing internet banking, gave only her a password to access the bank accounts.
  9. Ms Mace said that prior to Mrs Bossi taking over the running of Scala Bros, she had not recorded the time worked by Mr Scotto on Saturdays. She said that because she had not worked on Saturdays and had only been at the shop for four or five hours a week, she had had to rely on what she was told by Mr Carrano. Ms Mace said that after Mrs Bossi took over, she continued to record Mr Scotto’s time and wages as she had done previously. She said that it was only a year later, in early August 2010, that she and Mrs Bossi discovered that she had been recording Mr Scotto’s time and wages incorrectly. She said that she then created a new wages book to correctly record Mr Scotto’s start time of 5am, that he worked on Saturdays and was paid a wage of $800 instead of $550. Ms Mace said that she started paying Mr Scotto by electronic funds transfer in January 2010 based on what she believed he was entitled to. She said she only became aware in August 2010 that Mrs Bossi had been making additional cash payments to Mr Scotto. Ms Mace said that she had corrected the PAYG and superannuation after discovering that she had been recording the wrong details for Mr Scotto. She said that this was after Mr Scotto had already left.
  10. On 5 May 2010 Mr Scotto left Scala Bros. Ms Mace deposed that about a week or two after that she had a conversation with Mrs Bossi to the following effect:

She deposed that she was not fully aware of the laws relating to long service leave at that stage and she and Mrs Bossi did not know that Mr Scotto was not, according to their subsequent understanding, entitled to it.

  1. Ms Mace deposed that in June or July 2010 she began working through Mr Scotto’s employment history for the previous six years. She contacted Mr Samios seeking assistance in working out Mr Scotto’s entitlements, particularly his long service leave entitlements. Ms Mace said that she contacted Mrs Ciano who told her that Mr Scotto had not been paid his leave entitlements when he left in 2004.
  2. Ms Mace deposed that on 12 August 2010 Mr Scotto came to the shop and asked for a copy of his loan account. She deposed that as she only had one copy of the loan account, she went through it with him and told him that she would email him a clean copy. Ms Mace deposed that Mr Scotto then left the shop and about thirty minutes later Mrs Scotto arrived. Ms Mace deposed that Mrs Scotto handed Mrs Bossi a document titled “Paul Scotto Draft Workings of Entitlement”. She deposed that she, Mrs Bossi and Mr Ferlazzo were shocked by Mr Scotto’s claim of underpaid wages. Ms Mace deposed that she then showed Mrs Scotto a copy of Mr Scotto’s loan account and the latter acknowledged the $35,000 loan made on 24 November 1994 and repaid on 28 July 1995 and the $22,150 loan made on 19 November 1997 but otherwise skimmed past most of the entries saying “I know nothing about these”.
  3. On 16 August 2010 Ms Mace emailed Mr Scotto a clean copy of his loan account and on 21 August 2010 Scala Bros had its final day of trading.
  4. Ms Mace deposed that Mr Scotto did not do any of the banking for the business and that his handwriting was not in any of the deposit books. She deposed that when Mr Carrano was hospitalised in 2008 and 2009 it was Mrs Bossi rather than Mr Scotto who performed the daily task of counting the tills and summarising the takings or writing up the banking. Ms Mace deposed that during her time as bookkeeper she was never aware of Mr Scotto ordering goods. She said that Mr Scotto did not instruct employees on what to do.
  5. Ms Mace deposed that she did not know what Mr Scotto was referring to when he deposed to the practice of not recording large cash sales so as to pay staff wages from takings, given that she reconciled all the takings and expenses, including wages. Ms Mace deposed that when she was Scala Bros’ bookkeeper she was not aware of the Red Book and only became aware of it in August 2010 when cleaning up the office with Mrs Bossi. She deposed that they found a few pages, which were foolscap and not A4, in the middle of an old ledger.
  6. Ms Mace said that she was not paid by either Mr Carrano or Mrs Bossi for the bookkeeping duties she did at Scala Bros, and had not asked to be, but did occasionally receive groceries.

Benito Ferlazzo

  1. Mr Ferlazzo is the son of Mr Carrano’s sister, Giovanna Ferlazzo, and thus Mrs Bossi’s cousin. Mr Ferlazzo deposed that he did not recall Mr Scotto working at the shop when he first started going there in about 1983. Mr Ferlazzo deposed that the shop opened at 5am on weekdays and at 6am on Saturdays. He deposed that from the mid-1980s to the early 1990s the shop would open at 5am and close at 3pm or later on Fridays and at 2pm on Saturdays. From the late 1990s the shop closed at 2pm daily.
  2. Mr Ferlazzo said that he went to work with his mother on a regular basis when he was young, mostly on Saturdays and during school holidays. He said that he started doing tasks around the shop when he was about twelve or thirteen, when he would arrive at the shop around 7am or 8am with his mother. Mr Ferlazzo said that when he was older he would start during the Christmas period at 5am on weekdays and at 6am on Saturdays.
  3. Mr Ferlazzo said that after 1991 or 1992 his mother would work at the shop on a casual basis when she was needed. Mr Ferlazzo said that during the period he worked at Scala Bros on Saturdays and school holidays, Sonia Gapko, his parents, Ms Mace and Mrs Bossi also worked there. He said that they would all work during busy times such as Christmas and Easter but not at any other times. Mr Ferlazzo said that when he arrived at the shop at 5am Mr Scotto would already be there but sometimes he would arrive early and Mr Scotto and Mr Carrano would not have arrived. He said that his start time varied and he worked around his university timetable.
  4. Mr Ferlazzo said that he received varying amounts of pocket money for the work that he did at Scala Bros and Mr Carrano would not allow him to pay for groceries from the shop. He said that he did not ask Mr Carrano for money and he rarely took the money which was offered. Mr Ferlazzo said that he did not see any family members or employees of Scala Bros being paid. He said he never received a pay slip or a group certificate for the pocket money he received.
  5. Mr Ferlazzo deposed that from when he was about twelve or thirteen and while he was studying at university he would help out at the shop on Saturdays. He deposed that Mr Carrano had trusted him with all managerial matters. Mr Ferlazzo said that when Mr Carrano went away, his parents would open the shop. Mrs Bossi seldom opened it.
  6. Mr Ferlazzo deposed that as Saturday was the busiest day for the shop Mr Carrano would pay the wages from that day’s takings and bank the rest of the takings at a night safe. Mr Ferlazzo said that more people came to the shop on Saturdays because there were more people at the markets.
  7. Mr Ferlazzo deposed that Mr Scotto worked at the shop on a full-time basis performing the duties of a shop assistant which included the stacking of shelves, serving coffee, making sandwiches and general cleaning duties. He deposed that he had not seen Mr Scotto ordering stock for the shop or paying suppliers. Mr Ferlazzo said that Mr Carrano was the boss – he was the sole proprietor and looked after everything, from ordering stock to taking the cash takings. Mr Ferlazzo said that they assisted Mr Carrano but he was the boss and everything went through him. He did not agree that Mr Scotto had helped in giving directions to employees, saying instead that it was Mr Carrano who would direct employees on what to do.
  8. Mr Ferlazzo deposed that after his first wedding Mr Scotto left Scala Bros to work for his father-in-law at a florist shop but returned to Scala Bros the following year. Mr Ferlazzo said that Mr Scotto asked Mr Carrano for his job back when his florist/pot business failed.
  9. Mr Ferlazzo said that in 1992, while he was at university, he worked at Scala Bros and that during that time Mr Scotto did not work at Scala Bros because he had started a cleaning business, although he eventually returned. He deposed that in 2004 he became aware that Mr Scotto had again left Scala Bros and then returned.
  10. Mr Ferlazzo deposed that in the summer of 2008/2009 he worked at the shop while Mr Scotto was on holiday and ran the shop with Mr Carrano. He said that the routine in the morning would involve picking his uncle up from home at between 4.30am and 4.45am and, once at the shop, putting out chairs and tables, cutting up meats and salads and serving customers coffee. He deposed that he would receive instructions on managerial matters from Mr Carrano.
  11. Mr Ferlazzo deposed that after Mr Carrano died, Mrs Bossi, with his assistance and that of her husband, took charge of the shop and ordered stock, worked out mark-ups, checked deliveries and did the banking. Mr Ferlazzo deposed that Mr Scotto did not perform any of these tasks.
  12. Mr Ferlazzo deposed that after Mr Carrano’s death he would work in the shop from when it opened until about 11am or 12pm, depending on how busy it was. He said that when he opened the shop in that period he would arrive at between 4.30am and 5am and open it with either Mr Scotto or Dr Bossi. He deposed that towards the end when Mrs Bossi sold the shop he worked full-time cleaning and clearing out the warehouse before the settlement of the sale. Mr Ferlazzo deposed that during the summer of 2009/2010 he and Mrs Bossi ran the shop whilst Mr Scotto was on holidays. He deposed that when Mrs Bossi went on holidays he was in charge and was responsible for paying staff wages, except those of Mr Scotto who was paid via direct bank deposit by Ms Mace or Mrs Bossi. Mr Ferlazzo said that he did not receive any payment for the work he performed during that period.
  13. Mr Ferlazzo deposed that on 5 May 2010 Mrs Bossi and Mr Scotto had a disagreement following which Mr Scotto collected his keys, walked out of the shop and did not return to work for Scala Bros.

Giovanna Ferlazzo

  1. Mrs Ferlazzo was Mr Carrano’s sister and is Mrs Bossi’s aunt. She deposed that when she arrived in Australia in the early 1960s she would often help out in the shop without being paid. She deposed that from about November 1978 until 1991 she worked for Scala Bros on a full-time basis. Her duties included, among other things, making coffees, making sandwiches and serving customers.
  2. Mrs Ferlazzo said that generally she started work at 7am and finished at 2.30pm. She said that when she arrived the shop would already be open, having opened at 5am, and that Mr Scotto would already be there. Mrs Ferlazzo said that when the shop opened, they would prepare the coffee machine, serve customers and prepare the food for sandwiches. She said that she would cook some of the food at her house. She said that in the mornings the food would already have been prepared and only needed to be heated. She said that the busiest period for the shop was between 5am and 7am.
  3. Mrs Ferlazzo said that the shop normally closed at 2pm unless there were customers in the shop, in which case it would stay open until all the customers had left. She said that on certain occasions, not regularly, she would leave work before the shop closed in order to pick her children up from school. She said that they would close the shop together at about 2pm and, if necessary, Mr Scotto would stay a little longer to serve customers but that it was Mr Carrano who closed the shop.
  4. Mrs Ferlazzo deposed that when Mr Carrano went on holidays she, along with her husband and Mrs Carrano, jointly ran the shop and held its keys. She deposed that her husband and Mrs Carrano would pay the staff wages and order stock while she looked after the shop and supervised the staff. Mrs Ferlazzo said that she and her husband would open the shop at 5am and that that during those periods her husband would take leave from his work as an accountant, or failing that, he would go and open the shop in the mornings before leaving for his work. Mrs Ferlazzo deposed that when Mr Carrano was on holidays she worked full-time from Mondays to Saturdays and when he was not on holidays she had Tuesdays off. She said that Mr Scotto would have Wednesdays off.
  5. Mrs Ferlazzo said that her husband would also help at the shop on Saturdays and that if Mr Carrano “didn’t pay [her husband] one way he would pay in another way”. She said that they would not pay for groceries that they bought at Scala Bros. Mrs Ferlazzo said that Mr Carrano would often give money to children in the family as presents, not because they were working in the shop. Mrs Ferlazzo did not remember being lent money by Scala Bros but said that if she needed money she would ask Mr Carrano. She said that when she worked at Scala Bros, Mrs Carrano, Mrs Bossi, Ms Mace, Maria Naktich and Ray Scotto also worked there. She said that she would get paid after the non-family employees had been paid and that Mr Carrano would sometimes forget to pay her and would then bring the money to lunch on Sunday. Mrs Ferlazzo said that employees were paid cash in envelopes or straight from the till. She said that she thought that family members were also paid in cash and not cheque. Mrs Ferlazzo said that when she received her wages she would “sign in the book” but would not receive a pay slip every time.
  6. Mrs Ferlazzo deposed that Mr Scotto’s duties were to serve customers, stock shelves, make sandwiches and coffees and to clean. She deposed that he never ran the shop in the manner Mr Carrano did nor was he a supervisor. Mrs Ferlazzo said that she had not seen Mr Scotto ordering stock, rather it was Mr Carrano who did that.
  7. Although she could not recall the dates, Mrs Ferlazzo said that she knew from what Mr Scotto had told her and what she was told by other people that Mr Scotto had left Scala Bros on three occasions – to run a florist business, to run a cleaning business and to run La Scala.

Josephine Schultz

  1. Ms Schultz deposed that for a short time as a teenager she had been married to Mr Scotto. She said that she remembered going to the markets with her father when she was fifteen or sixteen, around 1982 and 1983. Ms Schultz said that they would arrive at the markets at 6am and they would go to Scala Bros for some coffee at about 7am to 7.30am after purchasing flowers for their florist business. She said that as far as she could remember Mr Scotto was at Scala Bros when she visited the shop, including on Saturdays. Ms Schultz said that she married Mr Scotto about six to eight months after she met him.
  2. Ms Schultz deposed that during their marriage Mr Scotto left Scala Bros for approximately two months to run his own business selling pots next to her family’s florist business. She said that Mr Scotto ran the business full-time for at least two months, seven days a week. Ms Schultz deposed that during that period Mr Scotto did not work for Scala Bros. She deposed that Mr Scotto returned to work for Scala Bros when his business failed.
  3. Ms Schultz said that Mr Scotto would wake up early in the morning for work and would be home by the time she returned at 6pm. She said that he finished at 3pm or 3.30pm. Ms Schultz said that during her marriage to Mr Scotto she visited the shop about once a week in addition to going there in the morning when she and her father went to the markets to buy flowers. She said that she never went there earlier than 6am.
  4. Ms Schultz deposed that during their marriage Mr Scotto received an income from Scala Bros, although she could not recall the amount. He also received additional benefits such as weekly groceries, clothing and cigarettes. Ms Schultz deposed that Mr Scotto was the only one she observed receiving these items. Ms Schultz said that Mr Scotto was paid by cheque which Mr Carrano cashed for him. She said that Mr Scotto had earned an average wage at the time and that because he was illiterate and did not have life skills sufficient to manage a bank account, Mr Carrano managed things like that for him. Ms Schultz said that during her marriage to Mr Scotto, in addition to working at her parents’ florist business, she worked at two other jobs. She said that she received $550 net a week from her job at Hardy Brothers. She said that Mr Scotto earned more than she did, excluding all the extra benefits he received. She said because they received free whatever groceries they needed, their income was enough to pay their mortgage with some spending money left over. Ms Schultz said that Mr Scotto purchased his clothes from a stall at the markets on an account which was settled by Mr Carrano.

OTHER EVIDENCE

  1. Exhibit 4 was a collection of correspondence between the solicitors for the parties seeking and providing further and better particulars.
  2. Exhibit H was a collection of attendance and pay records concerning La Scala that had been produced on subpoena. Those documents record that Mr Scotto worked at La Scala on 4, 5, 7, 9, 11, 13, 14 and 18-31 March 2004 and on 1-8 and 12-21 April 2004.
  3. Exhibit L was a Scala Bros wages book which covered the period when Mr Scotto was working at La Scala. It recorded that he had not worked at Scala Bros for the eleven weeks between 19 March 2004 and 7 June 2004. It also recorded that in each of the other forty-one weeks in that financial year he had been paid wages of $550 gross, which totalled $22,550 over the year. Mr Scotto’s group certificate for that financial year, found in exhibit O (tab 19), also recorded that Scala Bros had paid him gross wages in that year of $22,500.
  4. Exhibit P included many years of Scala Bros’ wages books and two ledgers.

CONSIDERATION
Introductory submissions

Applicant

  1. Mr Scotto submitted that the principal differences in the parties’ positions concerned his periods of employment, his daily starting and finishing times, his hours of work and the payments he received. He submitted that these differences arose out of the respondents’ reliance on Scala Bros’ employment records, whose accuracy he disputed. He submitted that if those records were shown to be unreliable then a significant part of the respondents’ defence failed.
  2. Mr Scotto submitted that the matters in dispute had to be understood in the context of the nature and operation of the Scala Bros business. He submitted that Scala Bros was a family concern which employed various members of the extended Carrano and Scotto families. He argued that it was run as a commercial concern and also for the benefit of the family, with the consequence that there was an intermingling of business and personal family matters, many business practices being treated in an informal manner and left to be worked out on a personal basis without proper records or compliance with legal obligations. Mr Scotto submitted that, understood in this light, neither Scala Bros’ employment and financial practices nor the business records purporting to document those practices ought to be considered objective and accurate accounts of its commercial affairs.
  3. Mr Scotto submitted that the nature of his relationship with Mr Carrano was also relevant in this context. He submitted that he had lived with Mr Carrano from his late teenage years until his second marriage, only leaving for a brief period during his first marriage, and had worked with him side-by-side on almost a daily basis for twenty-nine years. It was submitted that Mr Carrano became Mr Scotto’s principal mentor and father-figure and that their relationship had a special character which was not shared by Mrs Bossi and other family members. Mr Scotto submitted that Mr Carrano’s treatment of him as an employee, as a step-grandson and as a surrogate son became intertwined and it was not surprising that Mr Carrano might have given him gifts and privileges on a par with other members of the broader family as a demonstration of the love and affection between them and not as part of his remuneration. Mr Scotto also submitted that, in the circumstances, he came to trust that Mr Carrano would “look after” him. As a consequence, he did not question his wages and continued working at Scala Bros for twenty-nine years in the belief that ultimately he would be rewarded appropriately.
  4. Mr Scotto submitted that his evidence had to be seen in the context that he was almost illiterate and generally unsophisticated when it came to financial matters. Accordingly, he relied on others – first Mr Carrano and then his second wife and their accountant – to manage his financial affairs. Mr Scotto submitted that his lack of knowledge about such matters was understandable in the circumstances.

Respondents

  1. The respondents submitted that Mr Scotto advanced six claims in his further amended points of claim, namely:
    1. a period of service claim;
    2. a job classification claim;
    1. an overtime claim;
    1. a long service leave claim;
    2. an annual leave claim; and
    3. a superannuation claim.
  2. They submitted that Mr Scotto had failed to establish any but conceded that he was entitled to some payment for annual leave.
  3. The respondents submitted that some of Mr Scotto’s assertions were difficult to accept, such as:
    1. his claim that for twenty-nine years he believed that a significant amount of money was accruing to him but never asked about the amount owing and made no mention of it until eleven months after Mr Carrano’s death; and
    2. his claim that from 1992 to 2009 he had never counted his pay but knew when an amount was missing.

Limitation period

Submissions

  1. As agreed by the parties in addresses and as made clear by the terms of s.357 of the IR Act, quoted above at [38], Mr Scotto has no standing to seek the imposition of civil penalties under the IR Act for the breaches of the Shop Award he has alleged. Consequently, in respect of the period before 27 March 2006, when the Workplace Relations (Work Choices) Amendment Act 2005 commenced and excluded the continuing application of the IR Act to Mr Scotto’s employment, it is only necessary to consider his claims for monetary compensation pursuant to ss.365 and 369(1) of the IR Act.
  2. Section 544 of the FW Act provides that proceedings for contraventions of civil remedy provisions and safety net contractual entitlements cannot be commenced more than six years after the contraventions in question occurred. Section 545(5) relevantly provides that a court must not make a compensation order for an underpayment which relates to a period that is more than six years before the commencement of the proceeding. Sections 357(3) and 369(3) of the IR Act and ss.719(10) and (9) and 720 the WR Act made similar provision in respect of their periods of operation. The respondents alleged that those provisions prevented Mr Scotto from claiming any entitlements accruing before 28 October 2004, six years before the filing of his application.
  3. Mr Scotto submitted that his claim for the period before 28 October 2004 did not arise under the FW Act or the WR Act but under the IR Act. He submitted that the only limitation periods that were relevant were those under the IR Act, which he said did not bar his claims.
  4. Mr Scotto submitted that his claim for breach of the Shop Award and recovery of remuneration under the IR Act was made on two alternative bases:
    1. a claim under ss.365 and 369(1) of the IR Act for an order that Scala Bros pay an amount unpaid under an industrial instrument; and
    2. a claim under s.376 of the IR Act for the recovery, as a debt, of an amount unpaid under an industrial instrument.

The latter claim need not be decided because it depended on an unsuccessful application to amend the further amended points of claim made during Mr Scotto’s address in reply.

  1. Mr Scotto submitted that proceedings for the imposition of civil penalties and those seeking the recovery of underpaid amounts were interrelated in that they both involved contraventions of legislation arising out of an employer’s failure to comply with award obligations. Section 357(3) of the IR Act provides that a proceeding for the imposition of a civil penalty may be instituted within six years of the contravention while s.369(3) provides that an order for recovery of underpaid amounts may be made if the money “became due” within the six year period immediately before an application to a court is made.
  2. Mr Scotto submitted that in a civil penalty proceeding where there was a course of conduct deemed to be a continuing contravention, the last act of contravention marked the point when time began to run for limitation purposes. He submitted that, in light of the “symmetrical” length of the limitation periods in ss.357(3) and 369(3), the most harmonious construction would be to apply the same principles to both. That is to say, Mr Scotto alleged that no part of his claims for compensation was out of time because the underpayments were part of a course of conduct, which was to be treated as a single contravention, and that Scala Bros was still engaging in that course of conduct less than six years before the commencement of this proceeding.
  3. Mr Scotto also submitted that a new cause of action accrued on each day that Scala Bros failed to comply with its obligations to pay him in accordance with the Shop Award. He submitted that, because Scala Bros had not rectified the underpayments, his claim was within the six year limitation period.
  4. Mr Scotto further submitted that the time limit in s.369(3) of the IR Act applied where the “money became due” within the period of six years immediately before the application was made. He submitted that his unpaid entitlements became “due” upon termination of his employment in May 2010 and, as this proceeding was brought within six years of the amounts becoming due, the limitation period under s.369(3) did not apply.

Consideration

Pre-27 March 2006 –  NSW  law

  1. As already noted, s.369(3) of the IR Act provides that an application for an order, relevantly pursuant to s.365, may only be made if the sum “became due within the period of 6 years immediately before the application was made”. It might be observed that s.376 of the IR Act, upon which Mr Scotto was not permitted to rely, is not similarly limited in terms although  s.14(1)  of the  Limitation Act 1969  ( NSW ) (“ Limitation Act ”) provides:
Further,  s.63  of the  Limitation Act  provides that on the expiry of a limitation period such as that found in  s.14(1) , the right and title to the debt, damages or other money claimed is extinguished.
  1. As already noted, Mr Scotto alleged that Scala Bros was liable to make good the underpayments he alleged, no matter when they occurred, because they were part of a continuing course of conduct. A course of conduct may be treated as a single breach either by the common law treating it as a continuing breach: Brammer v Deery Hotels Pty Ltd (1974) 22 FLR 276, or by statutory provision. As the IR Act made no provision of that sort, the common law applies to Mr Scotto’s employment prior to 27 March 2006. Section 719(2) of the WR Act and s.557 of the FW Act apply to subsequent periods.
  2. Mr Scotto referred to a number of cases which dealt with contraventions of statutory provisions involving courses of conduct which commenced outside a particular limitation period and continued into it. Each proceeding was held to be maintainable. However, such considerations are of no significance for the limitation period applicable to Mr Scotto’s claims for compensation because the cases he referred to concerned courses of conduct in contravention of a statute, not claims for money. Proceedings for contravention of a statute, even proceedings seeking a civil penalty, are different from proceedings for damages, proceedings for payment of a debt or proceedings for monetary compensation based on statute. The latter class of matters requires the existence of a cause of action in the form of a set of facts whose existence, if proved, entitles the employee to obtain from the Court a remedy against his or her employer. In the case of wages said to be owed, the necessary facts giving rise to a cause of action in relation to each non-payment or underpayment are in place each time wages are not paid or are underpaid. The determination of those matters does not depend on and is not determined by the existence of a continuing statutory breach.
  3. Consequently, each non-payment or underpayment alleged by Mr Scotto gave rise to a separate cause of action and, in the case of the underpayments alleged to have occurred before 28 October 2004, causes of action which accrued more than six years before the commencement of this proceeding and which are thus out of time.
  4. Mr Scotto submitted that such an outcome would be perverse and anomalous because an employer could be subject to prosecution for continuing contraventions more than six years after the occurrence of the original contravention but not be liable for an employee’s claim for unpaid amounts in respect of the same period. However, that was exactly the situation acknowledged and accepted by Joske J in Brammer v Deery Hotels Pty Ltd at 279 where his Honour considered a provision similar in terms to s.369(3) of the IR Act, s.719(9) of the WR Act and s.545(5) of the FW Act, namely s.119(3) of the Conciliation and Arbitration Act 1904 as it stood between 1947 and 1973. Consequently, I do not accept Mr Scotto’s submission.
  5. Mr Scotto also submitted that the effect of cl.3(iii)(2) of the Shop Award was that his unpaid entitlements became due upon the termination of his employment and that time started to run then. However, that misreads cl.3(iii). In its early passages, cl.3 provided that all wages were to be paid weekly and on the same day each week. No purpose would be served by saying in cl.3(iii)(2) that they were also payable at a later date, indeed that would be likely to produce confusion and disputes. Seen in context, cl.3(iii)(2) can be understood to have been concerned with wages which had not yet fallen due for payment at the time of termination, not with the wages already due and payable by reason of an earlier passage in the clause. In any event, on Mr Scotto’s case his employment did not cease at any point prior to May 2010, by which time the Shop Award had been replaced by the Retail Award. Consequently, even if the Shop Award had once operated in the manner he contended, at the relevant time it, and particularly cl.3(iii)(2), no longer applied to him.

27 March 2006 - 30 June 2009 – Workplace Relations Act

  1. Section 719 of the WR Act relevantly provided for compensation orders in respect of underpayments of amounts which an “applicable provision” required be paid. Section 719(9) limited such compensation orders to underpayments occurring not more than six years before the commencement of the proceeding in which compensation was sought.
  2. As none of the alleged underpayments under the WR Act occurred more than six years before 28 October 2010, s.719(9) does not prevent them being pursued in this proceeding.

1 July 2009 – onwards – Fair Work Act

  1. Section 545(5) of the FW Act is relevantly to the same effect as s.719(9) of the WR Act. As a none of the alleged underpayments under the FW Act occurred more than six years before 28 October 2010, s.545(5) does not prevent them being pursued in this proceeding.

Wages books

Submissions

  1. Scala Bros produced wages books for periods between 2 September 1982 and 30 June 2010 and Mr Scotto submitted that they did not accurately reflect the matters which they purported to record – namely, his period of employment, his starting and finishing times, his hours of work, his days of work and his payments. He submitted that the wages books:
    1. were not supported by bundy cards or similar primary records;
    2. were prepared by Scala Bros’ bookkeepers on the basis of untested and unverified assumptions about employees’ hours of work and on instructions received from Mr Carrano;
    1. contained obvious errors which could not be explained adequately or reconciled with largely uncontroversial facts;
    1. did not always “add up” as they set out the same weekly wages for employees regardless of the number of hours worked, the number of days worked or the paid holidays taken;
    2. did not record details of people who worked at Scala Bros during specified periods, such as Mr Benito Ferlazzo who said that he worked at Scala Bros from time to time between 1983 and 2010 but was not recorded as having done so;
    3. recorded employees working after 2pm, when the respondents said the shop shut. Mr Scotto submitted that either Scala Bros closed at 4pm, as he alleged, or the wages records were inaccurate in a significant detail, or both;
    4. recorded significant periods when no employee worked on Saturdays or recorded that fewer employees worked on Saturdays, one of the busiest trading days, than on less-busy weekdays;
    5. recorded employees as having commenced employment with Scala Bros before their hours and pay were recorded. Mr Scotto submitted that this confirmed Mrs Ciano’s evidence of Mr Carrano’s instruction to not record employees until some time after they had commenced employment;
    6. recorded matters that were unlikely to be true, such as employees being terminated on one day and recommencing just a few days later;
    7. were inconsistent in some key respects with Scala Bros’ cheque books and general ledger regarding the payment of leave and wages. Mr Scotto submitted that, in his case, he was recorded in the ledger as having been paid certain “leave payments” but these payments were not recorded in the wages books. Further, the “leave payments” did not directly correspond with any annual leave which he was alleged to have taken; and
    8. were rewritten in respect of the period after Mr Carrano’s death, apparently to reflect more accurately Mr Scotto’s hours and days of work and wages paid which, as the original had not been retained, called into question the integrity of Scala Bros’ business records.
Mr Scotto also pointed to other examples of what he said was the wages books’ failure to record accurately fundamental details of the employment of Scala Bros’ staff.
  1. Mr Scotto submitted that it could be inferred that the wages books were designed to give the (mere) appearance of legal compliance and regularity. He submitted that it was more likely that the wages books, as well as Scala Bros’ other business records, served purposes other than the correct recording of its commercial and employment practices. Mr Scotto submitted that Mr Carrano had used Scala Bros to confer personal benefits or to make payments for family members and that the payments made to or for him, as recorded in the ledger, were similar to payments made by Mr Carrano to Mrs Bossi and other family members who did not work at Scala Bros. Mr Scotto submitted that Mr Carrano’s apparent mixing of his business and personal affairs explained the lack of obvious connection between the making of certain payments and the running of Scala Bros as a commercial concern. He submitted that his special relationship with Mr Carrano resulted in him receiving certain benefits, characterised as “benefits paid” in the ledger books, as a demonstration of familial love and affection.
  2. Mr Scotto submitted that, for these reasons, the wages books could not be accepted as an accurate record of his periods of employment, starting and finishing times, hours of work, working days or wages paid. Mr Scotto further submitted that as the wages books were unreliable, his group certificates were correspondingly unreliable because they were based on information obtained from the wages books.
  3. The respondents submitted that Mr Scotto’s challenge to the veracity of the wages books proceeded on false assumptions and misquotations of evidence and was significantly contradicted by Mrs Ciano. They submitted that Mrs Ciano recorded in the wages books the award wage applicable to Mr Scotto and that those books were the best evidence of whether Mr Scotto or any other employee was working.

Consideration

  1. The evidence satisfies me that the wages books are not reliable in all respects. However, notwithstanding Mr Scotto’s criticisms of Scala Bros’ record-keeping in the wages books, which clearly was idiosyncratic, I am not persuaded that those records are of no value or that they do not provide an adequately accurate record of at least some aspects of Scala Bros’ business. Specifically, based on the evidence of Mrs Ciano and Ms Mace, I find that the wages books provide a reasonably accurate record of when individuals worked for Scala Bros and of the amounts they were paid as wages.
  2. Nevertheless, it is apparent that the details of the hours which individuals worked were not accurate and reflected the facts in only a general way. For instance, Mrs Ciano deposed that unless Mr Carrano directed her to do otherwise, each week she merely copied from the previous week the starting and finishing times, hours of work and wages for each employee and Ms Mace said in cross-examination that she had followed the same practice.
  3. Specifically in relation to Mr Scotto, I find that the wages books only recorded what he was paid as wages and the periods of his employment. I find that they did not accurately record his hours of work, his starting and finishing times or even the days on which he worked. In particular, I have concluded, notwithstanding Mrs Ferlazzo’s evidence, that Mr Scotto’s habitual working week was six days long, Monday to Saturday inclusive. I have also had regard to Mrs Bossi’s affidavit evidence in respect of the period between 1984 and 1986:
As can be observed, that evidence said nothing about whether Mr Scotto took time off mid-week in the 1990s or the 2000s. However, later in her affidavit Mrs Bossi recorded that Mr Scotto worked six days a week following her father’s death, with no suggestion that this was in some way different from previous practice. Significantly, it did not involve an increase in what Mrs Bossi understood Mr Scotto’s wage to have been. I therefore conclude that Mr Scotto normally worked a six day week, Monday to Saturday inclusive.
  1. Finally, I reject any implication which may have been contained in Mr Scotto’s submissions that the wages books were designed to deceive. No evidence was adduced to the effect that Mr Carrano had any intention of that sort and I do not infer that Mrs Bossi’s continuation of his practices should be characterised in that way. Casualness with detail, even detail which the law requires be provided or recorded, is not synonymous with deception or dishonesty and I note that there was no suggestion that Mr Carrano had underpaid any other employee or been the subject of any complaint on that score.

General ledger

Submissions

  1. Mr Scotto submitted that Scala Bros’ general ledger, which Mrs Ciano completed, did no more than repeat information found in the company’s cheque butts. He submitted that Mrs Ciano could not know or verify the accuracy of those details and that there was no evidence that the payees recorded in the cheque butts had actually received and presented the cheques.
  2. Mr Scotto submitted that a comparison of the wages books with the general ledger demonstrated a number of discrepancies. He argued that, apart from some alleged wages cheques in 1991-1992, which he denied receiving, none of the alleged wages payments in the ledger books were recorded in the wages books. Mr Scotto also submitted that he had never received the director’s fees which he was recorded as receiving. He further submitted that the “holiday” payments which the general ledger recorded him receiving between 1995 and 2002 were not recorded in the wages books.
  3. Mr Scotto submitted that these discrepancies indicated that the general ledger could not be relied on as an accurate statement of payments made, the persons who received payments or the purpose of such payments. He submitted that the respondents’ claim that the amounts set out in the ledgers should be considered as part of his wages failed to acknowledge that Mr Carrano had used Scala Bros to pay personal expenses for close family members out of love and affection. Mr Scotto submitted that if it was accepted that the ledger recorded more than business expenses, then it could not be accepted that the cheques drawn in his favour represented benefits in the nature of wages.

Consideration

  1. Given the apparently limited purpose of the general ledger and the evidence that wages were paid on Saturdays from cash in the Scala Bros till, it is not surprising, and I draw no adverse inference from the fact, that the ledger rarely recorded payments of wages.
  2. Further, given that I do not accept that Mr Carrano, or Mrs Bossi for that matter, intended to practise a deception by their manner of record keeping, I also do not accept the proposition that some doubt should attach to the details recorded in the Scala Bros cheque butts or to the information derived from them which is recorded in the ledger. In this connection, I have had regard to the fact that Scala Bros’ books were reviewed at the end of each financial year by the company’s external accountant. While I recognise that Mr Scotto disputed receiving at least some of the payments which the ledgers record, I infer from Mrs Ciano’s evidence that she reconciled the cheques recorded in the ledger against bank statements. On balance, I find that Mr Scotto received and presented the cheques which Scala Bros’ ledger records having been drawn in his favour. In light of the passage of time and giving him the benefit of the doubt, I think it likely that he has forgotten those payments and so is convinced they were not made.
  3. The fact that cheques were apparently drawn in favour of Mr Scotto and recorded in the ledger as relating to “holidays” is of no significance unless the respondents suggested that they affected his accrual of annual leave, which they did not do. They did suggest that those amounts had been paid “in lieu” of annual leave but that argument was not developed. When the relevant parts of the wages books are reviewed, it is not surprising that the respondents did not submit that the payments affected Mr Scotto’s accrual of annual leave. Mr Scotto referred to payments made to him in October 1995 and May 1996 of $2,000 and $4,000 respectively, each described in the ledger as relating to holidays. The wages book for 1995/96 records Mr Scotto earning $425 per week for fifty-two weeks totalling $22,100, the figure cited in his group certificate for that year as his gross wage. The $2,000 which the ledger records as having been paid to Mr Scotto on 11 October 1995 and the $4,000 which it records having been paid to him on 2 May 1996 were also not included in Mr Scotto’s income declared by Scala Bros to the Australian Taxation Office (“ATO”).
  4. Mr Scotto also referred to a $4,000 payment made to him on 12 December 1996. This submission was curious as the payment was not described in the relevant cheque butt as being related to holidays and in the ledger was placed under the category “Loan A/C”. Whatever that payment was for, the wages book for that financial year recorded Mr Scotto earning $425 per week for fifty-two weeks, totalling $22,100, which was his gross wage disclosed in his group certificate for that year. The same situation applies in relation to cheques drawn in Mr Scotto’s favour on 19 November 1997 (two cheques) and 24 October 2002 to which he also referred in his submissions.
  5. I conclude that, rather than being an exercise in deception, relevantly the ledger simply recorded that, in addition to wages, Mr Scotto benefited from sums paid by cheque which were not treated as remuneration.

The Red Book

Submissions

  1. Mr Scotto submitted that although the respondents denied knowledge of the Red Book’s existence, in discovery they disclosed handwritten pages which referred to it and which appeared to record information it contained. He submitted that the handwritten pages appeared to be reconciliations of his wages and expenses for the 1988/89, 1989/90 and 1990/91 financial years. Mr Scotto submitted that those handwritten documents confirmed the existence of the Red Book and its apparent purpose as an alternative record of the wages he was owed.
  2. Mr Scotto submitted that the overall impression created by the documents was that Scala Bros had two sets of books recording his wages and that those records had different purposes. He submitted that it could be inferred that the wages books were an artifice designed to create an appearance of compliance with legal obligations by giving the impression that he received payment for working particular hours on particular days, which matched the amounts recorded on his group certificates, while the Red Book appeared to reflect the true nature of the arrangement at least until 1991/92 [sic], namely, an apparent record of his notional wages, deductions of payments made to him as “pocket money” and payment of expenses. Mr Scotto submitted that this confirmed his claim that he trusted Mr Carrano to “look after” him in that amounts had been set aside to be paid to him at some time in the future and he had acquiesced in being underpaid for the duration of his employment.
  3. Mr Scotto submitted that even if the Red Book recorded an intention to make payments to him at a later time for work performed, this did not relieve Scala Bros of its duty to comply with its legal obligations to make payments to him in accordance with relevant industrial laws and instruments on the due date. Mr Scotto submitted that it also proved that the wages books did not comprise a complete and accurate record of his hours and wages as, if they had, there would have been no need to create the Red Book as an alternative record of his wages.

Consideration

  1. I do not accept that the Red Book was a mechanism by which Mr Carrano short-changed Mr Scotto for his work. No hypothesis was advanced which would explain why the wages books would be a false record of Mr Scotto’s earnings and the Red Book the true record.
  2. Far from being a record of moneys Mr Scotto earned, or the balance of his (unpaid) wages, the Red Book seems to have been a record of moneys disbursed. The sheets of figures and calculations concerning Mr Scotto sitting loosely in the ledger books, which were part of exhibit P, indicate that the Red Book was a record of cash given to Mr Scotto including cash to pay identified expenses such as “go out Pictures”, “Shopping with Jo” and “With his father”. The sheets indicate that the $100 cash per week which Mr Scotto said he received in the late 1980s and early 1990s was noted in the Red Book, although it is also apparent that other amounts were paid to him from the Red Book too and that he received more than the weekly cash payments of $100. It seems that the Red Book was not much more than a record of petty cash disbursements made by Mr Carrano to or for Mr Scotto with other, larger, cheque payments to or for him being recorded in the ledger. The sheets of figures and the ledger books also indicate that the cash disbursements and the cheques were taken into account when determining a final balance owing to Mr Scotto at the end of a particular financial year, although exactly how that was done is not clear.
  3. I am not persuaded by Mr Scotto’s attempt to impugn Mr Carrano’s motives or by Mr Scotto’s suggestion that Mr Carrano short-changed him, particularly as that would be inconsistent with Mr Scotto’s own submissions that he received amounts from Mr Carrano which were expressions of affection and not part of his remuneration. It would also be inconsistent with him, as a person with limited literacy, being paid director’s fees of $10,000 in 1990, as recorded by the ledger.
  4. As noted earlier, the Red Book records that Mr Scotto received more cash payments than his weekly $100 pocket money. In all likelihood what Mr Scotto thought was being held back by Mr Carrano was actually being disbursed by Mr Carrano on his behalf to cover his expenses. I have gained the impression that Mr Carrano looked after Mr Scotto’s interests in a generous, if paternalistic, manner by supervising and controlling his spending and that Mr Scotto was uninterested in, or incapable of, understanding fully how this was achieved or the extent of Mr Carrano’s generosity.
  5. In any event, there was no evidence of the content or existence of the Red Book during the limitation period applicable to this proceeding. In those circumstances, it has no substantive relevance to Mr Scotto’s maintainable claims because any causes of action which Mr Scotto might have had arising out of the period covered by the documents referring to the Red Book are now out of time. Additionally, I note that the documents which referred to the Red Book did not cover the financial year in which Mr Scotto married his present wife or any subsequent period. This may reflect the fact that Mr Scotto was not limited to pocket money once he was married and so there was no need for the Red Book from that point.

Pay slips and proper records

  1. Mr Scotto submitted that in failing to keep accurate and complete wage records Scala Bros contravened its statutory obligations. He also submitted that he had given unchallenged evidence that Scala Bros had failed to supply him with pay slips.
  2. Mr Scotto submitted that the respondents’ failure to keep proper and accurate employment records and to supply him with pay slips made it difficult to ascertain the quantum of his underpayment. He submitted that if proper records had been kept, this dispute might not have arisen. He also submitted that where there was genuine ambiguity as to his precise hours of work and payments received, the Court should resolve those matters against the respondents on the basis that Scala Bros’ wrongdoing in failing to keep proper records was the cause of a determination being so problematic: Armory v Delamirie [1722] EWHC KB J94; (1722) 93 ER 664 referred to in McCartney v Orica Investments Pty Ltd  [2011] NSWCA 337 .

Consideration

  1. I have taken these submissions into account in reaching the conclusions expressed earlier in relation to the wages books, the general ledger and the Red Book. They will also be relevant when determining the quantum of amounts owed by Scala Bros to Mr Scotto.

Credit of witnesses

  1. Allowing for the uncertainties caused by many events having occurred a long time before the trial, generally I found the witnesses gave evidence as truthfully and as accurately as they could. However, I have reached a different conclusion in respect of Mr Scotto who, for the reasons set out below, I have concluded was not entirely frank. This has led me to place less weight on his evidence than on that of other witnesses. I also note the difficulty Mrs Scotto had with evidence about her earnings but am not of the view that it cast doubt on the remainder of her evidence.
  2. A significant difficulty in this case was the fact that the witnesses’ recollections were not corroborated by documentary records which were reliable in all respects. However, as recorded earlier, I am satisfied that the wages books did provide a generally reliable record of individuals’ periods of employment with Scala Bros. Significantly, the wages books record that Mr Scotto left Scala Bros on 10 April 1992 and recommenced on 30 May 1994. The figures for Mr Scotto’s gross pay and PAYE tax recorded in the relevant pages of the wages books also appeared in his Scala Bros group certificates for the relevant financial years. By contrast, however, Mr Scotto’s evidence was that he received cash wages from Mr Carrano every Saturday from 1992 to 2009 and that after he and Mrs Scotto moved into their Cremorne unit in July or August 1993, Mr Carrano drove him to and from Scala Bros every day.
  3. Mr Scotto submitted that two years was not an insignificant period of time and an absence of that length would have been recalled by the witnesses. In support of his submission that he had been at Scala Bros during that two year period, Mr Scotto relied on Mr Molloy’s evidence that they had had numerous discussions at Scala Bros about their wives’ concurrent pregnancies in 1993. Mr Scotto also referred to Suzanne Scotto’s evidence that she had travelled to Sydney with his father in early 1994 to see his first child. Mr Scotto also referred to the photographs Suzanne Scotto took during that visit, showing him behind the counter at Scala Bros, wearing an apron, preparing and serving coffees and holding his daughter who was a few months old. Mr Scotto submitted that this evidence placed him at Scala Bros during 1993 and 1994.
  4. Deficient though the wages books were, it stretches credulity to suggest that their failure to record Mr Scotto’s employment for a period of more than two years was the result of Mr Carrano’s idiosyncratic approach to recording employees’ start and finish dates. Before adopting such a credulous approach, a compatible explanation of Mr Scotto’s Scala Bros group certificates for the 1991/92 and 1993/94 financial years, which confirmed that he was not employed at Scala Bros for the whole year in either of those years, would be required and none can be extracted from the evidence. Rather, the group certificates are important evidence that Mr Scotto was not working at Scala Bros in the periods in question. Further in this regard, the 1992/93 group certificates for each of the persons recorded in the 1992/93 wages book are stapled to the front of that book which is part of exhibit P. Reflecting his absence from that wages book, no group certificate for Mr Scotto was attached.
  5. I do not accept Mr Scotto’s evidence that he worked at Scala Bros between April 1992 and May 1994, as it is contradicted by documents whose accuracy on this question I do accept. The wages books and Mr Scotto’s group certificates satisfy me that Mr Scotto did not work for Scala Bros from 10 April 1992 until the end of May 1994. The fact that Mr Scotto denied his absence and propounded a case which depended in part on him being present at Scala Bros during that period reflected adversely on his credit.
  6. In reaching that conclusion I have not ignored the evidence concerning children’s birth dates but I place less weight on witnesses’ recollections of the chronology of events about twenty years before they gave evidence, and a photograph which was merely evidence of Mr Scotto’s presence at Scala Bros not of his employment there, than on two sets of documents which corroborate each other, particularly as one set is a pair of group certificates which would have had to be lodged with the ATO.
  7. I was also concerned by Mr Scotto’s insistence that he had worked at Scala Bros in May 2004, notwithstanding that Scala Bros’ pay records did not bear this out. I have taken into account his submissions concerning the shortcomings of the wages books but, as expressed earlier in these reasons, have concluded that they, at least, record when individuals were working for Scala Bros. It may be that there was some minor imprecision in the details of individuals’ start dates but Mr Scotto said that he had only been away from Scala Bros for four weeks whereas the relevant wages book says that he was away for eleven. Moreover, the wages declared in his Scala Bros group certificate reflect the length of absence appearing in the wages book. I do not accept Mr Scotto’s evidence on the length of his absence from Scala Bros in 2004 and have concluded that he sought to minimise its duration. Presumably this was to strengthen his allegation that he had a period of uninterrupted service with Scala Bros which was sufficient to have entitled him to long service leave when he left in 2010. Whatever the case, I find that Mr Scotto’s minimisation of the length of his absence in 2004 also reflected poorly on his credit.

Mr Scotto’s classification

  1. The Shop Award relevantly defined classification 1 employees in the following terms:
  2. The Shop Award relevantly defined classification 4 employees as:
Within that classification were two sub-classifications concerning individuals who did or did not have “the duty of buying”, the rates within those sub-classifications increasing with the number of staff supervised.
  1. Mr Scotto alleged that under the Shop Award he was employed:
    1. as a “shop assistant” (i.e. classification 1) from 1 January 1981 to 30 January 1988; and
    2. as “shop assistant with the duty of buying – in charge of 5 to 12 assistants” (i.e. classification 4) from 1 February 1988 to 31 December 2009.
  2. Mr Scotto submitted that the expression “in charge” referred to someone who had the power to direct, or had responsibility for, other employees: Printing Industry Employees Union of Australia v Besley & Pike Pty Ltd (1960) 4 FLR 169. He submitted that such a person had, on a day-to-day basis, practical responsibility for those tasks and was not merely the person who had ultimate legal control such as the business owner. Mr Scotto submitted that, other than Mr Carrano, he was the longest serving and most senior employee at Scala Bros and inevitably became more involved in the management of the shop over time. He further submitted that, as Mr Carrano became older and focussed on the role of managing the cash register and liaising with customers, the bulk of the operational duties were left to him. It was submitted that he became “in charge” as he gave directions to employees in relation to the performance of their duties. In support of his submissions that he had been “in charge” Mr Scotto referred to NKS Enterprises Pty Ltd v Mekary (2004) 135 IR 301.
  3. Mr Scotto also submitted that a shop assistant in charge was a chief shop assistant, which he said was different from a person responsible for managing a shop. He argued that a chief shop assistant was like a leading hand in that he or she still carried out the duties associated with being a shop assistant, such as serving customers, stacking shelves and making orders, but had the additional role of being in charge of all other shop assistants and directing them in the performance of their duties and responsibilities.
  4. Mr Scotto submitted that the evidence clearly indicated that he had had a duty of buying. He submitted that while he might have shared that duty with others, including Mr Carrano, it had been his duty to deal with sales people and to make orders on a day-to-day basis.
  5. The respondents submitted that Mr Scotto had conceded that Mr Carrano was always “the boss” and that any ordering by Mr Scotto was verbal because of his limited literacy. The respondents submitted that the evidence of Messrs Moses, Cicco and Cimino was consistent with their claim that Mr Carrano was the person in charge and that when he was on holiday Mr and Mrs Ferlazzo would be in charge. They also argued that Scala Bros was a small shop, not an organisation with a hierarchy with different reporting lines.
  6. The respondents submitted that Mr Scotto’s claims to have had supervisory responsibility were misleading in that:
    1. he asserted that between 2 September 1982 and 11 February 1983 there were twelve employees but only two of them had been full-time and eight of them had periods of service ranging from five days to fourteen weeks;
    2. between 1 July 1983 and 30 June 1984 there were only two full-time employees, with the rest working for periods ranging from one to eight months;
    1. between 5 July 2002 and 27 June 2003 three employees worked for three months and one for seven months; and
    1. there were only two other employees in the wage books for the periods between 7 July 2006 and 29 June 2007, between 6 July 2007 and 21 June 2008 and between 5 July 2008 and 27 June 2009 and both worked part-time.
  7. Mr Scotto argued in reply that the Shop Award did not require the subordinate shop assistants to be permanent full-time employees or to be at work at the same time. He submitted that because the Shop Award set out a weekly wage for shop assistants in charge of other shop assistants, he had not had to supervise five to twelve shop assistants concurrently; it was enough that he supervised five to twelve people within a week and it did not matter whether they were full-time, part-time or casual employees.

Consideration

  1. In submitting that he had responsibility for certain employees Mr Scotto appears to have elided two different concepts, the power to give direction or guidance to staff and the responsibility for the performance of such staff. Albeit that it was in a different context, the latter concept was the one referred to by the plurality of the Full Court of the Commonwealth Industrial Court in PIEU v Besley & Pike when determining what “in charge of” meant in the context of the award considered in that case. Although Mr Scotto might, because of his length of service and familiarity with the business of Scala Bros, have given direction or guidance to staff, the evidence does not support a conclusion that he was responsible for their performance of their duties. Further, although NKS Enterprises v Mekary is an example of the unsurprising circumstance that a shop assistant in charge of a shop may not have responsibility for all aspects of the business, it turned on its own facts as this matter does.
  2. But, in any event, Mr Scotto’s allegation did not address the terms of classification 4, which was principally concerned with a person being in charge of a shop, not in charge of shop assistants. It is not until an employee is identified as being “in charge of a shop” that consideration turns to whether he or she performs “the duty of buying” and is in charge of staff. Notwithstanding the submissions vigorously advanced on Mr Scotto’s behalf, I am not persuaded that he should be considered to have been in charge of the Scala Bros shop except possibly temporarily when Mr Carrano was absent, or during his holidays, when Mrs Carrano or Mr and Mrs Ferlazzo were absent. In this regard I conclude that at all times he was in Australia Mr Carrano was the person in charge of the shop, as reflected by his almost constant presence, and I accept the respondents’ evidence that while Mr Carrano was away on holidays, Scala Bros was managed and supervised in his place by Mrs Carrano and Mr and Mrs Ferlazzo and, after Mrs Carrano’s death, by Mr and Mrs Ferlazzo.
  3. Mr Scotto may well have been the most experienced and senior employee at Scala Bros but he was not in charge. His submissions concerning being a chief shop assistant took the matter nowhere as the Shop Award did not refer to such a role and the idea underlying it is contradicted by the award’s terms. It is apparent to me that control of the shop was reserved by Mr Carrano to himself, with occasional assistance from his wife and his sister and her husband. That is to say, at all times Mr Scotto was responsible to others who were, in fact, in charge of the shop. Consequently, I find Mr Scotto’s proper job classification to have been as a shop assistant, i.e. classification 1.

Award underpayments

  1. The parties agreed that although the Retail Award had effect from 1 January 2010, it did not apply to wages, penalties and loadings until 1 July 2010, after Mr Scotto’s employment with Scala Bros had ceased. It was agreed that the Shop Award and Shop NAPSA wage rates, penalty rates and loadings applied for the duration of Mr Scotto’s employment although from 1 January 2010 the Retail Award applied to all other matters regarding his employment.
  2. Mr Scotto alleged that under the Shop Award and its iterations he had been underpaid:
    1. ordinary time wages;
    2. overtime;
    1. weekend penalties for working on Saturdays; and
    1. a breakfast allowance.

Submissions

Wages

  1. Mr Scotto submitted that he received the following amounts as cash wages during his employment with Scala Bros, which he said were less than the amounts prescribed in or for the Shop Award and the Shop NAPSA:
    1. between January 1981 and January 1992, $100 cash per week, other than for about a fourteen month period when he was married to Ms Schultz when he received a higher amount which he no longer recalled;
    2. between February 1992 and November 1993, $350 per week;
    1. between December 1993 and November 1996, $400 per week;
    1. between December 1996 and November 2001, $450 per week;
    2. between December 2001 and November 2004, $500 per week;
    3. between December 2004 and May 2009, $600 per week; and
    4. between June 2009 and 1 May 2010, $800 per week.
  2. The respondents denied that Mr Scotto had not been paid his award wages and overtime entitlements, saying that he had been paid more than the minimum conditions set out in the applicable instruments. They referred to Mrs Ciano’s evidence that each employee, including Mr Scotto, was classified in accordance with the award and that the payments recorded in the wages books were the relevant award wages.

Overtime and Saturday penalty rate claims

  1. Mr Scotto submitted that under the Shop Award overtime was payable in a number of circumstances, including for work performed:
    1. until 8 June 1988, in excess of forty hours and, after that date, in excess of thirty-eight hours per week;
    2. outside the prescribed minimum [recte: maximum] number of hours on any one day, which was usually nine hours per day; and
    1. outside the ordinary hours of work.
  2. Mr Scotto also submitted that he was entitled to overtime for work performed:
    1. before the commencement time prescribed in the Shop Award;
    2. after the daily maximum number of hours was exceeded, usually nine or ten hours per day; and
    1. after working thirty-eight or forty hours per week.
  3. Mr Scotto submitted that from 1988 the Shop Award referred to overtime being payable for time worked in excess of thirty-eight hours a week, not thirty-eight ordinary hours, and argued that once an employee had worked thirty-eight hours in one week, any further time which might be worked in that week was overtime.
  4. In relation to work performed on Saturdays, Mr Scotto submitted that once he exceeded the ordinary weekly hours of work, he was entitled to be paid at the overtime rate, and if he had not exceeded the ordinary weekly hours, he was nevertheless entitled to be paid the penalty rates applicable to work on Saturdays.
  5. Mr Scotto submitted that the wages books showed that the respondents had breached the Shop Award by failing to pay him when he worked on Saturdays and by failing to pay him overtime when he commenced work before 7am, worked more than nine hours a day or worked more than thirty-eight hours a week.
  6. Mr Scotto alleged that although until Mr Carrano’s death in 2009 the wages books generally recorded him as working no more than eight hours per day, Monday to Friday, in fact he had worked an average of twelve hours per day, from about 4am to 4pm, Monday to Saturday. He submitted that, putting aside the wages books, the evidence was that he opened the shop with Mr Carrano at between 4am and 4.30am, when he would serve the early customers and prepare the shop for trading, and that he would close the shop with Mr Carrano at between 3pm and 4pm.
  7. Mr Scotto also submitted that Mrs Bossi, Dr Bossi, Mr Ferlazzo, Ms Mace and Mrs Ferlazzo all stated that Scala Bros was open by at least 5am, which was consistent with his evidence. He submitted in this connection that the change after Mrs Bossi took over the business, to recording his starting time in the wages books as 5am, suggested that the reality of his working hours had been recognised. Mr Scotto also pointed to a newspaper article, various extracts from food guides and social media websites as evidence that he opened the shop earlier than was apparent from the employee start times recorded in the wages books.
  8. Mr Scotto submitted that Mrs Bossi’s claim that Scala Bros generally closed at around 2pm each day did not accord with the evidence of the respondents’ other witnesses or with the wages books. He submitted that Ms Mace claimed that the shop closed at 2.30pm, Mr Ferlazzo claimed that between the late 1980s and early 1990s the shop operated until 3pm, and Mrs Ferlazzo claimed that the shop closed at 2.30pm but also stated that she had to leave work early on occasion to pick up her children from school at 3.15pm. Mr Scotto submitted that if Scala Bros had really closed at 2pm or 2.30pm, then there would have been no need for Mrs Ferlazzo to leave Scala Bros “early”.
  9. Mr Scotto submitted that his overtime had been authorised because he worked the same hours as Mr Carrano, who drove him to work for a large part of the relevant period. He submitted that there was no suggestion that Mr Carrano had objected to him being at Scala Bros during the hours he worked and that even if Mr Carrano did not expressly direct that he work the hours he worked, the circumstances showed that he had impliedly authorised the overtime.
  10. The respondents submitted that Mr Scotto had driven to work with Mr Carrano because it had been convenient for him and that he had never been directed to attend or to leave work at a particular time. They argued that Mr Scotto had never taken note of his alleged start time and that it was their witnesses who confirmed that he was ordinarily present when Scala Bros opened at 5.00am. The respondents submitted that the observations of Mr Scotto’s market witnesses were vague and unclear as to whether they referred to events within or outside the six year limitation period.

Breakfast allowance

  1. The Shop Award provided that “confection shop” employees who commenced work before 7am were entitled to a breakfast break and a meal allowance each morning. Mr Scotto submitted that although Scala Bros had been a mixed business, it only needed to be classified as a refreshment or a confectionery shop, and thus be classified under the Shop Award as a confection shop, in order for him to have been entitled to a breakfast allowance. Notwithstanding the almost certain fact that Scala Bros provided him with his breakfast, Mr Scotto submitted that under the Shop Award he had been entitled to be paid a breakfast allowance.
  2. The respondents submitted that Scala Bros had been a liquor shop and that therefore Mr Scotto was not entitled to a breakfast allowance.

Consideration

Wages

  1. In light of the conclusion I have reached in relation to the operation of the limitation period, it is not necessary to consider Mr Scotto’s wages claims for any period before 28 October 2004. As far as subsequent years are concerned, I prefer the records of the wages books and PAYG payment summaries to Mr Scotto’s recollection. I therefore find that in the period from June 2004 to 27 June 2009 he was paid $550 gross per week and that in the period from 28 June 2009 until his departure on 5 May 2010 he was paid $989 gross per week.
  2. When these figures are compared over time with the relevant award wage, the following emerges:


Period
Award rate
(38 hr week)
Weekly
Wage
Weekly
Overpayment
(Underpayment)
28 October 2004 –
31 July 2005
525.80
550.00
24.20
1 August 2005 –
30 November 2006
542.80
550.00
7.20
1 December 2006 –
30 September 2007
570.00
550.00
(20.00)
1 October 2007 –
6 October 2008
580.26
550.00
(30.26)
7 October 2008 –
27 June 2009
601.92
550.00
(51.92)
28 June 2009 –
5 May 2010
601.92
989.00
387.08
  1. Mr Scotto was therefore underpaid his ordinary time wages from 1 December 2006 until 27 June 2009.
  2. In calculating those figures I have not overlooked Mr Scotto’s evidence that he was paid $600 per week from December 2004 to May 2009. However, that figure was contradicted by the wages books.

Overtime and Saturday penalty rates

Mr Scotto’s start and finish times

  1. The preponderance of the evidence supports a conclusion that Scala Bros opened at 5am, at least on weekdays. In reaching this conclusion I acknowledge the evidence adduced from Mr Scotto’s friends who worked at Flemington Markets but, although I accept their genuineness, I do not think that their recollections were likely to be more accurate than those of witnesses who actually worked at Scala Bros, including Mr Scotto who deposed in his affidavit of 18 July 2011 that the shop started to trade at 5am albeit in cross-examination he also said that coffee and breakfast were served before 5am. Even though I find that the shop opened at 5am, some work would have been required before the shop could open, with the consequence that I accept that Mr Scotto’s work day must have started before 5am, notwithstanding what the wages books might say.
  2. Mr Scotto said that he arrived at work at between 4am and 4.30am but, even if that was so, I am not persuaded that he was engaged in work from that point. In that regard, even if he arrived earlier than necessary because Mr Carrano gave him a lift, that is an insufficient basis on which to claim overtime unless he was working from the point he arrived and I am not persuaded that he did. Mr Scotto deposed that opening the shop and making it ready involved hosing the front, preparing the sandwich bar, cooking food, setting up the seating area and preparing the coffee bar. In light of the reservations I have concerning the reliability of Mr Scotto’s evidence I do not accept that food was cooked at that time because other witnesses, whose evidence I prefer, said that that no cooking was necessary before breakfast orders were placed as food for the sandwich bar would be cooked on the afternoon before. However, I do accept the remainder of the activities referred to in Mr Scotto’s evidence as inherently likely to have been necessary, although not very time consuming. In my view, no more than twenty minutes’ work would have been required to set up the shop for the commencement of trade and, in all probability, less. I find that from Monday to Friday, Mr Scotto started work at 4.40am.
  3. For the same reasons, on the subject of the opening time on Saturdays I prefer the evidence of Ms Mace and Mr Ferlazzo to the effect that the shop opened at 6am. I therefore find that Mr Scotto commenced work on Saturdays at 5.40am.
  4. The preponderance of evidence also supported a conclusion that Scala Bros closed at about 3pm on weekdays although there appears to have been some flexibility in this, presumably because customers might still have been in the shop. By and large the respondents’ witnesses were not present when the shop closed, apart from Mr Ferlazzo who said that from the late 1990s it closed at 2pm. I found Mr Molloy’s evidence, that he used to go for a coffee just before 3pm because he knew the shop shut at 3pm, to be particularly persuasive evidence of the shop’s closing time.
  5. Again, shutting the shop would not necessarily mean the end of the day’s work and Mr Scotto deposed that he helped Mr Carrano close up at the end of the day and that this would take anywhere from thirty minutes to an hour. He deposed that it included packing away the outside tables and chairs, packing away the sandwich bar items, cleaning the coffee bar and mopping the shop. However, the evidence indicates that there was much less trade in the afternoons than in the mornings and it seems unlikely that nothing was done, before the doors were shut to customers, to tidy up and prepare the shop for the next day. In this connection I accept Ms Mace’s evidence that all staff were responsible for cleaning their own sections of the shop and note that in their letter of 15 September 2010 to Mr Scotto’s solicitors, which Mr Scotto tendered and which became part of exhibit 4, the respondents’ solicitors stated that afternoons in the shop were generally quiet and that the staff started to clean up about an hour before closing. Even Mr Scotto’s evidence was that they started cleaning up the shop an hour before it closed, albeit he said they started cleaning at 3pm and closed at 4pm. I consider that there would have been about ten minutes’ work after the shop shut and thus that on weekdays Mr Scotto would generally finish work at 3.10pm.
  6. The evidence concerning the Saturday closing time was not particularly clear, especially as the evidence of Mr Scotto’s witnesses appeared to be principally concerned with weekdays. On balance I find, principally based on the evidence of Ms Mace and Mr Ferlazzo, that Scala Bros shut at 2pm on Saturdays. I therefore find that Mr Scotto would generally finish work on Saturdays at 2.10pm.
  7. Given the reservations I have concerning the reliability of Mr Scotto’s evidence I am not persuaded that he did not have time to take lunch breaks. If Mr Scotto’s work was as long and as demanding as he said it was, it is quite unlikely that he did not take breaks during the day, even if an uninterrupted one hour break might have been considered impractical on occasion. I do not accept Mr Scotto’s allegation that he did not take lunch breaks.
  8. I therefore find that Mr Scotto generally worked on weekdays from 4.40am to 3.10pm and on Saturdays from 5.40am to 2.10pm, with one hour for lunch each day, i.e. 9.5 hours per day during the week and 7.5 hours on Saturdays. I am satisfied that, in all likelihood, Mr Carrano at least implicitly authorised Mr Scotto to work those hours.

Construction of Shop Award

  1. For the purposes of the Shop Award, Scala Bros was a special or confection shop and so the working hours provisions in the Shop Award which were applicable to Mr Scotto were the ones which dealt with those shops.
  2. In the relevant period, a person was entitled under the Shop Award to be paid overtime for all work:
(c) after the prescribed ceasing time on any one day;
(d) outside the ordinary hours of work;
  1. Although the Court was taken to cases which construed award provisions similar to the ones presently being considered, each award must be construed according to its own term and, unless earlier cases considered closely similar provisions, their usefulness is limited. Because cases referred to in argument concerned provisions which, although similar were materially different from the relevant provisions of the Shop Award, their usefulness is limited accordingly.
  2. In Ansett Australia Ltd v Australian Licenced Aircraft Engineers’ Association [2003] FCAFC 209 at [8], the Full Court of the Federal Court endorsed the approach to the construction of awards which Madgwick J had taken in Kucks v CSR Ltd (1996) 66 IR 182 at 184. That approach was paraphrased by a different Full Court in United Firefighters’ Union of Australia v Metropolitan Fire and Emergency Services Board [2006] FCAFC 84; (2006) 152 IR 106 in the following terms:

Their Honours continued:

Clearly enough, the language of the instrument must be construed in its context, having regard to the subject matter and the wording of the entire agreement; Short v FW Hercus Pty Ltd [1993] FCA 51; (1993) 40 FCR 511 at 518; 46 IR 128 at 134-135. The context will include the statutory context in which the agreement is made. (at 114 [53])
  1. The Acts Interpretation Act 1901 relevantly provides:
  2. In Kenoss Contractors Pty Ltd v Warren (2005) 147 IR 390 at 397 [32], Madgwick J held that as awards are “instruments” made by an “authority” pursuant to a power conferred by an Act, s.15AA applied to them. That conclusion is consonant with the statements of Wilcox J in Bell v Gillen Motors Pty Ltd [1989] FCA 108; (1989) 24 FCR 77 at 84 that the making of awards and the amendment of awards is a legislative process and of Lee J in Warramunda Village Inc v Pryde (2002) 116 FCR 58 at 61 [5], citing Byrne v Australian Airlines Ltd (1995) 185 CLR 410, that awards are statutory instruments that establish obligations of the parties to the employment relationship to which they apply. In this connection, in Warramunda Village Finkelstein J said:
  3. The search for the meaning of an award’s provisions is a search for the objective meaning of those provisions, albeit not in a narrow or pedantic way. The intentions of the framers of the award are to be inferred from the terms of the award and its context.
  4. Applying those principles, I do not agree that overtime under the Shop Award commenced to accrue when an employee worked more than thirty-eight hours in any one week, rather than thirty-eight ordinary hours. Given that the maximum ordinary hours for any one week were thirty-eight, it is hardly surprising that the award provided that overtime would accrue once thirty-eight hours’ work had been performed. I infer that as the Shop Award’s overtime provisions made no other reference to a period of thirty-eight hours, the one it did make was a reference to thirty-eight ordinary hours. Such a conclusion is also indicated by the overtime clause’s reference not just to “38 hours per week” but also to “an average of 38 hours per week in accordance with clause 10, Hours” which was a clear reference to ordinary hours of work. I am further fortified in the conclusion that the overtime clause refers to ordinary hours by the fact that when the Shop Award was amended with effect from 8 June 1988 to provide for a thirty-eight hour week in special shops and confection shops, the award’s overtime clause was altered similarly.

Operation of overtime clause and application of the Saturday penalty rate

  1. The overtime clause of the Shop Award had two elements, the hours of work which would be classed as overtime, and the rates of overtime pay.
  2. In relation to the former, the Shop Award provided for a number of circumstances in which work would be classed as overtime and any time which met the definitions of overtime would attract payment in accordance with the overtime clause. It was possible for those circumstances to overlap but they were not cumulative entitlements which could lead to more than one overtime payment for the same period of work: Re Bank Officials’ (Federal) Award 1955 (1959) 1 FLR 305 at 308; Poletti v Ecob (No 2) (1989) 31 IR 321 at 328.
  3. The Shop Award relevantly provided for overtime pay to be calculated as follows:
Consequently, overtime was payable by reference to the number of hours on a particular day which were classed as overtime and in that regard the Shop Award had an operation significantly different from the awards considered in Re Bank Officials’ (Federal) Award 1955, Poletti v Ecob and Re Shipping Officers Award 1963 (1964) 8 FLR 262.
  1. Mr Scotto worked before 7am and for more than thirty-eight hours a week and so was entitled to overtime. He was also entitled to be paid penalty rates for ordinary time hours worked on Saturdays. I have concluded that Mr Scotto’s overtime and Saturday pay should be calculated as follows:
Mon
Tues
Wed
Thurs
Fri
Sat
Total hours worked
9.5
9.5
9.5
9.5
9.5
7.5

Overtime before 7am[1]
2.5
2.5
2.5
2.5
2.5
1.5
Ordinary time at standard rates[2]
7
7
7
7
7
Ordinary time at Saturday rates




3
(Cumulative ordinary hours
7
14
21
28
35
38)
Overtime for work exceeding 38 ordinary hours




3







Overtime for the day
2.5
2.5
2.5
2.5
2.5
4.5
Ordinary time for the day
7
7
7
7
7
3
  1. I find that every week from 28 October 2004 until 5 May 2010, apart from days which were public holidays or taken as leave, on Monday to Friday inclusive, each day Mr Scotto was entitled to be paid two hours overtime at time and a half and half an hour’s overtime at double time, while on Saturday he was entitled to be paid two hours overtime at time and a half and two and a half hours overtime at double time. Clause 14(a)(i) of the Shop Award provided for the three ordinary time hours on Saturdays to be paid the rate of time and a quarter.

Breakfast allowance

  1. I have found that Mr Scotto commenced work before 7am on each day he worked at Scala Bros. Scala Bros’ business had a number of facets and in some respects was, for the purposes of the Shop Award, a “special shop” because it sold cooked provisions and was a retail liquor shop and in others it was a “confection shop” because it was a “refreshment shop” for the purposes of the Shops (Trading Hours) Regulation 1992 ( NSW ) and its successors.
  2. Mr Scotto appears to have worked principally in that part of the business which would be characterised as a “refreshment shop”, at least for the first hours of each day. I therefore conclude that the provisions of the Shop Award which dealt with “confection shops” applied to him. As a consequence, subject to my conclusion below at [421], I find that Mr Scotto was entitled to be paid a breakfast allowance for each day he worked during the limitation period.

“Set-off” of entitlements and payments

  1. In Poletti v Ecob the Full Court of the Federal Court referred to two possible situations in which amounts paid by an employer exceed, or are not directed to the satisfaction of, an employee’s award entitlements:
  2. In that case their Honours found that there had been an agreement between the employer and employee in question about the manner in which certain amounts paid were to be applied and they gave effect to that agreement by allowing part of those payments to be treated as satisfying particular award obligations which had been underpaid.
  3. In Textile, Clothing & Footwear Union of Australia v Givoni Pty Ltd [2002] FCA 1406; (2002) 121 IR 250, after referring to Poletti v Ecob and other cases, Goldberg J found at 266 [60]-[61] that a payment made in discharge of an award obligation which exceeds what is required for that purpose cannot be set off against a different award obligation unless at the time the excess payment is made the employer designated it as paid in respect of the other obligation.
  4. The respondents submitted that the facts in this matter were similar to those in Poletti v Ecob and cited what they said was an agreement between the parties that Mr Scotto would be paid amounts above his ordinary time wage in satisfaction of his entitlement to overtime and other payments. The respondents submitted that in 1988 and 1989 Mr Carrano had sought to ensure that Mr Scotto received $400 net per week, made up of expenses paid on his behalf, cash and wages which increased over time, and referred to Mrs Ciano’s evidence that Mr Scotto was paid more than the award wage because he worked more hours. They submitted that those payments were clearly intended to compensate Mr Scotto for all the hours he spent at Scala Bros and ought to be “set off” against his claims for overtime, penalties and other entitlements.
  5. Mr Scotto submitted that the respondents had not pleaded in their amended response that any benefits alleged to have been paid to him, whether recorded in the Red Book or in the general ledger, should be set off against his wage entitlements. He submitted that absent an application to amend, such a “set-off” claim should not be allowed to proceed. He also said that the respondents had adopted an inconsistent position in that they sought to rely on those amounts as a “set-off” against award obligations while also claiming that they had to be repaid.
  6. Referring to Poletti v Ecob, Mr Scotto submitted that in order to demonstrate that a “set-off” applied, it had to be shown that there had been a contract between him and Scala Bros, what the purpose of any payments made under that contract had been and whether they were made in satisfaction of award entitlements. He submitted that there was no evidence of such an agreement ever having been made.
  7. Mr Scotto also submitted that even if it were accepted that the non-cash benefits he received had, pursuant to an agreement between him and Mr Carrano, formed part of his remuneration, such conduct would have contravened statutory provisions requiring remuneration to be paid in the form of money.
  8. Mr Scotto submitted that the Court’s discretion whether to make an order rectifying an underpayment was not unfettered and that, in deciding whether to exercise the discretion, the Court had to have regard to the fact that the proceeding was relevantly concerned with whether he had a right to be compensated for the respondents’ failure to comply with their obligations. Mr Scotto referred to Givoni at 268 [71] where Goldberg J found that an underpayment was an amount which an employer failed to pay an employee as required by an award, not the amount of any net underpayment after taking into account amounts paid to the employee under other agreements or arrangements.

Consideration

  1. The above summary of their submissions does not reflect the considerable effort devoted by the parties to this particular question of “set-off”, namely whether Scala Bros could set off any over-award payments it made to Mr Scotto against any underpayments which may have occurred. However, a lengthier summary was not necessary.
  2. Based on what is contained in the correspondence over particulars in exhibit 4, the characterisation of the present issue as a “set-off” of over-award payments against under-award payments seems to have arisen out of a misunderstanding by Mr Scotto as to the nature of the claim of set-off made by the respondents in their amended response and cross claim. Scala Bros pleaded a defence by way of set-off, as well as a cross claim, in respect of sums said to have been lent to Mr Scotto, not amounts paid in satisfaction of award obligations. Consequently, on the pleadings, this case is distinguishable from Poletti v Ecob and Givoni.
  3. Nevertheless, notwithstanding that a Poletti v Ecob question was not pleaded or particularised, once that issue was mistakenly identified by Mr Scotto it appears to have assumed a life of its own with the result that the respondents followed Mr Scotto down the same rabbit-hole.
  4. To the extent that the respondents’ submissions were not based on amounts which were properly part of the cross claim for moneys allegedly lent, their arguments substantially related to matters which occurred outside the limitation period applicable to Mr Scotto’s claims. The respondents also alleged that over-award payments were made during the limitation period but the evidence does not point to Mr Carrano and Mr Scotto having agreed that any overpayments were to be in satisfaction or part-satisfaction of other award-based entitlements. In those circumstances, there is no basis to reduce Mr Scotto’s entitlement to award-based amounts unpaid in the limitation period and before Mr Carrano’s death. Consequently, Scala Bros will be ordered to compensate Mr Scotto by paying him his underpaid or unpaid hours worked at ordinary time rates, overtime, Saturday penalty rates and breakfast allowance in respect of the period from 1 December 2006 to 27 June 2009. I have also determined that although the amount Mr Scotto was paid from 28 October 2004 to 30 November 2006 was sufficient to cover his hours worked at ordinary time rates, it did not satisfy his Saturday penalty rates, overtime or breakfast allowance entitlements. Consequently, Scala Bros will also be ordered to compensate Mr Scotto by paying him his unpaid Saturday penalty rates, overtime and breakfast allowance entitlements in respect of the period 28 October 2004 to 30 November 2006.
  5. Different considerations apply to the period 28 June 2009 to Mr Scotto’s departure on 5 May 2010.
  6. As identified earlier in these reasons, from 28 June 2009 until the end of his time with Scala Bros, Mr Scotto was paid $387.08 per week more than the award wages for a thirty-eight hour week paid at ordinary time rates. It has also been found that on every weekday during that period he was entitled to be paid two hours overtime at time and a half and half an hour’s overtime at double time while on Saturday he was entitled to be paid three ordinary hours at time and a quarter, two hours overtime at time and a half, and two and a half hours overtime at double time. Mr Scotto’s award hourly rate at that time was $15.84 and so each week where there were no public holidays and on which he took no leave he was entitled to $613.80 per week for ordinary time hours including Saturday penalty rates and $443.52 per week for overtime worked, totalling $1,057.32 per week. He was also entitled to a breakfast allowance of $6.70 per day until 31 December 2009 following which it was abolished by the Retail Award.
  7. I accept that the sudden increase in Mr Scotto’s wage came about because Mrs Bossi misunderstood Mr Scotto when he told her he was paid $800 per week. Suddenly, instead of receiving $550 gross per week, or $600 as he said, Mr Scotto was receiving $800 net ($989 gross). Mr Scotto apparently accepted this significantly increased pay without comment. Even so, the $989 per week was less than the total of the amounts Mr Scotto was due under the Shop NAPSA in the period 28 June 2009 to 5 May 2010.
  8. Section 545(2)(b) of the FW Act is relevantly similar to the equivalent provision in the WR Act considered in Givoni. Its effect is relevantly that the Court has a discretion whether to order compensation. In Givoni Goldberg J referred to Printing & Kindred Industries Union v Vista Paper Products Pty Ltd (1994) 57 IR 414 at 433 where Wilcox CJ had stated that the extent of an employee’s loss was a relevant consideration in determining whether or not to exercise the discretion to make an order for payment and that where there was no significant loss, a court might justifiably decline to make an order, although the discretion is only in relation to whether an order should be made, not its amount.
  9. The evidence does not support a conclusion that Mr Scotto or Mrs Bossi discussed or even considered how Mr Scotto’s pay was to be apportioned against Scala Bros’ award obligations. Consequently, there is no basis to “set-off” any overpayments against those obligations and Scala Bros will be ordered to compensate Mr Scotto by paying him his unpaid overtime entitlements in respect of the period 28 June 2009 to 5 May 2010. However, given the circumstances in which the increased wage was paid and the magnitude of the overpayment of Mr Scotto’s ordinary time hours in that period, in the exercise of discretion I will not make any order for compensation in respect of a breakfast allowance entitlement.

Long service leave

Submissions

Breaks in employment

  1. The respondents submitted that there had been significant breaks in Mr Scotto’s service with Scala Bros which made him ineligible for long service leave. They alleged that there had been four separate breaks in Mr Scotto’s employment, namely:
    1. 25 October 1986 to 27 November 1986;
    2. 25 December 1986 to 2 April 1987;
    1. 10 April 1992 to 29 May 1994; and
    1. 20 March 2004 to 6 June 2004.
  2. The respondents submitted that the Scala Bros wages books and Mr Scotto’s taxation papers recorded each of those breaks in employment. They referred to Mrs Ciano’s evidence that the wages books were the best record of when Mr Scotto was working and characterised as implausible and contrary to the evidence Mr Scotto’s explanation that it was a coincidence that on each occasion when he commenced a new business he was not recorded in Scala Bros’ wages books.
  3. The respondents particularly referred to the wages records showing that Mr Scotto had been absent for eleven weeks in the first half of 2004, submitting that after working part-time at La Scala for two weeks, he commenced full-time work there in the week ending 19 March 2004, only returning to Scala Bros after his and his wife’s interest in La Scala was sold on 31 May 2004.
  4. The respondents also referred to the records of La Scala’s payroll service provider, Gridpay, which recorded Mr Scotto commencing full time at La Scala on 18 March 2004. They submitted that it was clear that Mr Scotto had left Scala Bros completely. As material supporting the submission that Mr Scotto had resigned, the respondents referred to the evidence that Mr Carrano had been upset and dismayed when Mr Scotto left which, they argued, suggested that Mr Scotto had not been granted leave but had, rather, left Mr Carrano “in the lurch”.
  5. The respondents submitted that Mr Scotto’s absence from Scala Bros while running La Scala extinguished his entitlement to long service leave. In this connection they referred to their allegation that in March, April and May 2004 Mr Scotto’s status had been described in the Scala Bros wages book as “left” before later being changed to “time off”. They also referred to Mrs Ciano’s notification to the superannuation fund that Mr Scotto had been terminated as at 19 March 2004. They submitted that Mr Scotto’s long service leave entitlements did not begin to accrue again until his return in June 2004.
  6. Mr Scotto submitted that he never received any payment for long service leave during his employment with Scala Bros which, he alleged, ran continuously from about 1 January 1981 to 5 May 2010.
  7. Mr Scotto also submitted that his first alleged break coincided with his marriage to Ms Schultz and their honeymoon and to the period directly afterwards when he remained on leave and assisted her family with their florist business. He submitted that Ms Schultz’s evidence, that he had left his employment with Scala Bros for approximately two months to work in his own business selling pots, could not be relied upon because she could not remember when this had allegedly occurred and she did not state the basis of her knowledge of the reason for his alleged departure from Scala Bros or the circumstances giving rise to it. Mr Ferlazzo also gave evidence about the pots business but was unable to recall a specific time period. Mr Scotto submitted that the evidence of Ms Schultz and Mr Ferlazzo should be rejected as being vague and imprecise. Mr Scotto further submitted that, even assuming that Ms Schultz and Mr Ferlazzo were correct and that there had been a break which coincided with the break purportedly recorded in the wages books, the period of two months suggested by Ms Schultz was inconsistent with the one month period indicated by the wages books.
  8. As for the second alleged break, between December 1986 and April 1987, Mr Scotto submitted that none of the respondents’ witnesses recalled him being away from work during this period, or any reason for his alleged absence. He submitted that, other than the wages books, whose accuracy he disputed, there was no evidence to support this allegation.
  9. Mr Scotto submitted that although the wages books recorded that he had not been at Scala Bros for a two year period between 10 April 1992 and 29 May 1994, a period during which the respondents alleged he had been working in a cleaning business with his second wife, the evidence of his absence was scant and contradicted by the evidence of independent witnesses. As noted above, Mr Scotto claimed that he worked at Scala Bros between April 1992 and May 1994, submitting that the cleaning business operated for about six months from June 1992 and had not interfered with his work at Scala Bros.
  10. Mr Scotto submitted in relation to the period in 2004, around the time he had been working at La Scala, that there was no direct evidence that he had terminated his employment with Scala Bros. Mr Scotto submitted that the documents produced by Gridpay largely supported his version of events and demonstrated that his absence from Scala Bros was much shorter than the one recorded in the Scala Bros wages books. He submitted that, in particular, the Gridpay timesheets recorded that from 4 to 14 March 2004 he worked part-time at La Scala at night and on Sundays and that from 18 March to 21 April 2004 he worked full-time, including on Sundays. He said that after that point, when the La Scala timesheets did not record any time for him, he had returned to Scala Bros.
  11. Mr Scotto submitted that an employer and employee could initially believe that a termination of employment had occurred but later decide to re-characterise the situation which, he submitted, was what had happened in his case. Mr Scotto submitted that the notation change in the wages book in relation to his absence in 2004, from “left” to “time off”, could only have been made at Mr Carrano’s direction. Mr Scotto submitted that the superannuation document which referred to him being “terminated” could not be relied on because it had been completed prior to the correction in the wages book. He submitted that the wages books reflected Mr Carrano’s intention that his service be treated as continuous.
  12. Citing s.4(11)(a1)(vi) of the LSL Act, Mr Scotto submitted that because his break from Scala Bros in 2004 had been leave without pay approved by Mr Carrano, it did not amount to an interruption of his service. He went on to submit that even if his Scala Bros employment had been terminated 2004, he was re-employed within two months of his departure and so, pursuant to s.4(11)(a1)(vii) of the LSL Act, his service with Scala Bros was deemed not to have been interrupted.

Final termination of employment

  1. Mr Scotto also argued that even if his employment had ceased for a period of more than two months, he had been constructively dismissed in 2010. He submitted that when his relationship with Mrs Bossi reached an untenable point, she told him that he should look for other work because she would be selling Scala Bros, effectively presenting him with a choice of looking for work elsewhere or having his employment with Scala Bros come to an end. He submitted that in those circumstances, he had not resigned but had been dismissed and so he was still entitled to long service leave.
  2. The respondents submitted that Mr Scotto’s employment was not terminated in 2010 at Scala Bros’ initiative. They submitted that Mr Scotto had walked out.

Consideration

  1. Earlier in these reasons I rejected Mr Scotto’s claim to have worked at Scala Bros between April 1992 and May 1994. It is therefore unnecessary to determine whether, and to what extent, there was a break in Mr Scotto’s employment with Scala Bros in 1986 or 1987. Any claim which Mr Scotto might have had to long service leave following either of those absences from Scala Bros, as well as before the 1992-1994 absence, is out of time.
  2. The absence remaining to be considered is the one related to the La Scala business. Although the parties debated the precise periods of Mr Scotto’s absence from Scala Bros in 2004, and the nature of that absence, all parties agreed that he was indeed absent for a period. The evidence supports a conclusion that Mr Carrano was surprised and upset by Mr Scotto’s departure and I infer that it had not been agreed in advance. I note that Mrs Ciano appears to have advised Mr Scotto’s superannuation fund by a note in a remittance advice, which was exhibit M, that his employment with Scala Bros had terminated on 19 March 2004 and it may be that although the wages book for the period, exhibit L, characterised Mr Scotto’s absence as “time off”, it had originally described him as having “left”.
  3. Whatever the truth of these matters, the wages book does characterise Mr Scotto’s absence as “time off” and the note on the superannuation contributions remittance advice concerning Mr Scotto’s employment being terminated on 19 March 2004 was scribbled out. There is also no evidence which indicates that Mr Scotto’s accrued annual leave was paid out in association with his absence while at La Scala and his PAYG summary records him as having been employed at Scala Bros for the full year. In all the circumstances, I infer that Mr Carrano accepted Mr Scotto back to Scala Bros on the basis that his absence had been leave without pay and not a cessation of his employment. As a consequence, and by virtue of s.4(11)(a1)(vi) of the LSL Act, I find that Mr Scotto is entitled to be paid an amount in respect of long service leave, calculated from his return to work on 30 May 1994 until 5 May 2010, less eleven weeks pursuant to s.4(11)(a1) of the LSL Act, for his absence in 2004 and sums paid to him following his departure on 5 May 2010 until 30 June 2010.
  4. The respondents submitted that under the LSL Act the Court has a discretion whether or not to make orders for the payment of any outstanding long service leave entitlements. The Court was not taken to any provision of the LSL Act which made that submission out and, in my view, it is not borne out by the terms of s.4 of that Act.
  5. Mr Scotto submitted that even if he had terminated his employment with Scala Bros in 2004, he was re-employed within two months of his departure and so, pursuant to s.4(11)(a1)(vii) of the LSL Act, this alleged break could not be deemed to have interrupted his service with Scala Bros. I am not persuaded that s.4(11)(a1)(vii) of the LSL Act operates in the manner suggested but, given my finding above at [438], I need not address that issue further.
  6. The issue of Mr Scotto’s alleged constructive dismissal is similarly otiose. However, if I were called upon to decide, because I prefer Mrs Bossi’s evidence to Mr Scotto’s on matters where they differ, I would find that Mr Scotto was not constructively dismissed but abandoned his employment.

Commencement of employment

  1. Mr Scotto alleged that he commenced working at Scala Bros in or around January 1981 after having moved to Sydney from Brisbane in December 1980. The respondents alleged that Mr Scotto did not commence employment at Scala Bros until May 1984.
  2. Mr Scotto submitted that Mrs Bossi’s position on this point was based on her recollection that he was not present in Sydney at four specific events between 1981 and 1983 and that the Scala Bros wages books did not record him commencing employment until May 1984. As noted already, Mr Scotto submitted that the wages books could not be relied upon as an accurate record of his employment and he submitted that Mrs Bossi’s recollection of the period was not clear because it depended on inferences drawn from the reference points which she identified. Mr Scotto submitted that he had provided an explanation for his presence or absence at each event.
  3. Mr Scotto submitted that Ms Mace and Mr Ferlazzo’s evidence that he was not present at Scala Bros in 1981 should be given limited weight because Ms Mace was eight years old at the time while Mr Ferlazzo was six.
  4. Mr Scotto submitted that his first wife, Ms Schultz, placed him at Scala Bros before May 1984.
  5. The respondents submitted that Mr Scotto’s evidence of having commenced employment with Scala Bros in 1981 ought not be believed as the wages books pointed to a commencement in 1984. They also submitted that the chronology set out in Ms Schultz’s evidence, based on how old she was at the time of the various events she referred to, in particular the fact that she turned sixteen in October 1984, confirmed Mr Scotto’s 1984 start date.

Consideration

  1. In the event that it becomes relevant, on balance, and particularly by reference to Ms Schultz’s evidence, I am persuaded that Mr Scotto did not commence work with Scala Bros until 1984.

Annual leave

  1. Mr Scotto submitted that he had been entitled to four weeks’ paid annual leave each year but, apart from leave for his two honeymoons, a couple of days off around public holidays and two weeks in January 2010, he had rarely taken holidays. He alleged that, with the exception of the two weeks’ leave in January 2010, he did not receive payment for any annual leave that he took during his twenty-nine years at Scala Bros. The respondents alleged that Mr Scotto did, in fact, take annual leave and referred in this respect to the wages books which indicated that he had taken a limited number of paid holidays. Mr Scotto submitted that most of the days marked as holidays in the wages books were public holidays while some of the other days were, for instance, market picnic days when the Flemington Markets were closed.
  2. The respondents conceded that Scala Bros owed Mr Scotto annual leave entitlements amounting to $12,490.36 but submitted that an award in respect of those entitlements was dependent on the Court’s ruling on the loan account which they alleged had been paid in lieu of annual leave. Mr Scotto submitted that even assuming that the loan alleged by the respondents comprised amounts paid in respect of annual leave, the loan could not be legitimately allocated as a payment in respect of annual leave because none of the amounts were paid at the time of the taking of annual leave or given in the form of cash. Mr Scotto submitted that on each occasion he was alleged to have received an annual leave payment the wages book made it clear that he had been at work. He also submitted that he could not have cashed out his annual leave entitlements in any event.

Consideration

  1. In their response the respondent alleged that Mr Scotto had taken paid annual leave on:
    1. 17 August 2004;
    2. 19 January 2005;
    1. 25 March 2005;
    1. 28 March 2005;
    2. 16 August 2005;
    3. 3 January 2006 to 6 January 2006 inclusive;
    4. 15 August 2006;
    5. 7 September 2007;
    6. 6 November 2007;
    7. 25 December 2008 to 17 January 2009 inclusive; and
    8. 25 December 2009 to 16 January 2010 inclusive.
  2. However, many of the days referred to were also taken off by other staff members, suggesting a picnic day as Mr Scotto alleged, and some others were public holidays. Nevertheless, the wages books did record that in the period December 2008 to January 2009 Mr Scotto took fourteen days of annual leave and three public holidays and in the period December 2009 to January 2010 took sixteen days annual leave with public holidays. It seems that leave loading was not paid in respect of the 2008-2009 leave which, in any event, should have been recorded as seventeen days’ leave as the wages book did not reflect the fact that Mr Scotto worked six days a week, recording only five days’ work each week.
  3. Apart from the latter two periods, and in the absence of further evidence in the wages books, I conclude that the other dates on which the respondents allege Mr Scotto took annual leave were public or industry holidays and did not affect his annual leave balance.
  4. According to the cheque butts and the pages of the ledger reproduced in exhibit J, the following amounts were paid to Mr Scotto and recorded in the ledger as relating to holidays:
Date
Cheque butt description
11 October 1995
Paul Scotto A/C Holiday
$2000
2 May 1996
Paul Scotto A/C Holidays
$4000
19 November 1997
Paul Scotto A/C Holiday
$500
19 November 1997
Paul Scotto LOAN FOR HONDA Part Holiday
$22,150
24 October 2002
Paul Scotto A/C Holiday
$6,000
  1. Notwithstanding Mr Scotto’s submissions, I have already found that the cheques in question were given to him and that he banked them. However, they were not included in his earnings declared in the Scala Bros group certificates or PAYG summaries and so they ought not to be classified as amounts paid in satisfaction of his leave entitlements, although that was probably their intention. Further, the last two amounts were included by the respondents in the amounts they alleged had been lent to Mr Scotto and which they said he ought to repay. However, for reasons given later, I have concluded that the amounts were not loans.
  2. The reservations I have concerning the Scala Bros wages books have led me to conclude that they cannot be relied upon to record accurately that Mr Scotto was at work on a particular day. However, if Scala Bros wished to be given any credit for giving Mr Scotto paid annual leave then it should have recorded such leave in, at least, the wages books. It not having done so, and given the evidence of both Mr and Mrs Scotto, there is no basis to find that Mr Scotto did take paid leave apart from the three weeks in December 2008 – January 2009 and the three weeks in December 2009 – January 2010 to which I have referred.
  3. I find that Mr Scotto is entitled to be paid for his accrued annual leave in respect of the period 30 May 1994 to 5 May 2010, taking into account the thirty-three days of leave taken in 2008, 2009 and 2010, plus the 17.5% leave loading and that a leave loading should be paid in respect of the annual leave taken in December 2008 – January 2009.

Superannuation

  1. Mr Scotto submitted that although Scala Bros had made superannuation contributions on his behalf, those contributions were made on the basis of wages which were below the prescribed rates. As such, they were less than the amount which the Superannuation Guarantee Charge Act 1992 required be contributed in order to avoid a charge being imposed on Scala Bros. He submitted that he had been entitled to wages higher than the ones he was paid and that his superannuation contributions should have been based on his lawful wages.
  2. Mr Scotto submitted that an “officious bystander” would say:
Mr Scotto submitted that his contract contained an implied term to the effect that Scala Bros would make superannuation contributions on his behalf.
  1. The respondents submitted that no order should be made in relation to superannuation but if one were made, that superannuation is only payable on ordinary time earnings. The respondents submitted that there was no basis for the implication of a term into the employment contract as the obligation to pay superannuation is imposed by statute.

Consideration

  1. The sole basis on which Mr Scotto said his employment contract contained a term requiring payment of superannuation contributions was that an “officious bystander” would think that such contributions ought to be made. However, that is not the test. As acknowledged in the further amended points of claim, the test was set out by the Privy Council in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283:

That test was adopted by the High Court in Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596 at 605–606 per Mason J, Gibbs and Stephen JJ agreeing at 599, Aickin J agreeing at 615.

  1. The superannuation claim fails because, amongst other things including the existence of the Superannuation Guarantee Charge Act, the propounded term was not necessary to give business efficacy to the employment contract in that it was not one which it should be presumed the parties would have agreed upon had they turned their minds to it: Codelfa Construction Pty Ltd v State Rail Authority of  NSW  [1982] HCA 24; (1982) 149 CLR 337 at 345-346 per Mason J, Stephen J agreeing at 344, Wilson J agreeing at 392, at 404 per Brennan J; Commonwealth Bank of Australia v Barker [2014] HCA 32; (2014) 88 ALJR 814 at 821-822 [22]- [23] per French CJ, Bell and Keane JJ.

Pecuniary penalties – Scala Bros

  1. As recorded earlier, Mr Scotto alleged that Scala Bros contravened the IR Act, the WR Act and the FW Act by:
    1. failing to pay his wages, allowances, loadings and overtime in accordance with the Shop Award, the Shop NAPSA and the Retail Award; and
    2. failing to provide him with pay slips.
He also alleged that Scala Bros had contravened the LSL Act, by failing to pay him long service leave, and the FW Act, by failing to pay him his accrued annual leave.
  1. Mr Scotto submitted that even if the handwritten documents which Mrs Bossi alleged she had provided to him with his pay could be considered pay slips, which he contested, they did not record his wages accurately because they only set out the amounts he received in cash, not the other amounts he received by direct deposit into his bank.
  2. The question of statutory breaches was otherwise not the subject of detailed submissions although, as noted earlier, Mr Scotto did concede that he could not press for the imposition of civil penalties under the IR Act. In light of that concession, only statutory breaches which occurred on or after 27 March 2006 need be considered.
  3. Mr Scotto pressed for the imposition of pecuniary penalties on Scala Bros under:
    1. s.719(1) of the WR Act;
    2. s.546(1) of the FW Act; and
    1. sub-ss.10(1),(2) and (3) of the LSL Act.

Consideration

  1. Mr Scotto has made out his claim to have been underpaid or not paid:
    1. ordinary time wages;
    2. overtime;
    1. weekend penalties for working on Saturdays;
    1. a breakfast allowance; and
    2. annual leave loading

in the period 27 March 2006 to 27 June 2009. In that period, failing to pay or underpaying each of (a) – (e) was a breach of cl. 3 of the Shop NAPSA and thus a breach of cl.32 of sch.8 to the WR Act.

  1. Mr Scotto has also made out his allegation that Mr Carrano did not provide him with pay slips. As noted earlier at [52], Mr Scotto did not have standing to seek a civil penalty under the WR Act for so much of this failure as occurred between 27 March 2006 and 30 June 2009 but, in the period on and from 1 July 2009, such a failure was a breach of the FW Act and Regulations in respect of which he did have standing. Mr Scotto has additionally proved that following Mr Carrano’s death, when the business was being run by Mrs Bossi, Scala Bros still failed to provide him with payslips which satisfied the requirements of the FW Act and its regulations. Although Mrs Bossi appears to have improved on her father’s practice, in that she did provide pay slips of a sort, the pay slips she issued did not meet the requirements of reg.3.46 of the FW Regulations, which was a breach by Scala Bros of s.536(1) of the FW Act.
  2. Similarly, although Mrs Bossi’s payment of Mr Scotto’s wages satisfied Scala Bros’ obligations in respect of his ordinary time work, including ordinary time on Saturdays at penalty rates, those payments did not address his overtime and breakfast allowance entitlements. Consequently, I find, that Mr Scotto has made out his claim to have not been paid:
    1. overtime in the period 28 June 2009 until the termination of his employment in May 2010; and
    2. a breakfast allowance in the period 28 June 2009 to 31 December 2009.
Each of those failures was a breach by Scala Bros of a provision of the Shop NAPSA and the transitional provisions of the Retail Award and thus, each was in the relevant periods, a breach of cl.32 of sch.8 to the WR Act and of item 2(1) of sch.16 to the FW (TPCA) Act. The failure to pay overtime was also a breach of s.45 of the FW Act.
  1. I am also satisfied that following the termination of his employment in 2010, Mr Scotto was not paid:
    1. accrued annual leave and leave loading; and
    2. long service leave.
The first failure was a breach of ss.90(1) and 45 of the FW Act and the second was a breach of s.4(5) of the LSL Act. I accept that Scala Bros did continue to pay Mr Scotto weekly amounts following his departure, however, they were not sufficient to satisfy Scala Bros’ annual leave and long service leave obligations or either of them.
  1. The question of what, if any, penalties should be imposed as a result of those contraventions was not the subject of evidence or submissions and will be determined separately.

Accessorial liability – Giuseppina Bossi

  1. Mr Scotto alleged that Mrs Bossi was liable as an accessory for Scala Bros’ contraventions because she knowingly authorised or permitted them, aided or abetted them, was knowingly concerned in or a party to them and failed to correct the underpayments he alleged had occurred. Mr Scotto alleged that under the IR Act, the WR Act, the FW Act and the LSL Act, these matters made Mrs Bossi liable as an accessory for Scala Bros’ conduct.
  2. Although it is not necessary to consider the question of pecuniary penalties under the IR Act because those claims were not pressed, Mr Scotto did press his claim that, as an accessory to Scala Bros’ breaches of that Act, Mrs Bossi was liable pursuant to its ss.365 and 400(1) to compensate him for the company’s underpayments of his entitlements prior to 27 March 2006. In deciding that question, it is not necessary to consider Mr Scotto’s submissions which addressed Mrs Bossi’s alleged liability to compensate him for underpayments before 28 October 2004 which were outside the limitation period because Mrs Bossi would not be liable for such amounts for the same reasons that Scala Bros would not be liable for them.
  3. As to his claims within the limitation period, Mr Scotto alleged that pursuant to:
    1. ss.719 (1), 727(1) and 728(1) of the WR Act;
    2. ss.545(1), 546(1) and 550(1) of the FW Act; and
    1. sub-ss.10(1),(2) and (3) of the LSL Act,
Mrs Bossi was liable to the imposition of pecuniary penalties and to compensate him for underpayments which occurred under those Acts during their periods of operation.
  1. Mr Scotto submitted that there was a sufficient basis to infer that Mrs Bossi had had knowledge of Scala Bros’ contraventions because:
    1. she had been a director of Scala Bros for the duration of his employment with attendant duties in relation to corporate governance and statutory compliance generally;
    2. in her capacity as a director, she had participated in the management and control of the affairs of Scala Bros, including signing Scala Bros’ cheques and signing and approving the annual accounts which identified wages, leave liabilities and employee loans;
    1. she claimed to have witnessed the day-to-day operations of Scala Bros, including the negotiation and payment of staff wages and superannuation entitlements;
    1. she had worked as an employee at Scala Bros and would have acquired first-hand knowledge of Scala Bros’ employment practices including the making of cash payments to employees, the failure to issue pay slips and the absence of any reliable method of recording hours and wages paid;
    2. she made direct observations of his employment including his duties, responsibilities and working hours, such as his work before 6am and on Saturdays; and
    3. she had knowledge of her own employment arrangements and that of other family members (such as her mother and husband), demonstrating that Scala Bros adopted a cavalier if not wilfully ignorant approach to making payments and record keeping.
  2. In relation to the allegation that she had known of the situation at Scala Bros, Mr Scotto asserted that it was implausible that Mrs Bossi would have signed documents without asking questions about them and that her claimed ignorance of the contents of the company accounts, even though she signed the records, reflected a retrospective wish to distance herself from their preparation.
  3. Mr Scotto submitted that Mrs Bossi’s knowledge of these “suspicious circumstances” would have been heightened upon her taking over the business after Mr Carrano’s death. Mr Scotto submitted that Mrs Bossi made a number of significant changes to Scala Bros’ operations which he said demonstrated an awareness of the inadequacies of past practices, for example:
    1. for the first time he was recorded in the wages books as working from 5am and on Saturdays;
    2. Mrs Bossi modified the payment of his wages by making part a direct deposit and part a cash payment;
    1. Mrs Bossi directed him not to come to work before 5am as he had done before Mr Carrano’s death;
    1. Mrs Bossi paid him annual leave pay by cheque which, for the first time, appeared accurately in the wages books; and
    2. Mrs Bossi claimed that she continued to pay him after he ceased employment, as long service leave, on the understanding that long service leave was owed to him.
Mr Scotto submitted that each of these changes supported an inference that Mrs Bossi had known or suspected that her father’s record keeping and payment practices “did not accord with reality”. He submitted that the Court should infer that she had deliberately refrained from making enquiries when her father was alive.
  1. Mr Scotto submitted that Mrs Bossi should have made enquiries because she was a director and would have been aware from her own professional life that Scala Bros’ practices were highly irregular and not compliant with industrial laws. He submitted that she need not have known the law, just the facts constituting the contraventions, or have suspected the existence of the facts constituting the contraventions, and he asked the Court to infer from the overall circumstances of the case that Mrs Bossi’s denial that she had deliberately failed to make enquiries was untrue.
  2. Mr Scotto also submitted that Mrs Bossi could be liable as an accessory if she had been wilfully blind to Scala Bros’ contraventions. He argued that the test for whether Mrs Bossi had been wilfully blind was whether she had reasonably suspected that contraventions were occurring, realised the probability that her suspicions were true and had made a deliberate decision to refrain from making enquiries.
  3. Mr Scotto submitted that, in any event, Mrs Bossi became aware of his specific claims after he ceased employment but she did nothing to make good the underpayments. Mr Scotto submitted that as Mrs Bossi did not rectify the continuing contraventions once she became aware of them, she was taken to have been involved in the contraventions for the whole period of his employment.
  4. The respondents submitted that prior to Mr Carrano’s death on 13 June 2009, Mrs Bossi’s involvement was limited and she had deferred to him, which included signing company documents when he asked her to. The respondents submitted that the changes Mrs Bossi had introduced did not imply that she had known or had had strong suspicions about deficiencies in her father’s record-keeping.

Consideration

  1. For a person to have accessorial liability under s.400 of the IR Act, he or she has to have “knowingly authorised or permitted” the contravention in question. One of the tests for accessorial liability under the WR Act and the FW Act is that a person has been “knowingly concerned” in a contravention. Mr Scotto submitted, and I am willing to accept, that these tests are largely the same and require the person who is alleged to have been involved in another’s contravention to have known the essential facts constituting the contravention in question. Those tests require the person to have been an intentional participant in the contravention, the necessary intent being based on knowledge of the essential elements of the contravention: Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661; Australian Competition & Consumer Commission v Giraffe World Australia Pty Ltd (No 2) [1999] FCA 1161; (1999) 95 FCR 302; Rural Press Ltd v Australian Competition & Consumer Commission [2002] FCAFC 213; (2002) 118 FCR 236; Heydon v NRMA Ltd  [2000] NSWCA 374 ; (2000) 51 NSWLR 1. The accessory need not know that the conduct constituted a contravention: ACCC v Giraffe World at 346 [186]; Rural Press v ACCC at 282, 283 [159], [160]; Heydon v NRMA at 109 [334].
  2. The other bases upon which Mr Scotto submitted Mrs Bossi was liable under the FW Act, and presumably under the WR Act too, was that she had aided or abetted Scala Bros’ contraventions of those Acts.

Before 14 June 2009

  1. I am not persuaded by Mr Scotto’s arguments concerning Mrs Bossi’s involvement in the Scala Bros business when Mr Carrano was alive. Although, as Mr Scotto submitted, by signing the company’s annual documents she had been representing that she had read them, understood their contents and that they were truthful, too much should not be made of that in the circumstances. In particular, I conclude that Mrs Bossi’s signature was no more than a favour done for her father and consider that it would be a mistake to impute to her much knowledge of the operation of the business during that period. Indeed, the early reliance which Mrs Bossi placed on Mr Scotto, upon assuming conduct of the business after her father died, points to her initially having had only a general knowledge of its operations.
  2. The changes which Mrs Bossi introduced after she assumed control of the business do indicate that she did things differently from Mr Carrano, however, that does not prove that she knew how the business ran before his death, at least in the areas the subject of this proceeding. But even if she had had such knowledge, she was not, in any meaningful sense, part of the management of the business and it has not been demonstrated that she was knowingly involved in any way in any of the managerial decisions taken by Mr Carrano. The fact that Mrs Bossi, who had her own family and career, was a director of this very small company run by her father is an insufficient basis to conclude that she was concerned with its operations in a way which would satisfy the statutory test of a person “involved in a contravention”.
  3. Nor am I persuaded that Mrs Bossi was wilfully blind to Scala Bros’ contraventions in such a way as to impute to her knowledge of them. In R v Crabbe [1985] HCA 22; (1985) 156 CLR 464 the High Court said:
  4. I find that when her father ran the business Mrs Bossi had no particular responsibility for, or duties in, Scala Bros, other than to sign company documents as requested. What I find to have been Mrs Bossi’s lack of real responsibility for, or duties in, the business during that time satisfies me that she would have had no motivation to close her eyes to any particular conduct and, in respect of each of the contraventions of the WR Act which I have found occurred in the time of her father’s management, a lack of awareness of all of the matters going to make up the contraventions in question.
  5. For these reasons, I also find that Mrs Bossi did not aid or abet Scala Bros’ contraventions of the WR Act in the period prior to her assumption of control of the business.
  6. Consequently, the allegations of accessorial liability made against Mrs Bossi in respect of the period before 14 June 2009 are not made out.

14 June 2009 to 5 May 2010

Generally

  1. Different considerations apply to the period when Mrs Bossi was the proprietor of Scala Bros. I find that upon Mrs Bossi’s assumption of control of the business following Mr Carrano’s death on 13 June 2009, all decisions of any importance at Scala Bros were taken by her.


Contraventions of federal statutes

  1. I am willing to assume that Mrs Bossi was not aware that the failure to provide proper pay slips, overtime or a breakfast allowance were breaches of the Shop NAPSA and then the transitional provisions of the Retail Award, and thus of the WR Act and then the FW (TPCA) Act and the FW Act. I also assume that Mrs Bossi was not aware that Mr Scotto’s pay for the weeks ending 20 and 27 June 2009 was insufficient to satisfy his ordinary time wage entitlements, or his Saturday penalty rate entitlement. However, I find that she did know the essential facts constituting the contraventions and was an intentional participant in the relevant acts or omissions.
  2. Similar considerations also apply to the failure by Scala Bros, in contravention of the FW Act, to pay Mr Scotto his accrued annual leave following the termination of his employment on 5 May 2010. Mrs Bossi knew the essential facts constituting the contravention and was an intentional participant in the failure by Scala Bros to pay Mr Scotto’s accrued annual leave once his employment ended.
  3. I therefore find that Mrs Bossi was knowingly involved in the contraventions represented by Scala Bros’ failure under her management to:
    1. pay Mr Scotto:
      1. ordinary time wages and Saturday penalty rates prior to 28 June 2009;
      2. overtime;
      3. a breakfast allowance; or
      4. accrued annual leave; and to
    2. provide him with pay slips which complied with the FW Regulations.
  4. Mrs Bossi is therefore taken to have contravened:
    1. cl.32 of sch.8 to the WR Act in respect of the failure to pay Mr Scotto ordinary time wages in full and Saturday penalty rates from 14 June 2009 to 27 June 2009;
    2. cl.32 of sch.8 to the WR Act and item 2(1) of sch.16 to the FW (TPCA) Act in respect of the failure to pay Mr Scotto overtime and a breakfast allowance from 14 June 2009 to 31 December 2009;
    1. s.45 of the FW Act in respect of the failure to pay Mr Scotto overtime from 1 January 2010;
    1. s.90(2) of the FW Act in respect of the failure, upon the termination of Mr Scotto’s employment, to pay him his accrued annual leave entitlements; and
    2. s.45 of the FW Act in respect of the failure to pay Mr Scotto his annual leave loading.
As noted earlier, the breakfast allowance was abolished by the Retail Award and so its non-payment was not a breach of that award or s.45 of the FW Act.
  1. Again, the question of what, if any, penalties should be imposed will be determined separately.

Compensation under federal statutes

  1. Mr Scotto contended that if Mrs Bossi were found to have been involved in any of the contraventions found against Scala Bros, she would be liable not only to pecuniary penalties but also to pay compensation to him for any related underpayments by Scala Bros. For the following reasons, I have concluded that the WR Act did not permit an order of the latter sort but that the FW Act does.
  2. The provisions in each of the WR Act and the FW Act concerning persons involved in contraventions committed by another, state that such a person is, respectively, “treated as having contravened” and “taken to have contravened” the relevant provision, expressions which mean the same thing. Under the WR Act, the relevant right to recover underpayments was expressed in the following terms:

(1) An eligible court may impose a penalty in accordance with this Division on a person if:

(a) the person is bound by an applicable provision; and
(b) the person breaches the provision.
...
(6) Where, in a proceeding against an employer under this section, it appears to the eligible court that an employee of the employer has not been paid an amount that the employer was required to pay under an applicable provision ... the court may order the employer to pay to the employee the amount of the underpayment.
720 Recovery of wages etc.
Those provisions do not accommodate the idea that anybody other than the employer in question will be liable for underpayments.
  1. However, the relevant provision in the FW Act is materially different. It relevantly provides:

...

(b) an order awarding compensation for loss that a person has suffered because of the contravention ...

Mrs Bossi is taken to have contravened item 2(1) of sch.16 to the FW (TPCA) Act and ss.45 and 90 of the FW Act. As noted earlier in these reasons, item 16 of sch.16 to the FW (TPCA) Act provides that pt.4-1 of the FW Act, which includes s.545, applies to item 2 of sch.16 to the FW (TPCA) Act as if that item were part of the FW Act.
  1. In summary, under the FW Act Mrs Bossi is taken to have been involved in Scala Bros’ failures from 1 July 2009 to pay Mr Scotto overtime, accrued annual leave including loading, and, until 31 December 2009, a breakfast allowance. For the reasons given earlier in relation to Scala Bros, in the exercise of discretion no compensation order will be made in respect of the breakfast allowance but Mrs Bossi will be ordered to compensate Mr Scotto by sharing Scala Bros’ liability to pay him his unpaid overtime from 1 July 2009 to 5 May 2010 and his accrued annual leave entitlement with loading.

Long service leave

  1. Section 10 of the LSL Act provides in the case of a company which has breached that Act that a director or officer of the company will be deemed to have committed the same offence unless they prove that the breach occurred without their knowledge or that they used “all due diligence to prevent the commission of the offence”. In light of her control of Scala Bros at the time Mr Scotto left Scala Bros and afterwards, I find that Mrs Bossi has not discharged that onus. I appreciate that Scala Bros and Mrs Bossi contested Mr Scotto’s entitlement to long service leave but, albeit mistakenly believing that no long service leave was owed, Mrs Bossi did not seek to prevent the commission of the offence against the LSL Act. Whether the breach occurred without her knowledge raises questions similar to the ones raised by the expression “knowingly concerned” in s.728 of the WR Act and s.550 of the FW Act. I find that Mrs Bossi knew all the essential facts constituting the breach and should be taken to have had knowledge of it even if she did not appreciate that the conduct in question amounted to a breach of the LSL Act. As a result of these findings, Mrs Bossi is deemed to have breached s.4(5) of the LSL Act in that Mr Scotto’s full long service leave entitlement was not paid upon the termination of his employment.
  2. As with the question of civil penalties under the applicable federal statutes the question of question of what, if any, penalty should be imposed as a result of Mrs Bossi’s deemed breach of the LSL Act will be determined separately.
  3. Mr Scotto also sought an order that Mrs Bossi compensate him for the underpayment of his long service leave. The LSL Act does not provide for such a liability to be imposed on a director or officer of an offending company and so this claim is not made out.

Loan - cross claim and defence of set-off

  1. The respondents submitted that Scala Bros had lent sums to Mr Scotto and maintained an ongoing loan account which Mr Scotto had last drawn down on 15 November 2004. They submitted that Mr Scotto owed $30,430 under the loan. As noted earlier, a claim for interest was not pressed. In a letter dated 23 March 2011 providing further and better particulars, the respondents’ solicitors stated that the loan agreement was partly oral and partly written and that Mr Scotto, Mr Carrano and Mr Samios had been involved in making it. The respondents asserted that the repayments were due when Mr Scotto had the necessary funds and that Scotto Bros had had the right to demand full repayment at the end of each financial year.
  2. The respondents submitted that the annual reports were contemporaneous records of the loan and that they corresponded with the available ledger books. In this connection they referred to Mr Scotto’s evidence that he had repaid an amount to Mr Carrano once. The respondents also submitted that although in his pleadings Mr Scotto had denied the existence of the loan, in his evidence he equated the loan account to the Red Book and had recognised some of the entries which they alleged were sums lent.
  3. Mr Scotto denied the loan(s) alleged by the respondents. He submitted that while the respondents asserted that the loan agreement was partly written and party oral and had been made on 1 December 1993, no evidence had been adduced demonstrating a contractual discussion or agreement. He observed that Mr Samios had not given evidence and said that it should be inferred that his evidence would not have assisted the respondents on these points.
  4. Mr Scotto also submitted that although the respondents had produced an MYOB document which ostensibly recorded amounts owing, the document did not purport to be a loan agreement. He further submitted that although Scotto Bros’ annual reports set out amounts which referred to him and used the word “advance”, there was no evidence that he had agreed to repay those amounts or that he had even received them. Mr Scotto submitted that, in any case, Scala Bros’ records could not be relied upon to prove the existence of a loan account given that Scala Bros’ financial statements recorded loans to and from Mrs Bossi of which she had no recollection.
  5. Mr Scotto observed that although the respondents had characterised various amounts allegedly set out in the Scala Bros accounts as loans, they also relied on many of the same items as payments made in the form of wages and annual leave. He argued that the Court should not allow the respondents’ case to progress on inconsistent bases.
  6. Mr Scotto submitted that even if the respondents could prove the loan agreement and the loan amounts alleged,  s.14(1)  of the  Limitation Act  barred the respondents’ cross-claim and  s.63(1)  extinguished it. The last alleged loan was made on 15 November 2004 and the cross claim was first filed on 8 March 2011, more than six years later. He submitted that as the loans had been made more than six years earlier, the debts had been extinguished and the loan was statute barred.
  7. Mr Scotto also alleged that the cross claim did not fall within the Court’s associated or accrued jurisdiction because it did not concern transactions and facts common to the relevant federal matter. He submitted that all matters in dispute between the parties could be resolved and all relief could be granted without reference to the cross claim.

Consideration

  1. I reject Mr Scotto’s allegation and submission that the Court does not have authority by way of its accrued jurisdiction to entertain the cross claim. It was said in Re Wakim; Ex parte McNally [1999] HCA 27; (1999) 198 CLR 511 that:
  2. Although the determination of the cross claim did not depend on the outcome of Mr Scotto’s claims, the issues raised by the cross claim did arise out of a sub-stratum of facts which Mr Scotto’s claims shared. The question is one of substance: whether the cross claim forms a part of a single justiciable controversy or whether, in truth, it is a separate and distinct matter: Obacelo Pty Ltd v Taveraft Pty Ltd (1985) 5 FCR 210 at 217. I conclude that Mr Scotto’s claims and the cross-claim formed the same matter and that the cross claim attracted the Court’s accrued jurisdiction: see also Keldote Pty Ltd v Riteway Transport Pty Ltd [2010] FMCA 394; (2010) 195 IR 423 at 444 - 458 [77] – [136].
  3. It should be noted that Mr Scotto did not suggest that the defence by way of set-off, which raised the same issues as the cross claim raised, was beyond the Court’s jurisdiction to determine. Nor did he address what effect entertaining the defence by way of set-off might have on the cross claim’s justiciability in this proceeding. However, as I have concluded that the cross claim does attract the Court’s accrued jurisdiction, it is not necessary to consider these issues.
  4. In the absence of any evidence as to the terms of the purported loan agreement, and noting the lack of evidence that Mr Scotto had entered into any agreement of the sort postulated by the respondents, I conclude that the terms propounded by the respondents were no more than speculation on their part. I suspect that what was described as a loan account was really just a mechanism for Mr Carrano to balance the books by keeping track of sums he had given Mr Scotto but on which PAYE or PAYG tax had not been paid and which might have been written off at some future date. I accept Mrs Ciano’s evidence that Mr Scotto received more than his award entitlements and I infer that the amounts recorded as loans were, largely, the mechanism by which this outcome was achieved. Even so, at least one amount truly was a loan, namely the $35,000 appearing in the MYOB document cited in Mrs Bossi’s affidavit which was recorded as lent and then repaid. Consequently, I find that there was no loan account of the sort propounded by the respondents and that the sums which they alleged were owed by Mr Scotto to Scala Bros were not owed by him because they had not been lent to him.
  5. But in any event, the cross claim is as out of time as is a large part of Mr Scotto’s claim for wages dating back over twenty years. Assuming that there was a cause of action for advances not repaid, in the absence of any evidence as to the terms of the supposed loans it is appropriate to infer that they were repayable on demand: Ogilvie v Adams [1981] VicRp 92; [1981] VR 1041; Re Hayvio Pty Ltd – Ottavio v Hayvio Pty Ltd [2011] NSWSC 1125. A loan of that sort creates an immediate debt: Young v Queensland Trustees Ltd [1956] HCA 51; (1956) 99 CLR 560; Ogilvie v Adams. The evidence is that the last sum recorded as an advance was paid to Mr Scotto on 15 November 2004. As the cross claim was not filed until 2011, any claim based on that payment, as well as on any of the earlier ones, was, by virtue of the  Limitation Act , out of time
  6. I note that the respondents argued that the loan was one which was repayable at the end of each financial year, however, the evidence did not support that assertion.
  7. I further note that Mr Scotto did not raise the question of what, if any, time-bar applied to the defence by way of set-off: cf Commonwealth Trading Bank of Australia v Sidney Raper Pty Ltd (1975) 25 FLR 217, but that omission is of no consequence in light of my finding that there was no loan account of the sort alleged.
  8. I find that the defence by way of set-off is not made out and that the cross claim should be dismissed.

CONCLUSION
Compensation

  1. Scala Bros is to compensate Mr Scotto:
    1. pursuant to s.365 of the IR Act by paying him his underpaid or unpaid Saturday penalty rates, overtime and breakfast allowance entitlements in respect of the period 28 October 2004 to 26 March 2006, plus interest at the prescribed rate pursuant to 372 of the IR Act;
    2. pursuant to s.719(6) of the WR Act by paying him his underpaid or unpaid Saturday penalty rates, overtime and breakfast allowance entitlements in respect of the period 27 March 2006 to 30 November 2006, plus interest pursuant to s.722 of the WR Act calculated in accordance with r.26.01 of the Federal Circuit Court Rules 2001;
    1. pursuant to s.719(6) of the WR Act by paying him his underpaid or unpaid hours worked at ordinary time rates, Saturday penalty rates, overtime and breakfast allowance entitlements in respect of the period 1 December 2006 to 27 June 2009, plus interest pursuant to s.722 of the WR Act calculated in accordance with r.26.01 of the Federal Circuit Court Rules; and
    1. pursuant to s.719(6) of the WR Act by paying him his underpaid or unpaid overtime entitlements in respect of the period 28 June 2009 to 30 June 2009, plus interest pursuant to s.722 of the WR Act calculated in accordance with r.26.01 of the Federal Circuit Court Rules.
  2. Scala Bros and Mrs Bossi (pursuant to s.550 of the FW Act) are to compensate Mr Scotto:
    1. pursuant to s.545(2)(b) of the FW Act by paying him his underpaid or unpaid overtime entitlements in respect of the period 1 July 2009 to 5 May 2010, plus interest pursuant to s.547 of the FW Act calculated in accordance with r.26.01 of the Federal Circuit Court Rules;
    2. pursuant to s.545(2)(b) of the FW Act by paying him his unpaid accrued annual leave and 17.5% leave loading (as prescribed by cl.23 of the Shop NAPSA and sch.A to the Retail Award) in respect of the period 30 May 1994 to 5 May 2010, plus interest pursuant to s.547 of the FW Act calculated in accordance with r.26.01 of the Federal Circuit Court Rules; and
    1. pursuant to s.545(2)(b) of the FW Act by paying him his unpaid 17.5% leave loading (pursuant to cl.23 of the Shop NAPSA and sch.A to the Retail Award) in respect of the annual leave taken in the period December 2008 to January 2009, plus interest pursuant to s.547 of the FW Act calculated in accordance with r.26.01 of the Federal Circuit Court Rules.
  3. Scala Bros is to compensate Mr Scotto pursuant to s.12(1) of the LSL Act by paying him his underpaid long service leave entitlement plus interest pursuant to s.76 of the Federal Circuit Court of Australia Act 1999 calculated in accordance with r.26.01 of the Federal Circuit Court Rules.
  4. The parties are to quantify each of the above amounts by reference to these reasons and file an agreed draft short minute of orders setting out those amounts, and giving effect to this aspect of these reasons, within twenty-eight days.

Penalties

Scala Bros

  1. In the period 27 March 2006 to 30 June 2009, Scala Bros failed to pay Mr Scotto any or the entirety of his:
    1. ordinary time wages;
    2. overtime;
    1. penalty rates for working on Saturdays;
    1. a breakfast allowance; and
    2. annual leave loading.

Each failure was a breach by Scala Bros of cl.3 of the Shop NAPSA and thus of cl.32 of sch.8 to the WR Act.

  1. In the period 1 July 2009 until 31 December 2009, Scala Bros failed to pay Mr Scotto a breakfast allowance. That failure was a breach of item 2(1) of sch.16 to the FW (TPCA) Act.
  2. In the period 1 July 2009 until the termination of his employment, Scala Bros failed to pay Mr Scotto overtime. That failure was, in the relevant periods, a breach of item 2(1) of sch.16 to the FW (TPCA) Act or a breach of s.45 of the FW Act.
  3. In the period from 1 July 2009 until the termination of his employment, Scala Bros failed to provide Mr Scotto with pay slips which met the requirements of the FW Act and Regulations and so breached s.536(1) of the FW Act.
  4. Following the termination of his employment on 5 May 2010, Mr Scotto was not paid:
    1. accrued annual leave and leave loading; and
    2. the entirety of his long service leave.
The first failure was a breach of ss.90(2) and 45 of the FW Act and the second was a breach of s.4(5) of the LSL Act.

Giuseppina Bossi

  1. For reasons already given, Mrs Bossi is taken to have contravened:
    1. cl.32 of sch.8 to the WR Act in respect of Scala Bros’ failure to pay Mr Scotto’s ordinary time wages in full and his Saturday penalty rates in the period 14 June 2009 to 27 June 2009;
    2. cl.32 of sch.8 to the WR Act and item 2(1) of sch.16 to the FW (TPCA) Act in respect of Scala Bros’ failure to pay Mr Scotto’s overtime and a breakfast allowance in the period 14 June 2009 to 31 December 2009;
    1. s.45 of the FW Act in respect of Scala Bros’ failure to pay Mr Scotto overtime from 1 January 2010 to 5 May 2010;
    1. s.90(2) of the FW Act in respect of Scala Bros’ failure, upon the termination of Mr Scotto’s employment, to pay him his accrued annual leave entitlements;
    2. s.45 of the FW Act in respect of Scala Bros’ failure to pay Mr Scotto annual leave loading; and
    3. s.4(5) of the LSL Act in respect of Scala Bros’ failure to pay Mr Scotto the entirety of his long service leave entitlement.
  2. The matter will stand over to a date to be fixed for a hearing on what, if any, penalties should be imposed.

Costs

  1. Mr Scotto sought costs. That issue will also stand over to a date to be fixed.

Further conduct

  1. The matter will be listed for further directions on 14 November 2014 at 9.30am.

I certify that the preceding five hundred and twenty-nine (529) paragraphs are a true copy of the reasons for judgment of Judge Cameron

Associate:

Date: 17 October 2014

[1] Rounded up to the nearest 30 minutes in accordance with cl.15(iii) of the Shop Award.
[2] Reduced to take account of overtime worked before 7am being rounded up to the nearest 30 minutes in accordance with cl.15(iii) of the Shop Award.

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