Fair Work Ombudsman v Callaghan
[2022] FedCFamC2G 816
Federal Circuit and Family Court of Australia
(DIVISION 2)
Fair Work Ombudsman v Callaghan [2022] FedCFamC2G 816
File number(s): SYG 709 of 2022 Judgment of: JUDGE HUMPHREYS Date of judgment: 5 October 2022 Catchwords: INDUSTRIAL LAW – Fair Work Act 2009 – penalty hearing – statement of agreed facts – consideration of relevant matters – penalty imposed. Legislation: Fair Work Act 2009 (Cth) ss 557, 716 Cases cited: Australian Ophthalmic Supplies Pty Ltd v McAlary‑Smith (2008) 165 FCR 560
Canturi v Sita Coaches Pty Ltd (2002) 116 FCR 276
Fair Work Ombudsman v Nobrace Centre Pty Ltd (in Liquidation) [2019] FCCA 2979
Fair Work Ombudsman v NSH North Pty Ltd t/as New Shanghai Charlestown [2017] FCA 1301
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383
Seven Network (Operations) Ltd v Communications, Electrical, Electronic, Energy Information, Postal, Plumbing and Allied Services Union of Australia (2001) 110 IR 372
Division: Division 2 General Federal Law Number of paragraphs: 25 Date of last submission/s: 4 October 2022 Date of hearing: 4 October 2022 Place: Parramatta Solicitor for the Applicant: Mr Fiorenza Solicitor for the Respondent: In person
Table of Corrections 6 October 2022 At paragraph 2, including the word ‘ entitlements for payment in lieu of notice’. ORDERS
SYG 709 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: CHRISTINE LOUISE CALLAGHAN
Respondent
order made by:
JUDGE HUMPHREYS
DATE OF ORDER:
5 October 2022
THE COURT ORDERS THAT:
1.A declaration is made that the Respondent contravened s 716(5) of the Fair Work Act 2009 (Cth) (“FWA”), by failing to comply with the Compliance Notice issued by Fair Work Inspector Emma Warren on 6 September 2021.
2.Pursuant to s 545(1) of the FWA, the Respondent take the steps that were required by the by the Compliance Notice within 6 months of the date of this order, by:
(a)making the remaining specified payments set out in Column D of Schedule 1, to the Employees in Column A of Schedule 1 to rectify the underpayments in respect of annual leave, annual leave loading, minimum wages and payment in lieu of notice;
(b)calculate and pay any additional superannuation contributions required by clause 20.2 of the Transport Award in respect of the amounts owed to Ms Betts, Mr Murray and Mr Batman, and clause 20.2 of the Clerks Award in respect of the amounts owed to Ms Mahoney; and
(c)providing proof to the Applicant that the outstanding amounts set out in Orders 2(a) and 2(b) above were paid to the Employees.
3.Pursuant to s 547(2) of the FWA, the Respondent pay to the Employees interest on the amounts owed to them (in Order 2(a) above) within 6 months of the date of this order.
4.Pursuant to s 546(1) of the FWA, the Respondent pay a pecuniary penalty of $3,500.00 to the Commonwealth for the contravention declared in Order 1 above, within 6 months of the date of this order.
5.The Applicant have liberty to apply on 7 days’ notice in the event that any of the preceding orders are not complied with.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE HUMPHREYS
Introduction
In May 2022, the Fair Work Ombudsman (‘FWO’) commenced proceedings in this Court alleging that the respondent, Christine Louise Callaghan, contravened s 716 of the Fair Work Act 2009 (Cth) (‘the Act’) arising from a failure to comply with a compliance notice served on her on 6 September 2021.
The compliance notice alleged that the respondent failed to pay four employees entitlements for payment in lieu of notice, annual leave on termination, including applicable annual leave loading, and entitlements for minimum casual wages under the applicable awards.
In a Statement of Agreed Facts filed with the Court, the respondent has admitted to failing to comply with the compliance notice and in so doing, breaching s 715(6) of the Act.
It is agreed that there has been partial rectification in relation to some aspects of the actions required of the respondent. It is agreed that the amounts owing to the four employees total $20,684.71, and as at the date of the penalty hearing some $1,200.00 has been paid. The respondent has agreed to orders being made that full rectification be made within 6 months of any orders made by the Court.
The Law - Fair Work Penalties
The Court has a broad discretion as to penalty. In Fair Work Ombudsman v NSH North Pty Ltd t/as New Shanghai Charlestown [2017] FCA 1301 Bromwich J summarised how the discretion is to be approached at [36], as follows:
1. Identify the separate contraventions, with each breach of each obligation being a separate contravention, and each breach of a term of the Award being a separate contravention.
2. Consider whether each separate contravention should be dealt with independently or with some degree of aggregation for those contraventions arising out of a course of conduct, noting that s 557 of the Act provides that two or more contraventions of a given civil remedy provision are to be taken to be a single contravention if committed by the same person and arising out of a course of conduct by that person.
3. Consider whether there should be further adjustment to ensure that, to the extent of any overlap between groups of separate aggregated contraventions, there is no double penalty imposed, and that the penalty is an appropriate response to what each respondent did.
4. Consider the appropriate penalty in respect of each final individual group of contraventions, taken in isolation.
5. Consider the overall penalties arrived at, including by reference to those which may be proposed by the FWO (as permitted by Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482 (CFMEU Civil Penalties Case) at [64]) and what is proposed by the respondents, and apply the totality principle, to ensure that the penalties for each respondent are appropriate and proportionate to the conduct viewed as a whole, making such adjustments as are necessary: see Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14 at [30]; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; 165 FCR 560 at [23]. [71] and [102].
The purpose of a civil penalty is primarily, if not wholly, promoting the public interest in compliance with the laws that have been contravened, and it does not engage principles of retribution or rehabilitation: (see; Fair Work Ombudsman v Nobrace Centre Pty Ltd (in Liquidation) [2019] FCCA 2979 (‘Nobrace’) per Kelly J at [65]). As these principles of retribution or rehabilitation are not involved in the determination of a civil penalty, this intensifies the focus of a civil penalty determination on issues of specific and general deterrence: (see; Nobrace at [66]).
The Act does not set out any mandatory criteria, inclusive or exclusive, that the Court must consider when determining whether to impose a penalty or the amount of any penalty: (see; Canturi v Sita Coaches Pty Ltd (2002) 116 FCR 276 at [88]). The choice of penalty must be guided by the “individual circumstances of a case, not by a line-by-line comparison with another case”: (see; Australian Ophthalmic Supplies Pty Ltd v McAlary‑Smith (2008) 165 FCR 560 at [12]). The process is an intuitive one by the Court and not an application of a scientific process: (see; Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 at [60]‑[63]).
In Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 (‘Mason’), Mobray FCM set out what is a now well accepted set of factors relevant in assessing a pecuniary penalty. They are as follows:
•the nature and extent of the conduct which led to the breaches;
•the circumstances in which the conduct took place;
•the nature and extent of any loss sustained as a result of the breaches;
•whether there has been similar previous conduct by the Respondents;
•whether the breaches were properly distinct or arose out of one course of conduct;
•the size of the business enterprise involved;
•whether or not the breaches were deliberate;
•whether senior management was involved in the breaches;
•whether the party committing the breach had exhibited contrition;
•whether the party committing the breach had taken corrective action;
•whether the party committing the breach had cooperated with enforcement authorities;
•the need to ensure compliance with minimum standards by provision of an effective means for the investigation and enforcement of employee entitlements; and
•the need for specific and general deterrence.
Merkel J in Seven Network (Operations) Ltd v Communications, Electrical, Electronic, Energy Information, Postal, Plumbing and Allied Services Union of Australia (2001) 110 IR 372 set out some guiding considerations for the Court at 374:
… matters to be taken into account in determining the appropriate penalty include the cost of the contravention, deterrence, the flagrancy and deliberateness of the breach, the offender’s past record of behaviour and any contrition displayed by the offender.
The Applicant’s Submissions
On behalf of the FWO, it was submitted that this was not a case involving multiple contraventions and therefore questions of aggregation and totality do not arise.
General deterrence was a significant factor. Compliance notices are a mechanism for dealing with non-compliance with minimum entitlements under the Act, without commencing litigation. The efficacy of such notices will be undermined if recipients perceive that a failure to comply carries no meaningful consequences. There was thus a need to send a message to employers that a failure to comply with a compliance notice will not be tolerated by the FWO, the community or the Courts. The road freight transport industry has been highlighted as an area where there is some significant non-compliance.
In terms of specific determinants, the respondent has indicated she is no longer operating a business in which she has employees. No external evidence has been provided in support of this assertion. However, the Court has no reason to reject this assertion.
Whilst the size of the business was small, the respondent has not put forward any evidence of her financial status and/or her capacity to pay financial penalty.
The FWO acknowledges that the respondent has admitted the contravention an early opportunity. This admission has a utilitarian value in that the saved both the applicant and the Court considerable time and expenditure of public funds. This should be reflected in the penalties imposed. As against this, only limited corrective action has been taken in the payment of $1,200.00 from some $20,000 outstanding. The amount of the underpayment is significant.
There has been no specific evidence of contrition other than the admissions made in the statement of agreed facts and the very limited payment that has been made to date.
Compliance with minimum standards in terms of entitlements is an important consideration. Where a person fails to comply with a compliance notice, the penalty should be set at a level that reflects the seriousness of the failure to comply with the statutory notice.
Based on the penalty factors outlined above, the FWO submitted that the penalty in the range of $3,196.80 to $3,729.60, being 60% to 70% of the maximum including a 20% discount, to reflect the co-operation of the respondent admitting liability was appropriate.
No further adjustment was necessary to reflect the “totality” principle. Further, it was submitted the proposed penalty struck a reasonable balance between deterrence and oppressive severity. There was no evidence to suggest that the penalty proposed would be crushing or oppressive.
The Respondent’s Submissions
No written or other material was filed with the Court by the respondent in respect of mitigation of penalty. The respondent told the Court that she was no longer operating a business that employees people. She had no intention to do so in the future and had learnt her lesson. She is currently working part time as a driver and had hoped that her work would increase in the near future. When it did she would increase the amount of repayments.
The respondent acknowledged that the fault lay with her as she should have taken greater interest in the work that was being undertaken by a book keeper as regards wages payments.
Consideration
The Court has taken account of all the matters put by the FWO in its submissions.
On numerous occasions, this Court has indicated clearly that wage underpayments will not be tolerated and that appropriate penalties will be imposed to reflect the seriousness of the action together with the need for specific and general deterrence.
The Court has taken account of the admissions made by the respondent. These have a significant utilitarian value in terms of reducing the amount of time on public money being expended on the matter that warrant an appropriate reduction in the penalty that might be otherwise payable.
The Court, however, considers that a non-compliance with a compliance notice is a matter of some seriousness and that a clear message needs to be sent to employers the failure to do so will attract significant penalties.
Taking all matters into account, the Court is of the view that the range of penalties put forward by the FWO is appropriate and that, in the circumstances, an appropriate penalty is the amount of $3,500.
I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Humphreys. Deputy Associate:
Dated: 5 October 2022
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