Fair Work Ombudsman v Chapman
[2023] FedCFamC2G 1018
•9 November 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Chapman [2023] FedCFamC2G 1018
File number(s): BRG 542 of 2022 Judgment of: JUDGE EGAN Date of judgment: 9 November 2023 Catchwords: INDUSTRIAL LAW – Failure by Respondent to comply with Compliance Notices issued by the Applicant – No contrition evident – non-compliance by Respondent with Court orders – non-engagement by Respondent in the Court proceedings – pecuniary penalty orders made accordingly. Legislation: Fair Work Act 2009 ss716, 546, 545, 547, 687, 701, 539, s30N, 716, 90.
Federal Circuit and Family Court of Australia Act 2021 (Cth) s. 140.
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law Rules) 2021 r. 13.10.
Cases cited:
Ace Insurance Ltd v Trifunovski (No. 2) [2012] FCA 793.
Fair Work Ombudsman v Viper Industries Pty Ltd LTD & Anor [2015] FCCA 492.
Kelly v Fitzpatrick [2007] FCA 1080.
Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate & Anor [2015] HCA 46.
Division: Division 2 General Federal Law Number of paragraphs: 16 Date of last submission/s: 2 November 2023 Date of hearing: 23 October 2023 Place: Brisbane Counsel for the Applicant: Mr D Payard of Counsel Solicitor for the Applicant: Ms Anbar (Fair Work Ombudsman In House) For the Respondent: No appearance ORDERS
BRG 542 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: ANDREW RICHARD CHAPMAN
Respondent
ORDER MADE BY:
JUDGE EGAN
DATE OF ORDER:
9 NOVEMBER 2023
THE COURT NOTES THAT:
1.On 31 May 2023, the Court entered summary judgment against the Respondent pursuant to rule 13.10(2) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law Rules) 2021 in respect of the Applicant’s claim that the Respondent contravened section 716(5) of the Fair Work Act 2009 (Cth) by failing to comply with a compliance notice issued on 22 November 2021.
THE COURT ORDERS THAT:
1.Pursuant to section 546(1) of the FW Act, the Respondent pay a pecuniary penalty in the amount of $5,328.00 to the Consolidated Revenue Fund of the Commonwealth for his contravention of section 716(5) of the FW Act noted above, within 28 days of this order.
2.The Applicant have liberty to apply on seven 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 Egan
Introduction
The applicant commenced proceedings on 6 December 2022.
In a Statement of Claim also filed on 6 December 2022, the applicant sought the following relief:
15. A declaration that the Respondent contravened s 716(5) of the FW Act by failing to comply with the Compliance Notice.
16. Orders that:
(a) pursuant to s 545(1) of the FW Act, the Respondent remedy the effect of the contravention set out in the Compliance Notice within 28 days of this order, by paying $2,195.85 to the Applicant;
(b) pursuant to s 547(2) of the FW Act, the Respondent pay interest on the amounts owed pursuant to paragraph 16(a) calculated in accordance with the Federal Court of Australia’s Interest on Judgments Practice Note (GPN-INT) and for the period from 24 December 2021 to the date of the Court’s orders, to the Applicant;
(c) pursuant to s 545(1) of the FW Act and s 140 of the Federal Circuit and Family Court of Australia Act 2021 (Cth), the Applicant distribute the amounts referred to in paragraphs 15(a) and 15(b) to Ms Di Constanzo within 90 days of receipt;
(d) pursuant to s 546(1) of the FW Act, the Respondent pay a pecuniary penalty to the Consolidated Revenue Fund of the Commonwealth for the contravention set out in paragraph 15 above, within 28 days of this order;
(e) the Applicant have liberty to apply on seven days’ notice in the event that any of the preceding orders are not complied with; and
(f) such further or other orders as the Court thinks fit.
On 26 May 2023, the applicant filed an Application for Summary Judgment which sought the following orders:
1. Summary judgment be entered in favour of the Applicant against the Respondent pursuant to rule 13.10(2) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law Rules) 2021 by reason of:
(a) the Applicant’s claim being supported by evidence of the facts on which it is based; and
(b) the Respondent having no reasonable prospects of successfully defending the claim.
2.Pursuant to section 545(1) of the Fair Work Act 2009 (Cth) (FW Act), the Respondent remedy the direct effects of the contraventions set out in the compliance notice given to the Respondent on 22 November 2021 within 28 days of this order, by paying $2,195.85 (Outstanding Amount) to the Applicant.
3.Pursuant to section 547(2) of the FW Act, the Respondent pay interest on the Outstanding Amount calculated in accordance with the Federal Court of Australia’s Interest on Judgments Practice Note (GPN-INT) and for the period from 24 December 2021 to the date of the Court’s orders, to the Applicant on the Outstanding Amount within 28 days of this order.
4.Pursuant to section 545(1) of the FW Act and section 140 of the Federal Circuit and Family Court of Australia Act 2021 (Cth), the Applicant distribute the amounts referred to above to Ms Indigo Di Constanzo within 90 days of receipt.
5.The matter be set down for hearing (not exceeding half a day) on the whether the Respondent is to pay civil penalties pursuant to section 546(1) of the FW Act, and, if so, the amount of any such civil penalties, on or after 7 August 2023.
6.The Applicant file and serve any affidavit evidence and any submissions regarding the matter of penalty by no later than 4.00pm on the date that is six weeks before the hearing.
7.The Respondent file and serve any affidavit evidence and any submissions regarding the matter of penalty by no later than 4.00pm on the date that is two weeks before the hearing.
8.The parties have liberty to apply on the giving of three days’ notice, each to the other.
On 31 May 2023, the Court granted the Application for Summary Judgment and made the following orders:
1.Summary judgment be entered in favour of the Applicant against the Respondent pursuant to rule 13.10(2) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law Rules) 2021 by reason of:
(a) the Applicant’s claim being supported by evidence of the facts on which it is based; and
(b)the Respondent having no reasonable prospects of successfully defending the claim.
2. Pursuant to section 545(1) of the Fair Work Act 2009 (Cth) (FW Act), the Respondent remedy the direct effects of the contraventions set out in the compliance notice given to the Respondent on 22 November 2021 within 28 days of this order, by paying $2,195.85 (Outstanding Amount) to the Applicant.
3. The matter be set down for hearing (not exceeding half a day) on the whether the Respondent is to pay civil penalties pursuant to section 546(1) of the FW Act, and, if so, the amount of any such civil penalties, at 9.45am AEST on 23 October 2023.
4.The Applicant file and serve any affidavit evidence and any submissions regarding the matter of penalty on or before 4.00pm on 21 June 2023.
5.The Respondent file and serve any affidavit evidence and any submissions regarding the matter of penalty on or before 4.00pm on 12 July 2023.
6. The Applicant forthwith serve a copy of this order on the Respondent.
7.Each party have liberty to apply on the giving of two (2) days’ notice, each to the other.
8. The costs of and incidental to today’s hearing be reserved.
On 23 October 2023, the applicant made Application for the imposition of pecuniary penalties against the respondent. The respondent did not appear at the hearing before the Court.
RELEVANT CONSIDERATIONS
By reason of the non-appearance of the respondent at any stage of the proceeding, the respondent is taken to have admitted the allegations made against him in the Statement of Claim. The relevant allegations are as set out at [1] – [14] of the Statement of Claim and are as follows:
1. The Applicant, the Fair Work Ombudsman, is and was at all relevant times:
(a)a statutory appointee of the Commonwealth appointed by the Governor-General by written instrument pursuant to s 687(1) of the Fair Work Act 2009 (Cth) (FW Act);
(b) a Fair Work Inspector (FWI) pursuant to s 701 of the FW Act; and
(c)a person with standing to bring these proceedings and to apply for orders for contraventions of civil remedy provisions pursuant to s 539(2) of the FW Act.
2. The Respondent, Andrew Richard Chapman, is and was at all relevant times:
(a) a natural person capable of being sued;
(b)a “national system employer” by reason of the extended definition contained in s 30N(1)(a) of the FW Act;
(c)a sole trader holding the Australia Business Number 83 638 235 108, practicing as a dentist, and the operator of a dental practice trading as “East Ballina Dental” located at Shop 8, 38-44 Links Ave, East Ballina, in the State of New South Wales;
(d)by reason of the matters pleaded in paragraphs 2(b) and 2(c), covered by the FW Act in respect of his employees.
B. CONTRAVENTION OF S 716(5) OF THE FW ACT
3.FWI Carolina Gemayell (FWI Gemayell) is and was at all relevant times a FWI appointed by the Applicant under s 700 of the FW Act.
4.On or around 19 October 2021, FWI Gemayell commenced an investigation (Investigation) in respect of the employment of Ms Indigo Di Constanzo (Ms Di Constanzo).
5. Following the Investigation, FWI Gemayell formed a belief that:
(a)during the period from on or around 14 October 2020 to 22 July 2021 (Employment Period):
(i)the Respondent employed Ms Di Constanzo on a part-time basis;
(ii) the Health Professionals and Support Services Award 2020 (Award) applied to both the Respondent and Ms Di Constanzo in relation to Ms Di Constanzo’s employment with the Respondent;
(iii)Ms Di Constanzo was properly classified as a Level 4 Support Services employee under the Award in relation to her employment with the Respondent;
(b)Ms Di Constanzo’s employment with the Respondent ended on 22 July 2021 (Termination Date);
(c)despite having taken annual leave during her employment with the Respondent, Ms Di Constanzo had an accrued but untaken annual leave balance at the Termination Date;
(d) pursuant to s 90(2) of the FW Act, the Respondent was required to pay Ms Di Constanzo, when her employment ended, the amount of untaken paid annual leave that would have been payable to her
had she taken the period of leave, including any annual leave loading payable under clause 26.3(a) of the Award; and
(e)Ms Di Constanzo was not paid any amount, at the relevant time or at any time thereafter, for accrued but untaken annual leave as at the Termination Date.
6.By reason of the matters pleaded in paragraph 5 above, FWI Gemayell formed a reasonable belief within the meaning of s 716(1)(a) of the FW Act that the Respondent contravened s 90(2) of the FW Act (Contravention).
7.On 22 November 2021, FWI Gemayell gave the Respondent a compliance notice pursuant to s 716(2) of the FW Act in respect of the Contravention (Compliance Notice).
Particulars
A copy of the Compliance Notice was sent by pre-paid post to the principal place of business of the Respondent, being Shop 8, 38-44 Links Ave, East Ballina, in the State of New South Wales.
8.In accordance with s 716(2) of the FW Act, the Compliance Notice required the Respondent to:
(a)take the following specified action by 24 December 2021 to remedy the direct effects of the Contravention:
(i)identify the number of hours of annual leave that Ms Di Constanzo had accrued as at the Termination Date (Accrued Annual Leave Hours);
(ii)calculate the amount the Respondent should have paid to Ms Di Constanzo for the Accrued Annual Leave Hours;
(iii)calculate the amount the Respondent should have paid to Ms Di Constanzo as annual leave loading for the Accrued Annual Leave Hours;
(iv)pay Ms Di Constanzo the amounts calculated in (ii) and (iii) above; and
(v)make a record of the information and amounts referred to in (i) to (iii) above, and the amount of the payment referred to in (iv) above (Underpayment Rectification Information); and
(b)by 31 December 2021, produce reasonable evidence to the Applicant of the Respondent’s compliance with the Compliance Notice, by producing a schedule of the Underpayment Rectification Information, and proof that full payment of the amounts owed had been made to Ms Di Constanzo.
9.The Compliance Notice met the requirements as set out in s 716(3) of the FW Act.
10. The Respondent failed to:
(a)take the specified action set out in the Compliance Notice by 24 December 2021, or at all; and
(b)produce to the Applicant reasonable evidence of compliance with the Compliance Notice by 31 December 2021, or at all.
11.By reason of the matters pleaded in paragraph 10, the Respondent failed to comply with the Compliance Notice.
12.By reason of the matters pleaded in paragraphs 7 to 11, the Respondent contravened s 716(5) of the FW Act.
Outstanding Amounts
13.At the time of giving the Compliance Notice, FWI Gemayell had formed a belief that, on the termination of her employment, Ms Di Costanzo:
(a) had 67.27 hours of untaken and accrued annual leave;
(b) was entitled to a base rate of pay of $28.50 per hour; and
(c)was entitled, pursuant to clause 26.3(a) of the Award, to annual leave loading of 17.5% calculated using the Level 4 Support Services classification minimum hourly rate of pay of $23.67 prescribed by clause 16.2 of the Award.
14.By reason of the contravention pleaded in paragraph 12 and the matters at paragraph 13, FWI Gemayell formed a belief that, to rectify the direct effect of the Contravention, the Respondent was required to pay Ms Di Constanzo a total of $2,195.85 (gross).
The evidence before the Court is that the Respondent has failed to pay the sum of $2,195.85 to the Applicant within 28 days of the making of the order of the Court on 31 May 2023.
The Respondent has failed to engage in any aspect of the proceeding before the Court. Such actions are unusual for a person in the position of the Respondent.
Where a party has failed to comply with orders of the Court, and where such party has also failed to show any contrition for proven contraventions of the provisions of the Fair Work Act 2009, the Court is entitled to view such conduct as justifying the imposition of a higher than usual pecuniary penalty.
There is no evidence before the Court to indicate that the Applicant has taken any step to change his aberrant behaviour. [1]
[1] Ace Insurance Ltd v Trifunovski (No. 2) [2012] FCA 793 at [113] – [114] per Perram J.
As to general deterrence principles, in Kelly v Fitzpatrick [2007] FCA 1080, Tracey J at [28] said as follows:
28. The respondents have expressed contrition and have put in place mechanisms which are designed to ensure that there will be no repetition of the breaches which have led to the present proceeding. Specific deterrence does not, therefore, loom large as a consideration in determining penalty. It does not follow that the need for general deterrence may be disregarded. As Finkelstein J said in CPSU v Telstra Corporation Limited (2001) 108 IR 228 at 231: “even if there be no need for specific deterrence, there will be occasions when general deterrence must take priority, and in that case a penalty should be imposed to mark the law’s disapproval of the conduct in question, and to act as a warning to others not to engage in similar conduct …” No less than large corporate employers, small businesses have an obligation to meet minimum employment standards and their employees, rightly, have an expectation that this will occur. When it does not it will, normally, be necessary to mark the failure by imposing an appropriate monetary sanction. Such a sanction “must be imposed at a meaningful level”: see Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd [2001] ATPR 41-815 at [13].
Any penalty to be imposed ought to be commensurate with the seriousness of the conduct engaged in but should not be crushing or oppressive.
The overarching purpose to be achieved by the imposition of pecuniary penalties is to deter others from committing the same contraventions, and that proposition applies in both a specific and a general sense. The imposition of a pecuniary penalty should demonstrate to the public at large that should there be a contravention of provisions of the FWA, such penalties are of a sufficient amount as to be of significance. [2]
[2] Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate & Anor [2015] HCA 46 at [55] and [110]
As to the penalty to be imposed, the Court agrees with the submissions of the Applicant as set out at [16] – [29] inclusive of its written submissions filed on 21 June 2023, which relevantly were as follows:
16.The Respondent has demonstrated a disregard for his obligations under the FW Act and as an employer under Commonwealth workplace laws, not only by failing to comply with the Compliance Notice and failing to express any contrition, but by expressing anger towards the Applicant and contempt for Ms Di Constanzo in seeking to enforce those obligations.20 The Applicant submits that the Respondent’s attitude suggests that the failure to comply with the Compliance Notice was deliberate.
17. Furthermore, the Respondent has shown no respect for this Court or for the Applicant’s status as a Commonwealth regulator, having failed to engage with these proceedings, including failing to file a defence or any other material or to attend any hearings, and not contacting the Applicant since 1 February 2023.
18. In the meantime, the Respondent continues to operate a dental practice, and it is open to the Court to conclude that the Respondent may engage employees in the future. As such, a penalty should be fixed at a level which specifically deters the Respondent from engaging in any contravening conduct in the future.
General deterrence
19. The Respondent’s failure to comply with the Compliance Notice undermines the utility of compliance notices as an effective mechanism for the efficient and cost-effective rectification of identified contraventions of the FW Act and the safety net of entitlements it is designed to protect.
20. The failure to comply with a statutory notice properly issued by the Applicant is serious. If recipients perceive that a failure to comply carries no meaningful consequences, the efficacy of statutory notices such as compliance notices may be reduced.
21.The legislature has set penalties for non-compliance with a compliance notice because a failure to comply will cause the Applicant to spend time, public funds and resources dealing with civil remedy proceedings which would otherwise not have been required had compliance occurred.
22.In imposing a meaningful penalty, the Court will deter other persons from failing to comply with compliance notices. The importance of general deterrence in relation to non-compliance with a statutory notice has been recognised by Courts in the past, as non-compliance effectively thwarts the powers given to the Applicant as a regulatory authority. In order to be useful as a general deterrent, a penalty ”should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like-minded persons or organisations”.
23.On this basis, the Applicant submits that there is a need to send a message to employers like the Respondent that a failure to comply with a compliance notice will not be tolerated by the Applicant, the community or the Courts.
Contrition, corrective action and cooperation with enforcement authorities
24.The Respondent has not taken any steps to rectify his non-compliance with the Compliance Notice. This is despite the Applicant contacting the Respondent on a number of occasions before and after the Compliance Notice was issued.
25.The Applicant has not received any communication from the Respondent since 1 February 2023, and the Respondent has not engaged in these proceedings from that date. The Respondent’s inaction has frustrated the efficient progress of this matter.
26.In his communications with the Applicant, the Respondent has also failed to express contrition in relation to his contravention of the FW Act, and has on occasion used aggressive and insulting language towards the Applicant and Ms Di Constanzo. This indicates a lack of remorse regarding his failure to comply with the Compliance Notice.
Nature and extent of loss
27.As a result of the Respondent’s failure to comply, Ms Di Constanzo has not received the amounts that were required to be paid to her under the Compliance Notice.
28.On 31 May 2023, this Honourable Court ordered the Respondent to pay $2,195.85 to the Applicant, this being the amount owing to Ms Di Constanzo as a result of the contravention identified in the Compliance Notice. This is not an insignificant amount, and the Respondent has had the benefit of this money since Ms Di Constanzo’s end of employment and particularly since the failure to comply with the Compliance Notice in December 2021.
29.The failure to comply with a statutory notice also occasions a more public loss. As noted above, and as accepted by Judge Emmett in Fair Work Ombudsman v Viper Industries Pty Ltd &Anor:
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.
Having had regard to all the submissions made on behalf of the Applicant, the Court is of the view that a pecuniary penalty equal to 80% of the maximum penalty able to be imposed should be the subject of the Court’s order.
And it is so ordered that the Respondent pay the sum of $5,328.00 by way of pecuniary penalty.
I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Egan. Associate:
Dated: 9 November 2023
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