Fair Work Ombudsman v Blue Mist Entertainment Pty Ltd
[2022] FedCFamC2G 142
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Blue Mist Entertainment Pty Ltd [2022] FedCFamC2G 142
File number(s): SYG 578 of 2021 Judgment of: JUDGE MANOUSARIDIS Date of judgment: 8 March 2022 Catchwords: INDUSTRIAL LAW – application for remedies under the Fair Work Act 2009 (Cth) (FW Act) in relation to alleged failure by first respondent, contrary to s 716(5) of the FW Act, to comply with requirements of a compliance notice given under s 716(2) of the FW Act – whether first respondent failed to comply – whether second respondent involved in first respondent’s contravention – contraventions established – declarations and pecuniary penalty ordered against second respondent. Legislation: Crimes Act 1914 (Cth) s 4AA
Fair Work Act 2009 (Cth) ss 12, 539, 545, 546(1), 546(2), 550, 557A, 700, 701, 716, 717
Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (The BKH Contractors Case) (No 2) [2018] FCA 1563
Bevis v VA Holdings Pty Ltd trading as Granton Homes & Ors [2020] FCCA 2082
Fair Work Ombudsman v A to Z Catering Solution Pty Limited & Anor (No.2) [2018] FCCA 2299
Fair Work Ombudsman v Viper Industries Pty Ltd [2015] FCCA 492
Fair Work Ombudsman v VS Investment Group Pty Ltd [2013] FCCA 208
Fair Work Ombudsman v Sails Waterfront Bar & Grill Pty Ltd (No 2) [2021] FCCA 2002
George v Rockett [1990] HCA 26; (1990) 170 CLR 104
Kelly v Fitzpatrick [2007] FCA 1080
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
Division: Fair Work Number of paragraphs: 50 Date of hearing: 15 February 2022 Place: Sydney Counsel for the Applicant: Mr M Whitbread Solicitor for the Applicant: Office of the Fair Work Ombudsman The Respondents: No appearance by, or on behalf of, the respondents
Table of Corrections 9 March 2022 In order 3 “$5,040” is replaced with “$5,328” The following notation has been added on the orders page:
“THE COURT NOTES THAT:
5. These orders have been amended pursuant to r 17.05(2)(h) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) by order made on 9 March 2022.”In paragraph 38 “$210” is replaced with “$222” In paragraph 38 “$6,300” is replaced with “$6,660” In paragraph 49 “$5,040” is replaced with “$5,328” In paragraph 50 “$5,040” is replaced with “$5,328” ORDERS
SYG 578 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: BLUE MIST ENTERTAINMENT PTY LTD ACN 629 561 066
First Respondent
DIAA MOHAMED
Second Respondent
ORDER MADE BY:
JUDGE MANOUSARIDIS
DATE OF ORDER:
8 MARCH 2022
THE COURT DECLARES THAT:
1.The first respondent contravened s 716(5) of the Fair Work Act 2009 (Cth) (FW Act) by failing to comply with a compliance notice given to the first respondent on 11 November 2020 pursuant to s 716(2) of the FW Act.
2.The second respondent was involved, within the meaning of s 550(2) of the FW Act, in the first respondent’s contravention of s 716(5) of the FW Act referred to in declaration 1 and, by reason of s 550(1) of the FW Act, is therefore taken to have contravened s 716(5) of the FW Act.
THE COURT ORDERS THAT:
3.Pursuant to s 546(1) of the FW Act the second respondent pay a pecuniary penalty in the sum of $5,328 in relation to the contravention identified in declaration 2.
4.The second respondent pay the pecuniary penalty referred to in order 3 to the Commonwealth by 5 April 2022.
THE COURT NOTES THAT:
5.These orders have been amended pursuant to r 17.05(2)(h) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) by order made on 9 March 2022.
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
INTRODUCTION
In this proceeding the applicant (FWO) claims the second respondent, Mr Mohamed, was involved in the contravention by the first respondent (BME) of s 716(5) of the FW Act.
PROCEDURAL HISTORY
The FWO commenced the proceeding on 9 April 2021 by filing an application and a statement of claim. The application and statement of claim were served on BME shortly after 14 April 2021 by post at BME’s registered office.[1] The FWO has been unable to effect personal service on Mr Mohamed. Mr Mohamed, however, received notice of the proceeding because he attended the first court date on 4 May 2021, and the directions hearings on 22 June 2021, 13 July 2021, and 27 July 2021.
[1] Affidavit Z Holmes 04.05.2021, [7]
On 22 June 2021 I ordered the parties file an agreed statement of facts, and serve evidence and submissions on penalty, and I listed the matter for hearing on 21 September 2021 on the question of penalty. The parties did not file an agreed statement of facts. On 13 July 2021, therefore, I vacated most of the orders I made on 22 June 2021, directed Mr Mohamed to file and serve a defence by 23 July 2021, and listed the matter for directions on 27 July 2021.
Mr Mohamed did not file a defence. Instead he sent an email to my associate attaching a letter (Letter), and a document on which he copy and pasted the statement of claim and into which he interpolated text responding to particular paragraphs of the statement of claim (Response). On 27 July 2021 I made the following orders:
1.The documents sent by the second respondent to the associate to Judge Manousaridis on 26 July 2021, these being a letter dated 20/07/2021 addressed “to His Hono[u]r: JUDGE MANOUSARIDIS” and the interpolated draft statement of claim, shall stand as the second respondent’s answer to the statement of claim.
2. The hearing on liability and penalty listed on 21 September 2021 is vacated.
3. By 25 August 2021 the applicant file and serve all affidavits in relation to liability.
4. By 22 September 2021 the second respondent file and serve all affidavits on liability.
5. By 13 October 2021 the applicant file and serve affidavits in reply to the second respondent’s affidavits.
6. The matter is listed for directions before Judge Manousaridis at 9:30 am on 20 October 2021, such directions hearing to proceed by telephone.
7. The parties have liberty to apply on such notice as the circumstances warrant.
The FWO filed affidavits in relation to liability, but Mr Mohamed did not do so. Further, Mr Mohamed did not appear at the directions hearing on 20 October 2021. On that day, therefore, I set the proceeding down for hearing on 15 February 2022 both on the question of liability and penalty, and I directed the filing of evidence and submissions in relation to penalty.
The matter came before me for hearing on 15 February 2022. Mr Mohamed did not appear. I proceeded to hear the matter. I read the affidavits on which the FWO relies, and noted the FWO relied on two sets of written submissions, one on penalty, and the other on liability. I also heard submissions concerning whether Mr Mohamed can be said to have been served with the application and statement of claim. At the conclusion of the hearing I reserved judgment.
ARRANGEMENT OF REASONS
These reasons are arranged as follows. First, I will consider whether Mr Mohamed has been notified of the proceeding and of the hearing. Second, I will identify the relevant statutory provisions that apply to the FWO’s claims. Third, I will set out my findings of fact. Finally, I will consider whether BME contravened s 716(5) of the FW Act; and if so, whether Mr Mohamed was “involved” in BME’s contravention, and, if so, what orders, including an order for pecuniary penalty, should be made.
HAS MR MOHAMED BEEN NOTIFIED OF THE HEARING?
At the hearing counsel for the FWO reminded me that at the first court date on 4 May 2021 I noted that Mr Mohamed acknowledges he has been served with the application and statement of claim by email on 13 April 2021. Counsel also relied on two affidavits which shows that the FWO has communicated with Mr Mohamed by email sent to “[email protected]” (Email Address). Further, counsel also referred to an email chain, which included the following:[2]
(a)An email sent on 27 January 2022 by my associate to Mr Morris, the FWO’s lawyer, confirming that the matter had been listed for hearing at 10:00 am on 15 February 2022, noting that the hearing will proceed by telephone, and providing dial in details. The email requested Mr Morris provide a copy of the email to the respondents.
(b)An email Mr Morris sent to my associate at 2:49 pm on 14 February 2022 copied to Mr Mohamed at the Email Address which referred to the hearing listed at 10:00 am on 15 February 2022. The email attached the FWO’s submissions on liability.
(c)At 3:16 pm on 14 February 2022 the following email was sent to my associate’s email address and Mr Morris’ email address from the Email Address:
Hi All
Blue mist lounge is no longer on this email, I’ve advised the senders of all these email threads that Diaa Mohamed is NOT receiving these email and that he should be contacted directly.
It is open to infer, and I find, that this email was sent by or with the knowledge and authority of Mr Mohamed.
[2] I did not mark the email chain at the hearing, but I have marked the email chain as exhibit “A”.
I am satisfied Mr Mohamed has had notice of the proceedings because he attended the first court date and three directions hearings. I am also satisfied that the Email Address is Mr Mohamed’s email address and remained so up until at least 14 February 2022, and that Mr Mohamed had notice of the hearing at 10:00 am on 15 February 2022.
I indicated to counsel for the FWO that it may be necessary to formalise Mr Mohamed’s participation in the hearing by making an order confirming service. On further reflection it is not necessary that I do so. As I have already noted, at the first court date on 4 May 2021 Mr Mohamed acknowledged that he had been served with the application and statement of claim.
STATUTORY PROVISIONS
I begin with s 716(5) of the FW Act, which provides that a “person must not fail to comply with a notice given under this section”.[3] That directs attention to the notice that can be given under s 716(2) of the FW Act (716 Notice). More particularly, it directs attention to four things: the person who may give the 716 Notice; the circumstances in which the person may give it; the things the 716 Notice may require a person to do; and other information that must be included in the 716 Notice.
[3] I substantially repeat here what I said in Fair Work Ombudsman v Sails Waterfront Bar & Grill Pty Ltd (No 2) [2021] FCCA 2002, at [5]-[9]
The person who may give a 716 Notice must be an “inspector”, a word defined in s 12 of the FW Act to mean “a Fair Work Inspector”. That expression, in turn, is defined in s 12 of the FW Act to mean either a person appointed as a Fair Work Inspector under s 700 of the FW Act, or the FWO in his or her capacity as a Fair Work Inspector under s 701 of the FW Act.
Under s 716(1) of the FW Act an inspector may give a 716 Notice if:
an inspector reasonably believes that a person has contravened one or more of the following:
(a) a provision of the National Employment Standards;
(b) a term of a modern award;
(c) a term of an enterprise agreement;
(d) a term of a workplace determination;
(e) a term of a national minimum wage order;
(f) a term of an equal remuneration order;
…
In a different, but analogous context, the High Court in George v Rockett identified the circumstances in which a person will be held to have “reason to believe”. The High Court said:[4]
The objective circumstances sufficient to show a reason to believe something need to point more clearly to the subject matter of the belief, but that is not to say that the objective circumstances must establish on the balance of probabilities that the subject matter in fact occurred or exists: the assent of belief is given on more slender evidence than proof. Belief is an inclination of the mind towards assenting to, rather than rejecting, a proposition and the grounds which can reasonably induce that inclination of the mind may, depending on the circumstances, leave something to surmise or conjecture.
[4] George v Rockett [1990] HCA 26, at [15]; (1990) 170 CLR 104, at page 116
Subsection 716(2) of the FW Act provides a 716 Notice must specify that the person to whom it is directed do either or both of two things. The first is to “take specified action to remedy the direct effects of the contravention referred to in subsection (1)”, being the contraventions the inspector reasonably believes have occurred. The second is to “produce reasonable evidence of the persons’ compliance with the notice”. Under s 716(3) of the FW Act a notice given under s 716(2) must also:
(a) set out the name of the person to whom the notice is given; and
(b) set out the name of the inspector who gave the notice; and
(c) set out brief details of the contravention; and
(d) explain that a failure to comply with the notice may contravene a civil remedy provision; and
(e) explain that the person may apply to the Federal Court, the Federal Circuit and Family Court of Australia (Division 2) or an eligible State or Territory Court for a review of the notice on either or both of the following grounds:
(i) the person has not committed a contravention set out in the notice;
(ii) the notice does not comply with subsection (2) or this subsection; and
(f) set out any other matters prescribed by the regulations.
Subsection 716(4A) of the FW Act prohibits an inspector from applying for an order under Division 2 of Part 4-1 in relation to a contravention of a civil remedy provision by a person if the inspector has “given the person a notice in relation to the contravention”, and either the 716 Notice has not been withdrawn and the person has complied with it, or the person to whom the 716 Notice has been issued has made an application under s 717 of the FW Act in relation to the 716 Notice “that has not been completely dealt with”. Section 717 of the FW Act provides that a person who has been given a 716 Notice may apply to this Court or to the Federal Court of Australia, or to an “eligible State or Territory Court” for a review of the 716 Notice on either or both of two grounds, namely, the person has not committed the contravention set out in the 716 Notice, or the 716 Notice does not comply with s 716(2) or s 716(3) of the FW Act.
Subsection 716(5) of the FW Act is a “civil remedy provision” within the meaning of s 539(1) of the FW Act. That means that the person to whom a 716 Notice is given (716 Notice recipient) who fails to comply with a 716 Notice is liable to a court with jurisdiction making orders under s 545 of the FW Act, and an order under s 546(1) for the payment of a pecuniary penalty. It also means that a person to whom the 716 Notice is not directed will be taken to have failed to comply with a 716 Notice if that person is “involved” in the 716 Notice recipient’s failure to comply with a 716 Notice. A person’s being “involved in” a contravention of a civil remedy provision for the purposes of s 550(1) of the FW Act is defined in s 550(2) as follows:
A person is involved in a contravention of a civil remedy provision if, and only if, the person:
(a) has aided, abetted, counselled or procured the contravention; or
(b)has induced the contravention, whether by threats or promises or otherwise; or
(c)has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d) has conspired with others to effect the contravention.
To be a “person involved in” another person’s contravention of a provision of the FW Act a person must engage in or omit to do an act or acts that in some way links the person with the contravention in question.[5] Further, it is necessary that the person have actual knowledge of the facts that constitute the elements of the contravention. That requirement, however, goes no further than knowledge of the facts. It is not necessary that the person also have knowledge that the facts of which he or she has knowledge constitutes a contravention of the FW Act before that person can be held to be involved in another person’s contravention of a provision of the FW Act. Thus, the matters of which one person must have knowledge to be involved in the failure by another person (first person) to comply with the requirements of a 716 Notice are: the first person was given a 716 Notice; the 716 Notice required the first person to do one or more of the things specified in the 716 Notice; and the first person failed to do one or more of the things the 716 Notice required the first person to do.
[5] I discussed the relevant principles in some detail in Fair Work Ombudsman v A to Z Catering Solution Pty Limited & Anor (No.2) [2018] FCCA 2299, at [268]-[282]
FACTS
On or around 21 September 2021 Ms Sturgeon, a Fair Work Inspector appointed under s 700 of the FW Act, commenced an investigation into BME after receiving a request for assistance from Ms Davinia Mulawin (Employee). BME operated a café known as the “Blue Mist Café” (Café). The Employee, who resided in Australia as the holder of a temporary student visa, claimed she worked for BME, but it had not paid her wages for any of the hours she worked.
In the course of her investigation Ms Sturgeon obtained evidence from various sources, including from Mr Mohamed, and Mr Sweet, who said he was employed by BME as an executive chef from around 25 June 2020 to 7 September 2020.[6] This evidence included the following:
(a)The Employee informed Ms Sturgeon that Mr Sweet, whom the Employee described as the executive chef of the Café, had rostered the Employee as a cook; and the Employee’s duties consisted of preparing food and ingredients in preparation for the chef that was working the shift.[7]
(b)Mr Sweet confirmed with Ms Sturgeon that the Employee was employed as a cook; and that Mr Mohamed was responsible in the Café in relation to issues of pay, and that Mr Sweet told Mr Mohamed many times to pay the Employee.[8]
(c)In a telephone conversation Ms Sturgeon had with Mr Mohamed on 23 October 2020 Mr Mohamed said he was “from Blue Mist Café”, he had not received a previous email from Ms Sturgeon, and he said Ms Sturgeon needed to send emails addressed to him to the Email Address. After Ms Sturgeon said she had been talking with Mr Sweet, Mr Mohamed asked what classification Ms Sturgeon gave the Employee. Ms Sturgeon said “cook, level 1”, in response to which Mr Mohamed said “She wasn’t a cook”. Mr Mohamed said he did not have the Employee’s bank details, in response to which Ms Sturgeon said that Mr Sweet had told her that he had sent those details to the accounts team. Ms Sturgeon then said she will provide the Employee’s bank details to Mr Mohamed.[9] Mr Mohamed said: “Yes she will be paid once I get the bank account details”. It appears from an email Ms Sturgeon sent to Mr Mohamed on 23 October 2020, and I find, that Mr Mohamed provided to Ms Sturgeon his mobile number (Mobile Number).
(d)Ms Sturgeon sent emails to the Email Address on 23 October 2020 and 26 October 2020.[10]
(e)On 29 October 2020 Ms Sturgeon had a conversation with Mr Mohamed in which he said: “Yes I am going to pay her tonight”.[11]
[6] Affidavit M Sturgeon 25.08.2021, [7(e)]
[7] Affidavit M Sturgeon 25.08.2021, [7(c)]-[7(d)]
[8] Affidavit M Sturgeon 25.08.2021, [7(f)]
[9] Affidavit M Sturgeon 25.08.2021, [7(h)(iii)]
[10] Affidavit M Sturgeon 25.08.2021, [7(h)(iii)]
[11] Affidavit M Sturgeon 25.08.2021, [7(h)(vii)]
This evidence was reasonably capable of showing that BME employed the Employee from 3 July 2020 to 17 July 2020 as a casual employee; she performed duties that included making and preparing ingredients, and cooking; the Employee worked on Saturdays and Sundays; she was identified on rosters as a “cook” within the meaning of the Restaurant Industry Award 2010 (Restaurant Award); and BME did not pay the Employee at all for the work she performed.
On the basis of the evidence Ms Sturgeon collected, she came to believe the following:[12]
[12] Affidavit M Sturgeon 25.08.2021, [8]
(a)BME employed the Employee from 3 July 2020 to 17 July 2020;
(b)The Award covered and applied to BME in relation to the Employee’s employment;
(c)The Employee:
(i)was a Cook grade 1 as defined under Schedule A of the Restaurant Award;
(ii)was a casual employee, within the meaning of cl 11 of the Restaurant Award, as she was engaged to work irregular hours, as evidenced by the rosters provided by Mr Sweet which designated the Employee as working irregular hours without a consistent roster; statements made by Mr Sweet, Mr Mohamed, and the Employee that the Employee worked irregular hours each week; and the lack of any evidence of a firm advance commitment by BME to provide any guaranteed hours or regular work; and text messages of Mr Sweet to the Employee that were consistent with her not having any such guaranteed hours of work;
(iii)performed work on Saturdays and Sundays; and
(iv)was not paid at all for her work for BME.
(d)BME contravened cl 11.2 and cl 18.1 of the Restaurant Award (casual minimum wages), and cl 24.2 of the Restaurant Award (Saturday and Sunday penalty rates).
I find that it was reasonable for Ms Sturgeon to form these beliefs.
On 11 November 2020 Ms Sturgeon gave a notice to BME purportedly pursuant to s 716(2) of the FW Act (Compliance Notice) by sending it by express post to BME’s registered office.[13] On the same day, Ms Sturgeon sent to Mr Mohamed at the Email Address an email and “a text message via email by way of MessageNet SMS Gateway” to the Mobile Number advising him of “their rights and obligations under the Compliance Notice”. [14] Ms Sturgeon’s email is as follows:[15]
[13] Affidavit M Sturgeon 25.08.2021, [9]
[14] Affidavit M Sturgeon 25.08.2021, [11]
[15] Affidavit M Sturgeon 25.08.2021, [11], annexure MS-10
Good afternoon Diaa
I have sent a hard copy of a Compliance Notice to the registered business address today. If you wish for me to email a copy to you please call me. It is due by 14 December 2020.
Rights and obligations under this Compliance Notice
1. Failure to comply with this Compliance Notice may contravene section 716(5) of the Fair Work Act 2009 (Cth) (FW Act) and render you liable for a civil penalty (unless you have a reasonable excuse).
2. You may be liable to a civil remedy if you give false or misleading information or produce false or misleading documents. It is also a serious offence under the Criminal Code (Cth).
3. If you do not comply with this Compliance Notice, the Fair Work Ombudsman may, without further notice, commence legal action against you and/or individuals involved in your failure to comply with this Compliance Notice to recover any outstanding monies which this Compliance Notice requires you to pay and to seek civil penalties.
4. Complying with the Compliance Notice is not an admission that you contravened, or have been found to have contravened, the Award or the FW Act.
5. You may apply to the Federal Court, Federal Circuit Court or eligible State or Territory Court for a review of this Compliance Notice on either or both of the following grounds:
(a) you did not commit the contraventions set out in this Compliance Notice;
(b) this Compliance Notice does not comply with sections 716(2) or 716(3) of the FW Act.
If you have questions about the compliance notice please don’t hesitate to contact me on . . . or email me at . . . .
The Compliance Notice stated that Ms Sturgeon reasonably believed that BME contravened terms of the Restaurant Award, and that the Compliance Notice required that BME take steps to remedy the contraventions. The Compliance Notice identifies the contraventions as follows:
The Employer, between 3 July 2020 and 17 July 2020 (Period), contravened the clauses of the Restaurant Industry Award 2010 as in force at the time of the contraventions set out in the table below.
No
Clause
Details of contravention(s)
(a)
Clauses 11.2 and
18.1
Casual Minimum Wage contravention
failing to pay:
(a) Davinia Mulawin
the applicable minimum wage in clause 18.1 and a loading of 25% in respect of the ordinary hours worked (Casual Minimum Wage entitlement)
(b)
Clause 24.2
Saturday Casual Penalty contravention
failing to pay:
(a) Davinia Mulawin
at 150% of the minimum wage for the relevant classification (inclusive of the casual 25% loading) for ordinary hours worked on a Saturday (Saturday Casual Penalty entitlement)
(c)
Clause 24.2
Sunday Casual Level 1 & 2 Penalty contravention
failing to pay:
Davinia Mulawin
at 150% of the minimum wage for the relevant classification (inclusive of the casual 25% loading) for ordinary hours worked on a Sunday
(Sunday Casual Level 1 & 2 Penalty entitlement)
The Compliance Notice required BME to do the following.
7.In accordance with section 716(2) of the FW Act, I require you by 14 December 2020 to:
Step 1 - calculate and rectify underpayments
(a)in respect of the contravention referred to in row (a) of the table above:
(i) Davinia Mulawin was employed as a Casual Level 2 Grade 1 Cook (unqualified) employee and was not paid (but required by the Award to be paid) the Entitlement that is the subject of the contravention — The Entitlement is found in the 'Details of Contravention’ column in the table above.
(ii) In respect of Davinia Mulawin:
1. Identify the number of hours worked during the Period in respect of which the Entitlement was required to be paid by the Award (Hours);
2. Identify the amount the Employer paid to Davinia Mulawin during the Period in respect of the Entitlement (having regard to the Hours, where applicable);
3. Calculate the amount the Employer should have paid to Davinia Mulawin during the period in respect of the Entitlement (having regard to the Hours, where applicable);
4. Make a payment to Davinia Mulawin of the difference between the amount referred to in (2) and the amount referred to in (3) immediately above.
5.Make a record of the information and the amounts referred to in (1) to (3) and the amount of the payment referred to in (4) immediately above (Underpayment Rectification Information)
(a)repeat the same process described in Step 1(a) for each of the contraventions referred to in rows (b) to (c) of the table above.
Step 2 - Superannuation
(b) calculate superannuation contributions required by clause 22.2 of the Award in respect of the amounts required to be paid to Davinia Mulawin as a result of Step 1; and
(c) in relation to Davinia Mulawin who is owed such superannuation contributions, pay such superannuation contributions to her chosen Superannuation Fund.
Reasonable evidence of steps taken to comply with this Compliance Notice
8. In accordance with section 716(2) of the FW Act, I require you to produce the following reasonable evidence of your compliance with the actions specified in paragraph 7 above:
(a) a schedule that sets out:
(i) in relation to Davinia Mulawin, and in respect of the contravention that concerns her, the Underpayment Rectification Information;
(ii) in relation to Davinia Mulawin the superannuation contributions calculated and paid to her Superannuation Fund in accordance with Step 2.
(b) proof that full payment has been made to Davinia Mulawin identified in Step 1 of the payment(s) required to be made by Step 1 and Step 2, such as bank transfer showing the transfer of funds to Davinia Mulawin and her Superannuation Fund, or a copy of Davinia Mulawin's payroll records showing the payment(s).
9. The evidence referred to above must be provided to the Fair Work Ombudsman by
21 December 2020 by email to …, or by mail to … or by delivery to ….
There is evidence of correspondence between Ms Sturgeon and Mr Mohamed after Ms Sturgeon had given the Compliance Notice to BME.[16] This includes an email from the Email Address sent to Ms Sturgeon on 14 December 2020 stating “Please note payment will be made this Friday the 18th”.[17] No payment was made, and BME did not by that time, or at any later time, comply with the Compliance Notice.
[16] Affidavit M Sturgeon 25.08.2021, [12]-[22]
[17] Affidavit M Sturgeon 25.08.2021, [13]
On 31 March 2021 Mr Holmes, a lawyer within the FWO’s Legal Compliance and Enforcement Branch, arranged to send a letter by email to the Email Address stating that the FWO intended to commence proceedings against BME and Mr Mohamed in which the FWO would allege a contravention of s 716(5) of the FW Act. On 6 April 2021 Mr Holmes telephoned Mr Mohamed and had a conversation with him in which Mr Mohamed said he could pay within 48 hours.[18] Mr Mohamed made no payment.
[18] Affidavit M Sturgeon 25.08.2021, [18], [19]
STATEMENT OF CLAIM AND THE RESPONSE AND LETTER
The statement of claim alleges, among other things, that Ms Sturgeon is and at all relevant times has been a Fair Work Inspector appointed under s 700 of the FW Act; BME was a company that operated a café and restaurant trading as “Blue Mist Café”; Mr Mohamed is the brother of BME’s two directors, and was a person with actual or apparent responsibility for the operation, management, and control of the Café; Ms Sturgeon commenced an investigation in response to the Employee’s request for assistance; as a result of the investigation Ms Sturgeon formed the belief of the matters she later recorded in the Compliance Notice, and she had reasonable grounds for such belief; on 11 November 2020 Ms Sturgeon gave the Compliance Notice to BME requiring BME to take the actions specified in the Compliance Notice by 14 December 2020; and BME failed to take the specified action.
The statement of claim further alleges that, during Ms Sturgeon’s investigation, Mr Mohamed requested that Ms Sturgeon send correspondence relating to the investigation to him via the Email Address, and the Mobile Number; after Ms Sturgeon gave the Compliance Notice to BME she communicated with Mr Mohamed regarding it using the Email Address and the Mobile Number; because of these matters Mr Mohamed was the person responsible for ensuring BME complied with the Compliance Notice, and he had knowledge BME was given the Compliance Notice, and that BME did not comply with it.
In the Response, Mr Mohamed asserts as follows:
(a)After the FWO contacted Mr Mohamed about the Employee, Mr Mohamed checked BME’s records, and found there was no such employee. When “we asked for further information, our requests we[re] denied, as we were told as a matter of record you do not need any further information”.
(b)The investigation “failed to include any interviews with my staff or anyone who in fact knew this person”.
(c)BME has no record “of a grade 1 cook by th[e] name” of the Employee. “We later realized [sic]” that the Employee in question used an alias, and never went by her legal name. The Employee only identified herself as “Joy”. BME also realised that the Employee was not a cook, but rather “a trial” for a traineeship.
The Letter repeats the substance of these assertions but adds some detail. The Letter includes the following (errors in original):
When we were first contacted by the investigator of the FWO, and were told of an employee who was seeking wages
When we were given the details, I and my entire management team has never heard of the applicant.
We asked on several occasions for more information and none was given and in one reply via a ph call was “you don’t need any more information”
We asked for a driver’s license, TFN, bank account details so we could trace this employee who we supposedly did not pay, again we were told we didn’t require that information, we should just pay as we have done our investigation and have determined she is owed the money.
What we later found through sheer coincidence that the applicant never used her legal name and in fact went by a totally different name ‘Joy”
I later found out that I have never ever met Joy and she was reporting to my head chef, I also came to learn that she was not a cook but rather a trainee and this can be verified by a text I received from her, which is how I came to learn that the applicant and joy were one in the same person.
I cannot stress enough how all of this could have been avoided if the FWO imply provided us with information, other than her real name and her Bank acc details no other details were provided, when we advised the FWO we do not know who this person, we could have together come to realize that the applicant used an alias
When we found out about the confusion we offered to make the payment however the amount was way off for a trainee, we contacted the FWO and offered to make the payment to simply to get rid of the case as my father (the director) has just passed away we did not want this linger, that offer was denied by the applicants solicitors and said regardless of payment we’re pursuing this to federal court, I advised them that my father has just passed away and that wanted to finalize this they refused, as a result of their press release of the matter going to court we have since closed the business, as the name of the restaurant as both the restaurant and my personal name were both mentioned and published in a well known hospitality magazine, we feel that all of this over one employee who on a trial for a traineeship was hardly worth running our lives and lively hood.
Our home mortgage is severally in arrears we have no income at all, all because the FWO would refuse to simply help identify the applicant because the applicant gave us an alias rather that her legal name.
DID BME FAIL TO COMPLY WITH THE COMPLIANCE NOTICE?
On the basis of the evidence on which the FWO relies, and which I accept, I am satisfied of the following:
(a)On 11 November 2020 Ms Sturgeon, a person who had been appointed a Fair Work Inspector under s 700 of the FW Act, gave to BME the Compliance Notice purportedly pursuant to s 716(2) of the FW Act in which Ms Sturgeon identified conduct that contravened the FW Act in which Ms Sturgeon believed BME engaged, and in which Ms Sturgeon specified action BME was required to take to remedy the direct effects of the contraventions so identified.
(b)Ms Sturgeon reasonably believed that BME contravened the provisions specified in the Compliance Notice.
(c)BME failed to comply with any of the actions the Compliance Notice required BME to take.
(d)BME therefore contravened s 716(5) of the FW Act by failing to comply with the requirements of the Compliance Notice.
None of the matters on which Mr Mohamed relies in the Response or Letter is capable of preventing me from making these findings.
(a)The Response and Letter rely on affirmative statements which are not supported by any evidence.
(b)Even if supported by evidence, the assertions do not raise any arguable case either that the Compliance Notice did not comply with s 716(2) or s 716(3) of the FW Act, or that BME did not commit any contravention of s 716(5) in relation to the Compliance Notice.
(c)The statements, even if made under oath, would carry no weight. They do not respond to the evidence Ms Sturgeon has given of her conversations with Mr Mohamed. Those conversations, as deposed to by Ms Sturgeon, show Mr Mohamed understood that the Employee was employed by the Café, and was aware of her identity. Further, the assertions contained in the Response and Letter are inconsistent with the four communications Mr Mohamed made promising to pay the Employee, the first in his telephone conversation with Ms Sturgeon on 23 October 2020, where Mr Mohamed said the Employee “will be paid once I get the bank account details”; the second in a telephone conversation Mr Mohamed had with Ms Sturgeon on 29 October 2020 in which he said “Yes I am going to pay her tonight”; the third by email Mr Mohamed sent to Ms Sturgeon on 14 December 2020,[19] and the fourth in a telephone conversation with Mr Holmes on 6 April 2021.[20]
[19] Affidavit M Sturgeon 25.08.2021, [13]
[20] Affidavit M Sturgeon 25.08.2021, [18], [19]
WAS MR MOHAMED INVOLVED IN BME’S FAILURE TO COMPLY WITH THE COMPLIANCE NOTICE?
On the basis of the evidence before me, I make the following additional findings.
(a)Mr Mohamed was at the very least responsible for BME’s paying its employees their wages. I base that finding on the conversation between Ms Sturgeon and Mr Mohamed on 23 October 2020, in which Mr Mohamed demonstrated an awareness that the Employee worked in the Café, although Mr Mohamed said the Employee was not a cook, and he stated that once he is provided with the Employee’s bank details the Employee would be paid. I also base it on the evidence of Ms Sturgeon that on 14 December 2020 she received an email from the Email Address stating: “Please note payment will be made this Friday the 18th”;[21] and on the evidence contained in a file note prepared by Mr Holmes of his conversation with Mr Mohamed on 6 April 2021 that Mr Mohamed would pay within 48 hours.[22]
(b)Mr Mohamed had knowledge of the Compliance Notice. I base that finding on the email Ms Sturgeon sent on 11 November 2020 to the Email Address and on the “text message via email” Ms Sturgeon sent on 11 November 2020 to the Mobile Number;[23] on the evidence of Ms Sturgeon that on 14 December 2020 she received an email from the Email Address stating: “Please note payment will be made this Friday the 18th”;[24] and on the evidence contained in a file note prepared by Mr Holmes of his conversation with Mr Mohamed on 6 April 2021 that Mr Mohamed would pay within 48 hours.[25]
(c)Mr Mohamed had knowledge that BME did not comply with the Compliance Notice. I make this finding on the basis of the findings in (a) and (b).
[21] Affidavit M Sturgeon 25.08.2021, [13]
[22] Affidavit M Sturgeon 25.08.2021, [18], [19]
[23] Affidavit M Sturgeon 25.08.2021, [11]
[24] Affidavit M Sturgeon 25.08.2021, [13]
[25] Affidavit M Sturgeon 25.08.2021, [18], [19]
On the basis of these findings, I further find that Mr Mohamed was involved, within the meaning of s 550(2) of the FW Act, in BME’s contravention of s 716(5) of the FW Act and, because of s 550(1), is taken to have contravened s 716(5) of the FW Act.
PENALTY
Power and principles
Subsection 546(1) of the FW Act provides that this Court may, on application, order a person to pay a pecuniary penalty the Court considers is appropriate if the Court is satisfied the person has contravened a “civil remedy provision”.[26] That expression is defined in s 539(1) of the FW Act to include the provisions identified in column 1 of the table to s 539(2) of the FW Act. Subsection 716(5) is in column 1 of the table to s 539(2) of the FW Act.
[26] I repeat in this and the following 4 paragraphs what I said in Bevis v VA Holdings Pty Ltd trading as Granton Homes & Ors [2020] FCCA 2082, at [33]-[38]
Subsection 546(2) of the FW Act provides that the pecuniary penalty the Court may impose must not, where the person is an individual, be more than “the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2)” and, if the person is a body corporate, must not be more than five times “the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2)”. The maximum penalty units for a contravention of s 716(5) of the FW Act as at 14 December 2020, being the day by which BME was required to carry out the actions specified in the Compliance Notice, are 30 penalty units for an individual, and 150 penalty units for a body corporate. (This excludes “serious contraventions”, as defined in s 557A of the FW Act.) Section 12 of the FW Act provides that “penalty unit” has the meaning given by s 4AA of the Crimes Act 1914 (Cth). The penalty unit provided for by s 4AA of that Act as at 14 December 2020 was $222. Thus, $6,660 is the maximum penalty Mr Mohamed may be ordered to pay for BME’s contravention of s 716(5) of the FW Act.
The approach of most judges when assessing penalties for a single contravention of a provision of the FW Act is to take into account the non-exhaustive considerations Tracey J identified in Kelly v Fitzpatrick,[27] which his Honour adopted from the judgment of Mowbray FM in Mason v Harrington Corporation Pty Ltd. [28] Those considerations are:
[27] Kelly v Fitzpatrick [2007] FCA 1080, at [14]
[28] Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
(a)the nature and extent of the conduct which led to the breaches;
(b)the circumstances in which that conduct took place;
(c)the nature and extent of any loss or damage sustained as a result of the breaches;
(d)whether there had been similar previous conduct by the respondent;
(e)whether the breaches were properly distinct or arose out of the one course of conduct;
(f)the size of the business enterprise involved;
(g)whether or not the breaches were deliberate;
(h)whether senior management was involved in the breaches;
(i)whether the party committing the breach had exhibited contrition;
(j)whether the party committing the breach had taken corrective action;
(k)whether the party committing the breach had cooperated with the enforcement authorities;
(l)the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
(m)the need for specific and general deterrence.
Also relevant is the maximum penalty for the contravention provided for by the FW Act; and here I refer to the following passage from the judgment of Flick J in The BKH Contractors Case (No 2):[29]
In undertaking the task of assessing and quantifying the penalties to be imposed, the maximum penalty prescribed by the Commonwealth legislature for a specific contravention serves as a “yardstick” against which the assessment of penalties is generally to proceed . . . .
[29] Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (The BKH Contractors Case) (No 2) [2018] FCA 1563, at [19]
Nature, extent, circumstances, and deliberateness of the contravening conduct
The contravention consists of BME failing to comply with the requirements of the Compliance Notice. There is no explanation for the failure. On the contrary, as I have already found, Mr Mohamed stated, first on 23 October 2020, second on 29 October 2020, third on 14 December 2020, and fourth on 6 April 2021, that the amount owing to the Employee would be paid. That manifests a wilfulness on the part of Mr Mohamed not to comply with the Compliance Notice. That is a matter that weighs in favour of assessing penalty at the higher end of the scale.
The following passage from the judgment of Judge Emmett in Fair Work Ombudsman v Viper Industries Pty Ltd applies to the nature of BME’s contravention of s 716(5) of the FW Act, and Mr Mohamed’s involvement in that contravention.[30]
The Respondents’ intentional failure to comply with a mandatory notice issued by the workplace regulator is “conduct ... [which] undermines the utility and effectiveness of a fundamental object” [of] the FW Act. The failure to comply undermines and frustrates the powers conferred on Fair Work Inspectors, which are conferred for the purposes of providing an effective means of enforcing compliance with lawful minimum entitlements. There is a significant cost to the public by reason of the need to bring this matter before the court to enforce compliance.
[30] Fair Work Ombudsman v Viper Industries Pty Ltd [2015] FCCA 492, at [7]
Nature and extent of loss occasioned by contravention
According to the evidence of Ms Sturgeon, which I accept, the Employee was entitled to be paid for all time worked between 3 July 2020 to 17 July 2020 for a total of 39 hours worked but for which the Employee was not paid. Thus, had BME complied with the Compliance Notice, there is a prospect that it would have paid to the Employee the 39 hours’ worth of work. These are matters that weigh in favour of imposing a penalty at the higher end of the scale.
Corrective action and cooperation
Mr Mohamed has taken no action either to attempt to cause BME to comply with the Compliance Notice, or to place the Employee in the position she would have been had he caused BME to comply with the Compliance Notice.
Deterrence
The FWO submits there is a need for specific deterrence because Mr Mohamed continues to hold a number of offices in proprietary companies; and also because Mr Mohamed has demonstrated a deliberate disregard for the obligations of an employer under Commonwealth workplace laws by failing to ensure BME complied with the Compliance Notice. I agree with these submissions.
As for general deterrence, I respectfully adopt what Judge Jarrett said in Fair Work Ombudsman v VS Investment Group Pty Ltd:[31]
The failure to comply with a notice properly issued by the applicant in the course of its investigations and the discharge of its statutory functions is serious. Recipients of such notices should be left under no misapprehension about their obligations to comply with those notices.
[31] Fair Work Ombudsman v VS Investment Group Pty Ltd [2013] FCCA 208, at [51]
The FWO relies on data contained in an industry profile of the restaurant and café industry from July 2017 to June 2021, and submitted this showed a high level of non-compliance.
The penalty should be set at a level that should signal not only to employers in the restaurant and café industry, but to all employers that a wilful disregard of a lawfully issued 716 Notice will be met with a significant penalty.
Assessment
Given the deliberate, unexplained, and unremedied failure by Mr Mohamed to cause BME to comply with the Compliance Notice, particularly in circumstances where there is evidence of his accepting BME owes wages to the Employee which have not been paid, and the need for general deterrence, the penalty should be assessed on the higher end of the scale. In my opinion, a penalty of $5,328, being 80% of the maximum, is appropriate.
DISPOSITION
I propose to make declarations to the effect that BME contravened s 716(5) of the FW Act, and that Mr Mohamed was involved in that contravention. I also propose to order that Mr Mohamed pay a pecuniary penalty in the amount of $5,328, and that he pay this amount to the Commonwealth within 28 days after the day I pronounce my orders.
I certify that the preceding fifty (50) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Manousaridis. Associate:
Dated: 9 March 2022
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