FEDERAL COURT OF AUSTRALIA
Basi v Namitha Nakul Pty Ltd (No 2) [2023] FCA 671
File number(s): NSD 523 of 2019
NSD 730 of 2019Judgment of: HALLEY J Date of judgment: 22 June 2023 Catchwords: INDUSTRIAL LAW – application for declaratory relief and pecuniary penalties for contraventions of numerous provisions of the Fair Work Act 2009 (Cth) (Act) – where employer made admissions to contraventions of the Restaurant Industry Award 2010 (Award) by failing to display the Award and National Employment Standards, pay annual leave entitlements, pay superannuation contributions and give notice or payment in lieu on termination of employment – where parties agreed to orders in respect of unpaid wages and annual leave entitlements and outstanding superannuation guarantee payments – where respondent proposed range of pecuniary penalties – whether amount of penalties within the respondents’ proposed range sufficiently high to achieve specific and general deterrence – whether penalties should be paid, in equal amounts, to the applicants or into Consolidated Revenue Fund – whether applicants entitled to compensation for loss of growth in superannuation funds – whether applicant entitled to recover on his quantum meruit claim amounts payable under National Minimum wage as a casual employee – Held: total penalties imposed of $150,000 on the first respondent and $50,000 on the second respondent payable in equal amounts to each applicant Legislation: Crimes Act 1914 (Cth) s 4AA
Crimes Legislation Amendment (Penalty Unit) Act 2015 (Cth) Sch 1
Crimes Amendment (Penalty Unit) Act 2017 (Cth) Sch 1
Fair Work Act 2009 (Cth) ss 12, 44, 45, 90, 117, 323, 325, 340, 343, 344, 345, 539, 546, 547, 550, 556, 557, 557A, 793(1),
Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 (Cth) s 2
Restaurant Industry Award 2010 (Cth) cll 5, 20, 30.2, 31, 31.2, 34.1, 35.2
Cases cited: Ahmed v Al-Hussain Pty ltd t/as The Cheesecake Shop (No 3) [2019] FCA 848
Australian Building and Construction Commissioner v Construction, Forestry and Mining and Energy Union (2017) 254 FCR 68; [2017] FCAFC 113
Australian Building and Construction Commissioner v Huddy (No 2) [2017] FCA 1088
Australian Building and Construction Commissioner v Pattinson [2022] HCA 13
Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640; [2013] HCA 54
Australasian Meat Industry Employees Union v Dick Stone Pty Ltd (No 2) [2022] FCA 1263
Basi v Namitha Nakul Pty Ltd [2022] FCA 712
Bianca Strahan v John Christos Powis, trading as Blackwood Fitness [2019] SAET 229
Brenner and Another v First Artists’ Management Pty. Ltd. and Another [1993] 2 VR 221
Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482; [2015] HCA 46
Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (The Non-Indemnification Personal Payment Case) (2018) 264 FCR 155; [2018] FCAFC 97
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- Case
- [2023] FCA 671
- Decision Date
CaseChat Overview and Summary
The court found the respondents' conduct to be reprehensive, deliberate, and systemic, exploiting workers on temporary immigration visas through cash back arrangements, underpayments, and failures to make superannuation payments, combined with threats of withdrawing visa sponsorship. The court held that the penalties imposed must achieve appropriate levels of both specific and general deterrence. The court considered the nature and extent of the conduct and the loss and damage suffered by the applicants due to the respondents' actions. The court determined that the total penalties of $150,000 on the first respondent and $50,000 on the second respondent, payable in equal amounts to each applicant, were sufficient to achieve the necessary deterrence.
The court also ordered the respondents to pay compensation for unpaid wages, annual leave entitlements, and the quantum meruit claim to one of the applicants, Syed Haider, as well as unpaid superannuation to Haider's nominated superannuation fund. The court imposed pecuniary penalties on the first and second respondents, to be paid to Haider, finding that this method of payment would ensure that the penalties served their deterrent purpose. The court did not find it necessary to address the applicants' claims for compensation for the loss of growth in their superannuation funds or the quantum meruit claim, as the orders already provided sufficient redress.
In summary, the court imposed significant penalties on the respondents to deter them and other employers from engaging in similar conduct in the future. The penalties were set at $150,000 for the first respondent and $50,000 for the second respondent, payable in equal amounts to each applicant. The court also ordered the respondents to compensate the applicants for unpaid wages, annual leave entitlements, and unpaid superannuation.
Orders
Orders of the court
5. Pursuant to s 545(1) of the Act, the respondents pay:
(a) $89,687.34 to the applicant, Syed Haider, by way of compensation for unpaid wages, annual leave entitlements and the quantum meruit claim: and
(b) $10,617.32 to a superannuation fund in the name of Syed Haider, to be nominated by him, in respect of unpaid superannuation,
by Friday, 21 August 2023.
6. Pursuant to s 546(1) of the Act, the first respondent pay pecuniary penalties in the sum of $75,000 for its contraventions of the Act.
7. Pursuant to s 546(1) of the Act, the second respondent pay pecuniary penalties in the sum of $25,000 for his contraventions of the Act.
8. Pursuant to s 546(3)(a) of the Act, the pecuniary penalties imposed on the first respondent be paid to the applicant, Syed Haider by Friday, 21 August 2023.
9. Pursuant to s 546(3)(a) of the Act, the pecuniary penalties imposed on the second respondent be paid to the applicant, Syed Haider, by Friday 21 August 2023.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
I have referred to the contraventions by “the respondents” for two reasons. First, for all practical purposes, Mr Usha was the alter ego of Namitha Nakul. He was the sole director and shareholder of Namitha Nakul. He did not appear to draw any material distinctions between conduct that he might have engaged in his personal capacity and conduct that he might have engaged in on behalf of Namitha Nakul. Second, I found that Mr Usha contravened the Act as “a person involved in” each of the contraventions of Namitha Nakul summarised at [49(a)] to [49(g)] by reason of either s 550(2) or s 557A(5A) of the Act. I also found that Namitha Nakul was, within the meaning of s 793(1) of the Act, involved in each of Mr Usha’s contraventions summarised at [49(h)] to [49(j)]. B.6. Consideration of relevant factors The consideration below of relevant factors, is directed to the assessment of the overarching consideration, which is determining the penalty amount necessary to achieve appropriate levels of both specific and general deterrence. The conduct of the respondents in this proceeding requires the imposition of significant penalties to deter both the respondents and other restaurant operators and owners from engaging in similar conduct in the future. The conduct of the respondents was reprehensive. The respondents engaged in conduct that exploited workers on temporary immigration visas through cash back arrangements, underpayments and failures to make superannuation payments combined with demands for money to meet PAYG liabilities and visa sponsorship costs enforced by threats of withdrawing visa sponsorship. I am satisfied that it in light of the factors considered below, it is necessary for substantial penalties to be imposed in order to deter the respondents and other employers, particularly in the restaurant industry, from engaging in similar conduct in the future.B.6.1. Nature and extent of the conduct The conduct of the respondents occurred over an 18 month period. It could fairly be described as deliberate and systemic. The contraventions demonstrated a profound disregard of the fundamental obligations of an employer under both the Act and the Award. It included persistent and sustained failures to pay wages and entitlements and arrange hours of work consistently with the provisions of the Award and comply with Award notification requirements. More significantly, the respondents’ conduct extended to the making of demands for repayments of wages under cash back arrangements and payments to cover the PAYG obligations of Namitha Nakul and visa sponsorship costs. The respondents’ conduct in the course of operating the Restaurants took advantage of the inherent vulnerabilities of employees on temporary immigration visas who are reliant on the goodwill and sponsorship of their employers. B.6.2. Nature and extent of any loss or damage Both Mr Basi and Mr Haider were deprived of significant income and entitlements because of the contraventions by the respondents. The extent of this loss and damage is to be reflected in the compensation orders that are to be made.