Australian Building and Construction Commissioner v Chivell
[2022] FedCFamC2G 891
Federal Circuit and Family Court of Australia
(DIVISION 2)
Australian Building and Construction Commissioner v Chivell [2022] FedCFamC2G 891
File number(s): MLG 1062 of 2022 Judgment of: JUDGE MANSINI Date of judgment: 27 October 2022 Catchwords: INDUSTRIAL LAW – FAIR WORK – pecuniary penalty – two separate contraventions of the Building and Construction Industry (Improving Productivity) Act 2016 (Cth) by the Respondent’s failures to comply with written notices – non-appearance of the Respondent – penalty order made under s.81(1)(a) to be paid by the Respondent. Legislation: Bankruptcy Act (1966) (Cth) s.82
Building and Construction Industry (Improving Productivity) Act 2016 (Cth) ss.5, 66, 77, 81, 84, 99
Crimes Act 1914 (Cth) s.4AA
Fair Work Act 2009 (Cth) ss.44, 45, 90, 323
Building and Construction General On-Site Award 2010 cls. 37.1, 41.3
Cases cited: Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; (2022) 399 ALR 599
Australian Building and Construction Commissioner v Pattinson [2019] FCA 1654
Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25
Australian Ophthalmic Supplies Pty Ltd v McAlry-Smith (2008) 165 FCR 560
CFMMEU v ABCC [2018] FCAFC 97
Flight Centre Ltd v Australian Competition and Consumer Commission (No 2) [2018] FCAFC 53; (2018) 260 FCR 68
FWO v Foot & Thai Massage Pty Ltd (in liquidation) (No 4) [2021] FCA 1242
Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357
Trade Practices Commission v CSR Ltd [1990] FCA 762; [1991] ATPR 41-076
Wong v The Queen [2001] HCA 64; (2001) 207 CLR 582
Division: Division 2 Family Law Number of paragraphs: 83 Date of last submission/s: 11 October 2022 Date of hearing: 24 August 2022 Place: Melbourne Counsel for the Applicant: Mr L Howard Solicitor for the Applicant: Australian Building and Construction Commissioner The Respondent: No appearance ORDERS
MLG 1062 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: AUSTRALIAN BUILDING AND CONSTRUCTION COMMISSIONER
Applicant
AND: SHANE CHIVELL
Respondent
order made by:
JUDGE MANSINI
DATE OF ORDER:
27 October 2022
THE COURT ORDERS THAT:
1.Pursuant to s.81(1)(a) of the Building and Construction Industry (Improving Productivity) Act 2016 (Cth) (BCIIP Act), the Respondent pay to the Commonwealth of Australia a pecuniary penalty fixed in the sum of $2,400 for the contravention contained in declaration 3(a) made on 21 July 2022.
2.Pursuant to s.81(1)(a) of the BCIIP Act, the Respondent pay to the Commonwealth of Australia a pecuniary penalty fixed in the sum of $2,800 for the contravention contained in declaration 3(b) made on 21 July 2022.
3.The penalties in Orders 1 and 2 be paid to the Commonwealth of Australia within 28 days of these orders being made.
4.Costs be reserved.
5.Within three days after these orders are made available by the Court, the Applicant serve a copy of these orders on the Respondent by:
(a)posting it via pre-paid express post to the Respondent at the following address: Unit 12/6 Bright Street, Brighton east VIC 3187; and
(b)emailing it to the Respondent at the following email addresses: [email protected] and brighton [email protected].
6.Each party has liberty to apply.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
Judge Mansini
IN SUMMARY
By application in this matter the Australian Building and Construction Commissioner (Applicant) sought declarations, orders and the imposition of a pecuniary penalty against Mr Shane Chivell (trading as “Brighton Home Maintenance”) (Respondent) for alleged failures to comply with a notice to produce and a compliance notice in respective contravention of ss.77(3) and 99(7) of the Building and Construction Industry (Improving Productivity) Act 2016 (Cth) (BCIIP Act).
The Respondent accepted personal service of the originating application and has since been served with the various materials but has not engaged with or participated in these proceedings.
By default judgment entered on 21 July 2022, the Respondent was declared to have contravened ss.77(3) and 99(7) of the BCIIP Act and ordered to take certain steps consistent with the written notice to produce and compliance notice (Default Judgment).
These reasons address the remaining question of the appropriate pecuniary penalty(ies) (if any) to be imposed on the Respondent for its contraventions.
FACTUAL CONTEXT
By the Default Judgment, the Court deemed the contraventions as pleaded in the Applicant’s statement of claim to be admitted and those matters remain unchallenged in these penalty proceedings. The Applicant subsequently filed affidavits on 3 August 2022 in support of its applications for penalty and costs, which included evidence in support of service on the Respondent at the relevant times (as outlined above) and evidence of the background facts which was also not challenged by the Respondent. The relevant factual context was as follows:
The Applicant is a statutory appointee of the Commonwealth, an “authorised applicant” within the meaning of s.5 of the BCIIP Act and authorised to bring these proceedings by operation of s.81(1) of the BCIIP Act. The Applicant appointed a Mr Daniel Lindsay (ABC Inspector) pursuant to s.66(1) of the BCIIP Act.
The Respondent is and was at all material times a sole trader operating a business involving home maintenance work under the registered name “Brighton Home Maintenance”, engaged in “building work” for the purposes of the BCIIP Act, a “building employer” and “building industry participant” for the purposes of the BCIIP Act and a “person” for the purposes of ss.77(3) and 99(7) of the BCIIP Act.
On 18 March 2021, the Applicant received a request for assistance from a former employee of the Respondent, a Mr Brendan Sheahan. Mr Sheahan alleged to have been underpaid various entitlements owed to him during the course of his employment with the Respondent. The case was assigned to the ABC Inspector who attempted to engage with the Respondent regarding Mr Sheahan’s complaint by telephone and in writing. On one occasion, on 29 April 2021, the ABC Inspector spoke with a Mr Sean Carroll who acted in the role of General Manager for the Respondent and advised he would speak with the Respondent and request that the Respondent contact the ABC Inspector.
On 1 June 2021, the Respondent was served (by express post, at its known postal address) with a written notice which required the Respondent to produce specified documents and records relating to the ABC Inspector’s investigation of alleged underpayments of wages and entitlements in respect of Mr Sheahan (Notice to Produce), pursuant to the ABC Inspector’s power under s.77(1) BCIIP Act. The Notice to Produce required production by 4.00pm on 24 June 2021. The Respondent did not produce the specified records and documents by 4.00pm on 24 June 2021 or at all.
On 1 July 2021, the ABC Inspector received a telephone call from the Respondent who said words to the effect that: his General Manager had been dealing with this, he had no problem paying what was due, he questioned some of the alleged claims, he considered the amounts owing were “more closer to the $2600-$2800 plus change”, Mr Sheahan was responsible for damage to a work vehicle, the business had just come out of covid shutdowns and was still struggling and he would give it to the accountant on 8 July 2021 and put something in response in writing after doing the calculations.
As no response had been received, on 16 July 2021, the ABC Inspector telephoned the Respondent but there was no answer and a message was left.
The ABC Inspector continued his investigation into Mr Sheahan’s complaint in the following weeks based on payslips and bank statements provided by Mr Sheahan.
On 1 October 2021, the ABC Inspector caused a letter to be sent (by email and post, to the Respondent’s known addresses) outlining the ABC Inspector’s findings to the Respondent and requested that he respond by 16 October 2021. There was no response and no rectification of these alleged underpayments.
On 10 November 2021, the ABC Inspector had a telephone conversation with Mr Carroll who stated he was no longer employed by the Respondent and was aware that the Respondent’s business had scaled down dramatically, was not financially sound and may be entering into bankruptcy in the future.
On 12 November 2021, the ABC Inspector sent an email to the Respondent in which he advised that no response had been received and requested that the Respondent make contact by 18 November 2021 as the Applicant was considering further compliance actions.
The ABC Inspector continued his investigation into Mr Sheahan’s complaints by further discussions with Mr Sheahan about the type of work he performed and created a table of calculations. Mr Sheahan confirmed to the ABC Inspector that he had an accident in a work vehicle but had left the employment on amicable terms - with the Respondent having advised he would fix up Mr Sheahan’s pay and with no dispute regarding withholding money in relation to the vehicle at the time.
On 17 January 2022, after the ABC Inspector had formed a reasonable belief that the Respondent had contravened designated building laws for the purposes of s.99(1) of the BCIIP Act, the Respondent was served (at its known email and postal addresses) with a compliance notice which required the Respondent to take steps to remedy the contraventions described therein, pursuant to the ABC Inspector’s power under s.99(2) of the BCIIP Act (Compliance Notice). The Compliance Notice set out contraventions of the Fair Work Act 2009 (Cth) (FW Act) and the Building and Construction General On-Site Award 2010 (Award), being:
(a)contravention of section 44 of the FW Act in the failure to pay Sheahan $2,560.00 in respect of annual leave taken between 4 to 17 January 2021, as required by section 90(1) of the FW Act;
(b)contravention of section 44 of the FW Act in the failure to pay Sheahan $1,683.93 in respect of accrued but untaken annual leave on cessation of Sheahan’s employment, as required by section 90(2) of the FW Act;
(c)contravention of section 45 of the FW Act in the failure to pay Sheahan $930.24 in respect of overtime hours worked on 17 October 2020, 28 November 2020 and 12 December 2020, as required by clause 37.1 of the Award;
(d)contravention of section 45 of the FW Act in the failure to pay Sheahan $4,160.30 in respect of redundancy/severance payments on cessation of Sheahan’s employment, as required by clause 41.3 of the Award; and
(e)contravention of s.323 of the FW Act in the failure to pay Sheahan $285.21 in respect of work performed by Sheahan between 14 to 20 December 2020.
The Compliance Notice required the Respondent, by 16 February 2022, to:
(a)make payments to Mr Sheahan totalling $9,619.76 (less applicable taxation as required by law) comprising of the total value of the underpayments of entitlements arising from the aforementioned contraventions; and
(b)provide reasonable evidence of his compliance by email or in person.
The Compliance Notice explained that a failure to comply with the Compliance Notice may contravene s.99(7) of the BCIIP Act and explained that the Respondent may apply to this Court or other appropriate jurisdictions for review of the Compliance Notice on grounds that it did not commit the contraventions as set out therein or that the Compliance Notice did not comply with ss.99(2) or (3) of the BCIIP Act.
The Respondent did not make the payments to Mr Sheahan as specified in the Compliance Notice or produce reasonable evidence of compliance with the Compliance Notice by 16 February 2022 or at all.
On 18 February 2022, the ABC Inspector telephoned the Respondent but there was no answer and a voicemail was left to contact the Applicant in relation to the matter. Shortly afterwards, the Respondent telephoned the ABC Inspector who identified himself and the purpose of his call as to discuss the matter in relation to Mr Sheahan. The ABC Inspector’s statement said that the Respondent replied to the effect that he was in a quarry, could not hear and asked if he could call back around midday on Monday (21 February 2022) before disconnecting the call.
Also on 18 February 2022, the Applicant sent a “7-day, non-compliance letter” (to the Respondent’s known email and postal addresses). That letter invited the Respondent to provide a reasonable excuse as to why the Compliance Notice had not been complied with by 1 March 2022.
On 2 March 2022, the ABC Inspector telephoned the Respondent but there was no answer and a message was left to return the call. The Respondent did not return the call.
PROCEEDINGS BEFORE THIS COURT
On 11 May 2022, these proceedings were commenced by way of application and a statement of claim (originating documents). The originating documents were served on the Respondent personally (on 23 May 2022) and by email (on 24 May 2022). The originating documents included notice that a response was to be filed and served within 28 days of receipt of the application and that the matter was fixed for directions hearing at 10.00am on 21 June 2022.
On 27 June 2022, the matter came before the Court for directions hearing. At that time, the Respondent had not filed a response. There was an appearance on behalf of the Applicant but the Respondent did not appear. Being satisfied that the Respondent was personally served with and on notice of the proceeding, the directions hearing proceeded in its absence.
Following the directions hearing, on 27 June 2022, the Court made procedural orders which included that the Respondent was required to file and serve any defence by 12.00pm on 1 July 2022. The Court subsequently received evidence of service on the Respondent at its known email and postal addresses. No defence was filed by the Respondent by 12.00pm on 1 July 2022 or at all.
On 4 July 2022, the Applicant made an interlocutory application which sought declarations and orders in favour of the Applicant be made on default of the Respondent. The Court subsequently received evidence of service on the Respondent at its known email and postal addresses.
No material in opposition to the interlocutory application was filed by the Respondent by 18 July 2022 as ordered or at all.
On 11 July 2022, my chambers communicated with the parties by email to confirm that the interlocutory application was listed for in-person hearing at 9.30am on 21 July 2022. The Court subsequently received evidence of service on the Respondent at its known email and postal addresses.
On 21 July 2022, there was an appearance on behalf of the Applicant but the Respondent did not appear. Being satisfied that the Respondent was served with and on notice of the proceeding, the hearing proceeded in its absence. The Court entered default judgement (Default Judgment) and declared as follows:
1.The Respondent is in default within the meaning of r.13.04 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) rules 2021 (Cth) (the Rules) consequent upon his failure to:
(a)file a notice of address for service as required by r.6.01(1) and r.13.04(2)(b)(vi) of the Rules;
(b)file a response or a defence within 28 days of service as required by r.4.03 and 4.04(3) of the Rules; and
(c)defend the proceedings with due diligence as required by r.13.04(2)(b)(vii) of the Rules.
2.Pursuant to r.16.07(2) of the Federal Court Rules 2011 (Cth) (as picked up and applied by r.1.06 and Item 13 of Schedule 1 of the Rules), the Respondent is deemed to have admitted the allegations as pleaded in the Statement of Claim filed on 11 May 2022.
3.Pursuant to r.13.05(2)(c) of the Rules:
(a)the Respondent contravened s.77(3) of the Building and Construction Industry (Improving Productivity) Act 2016 (Cth) (BCIIP Act) by failing to comply with a written notice issued by an authorised officer to the Respondent pursuant to s.77(1) of the BCIIP Act on 1 June 2021 (Notice to Produce); and
(b)the Respondent contravened s.99(7) of the BCIIP Act by failing to comply with a written notice issued by an authorised officer to the Respondent pursuant to s.99(1) of the BCIIP Act on 17 January 2022 (Compliance Notice).
Also on 21 July 2022, the Court ordered that:
1.Judgment be entered against the Respondent pursuant to r.13.05(2)(c) of the Rules.
2.Within 28 days of the date of this order and pursuant to s.81(1)(c) and 81(3)(a) of the BCIIP Act, the Respondent comply with the Notice to Produce by producing to the applicant the records and documents specified in the Notice to Produce.
3.Within 28 days of the date of this order and pursuant s.81(1)(b) and (c) and s.81(3)(a) of the BCIIP Act, the Respondent comply with the requirements stipulated in the Compliance Notice by paying to Brenton Sheahan (Sheahan) the sum of $9,619.76 comprising of underpayments of wages and entitlements specified in the Compliance Notice.
4.Within 28 days of the date of this order and pursuant to s.81(1)(b), 81(1)(c), 81(3)(a), 81(3)(b) and 82 of the BCIIP Act, the Respondent calculate and pay to Sheahan interest at the applicable pre-judgement interest rates prescribed by the Federal Court of Australia on the underpayment amount specified in order 3 above.
5.The matter is adjourned to 24 August 2022 at 10.00 am for a further hearing in respect of the Applicant’s claim for a pecuniary penalty to be imposed on the Respondent for the contraventions contained in declaration 3.
6. Evidence in chief on the question of penalty be by way of affidavit.
7.By 4.00 pm on 3 August 2022, the Applicant is to file and serve any affidavits upon which it intends to rely and an outline of submissions relating to penalty and costs.
8.By 4.00 pm 10 August 2022, the Respondent is to file and serve any affidavits upon which he intends to rely and an outline of submissions relating to penalty and costs.
9.By 4.00 pm 17 August 2022, the Applicant is to file and serve any affidavits and submissions in reply.
10.Within three days after these orders are made available by the Court, the Applicant serve a copy of these orders on the respondent by:
(a)posting it via pre-paid express post to the respondent at the following address:
(b) Unit 12/6 Bright St, Brighton East VIC 3187; and
(c)emailing it to the Respondent at the following email addresses: [email protected] and [email protected].
11. Costs be reserved.
12. Liberty to apply.
In relation to the question of penalty, the Applicant sought the imposition of penalties of $4,000 in respect of each contravention. In support, the Applicant filed two affidavits of:
(a)a Ms Stacey Van der Meulen, solicitor for the Applicant, affirmed on 2 August 2022; and
(b)a Mr Daniel Lindsay, Australian Building and Construction Inspector (ABC Inspector) (Mr Lindsay), affirmed on 2 August 2022.
The Applicant also filed evidence that the Respondent was served at its known email and postal addresses with: the Court’s orders of 21 July 2022; the Applicant’s materials filed in support of the penalty application; and notice of the penalty hearing. The Applicant’s process server reported that, upon being served with the Court’s orders of 21 July 2022, the Respondent accepted service and told the process server that he is bankrupt. The Applicant subsequently conducted a search of the National Personal Insolvency Index which showed that the Respondent was declared bankrupt on 24 June 2021.
No affidavits or other material was filed by the Respondent on 10 August 2022 or at all.
On 24 August 2022, there was an appearance on behalf of the Applicant but the Respondent did not appear. In all of the circumstances, I determined it was appropriate to proceed with the penalty hearing absence in the attendance of the Respondent. However, at the penalty hearing, the Applicant raised a new case authority in relation to the new information that the Respondent was declared bankrupt on 24 June 2021 and made oral application for its costs to be paid on an indemnity basis. As the Respondent was not on notice of these matters, orders were made for the Applicant to effect service personally on the Respondent a letter identifying to the Respondent the oral submissions made to the Court regarding the case authority and its application for indemnity costs. By those orders, the Respondent was afforded liberty to make any application in relation to the material personally served on it within 14 days of such service and judgment was reserved on and from 21 days following the time for compliance with the personal service order.
The Applicant subsequently provided evidence of personal service on the Respondent which it effected on 26 September 2022 and advised the Court it had not received any correspondence from or on behalf of the Respondent. No application was filed by the Respondent within 14 days of 26 September 2022 or at all.
Indeed, at the time of publication of this judgment, the Court has received no communication from the Respondent in response to these proceedings whatsoever.
WHETHER TO MAKE ORDERS SOUGHT
The Applicant in this matter seeks orders for pecuniary penalties of $4,000 for each contravention and an order that its costs of $18,125.06 be paid on an indemnity basis.
The Court’s power in respect of the established contraventions resides in s.81(1) of the BCIIP Act which provides:
A relevant court, on application by an authorised applicant, may make one or more of the following orders relating to a person (the defendant) who has contravened a civil remedy provision:
(a) an order imposing a pecuniary penalty on the defendant;
(b)an order requiring the defendant to pay a specified amount to another person as compensation for damage suffered by the other person as a result of the contravention;
(c) any other order that the court considers appropriate.
Pecuniary penalty(ies)
By the Default Judgment, the Respondent has contravened ss.77(3) and 99(7) of the BCIIP. It falls to determine what level of penalty (if any) is appropriate as against the Respondent in light of those established contraventions.
For a “Grade B” civil remedy provision, the BCIIP Act proscribes a maximum penalty for each contravention of 20 penalty units for the Respondent as an individual/sole trader: s.81(2)(b) of the BCIIP Act. At the time of the contravening conduct, the value of a penalty unit was $222. Accordingly, the maximum penalty that might be imposed for each contravention is $4,440: and ss.4AA(1A) of the Crimes Act 1914 (Cth); see also Notice of Indexation of the Penalty Unit Amount, dated 14 May 2020.
The principles applied in cases arising under the FW Act apply here. As recently affirmed by the High Court of Australia, the purpose of a civil penalty is primarily, if not wholly, protective in the promotion of the public interest in compliance with the provisions of the legislation and in (general and specific) deterrence of further contraventions: Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; (2022) 399 ALR 599 (Pattinson) at [15]-[16]. An “appropriate” penalty being one that “strikes a reasonable balance between oppressive severity and the need for deterrence in particular case”: Pattinson at [41].
Subsection 81(6) of the BCIIP Act provides that:
In determining a pecuniary penalty under paragraph (1)(a), the court must take into account all relevant matters, including:
(a) the nature and extent of the contravention; and
(b)the nature and extent of any loss or damage suffered because of the contravention; and
(c) the circumstances in which the contravention took place; and
(d)whether the person has previously been found by a court (including a court in a foreign country) to have engaged in any similar conduct.
Some of the matters to consider are enumerated in s.81(6), however such checklists are non-exhaustive. The task of the Court is to fix an appropriate penalty which pays regard to the particular circumstances in which the contraventions have occurred: Pattinson at [19].
The principles that inform the determination of appropriate penalties in a particular case are well established. The task of assessing what amount to impose involves the selection of a figure taking into account all factors relevant to the particular case: Wong v The Queen [2001] HCA 64; (2001) 207 CLR 582, 611, [75] (Gaudron, Gummow and Hayne JJ); Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357, 373-375, [37] (Gleeson CJ, Gummow, Hayne and Callinan JJ); Flight Centre Ltd v Australian Competition and Consumer Commission (No 2) [2018] FCAFC 53; (2018) 260 FCR 68, 84, [55] (Allsop CJ, Davies and Wigney JJ); Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25, 36 [44] (Jagot, Yates and Bromwicgh JJ) as cited by Snaden J at [26] in Australian Building and Construction Commissioner v Pattinson [2019] FCA 1654.
The oft cited decision of French J in Trade Practices Commission v CSR Ltd [1990] FCA 762; [1991] ATPR 41-076 at [42], listed those factors relevant to an overall assessment of penalty, restated by the Full Court in CFMMEU v ABCC [2018] FCAFC 97 at [20]:
..the nature, character and seriousness of the conduct; the loss and damage caused; the circumstances in which the conduct took place; the size of the contravener and its degree of power; the deliberateness of the conduct and the time over which it occurred; the degree of involvement of senior officials or management; the culture of the organisation as to compliance or contravention; and, any co-operation with the regulator and contrition.
I consider the present matter in light of the mandatory s.81(6) factors and the well-established principles.
The statutory objects and need to sustain public confidence in the BCIIP Act
The statutory objects and need to sustain public confidence are relevant matters against which the penalty is to be assessed, within scope of s.81(6): Australian Ophthalmic Supplies Pty Ltd v McAlry-Smith (2008) 165 FCR 560, at [91].
The “main object” of the BCIIP Act is to provide an improved workplace relations framework for building work to ensure that building work is carried out fairly, efficiently and productively, without distinction between interests of building industry participants, and for the benefit of all building industry participants and for the benefit of the Australian economy as a whole: s.3(1) of the BCIIP Act. The BCIIP Act evinces an aim to achieve its main object by means which are expressed to include promoting respect for the rule of law, ensuring that building industry participants are accountable for their unlawful conduct and providing assistance and advice to building industry participants in connection with their rights and obligations under the BCIIP Act, designated building laws and the Building Code: s.3(2)(b), (c) and (h).
The Applicant contended, and it may be accepted, that it has a duty to promote the objects of the BCIIP Act. It argued that two of the tools available to it for that purpose (notices to produce and compliance notices) have in this case been ignored with contempt.
As the unopposed factual context reflects, that is a powerful submission and a compelling factor in favour of ordering pecuniary penalties in this case.
The nature and circumstances of the contravention – ss.81(6)(a) and (c)
The relevant conduct in the present case is the Respondent’s failure to comply with the Notice to Produce and its further failure to comply with the Compliance Notice.
The Notice to Produce was issued in order to assist the Applicant’s investigation and presented an opportunity for the Respondent to engage with the investigation process. The Respondent’s failure to comply with the Notice to Produce as required by 24 June 2021 essentially frustrated the Applicant’s investigation of the alleged underpayments toward Mr Sheahan.
The Compliance Notice was issued following further investigation and on the basis of the ABC Inspector’s reasonable belief that the Respondent had contravened several sections of the FW Act in respect of entitlements owed to a former employee, in particular:
(a)the contravention of s.44 of the FW Act in the failure to pay Mr Sheahan $2,560.00 in respect of annual leave taken between 4 to 17 January 2021, as required by section 90(1) of the FW Act;
(b)the contravention of s.44 of the FW Act in the failure to pay Mr Sheahan $1,683.93 in respect of accrued but untaken annual leave on cessation of Mr Sheahan’s employment, as required by section 90(2) of the FW Act;
(c)the contravention of s.45 of the FW Act in the failure to pay Mr Sheahan $930.24 in respect of overtime hours worked on 17 October 2020, 28 November 2020 and 12 December 2020, as required by clause 37.1 of the Award;
(d)the contravention of s.45 of the FW Act in the failure to pay Mr Sheahan $4,160.30 in respect of redundancy/severance payments on cessation of Mr Sheahan’s employment, as required by cl.41.3 of the Award;
(e)the contravention of s.323 of the FW Act in the failure to pay Mr Sheahan $285.21 in respect of work performed by Mr Sheahan between 14 to 20 December 2020; and
the contravention of s.77(3) of the BCIIP Act for the failure to comply with an notice to produce.
The Compliance Notice required certain remedial actions by 16 February 2022 including to rectify underpayments. Evidence of compliance was required by 16 February 2022. This litigation was not commenced until 11 May 2022.
The materials before the Court establish that the Respondent was given the Notice to Produce and the Compliance Notice at its known email and postal addresses for service. And, during the period of at least April 2021 to 2 March 2022, numerous attempts were made by the Applicant (including by telephone, post and email) to communicate with the Respondent about the need for compliance with the notices and the consequences of non-compliance. On 1 July 2021 and 18 February 2022, the Respondent indicated by telephone that he would respond and engage with the Applicant’s process, but did not comply or engage in any substantive way.
Notwithstanding the Respondent’s awareness of the notices, the Respondent did nothing to assist the Applicant in assessing or investigating Mr Sheahan’s claims as required by 24 June 2021 and did not provide reasonable evidence of compliance by making payments as Mr Sheahan alleged by 16 February 2022. That circumstance endured throughout these proceedings.
On the evidence before this Court, the Respondent was aware of the notices and the consequences of his failures to comply. The decision of the Respondent not to comply or ensure compliance with the notices was deliberate.
The notices relate to underpayments of statutory employee entitlements. As to the issues subject of the notices, the unchallenged evidence is that on 1 July 2021 the Respondent had a telephone conversation with the ABC Inspector in which he indicated that he may dispute the quantum but accepted that outstanding entitlements were owed to Mr Sheahan and that he would need to rectify this. These matters should also be taken into account in determining the penalty in this case.
The nature and extent of any loss or damage suffered – s.81(6)(b)
The Respondent contended, and it may be accepted, that Mr Sheahan was a lower paid employee on the basis of his Award coverage.
The value or quantum of Mr Sheahan’s unpaid entitlements (or loss) is not able to be precisely quantified on account of the Respondent’s failure to comply with the Notice to Produce.
However, as a lower paid, Award-covered employee, it may be accepted that an underpayment of $9,619.76 was significant to Mr Sheahan and of requisite impact on his circumstances.
Has the Respondent engaged in similar conduct - s.81(6)(d)
There is nothing before the Court to suggest that Respondent has been found to have engaged in any similar conduct on a previous occasion.
Other relevant matters
Cooperation and contrition
The Respondent did not ensure compliance with the Notice to Produce and did not comply with the Compliance Notice, nor actively cooperate or engage with the Applicant in an effort to comply or to rectify the underlying underpayments.
Since the commencement of these proceedings, the Respondent has been properly served with the relevant applications and orders but failed to file a response or defence, failed to attend and appear at hearings and not availed of the opportunities to address the Court.
It follows that the Respondent has not cooperated with the regulator, demonstrated any contrition or attempted to correct the wrongdoing subject of these proceedings. In the circumstances, I am not able to apply a discount on account of these factors.
Respondent’s size and financial circumstances
On the materials before the Court, the Respondent is an employer of multiple employees and the operator of two businesses: Brighton Home Maintenance and Brighton Earthmoving Services. On 27 July 2022, the Applicant became aware that the Respondent was declared bankrupt on 24 June 2021.
The Respondent did not participate in the proceedings and therefore did not contend that he could not pay a penalty of any kind, whether by reference to the circumstances of his bankruptcy or otherwise. Nonetheless, there is evidence of the fact of the Respondent’s bankruptcy which warrants consideration in the context of the Court’s discretion to order a penalty.
The Applicant contended that the imposition of a penalty by the Court including a civil penalty of the kind sought by the Applicant in these proceedings essentially falls within the exception at s.82(3) of the Bankruptcy Act (1966) (Cth) and the debts therefore are not provable in the Respondent’s bankruptcy: in reliance on the reasons of Katzmann J in FWO v Foot & Thai Massage Pty Ltd (in liquidation) (No 4) [2021] FCA 1242, at [940], [943], [944] and [949]. Accepting this as binding authority and as the principles applied in cases arising under the FW Act apply here, then there would be no cause for concern that a penalty order would result in the Commonwealth becoming a creditor of the bankrupt estate to the potential detriment of other pre-existing creditors. In any event, there is nothing before the Court as to the size of the bankrupt estate and number of creditors or otherwise as to find this factor to weigh against the exercise of the discretion to make a penalty order in this case. Further, as Katzmann J pointed out, whether the Respondent can pay the penalty is beside the point where the primary if not only purpose of such penalty is deterrence against contravention of laws made in protection of the public interest.
There is no other evidence that pertains to the Respondent’s financial circumstances and on what is before the Court that there is no compelling reason why the Respondent’s financial circumstances would tell against making an order that the Respondent pay a pecuniary penalty(ies) for the contraventions in this case.
Deterrence
This is a case where there is a need for specific deterrence, particularly in circumstances where the Respondent has failed to participate in the proceeding. It is also necessary given the complete lack of contrition and failure to make any attempt to rectify the underpayments to the former employee which remain outstanding.
There is also a need for general deterrence, to emphasise the importance of the maintenance of a building industry that abides by the rule of law, ensuring that building industry participants are accountable for their unlawful conduct and protecting the integrity of the BCIIP Act and its enforcement process which is designed to promote early resolution of such matters without recourse to litigation.
Multiple contraventions
Absent the Respondent, the Court was not addressed about whether a single civil penalty order was appropriate as permitted in certain instances of multiple contraventions pursuant to s.84 of the BCIIP Act. In any event, the contraventions in this case were separate and distinct failures to comply with the Notice to Produce and the subsequent Compliance Notice and are not properly characterised as founded on the same facts or part of a series of contraventions of the same or a similar character.
Accordingly, I consider the two separate contraventions appropriately attract separate penalty.
The Appropriate Penalty
In conclusion, the Respondent contravened s.77(3) when it failed to comply with the Notice to Produce and separately contravened s.99(7) when it failed to comply with the Compliance Notice.
When all of the above factors are considered, I am satisfied that it is appropriate to impose a pecuniary penalty on the Respondent for each contravention pursuant to s.81 of the BCIIP Act.
In the particular circumstances of this case, I consider a penalty in the vicinity of 90% of the maximum for each contravention (as pressed by the Applicant) is excessive. Weighing the various competing factors, I consider it appropriate to fix the penalty at $2,400 for the contravention of s.77(3) and at $2,800 for the contravention of s.99(7) of the BCIIP Act. That both penalties are at a relatively high amount for a respondent with no prior conduct reflects the weight applied to the Respondent’s failure to proffer any excuse and any expression of contrition for the contraventions and its blatant disregard for and failure to cooperate with the authorities in this proceeding. The higher penalty for contravention of s.99(7) reflects my consideration that the Respondent’s contravention of s.99(7) was more serious in nature and impact having regard to the factors above.
The totality principle requires that I consider, before imposing anything, whether the total of the penalties that I would impose might amount to a disproportionate response to the wrongdoing. Having considered them in their totality, I am satisfied that penalties totalling $5,200 are a proportionate response to the contraventions and strikes a reasonable balance between oppressive severity and the need for both general and specific deterrence in this particular case.
No order as to interest was sought and I make no order in this respect.
Costs
As earlier referenced, at the penalty hearing the Applicant indicated orally that it sought an order that its costs be paid, on an indemnity basis. The Applicant subsequently served the Respondent with a letter outlining the brief oral submission made at the penalty hearing in that respect.
The Applicant’s entire legal costs incurred in the proceedings were said to amount to $18,125.06 although there was no evidence of this before the Court. The Applicant contended that the Respondent’s lack of willingness to participate in the proceedings warranted the making of such an order. The Court was not specifically addressed about the implications of the Respondent’s bankrupt status in relation to any order as to costs or why costs in the scale would not be more appropriate.
In all of the circumstances, including with regard to the Respondent’s undischarged bankrupt status and the brief materials before the Court, I consider it premature to make an order as to costs and will hear further as to this matter on written application to the Court. Accordingly, I will order that costs be reserved.
CONCLUSION
I will make orders pursuant to the above reasons.
I certify that the preceding eighty-three (83) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Mansini. Associate:
Dated: 27 October 2022
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