Fair Work Ombudsman v Centennial Wealth Pty Ltd (No2)

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FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Fair Work Ombudsman v Centennial Wealth Pty Ltd (No2) [2023] FedCFamC2G 647   

File number(s): SYG 259 of 2022
Judgment of: JUDGE D HUMPHREYS
Date of judgment: 25 July 2023
Catchwords:  INDUSTRIAL LAW – Fair Work – Contravention of  716  of the Act – Determination of pecuniary penalties – orders mande
Legislation:  Fair Work Act 2009 (Cth) s 550, 716(5)
Cases cited:

 Australian Building and Construction Commissioner v Pattinson [2022] HCA 13

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

Jordan v Mornington Inn Pty Ltd [2007] FCA 1284

Mason v Harrington Corporation Pty Ltd [2007] FMCA 7

Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383

Seven Network (Operations) Pty Ltd v Communications, Electrical, Electronic, Energy Information, Postal Plumbing and Allied Services Union of Australia (CEPU) (2001) 110 IR 372

Division: Division 2 General Federal Law
Number of paragraphs: 31
Date of last submission/s: 17 July 2023
Date of hearing: In Chambers
Place: Parramatta
Solicitor for the Applicant: Ms Quigley.
Solicitor for the Respondents: No appearance.

ORDERS

SYG 259 of 2022

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN:

FAIR WORK OMBUDSMAN

Applicant
AND:

CENTENNIAL WEALTH PTY LTD (ACN 606 400 873)

First Respondent

MS NEVENKA LOVRIC

Second Respondent

order made by:

JUDGE D HUMPHREYS

DATE OF ORDER:

25 July 2023

THE COURT ORDERS THAT:

1.Pursuant to section 546(1) of the FW Act, the Second Respondent pay a pecuniary penalty of $4000.00 for her involvement in the contravention of section 716(5) by the First Respondent.

2.Pursuant to section 546(3) of the FW Act, that:

a.the pecuniary penalty imposed on the Second Respondent be paid into the Consolidated Revenue Fund of the Commonwealth of Australia within 28 days of the Court’s orders; and

b.within 28 days of receipt of the pecuniary penalty referred to in 2(a) above, the Applicant is to pay this amount to Ms Alla Krjatian.

3.The Applicant has liberty to apply on seven days’ notice in the event that any of the proceeding orders are not complied with.

4.Pursuant to rule 17.05(2)(g) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)) the Court vary the typographical errors made in the Judgment of 15 May 2023 in relation to:

a.The name of the Second Respondent be corrected from ‘Navenka Lovrich’ to ‘Nevenka Lovric’;

b.Order 3 - A declaration that the Second Respondent was involved, within the meaning of section 550 of the FW Act, in the contravention by the First Respondent of section 716(5) of the FW Act referred to at paragraph 2 above;

c.Paragraph [5] - Fair Work Department’s be amended to Fair Work Ombudsman’s;

d.Paragraph [34] - A declaration that the Second Respondent was involved, within…

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Details
Case
[2023] FedCFamC2G 647
Decision Date

CaseChat Overview and Summary

The case of Fair Work Ombudsman v Centennial Wealth Pty Ltd (No 2) involved the Fair Work Ombudsman (FWO) suing Centennial Wealth Pty Ltd, which was managed by Ms Lovric, following her husband's death. The dispute centred around allegations that Centennial Wealth had breached various provisions of the Fair Work Act 2009 (Cth) and failed to pay former employee Ms Alla Krajatian several entitlements, including wages for a three-week period, a notice period on dismissal, and accrued but untaken leave. Following the issuance of a Compliance Notice by the FWO, which Centennial Wealth failed to comply with, proceedings were initiated by the FWO in the Federal Circuit and Family Court of Australia. Due to Ms Lovric's lack of meaningful engagement with the Court, a default judgment was entered in favour of the FWO.

The primary legal issue before the court was to determine the appropriate pecuniary penalty to impose on Ms Lovric for the breaches of the Fair Work Act 2009 (Cth). The court had broad discretion in fixing a penalty that would protect the public interest from future contraventions of the Act and deter such contraventions by the contravener and others, as outlined in Australian Building and Construction Commissioner v Pattinson. The court was also required to consider various factors in determining the penalty, including the identification of separate contraventions, whether these should be dealt with independently or aggregated, and applying the totality principle to ensure the penalties were appropriate and proportionate to the conduct as a whole.

The court considered the evidence provided by the FWO and Ms Lovric, including affidavits and the compliance notice. In determining the appropriate penalty, the court followed the guidelines set out in previous cases, focusing on deterrence and the protection of the public interest. After evaluating the evidence and the legal principles, the court determined that a penalty of $4,000.00 was appropriate. This amount was to be paid by Ms Lovric to the FWO within 28 days of the court's order.

The final orders of the court included that Ms Lovric pay the FWO $4,000.00 within 28 days of the date of the order. This amount was deemed sufficient to achieve the purposes of deterrence and protection of the public interest, while also considering the totality of Ms Lovric’s conduct and the specific contraventions involved.

Orders

Orders of the court

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Background

Background to the litigation

For the reasons set out below, the Court is of the view that the appropriate pecuniary penalty to impose on Ms Lovric is $4,000.00. This amount is to be paid to the FWO within 28 days of the date of this order.THE FACTUAL BACKGROUND Centennial Wealth was a company that was run by Ms Lovric’s husband. On 6 June 2020, Ms Lovric’s husband passed away. Ms Lovric took over as the Sole Director of Centennial. Following a complaint lodged by a former employee, Ms Alla Krjation to the FWO, a reasonable belief was formed that Centennial had breached various provisions of the Act and failed to pay Ms Krajatian various entitlements, including pay for the period of 7- 30 March 2020, some 3 weeks, along with a failure to pay a notice period on dismissal and a failure to pay accrued but untaken leave. On 26 August 2021, the FWO issued a third Compliance Notice on Centennial, noting that two previous Notices had been withdrawn. That third Notice set out the details of the alleged breaches of the Act and required rectification by 23 September 2021, with evidence of rectification to be provided to the FWO by 30 September 2021. Centennial failed to comply with the Notice by the due date. Over a period of some months, up until 29 December 2021, Ms Krajatian was partially paid her entitlements by five instalments of $400.00 amounts or $2000.00 in total. An amount of $5,254.33 remains outstanding. On 22 February 2022, the FWO commenced proceedings in this Court. Ms Lovric has failed to effectively engage with the Court in a meaningful manner in relation to the finalisation of these proceedings with the result that default judgement was made, in favour of the FWO.EVIDENCE BEFORE THE COURT The FWO relies upon its Amended Statement of claim filed on 29 April 2022, along with 4 affidavits of Ms Shana Quigley affirmed 14 June 2023, 10 May 2023, 17 June 2022 and 28 April 2022. The FWO also relies upon an Affidavit of Diana Barker affirmed 10 May 2023. Ms Lovric has filed three Affidavits dated 10 June 2022, 15 August 2022 and 28 August 2022. The Court has considered all this material in arriving at the appropriate penalty to be imposed.THE LAW IN RELATION TO PENALTY’S IN FAIR WORK MATTERS. The Court has a broad discretion as to penalty. In Australian Building and Construction Commissioner v Pattinson [2022] HCA 13 at [71], that the Court should fix a penalty ‘it considers fairly and reasonably to be appropriate to protect the public interest from future contraventions of the Act’. Further, at [10] and [12], the High Court stated that the penalty must not exceed what is ‘reasonably necessary to achieve the purpose of section 546: the deterrence of future contraventions of a like kind by the contravener and others’. 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].

Evidence

Evidence Before The Court

Ms Lovric has failed to effectively engage with the Court in a meaningful manner in relation to the finalisation of these proceedings with the result that default judgement was made, in favour of the FWO.EVIDENCE BEFORE THE COURT The FWO relies upon its Amended Statement of claim filed on 29 April 2022, along with 4 affidavits of Ms Shana Quigley affirmed 14 June 2023, 10 May 2023, 17 June 2022 and 28 April 2022. The FWO also relies upon an Affidavit of Diana Barker affirmed 10 May 2023. Ms Lovric has filed three Affidavits dated 10 June 2022, 15 August 2022 and 28 August 2022. The Court has considered all this material in arriving at the appropriate penalty to be imposed.THE LAW IN RELATION TO PENALTY’S IN FAIR WORK MATTERS. The Court has a broad discretion as to penalty. In Australian Building and Construction Commissioner v Pattinson [2022] HCA 13 at [71], that the Court should fix a penalty ‘it considers fairly and reasonably to be appropriate to protect the public interest from future contraventions of the Act’. Further, at [10] and [12], the High Court stated that the penalty must not exceed what is ‘reasonably necessary to achieve the purpose of section 546: the deterrence of future contraventions of a like kind by the contravener and others’. 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].

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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