Fair Work Ombudsman v Central District Smash Repairs Pty Ltd (in liq)
[2023] FedCFamC2G 681
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Central District Smash Repairs Pty Ltd (in liq) [2023] FedCFamC2G 681
File number(s): SYG 1429 of 2022 Judgment of: JUDGE D HUMPHREYS Date of judgment: 2 August 2023 Catchwords: INDUSTRIAL LAW – Fair Work Act 2009 – Vehicle Repair, Services and Retail Award 2020 – determination of penalty Legislation: Corporations Act 2001 (Cth) s 440D
Fair Work Act 2009 (Cth) s 546
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
Hall v Active Towing Sydney Pty Ltd [2021] FedCFamC2G 385
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383
Division: Division 2 General Federal Law Number of paragraphs: 31 Date of last submission/s: 28 July 2023 Date of hearing: 28 July 2023 Place: Parramatta Solicitor for the Applicant: Ms Parekh Solicitor for the Respondents: The Second Respondent appeared in person ORDERS
SYG 1429 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: CENTRAL DISTRICT SMASH REPAIRS PTY LTD
First Respondent
WAYNE THOMAS WILLIAMSON
Second Respondent
order made by:
JUDGE D HUMPHREYS
DATE OF ORDER:
2 AugusT 2023
THE COURT ORDERS THAT:
1.Pursuant to s 546(1) of the Fair Work Act 2009 (Cth) (“the Act”), the Second Respondent pay a pecuniary penalty of $11,500.00 for failure to comply with two Compliance Notices issued on 7 April 2022 and 2 May 2022.
2.Pursuant to s 546(3) of the Act:
(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 pursuant to s 546(3) of the Act; and
(b)within 28 days of receipt of the pecuniary penalties referred to in order 2(a), the Applicant is to distribute the amounts equally between Mr Christopher Box and Ms Kim Hoesfsmit.
3.The Applicant has liberty to apply on seven days’ notice in the event that any of the proceeding 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 D HUMPHREYS
INTRODUCTION
On 9 June 2023, this Court made declarations that the second respondent, Mr Wayne Thomas Williamson, contravened s 716(5) of the Fair Work Act 2009 (Cth) (“the Act) by failing to comply with two Compliance Notices.
The first respondent, Central District Smash Repairs Pty Ltd (“Central District Smash Repairs”), was placed under external liquidation on 4 November 2022 and proceedings were stayed against Central District Smash Repairs pursuant to s 440D of the Corporations Act 2001 (Cth).
The Court made orders for the filing and service of any evidence in relation to penalty to be imposed on Mr Williamson. The Court has received evidence and submissions on behalf of the Fair Work Ombudsman (“FWO”), and submissions on behalf Mr Williamson.
The matter was listed for a Penalty Hearing on 28 July 2023…
For the reasons set out below, the Court is of the view that the appropriate pecuniary penalty to impose on Mr Williamson is $11500.00. This amount is to be paid to the Consolidated Revenue Fund of the Commonwealth within 28 days.
THE FACTUAL BACKGROUND
Central District Smash Repairs operated a vehicle smash repairs business in New South Wales. Mr Williamson was the sole Director and company Secretary of Central District Smash Repairs since 14 April 2021.
An investigation was commenced on 7 April 2022 by a Fair Work Inspector Amey Jambekar. Following this investigation, the FWO issued Central District Smash Repairs with a Compliance Notice (“Notice”) regarding its failure to pay a former employee his accrued untaken annual leave and annual leave loading. This Notice was address to Mr Williamson as the Director of Central District Smash Repairs and required the company to remedy the breaches by 3 June 2022 and provide evidence of rectification by 10 June 2022.
A second investigation was commenced by Amey Jambekar on 2 May 2022 which resulted in a second Notice being issued to Central District Smash Repairs for failure to pay a former employee her accrued but untaken annual leave and annual leave loading. This second Notice was also address to Mr Williamson and required certain actions to be taken by 10 June 2022 and proof of compliance provided by 17 June 2022.
No evidence has been produced which indicates that Central District Smash Repairs or Mr Williamson have rectified or attempted to rectify the issues raised by the Notices to this date.
EVIDENCE BEFORE THE COURT
The FWO relied upon its Application and Statement of Claim filed on 29 September 2022, and two Affidavits of Ms Parekh affirmed 22 February 2023 and 7 June 2023. The FWO also relied upon an Affidavit of Amey Abhay Jambekar affirmed on 29 June 2023.
Mr Williamson has not filed any evidence in the matter. He did provide a letter which the Court treated as submissions.
THE LAW IN RELATION TO PENALTIES 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] the Court stated that it 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], the High Court stated that the penalty must not exceed what is “reasonably necessary to achieve the purpose of s 546: the deterrence of future contraventions of a like kind by the contravenor and by 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].
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: 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: 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: 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”: 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: Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 at [60]‑[63].
In Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 (“Mason v Harrington”), Mowbray FCM set out what is a now well accepted set of factors relevant in assessing a pecuniary penalty. They are as follows:
a. the nature and extent of the conduct which led to the breaches;
b. the circumstances in which the conduct took place;
c. the nature and extent of any loss sustained as a result of the breaches;
d. whether there has been similar previous conduct by the Respondents;
e. whether the breaches were properly distinct or arose out of 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 enforcement authorities;
l. the need to ensure compliance with minimum standards by provision of an effective means for the investigation and enforcement of employee entitlements; and
m. the need for specific and general deterrence.
Merkel J in Seven Network (Operations) Pty Ltd v Communications, Electrical, Electronic, Energy Information, Postal Plumbing and Allied Services Union of Australia (2001) 110 IR 372 (“Seven Network”) 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.
WHAT PENALTY SHOULD BE IMPOSED?
The following matters are relevant using Mason v Harrington as a guide. The first issue relates to whether the two contraventions should be grouped together for the purposes of penalty. Each Compliance Notice related to a different employee and was the subject of a separate investigation and a separate Compliance Notice. The Court is if the view that each should be treated as a separate and distinct contravention.
The maximum penalty, pursuant to ss 539(2) and 546(2)(a) of the Act, the Court may impose is $6,600.00 in relation to an individual for a breach of s 716(5) of the Act. This results in a maximum available penalty of $13,320 being two times $6,600.
The nature of the contravention is a failure to comply with a Compliance Notice. Had the Notice been complied with, Court action would not have been necessary. The Court is satisfied Ms Mr Williamson was provided with multiple opportunities to address the matters the subject of the Compliance Notice at a time when she was the sole director of Central District Smash Repairs. The Court is satisfied the non-compliance was deliberate.
The Court notes that the nature and extent of the loss for the first complainant was an amount of $18,760.39 gross, and $62,197.17 for the second complainant. This represents a real and significant loss to both complainants, particularly the second complainant. The FWO submitted that the failure to comply with Notices also occasions a more public loss in the general undermining of the utility of this mechanism for the efficient and cost-effective rectification of contraventions of the Act, and the consequent burden that it causes in diverting resources away from other compliance strategies.
Mr Williamson’s finances is not in evidence, rather, he simply asserts that he does not have any funds to make a future payment or any penalty. He says he is unable to draw an age pension as he owes the Australian Tax Office money. The Court notes that no evidence has been provided by Mr Williamson and his precise financial circumstances are simply not known. While taking this into account, a capacity to pay do not exculpate contraventions of workplace laws and a capacity to pay is of less relevance than the objective of deterrence: Jordan v Mornington Inn Pty Ltd [2007] FCA 1384 at [99].
In terms of corrective action, contrition and cooperation, the FWO submit that Mr Williamson failed to meaningfully engage or take sufficient steps to enable Central District Smash Repairs to comply by the dates required in the Compliance Notice. Mr Williamson was assisted by his accountant who provided him with the calculations and encouraged him to negotiate a payment plan with the FWO and rectify the non-compliance.
Mr Williamson has failed to meaningfully engage with the Court and it was submitted, with this conduct, taken as a whole, demonstrates a lack of genuine contrition, a lack of insight into the seriousness of the non-compliance and a failure to acknowledge the responsibility of her conduct. The Court accepts this submission.
Mr Williamson’s submissions outline what are his views as to why Central District Smash Repairs has gone into liquidation, describing a conspiracy amongst the complainants to “send the business broke”. The Court notes that there is no evidence before it to support this submission. The FWO submitted that these assertions are predominately irrelevant and are not supported by evidence. The Court accepts the FWO’s submissions and places little weight on Mr Williamson’s allegations.
In relation to general deterrence, the Court accepts that general deterrence must serve a purpose that the penalty is not seen by others is just a cost of doing business. Further, given the importance of Compliance Notices as an enforcement tool, non-compliance is a serious matter and the Court is required to set a penalty that will demonstrate there are serious consequences for failing to comply with a Compliance Notice.
In relation to specific deterrence, any penalty needs to be set at a level that is directed at ensuring that the contravener will not embark upon such conduct in the future. Whilst no action can be taken against Central District Smash Repairs, it is important that any penalty set, will be a deterrence to Mr Williamson.
Mr Williamson submitted that he has not previously been in trouble with Fair Work. He claimed he was unaware of a previous contravention and pecuniary penalty imposed upon him. The Court has significant difficulty accepting this assertion. The FWO noted that an Australian Securities and Investment Commission media release of 17 July 2023, which was in evidence before the Court, stated that he was disqualified as a company Director for three and a half years. This media release outlined several examples of Mr Williamson failing to meet his obligations as a Director of three companies and cites a Court decision where he was found to have been involved in breaches of workplace laws: Hall v Active Towing Sydney Pty Ltd [2021] FedCFamC2G 385. Penalties were awarded personally against Mr Williamson for breaches of the Act. Given that Mr Williamson is a repeat contravener of workplace relations legislation, the FWO submitted that higher penalties are appropriate in these proceedings. Noting this, the FWO submitted that there is an elevated need for specific deterrence.
The FWO submitted that a penalty in the range of $11,220.00 to $11,880.00, being 85% to 90% of the maximum penalty for both contraventions, is the appropriate range. The Court agrees with this submission. Such a penalty would not be crushing or oppressive, but will be sufficient to signal both to Mr Williamson and the community that there are significant consequences in failing to comply with Compliance Notices.
Taking all relevant factors into account, the Court is of the view that a penalty of $5,750.00 for each contravention or a total of $11,500.00 is appropriate. The Court has determined that no further deduction should be made on the basis of totality.
The penalty is to be paid into the Consolidated Revenue Fund of the Commonwealth within 28 days.
I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment of Judge D Humphreys. Associate:
Dated: 2 August 2023
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