Australian Building and Construction Commissioner v Gray
[2022] FedCFamC2G 29
•27 January 2022
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 1412Division 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
ApplicantAND: 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 or order made in the absence of a party.
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 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE RILEY:
INTRODUCTION
This matter concerns the penalties to be imposed for certain contraventions of the Building and Construction Industry (Improving Productivity) Act 2016 (“the BCIIP Act”). The applicant is the Australian Building and Construction Commissioner (“the Commissioner”). The respondent (“Mr Gray”) is a carpenter.
The court is satisfied that Mr Gray was served properly and in a timely manner with all the relevant documents in this proceeding. However, Mr Gray has failed to file any material or appear at any of the hearings in this matter.
Pursuant to r.16.07(2) of the Federal Court Rules 2011, the respondent was deemed to have admitted all of the allegations pleaded in the statement of claim filed on 19 May 2021.
On 19 August 2021, the court gave default judgment for the Commissioner and:
(a)made declarations that Mr Gray had contravened the “BCIIP Act” by failing to comply with:
(i)a notice to produce; and
(ii)a compliance notice; and
(b)made consequential orders that Mr Gray:
(i)produce certain documents to the Commissioner; and
(ii)pay an employee certain underpaid amounts.
Mr Gray, at the time of the hearing on 16 December 2021, had not complied with those orders.
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
In his written submissions filed on 25 November 2021, the Commissioner summarised the approach to determining penalty as follows:
15.The overarching principles applicable to the exercise of the penalty-fixing discretion are well-established. The task for the Court is that stipulated by s 81 of the BCIIP Act. In discharging this function, the Court is to bear in mind that deterrence (general and specific) is the principal and indeed only object of the imposition of a penalty — to put a price on a contravention that is sufficiently high to deter repetition by the contravener and others who might be tempted to contravene the Act.2 That is, “specific deterrence of the contravener and, by his or her example, general deterrence of other would be contraveners.”3
16.Previous cases have listed factors that might be relevant.4 However, such checklists ought not become a rigid catalogue of matters for attention: the task of the Court is to fix a penalty which pays appropriate regard to the circumstances in which the contraventions have occurred and the need to sustain public confidence in the statutory regime which imposes the obligations.5
17.Section 81(6) of the BCIIP Act requires the Court to take account of “all relevant matters”, including the nature and extent of the contravening conduct and the circumstances in which it took place, previous contraventions, and the loss or damage suffered by the contraventions.
:Commonwealth of Australia v Director Fair Work Building Industry Inspectorate (Agreed Penalties Case) [2015] HCA 46; 258 CLR 482 (French CJ, Kiefel, Bell, Nettle and Gordon JJ) at [55]; citing French J in Trade Practices Commission v CSR Ltd [1990] FCA 762.
:Australian Building and Construction Commissioner (ABCC) v Construction Forestry Mining and Energy Union (CFMEU) [2018] HCA 3; 262 CLR 157 at [116].
:Stuart-Mahoney v CFMEU (2008) 177 IR 61 at [40] and the cases cited therein.
:See Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at [91].
SUBSECTION 81(6) OF THE BCIIP ACT
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.
THE NATURE, EXTENT AND CIRCUMSTANCES OF THE CONTRAVENTION
In his written submissions filed on 25 November 2021, the Commissioner said in relation to these issues that:
18.To appreciate the nature and extent of the contravening conduct, regard must be had to the objects of the BCIIP Act itself. Section 3 provides that the main object of the Act is to provide an improved workplace relations framework for building work to ensure, amongst other things, that building work is carried out fairly and for the benefit of all building industry participants.
19. The BCIIP Act aims to achieve this object through, amongst other things:
(a)promoting respect for the rule of law (s 3(2)(b));
(b)ensuring that building industry participants are accountable for their unlawful conduct (s 3(2)(d)); and
(c)providing assistance and advice to building industry participants in connection with their right and obligations under this Act and designated building laws (s 3(2)(h)).
20.The applicant was established with the statutory duty to promote the main object of the BCIIP Act and to monitor its compliance: ss 4, 16. Two of the statutory tools afforded to the applicant to achieve this are the power to issue a notice to produce under s 77 and a compliance notice under s 99. These are an important part of the armoury of the ABCC and its inspectors in fulfilling their statutory functions.6
21.The respondent’s conduct – which can only be described as deliberate – in failing to produce any material in response to the Notice to Produce, and in failing to comply with any aspect of the Compliance Notice, serves to defeat the object of the BCIIP Act. In this sense, the contravening conduct is serious.
22.The underlying conduct that relates to the respondent’s contraventions is also serious: the underpayment of a trainee employee in the sum of $11,392.12 plus overtime, allowances, and superannuation.
23.Given the seriousness of the respondent’s contravening conduct – and his conduct throughout this proceeding – the need for deterrence (both specific and general) looms large.
:See apposite reasoning in Fair Work Ombudsman v Blu Hornsby Pty Ltd & Anor [2016] FCCA 1150 (Judge Smith) at [29].
I accept those submissions. In relation to the question of whether Mr Gray’s contraventions were deliberate, I can only conclude, on the evidence available to me, that they were. This is a very significant aspect of the nature of the contraventions.
I also note that, at the time James Timmins (“Mr Timmins”) began working for Mr Gray, he was only 18 years old, having been born in 2001. As such, Mr Timmins was a vulnerable employee. This is a very significant aspect of the circumstances of the contraventions.
THE NATURE AND EXTENT OF ANY LOSS OR DAMAGE SUFFERED
In his written submissions filed on 25 November 2021, the Commissioner said in relation to this issue that:
24.The respondent’s contravention in failing to comply with the Notice to Produce impeded the applicant’s ability to assist Timmins in calculating the full quantum of his underpayment.
25.The respondent’s contravention in failing to comply with the Compliance Notice led to Timmins suffering loss and damage in the sum of more than $11,392.12.
I accept those submissions. The sum of $11,392.12 was unpaid wages for ordinary hours and annual leave. There was an additional amount owing to Mr Timmins, which has not yet been quantified, for unpaid overtime, travel allowance and superannuation.
WHETHER MR GRAY HAS ENGAGED IN SIMILAR CONDUCT PREVIOUSLY
The Commissioner did not allege that Mr Gray had engaged in similar conduct previously.
OTHER RELEVANT MATTERS
In Fair Work matters, which are somewhat analogous to the present matter, it is customary to take into account a number of other matters. I will address them below.
Single course of conduct and grouping of breaches
It seems to me that the two contraventions in this case were not a single course of conduct, and cannot properly be grouped, because they were distinct and were the result of separate decisions being made by Mr Gray in each case.
The size of the business involved
There was no evidence about the size of Mr Gray’s business. However, as Mr Gray appears to have conducted his business as a sole trader, it seems likely that his business is small.
Having said that, as Tracey J said in Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 at [28]:
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” (citation omitted).
Similarly, in Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412, the court said at [27]:
Employers must not be left under the impression that because of their size or financial difficulty that they are able to breach an award. Obligations by employers for adherence to industrial instruments arise regardless of their size. Such a factor should be of limited relevance to the Court’s consideration of penalty. …
In other words, the fact that Mr Gray conducts a small business does not excuse his non-compliance with the BCIIP Act.
Whether the contraventions were deliberate
This is discussed above. I am satisfied in this case that the contraventions were deliberate.
Whether senior management was involved in the breach
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)
In relation to specific deterrence, Gray J observed in Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357; (2008) 177 IR 243; [2008] FCAFC 170 at [37] that:
… Specific deterrence focuses on the party on whom the penalty is to be imposed and the likelihood of that party being involved in a similar breach in the future. Much will depend on the attitude expressed by that party as to things like remorse and steps taken to ensure that no future breach will occur. …
In relation to general deterrence, Lander J noted in Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543; (2007) 162 IR 444; [2007] FCAFC 65 at [93]:
… In regard to general deterrence, it is assumed that an appropriate penalty will act as a deterrent to others who might be likely to offend. The penalty therefore should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like minded persons or organisations. If the penalty does not demonstrate an appropriate assessment of the seriousness of the offending, the penalty will not operate to deter others from contravening the section. However, the penalty should not be such as to crush the person upon whom the penalty is imposed or used to make that person a scapegoat. In some cases, general deterrence will be the paramount factor in fixing the penalty…(citations omitted)
Similarly, in Community and Public Sector Union v Telstra Corporation Limited (2001) 108 IR 228 at 230-231; [2001] FCA 1364, Finkelstein J said:
… even if there be no need for specific deterrence, there will be occasions when general deterrence must take priority, and in that case a penalty should be imposed to mark the law's disapproval of the conduct in question, and to act as a warning to others not to engage in similar conduct ….
In my view, Mr Gray’s apparent disdain for the law, the court, the Commissioner and Mr Timmins warrants a substantial level of specific deterrence. There is also a need for general deterrence to dissuade others from copying Mr Gray’s behaviour.
Mr Gray’s financial circumstances
It is well-established that penalties for workplace contraventions should not be crushing. However, in the present case, Mr Gray has not deigned to provide any information to the court about his financial circumstances. It is therefore not possible to know if any particular level of penalty would be crushing.
In this regard, the Commissioner said in his written submissions filed on 25 November 2021 that:
30.The respondent has not (yet) adduced any evidence of his financial position so the Court should not infer that any penalty imposed in the high range would be oppressive to the respondent. To that end, it must be noted that a combined maximum penalty for both contraventions (which would total $8,800) would still only be about two-thirds of the amount the respondent has underpaid Timmins.
I accept those submissions.
THE APPROPRIATE PENALTY
Pursuant to s.81(1)(a) of the BCIIP Act, the court may impose penalties for each of the two contraventions in this case.
In his written submissions filed on 25 November 2021, the Commissioner said in relation to the amount of penalty that:
4.… [Mr Gray’s] failure to comply was a contravention of a Grade B civil remedy provision of the BCIIP Act. The maximum penalty for a Grade B contravention for an individual is 20 penalty units: BCIIP Act, s 81(2).
5.At the time that the contravening conduct occurred, the value of a penalty unit was $222.1 Accordingly, the maximum penalty that might be imposed for each contravention of the BCIIP Act is $4,440.
6.For the reasons that follow, the Court should impose penalties in the high range against the respondent for each of his contraventions.
:See Murrihy v Betezy.com.au Pty Ltd (No 2) (2013) 221 FCR 118 at [6]-[28]: see also Notice of Indexation of the Penalty Unit Amount dated 14 May 2020.
I accept those submissions. Mr Gray’s contraventions are liable to Grade B civil penalties because s.77(3) of the BCIIP specifies that level of penalty for a failure to comply with a notice to produce and because s.99(7) of the BCIIP Act specifies that level of penalty for a failure to comply with a compliance notice.
The Commissioner also said in his submissions filed on 25 November 2021 that:
31.Although it is current law that a “yardstick [is] provided by the maximum penalty as set by Parliament”,7 and that the maximum is usually reserved for “the worst category of cases”,8 when regard is had to the nature of the contraventions in this case, it is difficult to imagine a worse category of case. That is, both contraventions involved deliberate and flagrant failures to comply with statutory notices. There was no attempt to communicate with or assist the ABCC, let alone any excuse (reasonable or otherwise) proffered for his failures. … .
Pattinson v ABCC [2020] FCAFC 177; 384 ALR 75 (Allsop CJ, White and Wigney JJ) at [98]. See also ACCC v Reckitt Benckiser (Australia) Pty Ltd [2016] FCAFC 181; 340 ALR 25 (Jagot, Yates, Bromwich JJ) at [155].
:Veen (No 2) [1988] HCA 14; 164 CLR 465 (Mason CJ, Brennan, Dawson and Toohey JJ) at 476.
I accept that this case is very bad. It is possible to imagine worse cases of underpayment. For example, an employer might have engaged in the same conduct in respect of many more employees, or paid them nothing at all. However, this is not an underpayment case. It is a case about non-compliance with a notice to produce and a compliance notice. It is hard to imagine a worse case of that type.
In all the circumstances of this case, it seems to me that the appropriate penalty for each contravention is $4,000. That is for all the reasons discussed above, but particularly because Mr Gray:
(a)has exhibited no contrition, has taken no corrective action and has not cooperated with the authorities in this proceeding;
(b)has shown disdain for the process, warranting a very significant level of specific deterrence; and
(c)has said nothing to the court in mitigation or in relation to his financial circumstances.
THE TOTALITY PRINCIPLE
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.
I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Riley. Associate:
Dated: 27 January 2022
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