Fair Work Ombudsman v Absolute Thai Pty Ltd
[2022] FedCFamC2G 422
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Absolute Thai Pty Ltd [2022] FedCFamC2G 422
File number(s): MLG 2446 of 2021 Judgment of: JUDGE SYMONS Date of judgment: 2 June 2022 Catchwords: INDUSTRIAL LAW— Application for default judgment pursuant to rule 13.05(2)(c) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 – applicant seeking declaration of contravention of the Fair Work Act 2009 (Cth) – failure of the respondent to comply with compliance notice – whether penalty should be imposed and level of penalty to be imposed – consideration of nature and circumstances of the conduct – consideration of any contrition, corrective action and cooperation with enforcement authority – the need for specific and general deterrence – penalty imposed at 50% of statutory maximum Legislation: Fair Work Act 2009 (Cth) ss 12, 545, 546, 547, 550, 700, 716
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 rr 1.06, 4.03, 4.04, 6.08, 13.04, 13.05
Cases cited: Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd (2006) 236 ALR 665; [2006] FCA 1427
Australian Competition and Consumer Commission v MSY Technology Pty Ltd (2012) 201 FCR 378; [2012] FCAFC 56
Fair Work Ombudsman v Tester [2021] FCCA 771
Kelly v Fitzpatrick (2007) 165 IR 14; [2007] FCA 1080
Macquarie Bank Limited v Seagle (2005) 146 FCR 400; [2005] FCA 1239
Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7
Phonographic Performance ltd v Maitra (1998) 41 IPR 225 (United Kingdom)
Rathner; in the matter of Mildura Grand Pty Ltd (in liq) v Bendigo Skyrider Pty Ltd [2011] FCA 626
Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550
Speedo Holdings B.V. v Evans (No 2) [2011] FCA 1227
Division: Division 2 General Federal Law Number of paragraphs: 46 Date of last submission/s: 24 May 2022 Date of hearing: 24 May 2022 Place: Melbourne Applicant Solicitors Fair Work Ombudsman First Respondent No appearance Second Respondent No appearance ORDERS
MLG 2446 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: ABSOLUTE THAI MELBOURNE PTY LTD
First RespondentRONALD NAH
Second Respondent
ORDER MADE BY:
JUDGE SYMONS
DATE OF ORDER:
2 JUNE 2022
THE COURT DECLARES THAT:
1.Upon admissions which the Respondents are taken to have made consequent upon the Respondents' default pursuant to r 13.04(2) of the Federal Circuit and Family Court of Australia (General Federal Law) Rules 2021 (“Rules”):
(a)the First Respondent contravened s 716(5) of the Fair Work Act 2009 (Cth) (“FW Act”) by failing to comply with a compliance notice given to it by Fair Work Inspector Kez Ma (“FWI Ma”) on 25 September 2020 (“2010 Award Compliance Notice”);
(b)the First Respondent contravened s 716(5) of the FW Act by failing to comply with a compliance notice given to it by FWI Ma on 25 September 2020 (“2020 Award Compliance Notice”);
(c)the Second Respondent was involved, within the meaning of s 550(2) of the FW Act, in the First Respondent’s contraventions of s 716(5) of the FW Act by failing to comply with the 2010 Award Compliance Notice and the 2020 Award Compliance Notice (“Compliance Notices”).
THE COURT ORDERS THAT:
2.Pursuant to s 545(1) of the FW Act, the First Respondent take the steps that were required by each of the Compliance Notices within 28 days of the order by:
(a)calculating and paying to Ms Christabel Chen the outstanding entitlements required to be paid by each of the Compliance Notices (“Underpayment”);
(b)calculating and paying any superannuation contributions payable on the Underpayment into Ms Chen’s nominated superannuation fund;
(c)preparing and producing to the Applicant a schedule outlining its calculations of the Underpayment and any payable superannuation contribution; and
(d)providing evidence to the Applicant of the payment of the Underpayment and any payable superannuation contribution.
3.Pursuant to s 547(2) of the FW Act, the First Respondent pay interest calculated in accordance with the applicable pre-judgment interest rate prescribed by the Federal Court of Australia within 28 days of this order to:
(a)Ms Chen on the Underpayment; and
(b)Ms Chen’s nominated superannuation fund on any payable superannuation contribution.
4.Pursuant to s 546(1) of the FW Act, within 28 days, the First Respondent pay a pecuniary penalty of $16,650 to the Commonwealth in respect of the two contraventions declared in paragraphs 1(a) and 1(b) above.
5.Pursuant to s 546(1) of the FW Act, within 28 days, the Second Respondent pay a pecuniary penalty of $3,330 to the Commonwealth in respect of his involvement, within the meaning of s 550(2) of the FW Act, in the First Respondent’s two contraventions of s 716(5) of the FW Act declared in paragraph 1 above.
6.Order 1 of the Court’s Orders dated 10 November 2021 be vacated.
7.A copy of these orders be served upon the Respondents in accordance with r 6.11(2) of the Rules.
8.The Applicant have liberty to apply on seven days’ notice in the event that any of the above orders are not complied with.
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 SYMONS:
INTRODUCTION
The applicant (“the FWO”) applies under r 13.05(2)(c) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (“the Rules”) for default judgment against the respondents in a proceeding the FWO has brought under the Fair Work Act 2009 (Cth) (“FW Act”).
The FWO claims that the first respondent (“Absolute Thai”) contravened s 716(5) of the FW Act by failing to comply with the requirements of two compliance notices issued under s 716(2) of the FW Act, and that the second respondent, Mr Nah, was involved in Absolute Thai’s contraventions.
PROCEDURAL HISTORY
The FWO commenced this proceeding on 27 September 2021 by filing an application and a statement of claim. The FWO served the application and statement of claim on Absolute Thai and Mr Nah on 30 September 2021. Service was effected on both respondents by way of personal service on Mr Nah, who, relevantly, was (and remains) the sole director and secretary of Absolute Thai (r 6.08(1)(a) of the Rules).
The matter was listed before me for a first directions on 10 November 2021. According to an affidavit made by Ms Willoughby, the lawyer for the FWO, Mr Nah, on 7 November 2021, sent an email to the FWO (copied to my associate) in which he advised that he would not be attending the directions hearing as he was currently overseas. Despite being informed (as was the fact) by the FWO that it was important that he attend but that his physical attendance was not required as the directions hearing was to be conducted electronically by Microsoft Teams, neither respondent appeared or was represented at the directions hearing.
On that date, I made orders that by 17 November 2021, both respondents file and serve a notice of address for service and that by 8 December 2021, they file and serve a response to the FWO’s application and any defence to the FWO’s statement of claim. I also ordered that until a notice of address for service was filed, service of documents be effected on both respondents by sending copies of documents to Mr Nah’s email address (“November orders”).
The FWO served the November orders on the respondents via email on 10 November 2021. Neither respondent filed a notice of address for service by 17 November 2021 (or, as events transpired, at all).
Between 15 November 2021 and 15 December 2021, the FWO corresponded with the respondents (at all times, with Mr Nah) in relation to the preparation of a statement of agreed facts. Reflecting these discussions, the FWO informed the Court that it did not consider the respondents to be in default of order 4 of the November orders which had required them to file and serve a response and any defence by 8 December 2021.
On 21 December 2021 I made orders, including that by 24 January 2022, the parties file and serve a statement of agreed facts and if the parties did not comply with this order, the respondents each file and serve a response to the FWO’s application and any defence to the FWO’s statement of claim. The orders also provided that if either respondent did not file a response (or defence) by 31 January 2022, the FWO could file and serve an application seeking default judgment against the respondents by 14 February 2022 (“December orders”). The December orders were served on both respondents via email on 13 January 2022.
Between 13 January 2022 and 3 February 2022, the FWO made several attempts to contact the respondents via email and telephone in relation to these proceedings. In the last email, sent to Mr Nah on 3 February 2022, the FWO advised the respondents that as they had not filed and served a notice of address for service as required by the November orders or filed and served a response and any defence as required by the December orders, it intended to file an application seeking default judgment.
On 14 February 2022, the FWO filed an application in a case for default judgment. That application, together with an affidavit made by Ms Willoughby, was served on the respondents by email sent on 23 February 2022.
On 21 February 2022, I made orders listing the FWO’s application for default judgment and application for penalties for hearing on 24 May 2022. I also made orders for the filing and service of affidavit evidence and submissions on penalty with the respondents required to file such material on or before 6 May 2022 (“February orders”). The February orders were served on the respondents via email on 23 February 2022.
The respondents did not file any material responsive to the February orders and did not appear when the matter came before me on 24 May 2022. On that date, Ms Willoughby appeared for the FWO and made submissions on the question of whether this was an appropriate case for default judgment and whether (and in what amount) orders for pecuniary penalties should be made against the respondents.
In addition to its application and statement of claim filed on 27 September 2021, the FWO relied upon the following further documents:
(a)Affidavit of Graham Madders filed 25 October 2021;
(b)Affidavit of Laura Willoughby filed 10 November 2021;
(c)Affidavit of Laura Willoughby filed 14 February 2022;
(d)Affidavit of Laura Willoughby filed 6 April 2022 (“Third Willoughby affidavit”); and
(e)Affidavit of Natalie Marie May filed 6 April 2022 (“May affidavit”).
The FWO also produced an affidavit of Laura Willoughby affirmed on 24 May 2020 in which its deponent provided evidence of the steps (and attempted steps) taken by the FWO to serve on the respondents its outline of submissions, the Third Willoughby affidavit and the May affidavit. Those steps involved posting (by express post) these documents to the registered office of Absolute Thai on 8 April 2022 and sending the documents via email to an address identified by Mr Nah in his incoming passenger card when he returned to Australia on 10 January 2022. The documents, as well as a cover email that informed the respondents of the hearing date and time and that orders, including the imposition of pecuniary penalties could be made in their absence, was sent to the respondents via this new email address on 23 May 2022.
I am satisfied in these circumstances that the respondents were properly served with these documents and had notice and knowledge (if not actual, at least constructive), that the FWO would apply for default judgment and orders for pecuniary penalties on 24 May 2022 and would do so on the basis of the material identified at [13]. I am further satisfied that it is appropriate to hear and determine the FWO’s application for default judgment and penalties in the absence of an appearance from the respondents.
RULE 13.05(2)
Sub-rule 13.05(2) of the Rules applies to a respondent who “is in default”. Under r 13.04(2) of the Rules a respondent is in default if the respondent has not satisfied the applicant’s claims and the respondent has failed to do one or more of the things identified in r 13.04(2)(b) of the Rules. The things identified in r 13.04(2)(b) that are relevant to the application before me are the failure to give an address for service before the time for doing so has expired, the failure to file a response or defence before the time for doing so has expired, the failure to comply with an order of the Court in the proceeding, and the failure to defend the proceeding with due diligence.
When a respondent is in default, or when a respondent is absent from a hearing, the Court may make one of the orders set out in r 13.05(2) of the Rules. Relevant to the application before me is r 13.05(2)(c) which provides that the Court may:
(c)if the proceeding was started by an application supported by a statement of claim or the Court has ordered that the proceeding continue on pleadings – give judgment against the respondent for the relief that:
(i) the applicant appears entitled to on the statement of claim; and
(ii) the Court is satisfied it has power to grant.
ARE THE RESPONDENTS IN DEFAULT?
The respondents have failed to:
(a)give a notice of address for service, whether contrary to r 6.01 of the Rules or order 2 of the November orders;
(b)file and serve a response (or any defence), whether contrary to rr 4.03 and 4.04(3)(a) of the Rules, or order 4(a) of the December orders;
(c)defend the proceeding with due diligence, including by their failure to attend the first directions hearing on 10 November 2021.
I am therefore satisfied that the respondents are in default within the meaning of r 13.04(2) of the Rules.
PRINCIPLES
The principles guiding the exercise of this Court’s power in relation to default judgment and similar powers available to the Federal Court of Australia under its rules are well-settled. These principles include:
(a)First, r 13.05(2)(c) of the Rules “does not require proof of the claim by evidence, but only requires that – on the face of the statement of claim – there is a claim for the relief sought”.[1]
(b)Second, before the Court may make an order under r 13.05(2)(c) of the Rules it must be satisfied that the document, which the applicant has filed with the application, is on its face a “statement of claim”. A statement of claim is a pleading, which means it must comply with the rules of pleading.[2]
(c)Third, it follows from (b) that the statement of claim must plead at least one reasonable cause of action that supports the granting of the relief the applicant seeks in the application. More particularly, “each element of the relevant civil wrong” of which the applicant complains must be “properly and discretely pleaded in the statement of claim”.[3]
(d)Fourth, although 13.05(2)(c) of the Rules does not require proof of the claim by evidence, it is permissible for the applicant to adduce evidence that is relevant to the relief sought.[4]
(e)Finally, the Court retains a discretion not to make an order under 13.05(2)(c) of the Rules even if the preconditions for making an order are satisfied.[5]
[1] Rathner; in the matter of Mildura Grand Pty Ltd (in liq) v Bendigo Skyrider Pty Ltd [2011] FCA 626 at [9].
[2] Under r 1.06(3) of the Rules, the rules of the Federal Court Rules 2011 (Cth) (FC Rules) identified in Schedule 1 to the Rules apply, with necessary changes, to general federal law proceedings. The FC Rules there identified include the rules of pleading.
[3] Macquarie Bank Limited v Seagle [2005] FCA 1239 at [24].
[4] Phonographic Performance ltd v Maitra (1998) 41 IPR 225, at p 230.
[5] See the authorities decided under O 35A of the Federal Court Rules 1979 (Cth) referred to by Flick J in Speedo Holdings B.V. v Evans (No 2) [2011] FCA 1227 at [20].
THE FWO’S PLEADED CASE AND CLAIM FOR RELIEF
In its statement of claim the FWO alleges the following:
(a)Absolute Thai operates a restaurant trading as “Wokks” in Carlton.
(b)Mr Nah is (and was at relevant times) a director, secretary and shareholder of Absolute Thai; a person responsible for the overall operation, management and control of Absolute Thai; the person who corresponded with the FWO on behalf of Absolute Thai in respect of its investigation and the compliance notices, including by completing (incomplete) schedules of calculations; and the person responsible for ensuring that Absolute Thai complied with its legal obligations under the FW Act.
(c)On around 21 July 2020 Mr Ma (“FWI Ma”), a Fair Work Inspector appointed under s 700 of the FW Act, conducted an investigation into Absolute Thai, after which FWI Ma formed a reasonable belief that:
(i)Absolute Thai employed Ms Chen as a casual food and beverage attendant from 15 July 2019 to 3 July 2020;
(ii)the Restaurant Industry Award 2010 (“2010 Award”) and the Restaurant Industry Award 2020 (“2020 Award”) covered and applied to Ms Chen’s employment with Absolute Thai;
(iii)Ms Chen was classified – from 15 July 2019 to 4 August 2019, as a level 1 employee, food and beverage attendant grade 1; and from 5 August 2019 to 3 July 2020, as a level 2 employee, food and beverage attendant grade 2;
(iv)Ms Chen worked on weekdays, Saturdays and public holidays;
(v)Absolute Thai paid Ms Chen an amount/s for work that were insufficient to meet her entitlements under the 2010 Award and the 2020 Award; and
(vi)because of the matters in (i)-(v), Absolute Thai contravened – in respect of the period 15 July 2019 to 28 May 2020, clauses 20.1 (minimum wage for ordinary hours worked on Monday to Friday), 13.1 (casual loading of 25% for ordinary hours worked on Monday to Friday), 34.1 (150% of the minimum wage in respect of ordinary hours worked on a Saturday) and 34.1 of the 2010 Award (250% of the minimum wage in respect of ordinary hours worked on a public holiday) (“2010 Award contraventions”) and – in respect of the period 29 May 2020 to 3 July 2020, cl 11.1 of the 2020 Award (minimum wage and loading for ordinary hours worked) (“2020 Award contraventions”);
(d)On 25 September 2020, FWI Ma gave Absolute Thai a compliance notice pursuant to s 716(2) of the FW Act in relation to the 2010 Award contraventions (“2010 Compliance Notice”) and a compliance notice pursuant to s 716(2) of the FW Act in relation to the 2020 Award contraventions (“2020 Compliance Notice”) (together, “the Compliance Notices”) in which Absolute Thai was required to do the following (“Specified Action”);
(i)identify the hours worked by, and amounts paid to, Ms Chen for each entitlement that was required to be paid by the 2010 Award and the 2020 Award;
(ii)calculate the amounts Absolute Thai should have paid to Ms Chen in respect of each entitlement that was required to be paid by the 2010 Award and the 2020 Award;
(iii)pay Ms Chen the difference between the amount paid and the amount Absolute Thai should have paid to Ms Chen and calculate and pay the additional superannuation contributions (if any) to be made on the underpayment; and
(iv)produce reasonable evidence of compliance with the requirements of the Compliance Notice.
(e)Absolute Thai failed to take the Specified Action as required by the 2010 Compliance Notice and the 2020 Compliance Notice and, therefore, contravened s 716(5) of the FW Act.
(f)Given the matters referred to in (b), Mr Nah had actual knowledge of the Compliance Notices and Absolute Thai’s failure to comply with the Compliance Notices and, for those reasons, was a person involved, within the meaning of s 550(2) of the FW Act, in Absolute Thai’s contravention of s 716(5) of the FW Act.
The FWO seeks the following relief:
(a)Declarations that Absolute Thai contravened s 716(5) of the FW Act and that Mr Nah was a person involved in Absolute Thai’s contraventions of s 716(5) of the FW Act.
(b)Orders pursuant to s 545(1) of the FW Act that Absolute Thai take the steps the Compliance Notices required it to undertake;
(c)Orders pursuant to s 547(2) of the FW Act, that Absolute Thai pay interest on Ms Chen’s underpayment; and
(d)An order under s 546(1) of the FW Act, that Absolute Thai and Mr Nah pay a pecuniary penalty.
TO WHAT RELIEF IS THE FWO ENTITLED?
The statement of claim alleges a cause of action based on a contravention of s 716(5) of the FW Act, which provides that a “person must not fail to comply with a notice given under this section”. The “notice” referred to in s 716(5) is the notice which s 716(2) of the FW Act authorises “an inspector” to issue. “Inspector” is defined in s 12 of the FW Act as a “Fair Work Inspector”, which, in turn, is defined in s 12 of the FW Act to mean (relevantly) a person appointed as a Fair Work Inspector under s 700 of the FW Act. Subsection 716(2) provides for the giving of a notice in the circumstances identified in s 716(1) of the FW Act, namely, where an inspector reasonably believes that a person has contravened, among other things, a term of a modern award. The notice that s 716(2) of the FW Act authorises an inspector to give is one which requires the person whom the inspector reasonably believes has contravened (among other things) a term of a modern award to take specified action “to remedy the direct effects of the contravention referred to in subsection (1)”.
I am satisfied that the statement of claim filed in this matter and upon which the applicant relies complies with the rules of pleading and properly pleads a cause of action that supports the granting of relief. In particular, I am satisfied that the facts alleged in the statement of claim establish that Absolute Thai contravened s 716(5) of the FW Act, and that Mr Nah was a person involved, within the meaning of s 550(2) of the FW Act, in Absolute Thai’s contraventions.
SHOULD DECLARATIONS BE MADE?
It is not in doubt that this Court has a wide discretion to make declarations, including in circumstances where due to their default, the respondents are deemed to have made admissions. In this respect, there is no requirement, as there once was, for there to be a proper contradictor before declaratory relief can be granted. The requirement for a contradictor is met if there is a party who had an interest to oppose the declaratory relief that was being sought.[6] However, it has been recognised that in exercising appropriate caution when considering declaratory relief, the particular characteristics of an application for default judgment should be borne in mind. In particular, default judgment is given on the basis of the claim as pleaded by the applicant and in the absence of a defence or contradictory evidence. Accordingly, it is appropriate to make clear, as the FWO has proposed, that there has been no adjudication on the merits of the applicant’s claims by including wording in the declaration to the effect that the declarations are made “upon admissions which the respondents in question are taken to have made consequent upon their non-compliance with the requirements of the rules of Court”, as suggested by Kiefel J, as her Honour then was, in Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd [2006] FCA 1427 at [59].
[6] Australian Competition and Consumer Commission v MSY Technology Pty Ltd [2012] FCAFC 56 at [30] per Greenwood, Logan and Yates JJ.
Although there is room to doubt whether, in fact, declarations serve the educative and cautionary purpose that the FWO attributes to them (that presupposes that meaningful numbers of employers read and understand the import of judgments and orders made), I am satisfied that this is an appropriate case for declaratory relief, if for no other reason than to record the Court’s disapproval of the contravening conduct.
ORDERS REQUIRING ABSOLUTE THAI TO COMPLY WITH THE REQUIREMENTS OF THE COMPLIANCE NOTICES AND FOR PAYMENT OF INTEREST
I am satisfied that it is appropriate to make orders that require Absolute Thai to take the steps that were required by the 2010 Compliance Notice and the 2020 Compliance Notice and that Absolute Thai pay interest on the amount of the underpayment owing to Ms Chen and any payable superannuation contribution.
PECUNIARY PENALTY
The FWO submits that a penalty of $26,640 for Absolute Thai and $5,328 for Mr Nah is appropriate, in circumstances where the maximum penalty that the Court may impose for a contravention of s 716(5) of the FW Act by a corporation and an individual is $33,300 and $6,660, respectively.
I have been referred to a number of authorities by the FWO, in particular the decision of Kelly v Fitzpatrick [2007] FCA 1080 where, at [14], Tracey J adopted what were described as “a non-exhaustive list of factors relevant to the imposition of a penalty” summarised by Mowbray FM in Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7. Those factors include:
(a)the nature and extent of the conduct which led to the breaches;
(b)the circumstances in which that conduct took place;
(c)the nature and extent of any loss or damage sustained as a result of the breaches;
(d)whether there had been similar previous conduct by the respondent/s;
(e)whether the breaches were properly distinct or arose out of the one course of conduct;
(f)the size of the business enterprise involved;
(g)whether or not the breaches were deliberate;
(h)whether senior management was involved in the breaches;
(i)whether the party committing the breach had exhibited contrition, taken corrective action and co-operated with the enforcement authorities;
(j)the need to ensure compliance with minimum standards by provision of an effective means for an investigation and enforcement of employee entitlements; and
(k)the need for specific and general deterrence.
While this summary is a convenient checklist, it does not prescribe or restrict the mattes which may be taken into account in the exercise of the Court’s discretion.[7] The discretion remains at large.
[7] Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550.
Although the FWO’s written submissions traversed a number of these factors, the emphasis in oral submissions was on three considerations which it was said operated with particular force in this case. I will turn to these first.
Nature, extent and circumstances of the conduct, deliberateness and loss
The FWO noted generally that the power of a Fair Work Inspector to issue a compliance notice is a mechanism which allows it to deal with contraventions of minimum entitlements as an alternative to commencing litigation. Further, if Absolute Thai had complied with the Compliance Notices, the FWO would have been prevented from bringing civil remedy proceedings against it in respect of the underlying contraventions and Absolute Thai would not be taken to have admitted or contravened the civil remedy provisions in respect of the underlying contraventions. I accept this to be the case.
The FWO submitted that the following features of the case provided a basis for the Court to infer that the conduct of Absolute Thai was deliberate and should attract greater censure. In this regard, the FWO submitted that:
(a)the respondents had actual knowledge that Ms Chen had been underpaid her minimum entitlements, prior to and after the giving of the Compliance Notices, actual knowledge of the imperative to comply with the Compliance Notices and actual knowledge that Absolute Thai had failed to comply with the Compliance Notices:
(b)Mr Nah had explicitly advised the FWO that Absolute Thai would not provide calculations for a specified period of Ms Chen’s employment (22 March to 3 July 2020);
(c)the respondents had received guidance from the FWO in performing its calculations, including through the provision of two pay guides and explanations as to why (in the opinion of the FWO), the two pay schedules provided by Mr Nah on 4 and 26 January 2021 were incorrect or deficient.
Further, the FWO invited the Court to find that what it characterised as the respondents’ “sudden disengagement and discontinuation of the rectification process” was a deliberate decision taken “to ignore and evade the legal obligations imposed by the Compliance Notices”.
The FWO also submitted that while the Court’s focus should be directed to the non-compliance with the Compliance Notices, rather than the contraventions identified in it, the continuing delay in Ms Chen receiving her entitlements was a relevant loss flowing from the breach before the Court. The FWO had not however undertaken the exercise of calculating the amount outstanding to Ms Chen and so was not able to provide a figure to the Court that remained outstanding.
Ensuring compliance with minimum standards
The FWO made the submission that the respondents’ failure to comply with the Compliance Notices undermined the enforcement framework in the FW Act and the safety net of entitlements the FW Act is designed to protect (referring to Fair Work Ombudsman v Tester [2021] FCCA 771 at [27]).
The FWO submitted that in circumstances where the respondents had elected to not comply with the Compliance Notices, they had demonstrated a disregard for the FWO’s authority as a regulator, and the safety net of minimum entitlements in the FW Act and the relevant Modern Award.
Deterrence
Under the heading of “deterrence”, the FWO emphasised the importance of general deterrence in this case. The FWO made the submission that there was a need to send a message to employers generally (as well as to those individuals who are ultimately responsible for the actions of an employing entity) that a failure to comply with a compliance notice will not be tolerated.
The FWO produced a “Fair Work Ombudsman Industry profile and FWO Interactions Cafes and Restaurants” report for the period July 2017-June 2021[8] in support of the submission that as non-compliance was especially high in the café and restaurant industry (accounting for 21.3% of all compliance notices issued by the FWO) there was an enhanced imperative for general deterrence. I accept this to be so.
[8] Annexure LW-17 to the “Third Willoughby affidavit”.
In respect of specific deterrence, the FWO highlighted the deliberate disregard of the respondents for their obligations under the FW Act, the fact that Absolute Thai remains registered, and the fact that Mr Nah remains the sole director and secretary of Absolute Thai.[9]
[9] The affidavit of Ms Willoughby affirmed on 24 May 2022 annexed a company search for Absolute Thai dated 23 May 2022 which showed that Absolute Thai was a registered company and that Mr Nah was the sole director and secretary of Absolute Thai.
CONSIDERATION
While the affidavit material relied upon by the FWO and in particular, the May affidavit, satisfies me that the respondents had knowledge of the matters identified at [33(a)] and received the assistance from the FWO referred to at [33(c)], this material also indicates that the level of co-operation provided by Mr Nah during the investigation and then the Compliance Notice process, was more extensive than the FWO has, by its submissions to the Court, suggested.
Although it is the case that the respondents did not complete the Specified Action and did so in circumstances where they were aware of the consequences, they did continue a dialogue with the FWO for a period of 14 months (July 2020 to September 2021) during which time they produced documents in response to a Notice to Produce, produced two schedules of calculations, provided an explanation (albeit unsatisfactory) for the decision not to calculate entitlements for the period 22 March to 3 July 2020, produced financial documents as requested by the FWO, and provided an explanation as to why they were not in a position to rectify any underpayment. This explanation was made on a number of occasions, but what was said by Mr Nah on 28 February 2021, captures its essence. On this date he referred to “the devastating effect of Covid 19 on the business and personal finances; the serious mental and emotional stress that my wife and I continue to suffer; and the surrounding circumstances leading to the “Compassionate Lifeline Arrangement” introduced at the urging of the staff, resulting in devastating losses to the Company”.[10]
[10] Annexure NM-17 to the May affidavit.
None of this is exculpatory. However, it serves to contextualise the contraventions and gives me pause to reflect on the appropriateness of penalties that are at the upper end of those imposed under the FW Act for contraventions of s 716(5). There is no evidence that either respondent has a history of non-compliance with workplace laws and while I accept that there is a paucity of admissible evidence concerning the financial circumstances of Absolute Thai, it would appear (although it has not been produced in this proceeding) that the FWO was in possession of financial documents relating to the first respondent and this material was directed at establishing that its financial circumstances were dire.
I recognise on the other hand that there is a need for general and specific deterrence and that any penalty imposed must be directed at ensuring compliance with minimum standards. The penalty that is imposed must be fixed at a rate which is meaningful and acts as a deterrent so that other companies (including those that operate in the café and restaurant industry) have a real incentive to comply. To fix the penalty at too low a rate would, in effect, undermine the efficacy of the system.
I have approached the fixing of penalty on the basis that although two Contravention Notices were issued, there is a commonality of elements that reflects the fact that they were issued separately only to distinguish between the 2010 Award and the 2020 Award. I will fix the penalty against Absolute Thai and against Mr Nah in amounts that represent 50% of the statutory maximum; namely $16,650 and $3,330, respectively.
On balance, I find that a penalty in this amount properly balances the range of factors to which the Court must have regard and about which submissions have been made and does not require any further recalibration in order to avoid it having a crushing or oppressive impact on either respondent.
I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Symons . Associate:
Dated: 2 June 2022
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