The real world at variance with the claustrophobia of defamation proceedings … Relevant facts missing from judge’s reasons … United Petroleum franchise distress … Damages of $72,347.40 … Default judgment entered and then court approves a warrant for the arrest of the missing respondent … The missing backstory
Lee found that the respondent had defamed a United Petroleum boss by implying he treated his workers like slaves.
His Honour omitted from his 33 paragraph judgment the details of the defamatory email. He is adamant he “will not set [it] out”. All we are told is that the respondent, Ananth Balijepalli, sent an anonymous email to over 600 employees of United Petroleum’s petrol store franchise business.
There is nothing about the respondent’s relationship with United, although Lee quotes a line at the foot of the email, “This email is composed by 40+ operators (Franchisees/CA’s)”, suggesting that he might’ve been a franchisee or agent.
In December last year, David Szymczak sued Balijepalli. In February, 2019 orders were made for the discovery of “any document or thing in Ananth Balijepalli’s control relating to the email, the email recipients or containing the prospective respondent’s description”.
At around this time the respondent left for India, where he remains.
We are given a synopsis of the email’s imputations concerning Szymczak, the Chief Operating Officer of United Petroleum, and were in the following terms:
His Honour felt certain that Balijepalli sent the unsigned email. The account holder details and the IP address could all be traced back to him. Since Balijepalli didn’t enter a defence, this view went unchallenged.
Citing McCallum J in Al Muderis v Duncan, the judge said he had to consider whether the defamatory imputations were capable of being conveyed. If they were, then (and only then) default judgement could be entered.
Despite not setting out the matter complained of, His Honour assured us that “there is no question that each imputation conveyed is defamatory”.
With no respondent to slow proceedings, Lee moved to an award of damages. He first considered compensation for hurt feelings, where he commended the applicant for not “gild[ing] the lily”.
Szymczak said on first seeing the email, he was “a little bit panicked”. Later, he felt himself “under a bit of pressure” and “a bit helpless”. He did find the allegation of slave-ownership “hurtful”.
Lee said the applicant was “appropriately circumspect in suggesting that he is unlikely to suffer any such damage in the future”.
Nonetheless, His Honour felt the publication had some serious ramifications. It had many hundreds of recipients, and though it was couched in such extraordinary terms as to be “capricious”, there was “no doubt this caused the real distress”.
All factors considered, HH arrived at damages of $72,347.40, including aggravated damages. Costs were awarded on an indemnity basis because Balijepalli had “caused unnecessary expense” in the way he handled the case.
That’s despite Federal Court rule 40.08, which contemplates a reduction in costs if the total damages bill is less than $100,000.
The judgment concludes by spelling out the consequences for not turning up to the Federal Court. Balijepalli skipped town in February, three days after Lee had ordered him to hand over the device used to send the email, alongside any other correspondence relating to it.
Szymczak sought orders that a warrant be issued for the arrest of Balijepalli, and it is assumed the idea was to track down the “40+ operators” who had a hand in publishing the email, rather than chilling any further media coverage of United Petroleum.
Lee J granted the application under r. 41.05 of the Federal Court Rules, even though the limitation period for the May 2018 email had expired. He thought the original orders had been properly served and the respondent had no excuse for not complying with them.
He also thought the warrant was “necessary to vindicate the processes of the Court”.
Thereis a backstory to all of this. If Balijepalli had stayed around he might have been able to introduce evidence about how United Petroleum conducts its franchise business.
There was the unedifying racist outburst from one of United’s general managers. In 2015, a United insider told the ABC she had heard the general manager saying:
“These Indians don’t deserve a job cleaning f***ing toilets anywhere in the world, we have given them millions [of] dollars worth of business which they don’t deserve at all.”
The comments were made during an operations meeting, and were directed against roughly 80 per cent of United employees, who are Indian.
Szymczak, who was COO when this story broke, told the ABC the man had been fired.
At the same time, a nationwide scandal was brewing over gross underpayment to service station employees. 7-Eleven servos were caught up in this murky business – as was United Petroleum.
One franchisee said his United service station regularly paid workers just $15 an hour. He believed some stations paid as low as $10 per hour.
Bosses got away with paying appallingly low rates because many United workers were scared of losing their temporary visas, and so did not complain.
After the ABC launched its investigations, two of United’s managers confirmed reports of underpayment. One claimed that some workers were not paid at all.
Szymczak warned against believing two junior managers.
“Please be aware that the area managers are quite junior in the organisation and are only involved with site standards and company policy compliance.”
He also denied United was responsible for working conditions. He told the ABC “in our franchise network, the payment … of wages and entitlements is a matter for our franchisees and we have no involvement”.
But United insiders had a different view, laying blame squarely with senior management.
Speaking to the ABC, one franchisee said “the business model did not allow us to pay the required full award and penalty rates for staff”.
Some franchisees said United had forced them to buy stock above market rates. Similar practices at 7-Eleven prompted former ACCC boss Alan Fels to say:
“The only way of making profit in many cases is to underpay workers.”
Szymczak didn’t agree. None of United’s franchise businesses had ever gone broke, he said. He assured the ABC that there were protections in place:
“Our franchise agreement clearly compels our franchisees to pay award wages and all entitlements under law.”
Other franchisees have accused United of dodgy dealings, with one family even going to court over their claims.
Ram and Kiriti Nijhawan bought their Melbourne servo for about $400,000, but soon after opening the family discovered United had dramatically upped their energy bill. The company had changed electricity provider without consultation.
The Nijhawans refused to pay the difference. So United security guards seized the business. The family was locked out and lost their entire investment, along with full stock and a $50,000 bond.
United sued the Nijhawans for $100,000 in outstanding loan payments, with the family counterclaiming for termination of the franchise agreement. In 2016, the Vic County Court found in United’s favour.
Mr Szymczak told the ABC that it was rare to terminate a franchise and was only a last resort. He said United always complied with its legal obligations.
But Melbourne solicitor Tsungai Mukushi said it was common for United to force out its franchisees over trivial breaches of their agreements.
Mukushi represented two franchisees who had each lost over $500,00 when the company seized their businesses. He claimed United charged new owners about $145,000 in fees every time it sold a franchise.
“It appears based on the instructions that have been given to us that these people aren’t interested in selling petroleum but are interested in selling franchises again and again from the same site.”