Al-Hakim v Toyoor Al Jannah Pty Ltd and Ors (No.2)
[2019] FCCA 521
•8 March 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| AL-HAKIM v TOYOOR AL JANNAH PTY LTD & ORS (No.2) | [2019] FCCA 521 |
| Catchwords: INDUSTRIAL LAW – Application for final relief and the imposition of penalties – compensation under s.545 of the Fair Work Act 2009 (Cth) and civil penalties ordered. |
| Legislation: Fair Work Act 2009 (Cth), ss. 12, 44, 45, 90(2), 539, 536, 546(1), 546(3)(6) |
| Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113 |
| Applicant: | RAGHAD AL-HAKIM |
| First Respondent: | TOYOOR AL JANNAH PTY LTD ACN 167 552 249 |
| Second Respondent: | LAITH GHUNMAT |
| Third Respondent: | AHLAM ALJARADAT |
| File Number: | SYG 234 of 2017 |
| Judgment of: | Judge Manousaridis |
| Hearing date: | 28 February 2019 |
| Date of Last Submission: | 28 February 2019 |
| Delivered at: | Sydney |
| Delivered on: | 8 March 2019 |
REPRESENTATION
| Counsel for the Applicant: | Mr A Duc |
| Solicitors for the Applicant: | Attia Lawyers and Consultants |
| Counsel for the Respondents: | Ms M Wilson |
| Solicitors for the Respondents: | Mitry Lawyers |
ORDERS
Pursuant to s.546(1) of the Fair Work Act 2009 (Cth) (FW Act) the first respondent pay pecuniary penalties in the sum of $40,800 for its contraventions of s.44, s.45, and s.536 of the FW Act referred to in declarations 2, 3, and 4 made on 9 November 2018.
Pursuant to s.546(1) of the FW Act the second respondent pay pecuniary penalties in the sum of $8,160 for his involvement in the first respondent’s contraventions referred to in order 1.
Pursuant to s.546(1) of the FW Act the third respondent pay pecuniary penalties in the sum of $8,160 for her involvement in the first respondent’s contraventions referred to in order 1.
Pursuant to s.546(3)(c) of the FW Act the first, second, and third respondents each pay the pecuniary penalties they have been ordered to pay to the applicant by 5 April 2019.
The respondents pay to the applicant $2,493.17, being the sum of the loss the applicant suffered because of the respondents’ contravention of s.44 of the FW Act and interest.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 234 of 2017
| RAGHAD AL-HAKIM |
Applicant
And
| TOYOOR AL JANNAH PTY LTD ACN 167 552 249 |
First Respondent
| LAITH GHUNMAT |
Second Respondent
| AHLAM ALJARADAT |
Third Respondent
REASONS FOR JUDGMENT
Introduction
On 9 November 2018 I published reasons for judgment (earlier reasons) on the basis of which I made declarations that the first respondent (TAJ) contravened s.44, s.45, and s.536 of the Fair Work Act 2009 (Cth) (FW Act), and that each of the second and third respondents was involved in those contraventions.[1]
[1] Al-Hakim v Toyoor Al Jannah Pty Ltd & Ors [2018] FCCA 3184
In these reasons for judgment I deal with the question of relief, whether I should make any order for the payment of pecuniary penalties and, if so, the pecuniary penalties I should order.
Relief
In the earlier reasons I found that TAJ contravened s.45 of the FW Act by failing to make superannuation contributions it was required to make under cl.18.2 of the Educational Services (Teachers) Award 2010. The parties agree that the amount TAJ was required to contribute under the Award, but failed to contribute, is $1,968.75.
In his affidavit of 27 February 2019 Mr Ghunmat deposes that, after I published the earlier reasons, “in an effort to rectify the error, we paid a further $1,968.75 into the ‘Lost Super’ Fund with Industry SuperFund [sic] for the period of 27 April 2015 until 27 December 2015”.[2] In those circumstances I do not need to make any order requiring the respondents to make any contribution to a superannuation fund.
[2] Affidavit of Mr L Ghunmat, [19]
In the earlier reasons I also found TAJ contravened s.44 of the FW Act by failing to pay Ms Al-Hakim, contrary to s.90(2) of the FW Act, accrued but untaken annual leave at the time Ms Al-Hakim left her employment with TAJ. The parties agree that the amount TAJ was required but failed to pay Ms Al-Hakim is $2,197.05. I propose, therefore, to order that the respondents pay Ms Al-Hakim this amount together with interest.
I propose to calculate interest by applying the rates prescribed by the Interest on Judgments Practice Note (GPN-INT) issued by the Federal Court of Australia. That practice note provides for an interest rate of 4% above the cash rate last published by the Reserve Bank of Australia. I propose to apply the average rate of interest over the period 1 October 2016 to 8 March 2019 (being the day on which I propose to pronounce my orders). On these assumptions, I have calculated interest as follows:
Loss
Period
Interest rate (average)
Amount of interest
Amount to be paid
$2,197.05
1 October 2016 to 8 March 2019
5.54%
$296.12
$2,493.17
Penalties
Subsection 546(1) of the FW Act provides that this Court may, on application, order a person to pay a pecuniary penalty the Court considers is appropriate if the Court is satisfied the person has contravened a “civil remedy provision”. That expression is defined in s.539(1) of the FW Act to include the provisions identified in column 1 of the table to s.539(2) of the Act. Sections 44, 45, and 536 of the FW Act, being the provisions of the FW Act I have found the respondents have contravened, are included in column 1 of the table to s.539(2) of the Act.
Subsection 546(2) of the FW Act provides that the pecuniary penalty the Court may impose must not, where the person is an individual, be more than “the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2)” and, if the person is a body corporate, must not be more than five times “the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2)”. The maximum penalty units for each contravention of s.44 and s.45 of the FW Act at the relevant time of the contraventions are 60 penalty units for an individual and 300 for a body corporate. The maximum penalty units for each contravention of s.536 of the FW Act at the time of the contraventions are 30 penalty units for an individual and 150 for a body corporate.
I also need to refer to s.12 of the FW Act which provides that “penalty unit” has the meaning given by s.4AA of the Crimes Act 1914 (Cth). It is common ground that $170 was the penalty unit provided for by s.4AA for the period in which the contraventions I found occurred.
There is no dispute between the parties about the approach I should take when assessing penalties. Counsel for Ms Al-Hakim set out the relevant principles in his written submissions; and counsel for the respondents agrees these are the principles I should apply. Of particular relevance is the factors identified by Mowbray FM in Mason v Harrington Corporation Pty Ltd.[3] I will not set these out here, but it is the factors identified in that case to which I will have regard when assessing penalties. The parties also agree that the contraventions of s.45 and s.536 of the FW Act should each be treated as one contravention.
[3] [2007] FMCA 7, [26]-[55]
Contravention of s.45 – failure to pay superannuation
Nature and extent of conduct and circumstances in which it occurred. The earlier reasons do not identify the period for which TAJ made no superannuation contributions; and they appear to assume that TAJ made no superannuation contributions throughout the entire period for which TAJ employed Ms Al-Hakim, namely, 27 April 2015 to 30 September 2016.
That assumption, however, must be considered against the evidence the second respondent, Mr Ghunmat, has given in his affidavit of 27 February 2019, and the amount the parties agree TAJ failed to pay in relation to superannuation. Mr Ghunmat deposes that “we were aware” Ms Al-Hakim had not received her superannuation entitlements, but he says that was due to Ms Al-Hakim having provided the respondents “incorrect TFN details”.[4] Mr Ghunmat further deposes that “as we had not received Ms Al Hakim’s superannuation details, we made payment of her super at the end of each financial year from 28 December 2015 to 30 September 2016 into a ‘Lost Super’ Fund with Industry SuperFunds”. At the liability hearing Mr Ghunmat gave evidence that Ms Al-Hakim had given TAJ incorrect details. I did not accept that evidence;[5] and, I do not propose to accept it now.
[4] Affidavit of Mr L Ghunmat, [15]
[5] Al-Hakim v Toyoor Al Jannah Pty Ltd & Ors [2018] FCCA 3184, [91]
The earlier reasons do not record that TAJ made any superannuation contributions in relation to Ms Al-Hakim’s employment from 27 December 2015 to 30 September 2016. The $1,968.75 the parties agree represents the superannuation contributions TAJ failed to make, however, relates to the period 27 April 2015 to 27 December 2015. That indicates it is common ground that TAJ did make superannuation contributions in relation to Ms Al-Hakim for the period of her employment after 27 December 2015.
The nature of the contravening conduct, therefore, is TAJ’s failure to make any superannuation contributions in relation to Ms Al-Hakim for the period 27 April 2015 to 27 December 2015. The contravention occurred in circumstances where Ms Al-Hakim was a part-time employee, and where she complained that TAJ was not making superannuation contributions.[6] These matters weigh in favour of assessing the penalty at the higher end of the scale.
[6] Al-Hakim v Toyoor Al Jannah Pty Ltd & Ors [2018] FCCA 3184, [36], [37]
Nature and extent of any loss or damage sustained. As I have already noted, TAJ paid $1,968.75 into “the ‘Lost Super’ Fund with Industry SuperFund”. Thus, the only loss Ms Al-Hakim has made is the loss of an opportunity to earn returns on the amounts TAJ had failed to pay from the dates on which TAJ ought to have paid those amounts. There is no evidence of the value of that loss, but it would be safe to assume the loss, if any, would be small. These matters weigh in favour of assessing the penalty at the lower end of the scale.
The size of the business enterprise involved. TAJ conducts a small business, employing six full-time, and two part-time employees. That, however, does not by itself carry much weight in the assessment of penalties. Small businesses “have an obligation to meet minimum employment standards and their employees, rightly, have an expectation that this will occur”, and that a penalty must be imposed at a meaningful level.[7] The important consideration, at least where the employer’s business is ongoing, is that the penalty not be set at a level that would be oppressive or crushing. Relevant to that issue is what is recorded in the profit and loss statement annexed to Mr Ghunmat’s affidavit. TAJ made a profit of $152,803.19 for the year ended 30 June 2018.[8]
[7] Kelly v Fitzpatrick [2007] FCA 1080, [30]
[8] Affidavit of Mr L Ghunmat, Annexure C
Deliberateness of contraventions. Counsel for the respondents submits there is no evidence that any of the respondents’ actions were deliberate in the sense the respondents intended to contravene the FW Act. Counsel for the respondents also submits that TAJ’s failure to make superannuation contributions “was in the nature of an administrative error”.
It is true there is no evidence that, when failing to make the required superannuation contributions, any of the respondents directed their minds to any provision of the FW Act. That, however, does not mean the conduct was not deliberate. Nor do I accept that TAJ’s failure was in the nature of an administrative error. On the contrary, I am satisfied TAJ deliberately did not pay the superannuation contributions TAJ was required to pay. I base that finding on two matters. First, Mr Ghunmat states in his affidavit that the respondents were aware the applicant had not been paid her superannuation contributions, but gave an explanation which I have not accepted why TAJ did not make those payments. Second, as I have already noted, I found in the earlier reasons that the applicant complained about TAJ not having made any superannuation contributions.[9] These are matters that weigh in favour of assessing the penalty at the higher end of the scale.
[9] Al-Hakim v Toyoor Al Jannah Pty Ltd & Ors [2018] FCCA 3184, [36], [37]
Contrition and corrective action. I have already noted that TAJ has paid the $1,968.75 into a superannuation fund. That weighs in favour of assessing the penalty at the lower end of the scale.
Specific and general deterrence. TAJ continues to trade, and TAJ and the second and third respondents, as parties to this proceeding, are aware of the adverse consequences that may flow to an employer and, where the employer is a company, to persons who manage the company, if provisions of the FW Act are contravened. For these reasons I am satisfied there is little risk any of the respondents will knowingly contravene provisions of the FW Act. The penalty, therefore, should not include an element for specific deterrence.
General deterrence, however, raises different considerations. The principal, if not the only, purpose for imposing penalties is to ensure compliance with the FW Act:[10]
Whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty is primarily, if not wholly, protective in promoting the public interest in compliance. The principal object of a pecuniary penalty is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene; both specific and general deterrence are important. A pecuniary penalty for a contravention of the law must be fixed with a view to ensuring that the penalty is not to be regarded by the offender or others as an acceptable cost of doing business. In relation to general deterrence, it is important to send a message that contraventions of the sort under consideration are serious and not acceptable.
[10] Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113, [98] (citations omitted)
It has also been said that a penalty “should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like-minded persons or organisations”.[11]
[11] Ponzio v B & P Caelli Constructions [2007] FCAFC 65, at [93] (Lander J)
In my opinion, the penalty should be set at a level that signals to employers of the need to comply with their obligations, particularly those relating to superannuation, and of the risk of being ordered to pay a pecuniary penalty if they do not comply with their obligations.
Assessment. Weighing all these matters, I assess the penalty as follows:
Respondent
Maximum Penalty
Penalty %
Amount
TAJ
$51,000
30%
$15,300
Mr Ghunmat
$10,200
30%
$3,060
Ms Aljaradat
$10,200
30%
$3,060
Contravention of s.44 – failure to pay accrued but untaken annual leave
Nature and extent of conduct and circumstances in which it occurred. The contravention consisted of TAJ not paying to Ms Al-Hakim at the time she resigned an amount for annual leave she had accrued but not taken during the period 27 April 2015 to 27 December 2015.
In his affidavit of 27 February 2019 Mr Ghunmat says “we did not know that we owed [Ms Al-Hakim] annual leave and annual leave loading for the period of 27 April 2015 to 27 December 2015”, that at the time TAJ engaged Ms Al-Hakim “we weren’t aware that Ms Al-Hakim was regarded as an employee of the centre in that period”, and that “we hired Ms Al-Hakim as a contractor”. [12] There are two matters to note about that evidence. First, it does not address what Mr Ghunmat believed about Ms Al-Hakim’s status at the time Ms Al-Hakim resigned from TAJ. Secondly, and more importantly, the matters to which Mr Ghunmat deposes are inconsistent with the findings I made in the earlier reasons. I did not accept evidence given by Mr Ghunmat that Ms Al-Hakim said she wanted to be engaged as a contractor; I found there was no evidence Ms Al-Hakim provided to TAJ an Australian Business Number; and I found that TAJ completed a “PAYG payment summary” which represented that Ms Al-Hakim was an employee for the year ended 30 June 2016.[13]
[12] Affidavit of Mr L Ghunmat, [4]-[6]
[13] Al-Hakim v Toyoor Al Jannah Pty Ltd & Ors [2018] FCCA 3184, [19(d)]
I do not accept, therefore, that at the time Ms Al-Hakim resigned from her employment the respondents believed that for the period 27 April 2015 to 27 December 2015 TAJ had engaged Ms Al-Hakim as a contractor, rather than as an employee.
Nature and extent of any loss or damage sustained. The amount of Ms Al-Hakim’s loss is $2,197.05. That is not an insignificant amount.
The size of the business enterprise involved. What I have already said about this consideration in relation to the respondents’ contravention of s.45 of the FW Act applies to the respondents’ contravention of s.44 of the FW Act.
Deliberateness of contraventions. In his affidavit Mr Ghunmat deposes the respondents did not intentionally withhold Ms Al-Hakim’s annual leave for the period 27 April 2015 to 27 December 2015, pointing to the fact that TAJ paid to the applicant her leave entitlements for the period after 27 December 2015. I do not accept that submission. By paying to Ms Al-Hakim an amount for accrued but untaken annual leave, the respondents directed their minds to the question of Ms Al-Hakim’s entitlement to be paid an amount for accrued leave. Given the respondents must have been aware Ms Al-Hakim had been engaged by TAJ since 27 April 2015, the respondents decided they would calculate accrued leave on the basis of only part of the period she worked with TAJ. To that extent, TAJ’s failure to pay an amount for annual leave that Ms Al-Hakim had accrued during that period was deliberate.
It may be that the respondents believed that, given the terms on which they had agreed TAJ would engage Ms Al-Hakim, namely, at the rate of $25 an hour but without any entitlement to annual leave, TAJ was not obliged to pay Ms Al-Hakim any amount for accrued annual leave. And I am prepared to assume that the respondents believed they were not contravening any law by having engaged Ms Al-Hakim on those terms, and by abiding by the terms they had agreed. But these matters do not mean that TAJ’s failure to pay the accrued but untaken annual leave for the period 27 April 2015 to 27 December 2015 was not deliberate.
Contrition and corrective action. In his affidavit Mr Ghunmat says he has arranged for the payment of $2,197.05 into the trust account of his solicitors for the payment of the accrued but untaken annual leave. This is a matter that weighs in favour of assessing the penalty at the lower end of the scale.
Specific and general deterrence. For reasons I have already given in relation to the contraventions of s.45 of the FW Act, the penalty I assess should not include any element for specific deterrence. As for general deterrence, the penalty should be set at a level that signals to employers of the need to comply with their obligations, particularly those relating to the payment of annual leave, and of the risk of being ordered to pay a pecuniary penalty if they do not comply with their obligations.
Assessment. Weighing all these matters, I assess the penalty as follows:
Respondent
Maximum Penalty
Penalty %
Amount
TAJ
$51,000
25%
$12,750
Mr Ghunmat
$10,200
25%
$2,550
Ms Aljaradat
$10,200
25%
$2,550
Contravention of s.536 – failure to issue payslips
Nature and extent of conduct and circumstances in which it occurred. The contravention consisted of TAJ’s failing to provide to Ms Al-Hakim payslips within one day of each occasion on which TAJ paid Ms Al-Hakim for work she performed. The conduct occurred throughout Ms Al-Hakim’s entire employment with TAJ. That is a matter that weighs in favour of assessing the penalty at the higher end of the scale.
Mr Ghunmat deposes “we were unaware of our obligations to provide Ms Al-Hakim with payslips”, and that “[w]e had not been advised of our requirement to do so by our accountant”. Whether or not that is so has little bearing on the assessment of penalty. I have found that as early as November 2015 Ms Al-Hakim had complained to Ms Aljaradat that she was not being given payslips. Ms Al-Hakim repeated that complaint in February, May, and August 2016.[14] Whether or not the respondents were unaware of TAJ’s obligation to provide payslips, there is no evidence to suggest they made enquiries about their obligations to do so in response to Ms Al-Hakim’s complaints she was not being provided with payslips.
[14] Al-Hakim v Toyoor Al Jannah Pty Ltd & Ors [2018] FCCA 3184, [36], [37]
Nature and extent of any loss or damage sustained. It has not been suggested that Ms Al-Hakim has suffered any loss or damage because of TAJ’s contraventions of s.536 of the FW Act. In particular, Ms Al-Hakim does not claim that her not having been provided with payslips has made it difficult for her to determine the hours she has worked, or whether she has been properly paid for the hours she has worked.
The size of the business enterprise involved. What I have already said about this consideration in relation to the respondents’ contraventions of s.45 of the FW Act applies to the respondents’ contraventions of s.536 of the FW Act.
Deliberateness of contraventions. I have already referred to the findings in the earlier judgment that Ms Al-Hakim had complained on a number of occasions that she was not being provided with payslips. Given those findings, I find that at least from shortly after around November 2015, being the the first occasion that Ms Al-Hakim complained about not being given payslips, the respondents were aware that it was asserted that TAJ was required to provide to Ms Al-Hakim payslips but they failed to do so. That failure constitutes deliberate conduct, and is a matter that weighs in favour of assessing the penalty at the higher end of the scale.
Specific and general deterrence. For reasons I have already given in relation to the contraventions of s.45 of the FW Act, the penalty I assess should not include any element for specific deterrence. As for general deterrence, the penalty should be set at a level that signals to employers of the need to comply with their obligations, particularly those relating to the issuing of payslips, and of the risk of being ordered to pay a pecuniary penalty if they do not comply with their obligations.
Assessment. Weighing all these matters, I assess the penalty as follows:
Respondent
Maximum Penalty
Penalty %
Amount
TAJ
$25,500
50%
$12,750
Mr Ghunmat
$5,100
50%
$2,550
Ms Aljaradat
$5,100
50%
$2,550
Further adjustments?
I now consider whether there are any common elements between any of the contraventions for which I have assessed penalties to warrant any downward adjustment to the penalties I have assessed.[15] In my opinion, there are no common elements to the three contraventions for which I have assessed a penalty.
[15] This being step 3 of the approach outlined by Bromwich J in Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai [2017] FCA 1301, at [36]
The final matter to consider is whether the penalties I have assessed viewed as a whole are appropriate and proportionate to the contravening conduct viewed as a whole. The total of the penalties I have assessed for TAJ is $40,800 and the total for each of Mr Ghunmat and Ms Aljaradat is $8,160. In my opinion, the penalties I have assessed are appropriate and proportionate to the contravening conduct viewed as a whole.
Other matters
Counsel for the applicant also claims an amount of compensation for non-economic loss in the sum of $10,000. The basis of this claim is that the respondents failed to engage, or properly engage and recognise Ms Al-Hakim’s service which led Ms Al-Hakim to make several complaints that were not addressed; and that in those circumstances it would be appropriate for the Court to order compensation for the hurt, humiliation, and distress this caused Ms Al-Hakim.
I do not accept these submissions. First, the matters on which counsel relies for claiming Ms Al-Hakim has suffered hurt, humiliation, and distress are not said to arise from the conduct of the respondents that I have held contravened s.44, s.45, or s.546 of the FW Act. Second, the matters on which counsel relies are not reasonably capable, at least on the evidence that was before me, of having caused Ms Al-Hakim hurt, humiliation, or distress. Third, there is no evidence to suggest that Ms Al-Hakim has in fact suffered any hurt, humiliation, or distress or, if she has, it is of such degree as would warrant an award of compensation.
Disposition
I propose to order that the respondents pay to Ms Al-Hakim compensation in the amount of $2,493.17 which is the sum of $2,197.05 (being the amount of the accrued but unpaid annual leave to which Ms Al-Hakim became entitled for the period 27 April 2015 to 27 December 2015) together with interest of $296.12 from the period 1 October 2016 to 8 March 2019.
I also propose to order that TAJ pay pecuniary penalties in the sum of $40,800 for its contraventions of s.44, s.45, and s.536 of the FW Act, and that each of Mr Ghunmat and Ms Aljaradat pay pecuniary penalties in the sum of $8,160. The Court has power under s.546(3)(c) of the FW Act to order that the pecuniary penalty be paid to “a particular person”. In my opinion, Ms Al-Hakim is in the position of the applicant in Sayed v Construction, Forestry, Mining and Energy Union:[16]
In this appeal . . . the policy considerations of s 546(3) “speak loudly” in the circumstances to justify the payment of the penalty imposed to the individual affected by the contravention who, under the authority of the FW Act, commenced and maintained this enforcement proceeding. If [the applicant] had not pursued the action, it is unlikely that it would have been pursued. He took on the proceeding at obvious cost to himself.
[16] [2016] FCAFC 4, [116]
It is appropriate, and I therefore propose, to make an order under s.546(3)(c) of the FW Act that the penalties I propose the respondents pay be paid to Ms Al-Hakim by 5 April 2019, being 28 days after the day I propose to pronounce my orders.
I certify that the preceding forty-eight (48) paragraphs are a true copy of the reasons for judgment of Judge Manousaridis
Date: 8 March 2019
0
6
2