Fair Work Ombudsman v Althaus Homes Pty Ltd - [2021] FCCA 126

FEDERAL CIRCUIT COURT OF AUSTRALIA
Fair Work Ombudsman v Althaus Homes Pty Ltd [2021] FCCA 126

File number(s): BRG 168 of 2020

Judgment of: JUDGE JARRETT

Date of judgment: 29 January 2021

Catchwords: INDUSTRIAL LAW – Commonwealth – compliance and enforcement – civil remedies – pecuniary penalty orders – amount of penalty – failure to comply with compliance notice.

Legislation: Fair Work Act 2009 (Cth) ss 539(2), 546(2)(a), 716(2), 716(4A), 716(4B), 716(5)

Cases cited:
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157

Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 2) (2005) 215 ALR 281

Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482

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

Fair Work Ombudsman v Skypac Group Pty Ltd & Ors [2020] FCCA 2332

Fair Work Ombudsman v Viper Industries Pty Ltd & Anor [2015] FCCA 492

Jordan v Mornington Inn Pty Ltd (2007) 166 IR 33

Number of paragraphs: 39

Date of last submission/s: 29 January 2021

Date of hearing: By written submission

Place: Brisbane

Solicitor for the Applicant: Office of the Fair Work Ombudsman

Counsel for the Respondents: Mr Jeffery

Solicitor for the Respondents: Ei Legal Pty Ltd
ORDERS

BRG 168 of 2020

BETWEEN:
FAIR WORK OMBUDSMAN

Applicant

AND:
ALTHAUS HOMES PTY LTD

First Respondent

RONALD ALEXANDER ALTHAUS

Second Respondent

ORDER MADE BY:

JUDGE JARRETT

DATE OF ORDER:

29 JANUARY 2021

THE COURT DECLARES THAT:
1.Althaus Homes Pty Ltd contravened s.716(5) of the Fair Work Act 2009 (Cth) by failing to comply with a notice issued pursuant to s.716(2) of the Fair Work Act 2009 (Cth) on 20 November, 2020;
2.Ronald Alexander Althaus was involved, within the meaning of s.550(1) of the Fair Work Act 2009 (Cth), in the first respondent’s contravention of s.716(5) of the Fair Work Act 2009 (Cth).

THE COURT ORDERS THAT:
3.Pursuant to s.546(1) of the Fair Work Act 2009 (Cth), Althaus Homes Pty Ltd pay a pecuniary penalty of $11,340.00 in respect of the contravention of s.716(5) of the Fair Work Act 2009 (Cth) the subject of declaration 1 hereof.
4.Pursuant to s.546(1) of the Fair Work Act 2009 (Cth), Ronald Alexander Althaus pay a pecuniary penalty of $2,268.00 in respect of his involvement in the contravention of s.716(5) of the Fair Work Act 2009 (Cth).
5.Pursuant to s.546(3)(a) of the Fair Work Act 2009 (Cth), the pecuniary penalties the subject of orders 3 and 4 hereof be paid into the Commonwealth Revenue Fund of the Commonwealth of Australia within 28 days of the date of these orders.

REASONS FOR JUDGMENT
JUDGE JARRETT:

The applicant seeks declarations, pecuniary penalties and other orders against Althaus Homes Pty Ltd and Ronald Alexander Althaus for a single contravention of the Fair Work Act 2009 (Cth).
I have the benefit of written submissions from each of the parties and written submissions in reply from the respondents.
It is uncontentious that:
(a)Althaus Homes contravened s.716(5) of the Fair…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] FCCA 126
Decision Date: 29 January 2021

CaseChat Overview and Summary

The Fair Work Ombudsman brought proceedings in the Federal Circuit and Family Court of Australia against Althaus Homes Pty Ltd and Ronald Alexander Althaus. The dispute concerned Althaus Homes' failure to comply with a compliance notice issued by a Fair Work Inspector, and Mr Althaus's involvement in that failure. The compliance notice had been issued following an investigation into alleged underpayments to an employee.

The court was required to determine whether Althaus Homes Pty Ltd had contravened section 716(5) of the *Fair Work Act 2009* (Cth) by failing to comply with the compliance notice, and whether Ronald Alexander Althaus was involved in that contravention within the meaning of section 550(1) of the Act. The court also had to consider the appropriate pecuniary penalties to be imposed on both respondents for these contraventions.

Judge Jarrett reasoned that section 716(5) of the *Fair Work Act* is a civil remedy provision, and that failure to comply with a compliance notice can attract pecuniary penalties under section 546 of the Act. The court noted that the primary objectives for imposing civil penalties are specific and general deterrence, requiring penalties to have a sufficient "sting or burden". Despite Mr Althaus's assertion that he found the compliance notice confusing, the court found that the notice clearly outlined the potential consequences of non-compliance, including civil penalties and legal action. The court concluded that the respondents' failure to respond to reasonable requests for information and to comply with the notice prevented the expeditious resolution of the underlying underpayment issues and necessitated the institution of proceedings at public expense.

The court declared that Althaus Homes Pty Ltd contravened section 716(5) of the *Fair Work Act* and that Ronald Alexander Althaus was involved in this contravention. Consequently, Althaus Homes Pty Ltd was ordered to pay a pecuniary penalty of $11,340, and Ronald Alexander Althaus was ordered to pay a pecuniary penalty of $2,268. These penalties were ordered to be paid into the Commonwealth Revenue Fund within 28 days.

Orders

Orders of the court

THE COURT DECLARES THAT:

1. Althaus Homes Pty Ltd contravened s.716(5) of the Fair Work Act 2009 (Cth) by failing to comply with a notice issued pursuant to s.716(2) of the Fair Work Act 2009 (Cth) on 20 November, 2020;

2. Ronald Alexander Althaus was involved, within the meaning of s.550(1) of the Fair Work Act 2009 (Cth), in the first respondent’s contravention of s.716(5) of the Fair Work Act 2009 (Cth).

THE COURT ORDERS THAT:

3. Pursuant to s.546(1) of the Fair Work Act 2009 (Cth), Althaus Homes Pty Ltd pay a pecuniary penalty of $11,340.00 in respect of the contravention of s.716(5) of the Fair Work Act 2009 (Cth) the subject of declaration 1 hereof.

4. Pursuant to s.546(1) of the Fair Work Act 2009 (Cth), Ronald Alexander Althaus pay a pecuniary penalty of $2,268.00 in respect of his involvement in the contravention of s.716(5) of the Fair Work Act 2009 (Cth).

5. Pursuant to s.546(3)(a) of the Fair Work Act 2009 (Cth), the pecuniary penalties the subject of orders 3 and 4 hereof be paid into the Commonwealth Revenue Fund of the Commonwealth of Australia within 28 days of the date of these orders.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Specific deterrence focuses on the party upon whom the penalty is to be imposed and the likelihood of them being involved in a similar breach. I accept that the need for specific deterrence is clear in this case. Althaus Homes is still registered and Mr Althaus continues to be the director of Althaus Homes. He continues to have responsibility for employing people or overseeing employees’ entitlements. Both Althaus Homes and Mr Althaus have demonstrated a disregard for their obligations under the Fair Work Act by failing to comply with the compliance notice until well after these proceedings commenced and only intermittently engaging with the applicant during the investigation and these proceedings.CONCLUSION The parties submit that penalties of $11,340 for Althaus Homes and $2,268 for Mr Althaus are appropriate. I agree. I am persuaded as to the accuracy of the parties' agreement as to facts and the consequences that flow therefrom. I am persuaded that the penalty which the parties propose is an appropriate remedy in the circumstances. There will be orders in the terms proposed by the parties.

Ratio Decidendi

Legal Principle Established

Had Althaus Homes complied with the compliance notice by the time initially specified for compliance:(a)the applicant would have been prevented from bringing civil remedy proceedings against it in respect of the underlying contraventions; and(b)Althaus Homes would not have been taken to have admitted or to have been found to have committed the underlying contraventions in the compliance notice.This proceeding would have been avoided altogether.CONSIDERATION The Court may impose penalties pursuant to s.546 of the Fair Work Act if it is satisfied that a person has contravened a civil remedy provision. Subsection 716(5) of the Fair Work Act is a civil remedy provision. Pursuant to ss.539(2) and 546(2)(a) of the Fair Work Act, the maximum penalty that the Court may impose for a contravention of s.716(5) of the Fair Work Act is:(a)$31,500 on Althaus Homes; and(b)$6,300 on Mr Althaus. Specific and general deterrence is the primary objective for the imposition of civil penalties: Commonwealth v Director, Fair Work Building Industry Inspectorate (above) at 506, [55]; 513, [79]. The “principal object” of deterrence is achieved where a penalty has the necessary “sting or burden” to secure the specific and general deterrent effects that are the raison d’etre of its imposition: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157 at [116]. The compliance notice here was issued by a Fair Work Inspector following an investigation during which she made various attempts to engage with the respondents on the issues raised by Mr Schifcofske, including:(a)attempting to call Mr Althaus on his mobile phone and leaving a voice message on 7 November, 2019; and(b)sending an email to Mr Althaus and attempting to call Mr Althaus and leaving a voice message on 11 November, 2019. The conduct of Althaus Homes and Mr Althaus in failing to respond in a timely manner to reasonable requests for information from the applicant’s inspector and failing to properly engage and comply with the notice prevented the applicant from resolving the underpayments owing to Mr Schifcofske expeditiously. Further, the conduct of Althaus Homes and Mr Althaus in failing to comply with the compliance notice left the applicant with no other option than to institute these proceedings at the public’s expense in order to recover the outstanding amounts owing to Mr Schifcofske. Mr Althaus’s evidence is that whilst he recalls reading the compliance notice when he received it, he “found it somewhat confusing and did not clearly understand what steps I was required to take”. The notice contained, on its first page, the following:Rights and obligations under this Compliance Notice1. Failure to comply with this Compliance Notice may contravene section 716(5) of the FW Act and render you liable for a civil penalty (unless you have a reasonable excuse).2. You may be liable to a civil remedy if you give false or misleading information or produce false or misleading documents. It is also a serious offence under the Criminal Code (Cth).3. If you do not comply with this Compliance Notice the Fair Work Ombudsman may, without further notice, commence legal action against you and/or individuals involved in your failure to comply with this Compliance Notice to recover any outstanding monies which this Compliance Notice requires you to pay and to seek civil penalties.4. Complying with the Compliance Notice is not an admission that you contravened, or have been found to have contravened, the Award or the FW Act.5. You may apply to the Federal Court, Federal Circuit Court or eligible State or Territory Court for a review of this Compliance Notice on either or both of the following grounds:(a) you did not commit the contraventions set out in this Compliance Notice;(b) this Compliance Notice does not comply with sections 716(2) or 716(3) of the FW Act

File number(s):	BRG 168 of 2020
Judgment of:	JUDGE JARRETT
Date of judgment:	29 January 2021
Catchwords:	INDUSTRIAL LAW – Commonwealth – compliance and enforcement – civil remedies – pecuniary penalty orders – amount of penalty – failure to comply with compliance notice.
Legislation:	Fair Work Act 2009 (Cth) ss 539(2), 546(2)(a), 716(2), 716(4A), 716(4B), 716(5)
Cases cited:	Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157 Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 2) (2005) 215 ALR 281 Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 Fair Work Ombudsman v Extrados Solutions Pty Ltd [2014] FCCA 815 Fair Work Ombudsman v Skypac Group Pty Ltd & Ors [2020] FCCA 2332 Fair Work Ombudsman v Viper Industries Pty Ltd & Anor [2015] FCCA 492 Jordan v Mornington Inn Pty Ltd (2007) 166 IR 33
Number of paragraphs:	39
Date of last submission/s:	29 January 2021
Date of hearing:	By written submission
Place:	Brisbane
Solicitor for the Applicant:	Office of the Fair Work Ombudsman
Counsel for the Respondents:	Mr Jeffery
Solicitor for the Respondents:	Ei Legal Pty Ltd

ORDER MADE BY:	JUDGE JARRETT
DATE OF ORDER:	29 JANUARY 2021