Alcantara v Buildpower Pty Ltd (No.2)
[2010] FMCA 763
•8 October 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| ALCANTARA & ANOR v BUILDPOWER PTY LTD (No.2) | [2010] FMCA 763 |
| INDUSTRIAL LAW – Penalty hearing – contravention of regulation 3.42(4) of the Fair Work Regulations 2009 (Cth) – failure to produce requested employee record to applicants as soon as practicable after request – inadmissible evidence – factors for consideration in assessment of penalty. |
| Crimes Act 1914 (Cth), s.4AA Evidence Act 1995 (Cth), ss.56(2), 59(1) Fair Work Act 2009 (Cth), ss.3(b), (c) and (e), 12, 546(2)(b) Fair Work Regulations 2009 (Cth), regs.3.42(4), 3.45, 3.46, 4.01A -Item 12 |
| Abrahams v Qantas Airways Ltd (2007) 210 FLR 314; [2007] FMCA 639 ACCC v IPM Operation and Maintenance Loy Yang Pty Ltd (No.2) [2007] FCA 11 Carr v CEPU & Anor [2007] FMCA 1526 Commonwealth Bank of Australia & Anor v Finance Sector Union (2007) 157 FCR 329; [2007] FCAFC 18 Leighton Contractors Pty Ltd v CFMEU (2006) 164 IR 375; [2006] WASC 317 Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 |
| First Applicant: | FLORANTE ALCANTARA |
| Second Applicant: | THOMIE PACHO |
| Respondent: | BUILDPOWER PTY LTD |
| File Number: | PEG 64 of 2010 |
| Judgment of: | Lucev FM |
| Hearing date: | 5 October 2010 |
| Date of Last Submission: | 5 October 2010 |
| Delivered at: | Perth |
| Delivered on: | 8 October 2010 |
REPRESENTATION
| Counsel for the First and Second Applicants: | Mr J Nicholas |
| Solicitor for the First and Second Applicants: | Shannon Walker, CFMEU |
| For the Respondent: | Mr M Slabbert (by leave) |
ORDERS
That in relation to the Respondent’s contraventions of regulation 3.42(4) of the Fair Work Regulations 2009 (Cth) in relation to the First and Second Applicants the Respondent pay a penalty of $4,400.
That the penalty ordered to be paid under order (1) above be paid by the Respondent to the Construction, Forestry, Mining and Energy Union, by 8 January 2011.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG 64 of 2010
| FLORANTE ALCANTARA |
First Applicant
| THOMIE PACHO |
Second Applicant
And
| BUILDPOWER PTY LTD |
Respondent
REASONS FOR JUDGMENT
Previous orders and declarations
On 30 August 2010 the Court handed down Reasons for Judgment on liability in this matter[1] and made the following orders and declarations:
[1] Alcantara & Anor v Buildpower Pty Ltd [2010] FMCA 626 (“Alcantara (No. 1)”).
1. Mr Michael Slabbert be granted leave under r.9.04 of the Federal Magistrates Court Rules, 2001 (Cth) to appear as a representative for the Respondent.
2. The Court declares that in relation to the First Applicant the Respondent contravened regulation 3.42(4) of the Fair Work Regulations 2009 (Cth) by failing to produce a legible copy of a requested employee record to the First Applicant as soon as practicable after receipt of a request dated 7 April 2010.
3. The Court declares that in relation to the Second Applicant the Respondent contravened regulation 3.42(4) of the Fair Work Regulations 2009 (Cth) by failing to produce a legible copy of a requested employee record to the Second Applicant as soon as practicable after receipt of a request dated 7 April 2010.
4. The Respondent provide to each Applicant legible copies of the employee records requested in each Applicant’s letter to the Respondent dated 7 April 2010, those records to be sent by registered post to the address provided by each Applicant in each Applicant’s letter to the Respondent dated 7 April 2010, and to be posted to each Applicant by 17 September 2010.
5. That there be a penalty hearing at 10.15am on 5 October 2010, and in relation thereto:
(a)the Applicants file and serve any further affidavits by 6 September 2010;
(b)the Respondent file and serve any further affidavits by 13 September 2010;
(c)the Applicants file and serve any further affidavits in reply by 20 September 2010;
(d)each party file and serve an outline of submissions by 27 September 2010; and
(e)that in the event of non-compliance with Order 4, the Applicants have leave to file a further affidavit concerning non-compliance by 4 October 2010.
Penalty hearing
In compliance with the orders made on 30 August 2010:
a)the applicants filed an outline of submissions;[2] and
b)Buildpower Pty Ltd[3] filed submissions[4] and an affidavit sworn 13 September 2010 by its director, Mr Slabbert.[5]
[2] “Applicants’ Submissions”.
[3] “Buildpower”.
[4] “Buildpower’s Submissions”.
[5] “Mr Slabbert’s September 2010 Affidavit”.
Mr Slabbert was granted leave to represent Buildpower at the penalty hearing for essentially the same reasons he was granted leave to appear at the liability hearing.[6]
[6] Alcantara (No. 1) at paras.3-32 per Lucev FM.
It is convenient first to deal with issues arising in relation to Buildpower’s Submissions and Mr Slabbert’s September 2010 Affidavit.
Mr Slabbert’s Affidavit and Buildpower’s Submissions
Mr Slabbert’s Affidavit provides as follows:
1.I have had discussions with Mr Ashley Chapple of the Fair Work Ombudsman (FWO).
2.Mr Chapple has stated that he only requested the Wage Records from Buildpower on behalf of the CFMEU.
3.Mr Chapple stated that the request for the records from Buildpower were not part of an investigation by the FWO and that the FWO were only acting on a request by the CFMEU who were acting on behalf of Mr Alcantara and Mr Pacho.
4.Mr Chapple stated categorically that the request came from Ms Shannon Walker of the CFMEU.
5.Mr Chapple said that the complete records that Buildpower provided were passed on to Ms Walker of the CFMEU.
6.Attached is an email from Mr Chapple confirming the above.
The attached email from Mr Chapple, dated 10 September 2010, relevantly provides as follows:
As briefly discussed a few moments ago, I can confirm that the matter was initiated by the CFMEU who asked FWO to follow through on obtained records for Mr Alcantara and Mr Pacho. Once you provided these records to FWO, I forwarded them onto Ms Shannon Walker at the CFMEU.
Paragraphs 2 to 6 of Mr Slabbert’s September 2010 Affidavit are inadmissible hearsay and will be struck out.[7]
[7] Evidence Act 1995 (Cth), s.59(1) (“Evidence Act”).
Buildpower’s Submissions provide as follows:
2.Summary of respondent’s reasons for non-application of penalties
2.1The Fair Work Ombudsman (Representative Mr Ashley Chapple) has stated in writing that the Fair Work Ombudsman did not investigate this matter independently. Please see affidavit of M. Slabbert 13 September 2010.
2.2The Fair Work Ombudsman stated that the CFMEU initiated the process. Refer affidavit.
2.3The Fair Work Ombudsman obtained the records for Mr Alcantara and Mr Pacho. Refer affidavit.
2.4The Fair Work Ombudsman stated that these records were provided by Buildpower and passed onto the CFMEU’s Ms Shannon Walker in September 2009.
2.5Buildpower has maintained that these are the same records, no more or no less than those provided as per Courts Orders in September 2010. Buildpower stated in the trial that it did not have any other records … [other] than the records provided to the CFMEU/Applicants, care of the FWO in September 2009.
2.6Buildpower were unfortunately unable to have the opportunity to allow the Fair Work Ombudsman to testify at the trial which would have shown that the applicants, the CFMEU and Ms Walker have been in possession of the full records since September 2009, and that Buildpower had provided them and therefore complied with its obligations under the Fair Work Act.
2.7Buildpower has provided the identical set of records to the CFMEU on the 14 September 2010 as it did in September 2009. On both occasions the records went care of Ms Shannon Walker.
3.Conclusion
3.1Buildpower maintains its innocence in that it has provided a full set of employee’s records to the applicants via the CFMEU in September 2009. It has again provided the CFMEU with the exact same records and therefore could in no way have prejudiced the applicants.
3.2Buildpower has cooperated with the Courts Orders as it did with the Fair Work Ombudsman and provided the records again on 14 September 2010. Buildpower requests the Court to see that it has in no way withheld the information from the applicants as they have been in possession of this information since a year ago.
3.3Buildpower asks that the Court see that is actions have been co-operative and honest and therefore does not warrant any penalties to be imposed.
Insofar as Buildpower’s Submissions are based on matters adverted to in Mr Slabbert’s September 2010 Affidavit which have been found to be inadmissible they have no foundation in fact, and therefore cannot provide the basis for any conclusions of fact by the Court. In any event, the gist of Buildpower’s Submissions, namely that the records have previously been provided to the applicants via the Construction, Forestry, Mining and Energy Union[8] is a submission which has no foundation in law for reasons explained in Alcantara (No. 1) where the Court said:
[8] “CFMEU”.
67. The fact that the Fair Work Ombudsman’s request to produce employee records for the applicants was made of Buildpower in response to a complaint from the CFMEU, and that the employee records were provided to the CFMEU on behalf of their members, the applicants, does not provide a basis for asserting that the Fair Work Ombudsman was acting for and on behalf of the CFMEU. In any event, under the FW Act the Fair Work Ombudsman can do no more than exercise the statutory powers of that office.
68. Ultimately, for the purposes of the Application, it is irrelevant that the employees’ records were produced to the Fair Work Ombudsman in response to the Fair Work Ombudsman’s request in September 2009. The powers of Fair Work Inspectors under s.712 of the FW Act are independent of the ability of an employee to make a request to an employer, or former employer, under reg.3.42 of the FW Regulations to produce the employee’s records to the employee. Section 535 of the FW Act and reg.3.42 of the FW Regulations provide employees with a separate power to request employee records, irrespective of:
a) whether or not the Fair Work Ombudsman has previously requested the same records; and
b) whether, as a consequence of the Fair Work Ombudsman’s request, those records have been passed on to:
(i) the employees concerned; or
(ii) a registered organisation on behalf of those employees.
69. For that reason, it was never open as a matter of law for Buildpower to assert that the Employee Records Requests in April 2010 had already been complied with by providing the employee records to the Fair Work Ombudsman in September 2009 as a result of a request by the Fair Work Ombudsman.[9]
[9] Alcantara (No. 1) at paras.67-69 per Lucev FM.
It follows that paragraphs 2-6 of Mr Slabbert’s September 2010 Affidavit are also inadmissible because they are irrelevant.[10]
[10] Evidence Act, s.56(2).
Even if the asserted facts in Mr Slabbert’s September 2010 Affidavit are true and were admissible it would make no difference on the issue of liability, as Buildpower was still in contravention of reg.3.42(4) of the Fair Work Regulations 2009 (Cth).[11]
[11] “FW Regulations”.
Issue
The only issue in the penalty hearing is what penalty, if any, ought to be imposed upon Buildpower for the contraventions of reg.3.42(4) of the FW Regulations which were found by the Court to have been committed by Buildpower.[12]
Penalty – factors for consideration
[12] Alcantara (No. 1) at paras.70 and 75(b) per Lucev FM.
General considerations
The considerations to be taken into account in assessment of penalty are well established,[13] and are as follows:
[13] Mason v Harrington Corporation Pty Ltd [2007] FMCA 7; Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 (“Kelly”); Olsen v Sterling Crown Pty Ltd (2008) 177 IR 337; [2008] FMCA 1392 (“Sterling Crown”); Workplace Ombudsman v Golden Maple Pty Ltd (2009) 186 IR 211; [2009] FMCA 664 (“Golden Maple”).
a)the nature and extent of the conduct which led to the contraventions;
b)the circumstances of the conduct (including deliberate defiance or disregard of the relevant legislative provisions);
c)relevant record of civil penalty contraventions;
d)whether the contraventions are distinct or arise from a single course of conduct;
e)the consequences of the contravening conduct;
f)deterrence, both general and specific;
g)the objects of the relevant legislation;
h)the size and financial resources of the contravener;
i)co-operation with regulatory authorities;
j)the contravener’s contrition;
k)the size of the prescribed penalty, and any recent increases to that prescription; and
l)the totality principle.
This is not an exhaustive list of considerations that the Court may take into account.[14]
[14] Australian Ophthalmic Supplies v McAlary-Smith (2008) 165 FCR 560 at 580 per Buchanan J; [2008] FCAFC 8 at para.91 per Buchanan J (“Australian Ophthalmic Supplies”); Golden Maple IR at 224 per Lucev FM; FMCA at para.11 per Lucev FM.
The nature of Buildpower’s Submissions is such that they do not specifically address any of the factors for consideration. However, it is tolerably clear that some parts of Buildpower’s Submissions can be related to the factors for consideration in assessment of penalty, and will be considered accordingly.[15]
[15] For example, para.3.2 of Buildpower’s Submissions asserting co-operation will fall for consideration when considering deterrence, co-operation with regulatory authorities (if relevant), and contrition.
The Applicants’ Submissions were directed to each of the factors for consideration, and will be considered by the Court in relation thereto.
The Court notes that Buildpower’s Submissions assert that Buildpower was “unfortunately unable to have the opportunity to allow the Fair Work Ombudsman to testify at the trial”. Whatever fortune attended the matter was entirely of Buildpower’s own making, for:
a)no affidavit from the relevant officer of the Fair Work Ombudsman was filed;
b)no subpoena was issued to any relevant officer of the Fair Work Ombudsman; and
c)no adjournment was sought to call any relevant officer of the Fair Work Ombudsman as a witness.
In response to a question in cross-examination at the liability hearing, Mr Slabbert asserted that he would have called Mr Chapple from the Fair Work Ombudsman’s office if he (Mr Slabbert) had known that he was going to be allowed to represent Buildpower.[16] As indicated above, no application for an adjournment to call Mr Chapple was requested, and in any event, even if Mr Chapple gave evidence in terms of the asserted facts it would, for reasons set out above, have made no difference to Buildpower’s liability for contravention of reg.3.42(4) of the FW Regulations.[17]
[16] Transcript, 17 August 2010, page 18.
[17] See para.11 above.
Nature and extent of the conduct which led to the contraventions
The nature of the conduct was a failure to do that which the law, in this case the FW Regulations, prescribed must be done, that is to produce records on request by an employee, and in this case the two applicant employees. That failure must be considered in the context of the reason for the requirement to produce records, as set out below,[18] and the fact that the request was made in the context of an inquiry by the CFMEU into possible underpayment of each of the applicants. A prolonged failure to produce is serious. In this case the request was made on 7 April 2010, and notwithstanding contact between a representative of the applicants (the CFMEU’s solicitor) and Buildpower (Mr Slabbert) the records were not produced until this Court ordered that they be produced. It is common ground that they were finally produced on or about 14 September 2010.
[18] See paras.25-28 below.
The failure to provide the records involved a deliberate course of conduct by Buildpower. The nature of the conduct was therefore serious, deliberate, and in extent of time reasonably lengthy.
The circumstances of the conduct
As indicated above, the circumstances of the conduct involved a deliberate defiance of the provisions of the FW Regulations. That deliberate defiance was effected through Mr Slabbert, one of Buildpower’s then two directors, who was, on the evidence, Buildpower’s guiding mind and most senior management person. Further, the contraventions occurred in circumstances where Buildpower had a system in place to facilitate compliance with a request to produce records. At hearing, there was no dispute that the records were able to be provided within 14 days, although 21 or 28 days was preferable. In any event, the records were produced within 15 days of an order being made by this Court, which demonstrates that their production was never an overly onerous undertaking. The evidence sufficiently establishes, either directly or by implication, that the failure to produce the records to the employees hindered the inquiry being undertaken by the CFMEU on behalf of the applicants into possible underpayment.[19]
[19] Transcript 17 August 2010, pages 6, 11, 13 and 14.
The applicants submit that they were particularly vulnerable employees because they were Filipino nationals employed by Buildpower on sub-class 457 working visas, not fluent in English, and reliant upon the goodwill of Buildpower in order to remain in Australia. The applicants were not called at hearing, Counsel for the applicants taking the view that “[o]n the basis of the agreed facts and the evidence of Ms Walker … we’ve covered all the bases that we need to”.[20] The evidence only establishes that the applicants were bricklayers from the Phillipines, “brought” to Australia by Buildpower, and employed on four year contracts.[21] Although it is not in dispute that the applicants were working in Australia on sub-class 457 working visas, there is no sufficient evidence of the vulnerability of the applicants which would allow the Court to arrive at the conclusion that the applicants were vulnerable employees. Merely because an employee:
a)has a sub-class 457 working visa;
b)is from overseas; and
c)relies upon the goodwill of an employer to remain in Australia (a proposition not proven in law or fact in these proceedings),
is not sufficient to categorise an employee as “vulnerable”. Were it sufficient, every sub-class 457 visa holder working in Australia would arguably be capable of being characterised as a “vulnerable” employee. Manifestly, that is an absurd proposition which highlights the fact that in order to characterise an employee as “vulnerable” there must be evidence sufficient to enable the Court to make such a finding. In this case the evidence does not allow the Court to make findings that the employees were vulnerable employees.[22]
[20] Transcript, 17 August 2010, page 15.
[21] Transcript, 17 August 2010, page 17.
[22] Contrast Golden Maple IR at 224 per Lucev FM; FMCA at para.14 per Lucev FM, where the Court accepted that employees who were found to be minors, or temporary residents on student or working holiday visas, or who did not speak English well, may be regarded as vulnerable employees.
Relevant record of civil penalty contraventions
There is no evidence that Buildpower has been involved in similar conduct previously. Buildpower must therefore be treated as a first time contravener.
Whether the contraventions are distinct or arise from a single course of conduct
The applicants concede that the contraventions arise out of a single course of conduct by Buildpower, noting that the requests for employee records were essentially similar, and common in relation to their timing, content and purpose.
The Court accepts that there was a single course of conduct by Buildpower. Consequently, there is considered to be only a single contravention of reg.3.42(4) of the FW Regulations for the purposes of assessing penalty.[23]
[23] Cotis v Macpherson (2007) 169 IR 30 at 39 and 40 per Driver FM; [2007] FMCA 2060 at paras.11 and 15 per Driver FM (read as explained in Golden Maple IR at 229 per Lucev FM; FMCA at para.33 per Lucev FM); Workplace Ombudsman v SRS Investments (WA) Pty Ltd (2009) 191 IR 426 at 439 per Lucev FM; [2009] FMCA 1132 at paras.66-67 per Lucev FM.
The consequences of the contravening conduct
There is no evidence that there has been any actual loss or damage suffered by the applicants. However, the fact of loss or damage must be considered in the context of the relevant statutory objective. If the relevant statutory objective is undermined that is of similar importance to actual loss and damage being suffered.[24]
[24] Secretary, Department of Health & Ageing v Pagasa Australia Pty Ltd [2008] FCA 1545 at para.56 per Flick J; Fair Work Ombudsman v Industrial Roadpavers (WA) Pty Ltd (2010) 194 IR 436 at 446 per Lucev FM; [2010] FMCA 204 at para.28 per Lucev FM (“Industrial Roadpavers”).
The ability of employees to request records from an employer is an important one in relation to an employee’s capacity to determine whether various industrial instruments and minimum standards and entitlements owed to them are being, or have been, paid or observed.[25]
[25] Fair Work Act 2009 (Cth), s.3(b), (c) and (e).
In this case the failure of Buildpower to provide the records when requested has had the effect of delaying any investigation by the applicants, through their union, the CFMEU, until the records were provided following this Court’s judgment, declaration and orders in Alcantara (No. 1).[26]
[26] See para.20 above.
By failing to provide the records as requested by the employees, in breach of reg.3.42(4) of the FW Regulations, Buildpower has engaged in conduct undermining the utility and effectiveness of the relevant legislative provisions.[27]
[27] Industrial Roadpavers IR at 447 per Lucev FM; FMCA at para.33 per Lucev FM.
Deterrence both general and specific
General and specific deterrence are primary objectives of imposing penalties.[28] Therefore, both general and specific deterrence are significant considerations when determining the quantum of penalty.[29]
[28] Leighton Contractors Pty Ltd v CFMEU (2006) 164 IR 375 at 391 per Le Miere J; [2006] WASC 317 at para.74 per Le Miere J (“Leighton Contractors”); Carr v CEPU & Anor [2007] FMCA 1526 at para.29 per Lucev FM (“Carr”).
[29] Leighton Contractors IR at 391 per Le Miere J; WASC at para.74 per Le Miere J; Carr at para.29 per Lucev FM.
Specific deterrence in this case relates to the need to deter Buildpower from further contravention of the FW Regulations, while general deterrence refers to the need to deter others from contravening the FW Regulations, by showing the seriousness with which the Court considers the contravention.[30]
[30] Carr at para.29 per Lucev FM.
This is a case in which both specific and general deterrence must be taken into account when setting a penalty at a meaningful level.
General deterrence is an important and relevant consideration in assessing penalty, in order to mark disapproval of the conduct in question, and to act as a warning to others not to engage in similar conduct.[31]
[31] Klousia v TKM Investments Pty Ltd & Anor [2009] FMCA 208 at para.55 per FM O’Sullivan.
This is also a case in which general deterrence is important because the circumstances demonstrate that Buildpower was prepared to co-operate with a government authority, namely the Fair Work Ombudsman, if a request to provide employee records was made by the Fair Work Ombudsman, but not with a request made by an employee. It is important that a message be sent to employers required to provide employee records that it is as important to comply with a request properly made by an employee as it is to comply with a request properly made by the Fair Work Ombudsman.
In this case some measure of specific deterrence is required by reason of:
a)the duration of the contraventions;
b)the deliberateness of the contraventions; and
c)some evidence of a lack of contrition by reason of a maintenance of a plea of “innocence”.[32]
[32] Buildpower’s Submissions, para.3.1.
Whilst specific deterrence is necessary in this case, it is necessary at a lower level because:
a)Buildpower has systems in place to comply with requests for employee records;
b)there has been some, albeit late and reluctant, co-operation demonstrated following the orders of this Court arising from the Reasons for Judgment in Alcantara (No. 1);
c)of a view which has been formed by the Court that given the events that have taken place in this matter, and notwithstanding that there is a lack of contrition, that it is more likely than not that Buildpower would comply with future requests for employee records properly made under the FW Act; and
d)Buildpower does not appear to be currently trading, or likely to trade to any significant extent in the foreseeable future, and therefore the likelihood of further requests for employee records being made is minimal.
The objects of the relevant legislation
The objects of the legislation are discussed above in relation to the consequences of the contravening conduct.[33]
[33] See paras.25-28 above.
The size and financial resources of the contravener
This Court has previously held that the size and financial resources of a contravener, including their capacity to pay, are relevant factors in determining quantum of any penalty.[34] In relation to capacity to pay, the position was summarised in KSN Engineering in the following way:
9. Whether capacity to pay is a relevant consideration in determining penalty might be said to be controversial.
10. In Carr the Court as presently constituted observed that there “is an established principle in setting penalties for both individuals and corporations that regard is had to their financial position, and more particularly their capacity to pay.”[35] In Sterling Crown the Court, again as presently constituted, after an extensive review of the relevant authorities came to the view that it “appears that the size and financial resources of a contravener are factors to be considered, and the impact of those factors upon the setting of penalty is in each case a matter for consideration of the particular circumstances of the size and financial resources of the contravener, plus the other factors which are relevant”.[36]
11. In Lawlor v Personal Hire Pty Ltd[37] the headnote indicates that the Court found that the “financial health of a respondent corporation is not a relevant consideration in determining the quantum of penalty”[38] and that Workplace Ombudsman v Saya Cleaning Pty Ltd[39] was applied. However, no such conclusion was actually reached by the Court in Lawlor. The Court’s judgment in Lawlor simply sets out the relevant passages from Saya Cleaning, which quote passages from other judgments, without expressing a concluded view as to their effect.[40] Indeed, and arguably contrary to the effect of the headnote, the Court in Lawlor took into account, when imposing penalties on each of the first and second respondents, that the first respondent was “a very small entity … effectively a ‘one man company’” and that “any penalty ordered to be paid by the first [company] respondent is in effect going to have to be paid by the second [individual] respondent”.[41]
12. In Saya Cleaning the Court did not express a view as to whether or not the size and financial resources of a contravener ought to affect penalty. It merely quoted from various judgments and said that the Court would take into account what was said in those judgments in imposing penalties.[42] The Court in Saya Cleaning and Lawlor did not refer to the Court’s discussion of the issue, and extensive review and rationalisation of the relevant authorities (including authorities quoted from in Saya Cleaning), in Sterling Crown.
13. In the circumstances, neither Lawlor nor Saya Cleaning can be considered authority for the proposition that the size and financial resources of a contravener, or its capacity to pay, can be ignored, or not considered, when this Court determines penalty. It is the view of the Court, as presently constituted, that, for the reasons extensively set out in Sterling Crown, a contravener’s size and financial resources, including their capacity to pay, is a relevant factor in determining the quantum of any penalty.[43]
[34] Workplace Ombudsman v KSN Engineering Pty Ltd (2009) 185 IR 316 at 323 per Lucev FM; [2009] FMCA 538 at para.13 per Lucev FM (“KSN Engineering”).
[35] Carr at para.27 per Lucev FM.
[36] Sterling Crown IR at 356 per Lucev FM; FMCA at para.76 per Lucev FM (with the detailed consideration of the matter appearing at IR 352-356 per Lucev FM; FMCA at paras.58-76 per Lucev FM).
[37] (2009) 179 IR 91; [2009] FMCA 228 (“Lawlor”).
[38] Lawlor IR at 91, headnote two.
[39] [2009] FMCA 38 (“Saya Cleaning”).
[40] Lawlor IR at 99 per Wilson FM; FMCA at para.28 per Wilson FM, citing Saya Cleaning at paras.26-30 per Simpson FM.
[41] Lawlor IR at 100 per Wilson FM; FMCA at para.33 per Wilson FM.
[42] Saya Cleaning at para.31 per Simpson FM.
[43] KSN Engineering IR at 322-323 per Lucev FM; FMCA at paras.9-13 per Lucev FM. Footnotes 33-40 above are footnotes from the KSN Engineering judgment.
In Kelly the Federal Court noted that:
No less than large corporate employers, small businesses have an obligation to meet minimum employment standards and their employees, rightly, have an expectation that this will occur. When it does not it will, normally, be necessary to mark the failure by imposing an appropriate monetary sanction. Such a sanction “Must be imposed at a meaningful level”: see ACCC v ABB Transmission and Distribution Ltd [2001] ATPR 41-815 at [13].[44]
[44] Kelly IR at 21 per Tracey J; FCA at para.28 per Tracey J.
What this extract from Kelly means is that the size of a business does not affect the obligation to comply with the FW Act. It nevertheless is appropriate to take into account the contravener’s size and financial resources, including their capacity to pay, when independently determining the quantum of any penalty,[45] as was explained by the Federal Court in Dogma Enterprises:
The size of the business enterprise involved has led to some debate between the parties. It is clear enough that this is a suburban store of modest proportions in overall terms. However, it is a significant business enterprise and the reality is that many potential breaches of awards will take place by small enterprises. Nonetheless, it seems to me that the size of the undertaking is relevant, because the nature of a penalty, being by way of deterrent, needs to take account of the amount which would be such as to deter the enterprise itself from re-offending. It must be big enough to cause the enterprise not to risk the eventuality of a penalty by breaching awards and then buying their way out. However, as has been put, we are not, here, talking about BHP Billiton or David Jones.[46]
[45] See the extract from KSN Engineering at para.37 above, and see also Sterling Crown IR at 356 per Lucev FM; FMCA at para.76 per Lucev FM which was applied in Fair Work Ombudsman v Primrose Development Company Pty Ltd (2009) 183 IR 447 at 463 per O’Sullivan FM; [2009] FMCA 632 at para.73, resulting in the Court “impos[ing] a further discount of 30% to take account of the size and financial circumstamces of the respondents”: IR at 464 per O’Sullivan FM; FMCA at para.79 per O’Sullivan FM, and Sharpe vDogma Enterprises Pty Ltd [2007] FCA 1550 at para.15 per Gyles J (“Dogma Enterprises”).
[46] Dogma Enterprises at para.15 per Gyles J.
In his affidavit sworn 16 August 2010[47] Mr Slabbert gave evidence that:
a)Buildpower has ceased trading;
b)Buildpower has no revenue coming in;
c)Buildpower has no money in its bank account; and
d)Buildpower was unable to afford fees for the defence of this matter.[48]
[47] “Mr Slabbert’s August 2010 Affidavit”.
[48] Mr Slabbert’s August 2010 Affidavit, paras.1-2.
There was no documentation filed by way of bank accounts, profit and loss statements, or lists of assets or mortgages in relation to company property which would assist in corroborating or clarifying the bare assertions made in Mr Slabbert’s August 2010 Affidavit.
No discovery of any of the above documents was sought. Although orders for discovery are not the norm in this Court,[49] it may be that discovery might be ordered of documents related to the size and financial resources of a contravener because, on its face, that discovery might be in the interests of the administration of justice in the assessment of penalty and contravention cases, and might assist with the expeditious conduct of penalty proceedings by avoiding applications for adjournment if the Court comes to the view that documents pertaining to the size and financial resources of a contravener are necessary to assist it in the assessment of penalty.[50] However, because no application for discovery was made in these proceedings it is unnecessary to decide such issues.
[49] Abrahams v Qantas Airways Ltd (2007) 210 FLR 314; [2007] FMCA 639; Doukidis v Williamson (2008) 6 ABC(NS) 717; [2008] FMCA 1352.
[50] Although not a civil penalty contravention case see, by way of analogy, Verge & Anor v Devere Holdings Pty Ltd & Ors (No. 3) [2008] FMCA 1220 at paras.14-21 per Lucev FM where the Court made a declaration with respect to discovery of documents relevant to an objective assessment of the value of the consideration for the transfer of a property which had allegedly been transferred at undervalue and which was the subject of an application in bankruptcy proceedings for a declaration that the transfer at undervalue be declared void.
Mr Slabbert was cross-examined at the penalty hearing as to the affidavit evidence set out above,[51] and said that:
[51] See para.40 above.
a)Buildpower had done some work “finishing off” a job in February 2010;
b)Buildpower was not presently in a position to trade because it did not have any employees and had limited plant and equipment;
c)Buildpower had between $20 and $100 in its bank account;
d)Buildpower owed money to:
i)Mr Slabbert;
ii)the Australian Taxation Office; and
iii)a finance company, whose name Mr Slabbert could not recall, for a 1990 Toyota utility on which he said more was owing than would be able to be recovered by sale of the utility;
e)he was unable to give actual details of the quantum of Buildpower’s indebtedness, but said that an accountant had told him that Buildpower had an “assessed loss” (a term which he was unable to explain the meaning of) of about $250,000 at the end of the 2008/2009 financial year; and
f)Buildpower was not able to pay its debts.
The content of the evidence from Mr Slabbert was vague and unsatisfactory, such that there can be no certainty as to the accuracy of such detail as was revealed. That said, it is however clear that Buildpower has not been a successful business, that it has incurred losses, and that it owes debts that it is not able to pay.
In the circumstances, the Court is prepared to find that Buildpower is a company which is not financial and which probably does not have the resources to pay a significant penalty.
Co-operation with regulatory authorities
This factor is not relevant in this case.
The contravener’s contrition
The Court recognises that this matter unfolded in a somewhat unusual way, because Buildpower had previously supplied some employee records to the Fair Work Ombudsman, although it is impossible to tell to what extent there is commonality between the records supplied to the Fair Work Ombudsman and the applicants. There is however, evidence for the applicants, which the Court accepts, that the employment records (including pay slips) provided by Buildpower to the Fair Work Ombudsman were seemingly not complete.[52]
[52] Transcript, 17 August 2010, page 14. See also FW Regulations, regs.3.45 and 3.46.
The evidence however establishes that Buildpower has deliberately not complied with the applicants’ requests for their employee records. It has attempted to argue that the employee records were provided through the Fair Work Ombudsman, but for reasons set out in Alcantara (No. 1), and reiterated above,[53] that attempt does not constitute compliance with the applicants’ requests for their employee records, notwithstanding Buildpower’s assertions to the contrary. On the evidence Buildpower failed to comply with these requests:
a)partly because it took the view, wrongly, that it was sufficient to have previously provided certain employee records to the Fair Work Ombudsman; and
b)partly because the applicants refused to provide their residential addresses to Buildpower, addresses which the applicants were under no obligation to provide, especially when they had, as Buildpower knew, the CFMEU acting as their agents.[54]
[53] See para.9 above.
[54] Transcript, 17 August 2010, page 27.
There is therefore, up to the time of the liability hearing, actual defiance in the face of the applicants’ requests for their employee records. Since the judgment in Alcantara (No. 1) Buildpower has complied with the Court’s orders, but maintains its “innocence”.[55] No evidence of actual contrition was given, and there was no contrition expressed by way of submission either written or oral. Buildpower has therefore not exhibited contrition.
[55] See para.8 above.
The size of the prescribed penalty, and any recent increases in that prescription
The maximum allowable penalty that the Court may impose for a breach of reg.3.42(4) of the FW Regulations by a corporation is 100 penalty units, or $11,000.[56]
[56] FW Regulations, reg.4.01A-Item 12; FW Act 2009 (Cth), ss. 12 and 546(2)(b); Crimes Act 1914 (Cth), s.4AA.
The imposition of civil penalties in industrial law proceedings is no longer to be approached with a light hand,[57] but it remains the case that penalties must be meaningful and consistent in light of other considerations to be taken into account when determining an appropriate penalty.[58] Penalties were increased appreciably, more than five-fold, in 2006, and indicate the Parliament’s intention that contraventions of industrial law be treated seriously and that appropriate penalties be imposed.[59] These are matters to be considered in imposing, or deciding whether to impose, a penalty on Buildpower.
[57] Commonwealth Bank of Australia & Anor v Finance Sector Union (2007) 157 FCR 329 at 364 per Branson J; [2007] FCAFC 18 at para.192 per Branson J; Finance Sector Union v Commonwealth Bank of Australia (2005) 224 ALR 467 at 487 per Merkel J; [2005] FCA 1847 at para.72 per Merkel J; Sterling Crown IR at 346 per Lucev FM; FMCA at paras.32-33 per Lucev FM.
[58] ACCC v IPM Operation and Maintenance Loy Yang Pty Ltd (No.2) [2007] FCA 11 at para.66 per Young J; Carr at para.29 per Lucev FM.
[59] Sterling Crown IR at 346 and 358 per Lucev FM; FMCA at paras.31-32 and 83 per Lucev FM, and see also the Federal Court cases cited in footnotes 57 and 58 above.
The totality principle
The totality principle requires the Court, once it has made a judicial evaluation of what it considers to be an appropriate penalty, to examine one final time, the final penalty in order to determine whether it appears wrong.[60] However, the totality principle does not apply to a single contravention by a single respondent,[61] which is effectively the case in this instance.[62]
[60] Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 at 397 and 408 per Stone and Buchanan JJ; [2008] FCAFC 70 at paras.42-43 and 91 per Stone and Buchanan JJ; Australian Ophthalmic Supplies FCR at 567-568 per Gray J and 577 per Graham J; FCAFC at paras.27-28 per Gray J and para.78 per Graham J; Sterling Crown IR at 358 per Lucev FM; FMCA at para.84 per Lucev FM.
[61] Golden Maple IR at 240 per Lucev FM; FMCA at para.96 per Lucev FM.
[62] See para. 24 above.
Assessment of penalty
The applicants suggest that a penalty at the higher end of the scale of the maximum allowable penalty ought to be imposed.[63] Buildpower submit that no penalty ought to be imposed.[64]
[63] Applicants’ Submissions at para.33.
[64] Buildpower’s Submissions at para.3.3.
In circumstances where:
a)there has been a contravention of two requests, albeit arising from a single course of conduct, for the production of employee records;
b)those contraventions were deliberate;
c)there is a need for both specific and general deterrence; and
d)no contrition has been shown,
a penalty must be imposed. The only question is the quantum of that penalty.
Buildpower is a first-time contravener, and in that respect, it is appropriate to reduce penalty by an amount of 20%-30%. A further discount in the range of 10%-15% will be given having regard to the course of conduct in relation to the two contraventions which arise from a single course of conduct and are essentially a single matter.
The contraventions were contrary to the objects of the legislation, and were serious, deliberate and relatively lengthy in terms of time of non-compliance. Nevertheless, this is:
a)not a case in the most serious category of cases given that there are only two employees involved;
b)a case where the quantity of records requested does not appear to be significant; and
c)a case where the Court is satisfied that the matter is likely to be an isolated one, and further that that part of the penalty that goes to specific deterrence is likely to contribute to the matter being an isolated one.
These circumstances indicated that any penalty imposed ought to be somewhere around the mid-range of penalties.
The evidence as to Buildpower’s limited size and financial resources indicates that:
a)any penalty imposed ought not be unduly onerous, and ought be discounted so as be in the lower to middle range of penalty; and
b)a period of up to three months ought be given in which to pay any penalty.
In determining the final amount of penalty, the Court takes account of the need for specific and general deterrence. The Court considers that Buildpower does not require significantly greater than normal specific deterrence, but notes with concern the failure to express contrition. In terms of general deterrence the matter is one in which there is a need to provide for adequate general deterrence, particularly in the circumstances of requests by individual employees with which an employer has refused to comply.
Taking into account all of the above factors and the circumstances relevant thereto, the Court considers that a reduction of 60% from the maximum penalty payable is appropriate. On that basis, a penalty of $4,400 (or 40 penalty units) would be payable, the two contraventions being treated as a single contravention for penalty purposes.[65]
[65] See para.24 above.
To whom penalty payable
In circumstances where the CFMEU has effectively run the contravention proceedings on behalf of the applicants it is appropriate for the penalty to be paid to the CFMEU.[66]
[66] Rojas v Esselte Australia Pty Ltd (No. 2) (2008) 177 IR 306 at 326 per Moore J; [2008] FCA 1585 at para.68 per Moore J; CFMEU v Austral Bricks (Qld) Pty Ltd (2009) 224 FLR 178 at 188 per Wilson FM; [2009] FMCA 143 at paras.42-43 per Wilson FM; Liquor, Hospitality and Miscellaneous Union v Cuddles Management Pty Ltd (No. 2) (2009) 188 IR 435 at 445 per Lucev FM; [2009] FMCA 746 at para.37 per Lucev FM.
Conclusions and orders
For the reasons set out above there will be a penalty of $4,400 imposed on Buildpower. The penalty must be paid by 8 January 2011. The penalty will be payable to the CFMEU.
The Court will hear the parties, as to costs, if any.
I certify that the preceding sixty-two (62) paragraphs are a true copy of the reasons for judgment of Lucev FM
Associate:
Date: 8 October 2010
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