Bevis v VA Holdings Pty Ltd trading as Granton Homes & Ors
[2020] FCCA 2082
•31 July 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BEVIS v VA HOLDINGS PTY LTD TRADING AS GRANTON HOMES & ORS | [2020] FCCA 2082 |
| Catchwords: INDUSTRIAL LAW – Application for orders for the payment of pecuniary penalties for contravention of s.45 of the Fair Work Act 2009 (Cth) – whether employer contravened award – whether director of employer involved in contravention – employer and director ordered to pay pecuniary penalties. |
| Legislation: Building and Construction (General) On-Site Award 2010, cls, 16.2, 17, 32.2, 38.2(b) Evidence Act 1995 (Cth), s.131Fair Work Act 2009 (Cth), ss.44, 45, 90(2), 323, 368(4), 385(d), 394, 539, 546(1), 546(3)(c), 550(1), 557(1), 588, 725, 729 Fair Work Commission Rules 2013 (Cth), r.10 |
| Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (the BKH Contractors Case) (No 2) [2018] FCA 1563 Coote v Mainline Access Pty Ltd& Anor (No.3) [2019] FCCA 383 Fair Work Ombudsman v A To Z Catering Solution Pty Limited (No.3) [2018] FCCA 3574 Kelly v Fitzpatrick [2007] FCA 1080 Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 Sayed v Construction, Forestry, Mining and Energy Union [2016] FCAFC 4 |
| Applicant: | MICHELE BEVIS |
| First Respondent: | VA HOLDINGS PTY LTD TRADING AS GRANTON HOMES ACN (156 459 540) |
| Second Respondent: | LONG VU |
| Third Respondent: | JOSEPH THOMAS |
| File Number: | SYG 3188 of 2019 |
| Judgment of: | Judge Manousaridis |
| Hearing date: | 28 April 2020 |
| Date of Last Submission: | 5 May 2020 |
| Delivered at: | Sydney |
| Delivered on: | 31 July 2020 |
REPRESENTATION
| Solicitors for the Applicant: | Mr W Clarke of Marrickville Legal Centre, by video |
| Solicitors for the Respondents: | Mr A Xenos of Hunt & Hunt Lawyers, by video |
ORDERS
Pursuant to s.546(1) of the Fair Work Act 2009 (Cth) (FW Act) the first respondent pay pecuniary penalties in the sum of $22,050 for its contraventions of s.45 of the FW Act.
Pursuant to s.546(3)(c) of the FW Act the first respondent pay the pecuniary penalties referred to in order 1 to the applicant within 28 days after the day on which these orders are pronounced.
Pursuant to s.546(1) of the FW Act the second respondent pay pecuniary penalties in the sum of $4,410 for his contraventions of s.45 of the FW Act.
Pursuant to s.546(3)(c) of the FW Act the second respondent pay the pecuniary penalties referred to in order 3 to the applicant within 28 days after the day on which these orders are pronounced.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 3188 of 2019
| MICHELE BEVIS |
Applicant
And
| VA HOLDINGS PTY LTD TRADING AS GRANTON HOMES ACN (156 459 540) |
First Respondent
| LONG VU |
Second Respondent
| JOSEPH THOMAS |
Third Respondent
REASONS FOR JUDGMENT
Introduction
On 4 December 2019 the applicant, Ms Bevis, commenced this proceeding under the Fair Work Act 2009 (Cth) (FW Act) in which she alleges that the first respondent (VA Holdings) contravened s.44, s.45, and s.323 of the FW Act by failing to pay her a number of amounts VA Holdings was required to make under the Building and Construction (General) On-Site Award 2010 (Award). Ms Bevis also alleges that the second respondent, Mr Vu, was involved in VA Holdings’ contraventions.[1]
[1] Ms Bevis does not seek penalties against the third respondent.
In her application Ms Bevis claimed an order that VA Holdings and Mr Vu pay to her an amount totalling $8,071.10, and an order that VA Holdings and Mr Vu pay pecuniary penalties for their contraventions of s.44, s.45, and s.323 of the FW Act.
By the time the matter came for hearing before me on 28 April 2020, VA Holdings paid to Ms Bevis the amounts she claimed. What remained outstanding is a claim for interest, and the questions whether VA Holdings and Mr Vu contravened s.44, s.45, and s.323(1) of the FW Act and, if so, whether an order for the payment of pecuniary penalties should be made and, if so, the amount of the penalty.
To be in a position to address these questions, it will be necessary to set out the relevant evidence, most of which is not contested.
Facts
On about 9 October 2017 Ms Bevis commenced employment with VA Holdings as a contract administrator on the terms set out in a letter dated “04th October 2016 [sic]”. The letter provided that the terms of the Award were to apply to her employment unless the letter contained terms more favourable than the Award.
On 9 October 2019 VA Holdings terminated Ms Bevis’s contract of employment; and on 15 October 2019 it paid Ms Bevis an amount that was equivalent to three weeks’ salary.[2] Mr Vu has given the following evidence of the reason for the termination of Ms Bevis’s employment:[3]
[2] Affidavit of W J Clarke 20.04.2020, annexure “A”, page 15
[3] Affidavit of L Vu 10.03.2020, [3], [4], [5]
Prior to the redundancy determination, the Company had to consider its operational activities in that it is a small company with five (5) employees. The Applicant was the receptionist and working on accounts for the company. At her request the Applicant was only working four (4) days each week and I decided, in consultation with the Second Respondent, that the work required an employee to undertake five (5) days per week.
The Applicant was offered a position five (5) days per week but she declined.
Following a further review of the position, it was decided that the role could be dispensed with and her duties shared out amongst the remaining employees. As a consequence, a decision was made to declare her position redundant. She was notified on 9 October 2019.
On 31 October 2019 Ms Bevis filed an application with the Fair Work Commission (FWC) under s.394 of the FW Act for an unfair dismissal remedy. In its response VA Holdings claimed its dismissal of Ms Bevis’s employment “was a case of genuine redundancy”.[4]
[4] Affidavit of W J Clarke 20.04.2020, annexure “A”, page 9
On 18 November 2019 Ms Bevis, through her lawyer, Mr Clarke, and the respondents, through their lawyer, Mr Miller, participated in a telephone conciliation conference before the FWC. According to Mr Clarke, whose evidence on this subject was not disputed:[5]
[T]he Fair Work Conciliator imposed an express condition precedent of participation in the conciliation conference, to which all parties including Mr Miller were required to verbally agree. The condition precedent being that the entirety of the conciliation proceedings remain confidential and not be recorded, relied upon or referred to in any way subsequently, and indeed that any notes of that conference taken by the parties were to be destroyed.
[5] Affidavit of W J Clarke 20.04.2020, [9]
After the conciliation conference the FWC sent a letter to Mr Miller confirming that “you reached a settlement agreement and I attach terms of settlement”. Attached to that letter is an unsigned document titled “Terms of Settlement”. The FWC sent the same letter to Mr Clarke.[6]
[6] Exhibit B
Mr Clarke, who appeared for Ms Bevis, objected to the admission of the letter and “Terms of Settlement” on the grounds that the discussions in the conciliation proceeding are confidential, and, in any event, the “Terms of Settlement” do not reflect a binding agreement. In the course of the hearing, it became apparent that correspondence passed between Mr Clarke and Mr Miller after the FWC issued “Terms of Settlement” to the parties, but that correspondence was not in evidence. With the agreement of the parties, I directed the parties provide to my associate after the hearing the relevant correspondence. That occurred, and I have marked in chambers the correspondence as “Exhibit B”.
Mr Clarke did not submit that the obligation of confidentiality arises from any order by the FWC. And he did not submit there was any provision in the FW Act or elsewhere that rendered confidential statements made during conciliation. I therefore take Mr Clarke to submit that confidentiality arises from the agreement he and Mr Miller made during the conciliation conference to keep confidential matters stated at the conciliation conference. That, however, does not by itself render inadmissible in a court evidence of statements made during a conciliation conference.
Whether evidence of such statements is admissible depends on the application of the rules of evidence, and in particular the rule provided for by s.131(1) of the Evidence Act 1995 (Cth) (Evidence Act). That subsection renders inadmissible, among other things, “a communication that is made between persons in dispute . . . in connection with an attempt to negotiate a settlement of the dispute”. Under s.131(2) of the Evidence Act, however, s.131(1) does not apply where:
(f) the proceeding in which it is sought to adduce the evidence is a proceeding to enforce an agreement between the persons in dispute to settle the dispute, or a proceeding in which the making of such an agreement is in issue; or
(g) evidence that has been adduced in the proceeding, or an inference from evidence that has been adduced in the proceeding, is likely to mislead the court unless evidence of the communication or document is adduced to contradict or to qualify that evidence . . . .
It may be accepted that s.131(1) of the Evidence Act applies to communications that were made during the FWC conciliation conference; but that would not exclude evidence of those communications being tendered in this proceeding to prove the existence of an agreement, if such agreement is relevant to any issue I must decide. Nor would s.131(1) exclude evidence of what was said in the conciliation conference if to exclude it might mislead me in my assessment of the evidence that has been adduced.
Whether in the conciliation conference Ms Bevis and VA Holdings made an agreement is relevant to the issues I am required to consider. As will become apparent, one of the amounts Ms Bevis claims VA Holdings failed to pay in contravention of s.45 of the FW Act is an amount that was agreed, or at least arguably agreed, at the conciliation conference; and the existence or asserted existence of the agreement and its terms is a matter that influenced the behaviour particularly of VA Holdings. These are matters that are relevant to the assessment of penalty, assuming VA Holdings contravened s.45 of the FW Act. For these reasons, I rule that the “Terms of Settlement” is admissible in this proceeding as evidence of the agreement reached between the parties. I also rule admissible communications between Mr Clarke and Mr Miller after the conciliation conference that refer to what was agreed or asserted to have been agreed at the conciliation conference.
The “Terms of Settlement” provided that VA Holdings would pay to Ms Bevis $7,292.30 “gross, taxed as normal weekly wages, in addition to any other monies previously paid to [Ms Bevis] by [VA Holdings]”; and that “the dollar amount specified in these terms of settlement will be paid by [VA Holdings] within seven days of [Ms Bevis] and [VA Holdings] signing these terms of settlement”. The “Terms of Settlement” also provided for mutual releases in relation to “all claims, suits, demands, actions or proceedings arising out of or connected with [Ms Bevis’s] employment with [VA Holdings], including but not limited to the cessation of the employment”.
By email sent at 12:59 pm on 20 November 2019 Mr Clarke suggested some minor amendment to “the draft Deed” (which I find is intended to be a reference to the “Terms of Settlement”), one of which that there be added the words “at the rate of 27%” after the words “taxed as normal weekly wages”. Further correspondence passed on 20 November 2019 about this suggested change. Mr Clarke, however, raised a different issue in an email he sent Mr Miller on 21 November 2019. Mr Clarke said that Ms Bevis’s accountant advised that no “tax requirements” apply to “our client’s genuine redundancy pursuant to the Deed”. Correspondence then passed about this subject. Mr Miller said that 27% was the rate to be applied because that is what the parties had agreed.
The matter escalated by 28 November 2019. At 8:40 am on that day Mr Clarke sent to Mr Miller the following email:
Our client has helpfully extracted below your client’s package as set out In [sic] the Xero system for redundancy, as your client remains without an accountant at present.
You and your client have at all times stipulated that our client was subject to a genuine redundancy. Your client’s resulting breach[es] of the BCGO Award – and thus of s45 of the Fair Work Act – can only be remedied by your client paying the amount of 4.8 weeks redundancy pay without deductions in accordance with Clause 17 of the Award, their own payroll package, and ‘tax requirements’.
If your client refuses to follow its own procedures and employment contract there can be no agreement
Mr Miller responded by email at 8:45 am on 28 November 2019 stating that at no stage has VA Holdings refused to follow procedures; and that it will follow “the system in place”. Mr Miller further stated:
Rather you have been changing the arrangements by initially wanting a tax rate of 27% to be applied then asking for a nil deduction. Please send through the signed agreement and our client will arrange payment of the amount due to you client.
Mr Clarke responded with the following email at 9:07 am on 28 November 2019:
Your client has and continues to refuse to follow tax requirements and its own procedures.
You have never stated (and still do not state) which tax rate your client proposes to apply, despite repeated requests[.]
Rather than flouting the confidentiality of the FWC conciliation process – which the conciliator expressly sought your consent to – your client should pay the amount due under the Award (with which it is only now belatedly purporting to comply).
This amount is not subject to any deduction under the ITAA or your client’s own Xero process.
Failing that – do you have instructions to accept service?
On 2 December 2019 Ms Bevis filed a notice of discontinuance with the FWC in relation to her application for an unfair dismissal remedy. Ms Bevis did this pursuant to s.588 of the FW Act and r.10 of the Fair Work Commission Rules 2013 (Cth); and it is reasonable to infer she did so because she had decided to make a “general protections court application” (as that expression is defined in s.368(4) of the FW Act), and, because of the combined operation of s.725 and s.729 of the FW Act, she would have been unable to make such an application unless she withdrew from the unfair dismissal proceeding.
On 4 December 2019 Ms Bevis commenced this proceeding. In the statement of claim, Ms Bevis claimed payment of three amounts. One was $7,292.30, which, she alleged, represented 4.8 weeks’ redundancy Ms Bevis was entitled to receive under the Award. The second is $156.24, being for “1 day job search”, also said to be payable under the Award. The third amount is $622.56, which was alleged to be annual leave loading payable under cl.38.2(b) of the Award and s.90(2) of the FW Act.
On 12 December 2019 VA Holdings paid to Ms Bevis $4,898.31. By letter dated 13 December 2019 to Mr Clarke, Mr Miller confirmed that the payment was made, and that “[t]ax has been deducted in accordance with the relevant taxation requirements”. Mr Miller attached a document apparently generated by VA Holdings’ payroll system which showed that the $4,898.31 was calculated by deducting two amounts from the $7,292.30 VA Holdings agreed to pay to Ms Bevis under the “Terms of Settlement”; the first is $2,394 which is described as “PAYG Tax”; and the second is $692.77, which is described as “superannuation”. Mr Miller also noted that Ms Bevis had commenced proceedings in this Court, that she claimed an additional payment of $156.24, and that Mr Miller would advise VA Holdings to make the payment. VA Holdings paid that amount to Ms Bevis on 18 December 2019.
According to Mr Clarke,[7] on 20 December 2019 he sent a letter headed “Without Prejudice Save as to Costs” with which he enclosed an ATO fact sheet on the taxation of genuine redundancy payments, and demanded that VA Holdings’ accountant pay to Ms Bevis the remaining $2,394. That apparently led Mr Vu, on 23 December 2019, sending an email to a tax agent in which he said that he had recently “let go of our account person Michele Bevis through redundancy”, and he asked whether “redundancy pay similar to wage payment where the employer withheld the tax and pay the ATO or is it tax free?” On the same day, the tax agent responded: “Tax is withheld against redundancy payments. We would need to calculate this for you”.[8] By email sent on 23 December 2019 Mr Vu informed the tax agent that VA Holdings had “already made a payment of 4.8 weeks and withheld the tax”, and he asked whether the tax agent would check if what was done was correct. In a further email sent on 2 January 2020 Mr Vu asked whether superannuation was payable on redundancy, noting that “according to his calculation in the there is a super contribution of $692”. By email sent on 6 January 2020, the tax agent advised Mr Vu that superannuation is payable “on any salaried amount or time based payments, not on the discharging of the annual leave or other accrued entitlements”.
[7] Affidavit of W J Clarke 20.04.2020, [16]. The letter is not annexed to the affidavit.
[8] Exhibit A, page 37
The matter came before me for a first court date on 4 February 2020. The respondents did not appear, and I adjourned the matter for directions to 25 February 2020. By letter dated 7 February 2020 Mr Clarke informed Mr Miller of the orders I made on 4 February 2020, and Mr Clark repeated that “the relevant taxation requirements in relation to our client’s redundancy entitlement are nil”.[9] Mr Miller responded by email sent on 10 February 2020 in which he stated that “payment has been made to the tax office”, and “this was in accordance with our client’s advice received using the9629198package and his accountant’s advice”. Mr Miller requested that Mr Clarke advise of the basis on which no tax was deductible.[10] That initiated further correspondence between Mr Clarke and Mr Miller, which it is unnecessary for me to set out. On 24 February 2020 VA Holdings paid $2,394 into Ms Bevis’s account, and on 5 March 2020 it paid $622.56 into Ms Bevis’s account.
[9] Affidavit of W J Clarke 20.04.2020, annexure “H”
[10] Affidavit of W J Clarke 20.04.2020, annexure “I”
Did VA Holdings contravene the FW Act?
The statement of claim alleges VA Holdings contravened s.44, s.45, and s.323(1) of the FW Act in relation to three amounts: the $7,292.30 redundancy amount; the $156.24 one day job search amount; and the $622.56 leave loading amount. The statement of claim alleges these amounts were payable under cl.17, cl.16.2, and cl.38.2(b) of the Award. VA Holdings and Mr Vu admit that VA Holdings was obliged under these clauses of the Award to pay to Ms Bevis the $7,292.30 redundancy amount, the $156.24 one day job search amount, and the $622.56 leave loading amount; but they plead that the three amounts have been paid.
The statement of claim, however, does not allege the day by which VA Holdings was required to pay these amounts; and VA Holdings and Mr Vu do not allege in their defence the day by which VA Holdings was required to pay to Ms Bevis the three amounts. Thus, as the pleadings stand, VA Holdings and Mr Vu do not admit that VA Holdings paid to Ms Bevis the $7,292.30 redundancy amount, the $156.24 one day job search amount, and the $622.56 leave loading amount, after the day on which VA Holdings was required to do so.
In his affidavit of 20 April 2020 Mr Clarke asserts that VA Holdings was required to pay each of these three amounts on or before Ms Bevis’s “next pay date following termination”.[11] In his oral submissions Mr Clarke referred to a payment record apparently generated by the payroll system of VA Holdings which records that on 15 October 2019 VA Holdings paid amounts to Ms Bevis in relation to the work period 1 October 2019 to 14 October 2019.[12] Mr Clarke submitted that 15 October 2019 is the day on which VA Holdings was obliged to pay each of the redundancy, one day job search, and leave loading amounts. I accept that submission, and, therefore, find that VA Holdings was required to pay to Ms Bevis each of the $7,292.30 redundancy, the $156.24 one day job search, and the $622.56 leave loading amounts by 15 October 2019; and by failing to do so, VA Holdings contravened cl.17, cl.16.2, and cl.38.2(b) respectively of the Award and, therefore, engaged in three contraventions of s.45 of the FW Act. I do not find, however, that VA Holdings’ failure to pay these amounts by the time it was required to pay them constituted a contravention of s.44 of the FW Act. None of the terms of Award VA Holdings contravened is a “National Employment Standard”.
[11] Affidavit of W J Clarke 20.04.2020, [26]
[12] Affidavit of W J Clarke 20.04.2020, annexure “A”, page 15
I also do not find that VA Holdings’ failures to pay the three amounts constituted contraventions of s.323(1) of the FW Act. I have concluded elsewhere that the mere failure to pay an amount payable to an employee does not constitute a contravention of s.323 of the FW Act.[13] It is also not apparent that any of the redundancy, the leave loading, or the one day job search amounts can properly be characterised as amounts payable “in relation to the performance of work” within the meaning of s.323(1) of the FW Act. Mr Clarke submitted that s.323(1) applied because it required the payment of amounts payable in relation to the performance of work “at least monthly”. That, however, does not apply to any of the redundancy amount, the leave loading amount, or the one day job search amount, because these amounts became payable on the termination of Ms Bevis’s employment.
[13] Coote v Mainline Access Pty Ltd & Anor (No.3) [2019] FCCA 383, at [57]
In addition to the amounts referred to in the statement of claim, Ms Bevis appears to claim that VA Holdings has failed to make superannuation contributions it was required to make by the time it was required to make them and, for that reason, it contravened the Award and, therefore, s.45 of the FW Act. These claims, however, are not made in the statement of claim. Mr Clarke makes them in his affidavit of 20 April 2020. He there deposes that he had been informed by Ms Bevis that on 31 December 2019 VA Holdings paid $1,991.69 into her superannuation fund, being a superannuation contribution VA Holdings was required to pay by 28 October 2019 for the period July to September 2019;[14] and that on 21 February 2020 VA Holdings paid into Ms Bevis’s superannuation fund $461.85 which was due to be paid for October 2019.[15]
[14] Affidavit of W J Clarke 20.04.2020, [14]
[15] Affidavit of W J Clarke 20.04.2020, [245]
In her statement of claim Ms Bevis alleges that under cl.32.2 of the Award VA Holdings was required to make a superannuation contribution to a superannuation fund nominated by Ms Bevis such as would avoid a superannuation guarantee charge being levied against VA Holdings. The statement of claim does not allege that VA Holdings failed to make such superannuation contributions; and Mr Clarke, in his affidavit, goes no further than asserting that VA Holdings made superannuation contributions after the day on which it was required to do so, without identifying the facts which would support that assertion, or the facts which would establish that, by the day on which VA Holdings did make the payments, it was liable to a superannuation guarantee charge being levied against it. For those reasons, I do not propose to entertain the claims in relation to the superannuation contributions.
Was Mr Vu involved in contraventions?
There is little evidence in relation to Mr Vu’s management of VA Holdings. Nevertheless, the little evidence there is satisfies me that Mr Vu was the controlling mind of VA Holdings, and was responsible for all aspects of its management, including the payment of wages of employees. There are three items of evidence. The first is that Mr Vu describes himself as “the sole director/secretary” of VA Holdings.[16] Second, there are the emails between Mr Vu and the tax agent to which I have referred. That email shows that Mr Vu was aware and made decisions in relation to Ms Bevis’s entitlements. Third, and significantly, there is Mr Vu’s evidence to which I have referred about why VA Holdings terminated Ms Bevis’s employment. That evidence shows it was Mr Vu who decided to terminate Ms Bevis’s employment.
[16] Affidavit of L Vu, 10.03.2020
I therefore find that Mr Vu was involved in VA Holdings’ contraventions of s.45 of the FW Act and, pursuant to s.550(1) of the FW Act, is taken to have contravened s.45 of the FW Act.
Power and principles of assessment
Subsection 546(1) of the FW Act provides that this Court may, on application, order a person to pay a pecuniary penalty the Court considers is appropriate if the Court is satisfied the person has contravened a “civil remedy provision”. That expression is defined in s.539(1) of the FW Act to include the provisions identified in column 1 of the table to s.539(2) of the Act. Section 45 of the FW Act is in column 1 of the table to s.539(2) of the Act.
Subsection 546(2) of the FW Act provides that the pecuniary penalty the Court may impose must not, where the person is an individual, be more than “the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2)” and, if the person is a body corporate, must not be more than five times “the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2)”. The maximum penalty units for a contravention of s.45 of the FW Act at the relevant time are 60 penalty units for an individual, and 300 penalty units for a body corporate. Section 12 of the FW Act provides that “penalty unit” has the meaning given by s.4AA of the Crimes Act 1914 (Cth). The penalty unit provided for by s.4AA of that Act as at October 2019 was $210. The maximum penalty during October 2019 to February 2020 for each contravention for a body corporate, therefore, was $63,000, and $12,600 for an individual.
The approach to assessing penalties for contraventions of provisions of the FW Act was outlined by Bromwich J in Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown as follows (emphasis in original):[17]
(1)Identify the separate contraventions, with each breach of each obligation being a separate contravention, and each breach of a term of the Award being a separate contravention.
(2)Consider whether each separate contravention should be dealt with independently or with some degree of aggregation for those contraventions arising out of a course of conduct, noting that s 557 of the FW Act provides that two or more contraventions of a given civil remedy provision are to be taken to be a single contravention if committed by the same person and arising out of a course of conduct by that person.
(3)Consider whether there should be further adjustment to ensure that, to the extent of any overlap between groups of separate aggregated contraventions, there is no double penalty imposed, and that the penalty is an appropriate response to what each respondent did.
(4)Consider the appropriate penalty in respect of each final individual group of contraventions, taken in isolation.
(5)Consider the overall penalties arrived at, including by reference to those which may be proposed by the FWO (as permitted by Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482 (CFMEU Civil Penalties Case) at [64]) and what is proposed by the respondents, and apply the totality principle, to ensure that the penalties for each respondent are appropriate and proportionate to the conduct viewed as a whole, making such adjustments as are necessary: see Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14 at [30]; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; 165 FCR 560 at [23], [71] and [102].
[17] Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301, at [36]. In the following five paragraphs I repeat what I said in Fair Work Ombudsman v Safecorp Security Group Pty Ltd & Anor (No.3) [2019] FCCA 1756, at [17]-[21]
In Fair Work Ombudsman v A To Z Catering Solution Pty Limited (No.3),[18] I noted that step 3 (which I understood to express the “one transaction principle”) could be taken to suggest that it is appropriate to further group contraventions after the application of s.557(1) of the FW Act. For the reasons I gave in A To Z Catering Solution,[19] the proper approach appears to be to assess penalties to contraventions after the application of s.557(1) of the FW Act, and then to consider:[20]
whether the conduct giving rise to separate contraventions was such that the separate imposition of penalties would be effectively imposing multiple penalties for either the same conduct or for overlapping parts of the same conduct which separately went to make out the separate contraventions; and
ensure that a person who has engaged in contravening conduct is not punished twice for the same conduct and to ensure that the total penalty imposed in respect to the contraventions is “just and appropriate” and not disproportionate.
[18] Fair Work Ombudsman v A To Z Catering Solution Pty Limited (No.3) [2018] FCCA 3574, at [27]
[19] Fair Work Ombudsman v A To Z Catering Solution Pty Limited (No.3) [2018] FCCA 3574, at [28]
[20] Australian Building and Construction Commissioner v Construction, Forestry,Mining and Energy Union (the BKH Contractors Case) (No 2) [2018] FCA 1563, [59] (Flick J)
The approach of most judges when assessing penalties for single contraventions of a provision of the FW Act is to take into account the non-exhaustive considerations Tracey J identified in Kelly v Fitzpatrick,[21] which his Honour adopted from the judgment of Mowbray FM in Mason v Harrington Corporation Pty Ltd are relevant to assessing the amount of penalties. [22] Those considerations are:
[21] Kelly v Fitzpatrick [2007] FCA 1080, [14]
[22] Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
a)the nature and extent of the conduct which led to the breaches;
b)the circumstances in which that conduct took place;
c)the nature and extent of any loss or damage sustained as a result of the breaches;
d)whether there had been similar previous conduct by the respondent;
e)whether the breaches were properly distinct or arose out of the one course of conduct;
f)the size of the business enterprise involved;
g)whether or not the breaches were deliberate;
h)whether senior management was involved in the breaches;
i)whether the party committing the breach had exhibited contrition;
j)whether the party committing the breach had taken corrective action;
k)whether the party committing the breach had cooperated with the enforcement authorities;
l)the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
m)the need for specific and general deterrence.
Also relevant is the maximum penalty for the contravention provided for by the FW Act; and here I need only refer to the following passage from the judgment of Flick J in The BKH Contractors Case (No 2):[23]
In undertaking the task of assessing and quantifying the penalties to be imposed, the maximum penalty prescribed by the Commonwealth legislature for a specific contravention serves as a “yardstick” against which the assessment of penalties is generally to proceed . . . .
[23] The BKH Contractors Case (No 2) [2018] FCA 1563, [19]
Contravention in relation to redundancy amount
The nature and extent of the conduct that led to the contravention consisted of VA Holdings not paying the redundancy amount of $7,292.30, a significant amount, by 15 October 2019. VA Holdings’ failure in not paying the redundancy amount in full until February 2019 must, however, be viewed in the context that consists of the following elements:
a)First, on the evidence before me, VA Holdings first claimed to Ms Bevis that her employment had been terminated because her position was redundant in its response to Ms Bevis’s application for an unfair dismissal remedy. Ms Bevis was not bound to accept that claim because, if she did, she would not have been able to maintain her application for an unfair dismissal remedy.[24] There is evidence, in the form of the “Terms of Settlement”, that Ms Bevis accepted VA Holdings’ claim that it terminated her employment because her position had become redundant.
b)Second, the “Terms of Settlement” suggest that, at the conciliation conference, Ms Bevis and VA Holdings agreed that VA Holdings would pay Ms Bevis $7,292.30 to be “taxed as normal weekly wages”. That indicates the parties agreed that VA Holdings would deduct an amount for tax out of the $7,292.30 the parties agreed VA Holdings would pay to Ms Bevis for redundancy. That this was the agreement is supported by Mr Clarke’s email to Mr Miller sent on 20 November 2019 in which he requested that the percentage VA Holdings would deduct be specified in the agreement. That the tax law did not require VA Holdings to deduct tax does not deny, or at least automatically deny, binding force to what the parties agreed, assuming that at the conciliation conference the parties agreed to terms to the effect set out in the “Terms of Settlement”.
c)Third, the “Terms of Settlement” indicate the parties agreed the redundancy amount of $7,292.30 would be payable within seven days after the parties signed the “Terms of Settlement”. The parties, however, did not sign the “Terms of Settlement”; and that is because a dispute arose about whether there was any amount that should be deducted for tax from the $7,292.30. Nevertheless, VA Holdings made payments as if the parties had signed the agreement.
d)Fourth, VA Holdings sought advice from a tax agent, and the advice it received, at least initially, was consistent with its withholding an amount for tax.
[24] See s.385(d) of the FW Act.
Viewed in this context, VA Holdings’ continuing to intend to pay to Ms Bevis the redundancy amount other than in the manner that it did was due to VA Holdings’ abiding, or attempting to abide, by an agreement VA Holdings entered into, or which it believed it entered into, with Ms Bevis at the conciliation conference, in circumstances where, after she entered into the agreement, Ms Bevis took a different view about a matter that had been agreed, namely, the deductibility of an amount for tax from the $7,292.30 it was agreed VA Holdings would pay to Ms Bevis. These are matters that weigh against including as a factor in assessing a penalty VA Holdings’ delay in paying the redundancy amount after 18 November 2019, being the date of the conciliation conference.
I do not, however, accept the submission Mr Xenos made on behalf of the respondents, that no penalty should be imposed for VA Holdings’ failure to pay the redundancy amount because VA Holdings believed it had settled the matter, and that it attempted to abide by that settlement. This submission overlooks the fact that the settlement was reached a month after VA Holdings’ obligation to pay the redundancy amount had accrued, and, therefore, does not explain VA Holdings’ failure to pay the redundancy amount on 15 October 2019, and its failure to agree to pay that amount until the conciliation conference.
As for other matters that are relevant or potentially relevant to the assessment of penalty, I find as follows:[25]
a)Ms Bevis suffered loss to the extent there was a delay in her being paid the redundancy amount. Ms Bevis has not claimed, however, that her loss goes beyond not having the opportunity to receive interest on the amount. Thus, on the evidence before me, the loss Ms Bevis has suffered because of VA Holdings’ contravention is insignificant.
b)There is no evidence VA Holdings engaged in any similar previous conduct or that the contravention was the result of any course of conduct.
c)Mr Vu deposes, and I accept, that VA Holdings is a small company with five employees.
d)Accepting the evidence of Mr Vu, VA Holdings knew that Ms Bevis’s employment was being terminated because her position was redundant. There is no evidence Mr Vu was aware that in those circumstances the Award required an amount for redundancy. To that extent, I am not satisfied VA Holdings was aware it was required to pay the redundancy amount but decided not to pay it.
e)VA Holdings has not expressed contrition, although this must be seen in the context to which I have already referred where VA Holdings at the very least believed it had settled the matter with Ms Bevis and it endeavoured to comply with the settlement.
f)VA Holdings has taken corrective action to the extent it has paid the redundancy amount.
g)There is nothing to suggest that there is any risk VA Holdings will repeat its contravention and, for that reason, there is no need for a penalty to reflect any element for specific deterrence.
[25] In the remainder of these reasons, where I refer to VA Holdings it should be taken that I also intend to refer to Mr Vu, unless the context suggests otherwise.
I next consider what is usually the single most important factor in assessing penalty; and that is general deterrence. This is a case where the employer – VA Holdings – dismissed an employee because the position the employee occupied had become redundant; and this occurred in circumstances where an award that had been expressly incorporated into the contract of employment contained a provision that applied to redundancies, and with which, for no apparent reason, the employer failed to comply. A penalty should be imposed to signal to other employers of the need to be acquainted with the terms of awards that apply to their employees, and to comply with their obligations under the award.
I consider that $12,600 (20% of the maximum of $63,000) is an appropriate penalty for VA Holdings to pay, and $2,520 (20% of the maximum of $12,600) for Mr Vu to pay.
Contravention in relation to leave loading amount
The nature and extent of the conduct is VA Holdings’ failure to pay by 15 October 2019 an amount of $622.56 that was payable under the Award, but instead pay it on 5 March 2020, some five months later. Although the “Terms of Settlement” contained mutual releases, Mr Xenos, who appeared on behalf of the respondents, did not submit this released VA Holdings of its obligations under the Award to pay the leave loading amount. He did submit, however, that VA Holdings and Mr Vu believed VA Holdings had no other liabilities to Ms Bevis. Whether that is so by itself would not carry much weight unless it could be said that VA Holdings and Mr Vu reasonably held such belief. I am satisfied they had no reasonable basis for believing VA Holdings had no other liability. Although it is true the “Terms of Settlement” contained broad mutual releases, the agreement reflected in that document occurred in the settlement of a claim for an unfair dismissal remedy, and there is nothing to suggest the parties turned their minds, or there was an occasion for them to turn their minds, to the liability VA Holdings had to pay the leave loading amount. I am satisfied they did not turn their minds to that question.
As for other matters that are relevant or potentially relevant to the assessment of penalty, I find as follows:
a)Ms Bevis suffered loss to the extent there was a delay in her being paid the leave loading amount. On the evidence before me, the loss Ms Bevis has suffered because of VA Holdings’ contravention is insignificant.
b)There is no evidence VA Holdings engaged in any similar previous conduct, or that the contravention was the result of any course of conduct.
c)As I have already found, Mr Vu deposes, and I accept, that VA Holdings is a small company with five employees.
d)I am not satisfied VA Holdings was aware it was required to pay the leave loading amount but decided not to pay it.
e)VA Holdings has not expressed contrition.
f)VA Holdings has taken corrective action to the extent it has paid the redundancy amount.
g)There is nothing to suggest that there is any risk VA Holdings will repeats its contravention and, for that reason, there is no need for a penalty to reflect any element for specific deterrence.
General deterrence, however, is a consideration that leads me to conclude that a penalty should be imposed, and imposed at a level to signal to other employers of the need to be acquainted with the terms of awards that apply to their employees, and to act according to their obligations under awards.
I consider that $6,300 (10% of maximum of $63,000) is an appropriate penalty for VA Holdings to pay, and $1,260 (10% of maximum of $12,600) for Mr Vu to pay.
Contravention in relation to one day job search
The nature and extent of the contravening conduct is the failure to pay by 15 October 2019 an amount of $156.24 that was payable under the Award, but instead pay that amount on 18 December 2019. For reasons I have already given in relation to the leave loading amount, I do not consider that any belief VA Holdings and Mr Vu may have had about the “Terms of Settlement” having settled all claims Ms Bevis had in relation to her employment would be reasonable and, for that reason, would be a factor against imposing a penalty.
As for other matters, I find that, given the small amount involved, the relative short delay in payments, and the absence of any evidence that Ms Bevis suffered any loss other than interest, the loss Ms Bevis has suffered because of VA Holdings’ contravention is insignificant. There is no evidence VA Holdings engaged in any similar previous conduct, or that the contravention was the result of any course of conduct. As I have already found, VA Holdings is a small company with five employees. I am not satisfied VA Holdings was aware it was required to pay the leave loading amount but decided not to pay it. VA Holdings has not expressed contrition, but it has taken corrective action to the extent it has paid the one day job search amount. There is nothing to suggest that there is any risk VA Holdings will repeat its contravention and, for that reason, there is no need for a penalty to reflect any element for specific deterrence. General deterrence, however, is a consideration that leads me to conclude that a penalty should be imposed, and imposed at a level to signal to other employers of the need to be acquainted with the terms of awards that apply to their employees, and to act according to their obligations under awards.
I consider that $3,150 (5% of maximum of $63,000) is an appropriate penalty for VA Holdings to pay, and $630 (5% of maximum of $12,000) for Mr Vu to pay.
Aggregation and totality
Because the three contraventions relate to three different provisions of the Award, s.557(1) of the FW Act does not apply to VA Holdings’ contraventions.
I am satisfied that the sums of the three penalties I have assessed, namely, $22,050 for VA Holdings, and $4,410 for Mr Vu, are a just and appropriate response to their contravening conduct. I do not, therefore, propose to adjust the amounts I have assessed because of the totality principle.
To whom penalties should be paid
Subsection 546(3)(c) of the FW Act provides that the Court may order that a pecuniary penalty be paid to a “particular person”. Ms Bevis is in the position of the applicant in Sayed v Construction, Forestry, Mining and Energy Union:[26]
In this appeal . . . the policy considerations of s 546(3) “speak loudly” in the circumstances to justify the payment of the penalty imposed to the individual affected by the contravention who, under the authority of the FW Act, commenced and maintained this enforcement proceeding. If [the applicant] had not pursued the action, it is unlikely that it would have been pursued. He took on the proceeding at obvious cost to himself.
[26] Sayed v Construction, Forestry, Mining and Energy Union [2016] FCAFC 4, [116]
It is appropriate, and I therefore propose, to make an order under s.546(3)(c) of the FW Act that the penalties I propose VA Holdings and Mr Vu pay be paid to Ms Bevis.
Interest
Ms Bevis has claimed interest, but she has not provided any calculation of the interest she claims I should order be paid. For that reason alone, I am not prepared to make an order for the payment of an amount for interest. In any event, I am not satisfied this is a case where an order for the payment of interest ought not be made. First, in relation to the redundancy amount, although I have found that VA Holdings ought to have paid that amount by 15 October 2019, its failure to make the payment earlier than it did was in large part due to what it reasonably understood it had agreed with Ms Bevis at the conciliation conference, which, in turn, it reasonably believed was recorded in the “Terms of Settlement”, and Ms Bevis’s not abiding by the terms to which VA Holdings reasonably believed Ms Bevis had agreed. Second, the interest that would be payable on the other two amounts would be relatively trivial.
Disposition
I propose to order that VA Holdings pay pecuniary penalties in the sum of $22,050 and Mr Vu pay pecuniary penalties in the sum of $4,410; and that they pay these penalties to Ms Bevis within 28 days after the day I pronounce these orders.
I certify that the preceding fifty-seven (57) paragraphs are a true copy of the reasons for judgment of Judge Manousaridis
Associate:
Date: 31 July 2020
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