Lawyers for Kia Silverbrook say the embattled Memjet inventor admits liability for his alleged $870,000 in underpayments to staff at three of his companies, and hopes an agreement on penalties can be reached with the Fair Work Ombudsman out of court.
Silverbrook did not appear to face the charges for the first time in Sydney’s Federal Circuit Court this morning and instead sent lawyers to plead mitigating circumstances on his behalf, claiming his businesses were driven into the ground by competitors.
Eric White from Adam Wilson Lawyers, which represents Silverbrook companies Priority Matters, which processes patent applications for inventions, and medical research and development firm Geneasys, says in court that Silverbrook had invested $8m of his own money into the companies and was working towards the development and sale of a product expected to be worth $15-30m.
He says the project was besieged by a ‘calculated attempt by a third party’ competitor to damage Silverbrook’s business, and that the companies had earlier been ‘plagued with litigation from an American source’, likely referring to his lost court battle two years ago with his US financiers, who subsequently took over the Memjet business and Australian research facilities.
[Related: See you in court]
White says the trouble began around October 2012 and came to a head in March 2013 when Silverbrook was unable to pay the employees until the sale went through, and this never happened.
He says many of the employees were happy to stay on even though they weren’t being paid because of the prospect of sharing in the massive windfall when it eventuated.
Fiona Inverarity at In Legal, lawyer for the third Silverbrook business, solar cell research company Superlattice Solar, also says she thought the one employee owed $55,969 was happy with the situation.
The lawyers implied the attacks on Silverbrook’s businesses and its employees’ apparent willingness to continue working should be taken into account when determining penalties.
Judge Sylvia Emmett set the next court date for December 2 and ordered that statements of facts and issues, agreed upon by both parties, be filed by July 18, evidence by the Fair Work Ombudsman by mid-August and by Silverbrook in September, with replies alternating until the court date.
“It’s so sad, Australian businesses trying to make a go of it and ending up with a tragic outcome for all,” she says.
Both the Ombudsman and Silverbrook’s lawyers hope an agreement can be reached well before the case appears in court again.
[Related: Silverbrook facing court]
Court documents filed by the Fair Work Ombudsman in April allege engineers, scientists, patent attorneys, patent assistants and patent design assistants at three of Silverbrook’s companies were not paid for weeks or months at a time between February and August last year – with one employee owed $166,914.
The documents allege Priority Matters underpaid 15 employees a total of $452,997, Geneasys underpaid five employees $362,973, and Superlattice Solar underpaid one employee $55,969.
They were also underpaid on public holiday pay, casual loadings, annual leave entitlements, termination entitlements, redundancy pay and safety net contractual entitlements.
Geneasys has since entered liquidation after angry employees forced it into court-ordered liquidation late last year in a bid to recover their wages and entitlements, which can only be done once a company is declared insolvent.
Silverbrook’s lawyers say the other two companies are still solvent but no longer trading.
The wind-up application against Geneasys was supported by two of the company’s creditors, totalling $2m in statutory demands, and another successful application against another Silverbrook business, Precision Mechatronics, was supported by 46 creditors with $91,129 in demands.
His Silverbrook Research business is also in liquidation since April 15, but not before being renamed to the innocuous Worldwide Specialty Property Services Pty Ltd.
Silverbrook faces maximum penalties of up to $10,200 per breach, while Priority Matters and Superlattice Solar each face penalties up to $51,000 for each employee underpaid. Charges against Geneasys are suspended as it is in liquidation.
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