Fair Work Ombudsman v Anvisco Pty Ltd (in liquidation)
[2022] FedCFamC2G 738
Federal Circuit and Family Court of Australia
(DIVISION 2)
Fair Work Ombudsman v Anvisco Pty Ltd (in liquidation) [2022] FedCFamC2G 738
File number(s): SYG 2086 of 2021 Judgment of: JUDGE GIVEN Date of judgment: 8 September 2022 Catchwords: INDUSTRIAL LAW – imposition of penalties for failure to comply with notices – underpayment of minimum wage entitlements – failure to pay accrued annual leave entitlement – unsolicited expression of contrition – employer company in liquidation Legislation: Corporations Act 2001 (Cth) s 500
Fair Work Act 2009 (Cth) ss 546, 550, 557, 700, 716, 793
Cases cited: Construction, Forestry, Mining and Energy Union v Cahill (2010) 269 ALR 1
Fair Work Ombudsman v Absynthe Restaurant Pty Ltd & Anor [2015] FCCA 58
Fair Work Ombudsman v AJR Nominees Pty Ltd (No 2) [2014] FCA 128
Fair Work Ombudsman v Koojedda Carpentry Pty Ltd atf Gumley Trust (No 2) [2017] FCCA 2577
Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown (2017) 275 IR 148
Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7
Division: Division 2 General Federal Law Number of paragraphs: 48 Date of hearing: 10 August 2022 Place: Sydney Solicitor for the Applicant: Mr T Ahmed for the Fair Work Ombudsman The First Respondent: No appearance The Second Respondent: In person (via Microsoft Teams) ORDERS
SYG 2086 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: ANVISCO PTY LTD (IN LIQUIDATION) (ACN 146 928 921)
First Respondent
ANTHONY ANTONIADES
Second Respondent
order made by:
JUDGE GIVEN
DATE OF ORDER:
8 september 2022
THE COURT DECLARES THAT:
1.The Second Respondent was involved, within the meaning of s 550 of the Fair Work Act 2009 (Cth) (Act), in the contraventions by the First Respondent of s 716(5) of the Act:
(a)by failing to comply with a compliance notice issued on 25 November 2020; and
(b)by failing to comply with a compliance notice issued on 17 March 2021.
THE COURT ORDERS THAT:
1.Pursuant to s 546(1) of the Act, the Second Respondent must pay a pecuniary penalty of $5,100.00 for his involvement in the contraventions of s 716(5) by the First Respondent.
2.Pursuant to s 546(3) of the Act:
(a)the pecuniary penalty referred to in order 1 above be paid by the Second Respondent into the Consolidated Revenue Fund of the Commonwealth of Australia within 28 days of these orders; and
(b)within 28 days of receipt of the pecuniary penalty referred to in orders 1 and 2(a) above, the Applicant is to pay this amount to Mr Liyu (Rex) Wang.
3.The Applicant has liberty to apply on seven days’ notice in the event that any of orders 1 or 2(a) above is not complied with.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE GIVEN:
The Fair Work Ombudsman (applicant) seeks declarations and penalties for two admitted contraventions of s 716(5) of the Fair Work Act 2009 (Cth) (Act) by the second respondent, Anthony Antoniades, on the basis that he was involved (as defined by s 550 of the Act) in the failure of the first respondent, Anvisco Pty Ltd (Anvisco), to comply with two compliance notices which were issued on each of 25 November 2020 (2020 Notice) and 17 March 2021 (2021 Notice) (collectively Compliance Notices). The applicant says that pursuant to s 550(1) of the Act, the second respondent is taken to have himself committed two contraventions of s 716(5) of the Act.
Background
The background to this matter is not in dispute between the applicant and the second respondent, having been derived from a Statement of Agreed Facts (SOAF) entered into by them, and filed with the Court, on 20 April 2022.
At all relevant times:
(a)Anvisco was a company that owned and operated a business selling lights and lighting products which traded as “Go Lights” and/or “Fosini Lighting” (Business); and
(b)the second respondent was:
(i)a natural person capable of being sued;
(ii)the general manager of the Business;
(iii)responsible for the daily operations of the Business, including the payment of employees;
(iv)authorised to correspond with the applicant on behalf of Anvisco in respect of the investigation defined at [4] below and of the Compliance Notices;
(v)a person whose conduct engaged in on behalf of Anvisco and within the scope of his actual or apparent authority, including all conduct agreed in the SOAF, is taken to be that of Anvisco pursuant to s 793(1) of the Act.
Inspector Kim O’Connell (Inspector) is, and was at all relevant times, a Fair Work Inspector within the meaning of s 700 of the Act. On or around 3 September 2020, the Inspector commenced an investigation (investigation) into Anvisco’s compliance with the Act following a request for assistance made to the applicant by Mr Liyu (Rex) Wang (Employee). As a result of the investigation, the Inspector formed a belief that:
(a)the Employee was employed by Anvisco from 22 March 2017 to 3 January 2020 (Employment Period) on a full-time basis as a salesman;
(b)the Employee was a National System Employee within the meaning of s 13 of the Act;
(c)the Act applied to Anvisco in relation to its employment of the Employee;
(d)the General Retail Industry Award 2010 (Award) covered and applied to Anvisco in respect of its employment of the Employee;
(e)the Employee was classified as a Level 1 Retail Employee in accordance with schedule B of the Award (as it applied during the Employment Period);
(f)the Employee had an entitlement to, and did, accrue annual leave as a full-time employee;
(g)between 16 November 2018 to 3 January 2020, the amounts paid by Anvisco to the Employee were insufficient to meet his entitlement to the minimum wage for his classification under the Award; and
(h)Anvisco did not pay the Employee his accrued annual leave on termination.
On 25 November 2020, the Inspector issued Anvisco with the 2020 Notice which required it to calculate and rectify the relevant contravention by 24 January 2021, by posting the 2020 Notice to Anvisco’s registered office. On 1 December 2020, the Inspector also sent copies of the 2020 Notice by email to:
(a)the second respondent;
(b)Mr George Antoniades (at that time the sole director of Anvisco); and
(c)Mr Vince Hansimikali (a shareholder of Anvisco).
On 17 March 2021, the Inspector issued Anvisco with the 2021 Notice, which required it to calculate and rectify the relevant contravention by 12 April 2021, by posting the 2021 Notice to Anvisco’s registered office.
On 18 March 2021, the Inspector also sent copies of the 2021 Compliance Notice by email to:
(a)Mr Antoniades;
(b)Mr George Antoniades; and
(c)Mr Hansimikali.
Each of the Compliance Notices:
(a)was issued pursuant to s 716(2) of the Act; and
(b)met the requirements of s 716(3) of the Act.
Anvisco did not comply with either of the Compliance Notices by their due dates, or at all. While the second respondent did communicate with the Inspector about the Compliance Notices and provided some calculations, those calculations did not meet the requirements of the Compliance Notices, and no payments were made to the Employee.
On 10 November 2021, these proceedings were commenced. On 8 March 2022, Anvisco was placed into liquidation. The proceeding against it is stayed by operation of s 500(2) of the Corporations Act 2001 (Cth) but that liquidation does not prevent orders being made against the second respondent provided that the Court is satisfied that he was knowingly concerned in the impugned conduct.
Given the admissions made by the second respondent in the SOAF which include that the second respondent:
(a)had the authority to cause Anvisco to comply with the Compliance Notices;
(b)had actual knowledge of the compliance; and
(c)was an intentional participant in Anvisco’s failure to comply with the compliance notices;
I am satisfied as to those matters.
On 28 April 2022, consequent upon the first respondent having been placed in liquidation and the second respondent having admitted contraventions by the filing of the SOAF, I made orders for the future conduct of the matter which included a timetable for the filing of submissions and evidence by the applicant and the second respondent, and listed the matter for a hearing on penalty before me on 10 August 2022.
The first respondent filed submissions on penalty (in chief) and an Affidavit of the Inspector, affirmed on 13 May 2022 (Inspector’s Affidavit). Other than the initial filing of a Defence early in the proceedings, nothing further was filed for the second respondent in accordance with the orders, or at all. Accordingly, the applicant did not take up the grant of leave to file submissions in reply.
On the day before the listed hearing on penalty an enquiry was made of my chambers by the second respondent to appear using the Microsoft Teams platform as he was overseas. I granted the second respondent that leave in order that the proceedings could be heard and determined without further delay. At hearing, the applicant was represented by a solicitor who appeared before me in person and the second respondent appeared for himself using the Microsoft Teams platform. At one juncture during the hearing, the second respondent’s connection froze and I adjourned very briefly in order to enable him to reconnect. Aside from that occasion, the connection was otherwise clear and the parties had no difficulty engaging with each other or with the Court.
In addition to the factual matters agreed by the SOAF, I had before me the Inspector’s Affidavit and the applicant’s written submissions, both of which have been of assistance.
Relevant principles
The power of this Court to order the imposition of pecuniary penalties arises from s 546(1) of the Act. The authorities establish that the Court should consider the appropriate penalty to impose in respect of a contravention having regard to all of the circumstances of the case. The failure of Anvisco to comply with the Compliance Notices constitutes two separate contraventions of s 716(5) of the Act. The approach to assessing penalties for multiple contraventions of the Act is helpfully summarised in Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown (2017) 275 IR 148 (New Shanghai) per Bromwich J at [36] as involving the following five step process:
(1)Identify the separate contraventions, with each breach of each obligation being a separate contravention, and each breach of a term of the Award being a separate contravention.
(2)Consider whether each separate contravention should be dealt with independently or with some degree of aggregation for those contraventions arising out of a course of conduct, noting that s 557 of the FW Act provides that two or more contraventions of a given civil remedy provision are to be taken to be a single contravention if committed by the same person and arising out of a course of conduct by that person.
(3)Consider whether there should be further adjustment to ensure that, to the extent of any overlap between groups of separate aggregated contraventions, there is no double penalty imposed, and that the penalty is an appropriate response to what each respondent did.
(4)Consider the appropriate penalty in respect of each final individual group of contraventions, taken in isolation.
(5)Consider the overall penalties arrived at, including by reference to those which may be proposed by the FWO (as permitted by Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482 (CFMEU Civil Penalties Case) at [64]) and what is proposed by the respondents, and apply the totality principle, to ensure that the penalties for each respondent are appropriate and proportionate to the conduct viewed as a whole, making such adjustments as are necessary: see Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14 at [30]; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; 165 FCR 560 at [23]. [71] and [102].
Section 716(5) of the Act is not referred to in s 557(2) of the Act. Therefore, the second step referred to at [36(2)] of New Shanghai does not apply to multiple contraventions of s 716(5).
The third step referred to by his Honour Bromwich J in New Shanghai requires the application of what is sometimes referred to as the “one course of conduct” or “one transaction” principle, described by Middleton and Gordon JJ in Construction, Forestry, Mining and Energy Union v Cahill (2010) 269 ALR 1 at [39] as follows:
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.
The applicant submits that a separate penalty should be imposed for each of the two contraventions of s 716(5) because each of the 2020 Notice and 2021 Notice:
(a)was issued a separate date;
(b)related to separate and distinct underlying contravention; and
(c)required different steps to achieve compliance.
The applicant submits that the decision of the second respondent to not comply with each of the Compliance Notices constituted more than a single transaction and that, to the extent there is any overlap arising from the fact they each related to a single employee (albeit for different entitlements and requiring different steps to remedy the identified contravention), the applicant considers this is appropriately reflected in the ranges suggested. I accept that submission.
Submissions on appropriate penalty
As noted above at [15], the applicant filed written submissions on 13 May 2022 addressing the relevant factors which are said to fall for consideration in the instant case: see for example Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7 per Mowbray FM at [26]-[59], namely:
(a)the nature and circumstances of the conduct;
(b)deterrence (both general and specific);
(c)the loss sustained as a result of the contraventions; and
(d)cooperation, contrition and corrective action.
Nature and circumstances of the conduct
The relevant conduct in this matter which falls for consideration is the undisputed failure of the second respondent to assist Anvisco in complying with the two Compliance Notices.
Relevant to that failure is that the powers which were exercised by the Inspector in the investigation and leading to her issuance of the Compliance Notices were introduced into the Act to enable non-compliances with minimum entitlements under the Act to be dealt with without the need for commencing litigation for each underlying contravention of an obligation: see Fair Work Bill 2008, Explanatory Memorandum at [2673].
In the event of compliance the Inspector is prevented from bringing civil remedy proceedings for contraventions (pursuant to s 716(4A)(b)(i) of the Act). As such, the issuance of the Compliance Notices provided an efficient and cost-effective mechanism for rectification of the contraventions identified in the instant case without the need for these proceedings, had the first respondent complied with them.
In respect of the conduct relevant to penalty, the second respondent:
(a)was the person who received the Compliance Notices on behalf of Anvisco and knew that they had to be complied with;
(b)was the general manager of Anvisco and the person who was responsible for the daily operations of its business, including the payment of employees;
(c)had actual knowledge of the Compliance Notices and the action required to comply with the Compliance Notices; and
(d)had authority to cause Anvisco to comply with the Compliance Notices, but failed to ensure that it did so.
The applicant relies on a series of text message exchanges referred to in [8] of the Inspector’s Affidavit (copies of which form Annexure “KO-3” thereto) to say that it is a matter of moment that the second respondent failed to take steps to cause compliance with the Compliance Notices given he had acknowledged that the Employee was owed at least $30,000 on 12 December 2019. The additional significance of this is that it also predates the Employee approaching the applicant for assistance. In essence, the applicant says that the respondents (but in particular the second respondent) had multiple opportunities and lead-time in which to remedy these contraventions and did not, which has ultimately led to these proceedings, in which the contraventions are acknowledged by him albeit at a later stage than could have occurred and possibly without needed to involve the applicant at all.
At hearing before me the second respondent sought to mitigate his conduct in failing to remedy the contraventions by explaining that the reason he was not able to rectify the conduct the subject of the Compliance Notices was because he did not have access to the financial records of Anvisco. The second respondent explained that Anvisco’s owner had not paid the necessary renewal fees for its online accounting system. The second respondent says he provided evidence to the Inspector to demonstrate he was taking steps to obtain access to those records including his approaches to the owner of Anvisco, seeking to do what was necessary to access, retain and keep those records. The second respondent added that because he was neither an owner nor a director of Anvisco, there was limited scope and ability for him to rectify these problems in the business and its underpayment to the Employee.
In response the applicant says that this submission was in conflict with the SOAF, in particular [24] thereof, by which it is agreed inter alia that the second respondent “had the authority to cause Anvisco to comply with the Compliance Notices”. The applicant says the second respondent was an intentional participant with the first respondent’s failure to comply with each of the Compliance Notices. That latter point, however, is not in dispute. I reject the characterisation that the two matters are in conflict and am prepared to accept that while the second respondent’s overarching role had within its ambit a broad authority to direct the business, there may have been other aspects at play, such as the ability to compel certain information because of a decision elsewhere within the company to cease a subscription to software. It is not a significant point overall in the factual matrix of the matter. However, to the extent the second respondent was keen to emphasise it as a mitigating factor, I am prepared to accept that notwithstanding his general authority within Anvisco he may have faced some obstacles to achieving rectification, in accordance with the Compliance Notices from Anvisco itself.
Deterrence (both general and specific)
General deterrence
As was observed in Fair Work Ombudsman v Absynthe Restaurant Pty Ltd & Anor [2015] FCCA 58 by Judge Jarrett (as his Honour then was) at [47]:
Ordering penalties at a meaningful level for the failure to comply with a compliance notice will demonstrate that such notices are to be taken seriously. It is important that recipients of such notices understand that they are to be taken seriously and that there are benefits to employers, employees and the community alike if they are treated seriously.
Having regard to the observations I have made above at [26] there is utility in ensuring not only that compliance notices are taken seriously but that there is also a disincentive in failing to comply with them in circumstances where early compliance alleviates the need for the applicant to commence proceedings in circumstances where it transpires there is no significant dispute between the parties. This has benefits to the community and other court users as well.
Specific deterrence
The applicant contends that specific deterrence aims to ensure that a contravener is discouraged from embarking upon the same conduct in the future: see Fair Work Ombudsman v AJR Nominees Pty Ltd (No 2) [2014] FCA 128 at [50] per Gilmour J. The applicant says that while Anvisco is in liquidation, it remains important that the second respondent understand the importance of complying with statutory notices issued by regulators in his future activities. In this regard, the applicant relies on documents annexed to the Inspector’s Affidavit to highlight that the second respondent:
(a)has been the holder of an Australian Business Number since 2 September 2015 which was registered for GST on 26 April 2016 and remains so registered; and
(b)has also been a director of a number of other entities, which roles ceased in late December 2021 and April 2022, which is after these proceedings were commenced.
The applicant submits that it is open to the Court to infer that the second respondent may be a director or manager, or otherwise involved in the employment of employees, in the future. The applicant submitted that there is a need to send a message to employers generally that a failure to comply with a compliance notice will not be tolerated by the applicant, the community or the Courts. The applicant submitted that the fact the second respondent had previously been a company director meant that specific deterrence in this case would be aided by ordering a penalty amount to be paid by the second respondent.
The applicant submits that the financial circumstances of a contravener may be relevant to the level of penalty required to achieve specific deterrence, but this does not obviate from the need for penalties to be set at a meaningful level: Fair Work Ombudsman v Koojedda Carpentry Pty Ltd atf Gumley Trust (No 2) [2017] FCCA 2577 per Judge Lucev at [74]. However no evidence has been placed before the Court (by any party) as to the financial circumstances of the second respondent.
Loss sustained as a result of the contraventions
The failure of Anvisco to comply with the Compliance Notices, and more specifically the second respondent’s conduct in failing to ensure Anvisco so complied resulted in:
(a)the Employee being denied rectification, being the payment t of amounts owing to him for each of his minimum wage and annual leave entitlements; and
(b)an undermining of the Compliance Notices’ purpose as contemplated by the legislature, resulting in the present litigation, the expenditure of public funds and utilisation of Court resources which would have been avoided had compliance occurred, by reason of the operation of s 716(4A)(b)(i) of the Act (see [24] above).
Consequent upon the liquidation of Anvisco, it is now unable to take the steps required by the Compliance Notices, namely the calculation and payment of amounts owing to the Employee and it is reasonable to infer that these amounts may never be paid. The applicant says that material filed on behalf of Anvisco in the liquidation process records the amounts owing to the Employee in unpaid entitlements as being $28,244.84.
I have had regard to the text messages placed before the Court (as referred to at [26] above) which were exchanged during the employment period of the Employee and which record various hardships which are said to have flowed from the underpayments. Those messages are not proof of the underlying claims within them (for example that the Employee’s car was in danger of repossession) but I am prepared to accept that loss and hardship will have flowed to the Employee from the failure to pay him an amount of almost $30,000 to which he was entitled.
Cooperation, contrition and corrective action
While the applicant concedes that the second respondent “did not completely ignore the Compliance Notices”, it says he did fail to meaningfully engage with those Compliance Notices and to take sufficient steps to achieve Anvisco’s compliance therewith. The applicant further acknowledges that during the Inspector’s investigation, the second respondent did provide some calculations as to the amounts owed to the Employee but that this was after the due date for compliance, and not in the form required by the Compliance Notices.
However, ultimately the cooperation which did occur between the second respondent and the applicant obviated the need for a contested liability hearing by way of concession and agreeing to the SOAF, and the applicant says that that a discount of 20% should be applied to the penalty set for each contravention.
At the hearing of the matter, when given the opportunity to make submissions, the second respondent concluded those submissions with the following, unprompted on the issue of contrition[1]:
…I am sorry it has come to this. Obviously, I have never been in this position before and never plan to be in it again. I am sorry for the situation that Mr Wang has found himself in and, yes. It has been a terrible situation. I’m sorry and I will make sure that in future, it doesn’t happen again.
[1] Transcript, 12.38-42
I accept the second respondent’s unsolicited statement of contrition as being genuine.
Penalty amount
I am satisfied that penalties should be ordered.
The maximum penalty the Court may impose for a contravention by an individual of s 716(5) of the Act at the date of each contravention is $6,660 per contravention.
The applicant submits that the appropriate range to be imposed on the second respondent is:
(a)for the 2020 Notice (in respect of minimum wage entitlements): $3,168 to $3,696 (being 60% to 70% of the maximum, with a 20% discount for cooperation); and
(b)for the 2021 Notice (in respect of annual leave entitlements): $2,112 to $2,640 (being 40% to 50% of the maximum, with a 20% discount for cooperation)
on the basis that the Court should be satisfied that the range submitted by the applicant is an appropriate response to the second respondent’s contravening conduct and circumstances, and at a level required to achieve deterrence, and therefore should not make any further adjustment.
In respect of to whom the penalty should be made payable to the Commonwealth, s 546(3) of the Act provides the Court with a discretion to have the penalty paid to someone other than the applicant.
The applicant says that because first respondent is in liquidation, in which regime the Employee is an employee creditor with unpaid entitlements said to be $28,244.84, and that a stay operates against the first respondent such that no order has been made against it to comply with the Compliance Notices, it is unlikely that the Employee will ever be paid his full unpaid entitlements. In those circumstances the applicant seeks an order that the penalties imposed on the second respondent are made payable to the applicant to be thereafter transferred by the applicant to the Employee pursuant to s 546(3)(c) of the Act. This position is commendable.
The applicant has submitted that for each of the contraventions the conduct falls in a mid-range, and applied a suggested 20% discount for the second respondent’s cooperation. In my view the following additional factors should also be taken into account, in the second respondent’s favour:
(a)the statement of contrition set out at [39] above, given in an impromptu manner at hearing which indicates not only contrition, but also goes to the concerns expressed by the applicant regarding specific deterrence. The applicant placed emphasis on the need to specifically deter the second respondent from repeating this conduct in any future roles. I am prepared to accept the second respondent’s statement, which was expressed with sincerity, that he will ensure that this conduct on his part does not occur again; and
(b)the observations made above consequent upon the second respondent’s additional explanation about obstacles he faced from within the first respondent which hampered his ability to further cooperate with the Inspector, which goes to the consideration of cooperation. I am prepared to give the second respondent the benefit of the doubt that had he not been hampered in his own cooperation, it may have been more extensive.
Having regard to the factors set out in the preceding paragraph, and the amounts sought at [43], I consider that a further small adjustment should be made in favour of the second respondent. In my overall assessment of the matter this can be achieved by rounding the amounts sought down to result in the following:
(a)for the 2020 Notice (in respect of minimum wage entitlements): $3,100; and
(b)for the 2021 Notice (in respect of annual leave entitlements): $2,000.
The applicant sought that the second respondent pay combined pecuniary penalties of between $5,280 to $6,336. The overall effect of the orders will be a combined penalty of $5,100. I consider that this amount should be ordered on the basis that it be transferred to the Employee, by the applicant, in light of the submission summarised at [45] above, with which I agree.
I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Given. Associate:
Dated: 8 September 2022