Fair Work Ombudsman v Baal Gammon Copper Pty Ltd
[2021] FCCA 348
•25 February 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
Fair Work Ombudsman v Baal Gammon Copper Pty Ltd [2021] FCCA 348
File number(s): BRG 51 of 2020 Judgment of: JUDGE JARRETT Date of judgment: 25 February 2021 Catchwords: INDUSTRIAL LAW – Commonwealth – compliance and enforcement – civil remedies – pecuniary penalty orders – assessing penalty – contravention deemed to be admitted.
INDUSTRIAL LAW – Commonwealth – compliance and enforcement – civil remedies – pecuniary penalty orders – amount of penalty – particular cases.
Legislation: Bankruptcy Act 1966 (Cth), s 82(3)
Fair Work Act 2009 (Cth), ss 90(2), 539(2), 546(1), 546(2), 550(1), 716(2), 716(4A), 716(4B), 716(5)
Federal Circuit Court Rules 2001 (Cth)
Cases cited: Australian Building and Construction Commissioner v CFMMEU [2020] FCA 549
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157
CFMMEU v ABCC (2018) 264 FCR 155
Commonwealth of Australia v Director of the FWBII (2015) 258 CLR 482
Cotis v MacPherson (2007) 169 IR 30
Fair Work Ombudsman v Althaus Homes Pty Ltd [2021] FCCA 126
Fair Work Ombudsman v Blu Hornsby Pty Ltd [2016] FCCA 1150
Fair Work Ombudsman v Finetune Holdings Pty Ltd (No 3) [2012] FMCA 883
Fair Work Ombudsman v Garfield Berry Farm Pty Ltd [2011] FMCA 885
Fair Work Ombudsman v Goldfinger Facility Management Pty Ltd (2016) FCCA 356
Fair Work Ombudsman v Nobrace Centre Pty Ltd & Anor (No. 2) [2019] FCCA 2144
Fair Work Ombudsman v Sun Sea Equity Pty Ltd [2021] FCCA 104
Mathers v Commonwealth of Australia (2004) 134 FCR 135
Number of paragraphs: 41 Date of last submission/s: 12 February 2021 Date of hearing: 8 & 12 February 2021 Place: Heard in Brisbane, delivered in Hervey Bay Solicitor for the Applicant: Office of the Fair Work Ombudsman The First Respondent: No appearance Counsel for the Second Respondent: Mr Rawlings, directly instructed ORDERS
BRG 51 of 2020 BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: BAAL GAMMON COPPER PTY LTD (ACN 149 583 933)
First Respondent
DENIS WALTER REINHARDT
Second Respondent
ORDER MADE BY:
JUDGE JARRETT
DATE OF ORDER:
25 FEBRUARY 2021
THE COURT DECLARES THAT:
1.The first respondent contravened s.716(5) of the Fair Work Act 2009 (Cth) by failing to comply with the compliance notice issued pursuant to s.716(2) of the Fair Work Act 2009 (Cth) on 24 October, 2019.
2.The second respondent was involved in the first respondent’s contravention of s.716(5) of the Fair Work Act 2009 (Cth) for the purposes of s.550(1) of the Fair Work Act 2009 (Cth).
THE COURT ORDERS THAT:
3.Pursuant to ss.546(1) and 546(3)(a) of the Fair Work Act 2009 (Cth) the first respondent pay a pecuniary penalty of $20,000.00 to the Commonwealth for the contravention of s.716(5) of the Fair Work Act 2009 (Cth), within 28 days of this order.
4.Pursuant to ss.546(1) and 546(3)(a) of the Fair Work Act 2009 (Cth), the second respondent pay a pecuniary penalty of $3,750.00 to the Commonwealth for his involvement in the contravention of s.716(5) of the Fair Work Act 2009 (Cth), within 28 days of this order.
REASONS FOR JUDGMENT
JUDGE JARRETT:
The Fair Work Ombudsman commenced these proceedings on 29 January, 2020 against the first and second respondents. In the proceedings, the applicant alleges that:
(a)the first respondent failed to comply with a notice dated 24 October, 2019 issued pursuant to s.716(2) of the Fair Work Act 2009 (Cth), in contravention of s.716(5) of that Act; and
(b)the second respondent was involved in that contravention and therefore is taken to have also committed the contravention: s.550(1) of the Act.
Notwithstanding that the second respondent has appeared in these proceedings from time to time when they have been before the Court, the respondents have not defended the proceedings or responded to them as required by the Federal Circuit Court Rules 2001 (Cth). On 27 October, 2020 I made an order finding the respondents in default in these proceedings and deeming as admitted, the contravention of the Act pleaded against them.
THE CONTRAVENTION
The second respondent was at all relevant times the sole director of the first respondent and responsible for the management of the first respondent’s business. He was responsible for ensuring that the first respondent met its legal obligations. The second respondent was declared bankrupt on 12 December, 2019 and is no longer a director of the first respondent although his name still appears as such on official records.
From around February, 2017 the first respondent operated a copper mine located near Watsonville, Queensland. In January, 2019 the applicant received a request for assistance from one of the first respondent’s employees, Mr Thomas Payne, resulting in the applicant commencing an investigation into the first respondent’s employment practices. Mr Payne’s request for assistance related to the non-payment of accrued annual leave entitlements.
From 1 July, 2007 to 1 January, 2019 Mr Payne worked at two mine sites, during which time his employment transferred through four companies (where, each time, his service with the prior employer was recognised). The progression was as follows:
(a)Kagara Zinc Ltd (from 1 July, 2007 to 23 January, 2013);
(b)Snow Peak Mining Pty Ltd (from 24 January, 2013 to 26 July, 2015);
(c)Consolidated Tin Mines Ltd (from 27 July, 2015 to 1 February, 2017); and
(d)the first respondent (from 2 February, 2017 until Mr Payne’s termination of employment on 1 January, 2019).
Based on the information provided by Mr Payne, a Fair Work Inspector formed a belief that the first respondent had contravened s.90(2) of the Fair Work Act by failing to pay Mr Payne his accrued annual leave entitlements on termination of his employment. On 9 May, 2019 the Fair Work Inspector issued a compliance notice under s.716(2) of the Act to the first respondent in respect of this contravention. This compliance notice is not the subject of the present proceedings even though the first and second respondents took no action in respect of it.
In or around July, 2019 the Fair Work Ombudsman received a request for assistance from another of the first respondent’s employees, Mr Roger Walker, who also alleged that the first respondent had failed to pay him his accrued annual leave entitlements on termination of his employment. Mr Walker had worked on two of the mine sites that Mr Payne had worked on from 1 July, 2007 and was employed by the same four companies for the same periods and in the same circumstances, as Mr Payne, except that his employment with the first respondent ended on 10 October, 2018.
Based on the information provided by Mr Walker, a Fair Work Inspector again formed a belief that the first respondent had contravened s.90(2) of the Act by failing to pay Mr Walker his accrued annual leave entitlements on termination of his employment. On 24 October, 2019 the Fair Work Inspector issued to the first respondent the compliance notice the subject of these proceedings.
The power of a Fair Work Inspector to issue a compliance notice under s.716(2) of the Fair Work Act provides a mechanism for dealing with non-compliance with minimum entitlements arising under the Act or an award as an alternative to commencing litigation for each underlying contravention. According to s.716(5) of the Act, a person must not fail to comply with a compliance notice. Compliance notices therefore provide a mechanism for the efficient and cost-effective rectification of identified contraventions of the Fair Work Act, including underpayments to employees: see, for example, Fair Work Ombudsman v Nobrace Centre Pty Ltd & Anor (No. 2) [2019] FCCA 2144 at [19]; Fair Work Ombudsman v Blu Hornsby Pty Ltd [2016] FCCA 1150 at [29]. If the first respondent had complied with the compliance notice:
(a)the applicant would have been prevented from bringing civil remedy proceedings against it in respect of the underlying contraventions: s.716(4A) of the Act; and
(b)it would not be taken to have admitted or contravened the civil remedy provisions in respect of the underlying contraventions: s.716(4B) of the Act.
Thus, there are considerable benefits to employers, employees, the Regulator and the public that flow from the use of the compliance notice procedure. However, failure to comply with a compliance notice allows a Fair Work Inspector to bring civil remedy proceedings against the recipient of the notice and seek appropriate orders to remedy the contravention, including pecuniary penalties: s.539(2) of the Act.
The compliance notice required the first respondent to remedy the direct effects of the contraventions by 22 November, 2019. In respect of each employee it was required to:
(a)identify the amount of untaken annual leave that had transferred from Consolidated Tin Mines Limited to the first respondent;
(b)calculate the total number of hours of accrued annual leave at the time of termination and calculate the total amount that each of the employees should have been paid for their accrued annual leave; and
(c)make a payment to each of the employees for their accrued annual leave and make a record of the hours accrued, amounts owed and amounts paid in respect of the employees’ annual leave entitlements.
The notice required the first respondent to produce reasonable evidence to the applicant of the first respondent’s compliance with the notice, by producing the calculations and evidence of payments to the employees by 29 November, 2019.
The first respondent did not take the action specified in the compliance notice by 22 November, 2019 or at all. It did not provide evidence to the Fair Work Ombudsman of the relevant calculations or payments required by the notice.
ASSESSMENT OF PENALTY
The Court may impose penalties pursuant to s.546(1) of the Fair Work Act if it is satisfied that a person has contravened a civil remedy provision. Section 716(5) of the Act, the section of the Act at issue here, is a civil remedy provision.
There is only a single contravention of s.716(5) of the Act by each of the respondents relating to the failure to comply with the compliance notice issued on 24 October, 2019.
According to ss.539(2) and 546(2) of the Fair Work Act, the maximum penalty that the Court may impose on the first respondent and the second respondent for their contraventions of s.716(5) is $31,500 and $6,300 respectively.
Deterrence, both specific and general, is the “principal and indeed only” objective of pecuniary penalties under the Fair Work Act: Commonwealth of Australia v Director of the FWBII (2015) 258 CLR 482 at [55]; CFMMEU v ABCC (2018) 264 FCR 155 at [19]; Australian Building and Construction Commissioner v CFMMEU [2020] FCA 549 at [26]. Retribution, denunciation and rehabilitation have no part to play.
The penalty in this case must be set at a level such that it would be likely to act as a deterrent in preventing similar contraventions by like-minded persons. It must have the necessary “sting or burden” to secure “the specific and general deterrent effects that are the raison d’être of its imposition”: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157 at [116].
Notwithstanding that the compliance notice was served upon the second respondent personally, the second respondent did not make any contact with the applicant or the Fair Work Inspector who caused the issue of the notice to discuss it. It seems that it was simply ignored.
The evidence shows that on 2 December, 2019 a follow-up letter was sent to the first respondent at its registered address and also by email to the second respondent. On the same day, the Fair Work Inspector handling the case sent a text message to the second respondent notifying him that the letter had been sent via registered post and email. No response was received by the applicant, or the Fair Work Inspector who caused the issue of the letter, from either respondent.
The evidence also shows that prior to the issue of the first compliance notice in May, 2019 both Mr Payne and Mr Walker repeatedly raised the issue of their accrued annual leave entitlements with the second respondent. They discussed their entitlements with him as early as 15 February, 2018 some nine months before Mr Walker’s employment ended and 11 months before Mr Payne’s employment ended. Mr Walker raised the issue of his accrued annual leave entitlements with the second respondent on 11 occasions over 11 months: from February, 2018 to January, 2019. Mr Walker also spoke to the second respondent’s accountant about the entitlements.
The applicant submits that the first and second respondents’ conduct in failing to resolve the accrued annual leave entitlements issue directly with the employees resulted in the Fair Work Ombudsman having to spend time and public resources issuing the compliance notice the subject of these proceedings. I accept that submission. Consequently, the conduct of the first and second respondents in failing to engage and comply with the compliance notice by the due date left the Fair Work Ombudsman with no other option than to institute these proceedings at the public’s expense in order to recover the amounts owing to the employees.
The respondents’ failure to cooperate has continued during these proceedings. As the applicant submits, there was no appearance for the first respondent at the directions hearings on 7 August, 2020 and 2 October, 2020 or the hearing of the application for default judgment on 27 October, 2020. Whilst it is the case that the second respondent sought to appear on the first respondent’s behalf, despite being informed of the necessity for an application for leave to do so, the second respondent never brought such an application.
The applicant submits and I accept, that the second respondent has made limited attempts to engage with the proceedings. Although he has appeared at the hearings, he did not file a response or defence.
The evidence clearly demonstrates that some 14 months after the compliance notice fell due, more than a year after these proceedings were filed and three months after this Court made default orders for the first respondent to comply with the compliance notice on 27 October, 2020 the first respondent has still not satisfied the compliance notice.
The applicant submits that I should find that the first respondent’s failure to satisfy the compliance notice was deliberate. In his submissions, the second respondent by his counsel, argued that whatever the case might be in respect of the first respondent’s failure, the second respondent ought not to be found to have deliberately not complied with the compliance notice. He pointed to circumstances set out in an affidavit sworn by the second respondent and filed at the commencement of the penalty hearing with my leave. By the material in that affidavit, he suggested that at worst the first respondent’s failure to comply with the notice was inadvertent because the he had many other things happening in his life at the time the notice was issued which diverted his attention from it.
However, I reject the second respondent’s submissions because it is clear from the evidence before me that the issue of the unpaid annual leave owing to Mr Walker and Mr Payne had been alive for a considerable period before the compliance notice was issued. Moreover, the compliance notice the subject of these proceedings, was preceded by another compliance notice in respect of the accrued but unpaid annual leave owed to Mr Payne. There is no suggestion in any evidence relied upon by the second respondent that he ever took any steps in respect of the inquiries or complaints made to him by Mr Walker and Mr Payne or in respect of the first compliance notice. That background tends to suggest that the second respondent, both on his own behalf and on behalf of the first respondent, simply ignored the compliance notice the subject of these proceedings. That is no different to deliberately choosing not to comply with that notice. I am satisfied that the first respondent’s failure to comply with the notice was deliberate. Because the first respondent acted through the agency of the second respondent, it is impossible to avoid the conclusion that the second respondent’s conduct was deliberate also.
There has been no contrition, corrective action or co-operation in this matter from either respondent. There has been no acknowledgement of the compliance notice by the first or second respondent and the respondents have not filed any documents in this matter (save for the second respondent’s affidavit filed by leave at the commencement of this penalty hearing). They have repeatedly not responded to contact from the applicant without explanation and have failed to comply with orders of this Court.
I accept the applicant’s submission that the respondents’ approach to these proceedings shows that they do not regret or recognise the seriousness of their failure to act on the statutory notice and their actions evidence a failure to acknowledge the loss suffered by the employees. The first respondent’s failure to apologise to the employees, or to express any regret or remorse, is significant.
Mr Walker and Mr Payne have been deprived of the full benefit of the action that the first respondent was required to take under the compliance notice. Mr Payne is owed $42,163.09 and Mr Walker is owed $39,087.96. These are significant sums of money. The amounts due have accrued over 12 years of employment. The amounts owed to them have not been paid. The evidence shows that the first respondent’s failure to comply with the compliance notice and pay Mr Payne and Mr Walker the entitlements owing to them has had significant financial impact on both employees.
The failure to comply with a notice properly issued by the applicant is serious. The efficacy of statutory notices such as compliance notices will be hindered if recipients perceive that a failure to comply carries no meaningful consequence. The power to issue a compliance notice is an important tool available to Fair Work Inspectors and compliance with such notices avoids the need for litigation or the imposition of any penalties. Ordering penalties at a meaningful level for a compliance notice contravention allows a court to demonstrate that there are serious consequences for failing to comply with a compliance notice.
The second respondent is an undischarged bankrupt. That circumstance, however, does not prevent the applicant from obtaining or recovering a pecuniary penalty against him: s.82(3) of the Bankruptcy Act 1966 (Cth) and Mathers v Commonwealth of Australia (2004) 134 FCR 135; Fair Work Ombudsman v Goldfinger Facility Management Pty Ltd (2016) FCCA 356 at [28]-[38], citing Cotis v MacPherson (2007) 169 IR 30 at [6]-[10], Fair Work Ombudsman v Finetune Holdings Pty Ltd (No 3) [2012] FMCA 883 at [48] and Fair Work Ombudsman v Garfield Berry Farm Pty Ltd [2011] FMCA 885 at [11]-[15].
Notwithstanding the second respondent’s bankruptcy, as the applicant submits, his financial circumstances must still be considered within the broader framework of deterrence and marking the Court’s disapproval of the contravening conduct. Any penalty imposed against the second respondent should be set at a meaningful level regardless of his bankruptcy.
I accept that there is some purpose in imposing a penalty upon the first respondent that is designed to specifically deter the first respondent from engaging in the same contravening conduct in the future. That is so because the first respondent is still registered and has demonstrated a disregard for its obligations under the Fair Work Act by failing to comply with the compliance notice and failing to appear before this Court and participate in these proceedings.
As I have set out above, the primary purpose of imposing a pecuniary penalty upon the respondents in this case is deterrence. General deterrence is of particular importance given that non-compliance with a statutory notice effectively renders impotent one of the more effective weapons available to the applicant as a regulatory authority.
PENALTY
The Fair Work Ombudsman submits that a high range penalty of between $22,050 to $25,200 for the first respondent and $4,410 to $5,040 for the second respondent (being 70% to 80% of the maximum penalty) is appropriate. The first respondent did not appear at this hearing and so I have no submissions from it. The second respondent submits that a lower penalty in the range of 40% to 50% of the maximum penalty is appropriate to take into account the circumstances in which the non-compliance occurred. His submissions were based on the proposition that the non-compliance was inadvertent or was due to the second respondent’s attention being diverted away from the compliance notice by reason of matters that were happening around him at the time. I have rejected those submissions.
The penalties must not be crushing or oppressive. Fixing a penalty in this case requires the Court to ensure that the relevant compliance notice regime established by the Fair Work Act is met and that the regime is an effective means of ensuring compliance with the Act. Employers and others who receive such notices should be under no misapprehension about what is required of them. Having said that, the penalty must be fixed such that it is proportionate to the gravity of the contravening conduct. I have described the conduct above. It is objectively serious, but there is nothing to suggest that either respondent has been found to have contravened the Fair Work Act in the past.
I have, in recent times imposed penalties upon employers for similar conduct: Fair Work Ombudsman v Sun Sea Equity Pty Ltd [2021] FCCA 104 and Fair Work Ombudsman v Althaus Homes Pty Ltd [2021] FCCA 126. The penalties in those cases reflected the cooperation given by the employer and those knowingly concerned in the employers’ contraventions with the applicant and the Court. The amounts due and owing to the employees in those cases and in respect of which the compliance notices were issued were significantly less than the amounts involved here and had been restored to the employees concerned.
Having regard to the matters I have referred to above, I fix a penalty for the first respondent in respect of the single contravention of s.716(5) of the Fair Work Act of $20,000. I fix a penalty for the second respondent in respect of the single contravention of s.716(5) of the Fair Work Act (which he is taken to have committed by reason of s.550(1) of the Act) of $3,750.
In addition to penalties, the applicant seeks the making of declarations as to the relevant contravention and the second respondent’s involvement in that contravention. I am satisfied in the circumstances that it is appropriate to make those declarations.
The orders will be as set out at the commencement of these reasons.
I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Jarrett delivered on 25 February, 2021. Associate:
Dated: 25 February 2021
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