Fair Work Ombudsman v Big Daddy's Pty Ltd
[2022] FedCFamC2G 786
•23 September 2022
Federal Circuit and Family Court of Australia
(DIVISION 2)
Fair Work Ombudsman v Big Daddy’s Pty Ltd [2022] FedCFamC2G 786
File number(s): MLG 3345 of 2021 Judgment of: JUDGE LAING Date of judgment: 23 September 2022 Catchwords: FAIR WORK – where the first respondent engaged in two contraventions of s 716(5) of the Fair Work Act 2009 (Cth) – where the second respondent was involved, within the meaning of s 550(2) of the Fair Work Act 2009 (Cth), in the first respondent's contraventions – appropriate penalties Legislation: Fair Work Act 2009 (Cth) ss 3(b), 545(1), 546(1), 546(3)(a), 550(1), 550(2), 550(2)(c), 716(2), 716(5) Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3; 262 CLR 157
Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; 399 ALR 599
Fair Work Ombudsman v Corinthian Capital Pty Ltd [2022] FedCFamC2G 309
Fair Work Ombudsman v Extrados Solutions Pty Ltd [2014] FCCA 815
Fair Work Ombudsman v Hess [2021] FCCA 1883
Fair Work Ombudsman v Nobrace Centre Pty Ltd & Anor (No.2) [2019] FCCA 2144
Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301; 275 IR 148
Fair Work Ombudsman v Schneider [2022] FedCFamC2G 478
Fair Work Ombudsman v Statewide Security (WA) Pty Ltd [2022] FedCFamC2G 194
Fair Work Ombudsman v Sun Sea Equity Pty Ltd [2021] FCCA 104
Fair Work Ombudsman v Tester [2021] FCCA 771
Fair Work Ombudsman v Upper East Side Bondi [2021] FedCFamC2G 354
Fair Work Ombudsman v Yogurberry World Square Pty Ltd [2016] FCA 1290; (2016) 68 AILR ¶102–690
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
Trade Practices Commission v CSR Ltd [1990] FCA 762; [1991] ATPR 41-076
Division: Division 2 General Federal Law Number of paragraphs: 61 Date of hearing: 18 August 2022 Place: Sydney Solicitor for the Applicant Mr B. Adams (HWL Ebsworth) appeared in person Counsel for the First and Second Respondents Mr J. McLean (Counsel) appeared in person Solicitor for the First and Second Respondents Codex Lawyers ORDERS
MLG 3345 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: BIG DADDY'S PTY. LTD. (ACN 082 830 984)
First Respondent
ELIAS DANNAOUI
Second Respondent
order made by:
JUDGE LAING
DATE OF ORDER:
23 SEPTEMBER 2022
BY CONSENT, THE COURT DECLARES THAT:
1.The First Respondent engaged in two contraventions (Contraventions) of section 716(5) of the Fair Work Act 2009 (Cth) (FW Act) by failing to comply with each of the two compliance notices given to it on 3 March 2021 (Compliance Notices), each of which related to one of its former employees, Mr Andres Plazas and Ms Marta Valencia.
2.The Second Respondent was involved, within the meaning of section 550(2) of the FW Act, in the First Respondent's Contraventions, and is taken by section 550(1) of the FW Act to also have committed the same Contraventions.
BY CONSENT, THE COURT ORDERS THAT:
3.Pursuant to section 545(1) of the FW Act, the First Respondent take the outstanding steps that were required by the Compliance Notices, within 28 days from the date of this order by:
(a)calculating and paying into Mr Plaza's and Ms Valencia’s nominated superannuation funds such superannuation contributions as are required by the Compliance Notices in respect of the entitlements paid under each of the Compliance Notices; and
(b)providing proof to the Applicant that the outstanding superannuation entitlements have been made in accordance with order 3(a) above.
4.Pursuant to section 545(1) of the FW Act, the First Respondent pay interest to Mr Plazas and Ms Valencia on the entitlements that each of them was paid under the Compliance Notices, within 28 days from the date of this order, at the Federal Court of Australia's pre-judgement interest rate.
5.Within 120 days of this order:
(a)the First Respondent pay a pecuniary penalty pursuant to section 546(1) of the FW Act for the contraventions declared in order 1 above.
(b)The Second Respondent pay a pecuniary penalty pursuant to section 546(1) of the FW Act for the contraventions declared in order 2 above.
6.Pursuant to section 546(3)(a) of the FW Act, any pecuniary penalties ordered to be paid by the Respondents be paid to the Consolidated Revenue Fund of the Commonwealth.
7.The Applicant has liberty to apply on seven days’ notice in the event that any of the preceding orders are not complied with.
THE COURT FURTHER ORDERS THAT:
8.The penalty referred to in order 5(a) above be fixed in the amount of $20,000.
9.The penalty referred to in order 5(b) above be fixed in the amount of $4,000.
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 LAING
By an Application and Statement of Claim filed in this Court on 21 December 2021, the applicant (FWO) seeks relief against the first respondent (Big Daddy’s) and the second respondent (Mr Dannaoui) in respect of non-compliance with two compliance notices (Compliance Notices) in contravention of s 716(5) of the Fair Work Act 2009 (Cth) (FW Act).
The parties are in agreement regarding the majority of the orders sought by the FWO. A Statement of Agreed Facts was filed on 18 March 2022 (Agreed Facts). By that document, the parties have agreed a substantial proportion of the factual background contended by the FWO. This is summarised below. Big Daddy’s has admitted to contravening s 716(5) of the FW Act by failing to comply with the Compliance Notices. Based upon the admissions contained within the Agreed Facts, I accept that this has occurred.
Mr Dannaoui has admitted his involvement in the breaches within the meaning on s 550(2) of the FW Act, by reason of which he is taken to have also contravened s 716(5). Again, based upon these admissions and their factual underpinnings in the Agreed Facts, this is accepted.
The parties are also in agreement that certain declarations ought to be made recording the conceded breaches of the FW Act. Additionally, the parties agree that orders ought to be made, pursuant to s 545(1) of the FW Act, requiring Big Daddy’s to (a) take outstanding steps required in the Compliance Notices within a specified period; and (b) pay interest on amounts paid to the employees under the Compliance Notices within a specified period. I accept that these orders are appropriate.
Finally, the parties agree that the Court should order Big Daddy’s and Mr Dannaoui to pay pecuniary penalties to the Consolidated Revenue Fund of the Commonwealth within a specified period in respect of the admitted contraventions. Where the parties differ is on the appropriate amounts. The FWO submitted that appropriate penalties for Big Daddy’s fall within the range of $28,771.20 to $33,566.40 whereas the respondents contended that (at most) a range of $11,880 to $14,850 would be appropriate. In respect of Mr Dannaoui, the FWO sought penalties within the range of $5,754.24 to $6,713.28 whereas the respondents submitted that (at most) a range of $2,376 to $2,970 would be appropriate.
I say “at most” in relation to the respondent’s submissions because those submissions were filed prior to the hearing of this matter. At the hearing, there was some discussion regarding a discount proposed to be applied on account of certain payments having been made by Big Daddy’s. Over the course of the hearing, revised numbers were provided by the FWO in writing confirming that its proposed penalties were in the range described above. Whilst no such document was provided on behalf of the respondents, I had understood their Counsel to embrace a further discount to that effect being applied. Therefore, it may be fair to assume that the respondents contended that the amounts they had proposed (referred to in the paragraph above) should similarly be reduced.
BACKGROUND
The following factual summary is taken from the Agreed Facts which has been prepared by the parties.
Big Daddy's operates a take away food outlet located in the food court of the Alfred Hospital, in Melbourne (the Business). Mr Dannaoui has been the sole director and company secretary of Big Daddy's since 1 June 1998.
Following a request for assistance made to the FWO by Mr Andrew Plazas and Ms Marta Valencia on 17 December 2020, the FWO commenced an investigation into Big Daddy's (Investigation). As a result of the Investigation, the Fair Work Inspector involved formed a reasonable belief that Big Daddy’s had contravened various provisions of the Fast Food Industry Award 2010 (Award) by not paying amounts to which Mr Plazas and Ms Valencia were entitled. On this basis, two Compliance Notices were issued pursuant to s 716(2) of the FW Act on 3 March 2021. One was issued in relation to the contraventions concerning Mr Plazas (Plazas Contraventions). The other was issued in respect of contraventions concerning Ms Valencia (Valencia Contraventions).
The Compliance Notices required Big Daddy's to:
(a)take the following specified actions to remedy the direct effects of the Plazas Contraventions and the Valencia Contraventions by 28 April 2021 by (Specified Action):
(i)calculating and paying Mr Plazas and Ms Valencia, as applicable, the difference between the amount they were paid and the amount they should have been paid in respect of each relevant entitlement;
(ii)making a record of the information and amounts calculated under the Compliance Notices (Payment Information Schedules); and
(iii)calculating and paying any additional superannuation contributions required by clause 21.2 of the Award in respect of the amounts owed to Mr Plazas and Ms Valencia; and
(b)produce reasonable evidence to the FWO of its compliance with the Compliance Notices by 12 May 2021, by producing the Payment Information Schedules and proof that full payment was made to each of Mr Plazas and Ms Valencia as required.
Big Daddy’s did not take the Specified Action set out in the Compliance Notices by 28 April 2021. Nor did it provide to the FWO reasonable evidence of compliance with the Compliance Notices by 12 May 2021.
Big Daddy's admits that it failed without reasonable excuse to comply with the Compliance Notices, and thereby contravened s 716(5) of the FW Act. Mr Dannaoui admits that he was responsible for ensuring compliance with the Compliance Notices and that he had actual knowledge, and was a responsible participant, in the non-compliance. He accordingly concedes that he was involved with Big Daddy's contraventions within the meaning of s 550(2)(c) of the FW Act and is taken to have committed those contraventions pursuant to s 550(1).
PRINCIPLES
The principles regarding imposition of penalties have been considered recently by the High Court in Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; 399 ALR 599 (Pattinson) (per Kiefel CJ, Gageler, Keane, Gordon, Steward, Gleeson JJ). There, it was stated that “the purpose of a civil penalty is primarily, if not solely, the promotion of the public interest in compliance with the provisions of the Act by the deterrence of further contraventions of the Act” (at [9]). The “real task” of the Court was therefore described as “fixing the penalty which it considers fairly and reasonably to be appropriate to protect the public interest from future contraventions of the Act” (at [71]).
In Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301; 275 IR 148 at [36], the following, oft-cited, five step approach was applied to determining appropriate penalties:
(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…
(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].
A number of potentially relevant considerations have been identified in such cases as Trade Practices Commission v CSR Ltd [1990] FCA 762; [1991] ATPR 41-076 at [42] and Mason v Harrington Corporation Pty Ltd [2007] FMCA 7. However, it is to be borne in mind that such recitations of potentially relevant considerations are not to be used as if they “were a legal checklist”: Pattinson at [19]. The Court’s task is to determine the appropriate penalties by reference to the particular circumstances of each case.
MATERIAL
The FWO relies upon the following material:
(a)the Agreed Facts; and
(b)an affidavit of Sue-Ann Feltus affirmed on 24 March 2022 (Feltus Affidavit).
The respondents rely upon the Statement of Claim and the Feltus Affidavit, as well as an affidavit sworn by Mr Dannaoui on 22 April 2022 (Dannaoui Affidavit).
Additionally, certain facts were subsequently agreed between the parties and communicated to the Court orally during the hearing of this matter.
CONTRAVENTIONS AND COMMONALITIES
The contraventions concern two contraventions of s 716(5) of the FW Act, involving non-compliance with the two Compliance Notices.
Section 557 of the FW Act, which requires that certain contraventions be treated as a single contravention if they arise out of a course of conduct, does not apply to contraventions of s 716(5). The Court nonetheless has a discretion to group contraventions together where there is overlap or where the penalties imposed may otherwise result in double punishment for substantially similar conduct: Fair Work Ombudsman v Tester [2021] FCCA 771 at [14].
In this regard, the respondents accept that they have the onus of demonstrating any overlap or commonality within the factual stratum. They rely upon the following:
(a)The Statement of Claim indicates that the investigation was commenced on the request of Mr Plazas and Ms Valencia on 17 December 2020, being the same date. The Feltus Affidavit (at [9]) additionally indicates that Mr Plazas provided evidence regarding both Ms Valencia’s and his visas together, by email on 4 January 2022;
(b)Mr Plazas and Ms Valencia are spouses;
(c)There is overlap between the employees’ respective periods of employment. Mr Plazas’s employment was said to have commenced on or about 2 October 2017 and ended on or about October 2020. Ms Valencia’s was said to have commenced on or about 9 October 2017 and ceased on or about 20 September 2020 (Statement of Claim [7]-[9]);
(d)There is overlap between the clauses of the Award relied upon by the FWO in respect of the Contraventions (Statement of Claim [8] and [10]);
(e)There is commonality in what the Compliance Notices required Big Daddy’s to do for each employee (Statement of Claim [12]);
(f)The Compliance Notices were communicated under cover of a single covering email (CB 53). Parts of the email referred to “Compliance Notice” in the singular;
(g)The approach taken by the FWO in various communications was to engage in a single course of communication in relation to the Compliance Notices; and
(h)It would have been open to the FWO to deal with the underpayments through a single compliance notice.
There are a number of decisions of this Court that have treated non-compliance with multiple compliance notices as separate contraventions, notwithstanding some level of factual commonalty: see for example Fair Work Ombudsman v Tester [2021] FCCA 771 at [14]-[15]; Fair Work Ombudsman v Statewide Security (WA) Pty Ltd [2022] FedCFamC2G 194 at [34]-[35]; and Fair Work Ombudsman v Corinthian Capital Pty Ltd [2022] FedCFamC2G 309 at [38]-[39]. In Fair Work Ombudsman v Schneider [2022] FedCFamC2G 478 at [33]-[34], Judge Mansini decided to treat non-compliance with multiple compliance notices as separate contraventions although they were issued on the same date and concerned contraventions of the same award. However, in Fair Work Ombudsman v Upper East Side Bondi [2021] FedCFamC2G 354, Judge Obradovic considered certain failures to comply with compliance notices to have been contraventions arising out of a single course of conduct within the same factual circumstances. Her Honour therefore concluded that it was appropriate for a single penalty to be imposed (at [25]-[27]).
In the present case, the FWO disputed that the contraventions should be grouped in the manner contended by the respondents. The FWO submitted that the Compliance Notices related to different employees with different employment periods, different classifications under the Award and different (albeit to some extent overlapping) entitlements and contraventions. Each of the Compliance Notices required that action be taken that was specific to the employee and contraventions identified in the respective notices. The obligations imposed by the Compliance Notices were therefore contended to be separate and distinct, with the result that failure to comply with each of the Compliance Notices did not constitute a single course of conduct.
In the circumstances of this case, in which there are both commonalities and distinctions, I consider the appropriate course to be to treat the contraventions separately. That said, allowance will be made under the totality principle. This is considered further below.
APPROPRIATE PENALTIES
Circumstances surrounding the contraventions and subsequent action
The FWO observed that the respondents were on notice as early as March 2021 of the deadline for complying with the Compliance Notices and of the potential consequences of non-compliance. The FWO additionally engaged in a number of communications with Mr Dannaoui throughout April to July 2021 in this regard (set out at [11]-[20] of the Feltus Affidavit and the associated annexures). Despite Mr Dannaoui indicating at times that the work regarding calculation of the related underpayments was well-progressed, steps required to be taken in the Compliance Notices were not taken before the commencement of proceedings. Even then, there was delay.
At the hearing of this matter, I was informed that the parties agreed that the following had occurred:
(a)On 11 March 2022, an attempt was communicated regarding the calculations. However, an incorrect award was used as the basis for the calculations (notwithstanding that the Compliance Notices identified the correct Award). Those calculations were therefore not accepted by the FWO.
(b)On 27 April 2022, a further attempt was made. Whilst the correct Award was used on this occasion, errors were also apparent in those calculations. These issues were notified to the respondents’ solicitors on 5 May 2022.
(c)On 12 August 2022, further calculations were provided. These were acceptable.
At the hearing, I was also informed that (subject to some qualification) evidence had been provided that payments had been made in substantial compliance with the Compliance Notices. From the consent orders that were subsequently provided by the parties, I have inferred that there is some outstanding non-compliance relating to superannuation entitlements.
The FWO has observed that no attempt at calculations was provided until nearly a year had passed after the original deadline for compliance. The accepted calculations were provided some time subsequently. The FWO submitted that this adversely affected the employees who were denied their entitlements. This may be accepted.
The FWO also submitted that the employees were vulnerable as visa workers. However, whilst the materials gave some indication of the categories of the visas in question, the evidence in this regard was not entirely clear and I did not have the benefit of specific evidence regarding vulnerability. This limits my ability to make specific findings on this issue.
The respondents have submitted that various contextual factors were of importance in the present case.
Mr Dannaoui was said to have suffered from health issues. In this regard, evidence was put forward that he underwent some medical tests in January 2021 (before the Compliance Notices were issued), shortly after which he underwent an operation. Mr Dannaoui has also given evidence that he suffers from psoriasis (Dannaoui Affidavit at [8](e)). This evidence was, however, rather limited. It does not establish that Mr Dannaoui was incapacitated during the lengthy period between the notices being issued and the substantive steps that were taken towards compliance.
Mr Dannaoui has also given evidence about the impacts of the COVID-19 pandemic on the Business (Dannaoui Affidavit at [7]-[8]). This included changes that Big Daddy’s made to assist their customers and the hospital (such as by allowing space to be used as a temporary screen clinic, changing operating hours and delivering hot beverages directly to hospital staff). It also included evidence of decreased revenues and staffing difficulties encountered by the Business during this period.
Mr Dannaoui gave evidence of the personal effect upon him of increased hours, stress, staffing shortages and competing priorities that he found difficult to navigate. In addition, Mr Dannaoui gave evidence that business records had been destroyed when the hospital’s basement flooded in October 2020 which made it difficult for him to comply with the notices (Dannaoui Affidavit at [9]-[14]).
The FWO correctly observes there are limitations in this evidence. It does not entirely explain why there was such an extensive delay in progressing Big Daddy’s obligations under the Compliance Notices. The evidence does not establish that Big Daddy’s was incapable of complying with the Notices. Through the Agreed Facts, Big Daddy’s and Mr Dannaoui conceded that the non-compliance was without “reasonable excuse”. Matters such as damaged records were capable of being overcome through resort to the employees’ records, details of which appear to have been communicated to Mr Dannaoui by the FWO in July 2021 (CB 97).
However, I accept that Mr Dannaoui may have suffered from some health and other personal issues. In particular, I accept that the COVID-19 pandemic placed both Mr Dannaoui and the Business under significant stress. Whilst there is not clear evidence of the precise effect of the pandemic on the profits, staffing and other resources of the Business, I accept that the pandemic resulted in decreased revenues, staffing difficulties as well as other challenges (both professional and personal to Mr Dannaoui).
I do not accept that these matters excuse or adequately explain the non-compliance. Mr Dannaoui’s Counsel, on his behalf, quite rightly conceded that the breaches were deliberate insofar as the respondents were aware of the Compliance Notices and failed to respond appropriately. Mr Dannaoui in his evidence accepted that he “did not properly prioritise and manage” the issue (Dannaoui Affidavit at [17]).
However, I also accept that the circumstances in which the contraventions occurred provide important context. I have taken them into account in determining penalties.
I have also taken into account the steps that were ultimately taken to comply with the notices. I have taken into account Mr Dannaoui’s expression of remorse (Dannaoui Affidavit at [15]) and his evidence that he has now put (some kind) of “practices in place to prevent this from occurring again”, apparently involving his administration assistant conducting internal audits.
Additionally, I have taken into account that there has been some level of cooperation with the FWO in this case. This has ultimately resulted in a number of orders being able to be made by consent. The FWO accepts that this has reduced the cost and complexity of the proceedings. All in all, the FWO proposes a 20% discount to the penalties that would otherwise have been proposed to reflect the respondents’ remorse and cooperation. This is considered further below.
Loss and damage
Big Daddy’s failure to comply with the Compliance Notices has resulted in the need for the FWO to institute these proceedings, resulting in public cost. This has been acknowledged by the respondents. As noted above, however, the respondents’ decision not to contest a number of the matters contended by the FWO has reduced the costs that may otherwise have been incurred in the proceedings.
The delay in Big Daddy’s undertaking the actions required under the Compliance Notices has meant that the employees have experienced significant delays in receiving their statutory entitlements. This is a relevant loss flowing from the failure to comply with the notices: Fair Work Ombudsman v Hess [2021] FCCA 1883 at [35]. That said, I have also taken into account in this matter and placed weight upon the consent of the respondents to orders providing for the payment of interest by Big Daddy’s to the affected employees.
Compliance with minimum standards
The FWO have observed that one of the principal purposes of the FW Act is to provide a guaranteed safety net of fair, relevant and enforceable minimum standards for employees: s 3(b) of the FW Act. The ability of the FWO to exercise their compliance powers effectively under the FW Act is important to this end. Big Daddy’s failure to comply with the Compliance Notices undermined the enforcement framework and the safety net of entitlements that it is designed to protect.
The failure to comply with a statutory notice is serious. The efficacy of statutory notices would be hindered or made redundant if the recipients perceive that failure to comply will not carry meaningful consequences: Fair Work Ombudsman v Nobrace Centre Pty Ltd & Anor (No.2) [2019] FCCA 2144 at [40].
I accept these submissions and have taken them into account in determining the appropriate penalties.
Size and financial circumstances of the Business
The respondents asked the Court to take into account that, due to the effects of COVID-19, the workforce and size of the Business decreased substantially. In support of this, the respondents provided business activity statements from January 2019 to December 2021.
I accept that the Business activity statements demonstrate significant falls in revenue over the course of the pandemic. However, there are limits to this evidence. As the FWO has submitted, the records do not detail Big Daddy’s profitability or overall financial position. Even during the pandemic, it appears that the Business was able to generate substantial revenue. The evidence does not establish that the penalties contemplated by the FWO would result in significant financial hardship. I further accept that the size and financial circumstances of an employer will not excuse non-compliance with workplace laws: Fair Work Ombudsman v Extrados Solutions Pty Ltd [2014] FCCA 815 at [10].
Deterrence
It has been repeatedly emphasised in penalty cases that general deterrence must serve a purpose that ensures that any penalty imposed is not seen as “the cost of doing business”: see for example Fair Work Ombudsman v Yogurberry World Square Pty Ltd [2016] FCA 1290; (2016) 68 AILR ¶102–690 at [27]. Penalties must be set at a level which demonstrates that there are serious consequences for non-compliance, to deter others from failing to comply.
An additional consideration raised by the FWO in this regard concerns the industry in which Big Daddy’s operates. Evidence was provided that the takeaway food services industry is one which has a significant rate of workplace disputes (and involves a significant number of visa workers) (Feltus Affidivat, Annexure SF-19). It has been recognised that general deterrence is “especially important in cases of this type involving employees in the restaurant and hospitality industry where non-compliance with minimum wages requirements is notorious”: Fair Work Ombudsman v Sun Sea Equity Pty Ltd [2021] FCCA 104 at [17].
I accept that there is also a need for specific deterrence. This is in circumstances where Big Daddy’s remains registered and is likely to continue to operate with Mr Dannaoui as its director. I accept that this consideration is limited in this case, however, by the fact that these proceedings involve the first non-compliance by both respondents over a lengthy period of operations. The non-compliance occurred during a period involving considerable difficulties for Mr Dannaoui and the Business. Mr Dannaoui has expressed remorse for his actions. I also accept that the costs and stress associated with these proceedings are likely to have had a deterrent effect.
However, compliance with the notices in this matter, to the extent that it occurred, only occurred after considerable delay and difficulty, and after proceedings had been commenced. Mr Dannaoui’s evidence regarding the practices he has now put in place is somewhat underwhelming (general reference is made at [20] of the Dannaoui Affidavit to “internal audits” being conducted by an “administration assistant”). I accept that the penalties imposed should have sufficient “sting or burden” that the respondents will “seek to avoid the risk of subjection to further penalties”: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3; 262 CLR 157 at [116] per Keane, Nettle and Gordon JJ.
Appropriate penalties
During the hearing, the FWO submitted the following table to indicate the penalty ranges they contended were appropriate:
Respondent Contravention of section 716(5) Maximum penalty Recommended penalty range 60%- 70% Plus 20% discount Big Daddy's Plazas Compliance Notice $33,300 $19,980 - $23,310 $15,984 - $18,648 Valencia Compliance Notice $33,300 $19,980 - $23,310 $15,984 - $18,648 Total $31,968 - $37,296 Total with 10% totality discount $28,771.20 - $33,566.40 Mr Dannaoui Plazas Compliance Notice $6,660 $3,960 - $4,620 $3,196.80 - $3,729.60 Valencia Compliance Notice $6,660 $3,960 - $4,620 $3,196.80 - $3,729.60 Total $6,393.60 - $7,459.20 Total with 10% totality discount $5,754.24 - $6,713.28
In written submissions filed on 20 May 2022, the respondents submitted that the following ranges were appropriate:
Respondent Contravention of section 716(5) Maximum penalty Recommended penalty range 40%- 50% Plus 10% discount Big Daddy's Both Compliance Notices $33,300 $13,200 - $16,500 $11,880 - $14,850 Mr Dannaoui Both Compliance Notices $6,660 $2,640 - $3,300 $2,376 - $2,970
However, the respondents’ table was provided prior to the hearing of this matter. As noted above, it was advised during the hearing that certain payments had been made in accordance with the Compliance Notices. The FWO proposed a further discount in this regard. This appeared to be embraced by the respondents.
The respondents’ table is also premised on my acceptance of their submissions that the contraventions should be grouped entirely so that a single maximum penalty would be conceived as being applicable. I have not accepted those submissions.
In any event, the appropriate penalties in this matter are a question that must be determined by the Court.
I have taken as a conceptual, instinctive starting point in this matter appropriate penalties in the order of 50% of the maximum in respect of each non-compliance by Big Daddy’s and Mr Dannaoui. This would result in a total penalty of $33,300 for Big Daddy’s and $6,660 for Mr Dannaoui, given my decision to assess the contraventions separately.
To these numbers, I have applied the 20% discount the parties agreed as being appropriate on account of the respondents’ cooperation, remorse and action ultimately taken towards compliance with the notices. This results in penalties of $26,640 for Big Daddy’s and $5,328 in respect of Mr Dannaoui.
I have then assessed the figures against the totality principle, taking into account the overall circumstances of this case including the level of factual overlap in the circumstances surrounding the non-compliance.
The FWO proposed a “totality discount” of 10%. Overall, however, I have assessed fixing penalties in the amount of $20,000 in respect of Big Daddy’s and $4,000 in respect of Mr Dannaoui as appropriate.
CONCLUSION
I will make orders in accordance with those which have been proposed by the parties by consent.
Additionally, I have determined that orders should be made specifying the quantum of penalties to be paid in accordance with my reasoning set out above.
62 I certify that the preceding sixty-one (61) paragraphs are a true copy of the reasons for judgment of Judge Laing.
Associate:
Dated: 23 September 2022
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