Federal Court of Australia Fair Work Ombudsman v Foot & Thai Massage Pty Ltd (in liquidation) (No 6) [2023] FCA 1116 File number: ACD 41 of 2018 Judgment of: KATZMANN J Date of judgment: 21 September 2023 Catchwords: PRACTICE AND PROCEDURE – referees – referee appointed pursuant to s 54A of the Federal Court of Australia Act 1976 (Cth) to provide opinion on the amount by which employees were underpaid in respect of hours worked and untaken annual leave balances – where adoption opposed, whether report should be adopted or rejected Legislation: Federal Court of Australia Act 1976 (Cth) s 54A Federal Court Rules 2011 (Cth) r 28.67 Cases cited: Chocolate Factory Apartments Ltd v Westpoint Finance Pty Ltd [2005] NSWSC 784 Elvin v Fair Work Ombudsman [2022] FCA 881 Gulf Conveyor Systems Pty Ltd v Gulf Integrated Systems Solutions Pty Ltd [2020] FCA 1245 Leotta v Public Transport Commission (NSW) (1976) 9 ALR 437 Mununggurr v Channel Seven Sydney Pty Ltd (No 2) [2022] FCA 999 Seven Sydney Pty Ltd v Fuji Xerox Australia Pty Ltd [2004] NSWSC 902 Sheehan v Lloyds Names Munich Re Syndicate Ltd [2017] FCA 1340 Telecomputing PCS Pty Ltd v Bridge Wholesale Acceptance Corporation (Aust) Ltd (1991) 24 NSWLR 513 Water Board v Moustakas (1988) 180 CLR 491 Groves, M "The Rule Against Bias" [2009] UMonashLRS 10 Division: Fair Work Division Registry: Australian Capital Territory National Practice Area: Employment and Industrial Relations Date of last submissions: 26 April 2023 (Second Respondent) 18 May 2023 (Applicant) Date of hearing: Determined on the papers Number of paragraphs: 62 Counsel for the Applicant: Mr M Seck Solicitor for the Applicant: Office of the Fair Work Ombudsman Counsel for the Second Respondent: The Second Respondent was self-represented ORDERS ACD 41 of 2018 BETWEEN: FAIR WORK OMBUDSMAN Applicant AND: FOOT & THAI MASSAGE PTY LTD (ACN 147 134 272) (IN LIQUIDATION) First Respondent COLIN KENNETH ELVIN Second Respondent JUN MILLARD PUERTO Third Respondent order made by: KATZMANN J DATE OF ORDER: 21 SEPTEMBER 2023 THE COURT ORDERS THAT: 1. The report of the referee dated 24 July 2022 be adopted in whole. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT KATZMANN J: Introduction 1 In this proceeding, the Fair Work Ombudsman alleges that Foot & Thai Massage Pty Ltd (in liquidation) (FTM) contravened the Fair Work Act 2009 (Cth) (FW Act) in numerous respects and that Colin Kenneth Elvin and Jun Millard Puerto, respectively the sole director and a senior employee of FTM, were involved in certain of those contraventions. One of the principal alleged contraventions was that FTM underpaid wages to seven people it previously employed (the Massage Therapists). 2 On 14 October 2021 I delivered judgment on the question of liability: Fair Work Ombudsman v Foot & Thai Massage Pty Ltd (in liquidation) (No 4) [2021] FCA 1242 (the liability judgment). 3 In the liability judgment I found that FTM committed various contraventions alleged by the Ombudsman, including that the Massage Therapists had been underpaid, and that Mr Elvin and Mr Puerto were knowingly concerned in certain of those contraventions. I proceeded to order the parties to use their best endeavours to agree on orders giving effect to the reasons given in the liability judgment, including in relation to the amount of the underpayments. As the respondents were unrepresented, I referred the matter to a Registrar of the Court to assist them to reach agreement. I also ordered that, in the event that no agreement could be reached by 16 December 2021, the Registrar be appointed as a referee to conduct an inquiry into the following questions in accordance with my reasons for judgment, and provide to the Court a written report setting out her opinion on, those questions together with her reasons (the Referral Orders): (a) With respect to minimum wages, public holidays worked, Monday to Saturday overtime and Sunday overtime worked: (i) What amounts should have been paid to each of the Massage Therapists during his or her period of employment with the first respondent? (ii) Comparing the agreed amounts paid to each of the Massage Therapists during their employment with the amounts they should have been paid, to what extent was each of them underpaid? (b) With respect to accrued untaken annual leave, comparing the agreed amount of untaken annual leave each of the Massage Therapists had at the time their respective periods of employment with the first respondent ended with the amounts they should have been paid in accrued untaken annual leave, to what extent was each of them underpaid? 4 The Referral Orders were accompanied by a note defining several concepts contained within them: In these orders: (a) the term "Massage Therapists" is a reference to the former employees of the first respondent listed in para 4 of this judgment; (b) "the agreed amounts paid to each of the Massage Therapists during their employment" are the amounts recorded in column 5 of tables 2, 3, 4 and 5 of annexure A to the amended statement of claim and reproduced in all subsequent iterations of the applicant's pleading including in annexure A to the second further amended statement of claim; and (c) "the agreed amount of untaken annual leave each of the Massage Therapists had at the time their respective periods of employment with the first respondent ended" is a reference to the amount appearing alongside the names of the Massage Therapists in column 2 of table 7 in annexure A to the amended statement of claim and reproduced in all subsequent iterations of the applicant's pleading including in annexure A to the second further amended statement of claim. 5 I also gave the parties the opportunity to make further submissions on the questions in accordance with any directions the referee might make. 6 The parties did not reach agreement by 16 December 2021. Accordingly, the order for the appointment of the referee took effect. The parties provided the referee with submissions on the questions for determination and her report was finalised on 24 June 2022 (the Report). The matter was to be listed for further case management within seven days of the provision of the Report to the Court. 7 Regrettably, due to an administrative error in the Registry, the Report was not provided to my chambers until 5 April 2023. The following day I conducted a case management hearing. At that hearing the Ombudsman informed the Court that she intended to apply for the Report to be adopted in whole. Mr Elvin said that he intended to apply for it to be rejected in whole. Accordingly, I made orders following the case management hearing which, among other things, dispensed with any requirement for the parties to file an interlocutory application seeking adoption, rejection or variation of the Report, provided for the exchange of submissions on the question of whether the Report should be adopted, rejected or varied, and for that question to be determined on the papers. The relevant principles 8 The power of the Court to refer a question arising in a proceeding to a referee for inquiry and report is contained in s 54A of the Federal Court of Australia Act 1976 (Cth), which provides: Referral of questions to a referee (1) Subject to the Rules of Court, the Court may by order refer: (a) a proceeding in the Court; or (b) one or more questions arising in a proceeding in the Court; to a referee for inquiry and report in accordance with the Rules of Court. (2) A referral under subsection (1) may be made at any stage of a proceeding. (3) If a report of a referee under subsection (1) is provided to the Court, the Court may deal with the report as it thinks fit, including by doing the following: (a) adopting the report in whole or in part; (b) varying the report; (c) rejecting the report; (d) making such orders as the Court thinks fit in respect of any proceeding or question referred to the referee. 9 Division 28.6 of the Federal Court Rules 2011 (Cth) (FCR or Rules) sets out the requirements for the conduct of an inquiry by a referee. Rule 28.67 confers on the parties the ability to apply to the Court for orders following the provision of a referee's report to the Court: Proceeding on report (1) After a report has been given to the Court, a party may, on application, ask the Court to do any of the following: (a) adopt, vary or reject the report, in the whole or in part; (b) require an explanation by way of a further report by the referee; (c) remit on any ground, for further consideration by the referee, the whole or any part of the matter that was referred to the referee for inquiry and report; (d) decide any matter on the evidence taken before the referee, with or without additional evidence; (e) give judgment or make an order in relation to the proceeding or question. (2) A party must not adduce in the Court evidence given in an inquiry. 10 As I said in Gulf Conveyor Systems Pty Ltd v Gulf Integrated Systems Solutions Pty Ltd [2020] FCA 1245 at [12], while it would appear from the terms of r 28.67 that the Court has a broad discretion to determine whether to adopt or reject a referee's report, that discretion is limited by well-established principles drawn from the object and purpose of the relevant rules. 11 Those principles are collected in two judgments of the Supreme Court of New South Wales, both delivered by McDougall J. They are Seven Sydney Pty Ltd v Fuji Xerox Australia Pty Ltd [2004] NSWSC 902 and Chocolate Factory Apartments Ltd v Westpoint Finance Pty Ltd [2005] NSWSC 784. While those cases concern the operation of Pt 72 r 13 of the Supreme Court Rules 1970 (NSW), that rule is materially identical to FCR r 28.67, and the principles have been applied numerous times in this Court: see, for example, Sheehan v Lloyds Names Munich Re Syndicate Ltd [2017] FCA 1340 at [9]–[12] (Allsop CJ); Gulf Conveyor at [13]-[21] (Katzmann J); Mununggurr v Channel Seven Sydney Pty Ltd (No 2) [2022] FCA 999 at [22] (Rares J). 12 I summarised those principles in Gulf Conveyor at [13]–[21]: 13 First, an application made under the relevant rule is not an appeal. The Court does not conduct a hearing de novo or a rehearing. A party who is dissatisfied with a referee's report is not entitled to require the Court to reconsider and redetermine afresh matters, whether of fact or law, which the party wants to contest. See Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549 at 562–563 (Gleeson CJ). "The right to be heard does not involve the right to be heard twice": Super Pty Ltd at 567 (Mahoney JA). 14 Second, the discretion to adopt, vary or reject a referee's report is to be exercised in a manner consistent with the context and purpose of the relevant rules. The purpose of the rules is to provide, where the interests of justice so require, "a form of partial resolution of disputes alternative to orthodox litigation, and it would frustrate that purpose to allow the reference to be treated as some kind of warm-up for the real contest": Super Pty Ltd at 563. 15 Third, if the source of a party's dissatisfaction with a report is a question of law or the application of legal standards to established facts, a proper exercise of discretion requires the judge to consider and determine that matter afresh. 16 Fourth, "if the referee's report reveals some error of principle, absence or excessive jurisdiction, patent misapprehension of the evidence or perversity or manifest unreasonableness in fact finding, that would ordinarily be a reason for rejection": Chocolate Factory Apartments at [7]. In this context, "patent misapprehension of the evidence" means a lack of understanding of the evidence and not the weight attributed to it; and "perversity or manifest unreasonableness" means a conclusion that no reasonable tribunal of fact could have reached: Chocolate Factory Apartments at [7]. 17 But in general, the referee's findings of fact should not be re-agitated before the Court. The Court will not reconsider disputed questions of fact where there is factual material sufficient to entitle the referee to reach the conclusions he or she did, particularly where the disputed questions are in a technical area in which the referee has expertise. It is not enough for an aggrieved party to point to errors of fact which would be amenable to correction by an appellate court. 18 Fifth, even if it were to be shown that the Court might have come to a different conclusion in some respect from that reached by the referee, absent any error of the kind referred to above, it would not be a proper exercise of the discretion conferred by r 28.67 to allow matters agitated before the referee to be re-explored so as to lead to qualification or rejection of the report. 19 Sixth, the Court is entitled to consider the futility and cost of re-litigating an issue determined by the referee where the parties have had ample opportunity to place before the referee the evidence and submissions upon which they wish to rely. 20 Seventh, although the reasons given by the referee may appear to be adequate, where the party challenging the report contends that they are not because the referee did not deal with "very significant evidence", the Court may examine the evidence to see whether the reasons were in fact inadequate because they omitted to refer to such evidence: Chocolate Factory Apartments at [7]. 21 Eighth, if the Court decides that the reasons are flawed, either on their face or because they have been shown not to deal with important matters, the Court may decline to adopt the report or examine the evidence to see whether the expense of a further proceeding before the referee is justified. The Report 13 The referee commenced the Report by providing her answers to the questions posed in the Referral Orders. She then discussed the background to the Referral Orders. She noted that I had found the assumptions made by Ronnie Wong, a member of the Ombudsman's calculations team, to be fair and reasonable and the deductions he made appropriate but that I had expressed difficulty understanding his base rate calculations in his fourth and fifth affidavits. The referee also referred to inconsistencies I had identified in the liability judgment between the amount of alleged underpayments set out in the Ombudsman's second further amended statement of claim (2FASOC) and the amounts set out in Mr Wong's fifth affidavit. 14 The referee observed that, pursuant to the orders made on 14 October 2021, on 28 October 2021 the Ombudsman filed submissions and a sixth affidavit from Mr Wong in which he purported to correct a number of errors in his fifth affidavit and to explain how he arrived at the revised figures. The referee also observed that Mr Elvin had filed an affidavit on 25 November 2021 (affirmed the previous day) (Elvin Affidavit) and that both the Ombudsman and Mr Elvin had filed further submissions in late January 2022. 15 After a brief discussion of the parties' attempts to reach agreement as to the amount of the underpayments, the referee noted that she had annexed to the Report copies of the submissions provided to her by the parties in January 2022 and stated that she had prepared the Report "taking into account those submissions, as well as evidence filed in the proceeding and any other relevant extrinsic material". 16 The referee then extracted various findings of fact which were made in the liability judgment and which were relevant to the calculation of the quantum of underpayments, including that: each of the Massage Therapists was covered by the Health Professionals and Services Award 2010 [MA000027] and classified under the Award as a "Level 1 Health Professional" (HP Level 1) (at [12]); the amounts paid to each Massage Therapist and the amount of their untaken leave entitlements were agreed in the amounts set out in the 2FASOC (at [13]). The referee later noted that she found no reason to interrogate those agreed amounts given that they were not contested at trial (at [21]); the hours worked by each Massage Therapist had been admitted by FTM and not disputed by Mr Elvin (at [14]); FTM had failed to pay each of the Massage Therapists any amounts in respect of their entitlement to accrued untaken annual leave when their employment ended (at [15]); amounts had been deducted from the Massage Therapists' pay which had been described as "staff loans" in their payslips and that each Massage Therapist (except for Ruben Benting) had been required at specified times to pay cashbacks to FTM in the amount of $800 per fortnight (at [16]–[17]); each Massage Therapist, except Delo Be Isugan, had resigned from FTM without giving notice (at [20]); and the Massage Therapists received a total amount of $144,833.18 from Deloitte on behalf of FTM for unpaid entitlements, distributed as set out at [879] of the liability judgment (at [20]). 17 The referee understood that the deductions for "staff loans" and the cashbacks had already been factored into the total amounts recorded as paid to the Massage Therapists in the 2FASOC (at [18]–[19]). 18 The referee proceeded to explain the methodology she used to calculate the underpayments. This included an explanation of how she determined the base rate which applied to the Massage Therapists under the Award, including consideration of the applicable transitional minimum wage (at [25]–[38]), the rate which applied on public holidays (at [39]–[40]) and the rate for overtime hours (at [41]). The referee also recalled that the deductions for board and lodging and payment in lieu of notice were held to be appropriate at [435] of the liability judgment (at [42]–[45]). 19 Following that, the referee then explained how she reached the answers she gave to the questions posed in the Referral Orders. 20 First, for question 9(a)(i) she used the "HP" tables to determine the hours worked by the Massage Therapists across different time periods and then multiplied the various rates of pay by the number of hours as required before deducting board and lodging and payment in lieu of notice (at [47]–[48]). Second, for question 9(a)(ii) she took the amounts calculated in response to question 9(a)(i) and subtracted the agreed amounts paid to the Massage Therapists, the amounts described as "above health award payments" contained in column 8 of table 9 in Annexure A to the 2FASOC, and the payments made by Deloitte to each Massage Therapist in respect of their wages (at [49]). Third, for question 9(b) she added together underpayments of annual leave entitlements on termination with any underpayments in respect of annual leave actually taken and then subtracted the payment made to each Massage Therapist by Deloitte (after FTM went into voluntary administration) with respect to annual leave (at [50]–[53]). 21 The referee acknowledged that there were inconsistencies in the alleged underpayment amounts contained in various documents prepared by the Ombudsman (at [54]–[56]) but considered that nothing turned on those errors given that she had undertaken her own calculations and not simply relied on those provided by the Ombudsman (at [57]). 22 With respect to the submissions provided to her by Mr Elvin, the referee stated that she had "reviewed and considered everything that Mr Elvin had to say in connection with the referral process" but ultimately considered that few of his contributions were relevant to the questions posed in the Referral Orders, characterising Mr Elvin's submissions as failing to engage "in any meaningful way" with the Ombudsman's calculations and as focused on attacking the substance of the liability judgment (at [61]–[62]). 23 The rest of the Report consists of tables prepared in respect of each Massage Therapist which show the amount of their entitlements as calculated by the referee, the payments which had been made to them, any relevant deductions, and the total amount of underpayments. The submissions The Ombudsman's submissions 24 The Ombudsman submitted that the Report should be adopted in whole pursuant to r 28.67 of the Rules having regard to the "uncontroversial" principles collated in Seven Sydney and Chocolate Factory Apartments. 25 The Ombudsman articulated four reasons in support of that contention: (1) The opinions expressed by the referee in the Report were the product of arithmetic calculation undertaken by the referee based on findings made in the liability judgment. The referee did not make any evaluative factual findings of her own and had sufficient factual material to reach her conclusions and in those circumstances there was no reason to doubt the correctness of those conclusions. (2) The reasons of the referee were detailed and exposed the calculation methodology she applied, demonstrating that her conclusions were based upon an intellectual exercise. (3) The referee provided both parties with the opportunity to make written submissions, which were appropriately considered and referred to in the Report, such that the parties were afforded procedural fairness and there is no reason for the Court to embark on the same process. (4) The Report did not disclose any error of principle, misunderstanding of the questions asked, a misapprehension of the evidence or manifest unreasonableness or error that would warrant its rejection. Mr Elvin's submissions 26 Mr Elvin submitted that the Report should be rejected in whole because it failed to take into account the Elvin Affidavit, in which he challenged the methodology and calculations in Mr Wong's fifth and sixth affidavits, or his second amended defence (2AD) and he was thereby denied procedural fairness. Mr Elvin also asserted that the Referral Orders did not contain any provision for the Elvin Affidavit or the 2AD to be considered and that he had accordingly been denied procedural fairness. 27 Mr Elvin acknowledged that the referee referred to his affidavit at [7] of the Report, but noted that that paragraph was the "only occasion" on which she did so. 28 Mr Elvin argued that the referee had based her calculation of the underpayments exclusively on the 2FASOC, Mr Wong's fifth and sixth affidavits and the submissions prepared by the Ombudsman's lawyers, such that the Report merely reflected Mr Wong's "erroneous evidence" and "submissions from solicitors who are not calculations experts". Mr Elvin urged the Court to conclude that it would be "unsafe" to use the referee's calculations as a result. 29 Mr Elvin further submitted that Mr Wong's evidence was unreliable because it "inexplicably" did not reflect the evidence given by Mr Benting regarding cashbacks. He contended that there was "no accurate evidence whatsoever as to the underpayments". 30 Finally, Mr Elvin submitted that, because the amount of underpayments claimed in the 2FASOC differed from the amounts contained in Mr Wong's evidence, the "pleading must fail". The Ombudsman's reply 31 With respect to Mr Elvin's complaint that the referee did not refer to his evidence and submissions, the Ombudsman pointed to three paragraphs of the Report in which express references were made: [7], in which the referee noted that the Elvin Affidavit was filed in accordance with the Referral Orders; [11], in which the referee stated that submissions on the calculations had been received from Mr Elvin and annexed to the Report, and that the Report was "prepared taking into account those submissions, as well as evidence filed in the proceeding and any other relevant extrinsic material"; and [62], in which the referee recorded her view that Mr Elvin's submissions largely related to the substance of the liability judgment rather than the calculations she was to perform under the Referral Orders, and that while she reviewed and considered everything Mr Elvin had to say in connection with the referral process little of what he did say was relevant to the specific questions she was asked to answer. 32 The Ombudsman submitted that Mr Benting's evidence about cashbacks was irrelevant to the task of answering the questions posed in the Referral Orders, given that she had not made any claim in relation to cashbacks in respect of Mr Benting and that at [533]–[565] of the liability judgment the Court was satisfied that FTM had contravened s 325(1) of the FW Act by requiring the other Massage Therapists to pay cashbacks. 33 The Ombudsman denied that the referee had relied on Mr Wong's calculations. Consideration Reliance on Mr Wong's evidence 34 It is convenient to deal with this complaint first. 35 This complaint rests on a false premise. The referee did not base her calculations exclusively on the cited material. As the referee noted at [55] of the Report, "the numbers put forward on behalf of the Ombudsman in various documents have been somewhat plagued with errors". Mr Elvin made a similar point in his affidavit and submissions. For that reason, the referee performed her own calculations. She based those calculations on the agreed (and undisputed) facts and findings, using the applicable rates prescribed by the Award and, where relevant, the applicable transitional minimum wage instrument. 36 The referee only drew on Mr Wong's affidavits for limited purposes: for the breakdown of the weeks in respect of which deductions were made from the Massage Therapists' pay for board and lodging which were recorded in Ex RW-6 to Mr Wong's fifth affidavit (at [44]) and for the methodology for calculating deductions for payment in lieu of notice described at para 37(c) of Mr Wong's first affidavit (at [45]). She also noted that, at para 19 of his first affidavit, Mr Wong referred to the transitional provisions in Sch A to the Award which allow for a phasing in of the minimum rates of pay, loadings and penalties under the Award where there is a difference between a relevant transitional minimum wage instrument or award-based transitional instrument, and an equivalent provision in the Award (at [25]). None of these matters were controversial. Certainly they were not the subject of specific criticism. 37 The referee only drew on the 2FASOC for information which reflected admissions made by FTM and which Mr Elvin did not dispute. 38 While the referee compared her calculations to those set out in the submissions provided to her by the Ombudsman (at [57]), she did so only to demonstrate that her calculations were similar to the Ombudsman's. 39 Contrary to Mr Elvin's contention, there was reliable evidence from which the referee could determine the amount of the underpayments. Armed with my findings, and the documents upon which they were based, the referee was as well-equipped as anyone to carry out the calculations. Was Mr Elvin denied procedural fairness because the referee failed to consider the 2AD and the evidence in the Elvin Affidavit? 40 Mr Elvin submitted that the referee appears to have overlooked the Elvin Affidavit because, apart from noting that it had been filed, she did not refer to it in the Report. He argued that, in order to accurately answer the questions posed in the Referral Orders she should have taken both it and the 2AD into account. 41 There can be no question that the referee was required to afford the parties procedural fairness. The Ombudsman did not contend otherwise. If authority for this proposition is required, see Telecomputing PCS Pty Ltd v Bridge Wholesale Acceptance Corporation (Aust) Ltd (1991) 24 NSWLR 513 (Rogers CJ in Comm D). Generally speaking, procedural fairness has two elements: the hearing rule and the rule against bias. The first requires a decision-maker to afford a person a reasonable opportunity to be heard before making a decision affecting their interests, rights or expectations. The second requires that the decision-maker approach the matter with an open mind, free of prejudgment and prejudice, and that they not be the subject of any reasonable apprehension that they might not bring an impartial mind to the matter. See, for example, Groves M, "The Rule Against Bias" [2009] UMonashLRS 10. The content of both rules is flexible. In the present context, Rogers CJ in Comm D said in Telecomputing PCS at 523: Fairness demands that each party be afforded a proper opportunity of putting before the referee particulars of the contentions relied upon and an opportunity to comment, not just on the information adduced by the other side, but also any information on contentious matters which may have been gathered by the referee. Further it means that a referee should not form a concluded opinion, or close his or her mind to the contentions of the parties before all the evidence is in. 42 There is, however, no procedural unfairness in merely preferring the evidence and/or arguments of one party over the evidence and/or arguments of another or in resolving a dispute in a manner unfavourable to one of the parties. Nor is there any error in failing to take into account irrelevant evidence or material. 43 The Elvin Affidavit contains a great deal of criticism of the methodology employed in Mr Wong's fifth and sixth affidavits. It appears from the referee's acknowledgment of that document at [7] of the Report and from her statement at [11] that the Report had been prepared taking into account the evidence filed in the proceeding that she did, in fact, consider the Elvin Affidavit in preparing the Report. As I have already observed, the referee did not rely on any of Mr Wong's calculations. Rather, she performed her own calculations. That does not suggest she failed to consider Mr Elvin's criticisms. If anything, the opposite inference should be drawn. 44 In relation to the 2AD, on 14 October 2021, the Ombudsman was granted leave to file and serve the 2FASOC in the form annexed to the affidavit of Sharissa Thirukumar affirmed on 22 December 2020 and Mr Elvin was ordered the same day to file any amended defence "in response to the amendments made in the second further amended statement of claim". The amendments contained in the 2FASOC related to the Ombudsman's claim that the Massage Therapists were classified as HP Level 1 employees under the Award. The leave granted to Mr Elvin was limited to amending his defence to respond to that allegation. In the 2AD Mr Elvin denied that claim, consistently with the position he had taken at the hearing, reflected in closing submissions and supplementary closing submissions he provided to the Court on 11 December 2020. The purpose of making the order permitting the Ombudsman to file and serve her 2FASOC and for Mr Elvin to file any amended defence in response to the amendments it made was to ensure that the pleadings reflected the way the case was argued: cf. Leotta v Public Transport Commission (NSW) (1976) 9 ALR 437 at 446; 50 ALJR 666 at 668 (Stephen, Mason and Jacobs JJ); Water Board v Moustakas (1988) 180 CLR 491 at 497 (Mason CJ, Wilson, Brennan and Dawson JJ). 45 I resolved this particular dispute at [379]–[387] of the liability judgment. At [387] I found, contrary to Mr Elvin's submission, that at all relevant times the applicable classification for the employment of the Massage Therapists was HP Level 1. The referee was bound to proceed on the basis that that finding was correct. It was not open to her to reconsider the matter, despite the Mr Elvin's denial in the 2AD. As the orders make abundantly clear, her task was to answer the questions in accordance with the reasons I had given in the liability judgment. The fact that Mr Elvin denied that the Massage Therapists were properly classified as HP Level 1 was irrelevant. 46 Mr Elvin was given a reasonable opportunity to be heard on the applicable classification at the hearing. He was not entitled to be heard again on the same point during the reference nor is he so entitled on the present application. 47 There was no denial of procedural fairness. Did the referee have regard to Mr Elvin's submissions? 48 It is clear that the referee had regard to Mr Elvin's submissions. As the Ombudsman pointed out, the referee noted at [11] of the Report that Mr Elvin had filed written submissions and that the Report was prepared taking into account those submissions. There is no reason why the referee should not be taken at her word. 49 It is also clear that the referee did not consider the materials provided by Mr Elvin helpful in answering the questions posed in the Referral Orders. At [61]–[62] of the Report, she wrote: The Second Respondent provided short responsive submissions to the effect that the further evidence and submissions provided by the Ombudsman clarifying calculation methodologies does not resolve issues relating to the underpayment calculations. Mr Elvin did not seek [to] engage with the calculations undertaken by the Ombudsman or the methodology underpinning those calculations in any meaningful way. The focus of Mr Elvin's short submissions was in relation to the substance of the Liability Decision rather than the specifics of the calculation questions the subject of this report. To that end, while I reviewed and considered everything that Mr Elvin had to say in connection with the referral process, I did not ultimately find much of that content to be relevant to the specific questions that I have been asked to address in this report. 50 Mr Elvin's submissions were annexed to the Report. They were of no assistance to the referee. They were largely complaints about the Referral Orders themselves. Mr Elvin asserted in those submissions that the process established by the Referral Orders was somehow contingent on the Ombudsman proving that her underpayment calculations were correct, that the inability of the referee to determine whether an order should be made requiring FTM to pay the Ombudsman the amount of the underpayments for distribution to the Massage Therapists rendered the referral process "unworkable", and that no order was made requiring the referee to consider Mr Elvin's 2AD or the Elvin Affidavit. He also pointed out that he had applied for an extension of time to appeal the liability judgment and submitted that, if he were successful, a determination of the amount of the underpayments "may be a pointless exercise, and a waste of the Court's resources". 51 Having regard to the content of the submissions, it is unsurprising that the referee did not say anything more about them. The fact that the referee was unable to determine whether an order should be made that FTM pay the Ombudsman the amount of the underpayments for distribution to the Massage Therapists did not preclude her from determining the extent of the underpayments or otherwise render the referral process "unworkable". The amount of the underpayments was one thing. Whether an order should be made requiring FTM to pay the amount to the Ombudsman for payment out as compensation to the Massage Therapists is another. I reserved on the second question, not the first. Even if the Court is ultimately persuaded not to make such an order, there is no apparent reason why declarations as to the extent of the underpayments should not be made. 52 The liability judgment was interlocutory, which means that Mr Elvin could not appeal without leave and he needed an extension of time to make that application. Mr Elvin applied for an extension of time and leave to appeal but, on 29 July 2022, Abraham J refused his application, holding that the proposed appeal was incompetent and the application premature: Elvin v Fair Work Ombudsman [2022] FCA 881. 53 Finally, I note that, despite Mr Elvin's grievances concerning the Referral Orders, he did not avail himself of the liberty to apply which was provided in those orders. The evidence of Mr Benting regarding cashbacks 54 One of the Ombudsman's arguments at the trial was that FTM contravened s 325(1) of the FW Act by requiring each of the Massage Therapists to repay FTM from their earnings $800 in cash per fortnight for a period of time after they started work for the company. As I observed at [532] of the liability judgment, each of the Massage Therapists gave evidence to that effect. 55 Mr Elvin complains that "inexplicably Mr Wong's evidence does not reflect Mr Benting's evidence about cash backs" and there is consequently "a major discrepancy in Mr Wong's calculation evidence". He also complains that the referee did not address the issue, although it had "a bearing on Mr Wong's calculations". 56 This complaint is without merit for two reasons: first, because the referee did not rely on Mr Wong's calculations; and second, because the Ombudsman never pleaded that FTM contravened s 325(1) in Mr Benting's case. 57 As I explained at [532] of the liability judgment, despite the evidence given by Mr Benting and the reference in both opening and closing (written) submissions that all the Massage Therapists were subjected to this requirement, the Ombudsman's pleadings made no such claim in relation to Mr Benting. I raised the inconsistency with the Ombudsman's counsel during oral argument. I referred to the answer I received and indicated the course I intended to take also at [532] of the liability judgment: I was informed that this was a "forensic choice", although I was not informed why the choice was made and it is not open to me to speculate. In these circumstances I consider that the Ombudsman should be held to her pleading. Had the position been otherwise I would likely have inferred that the omission of Mr Benting was inadvertent, dealt with the matter on its merits and invited the Ombudsman to amend her pleading, for the matter was not only captured by her opening submissions but Mr Elvin cross-examined Mr Benting on his evidence on this subject: see, for example, Leotta v Public Transport Commission (NSW) (1976) 9 ALR 437 at 446; 50 ALJR 666 at 668 (Stephen, Mason and Jacobs JJ); Water Board v Moustakas (1988) 180 CLR 491 at 497 (Mason CJ, Wilson, Brennan and Dawson JJ). 58 In the result, I determined that FTM had contravened s 325(1) by requiring each of the Massage Therapists except for Mr Benting to repay the relevant amounts. 59 In these circumstances, it is beside the point that Mr Wong's evidence did not reflect Mr Benting's evidence on this question or that Mr Benting gave evidence that, he, too, was subject to the cashback requirement. Nor is it to the point that the referee did not "address" Mr Benting's evidence. No matter how vexed Mr Elvin may be about the Ombudsman's position, as the Ombudsman was held to her pleading the inconsistency between Mr Benting's evidence and that pleading was simply irrelevant to the referee's task. 60 It does not appear that the referee assumed that Mr Benting had been required to repay from his wages $800 a fortnight at any time. Mr Elvin does not point to anything in the Report to suggest that she made such an assumption. Indeed, at [17] of the Report she does not include Mr Benting in the list of those Massage Therapists who had been subject to such a requirement. 61 In any event, it is difficult to understand why Mr Elvin complains about the absence of any cashback calculations in respect of Mr Benting. As the referee explains at [17]–[19] of the Report, the amounts recorded as having been paid to each Massage Therapist in Annexure A to the 2FASOC were reduced by the amount of the cashbacks found to have been paid by each Massage Therapist in the liability judgment. Since no finding on this subject was made with respect to Mr Benting, if the referee acted on this basis, the result is to Mr Elvin's advantage. Conclusion 62 Having regard to the established principles, I am not persuaded that any of the matters Mr Elvin raised provides a proper basis for rejecting the Report. None of his complaints withstands scrutiny. In the circumstances, the Report should be adopted in its entirety. I certify that the preceding sixty-two (62) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Katzmann. Associate: Dated: 21 September 2023