Cai v Tiy Loy and Co Ltd (No. 3)
[2016] FCCA 675
•31 March 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CAI v TIY LOY & CO LTD (No. 3) | [2016] FCCA 675 |
| Catchwords: INDUSTRIAL LAW – Assessment of pecuniary penalties for contraventions of awards, contravention of s.340 of the Fair Work Act 2009 (Cth), and record keeping provisions – principles for assessing pecuniary penalties – whether decision in Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate; Construction, Forestry, Mining and Energy Union v Director, Fair Work Building Industry Inspectorate [2015] HCA 46 calls into question approach that has been taken to date in assessing pecuniary penalties. |
| Legislation: Crimes Act 1914 (Cth), s.4AA Fair Work Act 2009 (Cth), ss.4(1), 44, 45, 117, 340, 535, 536, 539(2), 545(2)(b), 546, 546(1), 546(2), 546(3), 546(3)(c), 557(1), 570 Fair Work (Transitional Provisions and Consequential Amendment) Act 2009 (Cth), sch.2, pt.3, item 11 |
| Attorney-General (SA) v Tichy (1982) 30 SASR 84 Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) [2010] FCA 977 Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54 Australian Competition and Consumer Commission v Woolworths Limited [2016] FCA 44 Australian Licensed Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd (No 2) [2011] FCA 394 Barbaro v The Queen (2014) 253 CLR 58 Blandy v Coverdale NT Pty Ltd ACN 102 611 423 [2008] FCA 1533 Cai v Tiy Loy & Co Ltd [2015] FCCA 715 Cai v Tiy Loy & Co Ltd (No.2) [2015] FCCA 2924 Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39 Construction, Forestry, Mining and Energy Union v Williams [2009] FCAFC 171 Contin v The Queen [2012] VSCA 247 Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate; Construction, Forestry, Mining and Energy Union v Director, Fair Work Building Industry Inspectorate [2015] HCA 46 Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCAFC 59 Fair Work Ombudsman vKentwood Industries Pty Ltd (No 3) [2011] FCA 579 Fair Work Ombudsman v Lu's Healthcare Pty Ltd & Anor [2016] FCCA 506 Kelly v Fitzpatrick [2007] FCA 1080; (2007) 166 IR 14 Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70 NSW Nurses & Midwives' Association v SOS Nursing & Home Care Service Pty Ltd & Anor [2015] FCCA 2181 Ponzio v B & P Caelli Constructions Pty Ltd [2007] FCAFC 65; (2007) 158 FCR 543 R v Holder (1983) 3 NSWLR 245 Royer v Western Australia [2009] WASCA 139 Sayed v Construction, Forestry, Mining and Energy Union [2016] FCAFC 4 Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; (2012) 287 ALR 249 Trade Practices Commission v CSR Ltd (1991) ATPR ¶41-076 |
| Applicant: | REE BIN CAI |
| Respondent: | TIY LOY & CO LTD |
| File Number: | SYG 2817 of 2012 |
| Judgment of: | Judge Manousaridis |
| Hearing date: | 11 December 2015 |
| Date of Last Submission: | 23 December 2015 |
| Delivered at: | Sydney |
| Delivered on: | 31 March 2016 |
REPRESENTATION
| Counsel for the Applicant: | Mr K G Bennett |
| Solicitors for the Applicant: | Andrew Wong & Co |
| Counsel for the Respondent: | Mr D Nagle |
| Solicitors for the Respondent: | People + Culture Strategies |
DECLARATIONS
From 26 July 2007 to 1 July 2009 the respondent contravened the following provisions of the Miscellaneous Workers General Services (State) Award (State Award), being “applicable provisions” within the meaning of s.719(1) of the Workplace Relations Act 1996 (Cth) (WR Act):
(a)cl.27 of the State Award, by failing to pay the applicant 17.5% annual leave loading;
(b)cl.21 of the State Award, by failing to pay the applicant overtime at the rate of time and one half for the first 2 hours and double time thereafter;
(c)cl.13 of the State Award, by failing to pay the applicant a penalty loading for working ordinary hours on Saturdays at the rate of time and one half;
(d)cl.13(iv) of the State Award, by failing to pay to the applicant a penalty loading of double time for working on a Sunday outside of ordinary hours;
(e)cl.25 of the State Award, by failing to pay to the applicant a penalty loading at the rate of double time and a half for time worked on a public holiday; and
(f)cl.4(iii) of the State Award, by failing to display a roster/notice notifying the commencing and ceasing times of ordinary hours of work.
From 1 July 2009 to 31 December 2009 the respondent contravened the following provisions of the State Award, being an “award-based transitional instrument” within the meaning of item 2(1) of Part 16 of Schedule 16 to the Fair Work (Transitional Provisions and Consequential Amendment) Act 2009 (Cth) (Transitional Act):
(a)cl.27 of the State Award, by failing to pay the applicant 17.5% annual leave loading;
(b)cl.21 of the State Award, by failing to pay the applicant overtime at the rate of time and one half for the first 2 hours and double time thereafter;
(c)cl.13 of the State Award, by failing to pay to the applicant a penalty loading for working ordinary hours on Saturdays at the rate of time and one half;
(d)cl.13(iv) of the State Award by failing to pay to the applicant a penalty loading of double time for working on a Sunday outside of ordinary hours;
(e)cl.25 of the State Award, by failing to pay to the applicant a penalty loading at the rate of double time and a half for time worked on a public holiday; and
(f)cl.4(iii) of the State Award, by failing to display a roster/notice notifying the commencing and ceasing times of ordinary hours of work.
From 1 January 2010 to 1 July 2012 the respondent contravened s.45 of the Fair Work Act 2009 (Cth) (FW Act) by contravening the following provisions of the Miscellaneous Award 2010 (2010 Award), being a “modern award” within the meaning of the FW Act:
(a)cl.23 of the 2010 Award, by failing to pay the applicant 17.5% annual leave loading;
(b)cl.22 of the 2010 Award, by failing to pay the applicant for overtime at the rate of time and one half for the first 3 hours and double time thereafter;
(c)cl.22 of the 2010 Award, by failing to pay the applicant a penalty loading at the rate of double time and a half for time worked on a public holiday; and
(d)cl.5 of the 2010 Award, by failing to display the award and the National Employment Standards at the workplace.
The respondent contravened reg.2.03 of the Fair Work (Transitional Provisions and Consequential Amendments) Regulations 2009 (Cth) (Transitional Regulations) by failing from 26 July 2007 to 1 July 2009 to maintain records as required by Division 2 of Part 19 of the Workplace Relations Regulations 2006 (Cth).
The respondent contravened s.535 and s.536 of the FW Act by failing to maintain records in relation to the applicant as required by regulations made pursuant to s.535 of the FW Act, and by failing to issue payslips to the applicant as required by s.536 of the FW Act.
The respondent contravened s.44 of the FW Act by failing to pay to the applicant five weeks pay in lieu of notice, contrary to s.117 of the FW Act.
By reason of the contraventions of the State Award and the 2010 Award the applicant is entitled to:
(a)an order under s.720(1) of the WR Act that the respondent pay to the applicant the amounts the respondent ought to have paid to the applicant under the State Award from 26 July 2007 to 30 June 2009, but, because of the contraventions referred to in the above declarations, the respondent did not pay to the applicant, together with interest on those amounts as provided for by s.722 of the WR Act;
(b)an order for compensation under s.545 of the FW Act in an amount equal to the sum of the amounts the respondent ought to have paid the applicant under the State Award from 1 July 2009 to 31 December 2009 and under the 2010 Award from 1 January 2010 to 1 July 2012, but, because of the contraventions referred to in the above declarations, the respondent did not pay to the applicant, together with interest on those amounts as provided for by s.547 of the FW Act.
ORDERS
Pursuant to s.720 of the WR Act and s.545 of the FW Act the respondent pay to the applicant $415,698.55 being the sum of the amounts the applicant ought to have paid the applicant under the State Award from 26 July 2007 to 31 December 2009 and under the 2010 Award from 1 January 2010 until 1 July 2012 but, because of the contraventions referred to in the above declarations, the respondent did not pay to the applicant, together with interest as provided for by s.722 of the WR Act and s.547 of the FW Act.
Pursuant to s.719 of the WR Act and s.546 of the FW Act the respondent pay a pecuniary penalty in the sum of $25,000 for the respondent’s contraventions referred to in declarations 1, 2, and 3.
Pursuant to s.546 of the FW Act, the respondent:
(a)pay a pecuniary penalty in the sum of $16,500 for the respondent’s contravention of s.340 of the FW Act as declared in the orders made on 27 March 2015;
(b)pay a pecuniary penalty in the sum of $3,000 for the respondent’s contravention referred to in declaration 4;
(c)pay a pecuniary penalty in the sum of $4,000 for the respondent’s contravention referred to in declaration 5; and
(d)pay a pecuniary penalty in the sum of $5,000 for the respondent’s contravention referred to in declaration 6.
The respondent pay the pecuniary penalties referred to in orders 9 and 10 to the applicant within 28 days of the making of these orders or within such further time as the applicant and the respondent may agree or as the Court may order.
There be no order as to costs.
The parties have liberty to apply in relation to the implementation of these orders.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 2817 of 2012
| REE BIN CAI |
Applicant
And
| TIY LOY & CO LTD |
Respondent
REASONS FOR JUDGMENT
Introduction
These reasons for judgment deal with one outstanding question of fact, the assessment of penalties and compensation, and an application for costs made by Mr Cai. These reasons should be read together with my two previous reasons for judgment.[1]
[1] Cai v Tiy Loy & Co Ltd [2015] FCCA 715; Cai v Tiy Loy & Co Ltd (No.2) [2015] FCCA 2924
Hours Mr Cai worked after injury
In my reasons for judgment published on 27 March 2015, I recorded Mr Cai’s evidence that, after he was injured, he worked six days a week between the hours of 8 am and 6 pm. I did not, however, make a finding to that effect.[2]
[2] Cai v Tiy Loy & Co Ltd [2015] FCCA 715 at [39]
Mr Cai was not cross-examined on that part of his evidence; and the respondent (Tiy Loy) filed no evidence contradicting Mr Cai’s evidence. In those circumstances, and given the other findings I have made based on my having accepted Mr Cai’s evidence, I accept Mr Cai’s evidence on this point, and find that, after he was injured, Mr Cai did work six days a week between the hours of 8 am and 6 pm.
Penalties
The jurisdiction of the Court to order pecuniary penalties is conferred by s.546(1) of the Fair Work Act 2009 (Cth) (FW Act). That subsection provides that the Court may “on application, order a person to pay a pecuniary penalty that the court considers is appropriate if the court is satisfied that the person has contravened a civil remedy provision”. Subsection 546(2) of the FW Act provides that the pecuniary penalty the Court may order must not, where the person who contravened a civil remedy provision is a corporation, 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) of the FW Act. For reasons I will shortly state, the Court also has jurisdiction under s.719(1) of the Workplace Relations Act 1996 (Cth) (WR Act) to make an order for pecuniary penalties in relation to contraventions of the WR Act that occurred before 1 July 2009, being the date on which the FW Act came into effect.
The first step in applying these provisions, therefore, is to identify Tiy Loy’s contraventions of the FW Act and of the WR Act.
Tiy Loy’s contraventions
There are four classes of contraventions. The first is Tiy Loy’s contravention of s.340 of the FW Act. That consisted of Tiy Loy’s decision to alter Mr Cai’s employment from full time to part time employment for the reason or for reasons that included as a particular reason Mr Cai’s having an entitlement to a benefit under the Workplace Injury Management and Workers Compensation Act 1998 (NSW) (Compensation Act).[3]
[3] Cai v Tiy Loy & Co Ltd [2015] FCCA 715 at [130]
The second class of contraventions consists of breaches of the Miscellaneous Workers General Services (State) Award (State Award) and the Miscellaneous Award 2010 (2010 Award). Tiy Loy contravened the following provisions of those awards:
a)cl.27 of the State Award and cl.23 of the 2010 Award by failing to pay the applicant 17.5% annual leave loading;
b)cl.21 of the State Award by failing to pay the applicant overtime at the rate of time and one half for the first 2 hours and double time thereafter;
c)cl.22 of the 2010 Award by failing to pay the applicant for overtime at the rate of time and one half for the first 3 hours and double time thereafter;
d)cl.13 of the State Award by failing to pay the applicant a penalty loading for working ordinary hours on Saturdays at the rate of time and one half;
e)cl.13(iv) of the State Award by failing to pay the applicant a penalty loading of double time for working on a Sunday;
f)cl.25 of the State Award by failing to pay the applicant a penalty loading at the rate of double time and a half for time worked on a public holiday;
g)cl.22 of the 2010 Award by failing to pay the applicant a penalty loading at the rate of double time and a half for time worked on a public holiday;
h)cl.4(iii) of the State Award by failing to display a roster/notice notifying the commencing and ceasing times of ordinary hours of work; and
i)cl.5 of the 2010 Award by failing to display the award and the NES at the workplace.
Tiy Loy’s failure to comply with the State Award up to and including 30 June 2009 did not constitute a contravention of the FW Act. It did, however, constitute a contravention of the WR Act. To see how that is so requires some explanation.
The Court’s power to order pecuniary penalties under the WR Act is found in item 11 of Part 3 of Schedule 2 to the Fair Work (Transitional Provisions and Consequential Amendment) Act 2009 (Cth) (Transitional Act). That item provides that the WR Act continues to apply on and after the “WR Act repeal day”, namely, 1 July 2009,[4] in relation to conduct that occurred before the “WR Act repeal day”. Subsection 719(1) of the WR Act provides that an “eligible court” (which, under s.717 of the WR Act, includes this Court) may impose a pecuniary penalty on a person in accordance with Division 2 of Part 14 of the WR Act if the person is bound by “an applicable provision”, and the person breaches that provision. The expression “applicable provision” in relation to a person is defined in s.717 of the WR Act as a term of, among other things, a “collective agreement”. Under cl.31 of Schedule 8 to the WR Act, terms and conditions of employment that had been determined by a “state award” and were not determined under a State employment agreement, were taken to be the subject of an agreement known as a “notional agreement preserving State awards” (NAPSA) that bound the parties who were already bound by the state award. Under cl.43 of Schedule 8 to the WR Act, a NAPSA could be enforced as if it were a collective agreement.
[4] Which, when read with the definition of “WR Act repeal” in item 2 of Schedule 1 to the Transitional Act and s.2 of the Transitional Act, is defined as 1 July 2009
There is no issue that the State Award, at least from the date on which Schedule 8 to the WR Act came into effect, namely, 27 March 2006, was a NAPSA. That means that by contravening provisions of the State Award from 27 March 2006 to 30 June 2009, Tiy Loy contravened “applicable provisions” within the meaning of s.717 of the WR Act and, thus, became liable to an order under s.719(1) of the WR Act for the payment of a pecuniary penalty for those contraventions.
The State Award continued as a NAPSA until 1 January 2010 when it was replaced by the 2010 Award. Each failure by Tiy Loy to comply with the State Award after 30 June 2009, but before 1 January 2010, constituted a contravention of the FW Act. That follows from Schedules 3 and 16 to the Transitional Act. Under item 2(2)(b) of Schedule 3 to the Transitional Act, a NAPSA is a “WR Act instrument”; under item 3(a) of Schedule 3, a WR Act instrument that was in operation immediately before the WR Act repeal day is a “transitional instrument”; and under item 5(a) of Schedule 3 to the Transitional Act, NAPSAs that are “transitional instruments” are “award-based transitional instruments”. Item 2(1) of Schedule 16 to the Transitional Act provides that a person must not contravene a term of an award-based transitional instrument that applies to the person. Item 16(1)(a) of Schedule 16 to the Transitional Act provides that Part 4-1 of the FW Act applies as if item 2 (among other items) of Schedule 16 was a provision of the FW Act and that the table in s.539(2) of the FW Act included the table in item 16 of Schedule 16. A contravention of item 2(1) of Schedule 16 to the Transitional Act, therefore, is a contravention of a civil remedy provision within the meaning of s.546 of the FW Act. That means, therefore, that Tiy Loy’s failure to comply with the State Award from 1 July 2009 to 30 June 2010 constituted contraventions of the FW Act and rendered it liable to an order for the payment of a pecuniary penalty under s.546(1) of the FW Act.
This, then, leads me to the 2010 Award. There is no issue that it is a “modern award”, that is, an award that was made under Part 2-3 of the FW Act. Section 45 of the FW Act provides that a person must not contravene a term of a modern award. A contravention of s.45 of the FW Act is a contravention of a civil remedy provision within the meaning of s.546 of the FW Act, and a person who contravenes s.45 of the FW Act, therefore, is liable to an order for a pecuniary penalty under s.557(1) of the FW Act.
The third class of contravention is Tiy Loy’s failure to keep appropriate records, and to issue appropriate payslips. Under the FW Act, the duty to keep records and issue pay slips are imposed by s.535 and s.536 of the FW Act respectively, and by regulations prescribed for the purposes of those provisions. Before the FW Act came into effect, the employer’s duty to keep records was imposed by reg.19.4 in Division 2 of Part 19 of Chapter 2 of the Workplace Relations Regulations 2006 (Cth) (WR Regulations), and the duty to issue payslips was imposed by reg.19.20 of the WR Regulations. Those regulations, which were made for the purposes of s.836 of the WR Act, were civil remedy provisions for the purpose of the WR Regulations.
The Court has jurisdiction to impose civil penalties in relation to an employer’s failure, before the FW Act came into effect, to comply with the record keeping provisions contained in Division 2 of Part 19 of Chapter 2 of the WR Regulations. That jurisdiction is conferred by reg.2.03 of the Fair Work (Transitional Provisions and Consequential Amendments) Regulations 2009 (Cth) (Transitional Regulations), which provides that, on and after the WR Act repeal day, reg.19.4 of the WR Regulations “continues to apply to require an employer to keep, or cause to be kept, an entry in a record for any part of the period identified in that regulation that has not expired before the WR Act repeal day”. Under reg.5.06 of the Transitional Regulations, sub-reg.2.03(2) of those regulations is a “transitional civil remedy provision” and is to be treated as a civil remedy provision for the purpose of s.539 of the FW Act. There does not appear to be, however, any equivalent provision in relation to an employer’s contravention of the obligation imposed by reg.19.20 of the WR Regulations to issue pay slips.
The fourth contravention is Tiy Loy’s failure to comply with s.44 of the FW Act which prohibits a person from contravening a provision of the National Eemployment Standards (NES). The relevant NES Tiy Loy contravened is s.117 of the FW Act, which prohibits an employer from terminating an employee’s employment, unless the employer either gives the employee notice as specified in s.117 of the FW Act or pays the employee an amount in lieu of notice.
How many contraventions?
Tiy Loy contravened s.340 of the FW Act only once. That, however, is not the case with its contraventions of the State Award and the 2010 Award. Each contravention of each separate obligation sourced in the State Award “is a separate contravention of an applicable provision for the purposes of s 719 of the WR Act”[5] and, between 30 June 2009 and 31 December 2009, item 2(1) of Schedule 16 to the Transitional Act; and each contravention of each separate obligation sourced in the 2010 Award is a separate contravention of s.45 of the FW Act. Similarly with the contraventions of reg.2.03 of the Transitional Regulations and, after 30 June 2009, s.535 and s.536 of the FW Act.
[5] Fair Work Ombudsman vKentwood Industries Pty Ltd (No 3) [2011] FCA 579 at [10] (McKerracher J)
When determining how many contraventions Tiy Loy engaged in, it is necessary to consider s.719(2) of the WR Act and s.557(1) of the FW Act, which are in similar terms. Subsection 557(1) of the FW Act provides that, for the purposes of Part 4.1 of the FW Act, two or more contraventions of a civil remedy provision referred to in s.557(2) is taken to constitute a single contravention if the contraventions are committed by the same person, and “the contraventions arose out of a course of conduct by the person”. Subsection 557(2) includes s.45 and, because of item 16(1)(f) of Schedule 16 to the Transitional Act, Item 2(1) of Schedule 16 to the Transitional Act and, because of reg.5.06 and reg.2.03 of the Transitional Regulations. Subsection 719(2) of the WR Act is similar to s.557(1) of the FW Act and is available to be applied, if the conditions for its application are present, to two or more contraventions of two or more “applicable provisions”. There is no provision under the FW Act, however, that permits the one contravention of a single provision of an award that was subject to enforcement both under the WR Act and the FW Act to be treated as a single contravention. Thus, a contravention by Tiy Loy of a term of the State Award before and after 1 July 2009 to which both s.719(2) of the WR Act and s.557(1) apply are two contraventions, one under the WR Act, and the other under the FW Act.
The manner in which s.557(1) of the FW Act and s.719(2) of the FW Act should apply to contraventions of terms of awards or enterprise agreements has been considered by the Federal Court in a number of cases. Some of those cases were referred to by Judge O’Sullivan in Fair Work Ombudsman v Lu's Healthcare Pty Ltd & Anor.[6] The effect of the Federal Court decisions is that the multiple contraventions of the same term of an award by the same person arising out of a course of conduct falls within s.557(1) of the FW Act, but not multiple contraventions of different terms of the same award, at least not where the substance of the obligations imposed by the terms do not overlap or involve cumulative obligations. This is how Reeves J, in Blandy v Coverdale NT Pty Ltd ACN 102 611 423, stated the relevant principles:[7]
In Gibbs v City of Altona [1992] FCA 374; (1992) 37 FCR 216 (‘Gibbs’) at 223, Gray J made a number of observations about the operation of s 178(2), which I consider apply equally to the similar provisions of s 719(2). First, each separate obligation found in an award is to be regarded as a separate “term”; secondly, whether a separate obligation is a separate term is determined by whether it is in substance a different obligation; and thirdly, where different terms impose cumulative obligations or obligations that substantially overlap, that may be taken into account by imposing a nominal (or no) penalty for some breaches and a substantial penalty for others.
[6] [2016] FCCA 506 at [31]
[7] [2008] FCA 1533 at [56]
Mr Cai and Tiy Loy disagree about how s.557(1) of the FW Act and s.719(2) of the WR Act should be applied to Tiy Loy’s breaches of the State Award and the 2010 Award. Mr Cai submits Tiy Loy contravened six distinct terms. These are:
a)failing to pay a 17.5% annual leave loading , contrary to cl.27 of the State Award, and cl.23 of the 2010 Award;
b)failing to pay overtime contrary to cl.21 of the State Award and cl.22.1 of the 2010 Award;
c)failing to pay a loading at the rate of time and a half for working ordinary hours on Saturday, contrary to cl.13 of the State Award;
d)failing to pay work on public holidays at the rate of double time and half, contrary to cl.25 of the State Award, and failing to pay a penalty rate of double time and a half for working on public holidays, contrary to cl.22 of the 2010 Award;
e)failing to pay for work on Sundays outside ordinary hours at the rate of double time, contrary to cl.13(iv) of the State Award; and
f)failing to display a notice notifying the commencing and ceasing of times of ordinary hours, contrary to cl.4(iii) of the State Award, and failing, contrary to cl.5 of the 2010 Award, to display the award and the NES at the workplace.
Tiy Loy, on the other hand, submits that in substance it contravened only two obligations – those requiring Tiy Loy to pay 17.5% holiday loading, and those requiring the payment of rates that applied to working outside normal hours and on the weekends and public holidays.
In my opinion, there were in substance four distinct obligations under the State Award and the 2010 Award Tiy Loy contravened – failure to pay holiday loading, failure to pay rates that applied to working outside ordinary hours and on the weekends and public holidays, the failure to display notices specifying the commencement and cessation of ordinary hours, and the failure to display the award and the NES at the workplace.
Finally, Mr Cai and Tiy Loy disagree that Tiy Loy’s contravention of s.44 of the FW Act by failing to comply with s.117 of the FW Act constitutes a distinct contravention. In my opinion, Tiy Loy’s contravention of s.44 of the FW Act, by failing to comply with s.117 of the FW Act, is a distinct contravention.
Both Mr Cai and Tiy Loy assumed that the obligations imposed by s.535 and s.536 of the FW Act are in substance the one obligation. I have doubts whether that is so but, for the purposes of these reasons, I will accept that assumption to be correct.
Mr Cai and Tiy Loy also appear to assume that those contraventions of the relevant provisions of the State Award, before and after the commencement of the FW Act, that in substance impose the same obligation should be treated as one contravention. In my opinion, that assumption is not correct. There is no provision under the Transitional Act that permits the treatment of contraventions of an applicable provision for which a penalty may be ordered under s.719 of the WR Act to be part of the one contravention of a provision under the FW Act.
Mr Cai and Tiy Loy also assume that Tiy Loy’s failure to comply with the record-keeping obligations imposed by Division 2 of Part 19 of the WR Regulations may be treated as the same contravention of s.535 and s.536 of the FW Act. I do not agree. As I will shortly show, the penalty for contravening s.535 and s.536 of the FW Act is different from the penalty that applies to a contravention of the record-keeping provisions under the WR Regulations.
It follows, therefore, that the contraventions of the WR Act and the FW Act for which a penalty may be imposed are as follows:
a)under s.719(1) of the WR Act:
i)contraventions of the provision of the State Award requirement payment of a 17.5% holiday loading;
ii)contraventions of provisions of the State Award requiring payment of rates that applied to working outside ordinary hours and on the weekends and public holidays; and
iii)contraventions of provisions of the State Award requiring the notification of the commencing and ceasing times of ordinary hours.
b)under s.557(1) of the FW Act:
i)contraventions of the provisions of the State Award and the 2010 Award requirement payment of a 17.5% holiday loading; and
ii)contraventions of provisions of the State Award and the 2010 Award requiring payment of rates that applied to working outside ordinary hours and on the weekends and public holidays;
iii)contraventions of reg. 2.03 of the Transitional Regulations;
iv)contraventions of s.535 and s.536 of the FW Act;
v)contravention of s.340 of the FW Act;
vi)contraventions of provisions of the State Award requiring the notification of the commencing and ceasing times of ordinary hours;
vii)contraventions of cl.5 of the 2010 Award requiring the displaying of the award and the NES at the workplace; and
viii)contravention of s.44 of the FW Act in relation to Tiy Loy’s failure to comply with s.117 of the FW Act.
Maximum penalties payable
Under s.546(2) of the FW Act, the pecuniary penalty the Court may impose must not, where the person who contravened the FW Act is a corporation, be more than the “5 times the maximum number of penalty units referred to in the relevant column of the table in subsection 539(2) of the Act”. The maximum penalty units specified in the table in s.539(2) of the FW Act for the contravention of each of s.340, item 2 of Part 16 to Schedule 16 to the Transitional Act, and s.45 of the FW Act, is 60 penalty units, and the maximum penalty units for contravention of s.536 of the FW Act is 30 penalty units. Thus, the maximum penalty units for which a penalty may be imposed for contraventions each of s.340 and s.45 of the FW Act and item 2 of Part 16 to Schedule 16 to the Transitional Act is 300 penalty units, and the maximum penalties that may be imposed for contravention of s.535 and s.536 is 150 penalty units. Under reg.5.06 of the Transitional Regulations, the maximum penalty unit for a contravention by a corporation of reg.2.03 is 20 penalty units. Thus, the maximum penalty units that may be imposed on a corporation that contravenes reg.2.03 is 100 penalty units. Subsection 719(4) of the WR Act provides that the maximum penalty units that may be imposed under s.719(1) of the WR Act for contravention of an “applicable provision” is 300 penalty units.
It remains to identify the monetary value of the penalties. Under s.4(1) of the FW Act and s.4(1) of the WR Act, “penalty unit” has the meaning given by s.4AA of the Crimes Act 1914 (Cth). Up to 28 December 2012 the penalty unit was $110. That means that the maximum penalties expressed in money terms that may be imposed on each of Tiy Loy’s contraventions are as follows:
Contravention
Amount
Under s.719(1) of the WR Act, contraventions of the provision of the State Award requiring payment of a 17.5% holiday loading
$33,000
Under s.719(1) of the WR Act, contraventions of provisions of the State Award requiring payment of rates that applied to working outside ordinary hours and on the weekends and public holidays.
$33,000
Under s.719(1) of the WR Act, contravention of provision under State Award requiring the notification of the commencing and ceasing times of ordinary hours.
$33,000
Under s.557(1) of the FW Act, contraventions of the provisions of the State Award and the 2010 Award requirement payment of a 17.5% holiday loading.
$33,000
Under s.557(1) of the FW Act, contraventions of provisions of the State Award and the 2010 Award requiring payment of rates that applied to working outside ordinary hours and on the weekends and public holidays
$33,000
Under s.557(1) of the FW Act, contraventions of reg. 2.03 of the Transitional Regulations
$11,100
Under s.557(1) of the FW Act, contraventions of s.535 and 536 of the FW Act
$16,500
Under s.557(1) of the FW Act, contraventions of provisions of the State Award requiring the notification of the commencing and ceasing times of ordinary hour and contraventions of the 2010 Award requiring the displaying of the award and the NES at the workplace
$33,000
Under s.557(1) of the FW Act, contravention of s.340 of the FW Act
$33,000
Under s.557(1) of the FW Act, contravention of s.44 of the FW Act in relation to s.117 of the FW Act.
$33,000
Having identified Tiy Loy’s contraventions for which I must consider whether to impose pecuniary penalties and, if so, the amount of those penalties, I must next identify the principles that should guide me in determining those questions.
Principles for assessing penalties
When assessing the amount of a pecuniary penalty that should be ordered under s.557(1) of the FW Act and under s.719 of the WR Act, it is important to have in mind the purpose or purposes for which pecuniary penalties are imposed. That subject was recently considered by the High Court in Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate; Construction, Forestry, Mining and Energy Union v Director, Fair Work Building Industry Inspectorate (CFMEU case).[8]
[8] [2015] HCA 46
Purpose of imposing penalties
In the CFMEU case, the plurality, in the context of the imposition of penalties under the Building and Construction Industry Improvement Act 2005 (Cth) (BCII Act), said that the purpose of a civil penalty “is primarily if not wholly protective in promoting the public interest in compliance”.[9] The plurality quoted[10] with approval what French J (as his Honour then was) said in Trade Practices Commission v CSR Ltd[11] in the context of the imposition of a civil penalty under s.76 of the Trade Practices Act 1974 (Cth):
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.
[9] [2015] HCA 46 at [55]
[10] [2015] HCA 46 at [55]
[11] (1991) ATPR ¶41-076 at page 52,152
The plurality also said that “civil penalties are not retributive, but like most other civil remedies essentially deterrent or compensatory and therefore protective”.[12] In a separate judgment, Keane J referred to French CJ, Crennan, Bell and Keane JJ in Australian Competition and Consumer Commission v TPG Internet Pty Ltd[13] referring with approval to the statement by the Full Court of the Federal Court in Singtel Optus Pty Ltd v Australian Competition and Consumer Commission[14] that a civil penalty for a contravention of the “must be fixed with a view to ensuring that the penalty is not such as to be regarded by [the] offender or others as an acceptable cost of doing business”.
[12] [2015] HCA 46 at [59]
[13] [2013] HCA 54; (2013) 250 CLR 640 at 659
[14] [2012] FCAFC 20; (2012) 287 ALR 249 at 265 [62] - [63].
Thus, the purpose of imposing civil penalties under the FW Act is to promote the public interest in complying with the FW Act; and that is to be achieved by putting a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the FW Act. Retribution is not a purpose for which a penalty may be imposed.
These observations of the plurality in the CFMEU case suggest that the only purpose for which a pecuniary penalty may be imposed is to deter the contravenor from again contravening the FW Act (specific deterrence), and from deterring others from contravening the FW Act (general deterrence). If that is what the plurality intended to say, however, the CFMEU case casts doubt on the correctness of the approach that has been taken to assessing pecuniary penalties for contraventions of the FW Act and the WR Act. Retribution or punishment has been taken to be a purpose for which a civil penalty may be imposed;[15] and a number of principles, borrowed from the law of sentencing, have been applied, principally as ameliorating factors, on the assumption that retribution is a purpose for imposing penalties. Thus, it has been said that the penalty that is to be imposed must be proportionate to the gravity of the contravening conduct,[16] and it must accord with prevailing standards of punishment.[17] Further, because the purpose of retribution is to inflict the punishment the offender deserves, the circumstances of the contravention of the law are especially important.[18] Additionally, the “one transaction principle”[19] and the “totality principle”[20] have been applied to cases of multiple contraventions of the WR Act and the FW Act to ensure that the contravenor is penalised no more than once for what in substance is the one contravention, and to ensure that the overall assessment of the penalty or penalties is or are reasonably proportional in the circumstances.[21]
[15] See, for example, Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCAFC 59 at [67]-[71]
[16] Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) [2010] FCA 977 at [5] (Barker J)
[17] Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) [2010] FCA 977 at [6] (Barker J)
[18] Ponzio v B & P Caelli Constructions Pty Ltd [2007] FCAFC 65; (2007) 158 FCR 543 at [93] (Lander J)
[19] See, for example, Construction, Forestry, Mining and Energy Union v Williams [2009] FCAFC 171.
[20] Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCAFC 59 at [41]
[21] See, for example, Construction, Forestry, Mining and Energy Union v Williams [2009] FCAFC 171 (Moore, Middleton, Gordon JJ); Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39 (Moore, Middleton, Gordon JJ); Sayed v Construction, Forestry, Mining and Energy Union, [2015] FCA 338 at [31] (Mortimer J)
Is it to be supposed that the plurality in the CFMEU case intended that the purpose of retribution, and the principles that have been applied in relation to assessing penalties in the light of that purpose, are not relevant to the assessment of pecuniary penalties for contravention of the FW Act or the WR Act? In my opinion, that question is to be answered in the negative. In its ordinary meaning, a “penalty” is a form of punishment,[22] and “punishment” is another word for retribution.[23] Retribution, therefore, is inherent in the nature of a penalty itself; an assessment of a pecuniary penalty under s.557(1) of the FW Act is nothing more than the measuring in money terms of the amount of retribution. Given that it is retribution that is measured when a penalty is being assessed, therefore, the factors that have been applied to determining the amount of retribution that should be visited on the contravenor – and in particular, the particular circumstances in which the contravening conduct occurred - remain relevant.
[22] The Oxford English Dictionary (online edition accessed on 12 March 2016) includes as definitions of “penalty” “[p]unishment, disadvantage, or liability” and “punishment imposed for breach of a law, rule, or contract”.
[23] The Oxford English Dictionary (online edition accessed on 12 March 2016) includes as a definition of “punishment” the “infliction of a penalty or sanction in retribution for an offence or transgression; (also) that which is inflicted as a penalty; a sanction imposed to ensure the application and enforcement of a law”.
In my opinion, apart from the specific matter with which the CFMEU case was concerned – the application of Barbaro v The Queen[24] to the assessment of pecuniary penalties - nothing the plurality said in the CFMEU case should be seen as casting doubt on the approach courts have been taking to the assessment of pecuniary penalties for contraventions of the FW Act. What the plurality may be taken to have said is that although the infliction of a penalty is a form of punishment – that is, a form of retribution - that is not the end for which the penalty is to be imposed. The purpose of a penalty is to promote compliance with the FW Act by inflicting retribution on the contravenor to deter the contravenor from contravening the FW Act again and, on the basis of the infliction of that punishment, to deter others from contravening that Act. The extent to which a penalty should be set to deter non-compliance with the FW Act, however, should be assessed after the Court considers matters that are relevant to the extent to which the contravenor should be punished in the first place.
[24] (2014) 253 CLR 58
Principles for assessing penalties – single contravention
The approach of most courts in assessing penalties for contravention of the FW Act is to take into account the factors that were identified by Mowbray FM in Mason v Harrington Corporation Pty Ltd.[25] These factors are: the nature and extent of the conduct which led to the breaches; the circumstances in which that conduct took place; the nature and extent of any loss or damage sustained as a result of the breaches; whether there had been similar previous conduct by the party committing the breach; whether the breaches were properly distinct or arose out of the one course of conduct; the size of the business enterprise involved; whether or not the breaches were deliberate; whether senior management was involved in the breaches; whether the party committing the breach had exhibited contrition; whether the party committing the breach had taken corrective action; whether the party committing the breach had cooperated with the enforcement authorities; the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and the need for specific and general deterrence.
[25] [2007] FMCA 7. In Kelly v Fitzpatrick [2007] FCA 1080; (2007) 166 IR 14 at [14] Tracey J adopted this same list of factors as “potentially relevant and applicable”.
Although any one or more of these factors may be relevant to the assessment of a pecuniary penalty in any given case, “courts have warned against the use of checklists because they give rise to the risk of transforming the process of instinctive synthesis into the application of a rigid catalogue of matters for attention”.[26] With these reservations in mind, I will later consider the factors identified in Mason that are relevant to the circumstances of this case.
Multiple contraventions[27]
[26] Australian Building & Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) [2010] FCA 977; (2010) 199 IR 373 at [10] (Barker J)
[27] Much of what is contained in this section of my reasons for judgment I have taken from my reasons for judgment in NSW Nurses & Midwives' Association v SOS Nursing & Home Care Service Pty Ltd & Anor [2015] FCCA 2181 at [72]-[79]
I have already referred to s.557(1) of the FW Act and s.719(2) of the WR Act which take two or more contraventions of a provision of the FW Act or of an applicable provision respectively to be a single contravention where the contraventions were committed by the one person arising out of a course of conduct by that person. Even where those provisions do not apply, however, it may be permissible when assessing a pecuniary penalty to consider whether a person’s multiple contraventions occurred as part of a single course of conduct. It may be permissible under a sentencing principle that is sometimes referred to as the “one transaction principle”. Owen JA stated that principle in Royer v Western Australia as follows:[28]
At its heart, the one transaction principle recognises that, where there is an interrelationship between the legal and factual elements of two or more offences with which an offender has been charged, care needs to be taken so that the offender is not punished twice (or more often) for what is essentially the same criminality. The interrelationship may be legal, in the sense that it arises from the elements of the crimes. It may also be factual, because of a temporal or geographical link or the presence of other circumstances compelling the conclusion that the crimes arise out of substantially the same act, omission or occurrences.
[28] [2009] WASCA 139 at [22]. This passage was included in a longer passage which was set out in Construction, Forestry, Mining and Energy Union v Williams [2009] FCAFC 171 with apparent approval of the Full Federal Court in Construction, Forestry, Mining and Energy Union v Williams [2009] FCAFC 171 at [17] (Moore, Middleton, Gordon JJ)
This principle has been held to be relevant to the assessment of penalties under the WR Act and the FW Act;[29] and in Sayed v Construction, Forestry, Mining and Energy Union,[30] after setting out a passage from the judgment of Wells J in Attorney-General (SA) v Tichy,[31] Mortimer J said:[32]
In fixing a penalty, just as imposing a sentence, the aim is, as Wells J observed, to “mould a just sentence for the conduct” found to have occurred, and where there are “truly two or more incursions into criminal conduct” to punish these incursions separately.
[29] See, for example, Construction, Forestry, Mining and Energy Union v Williams [2009] FCAFC 171 (Moore, Middleton, Gordon JJ); Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39 (Moore, Middleton, Gordon JJ); Sayed v Construction, Forestry, Mining and Energy Union [2015] FCA 338 at [31] (Mortimer J)
[30] [2015] FCA 338 at [31]
[31] (1982) 30 SASR 84 at pages 92-93
[32] [2015] FCA 338 at [34]
There is a related, but distinct,[33] sentencing principle, known as the “totality principle”. Under that principle, a sentencing judge is required “to impose a sentence or sentences which reflect the overall criminality of the offending for which the offender has been convicted”.[34] In R v Holder Street CJ described the principle as follows:[35]
The principle of totality is a convenient phrase, descriptive of the significant practical consideration confronting a sentencing judge when sentencing for two or more offences. Not infrequently a straight-forward arithmetical addition of sentences appropriate for each individual offence considered separately will arrive at an ultimate aggregate that exceeds what is called for in the whole of the circumstances. In such a situation the sentencing judge will evaluate, in a broad sense, the overall criminality involved in all of the offences and, having done so, will determine what, if any, downward adjustment is necessary, whether by telescoping or otherwise, in the aggregate sentences in order to achieve an appropriate relativity between the totality of the criminality and the totality of the sentences.
[33] Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70. At [42], Stone and Buchanan J said: “For the purpose of the present discussion the general principle which appears to be relied upon by the appellant [i.e., the “one transaction” principle] may be accepted, although it is important to distinguish it from the application of the totality principle which is a final check to be applied to ensure that a final, total or aggregate, penalty is not unjust or out of proportion to the circumstances of the case.”
[34] Contin v The Queen [2012] VSCA 247 at [38]
[35] R v Holder (1983) 3 NSWLR 245 at 260
The totality principle has been held to apply to the assessment of pecuniary penalties.[36]
[36] Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCAFC 59 at [41]
The method for assessing penalties for multiple contraventions of provisions of “applicable provisions” was described by McKerracher J in Fair Work Ombudsman vKentwood Industries Pty Ltd (No 3). His Honour said: [37]
1.First, each contravention of each separate obligation sourced in the Standard or the NAPSA is a separate contravention of an applicable provision for the purposes of s 719 of the WR Act. However, pursuant to s 719(2), multiple contraventions of the same applicable provision may be treated as a single contravention, if the Court considers them to be part of a single ‘course of conduct’. It is necessary to identify the maximum penalty for each separate contravention.
2.Second, it is necessary then to consider an appropriate penalty to impose in respect of each contravention (whether a single contravention alone or as part of a course of conduct), having regard to all of the circumstances of the case.
3.Next, to the extent that two or more contraventions have common elements, this may be taken into account when considering what is an appropriate penalty for each contravention. The respondents should not be penalised more than once for the same conduct. The penalties imposed by the Court should be an appropriate response to the respondents’ actions.
4.Finally, having fixed an appropriate penalty for each separate contravention, group of contraventions or course of conduct, a final review of the aggregate penalty is necessary to determine whether it is an appropriate response to the conduct which led to the contraventions. Put another way, a Court may apply an overall ‘instinctive synthesis’.
[37] [2011] FCA 579 at [10]
His Honour’s reference to “instinctive synthesis” should be read against what Edelman J said in Australian Competition and Consumer Commission v Woolworths Limited:[38]
The same “instinctive synthesis” approach does not directly apply to civil proceedings (see Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46 ; (2015) 90 ALJR 113, 127 [56] (French CJ, Kiefel, Bell, Nettle and Gordon JJ)). But there is a common process of assessing the relevant factors and synthesising a conclusion as to penalty where the parties have not agreed an appropriate penalty and the central purpose of the penalty is deterrence.
[38] [2016] FCA 44 at [131]
My approach
I have held that Tiy Loy’s contraventions of the same provisions of the State Award before the FW Act came into effect are distinct from the contraventions of the same provisions of the State Award that occurred after the FW Act came into effect. In substance, however, the contraventions are the same, and I propose to apply the “one transaction principle” to treat them as the one contravention. Accordingly, the contraventions that I will consider for the purposes of determining whether to impose pecuniary penalties, and, if so, the amount of the penalties I should impose, are as follows:
Contravention
Amount
Under s.719(1) of the WR Act and s.557(1) of the FW Act, contraventions of the provisions of the State Award and the 2010 Award requiring payment of a 17.5% holiday loading
$33,000
Under s.719(1) of the WR Act and 557(1) of the FW Act, contraventions of provisions of the State Award requiring payment of rates that applied to working outside ordinary hours and on weekends and public holidays.
$33,000
Under s.719(1) of the WR Act and 557(1) of the FW Act, contraventions of provisions of the State Award requiring the notification of the commencing and ceasing times of ordinary hour and contraventions of the 2010 Award requiring the display the award and the NES at the workplace
$33,000
Under s.557(1) of the FW Act, contraventions of reg. 2.03 of the Transitional Regulations
$11,100
Under s.557(1) of the FW Act, contraventions of s.535 and 536 of the FW Act
$16,500
Under s.557(1) of the FW Act, contravention of s.340 of the FW Act
$33,000
Under s.557(1) of the FW Act, contravention of s.44 of the FW Act in relation to s.117 of the FW Act
$33,000
I will assess the penalty for each contravention having regard to the factors referred to in Mason. I will then apply the “totality principle” to arrive at an overall assessment of the penalties I should impose.
Failure to pay rates that applied to working outside ordinary hours and on the weekends and public holidays
As is evidenced by the amount of compensation to which Mr Cai is entitled, the provisions of the State Award and the 2010 Award with which Tiy Loy failed to comply were significant components of the remuneration payable to Mr Cai; and the extent to which Tiy Loy failed to comply with them is significant. These matters way in favour of fixing the penalty at the upper end of the scale. Further, the nature and extent of the loss Mr Cai suffered is large and that, too, weighs in favour of fixing the penalty at the upper end of the scale.
Counsel for Tiy Loy submitted that the contravention related only to one employee. One difficulty with this submission is there is no evidence before me about the extent to which Tiy Loy has complied with industrial laws in relation to other employees during the period in which Mr Cai was an employee. I cannot therefore proceed on the assumption that Tiy Loy has complied with industrial laws in relation to all other employees, or that it has not so complied.
Counsel for Tiy Loy also submitted Mr Cai received benefits over and above his legal entitlements. These included his being provided with meals and board, and an opportunity to play mahjong. In my opinion, given the hours I found Mr Cai worked, I cannot view these benefits as carrying any material weight in assessing the nature and extent of Tiy Loy’s contraventions.
There is no evidence Tiy Loy committed similar breaches. That, however, warrants little weight in favour of fixing the penalty at the lower end of the scale. Tiy Loy’s breaches of the provisions of the State Award and of the 2010 Award persisted over a considerable period of time.
There is no evidence on the basis of which I could reasonably find Tiy Loy’s contraventions were deliberate, in the sense that those who managed Tiy Loy were aware that the State Award and 2010 Award applied to Tiy Loy and Mr Cai, and that Tiy Loy knowingly failed to comply with the award. Counsel for Mr Cai submitted that Tiy Loy had retained professional advisers to assist it. That may well be so. The evidence before me, however, indicates that Tiy Loy believed that Mr Cai was benefitting from his being present at Tiy Loy’s premises and was not an employee after 6 pm. It was not put to any of Tiy Loy’s witnesses – because it was not necessary to show – that Tiy Loy did not hold the beliefs it claimed it held. In those circumstances, I am not prepared to find that Tiy Loy did not hold those beliefs. These matters, therefore, weigh in favour of fixing a penalty at the lower end of the scale.
Tiy Loy has taken corrective action. These are detailed in the affidavit of Mr Choy. I am satisfied that if the changes referred to in Mr Choy’s affidavit are adhered too, there will be little risk of Tiy Loy repeating its contraventions of the 2010 Award and of its obligations as an employer under the FW Act. These matters weigh in favour of a lower penalty. Given the corrective action Tiy Loy has taken, therefore, the penalty does not need to reflect specific deterrence. The penalty, however, should reflect general deterrence. The amount of the penalty should signal to the community that the failure to pay employees their proper entitlements is a serious matter, even where such failure may be due to ignorance of the law.
Finally, I have considered the nature, size and financial standing of Tiy Loy and its business. The financial statements relating to Tiy Loy’s business that are annexed to the affidavit of Mr Choy made on 5 June 2015 satisfy me that Tiy Loy will not have any difficulty paying even the maximum penalty.
In all the circumstances, I am of the opinion that a penalty in the amount of $25,000 would be appropriate.
Failure to pay 17.5% holiday loading
The same observations I made in relation to Tiy Loy’s failure to pay rates that applied to working outside ordinary hours and on the weekends and public holidays apply in relation to Tiy Loy’s failure to pay 17.5% holiday loading. I am of the opinion that a penalty in the amount of $25,000 would be appropriate.
Failure to notify the commencing and ceasing times of ordinary hours and displaying award and NES at workplace
Tiy Loy’s breach of the provision of these parts of the State Award and 2010 Award were extensive. There is no evidence, however, the breaches were deliberate or that senior management of Tiy Loy was involved in the contraventions. Tiy Loy has taken remedial measures; it has employed a manager who prepares rosters and pay slips. There is little risk Tiy Loy will repeat the contravention of the equivalent provisions of the 2010 Award. In my opinion, an appropriate penalty is $5,000.
Contraventions of record keeping provisions
I will deal with these two contraventions together. The obligations imposed by reg.2.03 of the Transitional Regulations, and s.535 and s.536 of the FW Act are important. The keeping of records as required by these provisions assists in the compliance with the WR Act and the FW Act.
Tiy Loy’s contraventions of the record-keeping provisions were extensive. There is no evidence the breaches were deliberate or that senior management of Tiy Loy was involved in the contraventions. Tiy Loy has taken the remedial measures identified by Mr Choy in his affidavit, and, on the basis of those actions, it is unlikely Tiy Loy will again contravene s.535 and s.536 of the FW Act. It is unnecessary, therefore, for the penalty to reflect specific deterrence. There is a need, however, for the penalty to reflect general deterrence.
In the circumstances, a penalty of $6,500 for contravention of reg.2.03 of the Transitional Regulations and a penalty of $7,500 for contravention of s.535 and s.536 is appropriate.
Contravention of s.340 of the FW Act
I note the following matters about Tiy Loy’s contravention of s.340 of the FW Act:
a)The circumstances of Tiy Loy’s contravention of s.340 of the FW Act are serious. On my findings, Tiy Loy unilaterally altered Mr Cai’s terms of employment because Mr Cai was entitled to a benefit under the Compensation Act, that benefit being Tiy Loy’s obligation to formulate and implement an injury management plan in relation to the injury Mr Cai suffered on 7 January 2012. These matters weigh in favour of fixing the penalty at the upper end of the scale.
b)As to the nature and extent of the loss Mr Cai suffered, counsel for Tiy Loy submitted that Mr Cai did nothing to mitigate his loss. In my reasons for judgment of 27 March 2015 I found Mr Cai did not act unreasonably by not seeking employment after his employment with Tiy Loy was terminated.[39] My finding was, at least in part, based on my opinion that Tiy Loy bore the onus of proving that Mr Cai failed to mitigate his loss. I am not prepared to find, however, that such onus applies when assessing a penalty. Accordingly, I will not when assessing the amount of penalty give weight to my finding that Mr Cai did not act unreasonably by not seeking alternative employment.
c)There is no evidence of Tiy Loy having committed similar breaches. That weighs in favour of fixing the penalty at the lower end of the scale.
d)The financial statements of Tiy Loy’s business that are annexed to the affidavit of Mr Choy made on 5 June 2015 satisfy me that Tiy Loy will not have any difficulty paying even the maximum penalty. That is so even when regard is had to the other penalties that I have already assessed.
e)Tiy Loy’s contravention of s.340 of the FW Act was deliberate, in the sense I found that Tiy Loy had taken adverse action for reasons that included a prohibited reason. I do not find, however, that the person or persons who made the decision to alter Mr Cai’s employment was or were aware the decision was made in breach of any law. That is a matter that weighs in favour of fixing a penalty at the lower end of the scale.
f)The remedial steps, as detailed in Mr Choy’s affidavit, satisfy me that Tiy Loy is unlikely to repeat the contravention. The amount of the penalty need not reflect specific deterrence. The penalty, however, should reflect general deterrence. The amount of the penalty should signal to the community that the unilateral and disadvantageous alteration of an employee’s position because the employee has exercised his or her rights is a serious matter, even where such alteration is made pursuant to a decision made in ignorance of the law.
[39] Cai v Tiy Loy & Co Ltd [2015] FCCA 715 at [139]
In all the circumstances, I consider $16,500 to be an appropriate penalty.
Contravention of s.44 of the FW Act
Counsel for Tiy Loy submits that no penalty should be imposed for Tiy Loy’s contravention of s.44 because it paid to Mr Cai five weeks pay in lieu of notice before the proceedings commenced.
That Tiy Loy paid to Mr Cai an amount representing his entitlement under s.117 of the FW Act is a matter that favours the ordering of a penalty at the lower end of the scale. But there are other matters to consider. Of particular importance is general deterrence. To permit a contravener to escape the imposition of a penalty because the contravenor ultimately complied with his or her obligation would encourage employers not to perform their obligations under the FW Act.
In the circumstances, a penalty of $5,000 would be appropriate.
Application of totality principle
In my opinion, Tiy Loy’s failure to pay rates that applied to working outside ordinary hours, on weekends and on public holidays, its failure to pay the 17.5% holiday loading, its failure to post a notice of commencing and ceasing of ordinary hours and its failure to display the 2010 Award and the NES at the workplace is the product of one series of acts, and should in substance be considered to be one contravention. The one contravention is Tiy Loy’s failure to comply with the relevant award. One penalty, therefore, should be imposed for all three contraventions, and I propose that the penalty be $25,000.
Tiy Loy’s contraventions of reg.2.03 of the Transitional Regulations and s.535 and s.536 of the FW Act are in substance the same contravention. The combined total of the pecuniary penalties that should be imposed for the contraventions should be $7,000. I propose to impose a penalty of $3,000 for contravention of reg.2.03, and $4,000 for contravention of s.535 and s.536 of the FW Act.
Tiy Loy’s contravention of s.340 of the FW Act, however, is a separate contravention. The penalty I have already assessed for that contravention, namely, $16,500, should remain. I propose to order that Tiy Loy pay a pecuniary penalty of $16,500 for its contravention of s.340 of the FW Act. Tiy Loy’s contravention of s.44 in relation to its failure to comply with s.117 is also a separate contravention, and the penalty I have already assessed for that contravention, namely, $5,000, should remain.
Assessment of compensation
The jurisdiction of the Court to order that Tiy Loy pay to Mr Cai the amounts it ought to have paid him under the State Award before 1 July 2009 is s.720 of the WR Act. That provides that a person who has not received an amount which an employer ought to have paid to the employee under an “applicable provision” may sue for the amount of the payment in an “eligible court”. The Court’s jurisdiction to order Tiy Loy pay to Mr Cai amounts it ought to have paid to him after 30 June 2009 under the State Award and under the 2010 Award is s.545(2)(b) of the FW Act. That paragraph empowers the Court to make an order awarding compensation for loss that a person has suffered because of a contravention of a civil remedy provision.
Counsel for the parties have agreed on the calculation of the amounts I should order Tiy Loy pay to Mr Cai, based on the findings I made in my earlier reasons for judgment. I thank the parties and their legal representatives for reaching that agreement.
Under that agreement, the amounts I should award Mr Cai are set out in a document titled “Summary Underpayment, Public Holiday, Annual Leave” (Summary) that by leave was sent by email to my Associate on 23 December 2015. I propose to mark the document as exhibit 5.
On the basis of the calculations contained in the Summary, as at 23 December 2015 Mr Cai was entitled to be paid $412,153.36. Mr Cai is also entitled to interest of $35.81 per day. As I propose to give judgment on 31 March 2016, the amount for which I should enter judgment as at that day is $415,698.55. I propose, therefore, to enter judgment in favour of Mr Cai in the amount of $415,698.55 .
Costs
Mr Cai applies for an order for costs. That application is made under s.570 of the FW Act which permits the Court to order a party to pay the costs of the other party if, among other things, the Court is satisfied that the first-mentioned party’s unreasonable act or omission caused the other party to incur the costs.
Mr Cai submits that he incurred costs as a result of the unreasonable acts or omissions of Tiy Loy, those acts being Tiy Loy’s not accepting offers Mr Cai had made to resolve the proceedings. Mr Cai relies on three letters. One is a letter dated 9 October 2012 from the solicitors for Tiy Loy to Mr Cai’s solicitors stating they looked forward to receiving from Mr Cai’s solicitors “the particulars and formalised position with respect to your client’s claim for an alleged underpayment” by 29 October 2012. The letter refers to Mr Cai having made a without prejudice offer of $27,000 “under your client’s General Protection Application”. The second letter is from Mr Cai’s solicitors to Tiy Loy’s solicitors dated 25 October 2012. It refers to Mr Cai having met with Tiy Loy’s board members that resulted in Mr Cai’s having been provided with a document for Mr Cai to sign. Mr Cai’s solicitors requested they be provided with a copy of the document. The third is a letter from Mr Cai’s solicitors to Tiy Loy dated 6 May 2014 in which it is stated that “[w]e have our client’s instructions that as full and final settlement on all matters arising from his employment, he is prepared to accept the sum of $90,000.00”. That letter was sent the day before the hearing commenced.
It has been held that costs could be awarded under s.570 of the FW Act against a party who unreasonably does not accept a reasonable offer of settlement on the basis that such non-acceptance may constitute “an unreasonable act or omission, [which] caused another party to the proceeding to incur costs in connection with the proceeding”.[40] That a party who has not accepted an offer of settlement is in a worse position than if the party had accepted the offer does not necessarily mean that the party’s non-acceptance of the offer was unreasonable. Nor can the extent of the disparity between the position the party who has not accepted the offer finds himself or herself or itself at the end of the proceeding and the position that party would have been in had he or she or it accepted the offer necessarily mean the party acted unreasonably in not accepting the offer. Thus, the fact that Tiy Loy did not accept an offer to pay $90,000 in circumstances where Tiy Loy will, as a result of the orders I propose to make, require to pay five times that amount cannot by itself indicate Tiy Loy acted unreasonably.
[40] Australian Licensed Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd (No 2) [2011] FCA 394 at [29] (Barker J)
Counsel for Tiy Loy submitted that the first two letters do not record or, at least, do not record with sufficient particularity, that Mr Cai had made a formal offer. I accept that submission. As for the offer made on 6 May 2014, counsel submitted it was not reasonable for Tiy Loy to have accepted it because it was made on the day before the hearing. I also accept that submission. Counsel also submitted that the letter was ambiguous because it was not clear whether the offer extended to Mr Cai not applying for penalties. I do not accept that submission.
Even if I were to find that it was not unreasonable for Mr Cai to have made the offer to settle on the day before the hearing, I would nevertheless not have concluded Tiy Loy acted unreasonably in not accepting the offer. That Mr Cai offered to settle his claims against Tiy Loy on a basis that was significantly more favourable to Tiy Loy than the orders I will be making in these proceedings, does not by itself satisfy me that Tiy Loy acted unreasonably in not accepting the offer. It may have been that at the time it received the offer, Tiy Loy had reasonable grounds for believing that the proceeding would have a more favourable outcome for it than its accepting Mr Cai’s offer. I am not prepared to find that Tiy Loy did not hold any such reasonable grounds.
For these reasons, I do not propose to order that Tiy Loy pay Mr Cai’s costs.
Disposition
I propose to:
a)make declarations in relation to the contraventions for which I will make orders under s.720 of the WR Act and s.545 of the FW Act, and for which I will order pecuniary penalties;
b)order that Tiy Loy pay to the applicant the amount of $415,698.55;
c)order that Tiy Loy pay a pecuniary penalty of $25,000 in relation to Tiy Loy’s failure to comply with its obligations under the State Award and the 2010 Award;
d)order that Tiy Loy pay $3,000 in relation to its contravention of reg.2.03 of the Transitional Regulations and $4,000 in relation to its contraventions of s.535 and s.536 of the FW Act;
e)order that Tiy Loy pay a pecuniary penalty of $16,500 in relation to Tiy Loy’s contravention of s.340 of the FW Act; and
f)order that Tiy Loy pay a pecuniary penalty of $5,000 in relation to Tiy Loy’s contravention of s.44 of the FW Act.
Mr Cai submits that the Court should order under s.546(3)(c) of the FW Act that Tiy Loy pay the pecuniary penalties I might order to Mr Cai. The exercise of the power conferred by s.546(3) of the FW Act was recently considered by the Full Federal Court in Sayed v Construction, Forestry, Mining and Energy Union, where the Court said that the power conferred by s.546(3) of the FW Act “is ordinarily to be exercised by awarding any penalty to the successful applicant”.[41] I also propose, therefore, to make an order under s.546(3)(c) of the FW Act that Tiy Loy pay the pecuniary penalties to Mr Cai within 28 days or within such further time as the parties may agree or the Court may order.
[41] [2016] FCAFC 4 at [101] (Tracey, Barker, and Katzmann JJ)
I certify that the preceding seventy-nine (79) paragraphs are a true copy of the reasons for judgment of Judge Manousaridis
Date: 31 March 2016
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