Dixon v Pro-Tect Security Management Pty Ltd (No 2)
[2024] FedCFamC2G 47
•29 January 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Dixon v Pro-Tect Security Management Pty Ltd (No 2) [2024] FedCFamC2G 47
File number(s): SYG 1973 of 2021 Judgment of: JUDGE CAMERON Date of judgment: 29 January 2024 Catchwords: INDUSTRIAL LAW – contravention of Award in breach of the Fair Work Act 2009 (Cth).
INDUSTRIAL LAW – compensation – dependant on contravention or purported contravention of a civil remedy provision.
Legislation: Fair Work Act 2009 (Cth), ss 45, 539, 545, 546, 557, 557A, 570
Crimes Act 1914 (Cth), s 4AA
Cases cited: Dixon v Pro-Tect Security Management Pty Ltd [2022] FedCFamC2G 854
Dafallah v Fair Work Commission (2014) 225 FCR 559
Leggett v Hawkesbury Race Club Limited (No 4) (2022) 293 FCR 608
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157
Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (2018) 264 FCR 155
Gibbs v Mayor, Councillors and Citizens of City of Altona (1992) 37 FCR 216
Kelly v Fitzpatrick (2007) 166 IR 14
McIver v Healey [2008] FCA 425
Rocky Holdings Pty Ltd v Fair Work Ombudsman (2014) 221 FCR 153
Fair Work Ombudsman v Lohr (2018) 158 ALD 457
Johnson v The Queen (2004) 78 ALJR 616
Fair Work Ombudsman v Lifestyle SA Pty Ltd [2014] FCA 1151
Australian Competition and Consumer Commission v Yazaki Corporation (2018) 262 FCR 243
Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560
Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450
Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557
Carbone v James McConvill and Associates Pty Ltd [2019] FCA 1305
Division: Fair Work Number of paragraphs: 48 Date of last submissions 20 December 2022 Date of hearing: On the papers Place: Sydney Counsel for the Applicant: Mr A. Neal Solicitor for the Applicant: Slater & Gordon Lawyers Counsel for the Second Respondent: Mr D. Burwood Solicitor for the Second Respondent: Elysium Law Firm ORDERS
SYG 1973 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: JAI DIXON
Applicant
AND: PRO-TECT SECURITY MANAGEMENT PTY LTD (ABN 51145301391)
First Respondent
TAREK SOBH
Second Respondent
STEVE MOSS
Third Respondent
ORDER MADE BY:
JUDGE CAMERON
DATE OF ORDER:
29 JANUARY 2024
THE COURT ORDERS THAT:
1.The first respondent pay the applicant compensation of $19,940.62 together with interest of $4,500.00.
2.The first respondent pay the applicant penalties totalling $20,000.00.
3.The first respondent pay the applicant 25% of his costs of the proceeding assessed in accordance with the Court’s scale as at today.
4.The applicant file written submissions on the calculation and quantification of costs within 21 days.
5.The first respondent file any written submissions in reply within 42 days.
6.The application be otherwise dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
Judge Cameron
INTRODUCTION
This is the second judgment in this proceeding concerning alleged underpayments by the first respondent, Pro-Tect Security, of its erstwhile employee, Mr Dixon, the applicant. In the First Judgment, Dixon v Pro-Tect Security Management Pty Ltd [2022] FedCFamC2G 854, it was found that Pro-Tect Security had contravened the Security Services Industry Award 2010 (2010 Award) and the Security Services Industry Award 2020 (2020 Award), collectively the Award, and so also s.45 of the Fair Work Act 2009 (Cth) (FW Act) by failing to pay Mr Dixon his casual loading and penalty rate entitlements during its employment of him. It was also found that further submissions were necessary on the question whether the second respondent, Mr Sobh, was liable as an accessory to that conduct.
The parties have filed written submissions touching on these issues. Mr Dixon’s submissions attached spreadsheets concerning the claim for compensation. He also filed an affidavit he had affirmed on 22 November 2022.
These reasons concern questions of compensation and penalty consequent upon the findings made in the First Judgment.
LEGISLATION
Compensation
Sections 545 and 557 of the FW Act relevantly provide:
545 Orders that can be made by particular courts
Federal Court and Federal Circuit and Family Court of Australia (Division 2)
(1) The Federal Court or the Federal Circuit and Family Court of Australia (Division 2) may make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision.
(2) Without limiting subsection (1), orders the Federal Court or Federal Circuit and Family Court of Australia (Division 2) may make include the following:
(a)an order granting an injunction, or interim injunction, to prevent, stop or remedy the effects of a contravention;
(b) an order awarding compensation for loss that a person has suffered because of the contravention;
(c) an order for reinstatement of a person.
…
557 Course of conduct
(1) For the purposes of this Part, 2 or more contraventions of a civil remedy provision referred to in subsection (2) are, subject to subsection (3), taken to constitute a single contravention if:
(a) the contraventions are committed by the same person; and
(b) the contraventions arose out of a course of conduct by the person.
(2) The civil remedy provisions are the following:
…
(b) section 45 (which deals with contraventions of modern awards);
…
Penalties
Sections 539(2) and 546(2) of the FW Act provide that the maximum pecuniary penalty for a contravention of s.45 of the FW Act, if not a serious contravention under s.557A of the FW Act, is 60 penalty units for individuals and 300 penalty units for corporations. It was not suggested that this case involved serious contraventions.
Pursuant to s.4AA of the Crimes Act 1914 (Cth), at all times relevant to this proceeding, a penalty unit was worth:
(a)$210 in the period up to 30 June 2020; and
(b)$222 in the period on and from 1 July 2020.
Costs
Section 570 of the FW Act relevantly provides:
570 Costs only if proceedings instituted vexatiously etc.
(1) A party to proceedings (including an appeal) in a court (including a court of a State or Territory) in relation to a matter arising under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or section 569 or 569A.
(2) The party may be ordered to pay the costs only if:
…
(b) the court is satisfied that the party’s unreasonable act or omission caused the other party to incur the costs; or
…
EVIDENCE
Mr Dixon’s affidavit of 22 November 2022 annexed copies of emails and payslips sent to him by Pro-Tect Security between 27 November 2018 and 9 September 2020. Also annexed were copies of his rosters.
SUBMISSIONS
Applicant
Compensation
Mr Dixon’s submissions in chief referred to the pay rates, including casual loading, applicable from time to time to the job classification that was found in the First Judgment to be the one relevant to him. Reference was also made to the circumstances in which the Award provided that penalty rates would apply and what those rates would be. It was submitted that Mr Dixon had been paid wages at a flat rate that varied over time, with a higher rate being paid for work on public holidays. It was submitted that all of those rates were less than what Mr Dixon had been entitled to be paid at the relevant times for particular periods of work. In addition to not being paid the casual loading at all and so being underpaid at the minimum for ordinary hours worked, Mr Dixon submitted that he had not been paid relevant penalties, saying:
…The First Respondent failed to pay the Applicant penalty rates in accordance with the 2010 Award and the 2020 Award on each and every occasion on which the Applicant performed hours of work for the First Respondent during Night Span, Saturday Span and Sunday Span and Public Holiday Span, during the Employment Period, the $32 per hour rate not being equal to the minimum hourly rate including casual loading payable for work on a public holiday in accordance with those Awards.
I said in the First Judgment:
79.Although I accept that Mr Sobh was aware of the Award and had a managerial role at Pro-Tect Security once he had bought the company, the evidence does not go so far as to indicate what that role involved apart from high-level direction. Relevantly, apart from one pay rise and the investigation that followed Mr Dixon’s complaint to the FWC, there is no evidence that Mr Sobh had any involvement at all in issues concerning Mr Dixon’s remuneration. I am not persuaded that Mr Sobh was knowingly concerned in or party to Pro-Tect Security’s contraventions.
80.However, Mr Sobh has indicated in his written submissions that he “accepts liability” for underpayment of Mr Dixon during the time when he owned Pro-Tect Security which, as he has only conceded the failure to pay the casual loading, can be taken to be a reference to that. Even so, he did not admit to having been an accessory to the company’s contraventions in failing to pay that loading.
Mr Dixon submitted that even though it has not been found that Mr Sobh was an accessory to Pro-Tect Security’s contraventions, regard should nevertheless be had to his admission of “liability” in respect of the failure to pay casual loading. Mr Dixon argued that consistently with the Court’s power to make remedial and compensatory orders under s.545 of the FW Act it should find, in the exercise of the broad discretion conferred by that section, that Pro-Tect Security and Mr Sobh were jointly and severally liable for the underpayment of his casual loading entitlements.
Penalties
No penalty was sought against Mr Sobh.
Mr Dixon accepted that Pro-Tect Security’s contraventions of cl.10.5 of the 2010 Award and cl.11.2 of the 2020 Award and s.45 of the FW Act by not paying him his casual loading entitlements, were part of a course of conduct and that its contraventions of cl.22.3 of the 2010 Award and cl.20.2 of the 2020 Award and s.45 of the FW Act by not paying him his penalty rates entitlements, were part of a separate course of conduct. He referred in that regard to s.557 of the FW Act, quoted earlier in these reasons.
Having identified those courses of conduct, Mr Dixon submitted that they were not interrelated and should not be grouped together, with the consequence that they attracted separate penalties. He argued that the casual loading contraventions were grounded on facts known to Pro-Tect Security from the beginning of and throughout his employment whereas the penalty rates contraventions arose from time to time out of particular and discrete factual circumstances. It was also submitted that the casual loading contraventions arose out of the nature of his employment whereas the penalty rate contraventions arose out of the particular hours he worked.
Mr Dixon submitted that the nature, gravity and seriousness of the contraventions required penalties at the higher end of the relevant range. He contended that he had complained about his pay throughout his employment but that Pro-Tect Security had only acknowledged his complaints after he approached the Fair Work Ombudsman around the time of his resignation, and that since it had been sold by Mr Sobh in 2022 it had not engaged with the proceeding or taken any other positive step.
Costs
Mr Dixon also sought his costs of the proceeding from Pro-Tect Security on the basis that its failure to comply with the orders of the Court from time to time or to engage with the proceeding more generally once Mr Sobh had ceased to be owner was unreasonable conduct engaging s.570 of the FW Act.
Respondents
Mr Sobh made submissions but Pro-Tect Security did not.
Mr Sobh submitted that it was not clear from Mr Dixon’s spreadsheets how the amount he claimed had been calculated and whether it reflected the total period during which Mr Dixon worked for Pro-Tect Security or the shorter period during which Mr Sobh owned the company, which commenced on 4 November 2019. He argued that Mr Dixon’s affidavit did not clarify the situation and repeated his evidence led in the earlier part of the proceeding that during the period that Mr Sobh had owned Pro-Tect Security, Mr Dixon had been underpaid his casual loading entitlements by $3,017.60.
Mr Sobh also invited the Court to resist Mr Dixon’s submission that, in the exercise of its broad discretion as to remedies under s.545 of the FW Act, it should find him to be an accessory to Pro-Tect Security’s contraventions.
CONSIDERATION
Compensation
Generally
Compensation may not be ordered under s.545 of the FW Act unless a person has contravened, or proposes to contravene, a civil remedy provision. If that criterion is satisfied, compensation may be awarded if the Court “considers [that to be] appropriate”.
As to the existence of a compensable loss, in Dafallah v Fair Work Commission (2014) 225 FCR 559 Mortimer J said at 596 [158]:
While by no means operating as a mandatory approach to a discretion such as that conferred by s 545(1), with respect I adopt the remarks of Lee J in Aitken v Construction, Mining, Energy, Timberyards, Sawmills and Woodworkers Union of Australia (WA Branch) (1995) 63 IR 1 considering factors relevant to an award of compensation under s 170EE of the then Industrial Relations Act 1988 (Cth). His Honour said (at 9), that the Court will:
have regard to what is reasonable in the circumstances and will look at what would have been likely to occur had the Act not been contravened … The Court will consider the detriment occasioned to the employee by the employer’s contravention of the Act, and the extent to which it is reasonable to compensate the employee for such consequences.
Her Honour went on to observe at 597 [164] that the burden remained on the applicant to prove their loss.
In Leggett v Hawkesbury Race Club Limited (No 4) (2022) 293 FCR 608, Rares J said:
31.The expressions used in s 545(2)(b) “compensation” and “loss that a person has suffered” are not defined in the Fair Work Act. But the provision creates a causal link that the loss for which compensation may be awarded must arise “because of the contravention” of that Act…
51.Any award under s 545(2)(b) is not made at common law. Rather, it is a form of statutory compensation for loss in supplementation of the more general power in s 545(1) to make “any order the court considers appropriate” if satisfied that a person has contravened a civil remedy provision. And, the relevant causal nexus between the entitlement to an order for compensation is that the person suffered the loss “because of the contravention”.
…
56.[The applicant’s] loss, to which the compensation payable under s 545(2)(b) applies, is to be measured by comparing her position as it is against what it would have been but for the Club’s contravention of the Fair Work Act.
Quantum
Pro-Tect Security has not engaged with the proceeding and, most relevantly, has adduced no evidence and made no arguments in contradiction of Mr Dixon’s case.
Mr Sobh’s written submissions made rhetorical arguments questioning Mr Dixon’s spreadsheets but did not identify in what particular they were inaccurate. Reference was made to a spreadsheet that had been annexed to Mr Sobh’s affidavit filed in the earlier part of the proceeding but that document was obscure and inadequately explained. No forensic accountant’s report was relied on. That spreadsheet was of no assistance in determining the accuracy of Mr Dixon’s spreadsheets.
Mr Sobh did argue that the spreadsheets were not explained by an affidavit, but they were said to be based on Mr Dixon’s own records of his employment which he had copied and annexed to his 22 November 2023 affidavit. It was said in Mr Dixon’s written submissions that the spreadsheets were based on the information contained in those employment records. That has not been shown to have been incorrect and I accept his submission.
Pro-Tect Security
In the absence of any evidence or submissions by or on behalf of Pro-Tect Security, I accept that it owes Mr Dixon the $19,940.62 particularised in the second spreadsheet. To that should be added a lump sum for interest of $4,500.00.
Mr Sobh
It has already been noted that Mr Sobh is willing to take responsibility for the underpayment of Mr Dixon’s casual loading entitlements. He has expressed that willingness in terms of an admission but I have found that he was not an accessory to the underpayments and it must be noted that he has denied being liable with Pro-Tect Security. In the First Judgment, after having found that, notwithstanding that purported admission in relation to the underpayment of the casual loading, Mr Sobh had not been an accessory to Pro-Tect Security’s contraventions, I said:
81.No party adverted to the relevance of s.545(1) of the FW Act to Mr Sobh’s concession. Further submissions on that issue are necessary.
Section 545 of the FW Act was quoted earlier in these reasons. It is concerned with remedies and does not provide a separate power to find a party liable for a contravention of the FW Act, as Mr Dixon’s written submissions assumed.
As Mr Dixon observed in his written submissions in reply, the Court invited the parties to make submissions on the power of the Court under s.545 to order a party to pay compensation. The relevant point was that the Court’s discretion under s.545 of the FW Act is only engaged if a person has contravened a civil remedy provision and it is implicit that remedies may only be granted as against a party who has committed such a contravention. Because I have found that Mr Sobh has not contravened the FW Act, no order for compensation lies, or can be made, against Mr Sobh notwithstanding his willingness to accept responsibility for the casual loading underpayments.
Penalties
Quite apart from the fact that Mr Dixon did not seek penalties against him, as Mr Sobh has not contravened the FW Act, he is not liable to be penalised under that Act. However, Pro-Tect Security did contravene the Act and is so liable.
Considerations
The purpose of civil penalties of the sort available under the FW Act is deterrence, not compensation: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157 at 195 [116]; Dafallah v Fair Work Commission (2014) 225 FCR 559 at 593 [140]. In Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (2018) 264 FCR 155, the Full Court of the Federal Court said:
It is unnecessary to engage in any extended discussion of principle. Of particular significance is the recognition that deterrence (general and specific) is the principal and indeed only object of the imposition of a penalty — to put a price on contravention that is sufficiently high to deter repetition by the contravener and others who might be tempted to contravene the Act: French J in Trade Practices Commission v CSR Ltd [1990] FCA 762; [1991] ATPR 41-076 at 52,152, cited by the plurality in Commonwealth v Director of the Fair Work Building Industry Inspectorate (Civil Penalties Case) [2015] HCA 46; (2015) 258 CLR 482 at [55]. ... (at 167 [19])
In this case, the question of penalty is to be determined as follows:
(a)the Court is to identify the separate contraventions involved. Each contravention of a separate obligation in the Award and the FW Act is a separate contravention: Gibbs v Mayor, Councillors and Citizens of City of Altona (1992) 37 FCR 216 at 223; Kelly v Fitzpatrick (2007) 166 IR 14 at 17 [11]; McIver v Healey [2008] FCA 425 at [16]; Rocky Holdings Pty Ltd v Fair Work Ombudsman (2014) 221 FCR 153 at 159 [13]; Fair Work Ombudsman v Lohr (2018) 158 ALD 457 at 469 [29];
(b)the Court should consider whether contraventions resulting from any particular course of conduct ought to be treated as a single contravention under s.557(1) of the FW Act (“course of conduct”);
(c)because a contravener should not be penalised twice for what is, in substance, the same conduct, to the extent that two or more contraventions arise out of the same course of conduct or the one transaction, that fact should be taken into account when considering whether a “concurrent” or single penalty should apply to those contraventions: Johnson v The Queen (2004) 78 ALJR 616 at [4]-[5]; Fair Work Ombudsman v Lifestyle SA Pty Ltd [2014] FCA 1151 at [61] - [63]. Australian Competition and Consumer Commission v Yazaki Corporation (2018) 262 FCR 243 at 294-296 [226]-[234], (the “course of conduct” or “grouping” principle). These considerations are distinct from the totality principle: Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 at 396 – 398 [41]-[46] (per Stone and Buchanan JJ);
(d)the Court should determine an appropriate penalty to impose in respect of each contravention that is to be penalised (whether a single contravention, a course of conduct or group of contraventions) having regard to all of the circumstances of the case; and
(e)having fixed an appropriate penalty for each contravention or group of contraventions, the Court should consider the aggregate penalty to determine whether it is an appropriate response to the contravening conduct; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560, (the “totality principle”).
When determining the appropriate penalty to impose, regard should be had to all of the circumstances of the case, guided by the various discretionary considerations discussed in authorities such as Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450 at 460-461 [18]-[19], in order to arrive at a single result that is an instinctive synthesis of those various factors. In circumstances such as the present, where the contraventions occurred over a period during which the value of a penalty unit changed, it would be appropriate, when setting the penalties to be imposed, to have regard to the value of a penalty unit at the end of the period of contravention, although regard may also be had to the fact that lower amounts applied for part of the period: Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557 per Katzmann J at [396]–[401].
Discussion
The nature and extent of the conduct which led to the breaches.
Mr Dixon was paid at flat rates throughout his two year employment with Pro-Tect Security with little or no regard being given to the particular wages he was entitled to under the Award from time to time. The contravention was lengthy and went unaddressed.
The nature and extent of any loss or damage sustained as a result of the breaches.
I accept that Mr Dixon was underpaid $19,940.62 over the course of his employment which is a significant sum for a low wage worker.
Whether the breaches were properly distinct or arose out of the one course of conduct.
I accept Mr Dixon’s arguments that the casual loading and penalty rates contraventions are distinct courses of conduct and that two penalties should be imposed.
Whether or not the breaches were deliberate.
The evidence adduced by Mr Dixon in the earlier stage of this proceeding indicates that Pro-Tect Security was aware that its employees were not being paid the “minimum wage” which indicates that the breaches were deliberate.
Whether there is a history of contraventions
It has not been demonstrated that Pro-Tect Security has contravened the FW Act at other times or in other respects.
Whether the party committing the breach had exhibited contrition, taken corrective action and co-operated in the investigation and resolution of the matter.
As already noted, Pro-Tect Security has not engaged with the proceeding. It has also not taken any corrective action nor demonstrated any contrition or willingness to address the issues presented, except to the extent that Mr Sobh did so when owner of the company.
The need for specific and general deterrence.
The evidence suggests that Pro-Tect Security contracted to provide security services at rates which made it impossible for it to pay its security guards their award entitlements and to produce a profit as well. It is unclear if operating at break-even would have allowed award wages to be paid. Whatever the case, it is important to manifest the Court’s disapproval of Pro-Tect Security’s underpayment practices by imposing a penalty which includes significant elements for specific deterrence, as there is no evidence suggesting that Pro-Tect Security has ceased to trade following its sale by Mr Sobh, and general deterrence, to discourage others from repeating what Pro-Tect Security did.
Result
The maximum penalty for each of Pro-Tect Security’s contraventions of s.45 of the FW Act is $66,600.00. I find that Pro-Tect Security should pay a penalty of $10,000.00 in respect of each contravention. Those penalties total $20,000.00 which I consider reasonable in the circumstances. It should be paid to Mr Dixon.
COSTS
In support of his application for costs, Mr Dixon cited Carbone v James McConvill and Associates Pty Ltd [2019] FCA 1305. In that case under the FW Act, the respondents’ persistent failure to comply with procedural orders led to a successful application by the applicant for a self-executing order for summary judgment. The applicant was awarded his costs of the interlocutory application on the basis that it had been necessitated by the respondents’ undeniably egregious history of non-compliance.
The present application for costs is distinguishable from Carbone’s case in that it concerns the costs of the whole proceeding in which Pro-Tect Security has been largely silent or absent. Even so, Pro-Tect Security has not sought to explain its absence from the proceeding in the period after Mr Sobh sold it and, if it was unwilling to mount a defence, it should have admitted the underpayments and saved all concerned the time and effort of addressing those questions. Some time and effort would nevertheless have been necessary to decide the question of penalties.
In the circumstances I consider that Pro-Tect Security’s inaction, which caused Mr Dixon to incur costs that he would not have had to incur if admissions had been made, was unreasonable. Mr Dixon should have, as against Pro-Tect Security, an order for 25% of his costs of the proceeding assessed in accordance with the Court’s scale as at today. Mr Dixon should file written submissions on the calculation and quantification of those costs within 21 days. Pro-Tect Security may file written submissions within 21 days thereafter.
CONCLUSION
Pro-Tect Security is to pay Mr Dixon compensation of $19,940.62 together with interest of $4,500.00.
Pro-Tect Security is to pay penalties totalling $20,000.00 to Mr Dixon.
Pro-Tect Security is to pay 25% of the applicant’s costs of the proceeding, assessed in accordance with the Court’s scale of costs.
In all other respects, the application will be dismissed.
I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Cameron. Associate:
Dated: 29 January 2024
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