Fair Work Ombudsman v Andary

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FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Fair Work Ombudsman v Andary [2022] FedCFamC2G 577  

File number(s): ADG 376 of 2021
Judgment of: JUDGE BROWN
Date of judgment: 19 July 2022
Catchwords: INDUSTRIAL LAW – fair work - underpayment of one employee – Compliance Notice – penalty hearing – where the respondent has not participated in proceedings - calculation of penalty – second offence – intuitive synthesis  
Legislation:

Crimes Act 1914 (Cth) s 4AA.

Fair Work Act 2009 (Cth) ss 3, 539, 546, 557, 682, 701, 706, 712, 716.

Fast Food Industry Act 2010.

Federal Circuit & Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) rr 13.04, 13.05.  
Cases cited:

Australian Building and Construction Commissioner v Pattinson [2022] HCA 13

Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCA

Blandy v Coverdale NT Pty Ltd [2008] FCA 1533

Fair Work Ombudsman v Andary [2021] FedCFamC2G 296

Fair Work Ombudsman v Corporation Sun Pty Ltd [2020] FCCA 2849

Fair Work Ombudsman v Darna Pty Ltd [2015] FCCA 709

Fair Work Ombudsman v Kentwood Industries Pty Ltd (No 3) [2011] FCA 579

Fair Work Ombudsman v Lifestyle SA Pty Ltd [2014] FCA 1151

Fair Work Ombudsman v Matcraft Pty Ltd & Ors [2021] FCCA 272

Kelly v Fitzpatrick [2007] FCA 1080

Mason v Harrington Corporation Pty Ltd [2007] FMCA 7

Minister for Immigration & Citizenship v Li (2013) 249 CLR 332

Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412

Veen v R (No 2) (1988) 164 CLR 465, 472

Division: Division 2 General Federal Law
Number of paragraphs: 98
Date of hearing: 6 July 2022
Place: Adelaide
Counsel for the Applicant: Ms Yazidjoglou
Solicitor for the Applicant: The Australian Government Solicitor
Solicitor for the Respondent: No Appearance

ORDERS

ADG 376 of 2021

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

FAIR WORK OMBUDSMAN

Applicant
AND:

ZIAD ANDARY

Respondent

ORDER MADE BY:

JUDGE BROWN

DATE OF ORDER:

19 JULY 2022

THE COURT FINDS THAT:

1.The respondent, Ziad Andary (hereinafter referred to as “the respondent”) has contravened section 716(5) of the Fair Work Act 2009 (Cth) (hereinafter referred to as “the Act”) by failing to comply with the Compliance Notice issued by the applicant, the Fair Work Ombudsman (hereinafter referred to as “the applicant”) on or about 17 July 2021.

THE COURT ORDERS THAT:

2.The first respondent pay a total pecuniary penalty of $4,620.00 pursuant to subsection 546(1) of the Act for his contraventions set out in order (1) above.

3.Pursuant to section 546(3) of the Act, the pecuniary penalty ordered to be paid by the respondent in order (2) above are paid to the Commonwealth within twenty-eight (28) days of the date of this order.

4.The applicant has liberty to apply.

Note: The form of the order is subject to the entry in the Court’s records.

Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family…

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Details
Case
[2022] FedCFamC2G 577
Decision Date

CaseChat Overview and Summary

In the case of Fair Work Ombudsman v Andary, the Fair Work Ombudsman (FWO) brought proceedings against Mr Andary, an employer, for failing to comply with industrial obligations. The dispute centred on Mr Andary's refusal to pay his former employee, Mr Marschall, the wages and penalty entitlements he was owed. This was the second time Mr Andary had faced legal action for similar breaches. The Federal Circuit and Family Court of Australia was tasked with determining an appropriate penalty for Mr Andary's conduct.

The court had to consider several legal issues, including the gravity of Mr Andary's repeated breaches, his lack of cooperation and contrition, and the necessity for deterrence. The FWO argued that Mr Andary's conduct warranted a severe penalty to achieve general deterrence and to underscore the importance of complying with industrial obligations. Mr Andary, on the other hand, had ceased trading and appeared financially strained, which he suggested should mitigate the penalty.

The court found that Mr Andary's repeated disregard for his obligations and lack of cooperation warranted a significant penalty. Despite the absence of evidence about Mr Andary's financial situation, the court determined that a penalty of 70% of the maximum, amounting to $4,620, was appropriate. This penalty was intended to serve both as a punishment for Mr Andary's actions and as a deterrent to others in the industry. The court emphasised that the penalty should reflect the seriousness of the breaches and the need to uphold the industrial safety net, particularly for vulnerable workers.

In conclusion, the court ordered Mr Andary to pay the penalty of $4,620 to the FWO. This penalty was deemed sufficient to achieve the desired deterrence and to uphold the principles of industrial justice.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

However, regardless of what Mr Andary does or does not plan to do regarding returning the fast food industry, the court must point out to him its significant disapproval of his conduct to act as a personal deterrence from him being cavalier in respect of any future obligations as an employer, if he ever considers resuming some form of similar enterprise in future.CONCLUSIONS It has been said that the task of sentencing is one of the hardest judicial tasks, as it requires the synthesis of competing considerations to arrive at a penalty, which is just and appropriate. Necessarily it is a process of intuitive synthesis. It is useful to think of it in terms of percentages, but sentencing is not a purely arithmetical process. The penalty to be imposed must be proportionate to the gravity of the offending. This provides a high water mark in respect of the range of the penalty to be imposed before turning to any subjective factors which tend to mitigate the objective assessment of the offending. The earlier proceedings have had no salutary effect on Mr Andary whatsoever. He has not paid the penalty imposed. More significantly, both Mr Roberts and Mr Marschall remain without recompense for their wage and penalty entitlements. Mr Andary has ceased his business and it seems the FWO will struggle to enforce any judgment granted in its favour. The most significant factor in these current proceedings must be the fact that Mr Andary is, in effect, thumbing his nose, at the FWO and its legislatively justified attempts to ensure that an employee, employed in an industry which is rife with exploitation through underpayment, receives his just entitlements. More significantly, earlier attempts directed towards emphasising to Mr Andary the error of his ways, have been an abject failure, resulting only in the response of Mr Andary ceasing to trade. In my view, these factors distinguish between these current proceedings and the earlier ones and justify a more severe penalty. In my assessment, an appropriate penalty for the respondent is one of 70% of the maximum penalty, which equates to a sum of $4,620.00. This is a significant sum, in my view. However there has been no cooperation with authorities and the case has been protracted leading to the protraction of these proceedings, which represents a significant impost on the public purse. At the same time, the breach represents a failure of the Compliance Notice system to achieve its objectives. As such, a message must be sent to small cottage-type industries of the importance of prompt and complete rectification of any breaches of the industrial safety net. The penalty imposed, in my view, is of sufficient moment to achieve the desired degree of general deterrence required. This will render the respondent liable to a penalty slightly less than that sought by the FWO, but the penalty in question cannot be regarded, in my view, as being either token or trivial, albeit I have very limited information about the respondent’s financial circumstances. Importantly, as indicated above, I consider the penalty to be of sufficient magnitude to provide general deterrence.

Ratio Decidendi

Legal Principle Established

As counsel for the FWO points out in its written submissions:[T]his is the second time the Applicant has been required to commence proceedings at the public expense against the Respondent to seek to recover outstanding amounts owed to a former employee.[34]I am satisfied that Ms Roberts made every reasonable effort to explain the purposes of the Notice to Mr Andary with a view to ensuring Mr Marschall received his due entitlements expeditiously. Mr Andary entirely rebuffed her efforts, which exacerbates the seriousness of the offending conduct. [34] See the Outline of Submissions of the Fair Work Ombudsman filed 1 September 2021 at [40].Contrition, corrective action and cooperation with authorities For reasons I can only speculate the respondent has not elected to pay the sum to Mr Marschall. The most concrete manner in which Mr Andary could have expressed contrition for underpaying Mr Marschall would have been to pay his entitlements promptly. There is no evidence of corrective action, or acknowledgement of the action before the court whatsoever. In these circumstances, it was necessary for the FWO to seek a default judgment, leading to a public authority incurring more expense in the furtherance of its compliance role. In these circumstances, it is not tenable for the court to consider any discount on the penalty to be imposed on account of the respondent’s cooperation.Size of business and capacity to pay I know nothing about the financial circumstances of Mr Andary other than The Valley Pizza has ceased to trade. In addition, I do not know whether the business was impacted by the pandemic crisis. On balance, it is more likely than not the respondent operated a small business which had limited cash flow. However, it is well established that is no excuse for an offender to rely on the fact that they are the operator of a small business. To the contrary, the court must bear in mind that small businesses, of one form or another, represent a large component of employers in this country. Such small businesses, in areas like the fast food industry, very often employ, members of the community who must be considered vulnerable, such as a young people with limited skills, sometimes from a non-English speaking backgrounds. In this regard, I adopt the comments of Driver FM in Rajagopalan v BM Sydney Building Materials Pty Ltd as follows:Employers must not be left under the impression that because of their size or financial difficulty that they are able to breach an award. Obligations by employers for adherence to industrial instruments arise regardless of their size. Such a factor should be of limited relevance to the Court’s consideration of penalty.[35][35] Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412 at [27] (Driver FM).Deterrence As I have already observed deterrence has two aspects – general deterrence directed towards the community as a whole, and specific deterrence directed towards the individual concerned whose conduct is to be sanctioned.