Fair Work Ombudsman v Active Services Group Pty Ltd

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FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Fair Work Ombudsman v Active Services Group Pty Ltd [2024] FedCFamC2G 35

File number(s): MLG 1897 of 2022
Judgment of: DEPUTY CHIEF JUDGE MERCURI
Date of judgment: 23 January 2024
Catchwords: INDUSTRIAL LAW – parties by consent seek declaration of contraventions of the Fair Work Act 2009 (Cth) – failure to comply with three compliance notices issued under s 716 Fair Work Act 2009 (Cth) – where liquidator has been appointed to first respondent company – where applicant only seeks declarations and orders against second respondent sole director – consideration of whether the common law concept of ‘course of conduct’ should apply to respondents’ failure to comply with compliance notices – further consideration of whether the court should exercise its discretion in setting penalty – where applicant primarily sought no penalty be imposed – consideration of weight to be given to second respondent’s financial difficulties and mental health challenges – declaration of contraventions and penalty orders made.
Legislation: Fair Work Act 2009 (Cth), ss 90, 545, 546, 550, 557, 716
Cases cited:

Australian Building and Construction Commission v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157

Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450

Construction, Forestry, Mining and Energy Union and Anor v Cahill (2010) 269 ALR 1

Fair Work Ombudsman v Blu Hornsby Pty Ltd [2016] FCCA 115

Fair Work Ombudsman v Dawe [2013] FMCA 94

Fair Work Ombudsman v Extrados Solutions Pty Ltd and Anor [2014] FCCA 815

Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown (2017) 275 IR 148

Fair Work Ombudsman v Route 45 Pty Ltd [2023] FedCFamC2G 83

Kelly v Fitzpatrick (2007) 166 IR 14

Parker & Ors v Australian Building and Construction Commissioner (2019) 270 FCR 39

Ponzio v BP Caelli Constructions Pty Ltd (2007) 158 FCR 543
Division: Division 2 General Federal Law
Number of paragraphs: 113
Date of last submission/s: 7 August 2023
Date of hearing: 7 August 2023
Place: Melbourne
Solicitor for the Applicant: Mr M Nicolazzo of Maddocks Lawyers
Solicitor for the First Respondent: Did not participate
Counsel for the Second Respondent: Ms S Kelly
Solicitor for the Second Respondent: Spiliotis Legal

ORDERS

MLG 1897 of 2022

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN:

FAIR WORK OMBUDSMAN

Applicant
AND:

ACTIVE SERVICES GROUP PTY LTD

First Respondent

JOHN GERANTIDIS

Second Respondent

ORDER MADE BY:

DEPUTY CHIEF JUDGE MERCURI

DATE OF ORDER:

23 JANUARY 2024

THE COURT DECLARES THAT:

1.The second respondent was involved, within the meaning of section 550(2)(c) of the Fair Work Act 2009 (Cth) (‘FW Act’), in the following contraventions by the first respondent:

(a)a contravention of section 716(5) of the FW Act by failing to comply with the Baxas Compliance Notice issued on 4 March 2021;

(b)a contravention of section 716(5) of the FW Act by failing to comply with the Margaritis Compliance Notice issued on 28 June 2021; and

(c)a contravention of section 716(5) of…

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Details
Case
[2024] FedCFamC2G 35
Decision Date

CaseChat Overview and Summary

In the matter of Fair Work Ombudsman v Active Services Group Pty Ltd, the Fair Work Ombudsman sought declarations and penalties against Active Services Group Pty Ltd and its director for failure to comply with compliance notices issued under the Fair Work Act 2009. The compliance notices related to the underpayment of three employees' accrued but untaken annual leave. The first respondent, Active Services Group Pty Ltd, had been placed in liquidation, and the proceedings were directed against the second respondent, the sole director. The primary issues before the court were whether the failures to comply with the notices constituted a single course of conduct and the weight to be given to the director's financial difficulties and mental health issues in determining the penalty.

The court considered whether the common law concept of a course of conduct applied to the respondents' failure to comply with the compliance notices. It noted that while the statutory definition in the Fair Work Act did not apply, the common law concept might be relevant in determining the penalty. The court relied on the decision in Construction, Forestry, Mining and Energy Union v Cahill, which held that a course of conduct is not a concept peculiar to the industrial context but one that may be relevant to the exercise of sentencing discretion in criminal matters. The court determined that the failures to comply did not constitute a single course of conduct as the offences were separate and distinct. The court also considered the director's financial difficulties and mental health issues but found these did not absolve him from liability.

After weighing all the factors, the court determined that penalties of a total of $4,620 were appropriate. The penalties reflected the seriousness of the contraventions without being oppressive or crushing. The court emphasised that it was setting the penalty based on the failure to comply with the compliance notices, not the underlying conduct that led to the notices being issued.

The court made declarations of contraventions and ordered the director to pay penalties of $4,620. The court considered the penalties to be proportionate to the contraventions and took into account the director's personal circumstances.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Relevantly, the second respondent submits that, notwithstanding the concessions made in the SOAF as to the first respondent’s conduct and his involvement in that conduct, the particular facts of this case indicate that no penalty should be imposed on the second respondent.[6] In the alternative, if a penalty is to be imposed, it should be at the lower level of the range.[7][6] Court transcript at page 20 and following.[7][7] Respondent’s Outline of Submissions filed on 2 June 2023 at paragraph [7].AGREED FACTS As stated, the parties have entered into a SOAF, upon which the following summary is based. It is agreed between the parties that:(a)each of the three employees was employed by the first respondent and did not receive their full entitlement to accrued but untaken annual leave on termination;[8](b)the first respondent did not comply with any of the compliance notices issued in this matter;[9] and(c)the first respondent did not have a reasonable excuse for that non-compliance, and consequently, the first respondent contravened section 716(5) of the FW Act with respect to each of the compliance notices.[10][8] Statement of Agreed Facts filed on 20 February 2023 at paragraphs [7], [13] and [19].[9] Statement of Agreed Facts filed on 20 February 2023 at paragraph [25].[10] Statement of Agreed Facts filed on 20 February 2023 at paragraph [26]. The parties have also agreed that: (a)the second respondent was responsible for ensuring that the first respondent complied with the compliance notices;[11] and(b)the second respondent had actual notice that:(i)the compliance notices were given to the first respondent;(ii)the first respondent failed to comply with those notices; and(iii)consequently, the second respondent was knowingly concerned in the first respondent’s failure to comply with the said compliance notices.[12][11] Statement of Agreed Facts filed on 20 February 2023 at paragraph [28].[12] Statement of Agreed Facts filed on 20 February 2023 at paragraph [29]. The parties also agreed that the second respondent was therefore involved, within the meaning of section 550(2)(c) of the FW Act, in the three contraventions and that pursuant to section 550(1) of the FW Act, is taken to have contravened section 716(5) of the FW Act.[13][13] Statement of Agreed Facts filed on 20 February 2023 at paragraph [30]. The parties further agreed on the amount of the underpayments as follows:(a)$5,376.95 with regard to the Baxas CN;(b)$4,767.00 with regard to the Margaritis CN; and(c)$2,431.13 with regard to the Dirani CN.[14][14] Statement of Agreed Facts filed on 20 February 2023 at paragraph [31]. It is also common ground that no steps had been taken to rectify the underpayments in relation to any of the three employees.[15][15] Statement of Agreed Facts filed on 20 February 2023 at paragraph [32]. Pursuant to section 716 of the FW Act, a contravention arises where:(a)a compliance notice is given to a person;(b)the notice arises from a reasonable belief that the person has contravened, among other things, an award or the provisions of the National Employment Standards, which includes annual leave entitlements; and(c)the notice complies with section 716(3) of the FW Act and relevantly contains the details of the contravention and the consequences of failing to comply with the notice.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Penalties in the sum of a total of $4,620 are not oppressive or crushing in my view and reflect the seriousness of the contraventions in this case.CONCLUSION For each of these reasons, I make the declarations and orders as set out at the commencement of these reasons.

Ratio Decidendi

Legal Principle Established

It is also important to note that, in a case such as this, the court is required to consider the penalty appropriate to the contravention established, namely the failure to comply with a compliance notice. The court does not have before it, and therefore is not setting a penalty by reference to, the underlying conduct which gave rise to the issuing of the compliance notice.[38] [38] See Fair Work Ombudsman v Extrados Solutions Pty Ltd and Anor [2014] FCCA 815 at [7].ISSUES FOR CONSIDERATION As stated, there is no issue taken as to the principles which apply to a case such as this. The key issues which arise for considerations are:(a)whether the failure to comply with the three compliance notices should be considered to have occurred within the one course of conduct and therefore any penalty imposed determined accordingly; and(b)the weight to be given to the second respondent’s financial and health issues in determining whether, and if so, what penalty should be imposed.Course of conduct It is common ground that the failure to comply with each of the three compliance notices in this case does not fall within the statutory definition of a ‘course of conduct’ contained in section 557 of the FW Act.[39][39] Applicant’s Outline of Submissions filed on 12 May 2023 at paragraph [19]; Court transcript at page 14. The issue is whether it falls within the common law concept of a ‘course of conduct’ such that it is a factor which ought to be considered in determining whether, and if so, what penalty ought be imposed. In Construction, Forestry, Mining and Energy Union v Cahill (2010) 269 ALR 1 (‘Cahill’), the court was asked to consider whether the judge at first instance had erred by failing to consider whether three contraventions ought properly be seen as arising out of the one course of conduct, or whether the judge at first instance had misapplied the ‘one course of conduct’ or the ‘one transaction’ principle. In rejecting these submissions, Justices Middleton and Gordon of the majority said at paragraphs [38] to [39]:38.… the appellants’ submission should be rejected as it proceeds on a misconception about the single course of conduct principle and the role it plays, or the place it occupies, in the exercise of the sentencing discretion …39.As the passage in Williams … explain, a “course of conduct” or the “one transaction principle” is not a concept peculiar to the industrial context. It is a concept which arises in the criminal context generally and one which may be relevant to the proper exercise of the sentencing discretion. The principle recognises that where there is an interrelationship between the legal and factual elements of two or more offences for which an offender has been charged, care must be taken to ensure that the offender is not punished twice for what is essentially the same criminality. That requires careful identification of what is “the same criminality” and that is necessarily a factually specific enquiry. Bare identity of motive for commission of separate offences will seldom suffice to establish the same criminality in separate and distinct offending acts or omissions. (emphasis in original)