Australian Building and Construction Commissioner v Gray

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FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Australian Building and Construction Commissioner v Gray [2022] FedCFamC2G 29

File number(s): MLG 1029 of 2021
Judgment of: JUDGE RILEY
Date of judgment: 27 January 2022
Catchwords: INDUSTRIAL LAW – Failure to comply with a notice to produce and a compliance notice issued under the Building and Construction Industry (Improving Productivity) Act 2016 – penalties – respondent not participating in proceeding – no contrition, corrective action or cooperation.
Legislation:

Building and Construction Industry (Improving Productivity) Act 2016, ss.77(3), 81(1)(a), 81(6) and 99(7)

Federal Court Rules 2011, r.16.07
Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (CFMEU) (2018) 262 CLR 157; (2018) 351 ALR 190; (2018) 92 ALJR 219; (2018) 273 IR 211; [2018] HCA 3
Community and Public Sector Union v Telstra Corporation Limited (2001) 108 IR 228
Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482; (2015) 326 ALR 476; (2015) 90 ALJR 113; (2015) 255 IR 87; (2015) 326 ALR 476; [2015] HCA 46
Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080
Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357; (2008) 177 IR 243; [2008] FCAFC 170
Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543; (2007) 162 IR 444; [2007] FCAFC 65
Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412
Division Division 2 General Federal Law
Number of paragraphs: 46
Date of hearing: 16 December 2021
Place: Melbourne
Counsel for the applicant: Andrew Denton
Solicitor for the applicant: Office of the Australian Building and Construction Commissioner
Advocate for the respondent: No appearance
Solicitor for the respondent: None

ORDERS

MLG 1029 of 2021

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN:

AUSTRALIAN BUILDING AND CONSTRUCTION COMMISSIONER
Applicant

AND: JAKE GRAY
Respondent

ORDER MADE BY:

JUDGE RILEY

DATE OF ORDER:

27 JANUARY 2022

THE COURT ORDERS THAT:

1.Within 28 days, pursuant to s.81(1)(a) of the Building and Construction Industry (Improving Productivity) Act 2016 (“BCIIP Act”), the respondent pay to the Commonwealth of Australia a pecuniary penalty fixed in the sum of $4,000 for the contravention contained in declaration 4(a) made on 19 August 2021.

2.Within 28 days, 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 $4,000 for the contravention contained in declaration 4(b) made on 19 August 2021.

3.The respondent pay the applicant’s costs of the proceeding.

4.Within seven days, the applicant serve a copy of these orders on the respondent.

AND THE COURT NOTES THAT:

A.The respondent has not complied with orders 6 and 7 of the orders made on 19 August 2021.

B.Pursuant to r.17.05(2)(a) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021, the court may vary or set aside a judgment…

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Details
Case
[2022] FedCFamC2G 29
Decision Date

CaseChat Overview and Summary

In the case of Australian Building and Construction Commissioner v Gray, the primary dispute involves penalties imposed on the respondent for failing to comply with notices issued under the Building and Construction Industry (Improving Productivity) Act 2016 (BCIIP Act). The Commissioner sought penalties for the respondent's non-compliance with a Notice to Produce and a Compliance Notice. The underlying issue was the underpayment of wages to a trainee carpenter, James Timmins, who was grossly underpaid during his employment with the respondent. The court had to decide on the appropriate penalties for these contraventions, considering the respondent's lack of participation, contrition, corrective action, and cooperation with the authorities.

The key legal issues before the court were the determination of penalties for the contraventions identified on 19 August 2021, and the consideration of factors such as the totality principle, contrition, corrective action, cooperation, compliance with minimum standards, and the need for specific and general deterrence. The court needed to balance these factors to arrive at an appropriate penalty that serves both punitive and deterrent purposes.

In its reasoning, the court noted that the respondent, being the sole trader and in complete control of the business, could not shift blame to others. The respondent demonstrated no contrition, took no corrective action, and did not cooperate with the authorities. The court found that the usual discounts for admissions, contrition, rectification, and cooperation were not applicable. The penalties needed to ensure compliance with minimum standards and to deter the respondent and others from similar breaches in the future. The court concluded that the aggregate penalties were appropriate for the respondent's conduct. The court ordered that the respondent pay the Commissioner’s costs and would hear the Commissioner, and if the respondent attended, on the quantum of costs.

The final orders included the imposition of penalties for the contraventions and the requirement for the respondent to pay the Commissioner’s costs, with further hearings to determine the exact amount of those costs.

Orders

Orders of the court

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Background

Background to the litigation

The current aspect of the proceeding concerns penalties for the contraventions identified on 19 August 2021.BACKGROUND In his written submissions filed on 25 November 2021, the Commissioner provided the following procedural background to this matter:1.On 19 August 2021, following material and ongoing defaults by the respondent, the Court made declarations that the respondent had contravened:(a)s 77(3) of the Building and Construction Industry (Improving Productivity) Act 2016 (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 24 June 2020 (Notice to Produce); and (b)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 19 November 2020 (Compliance Notice).2.The underlying conduct instigating the Notice to Produce and Compliance Notice arose from the respondent employing a trainee carpenter, James Timmins (Timmins), on a full-time basis between December 2019 to June 2020. In this period, Timmins – a full-time trainee – was paid just $1,350.3.An inspector of the ABCC formed the reasonable belief that the respondent had contravened multiple provisions of the Fair Work Act 2009 (Cth) (FW Act). The applicant sought to monitor and enforce compliance with those provisions through the issuance of the Notice to Produce and Compliance Notice.4.The respondent failed to comply with either of those notices. …CHRONOLOGY OF EVENTS In his written submissions filed on 25 November 2021, the Commissioner provided the following chronology in relation to this matter:7.Timmins commenced employment with the respondent on a ‘trial basis’ sometime in December 2019. On 16 March 2020, the respondent employed Timmins as an apprentice carpenter pursuant to a training contract.8.From December 2019 to June 2020, Timmins worked on a full-time basis for the respondent pursuant to the training contract. In this period, he received only $1,350 in wages. He was paid no overtime, no travel allowance, and no superannuation.9.On or about 23 June 2020, an inspector of the ABCC issued the Notice to Produce to the respondent pursuant to s 77 of the BCIIP Act. The respondent was required to produce documents and calculations pursuant to the Notice to Produce by 10 July 2020. He failed to do so.10.On 19 November 2020, an inspector of the ABCC gave the Compliance Notice to the respondent pursuant to s 99 of the BCIIP Act. The respondent was required to make payment to Timmins rectifying quantifiable underpayments by 10 December 2020 and provide evidence of such payment to the applicant by 17 December 2020. He failed to do so.11.On 18 May 2021, the applicant commenced this proceeding. The originating documents were served on the respondent personally on 21 May 2021. He was required to file a response and a defence within 28 days of service. He failed to do so.12.On 28 July 2021, the Court held a directions hearing where the respondent was required to attend. He failed to do so.13.On 30 July 2021, the applicant filed an application seeking judgment in default. The Court ordered that the respondent was to file and serve any material in opposition to the application by 13 August 2021. He failed to do so.14.On 19 August 2021, the Court made declarations that the respondent was in default and had contravened the BCIIP Act. The Court ordered that the respondent was to produce the documents sought in the Notice to Produce and to take the action set out in the Compliance Notice by 16 September 2021. He failed to do so. APPROACH TO DETERMINING PENALTY

Evidence

Evidence Before The Court

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Decision

Reasons for decision

In relation to the check that is required by the totality principle, I consider that the aggregate penalties indicated above are appropriate for the whole of the contravening conduct engaged in by the respondent.CONCLUSION There will be orders accordingly, and an order that Mr Gray pay the Commissioner’s costs. I will hear the Commissioner, and if he attends court, Mr Gray, on the question of the quantum of costs.

Ratio Decidendi

Legal Principle Established

Mr Gray was the senior manager of the business in the sense that he was a sole trader and entirely in control of the business. This issue is significant because it means that the blame cannot be shifted to anyone else.Contrition, corrective action and co-operation with the authorities Mr Gray has not demonstrated any contrition. Indeed, his failure to engage with the proceedings is indicative of disdain for the law, the court, the Commissioner and Mr Timmins. Mr Gray has not undertaken any corrective action, even though the orders made on 19 August 2021 set out exactly what he needed to do. Indeed, the Commissioner indicated exactly what Mr Gray needed to do by way of corrective action in the statement of claim. Mr Gray has not co-operated with the authorities at all. He has not made any admissions, except by default. He has put the Commissioner to the expense and inconvenience of pursuing this matter. The usual discount for admissions, contrition, rectification and co-operation cannot be applied in the present case.The need to ensure compliance with minimum standards Obviously, Mr Gray breached Mr Timmin’s minimum entitlements. Mr Gray grossly underpaid Mr Timmins.The need for specific and general deterrence In Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482; (2015) 326 ALR 476; (2015) 90 ALJR 113; (2015) 255 IR 87; (2015) 326 ALR 476; [2015] HCA 46, French CJ, Kiefel, Bell, Nettle and Gordon JJ said at [55]:No less importantly, whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty, as French J explained in Trade Practices Commission v CSR Ltd, is primarily if not wholly protective in promoting the public interest in compliance:“Punishment for breaches of the criminal law traditionally involves three elements: deterrence, both general and individual, retribution and rehabilitation. Neither retribution nor rehabilitation, within the sense of the Old and New Testament moralities that imbue much of our criminal law, have any part to play in economic regulation of the kind contemplated by Pt IV [of the Trade Practices Act]. ... The principal, and I think probably the only, object of the penalties imposed by s 76 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 the Act.”(footnotes omitted) Similarly, in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (CFMEU) (2018) 262 CLR 157; (2018) 351 ALR 190; (2018) 92 ALJR 219; (2018) 273 IR 211; [2018] HCA 3, Keane, Nettle and Gordon JJ said at [116]:As has been observed, the principal object of an order that a person pay a pecuniary penalty under s 546 is deterrence: specific deterrence of the contravener and, by his or her example, general deterrence of other would-be contraveners. According to orthodox sentencing conceptions as they apply to the imposition of civil pecuniary penalties, specific deterrence inheres in the sting or burden which the penalty imposes on the contravener. Other things being equal, it is assumed that the greater the sting or burden of the penalty, the more likely it will be that the contravener will seek to avoid the risk of subjection to further penalties and thus the more likely it will be that the contravener is deterred from further contraventions; likewise, the more potent will be the example that the penalty sets for other would-be contraveners and therefore the greater the penalty's general deterrent effect. Conversely, the less the sting or burden that a penalty imposes on a contravener, the less likely it will be that the contravener is deterred from further contraventions and the less the general deterrent effect of the penalty. Ultimately, if a penalty is devoid of sting or burden, it may not have much, if any, specific or general deterrent effect, and so it will be unlikely, or at least less likely, to achieve the specific and general deterrent effects that are the raison d'être of its imposition.(footnotes omitted)