Fair Work Ombudsman v Access Embroidery (Australia) Pty Ltd & Anor
[2012] FMCA 835
•14 September 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v ACCESS EMBROIDERY (AUSTRALIA) PTY LTD & ANOR | [2012] FMCA 835 |
| INDUSTRIAL LAW – Contravention of awards and Workplace Relations Act and Regulations – underpayments – agreed facts – grouping of contraventions – penalties imposed – general and specific deterrence –assessment of – accessorial liability – penalties imposed – declarations made. |
| Workplace Relations Act1996, ss.182(1), 235, 719, 728 Fair Work Act2009, ss.44(1), 45, 546, 550, 557(1) Fair Work Regulations 2009, r.3.46 Crimes Act 1914, s.4AA Evidence Act 1995, s.191 |
| Construction, Forestry, Mining and Energy Union v Williams (2009) 262 ALR 417 CPSU v Telstra Corporation Limited (2001) 108 IR 228 Dowling v Kirk & 16 Ors [2007] FMCA 2106 Fair Work Ombudsman v AWU, NSW [2010] FMCA 744 Fair Work Ombudsman v Kentwood Industries Pty Ltd (No.2) (2010) 201 IR 234 Finance Sector Union v Commonwealth Bank of Australia & Anor (2005) 224 ALR 467 Giorgianni v The Queen 156 CLR 473 Hamilton v Whitehead (1988) 166 CLR 121 He Kaw Teh v R (1985) 60 ALR 449). Kelly v Fitzpatrick (2007) 166 IR 14 Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357 Ponzio v B & P Caelli Constructions Pty Ltd and Ors (2007) 158 FCR 543 Rafferty & Anor v Madgwicks (2012) 287 ALR 437 Rural Press Ltd & Ors v Australian Competition and Consumer Commission & Ors (2002) 118 FCR 236 Siganto v The Queen (1998 194 CLR 656 Walden v Hensler (1987) 163 CLR 561 Yorke v Lucas (1985) 158 CLR 661 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | ACCESS EMBROIDERY (AUSTRALIA) PTY LTD (ACN 094 881 339) |
| Second Respondent | TAO HUA |
| File Number: | MLG 815 of 2011 |
| Judgment of: | Turner FM |
| Hearing dates: | 1 & 2 August 2012 |
| Date of Last Submission: | 2 August 2012 |
| Delivered at: | Melbourne |
| Delivered on: | 14 September 2012 |
REPRESENTATION
| Counsel for the Applicant: | Ms Richards |
| Solicitors for the Applicant: | Fair Work Ombudsman |
| Counsel for the Respondent: | Mr Follett |
| Solicitors for the Respondent: | Lim Whelan & Co |
ORDERS
That the first respondent pay a penalty of $29,700.00 into Consolidated Revenue within 28 days.
That the second respondent pay a penalty of $7,920.00 into Consolidated Revenue within 28 days.
THE COURT DECLARES:
That Access Embroidery (Australia) Pty Ltd contravened:
(a)Subsection 182(1) of the Workplace Relations Act 1996 (the “WR Act”) and Item 5 of Schedule 16 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the “Transitional Act”);
(b)Section 45 of the Fair Work Act 2009 (the “FW Act”) (cl.A.2.3 of Schedule A of the Textile, Clothing, Footwear and Associated Industries Award 2010 (the “Modern Award”);
(c)Clause 34.3.1 of the Clothing Trades Award 1999 ( the “Pre-Modern Award”);
(d)Section 45 of the FW Act (cl.39.3 of the Modern Award);
(e)Section 45 of the FW Act (cl.39.4(a) of the Modern Award);
(f)Clause 36.1 of the Pre-Modern Award;
(g)Section 45 of the FW Act (cl.39.4(b) of the Modern Award);
(h)Clause 38.6 of the Pre-Modern Award;
(i)Section 45 of the FW Act (cl.43.2(a) of the Modern Award);
(j)Section 44 of the FW Act (s.90(1) of the FW Act);
(k)Section 44 of the FW Act (s.90(2) of the FW Act);
(l)Clause 37.8.3 of the Pre-Modern Award;
(m)Section 45 of the FW Act (cl.41.1(a) of the Modern Award);
(n)Regulation 19.9(1) of the Workplace Regulations 2006 (the “WR Regulations);
(o)Section 535 of the FW Act [reg.3.34 of the Fair Work Regulations 2009 ( the “FW Regulations”)];
(p)Regulation 19.20(3) of the WR Regulations; and
(q)Section 536 of the FW Act (reg.3.46 of the FW Regulations).
The second respondent was involved in the above contraventions.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 815 of 2011
| FAIR WORK OMBUDSMAN |
Applicant
And
| ACCESS EMBROIDERY (AUSTRALIA) PTY LTD (ACN 094 881 339) |
First Respondent
| TAO HUA |
Second Respondent
REASONS FOR JUDGMENT
This is an application by Fair Work Ombudsman (“FWO”) for the imposition of penalties on Access Embroidery (Australia) Pty Ltd (“Access Embroidery”) and on it’s sole director, secretary and manager, Tao Hua (“Hua”), pursuant to s.719 of the Workplace Relations Act 1996 (the “WR Act”) and s.546(1) of the Fair Work Act 2009 (the “FW Act”).
The penalties sought relate to breaches of various industrial instruments that covered the employment of Diemin Wang (“Wang”). Those breaches were admitted by Access Embroidery in the Amended Statement of Agreed Facts (“Amended SOAF”) filed with the Court on 5 April 2012. Accessorial liability is contested by Hua in the Statement of Agreed Facts (“SOAF”) of the applicant and Hua filed on 21 May 2012.
Among the facts agreed with Access Embroidery are:
(1)It contravened relevant provisions of the WR Act and Workplace Relations Regulations 2006 (“WRR”) and the FW Act and Fair Work Regulations 2009 (“FWR”), and relevant Awards by:
· Failing to pay the correct minimum wage;
· Failing to pay overtime;
· Failing to pay overtime and weekend penalty rates;
· Failing to pay penalty rates for work on public holidays;
· Failing to pay for annual leave;
· Failing to pay out accrued annual leave on termination of employment;
· Failing to pay an annual leave loading;
· Failing to make or keep records of overtime hours worked; and
· Failing to issue payslips containing all the required particulars.
(2)That Wang was employed full time by Access Embroidery as an embroiders assistant from 29 May 2006 until 25 March 2010.
(3)That Access Embroidery was at all material times bound by the Awards alleged to have been breached.
(4)That the calculations in Attachment A to the Amended Statement of Claim filed 29 March 2012 are correct.
(5)That the contraventions resulted in the underpayment to Wang of $22,803.99.
(6)That on 21 April 2011, a Fair Work Inspector increased the calculated total underpayment figure, as payment for one period had been omitted.
(7)That on 28 April 2011, Access Embroidery delivered a cheque to FWO for $27,774.14 in full settlement of the underpayment.
(8)That the alleged underpayment in the Statement of Claim filed on 10 June 2011 was $27,123.31.
(9)That the underpayment amount was reduced by $4,259.32 after receipt of additional evidence as to hours worked by Wang.
(10)That on 6 June 2011, FWO sent Wang a cheque for $537.55 to rectify overpayment of the amount due. (At the hearing it was agreed that the overpayment of $4,259.32 had not been repaid to Hua by Wang).
(11)That on 10 June 2011 FWO filed a Statement of Claim.
(12)That on 11 July 2011 Access Embroidery admitted liability for the contraventions.
At the hearings before the Court on 1 and 2 August 2012 Ms Richards of Counsel appeared for FWO and Mr Follett of Counsel for the respondents (Access Embroidery and Hua).
Mr Follett submits that the contravention of failing to pay for accrued annual leave taken by Wang during her employment is incorrectly characterised as a contravention of s.235 of the WR Act instead of a contravention of cl.37.8 of the Clothing Trades Award 1999 (the “Pre-Modern Award”). In para.13 of the respondent’s submissions on penalty filed on 16 July 2012, Mr Follett submits that:
“Apart from properly recording the nature of the contraventions, this “issue” has no other consequence: the nature and circumstances of the contravention and the available penalties are the same either way”.
Ms Richards made a similar submission.
The effect of the submissions is that a Declaration sought in the Amended Statement of Claim is incorrect. Declaration A (ix) in that document will not be made. A Declaration is sought as to a breach of cl.37.8.3 of the Pre-Modern Award (Declaration xii). Section 191 of the Evidence Act 1995 provides in part that:
(2)In a proceeding:
(b)evidence may not be adduced to contradict or qualify an agreed fact.
The Court finds that evidence is not being produced to contradict an agreed fact. Mr Follett has identified a mistake in the agreed facts; As the issue “has no other consequence”, the Court grants leave to amend the Declarations sought.
Among the facts agreed in the SOAF with Hua are that:
·The various alleged contraventions by Access Embroidery occurred.
·Hua denies the contraventions alleged against him.
·At all material times:
·Hua was the sole director and secretary of Access Embroidery and was “responsible for the day to day management, directions and control of Access Embroidery”;
·Hua was responsible for employing Wang and negotiating her terms and conditions with her;
·Hua was responsible for setting and adjusting wage rates for Wang;
·Hua was responsible for paying Wang’s wages and issuing relevant payslips; and
·Hua was responsible for making and keeping records of the employment of Wang;
·In late January 2004, Hua received and read the letter from the Department of Employment and Workplace Relations (“DEWR”) to Access Embroidery about underpayment of another employee of Access Embroidery at the time, Ms Chun Yang (Jenny) He (“He”) (Annexure A to the SOAF).
The issues to be determined by the Court
(1)How many groups the admitted contraventions should be placed into;
(2)What level of penalties should be imposed on Access Embroidery; and
(3)Whether Hua has accessorial liability for the contraventions and if so, what level of penalties should be imposed on him.
Grouping of the Contraventions
Ms Richards referred to Annexure A – Summary of Contraventions (the “Summary of Contraventions”) (Annexure ‘A’ to the applicant’s Outline of Submissions on Penalty filed 2 July 2012) which sets out FWO’s proposed grouping of the contraventions:
The first category is the failure to pay the minimum rates derived from the Pre-Modern Award, and the Textile, Clothing, Footwear and Associated Industries Award 2010 (the “Modern Award”).
The second category relates to the failure to pay for overtime at the correct rate under the Pre-Modern Award and the Modern Award. Wang was paid an additional $1.00 per hour for overtime. This group includes also the failure to pay correct overtime and weekend penalty rates.
The third category relates to the failure to pay the correct rate for work on public holidays.
The fourth category relates to the incorrect payment for annual leave and non payment of the annual leave loading.
The fifth category relates to the failure to pay for accrued annual leave on termination of employment on 25 March 2010. The Court notes that Hua admits this contravention.
The sixth category related to the failure to keep records of overtime worked.
The seventh category relates to deficiencies in Wang’s payslips, being:
·not specifying the name of the employer;
·the period to which the payslip relates;
·failure to itemise penalties and allowances; and
·the hourly rate of pay and superannuation contributions.
Ms Richards submits as to the groupings proposed by the respondents:
a)That the parties agree on the last three groupings in the Summary of Contraventions (five, six and 7seven) (supra);
b)As to grouping one and four together, and two and three together:
i)One is the failure to pay the correct basic rate of pay and minimum wage; Four is the failure to make the correct payments for annual leave, and the annual leave loading.
Ms Richards submits that the failure to pay the annual leave loading cannot be “bundled up” with the failure to pay minimum wage.
c)As to two and three; Ms Richards submits that two is the failure to pay the correct rate for overtime and weekend penalty rates; Three is the failure to pay the correct rate for work on public holidays.
Ms Richards submits that there is a clear distinction between the failure to pay for overtime according to the number of hours worked, and the failure to pay double time for a minimum of four hours for work on public holidays.
Submissions for the Respondents
Mr Follett agrees that the groupings in five, six and seven in the Summary of Contraventions are correct (Transcript “T” 1/8/2012 p.81, l.16), but submits that the failure to pay the minimum wage for normal hours worked and the failure to pay the minimum rate for annual leave and the annual leave loading, should be grouped together.
The Court rejects that submission. The failure to pay entitlements with respect for annual leave differ in nature from, and results from, a different course of conduct than the failure to pay the correct minimum rate for normal hours worked. They are correctly identified as separate contraventions one and four in the Summary of Contraventions. Even if the failure to pay the correct minimum rates were grouped, that would leave a separate contravention of failure to pay the annual leave loading, which cannot be grouped with the failure to pay the correct minimum rate.
Mr Follett submits that the failure to pay the correct overtime and weekend penalty rates should be grouped with the failure to pay the correct rate for work on public holidays.
Again, the Court finds those contraventions to be different in nature, and to arise from different courses of conduct. The failure to pay a minimum number of hours on a public holiday is a different contravention. They are correctly identified as separate contraventions two and three in the Summary of Contraventions.
The Court finds that as a matter of discretion, the groupings proposed by the applicant are correct: Construction, Forestry, Mining and Energy Union v Williams (2009) 262 ALR 417 at [18].
What level of penalty should be imposed on Access Embroidery
Ms Richards referred to the Summary of Contraventions which sets out the maximum penalty that can be imposed for the contraventions.
The Court has found that the groupings proposed by FWO in that document are correct.
The maximum penalty for Access Embroidery for each group is as follows:
Group
Penalty
1
$33,000.00
(s.719(4) WRA , 300 penalty units)
2
$33,000.00
3
$33,000.00
4
$33,000.00
5
$33,000.00
6
$5,500.00
7
$5,500.00
TOTAL
$176,000.00
Ms Richards proposed that the total be discounted by 25% for the early admissions made by Access Embroidery:
$176,000.00 x 75% = $132,000.00
Ms Richards submits that the appropriate penalty range is then between 30% and 40% of the maximum of $132,000.00; being from $39,600.00 to $52,800.00. Access Embroidery would therefore obtain a reduction of 25% and then a further 60% to 70% of the available penalties. Imposing a penalty of 30%, would result in an overall level of 22.5%.
That is at the very low end of the range, but would still result in a significant financial penalty.
Ms Richards submits that in assessing penalty, the Court should:
(1)Identify the separate contraventions involved.
The Court finds that there were 18 separate contraventions [as set out in the Summary of Contraventions]. They are each separate contraventions for purposes of the applicable provisions of the WR Act, WRR, the FW Act and FWR and the Awards. Multiple breaches of the same provision in a course of conduct are treated as a single contravention.
(2)Assess an appropriate penalty for each single contravention.
(3)Take into account if single contraventions have common elements, so that a respondent is not penalised twice for the same conduct.
(4)After completing the above, look at the final aggregate penalty to determine whether it is appropriate, and apply an “instinctive synthesis” in making that assessment.
As to step one, Ms Richards submits that there were 18 separate contraventions. Ms Richards submits that some contraventions have common elements which result in the groupings in the Summary of Contraventions.
As to step two, Ms Richards submits that the Court should take into account the following factors that were adopted by Tracey J in Kelly v Fitzpatrick (2007) 166 IR 14 p.21 – 22 at [30]:
a)The nature and extent of the conduct which led to the breaches;
b)The circumstances in which that conduct took place;
c)The nature and extent of any loss or damage sustained as a result of the breaches;
d)Whether there had been similar previous conduct by the respondent;
e)Whether the breaches were properly distinct or arose out of the one course of conduct;
f)The size of the business enterprise involved;
g)Whether or not the breaches were deliberate;
h)Whether senior management was involved in the breaches;
i)Whether the party committing the breach had exhibited contrition;
j)Whether the party committing the breach had taken corrective action;
k)Whether the party committing the breach had cooperated with the enforcement authorities;
l)The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
m)The need for specific and general deterrence.
Considering the factors immediately above:
a)Nature and extent of the conduct.
The conduct extended over the entirety of Wang’s employment from 29 May 2006 to 25 March 2010, and resulted in the underpayment of $22,869.39 (being $27,123.31 – $4,259.32 = $22,869.39). The conduct was not in deliberate contravention of the law, but was conceded to be “perhaps cavalier, it was careless, it was reckless” [T 1/8/2012 p.70, l.18 (post)].
b)The circumstances in which the conduct took place.
Access Embroidery was put on notice by the letter from DEWR (re: He on 20 January 2004), that employees had minimum entitlements under the WR Act and relevant Awards, but the respondents failed to make enquiries as invited.
c)Nature and extent of any loss or damage sustained as a result of the breaches.
The applicant was a low paid worker and had to exist over the course of her employment, while $22,869.39 was progressively withheld from her. No permanent loss or damage has been suffered by her as the full amount has been paid. In fact more than the full amount has been paid. As a result of the overpayment the applicant does not seek interest on the underpayments (T 1/8/2012 p.58, l.45).
d)Similar previous conduct.
Access Embroidery previously rectified underpayments in 2004 as a result of DEWR investigations relating to He. Although there was no prosecution, the fact of the underpayments was acknowledged by Access Embroidery in rectifying the matter. The respondents are not being penalised for unproved conduct, contrary to the submissions of Mr Follett. The relevance of the letter from DEWR is that it brought previous breaches and entitlements to the notice of the respondents and they were rectified.
e)Whether the breaches were distinct or arose out of the one course of conduct.
The Court has considered this issue (supra).
f)The size of the business enterprise involved.
Access Embroidery has consistently had less than ten employees. The business had a gross profit for the years ending:
i)30 June 2009 of $215,601.30.
ii)30 June 2010 of $244,346.62.
iii)30 June 2011 of $107,926.79.
The business is therefore small but profitable. Hua is one of the two equal shareholders.
g)Whether the breaches were deliberate.
The respondents were alerted by the letter from DEWR dated 20 January 2004 that employees had minimum entitlements, but no follow up enquiries were made by Hua. There was reckless disregard for the proper entitlements of Wang. As a result of the these and other factors, penalties are being imposed at the low end of the range.
h)Involvement of senior management.
Hua was the sole director, secretary and manager of Access Embroidery at all relevant times, and was directly responsible for all the relevant decisions. He therefore played the major part in all of the contraventions. Access Embroidery acted through its most senior officer.
i)Access Embroidery has expressed contrition.
j)Access Embroidery made full rectification of the underpayment on 28 April 2011, being one week after notification of the breaches by FWO. Hua has since taken action to ascertain the correct entitlements of employees.
k)Access Embroidery cooperated with the authorities.
l)There is a need to ensure compliance with minimum standards, especially for low paid employees. The penalties provided in the legislation show the importance placed on compliance with those standards.
m)The need for general deterrence.
The Court refers to the following decisions:
Ponzio v B & P Caelli Constructions Pty Ltd and Ors (2007) 158 FCR 543 at [93]:
“… an appropriate penalty will act as a deterrent to others who might be likely to offend….
The penalty therefore should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like minded persons or organisations. If the penalty does not demonstrate an appropriate assessment of the seriousness of the offending, the penalty will not operate to deter others from contravening the section. However, the penalty should not be such as to crush the person upon whom the penalty is imposed or used to make that person a scapegoat. In some cases, general deterrence will be the paramount factor in fixing the penalty: R v Thompson (1975) 11 SASR 217”
CPSU v Telstra Corporation Limited (2001) 108 IR 228 at [9]:
“…a penalty should be imposed to mark the law's disapproval of the conduct in question…”.
Finance Sector Union v Commonwealth Bank of Australia & Anor (2005) 224 ALR 467 at [72]:
“The legislature has, over time, also moved to increase the penalties that may be imposed in respect of unlawful industrial conduct… any light handed approach that might have been taken in the past to serious, wilful and ongoing breaches of the industrial laws should no longer be applicable”.
Having regard to the above, the Court assesses a penalty on Access Embroidery at 30% of $132,000.00 = $39,600.00. That assessment gives a 25% reduction of the overall maximum, plus a 70% reduction of the remainder. Applying an instinctive synthesis to $39,600.00, the Court finds that the aggregate penalty would be excessive in the circumstances, and reduces it by a further 25% to $29,700.00.
The total penalty is not excessive having regard to the number of contraventions, the seriousness of the conduct and to the maximums prescribed. The penalty of $29,700.00 will not be oppressive or crushing having regard to the profitability of the business.
Access Embroidery is to pay the penalty of $29,700.00 into Consolidated Revenue within 28 days.
Accessorial Liability of Hua
Mr Follett states that Hua denies liability for the contraventions.
Section 728 of the WR Act provides:
Involvement in contravention treated in same way as actual contravention
(1)A person who is involved in a contravention of a civil remedy provision is treated as having contravened that provision.
(2)For this purpose, a person is involved in a contravention of a civil remedy provision if, and only if, the person:
(a)has aided, abetted, counselled or procured the contravention; or
(b)has induced the contravention, whether by threats or promises or otherwise; or
(c)has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d)has conspired with others to effect the contravention.
Section 550 of the FW Act provides:
Involvement in contravention treated in same way as actual contravention
(1)A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.
(2)A person is involved in a contravention of a civil remedy provision if, and only if, the person:
(a)has aided, abetted, counselled or procured the contravention; or
(b)has induced the contravention, whether by threats or promises or otherwise; or
(c)has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d)has conspired with others to effect the contravention.
The above provisions are the same for accessorial liability of a person involved in a contravention of a civil remedy provision.
Mr Follett states that the parties agree:
“… that to be held liable as an accessory the second respondent needs to have actual knowledge of the essential elements of each contravention” (T 1/8/2012 p.8, l.28).
Hua gave evidence:
·That he acquired Access Embroidery in 2002.
·That at that time he “had no idea about Acts, legislation, awards, regulations or anything like it” (Affidavit sworn 14 June 2012 at [15]).
·That in relation to the letter from DEWR, he “did not really know what it meant” (Ibid [16]) and that he “believed that the complaint from Ms He had something to do with what level she was employed at, and whether she was getting paid the right amount per hour as a casual machine operator”. (Ibid [17]).
·That he has been the company secretary of Access Embroidery since it was incorporated in 2000.
·That he has sole management responsibility for Access Embroidery.
·That the previous owner of Access Embroidery gave him details of the overtime rate and wage rates paid to employees.
·That he did not seek any advice (as to correct rates) after receiving the letter from DEWR in 2004.
·That he did not understand that there were minimum wages that Access Embroidery was legally required to pay.
·That it did not occur to him that the rates paid to others may have been incorrect as they were full-time employees, whereas He was a casual.
·That he did not take any steps to inform himself about minimum entitlements, and that he understood that sources of advice were available.
·That he set the rates of pay for Wang.
·That he calculated the hours worked by Wang and calculated her wages.
·That he paid Wang an additional $1.00 per hour for overtime.
·That he paid the wages to Wang by transferring them into her bank account.
·
That he did not pay her any extra for when she took annual leave
(T 1/8/2012 p.30 l.15).
·That he kept the records of Wang’s employment.
·That he did not include details of starting and finishing times of overtime, and that he decided not to retain that information.
·That he prepared Wang’s payslips.
·
That he decided what information to include on the payslips
(T 1/8/12 p.31, l.26).
·That since FWO contacted him in April 2010 he has corrected the payslips and now keeps records.
·That he will pay overtime at 150% for the first three hours and 200% thereafter.
·That he is aware that there is an annual leave loading of 17.5%.
Ms Richards submits that it is clear from the decision in Giorgianni v The Queen 156 CLR 473, that in order to have aided and abetted a contravention, you must know what you are doing.
Ms Richards submits that Hua had actual knowledge of the essential elements of the contraventions and that he was the person “who made all of the things that amounted to the contraventions happened (sic “happen”) (T p.36, l.47).
Ms Richards submits that “… it’s not necessary… to know that you’re contravening the law. You have to know what you’re doing and intend to do what is done”. (Ibid p.37, l.15).
Ms Richards submits that ignorance of the law is no excuse.
The Court finds that there is a common law and statutory principle that no person will be excused from liability because of ignorance of the law (see Walden v Hensler (1987) 163 CLR 561).
It is clear in this case that Hua calculated and knew the rates that Access Embroidery was paying, he knew that it did not pay the annual leave loading, he knew that it did not pay correct penalty rates, he knew that it did not keep records and he knew what was included on the payslips as he prepared them. The Court finds that on his evidence, he knew what he was doing and intended to do what he did.
Ms Richards referred to the decision in Dowling v Kirk & 16 Ors [2007] FMCA 2106 where FM Cameron stated at [23] – [33] as follows (emphases added):
23. Section 728 of the Act provides:
(1)A person who is involved in a contravention of a civil remedy provision is treated as having contravened that provision.
(2)For this purpose, a person is involved in a contravention of a civil remedy provision if, and only if, the person:
(a) has aided, abetted, counselled or procured the contravention; or
(b) has induced the contravention, whether by threats or promises or otherwise; or
(c) has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d) has conspired with others to effect the contravention.
24. Section 728 is drawn in terms very similar to those of s.75B of the Trade Practices Act 1974. The latter section has been considered in a number of decisions which provide guidance as to the meaning of the same terms where they are found in s.728(2). Those Trade Practices Act authorities show that in order that a person may be “involved in” a contravention of a civil remedy provision it is necessary to demonstrate that the person in question was a knowing participant in the contravention: Yorke v Lucas (1985) 158 CLR 661 at 668-670.
25. In Yorke v Lucas, speaking of s.75B(1)(a), the High Court observed at 667 that that paragraph uses criminal law terms, namely the words “aided, abetted, counselled or procured” which, in that branch of the law, are used to designate participation in a crime either as a principal in the second degree or as an accessory before the fact. Such conduct requires intent in order that the offence can be proved. The High Court noted that a person will be guilty of the offences of aiding and abetting or counselling and procuring the commission of an offence only if the person intentionally participates in it, in the sense that he or she has knowledge of the essential matters going to make up the offence, whether or not he or she knows they amount to a crime.
26. As to the proper construction of s.75B(1)(a), the High Court said:
Notwithstanding that s.75B operates as an adjunct to the imposition of civil liability, its derivation is to be found in the criminal law and there is nothing to support the view that the concepts which it introduces should be given a new or special meaning. (at 669)
27. The High Court described persons falling within the reach of s.75B(1)(a) of the Trade Practices Act – s.728(2)(a) in the Workplace Relations Act – as “accessories”, with the consequent requirement implied by that term of knowing participation in a contravention.
28. As to the Trade Practices Act equivalent of s.728(2)(c), the High Court said:
In our view, the proper construction of par (c) requires a party to a contravention to be an intentional participant, the necessary intent being based upon knowledge of the essential elements of the contravention. (at 670)
29. Lindgren J summarised the relevant passage in Yorke v Lucas in Australian Competition & Consumer Commission v Giraffe World Australia Pty Ltd (1999) 95 FCR 302 at 346 [184] in the following terms:
In Yorke v Lucas (1985) 158 CLR 661, in which the managing director of a vendor’s corporate agent was held not liable by reason of s.75B(1) for the vendor’s misrepresentation, Mason ACJ, Wilson Deane and Dawson JJ held in a joint judgment (at 670) that:
· for a person to be “knowingly concerned in” a contravention, he or she must have “knowledge of the essential facts constituting the contravention”;
· The word “knowingly” in para (c) qualifies the expression “concerned in” and not “a party to”; and
· “the proper construction of par (c) requires a party to a contravention to be an intentional participant, the necessary intent being based upon knowledge of the essential elements of the contravention.”
In the same case, Brennan J said that under s.75B, civil liability is imposed only on “those who engage in the conduct prescribed in s.75B with the state of mind ... call[ed] mens rea” (at 673).
30. Although Lindgren J said at [186] that it was not necessary that the accessory should have appreciated that the conduct was unlawful, his Honour stressed at [187] that the state of mind of a supposed accessory in relation to a particular pleaded contravention was a critical issue. His Honour said that simple reference to evidence of the positions and conduct of the respective alleged accessories, without attempting to show that the evidence established intention and knowledge as well as “involvement”, would be to fail to address that critical issue.
31. His Honour’s reasoning was approved by the Full Court of the Federal Court in Rural Press Ltd v Australian Competition & Consumer Commission (2002) 118 FCR 236 at 283 [160]. Their Honours also approved the following comments of Malcolm AJA in Heydon v NRMA Ltd (2000) 51 NSWLR 1 at 109 in relation to a party being knowingly concerned in, or party to, a contravention:
In Yorke v Lucas, it was held that for liability to be attracted the person concerned must be an intentional participant and possessed of knowledge of the matters or things constituting the contravention, even if he did not know that they did constitute a contravention. It is enough to know the essential facts.
32. In Australian Competition & Consumer Commission v IMB Group Pty Ltd [2003] FCAFC 17, the Full Court of the Federal Court said:
For a person to be involved in a contravention within the meaning of s.75B(1)(c) of the Act, a person must be an intentional participant in the contravention, the necessary intent being based upon knowledge of the essential elements of the contravention: see Yorke v Lucas (1985) 158 CLR 661 at 670. Thus, while it is not necessary to establish that the individual Respondents had knowledge that there was a contravention of a provision of Pt V of the Act, it is necessary to demonstrate that each individual Respondent had knowledge of each of the essential elements of the contravention.
In order to establish whether any of the individual Respondents was involved in a contravention, it is necessary to examine the state of mind of each of them separately in relation to each alleged contravention. Here the Commission's pleading did not permit of such a course. It did not ever identify the contravention that the particular Respondent was said to be involved in. We do not understand any of the Respondents to have addressed any case specific to them. Rather, his Honour appears to have assumed that merely being a director of IMB and being involved in promoting its activities was sufficient to attract the operation of s.75B(1)(c) in relation to any contravention on the part of IMB that occurred during the time that the individual was involved in promoting IMB's activities. However, his Honour made no finding concerning the state of mind of any of the individual Respondents. Further, the Full Court was not invited by the Commission to make findings in that regard. Rather, the Commission sought to support the conclusions reached by the primary judge.
It is not necessary to establish any subjective element in relation to a contravention of Pt V of the Act. A contravention may be committed unintentionally. That is to say, a person may contravene a provision of Pt V even though that person does not have knowledge of all of the essential elements that constitute the contravention. However, before any accessorial liability will arise, it is necessary to establish the subjective element of knowledge of each of the essential elements of the contravention. That knowledge may be constructive in the sense that it may be possible to show wilful blindness in relation to the elements of a contravention. However, absent a finding of wilful blindness, it is necessary to establish actual knowledge on the part of a person to whom it is sought to sheet home accessorial liability in respect of a contravention of Pt V. (at [133] – [135])
33. What these authorities show is that in order for a person to have accessorial liability under s.728(2) of the Act he or she
· must have knowledge of the essential facts constituting the contravention;
· must be knowingly concerned in the contravention;
· must be an intentional participant in the contravention based on actual not constructive knowledge of the essential facts constituting the contravention – although constructive knowledge may be sufficient under paragraph (c) in cases of wilful blindness; and
· need not know that the matters in question constituted a contravention.
The Court adopts and applies those statements of the law.
It is clear that Hua was a knowing participant:
·In what payments were made to Wang;
·In calculating the rates paid to Wang;
·In not paying more than an additional $1.00 per hour for overtime worked;
·In not paying the annual leave loading;
·In not keeping the required records; and
·In compiling the payslips without including the required details.
Hua intentionally participated in calculating and paying rates to Wang, in not keeping records, and in not including the required details in the payslips. He had knowledge of the essential matters going to make up the offences (the rates paid, the non payment of an annual leave loading, the non keeping of records, and the content of the payslips), even if he did not know they amounted to contraventions.
Hua was a knowing participant in the contraventions, and apart from Access Embroidery, he was the only participant.
Hua knew of the essential elements of the contraventions. Hua had knowledge of the essential facts constituting the contraventions. It is not necessary for Hua to have known that his conduct was in contravention of the law. The Court finds that Hua had knowledge of each of the essential elements of each contravention.
Applying the decision in Dowling (supra), Hua has accessorial liability under s.728 of the WR Act and s.550 of the FW Act.
Ms Richards referred to page 494 et seq in Giorgianni (supra) as follows (emphasis added):
“The application of the doctrine of secondary participation to statutory offences involving no mental element has been considered in a number of cases. In general, the absence of intention as an element of the substantive offence has not been regarded as obviating the necessity for knowledge on the part of the secondary party of the essential facts constituting the offence. The “link in purpose” between the secondary party and the principle offender is not established where a person does something to bring about, or render more likely, the commission of an offence by another in circumstances in which , through ignorance of the facts, it appears to him to be an innocent act.
The classic statement of the position is that of Lord Goddard C.J. in Johnson v. Youden[5]:
“Before a person can be convicted of aiding and abetting the commission of an offence he must at least know the essential matters which constitute that offence. He need not actually know that an offence has been committed, because he may not know that the facts constitute an offence and ignorance of the law is not a defence. If a person knows all the facts and is assisting another person to do certain things, and it turns out that the doing of those things constitutes an offence, the person who is assisting is guilty of aiding and abetting that offence, because to allow him to say, ‘I knew of all those facts but I did not know that an offence was committed,’ would be allowing him to set up ignorance of the law as a defence.
The reason why, in our opinion, the justices were right in dismissing the informations against the first two defendants is that they found, and found on good grounds, that they did not know of the matters which in facts constituted the offence; and, as they did not know of those matters, it follows that they cannot be guilty of aiding and abetting the commission of the offence.”
This statement has received endorsement of the House of Lords in Reg. v. Churchill[6], and Reg. v. Maxwell[7] and has been followed in a number of English cases: Ackroyds Air Travel Ltd. V. Director of Public Prosecutions[8]; Thomas v. Lindop[9]; Ferguson v. Weaving[10]; Smith v. Jenner[11]; D. Stanton & Son Ltd. v. Webber[12]. The proposition that a person cannot be convicted of secondary participation at common law unless he knows the facts which must be proved to show that the offence has been committed has also been embraced in Australia: Abley v. Crosaro[13]; Blackmore v. Linton[14]; Reg. v. Glennan[15]; Dennis v. Pight[16]. The reasoning of the Full Court of South Australia in Lenzi v. Miller[17], if it proceeds on a different basis, cannot be supported.
The application of the proposition to the offence created by s.52A does not require that the applicant be shown to have any knowledge or intention concerning the impact with a motor vehicle or the occasioning of death or grievous bodily injury even though these matters must be proved to establish the defence. The reason is that the actions of both the principle offender and the secondary party under s.52A are complete where the vehicle is driven in a manner dangerous to the public. The circumstance that liability attaches under the section only where that manner of driving carries certain consequences, which are the natural and probably results of such driving, does not relieve the secondary party of culpability merely because he has no knowledge of those consequences.
As we have seen, knowledge of all the essential facts giving rise to the dangerous driving is necessary to constitute commission of the offence on the part of the applicant. But it is not necessary that there should be actual knowledge of all the essential facts constituting the offence in order to establish secondary participation. It is enough if the defendant has deliberately shut his eyes to a relevant fact or deliberately abstained from obtaining knowledge by making an inquiry for fear that he may learn the truth: cf. Reg. v. Crabble[18]. On this aspect of the case, notwithstanding my participation in the judgment of the Court of Criminal Appeal in Reg. v. Glennan, I am now in agreement with what the Chief Justice has written, including his comments on the passage in the judgment in Reg. v. Glennan[19]. It follows that the summing up was defective to the extent that it referred to the concept of recklessness”.
[5] [1950] 1 K.B. 544, at pp. 546-547.
[6] [1967] 2 A.C. 224, at pp. 236-237.
[7] [1978] 1 W.L.R. 1350; [1978] 3 All E.R. 1140.
[8] [1950] 1 All E.R. 933.
[9] [1950] 1 All E.R. 966.
[10] [1951] 1 K.B. 814.
[11] [1968] Crim. L.R. 99.
[12] [1972] Crim. L.R. 544.
[13] [1946] V.L.R. 53.
[14] [1961] V.R. 374, at p. 377.
[15] (1970) 91 W.N. (N.S.W.) 609.
[16] (1968) 11 F.L.R. 458.
[17] [1965] S.A.S.R. 1.
[18] Ante, p. 464.
[19] (1970) 91 W.N. (N.S.W.), at p. 614.
The Court follows those statements of the law. Hua knew all the facts and it is no defence for him to say that he did not know that he was committing contraventions. Further, it appears as though Hua decided not to make enquiries after the contraventions in relation to He in 2004; he “deliberately abstained from obtaining knowledge by making an inquiry”, which could have avoided the contraventions. The Court does not find that Hua “deliberately abstained from obtaining knowledge by making an enquiry for fear that he may learn the truth” (see above).
Ms Richards referred to the decision in Yorke v Lucas (supra) where the High Court stated per curiam on p.667:
“Both in the case of felonies where the principle offender and the secondary participant commit separate offences, and in the case of misdemeanours where no distinction is drawn between the two, a person will be guilty of the offences of aiding and abetting or counselling and procuring the commission of an offence only if he intentionally participates in it. To form the requisite intent he must have knowledge of the essential matters which go to make up the offence whether or not he knows that those matters amount to a crime. So much was affirmed recently in Giorgianni v. The Queen[20] where the relevant authorities were examined”. (emphasis added)
[20] (1985) 156 C.L.R. 473.
Ms Richards referred to the decision in Hamilton v Whitehead (1988) 166 CLR 121 at 127 and 128 as follows:
“There can be no doubt on the facts of the present case, that the respondent, in placing the advertisement and in dealing with those who replied to it, was the company. He was its managing director and his mind was the mind of the company. The company therefore was liable as a principle for the breaches of s.169 of the Code. The liability was direct, not vicarious.
It is against this background that the liability of the respondent falls to be considered. As we have said, the applicant relies upon s.38(1) of the Interpretation Code, the terms of which have been set out. Since the respondent was the actor in the conduct constituting the offences and had knowledge of all the material circumstances, it must follow, according to the applicant, that the respondent was “knowingly concerned” in the commission of the offences committed by the company.
In our opinion, the submission is plainly right… Indeed, the fundamental purpose of the companies and securities legislation – to ensure the protection of the public – would be seriously undermined if the hands and brains of a company were not answerable personally for breaches of the Code which they themselves have perpetrated”.
The Court adopts and applies those comments in this case. Hua cannot admit that he did all the acts, but claim that he is not liable for them.
Ms Richards referred to the decision in Rural Press Ltd & Ors v Australian Competition and Consumer Commission & Ors (2002) 118 FCR 236. On p.280 at [154] the Full Court stated that the only issue was whether the findings of accessorial liability in relation to breaches of the Trade Practices Act 1974 should be set aside. Ms Richards referred to [155], [156], [159] and [160] as follows:
“Speaking of the arrangement between Waikerie Printing, on the one hand, and Rural Press and Bridge Printing on the other, in the context of the liability of the Taylors as accessories, his Honour found (at [141]; 42,744) that the purpose of the arrangement was that competition between the River News and the Standard around Mannum “should come to an end”.
The primary Judge had earlier (at [136]; 42,743) identified the principles to be applied as follows:
“It is necessary that each of those persons participated in, or assented to, the contraventions with actual knowledge of the essential elements constituting the contraventions: Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661 at 670; Crocodile Marketing Ltd v Griffith Vinters Pty Ltd (1989) 28 NSWLR 539. If it is shown that those persons had knowledge of all material circumstances and engaged in conduct which was part of the conduct constituting the commission of Rural Press, Bridge and Waikerie Printing respectively of the contraventions, those persons may be liable as accessories to the contraventions and knowingly concerned in, or party to them: Hamilton v Whitehead [1988] HCA 65; (1988) 166 CLR 121 at 128. It is not necessary that the accessory should have appreciated that the conduct was unlawful: Australian Competition and Consumer Commission v Giraffe World Australia Pty Ltd [1999] FCA 1161; (1999) 166 ALR 74 at 117. There was no real issue between the parties as to those principles.”
In argument before us, Mr Douglas on behalf of the appellants took issue with the proposition in the second last sentence of the above passage (although it was not made the subject of any specific challenge in the grounds of appeal). He submitted that such a statement was contrary to the law laid down by the High Court in Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661. Mr Douglas contended, in effect, that the ACCC had to show that Mr Law and Mr McAuliffe actually knew that what Rural Press and Bridge Printing were doing amounted to a contravention of the TP Act.
“… Finally, where knowledge is inferred from the circumstances surrounding the commission of the alleged offence, knowledge must be the only rational inference available. All that having been said, the fact remains that a combination of suspicious circumstances and failure to make inquiry may sustain an inference of knowledge of the actual or likely existence of the relevant matter.”
In our opinion, Lindgren J's formulation in Giraffe World, which the primary Judge applied in the present case, accords with the principles relating to accessory liability stated by the High Court in the extracts reproduced above. Moreover, it is in line with the recent views expressed (admittedly obiter) in the NSW Court of Appeal in Heydon v NRMA Ltd [2000] NSWCA 374; (2000) 51 NSWLR 1, at 109-112, per Malcolm A-JA 149-150 per McPherson A-JA, and 243, per Ormiston A-JA. In that case Malcolm A-JA said (at 109) of s 75B(1)(c), in the context of a contravention of s 52 of the TP Act:
“In Yorke v Lucas, it was held that for liability to be attracted the person concerned must be an intentional participant and possessed of knowledge of the matters or things constituting the contravention, even if he did not know that they did constitute a contravention. It is enough to know the essential facts”. (emphasis added)
And at [163]:
“It was not, in our view, necessary for the primary Judge to find that Mr McAuliffe and Mr Law knew and appreciated that the purpose or effect of the arrangement was substantially to reduce competition in the market ultimately identified in the judgment. The definition of the market is a mixed question of fact and law involving sophisticated economic and legal concepts. It is not to be supposed that accessory liability is to depend on issues that business people are unlikely to address and, in any event, often cannot be resolved without detailed expert evidence and fine legal analysis. In the present case, the findings and the evidence amply support the conclusion that Mr Law and Mr McAuliffe had actual knowledge of the essential elements of the contraventions by Rural Press and Bridge Printing of s 45(2)(a)(ii) and s 45(2)(b)(ii) of the TP Act”. (emphasis added)
Ms Richards referred to the decision in Rafferty & Anor v Madgwicks (2012) 287 ALR 437 at [248] and [254] as follows:
“At the relevant time, s 75B(1) of the TPA provided:
A reference in this Part to a person involved in a contravention of a provision of Part IV, IVA, IVB, V or VC, or of section 95AZN, shall be read as a reference to a person who:
(a)has aided, abetted, counselled or procured the contravention;
(b)has induced, whether by threats or promises or otherwise, the contravention;
(c)has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or
(d) has conspired with others to effect the contravention”
“In other cases, as Rural Press Ltd v Australian Competition and Consumer Commission (2003) 216 CLR 53 ; 203 ALR 217 ; [2003] HCA 75 (Rural Press v ACCC) illustrates, the terms of a legislative prohibition may mean that the essential elements involve more complex facts. Although this can make the identification of the essential facts less than straightforward, the principles referred to in Yorke continue to apply. In Rural Press a newspaper publisher, Bridge Printing Office Pty Ltd (Bridge), started circulating a local newspaper in a neighbouring community in competition with that community’s newspaper, which was published by Rural Press Pty Ltd (Rural Press). Rural Press threatened to start distributing a newspaper in Bridge’s community unless Bridge ceased distributing its paper in the Rural Press community. Bridge, mindful of Rural Press’s financial strength, ceased to do so. The ACCC subsequently brought an action against Rural Press for contraventions of ss 45 and 46 of the TPA, which, broadly speaking, prohibited (1) the making of arrangements that would have, or be likely to have, the effect of substantially lessening competition in a relevant market, and (2) the having and taking advantage of a substantial degree of power in a market for a proscribed purpose. In determining whether the regional manager and the general manager of Rural Press were “involved” in the corporate contraventions of ss 45 and 46 of the TPA under s 75B(1), the trial judge required the general and regional manager to be aware of each of the relevant essential elements of the offences, but did not require them to have undertaken a more specific analysis in terms of the legislative prohibitions: see Australian Competition and Consumer Commission v Rural Press Ltd [2001] FCA 116 at [138]. The High Court later upheld his Honour’s approach. Hence, while the identification of the elements of a contravention requires careful legal analysis, “[i]n order to know the essential facts, and thus satisfy s 75B(1) … and like provisions, it is not necessary to know those facts are capable of characterisation in the language of the statute”: see Rural Press v ACCCat [48]. This is another aspect of the longstanding principle that it is not necessary for a person to “recognise” the contravention as such, or explicitly to think about the relevant legislation that their actions may contravene: see Giorgianni at CLR 506; ALR 665; MVR 120–1 and Yorke at CLR 676; ALR 317 per Brennan J, citing Johnson v Youden [1950] 1 KB 544 at 546 ; [1950] 1 All ER 300”. (emphasis added)
Ms Richards referred to the decision in Fair Work Ombudsman v Kentwood Industries Pty Ltd (No 2) (2010) 201 IR 234 at [197] et seq as follows:
Accessorial liability of Mr Zhang
The applicant's pleaded case asserts that Mr Zhang was at all material times a "person involved in a contravention of civil remedy provisions" within the meaning of s 728 of the WR Act. More specifically, in relation to the contraventions of Kentwood, it is said that Mr Zhang:
(a)aided, abetted, counselled or procured the contraventions;
(b) induced the contraventions;
further or alternatively
(c) was knowingly concerned in the contraventions.
For accessorial liability sourced in s 728 of the WR Act to lie, it must be proven that the person sought to be made liable on that basis was sufficiently aware of all of the relevant facts going to the primary contraventions and, with that knowledge of those essential matters, committed acts or omissions which constitute aiding or abetting, counselling or procuring the contraventions, inducing the contraventions, or being knowingly concerned in the contraventions (as the case may be) (Yorke v Lucas (1985) 158 CLR 661[PDF] at [666]-[667]).
In Hamilton v Whitehead (1988) 166 CLR 121[PDF] Mason CJ, Wilson and Toohey JJ observed (at 128);
“Indeed, the fundamental purpose of the ... legislation — to ensure the protection of the public — would be seriously undermined if the hands and brains of a company were not answerable personally for breaches of the Code which they themselves have perpetrated.”
All of the admitted facts and unchallenged evidence, together with the way that Mr Zhang has appeared before and communicated with the Court and with the applicant during these proceedings, makes clear that Mr Zhang is the "hands and brains" or guiding mind of Kentwood. It has been through his human agency that the corporate personality of Kentwood has perpetrated all of the contraventions alleged by the applicant. In particular and as admitted by the respondents:
(a)Mr Zhang was at all material times the Managing Director and company Secretary of Kentwood and owned 50% of the issued share capital of Kentwood.
(b)Mr Zhang had been employing Chinese nationals to work in Australia under Subclass 457 visas since early 2005.
(c)Mr Zhang has operated his building and construction business in Western Australia for approximately nine years.
(d)As at 1 January 2006 the minimum salary level payable to employees engaged to work as tradespersons in Australia under Sub-class 457 visas under the Migration Regulations 1994 (Cth) for a 38 hour week was $39,100, a matter which Mr Zhang knew at material times”. (emphasis added)
It is apparent from the above decision that Zhang knew of the minimum rates that were required to be paid [206]. The Court accepts the submission by Ms Richards that Zhang’s knowledge of those rates was not essential to McKerracher J’s reasoning about the accessorial liability of Zhang. McKerracher J applied the reasoning in Yorke v Lucas (supra), and Hamilton v Whitehead (supra) to find accessorial liability. Neither of those decisions required actual knowledge of wrong doing to find accessorial liability (Yorke at [186] and Hamilton at p.667).
From these authorities it is clear that once a person knows of the essential elements that constitute a contravention, it is not required that they know that what they did constituted a contravention for a finding of accessorial liability to be made.
Ms Richards submits that the essential elements are:
·That Wang was an adult employee;
·That her duties included basic sewing and embroidery preparation;
·Knowledge of the hourly rates that were paid;
·Knowledge that an additional $1.00 per hour was paid for overtime;
·Knowledge that she worked the hours for which she was paid;
·Knowledge that she was entitled to annual leave and took it; and
·That she was paid the amounts that she was in fact paid.
The Court accepts those and adds:
·That Hua knew that Wang was not paid an annual leave loading;
·That Hua failed to keep proper records; and
·That Hua failed to enter the required details on the payslips.
It is against the background of these cases that Mr Follett argues
(T 1/8/2012 p.61, l.41).
Submissions for Hua on Accessorial Liability
Mr Follett referred to his written submissions filed 16 July 2012 on this issue.
Hua acknowledges that he was involved in the contravention of failing to pay out accrued annual leave on termination of employment (T 1/8/2012 p.62, l.11).
Mr Follett submits that Hua is not liable as he did not “know that paying less than the award is, in fact, unlawful” (T 1/8/2012 p.63, l.1) or that his actions “meant that he was liable for a penalty” (T 1/8/2012 p.62, l.42). Whatever way that is put, it amounts to claiming immunity because of lack of knowledge of the law. That defence is rejected.
Mr Follett submits that what is required is knowledge of the essential elements. Mr Follett refers to his written submissions at [27] et seq:
a)As to the underpayments of the minimum wage [28] Mr Follett submits to that to be liable as an accessory, the person must have knowledge:
·Of the employment relationship;
·Of the application of an Award;
·That the Award imposes obligations to pay minimum rates; and
·That the amounts paid are less than the minimums prescribed.
Again, this amounts to a claim based on ignorance of the law and is rejected.
The Court has set out (supra) what the essential elements are in this matter, and finds that Hua had knowledge of all of those elements.
a)As to overtime and weekend and public holiday penalty rates; Mr Follett submits at [32] that the same essential elements must exist. The Court rejects this contention for the same reasons as above.
b)As to annual leave; Mr Follett submits at [39] that the same essential elements exist. This submission is rejected.
c)As to the failure to pay the annual leave loading; Mr Follett submits at [40] that the same essential elements must exist. Mr Follett submits again that:
·There must be an employment relationship;
·There must be an applicable instrument
·That instrument must impose a relevant obligation; and
·The employer must accord less than the requirement.
The Court finds that all those elements exist in this matter.
d)As to record keeping and payslips; Mr Follett submits that those contraventions are “technical in nature”. Mr Follett submits that the essential elements are those set out immediately above. The Court finds that Hua had knowledge of them all.
Mr Follett submits at [46] that to have accessorial liability the person must know the actual rate that they were required to pay. Again, that defence relies on ignorance of the law, and is rejected.
In his oral submissions, Mr Follett submitted that the essential elements are that:
·There must be an employment relationship;
·There can be no contravention unless there is a legal obligation to pay attached to the relationship;
·There is no contravention unless the amounts paid are less than the legal obligation (T 1/8/2012 p.65,l.1-12).
The Court accepts that submission and finds that those elements exist.
Mr Follett submits that if the applicant is correct every payroll officer would be liable as an accessory for every underpayment (T 1/8/2012 p.67, l.37). However, Mr Follett did not turn his attention to the fact that most payroll officers will be employees of, and not the controlling mind of, the company.
Mr Follett referred to the applicant’s submissions at [48] on the decision in Rural Press Ltd (supra), and that Access Embroidery has strict liability for the contraventions at [29]. Although the submission is unclear, (T 1/8/2012 p.69, l.23), Mr Follett seems to be submitting that Hua does not have strict liability. That is correct, but the Court finds that Hua has accessorial liability.
Mr Follett referred to Giorgianni (supra) at p.479 that a person cannot become liable as a secondary party for the commission of an offence of strict liability… “without having an intention to do so formed in light of knowledge of the facts”… and “the secondary party should in some way be linked in purpose with the person actually committing the crime”.
The Court finds that Hua was linked in purpose with Access Embroidery in paying the rates paid to Wang, in withholding payment for annual leave, in failing to keep proper records and in the other contraventions.
Mr Follett submits that Hua’s defence is not based on a claim of ignorance of the law, but on a lack of knowledge of all the circumstances (T 1/8/2012 p.73, l.21). The circumstances that Hua lacked knowledge of were the existence of the relevant Awards and legislation and the requirements under them. That is the same as claiming ignorance of the law, and that defence must fail.
Mr Follett submits that “ignorance of the law” is a “happy little colloquialism… then of course my client is ignorant of the law” (T 1/8/2012 p.73, l.29), “but that does not mean that he is an accessory”. The Court accepts the later submission but finds that Hua has accessorial liability and cannot rely on ignorance of the law as a defence.
Mr Follett concedes that if the applicant is correct as to what the essential elements are, Hua is liable as an accessory. The Court finds that the applicant is correct as to what the essential elements are; which are set out (supra).
Mr Follett then deals with the issue of whether Hua could be found to have knowledge of the essential elements because of his “wilful blindness” (T 1/8/2012 p.73, l.46). Mr Follett submits that wilful blindness may enable an inference of actual knowledge where the alleged accessory does not give evidence denying the knowledge. However, here Hua was alerted to the fact of industrial regulation by the letter re He on 20 January 2004, but failed to make enquiries in relation to his obligations. Mr Follett agreed that Hua was “mistaken, perhaps cavalier, it was careless, it was reckless” (T 1/8/20102 p.70, l.18), but was “not motivated by malice or spite or intent”. The Court accepts that submission but finds that a person in Hua’s position cannot be “cavalier, careless or reckless” as to his obligations to employees. The Court’s finding on the liability of Hua is not based on “wilful blindness” and the issue requires no further attention.
Mr Follett referred to the decision in Rafferty (supra) at p.501 where it was decided that for “… ‘a person to be involved in a contravention’ within s 75B(1)(a) or (c) (of the Trade Practices Act 1974) is actual knowledge [261]”; That of course is not the test for accessorial liability under the WR Act or FW Act.
Mr Follett referred to Yorke v Lucas (supra). There, Lucas did not know that the business turnover figures that he gave were false, and he was found not to be liable. The Court accepts that a mistake of fact can be raised as a defence but not a mistake as to the law (He Kaw Teh v R (1985) 60 ALR 449).
Mr Follett referred to the decision in Kentwood Industries (supra) to p.267 [200(d)] and the finding that Zhang knew of the required salary level and the minimum salary payable [206], and was aware of each of the essential matters which go to make up the contraventions by Kentwood. The Court does not find that decision to mean that accessorial liability under s.728 of the WR Act can only be found where the person involved had actual knowledge of the legal requirements. McKerracher J applied the reasoning in Yorke v Lucas (supra) and Hamilton v Whitehead (supra) to find accessorial liability. Neither decision required actual knowledge of wrong doing to find accessorial liability (Yorke at [186] and Hamilton at p.667). The Court observes that McKerracher J did not have to consider the issue of whether the employer being aware of the essential issues that exist in the present case was sufficient in Kentwood, as the employer there had knowledge of the award entitlements. The issues in the present case were not considered in Kentwood. It is distinguishable.
The Court finds that Hua has accessorial liability for all of the contraventions.
Submissions for the Applicant as to Penalty
The applicant filed written submissions as to penalty on 2 July 2012. In relation to Hua, it is submitted:
·That the only admission by Hua is that he contravened s.44(1) of the FW Act by failing to pay Wang accrued annual leave on termination of employment;
·That for contraventions before 1 July 2009 the WR Act continues to apply;
·That a penalty must be imposed at a meaningful level (Kelly v Fitzpatrick (supra) at [28]);
·That Hua was aware of the fact that Award and statutory entitlements existed, but that he decided not to enquire as to what they were;
·That the substantial penalties prescribed set for contraventions shows the importance placed on compliance with minimum standards;
·As stated by Gray J in Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357 at [37]:
“Much will depend on the attitude expressed by that party as to things like remorse and steps taken to ensure that no future breach will occur”.
·That Hua has provided no evidence of current compliance relating to other employees;
·That Hua should not receive a discount for admissions that show remorse and an acceptance of responsibility (Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383);
The Court finds that Hua does not show remorse and denies responsibility for all but one of the contraventions and raises a flimsy excuse for that contravention.
·That the respondents assisted and cooperated with the applicant during the course of the matter.
Submissions for the Respondents as to Penalty on Hua
Mr Follett referred to the respondents submissions on penalty filed on 16 July 2012.
Mr Follett submits that the Court is to ensure that is imposes a just and fair penalty having regard to the conduct in question.
Mr Follett submits that a just and fair penalty is one involving the contravener being penalised only once for a course of action. The Court accepts that submission.
Mr Follett submits that “there are only in reality 10 separate contraventions worthy of separate penalty consideration”.
Mr Follett submits that the contraventions comprise five groups. The Court has rejected this submission (Grouping of the Contraventions supra).
Mr Follett supports the Court applying the factors identified in Kelly v Fitzpatrick (supra) in assessing the appropriate penalty.
Mr Follett submits that the Court should have regard to the fact that a job was created for Wang, which resulted in a loss to Access Embroidery (T 1/8/2012 p.84, l.8), and that Wang was not asked to work overtime (Ibid l.10).
Mr Follett submits that the respondents “can be excused for thinking that their actions were commendable”. The Court finds that the plain fact is that their actions were in contravention of the law.
Mr Follett concedes that the contraventions were “careless” and “reasonably avoidable”.
Mr Follett submits that the contraventions are not at the more serious end of the range of contraventions. The Court agrees.
Mr Follett submits that there should be no penalty for the failure to pay out accrued annual leave on termination of employment, as Hua was waiting for the applicant to tell him how much to pay. The Court finds that Hua was not entitled to do that. The accrued annual leave was not paid out for over a year (T 2/08/12 p.107, l.11) as Wang’s employment finished on 25 March 2010, and the entitlement was paid on 28 April 2011 (Ibid p.107, l.108)
Mr Follett submits that the record keeping and payslip contraventions were “technical and trivial”. The law requires the records to be kept. Regulation 3.46 of the FWR states what must be specified on a payslip. The maximum penalty for non compliance is less than for the other contraventions (Summary of Contraventions); however, the clear intent is that a penalty apply.
Mr Follett submits that contrition, corrective action and cooperation warrant significant discounting in this case. The Court accepts that submission in relation to Access Embroidery, but does not find contrition applicable to Hua. The Court accepts the submission by Mr Follett that it cannot increase punishment by reason of the fact that the respondent has defended himself against the charge (Siganto v The Queen (1998 194 CLR 656 at [21]-[22]; but the Court finds that it is free to not decrease an otherwise appropriate penalty when contrition is not shown (Ibid [22]). Hua has expressed contrition for the contraventions by Access Embroidery.
Mr Follett submits that penalising for “essentially innocent conduct is likely to bring the law into disrepute”. However that begs the question of whether the respondents conduct was “essentially innocent?”. The Court does not regard the conduct as such. The respondents contravened the law, and cannot rely on their ignorance of the law.
This has not been a “regrettable prosecution” and “much ado about nothing” as submitted by Mr Follett (T 1/08/12 p.90, l.46). Wang had $22,869.39 withheld from her. General and specific deterrence’s are warranted.
Mr Follett accepts that Hua did not do enough and “could have done better… with easy avenues for him to find out… entitlements” (T 1/8/2012 p.84, l.22).
Mr Follett submits that the penalty on both respondents should, if imposed, be at the very low end of the range.
Mr Follett submits that if a penalty is imposed on either respondent that the penalty should be suspended for two years, and lapse thereafter if no contraventions are proven within that time. Mr Follett referred to the decision in Fair Work Ombudsman v AWU, NSW [2010] FMCA 744.
Ms Richards replied on 2 August 2012 to the application for suspension of penalties.
Ms Richards concedes that there is nothing in s.545 of the FW Act to exclude a power to suspend a pecuniary penalty. She submits that this is not an appropriate case in which to suspend penalties because:
·All cases the applicant had located on suspension of penalties resulted from an agreement between the parties to do so;
·Suspension should not be granted unless a future breach or further contravention will be readily apparent; and
·If a suspension is granted here, the FWO will have to scrutinise the ongoing compliance of the respondents with their obligations, which will involve public expense; and there is to be no ongoing relationship between the parties by which a further contravention may be readily identified.
The Court finds force in the submission by Ms Richards. The penalties or part thereof, to be imposed on the respondents will not be suspended.
Penalty on Hua
The Court finds that Hua has accessorial liability for all of the contraventions by Access Embroidery.
He knew all of the relevant facts.
He took all of the relevant actions.
He is responsible to the same degree as Access Embroidery, but has not expressed contrition.
Hua is not entitled to a 25% discount as, Hua makes no admissions of his own liability, apart from non payment for annual leave taken during employment (T 1/8/2012 p.54, l.15). That submission appears to be in error as the admission relates to non payment of accrued annual leave upon termination of employment (T 1/8/2012 p.77, l.36).
Specific Deterrence
Ms Richards submits that specific deterrence in required.
The Court finds that there is a need for specific deterrence.
Section 719(2) of the WR Act and s.557(1) of the FW Act provide that where two or more contraventions of a civil remedy provision are committed by the same person, and arise out of the same course of conduct by that person, the contraventions shall be taken to be a single contravention of that provision.
Section 719(4) of the WR Act and s.546(2) of the FW Act prescribe the maximum penalties. The maximum penalty for an individual is 60 penalty units [a penalty unit (“pu”) is $110.00 (s.4AA of the Crimes Act 1914)]. The maximum penalty for a body corporate is 300 penalty units.
The maximum penalty for a contravention of the WRR is 10 pu’s for a contravention by an individual and 50 pu’s for a body corporate. The failure to keep records of overtime worked is covered by reg19.9(1) of the WRR and reg.3.34 of the FWR.
The Court first reduces the maximum penalties applicable to Hua (set out in the Summary of Contraventions) of $35,200.00 by 70% to $10,560.00. Again, that is at the low end of the range, but would still result in a significant financial penalty. Applying an instinctive synthesis to the aggregate of $10,560.00, the Court finds that the penalty would be excessive in the circumstances, and reduces it by a further 25% to $7,920.00.
The Court had considered the factors relevant to setting penalties set out above, and finds that:
·The penalty imposed for each contravention is appropriate;
·The total penalty is just and appropriate;
·The total penalty is not excessive having regard to the number of contraventions, the seriousness of the conduct and to the maximums prescribed.
The Court finds that the penalties will not be oppressive or crushing having regard to the profitability of Access Embroidery of which Hua is the sole director and equal joint shareholder.
The Court orders that that Hua pay $7,920.00 into Consolidated Revenue within 28 days.
I certify that the preceding one hundred and seventeen (117) paragraphs are a true copy of the reasons for judgment of Turner FM
Date: 14 September 2012
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