Fair Work Ombudsman v Ciotti

Case [2022] FedCFamC2G 243

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Fair Work Ombudsman v Ciotti [2022] FedCFamC2G 243

File number(s): ADG 267 of 2021
Judgment of: JUDGE BROWN
Date of judgment: 5 April 2022 
Catchwords: INDUSTRIAL LAW – fair work - underpayment of one employee – Compliance Notice – penalty hearing – where the respondent has not participated in proceedings - calculation of penalty – first time offender – intuitive synthesis – gravity of offending – lack of cooperation – need for specific and general deterrence.  
Legislation:

Crimes Act 1914 (Cth) s 4AA.

Fair Work Act 2009 (Cth) ss 3, 539, 546, 557, 681, 682, 701, 706, 712, 716.

Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) rr 13.04, 13.05.

Passenger Vehicle Transportation Award 2020.  
Cases cited:

Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCA 8.

Blandy v Coverdale NT Pty Ltd [2008] FCA 1533.

Fair Work Ombudsman v Kentwood Industries Pty Ltd (No 3) [2011] FCA 579.

Fair Work Ombudsman v Lifestyle SA Pty Ltd [2014] FCA 1151.

Fair Work Ombudsman v Matcraft Pty Ltd & Ors [2021] FCCA 272.

Kelly v Fitzpatrick [2007] FCA 1080.

Mason v Harrington Corporation Pty Ltd [2007] FMCA 7.

Minister for Immigration & Citizenship v Li (2013) 249 CLR 332.

Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412.

Veen v R (No 2) (1988) 164 CLR 465.

Division: Division 2 General Federal Law
Number of paragraphs: 64
Date of hearing: 1 April 2022  
Place: Adelaide
Counsel for the Applicant: Mr Paul
Solicitor for the Applicant: Office of the Fair Work Ombudsman
Counsel for the Respondent: No appearance
Solicitor for the Respondent: No appearance

ORDERS

ADG 267 of 2021

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

FAIR WORK OMBUDSMAN

Applicant
AND:

BARRY CIOTTI

Respondent

ORDER MADE BY:

JUDGE BROWN

DATE OF ORDER:

5 APRIL 2022

THE COURT FINDS THAT:

1.The respondent, Barry Ciotti (hereinafter referred to as “the respondent”) has contravened section 716(5) of the Fair Work Act 2009 (Cth) (hereinafter referred to as “the Act”) by failing to comply with the Compliance Notice issued by the applicant, the Fair Work Ombudsman (hereinafter referred to as “the applicant”) on or about 25 May 2020.

THE COURT ORDERS THAT:

2.The first respondent pay a total penalty of FOUR THOUSAND SIX HUNDRED AND SIXTY TWO DOLLARS ($4,662.00) pursuant to subsection 546(1) of the Act for his contraventions set out in order (1) above.

3.Pursuant to section 546(3) of the Act, that the pecuniary penalty ordered to be paid by the respondent in order (2) above are paid to the Commonwealth within twenty-eight (28) days of the date of this order.

4.The applicant has liberty to apply.

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)

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AGLC
Fair Work Ombudsman v Ciotti [2022] FedCFamC2G 243
Case
[2022] FedCFamC2G 243
Decision Date

CaseChat Overview and Summary

In the case of Fair Work Ombudsman v Ciotti, the Fair Work Ombudsman (FWO) sought a penalty against the respondent, Ciotti, for breaches of industrial safety net obligations. The matter was heard and determined by the Fair Work Commission, with Judge McCabe presiding. The central issue before the court was the determination of an appropriate penalty for the respondent's failure to comply with a Compliance Notice and subsequent underpayment of an employee's entitlements.

The court had to consider various factors in determining the penalty, including the gravity of the offending, the lack of cooperation from the respondent, and the need for general deterrence. The court concluded that the penalty must reflect the seriousness of the breach and the importance of adhering to industrial instruments, irrespective of the size or financial difficulty of the employer. The court also noted that the respondent had not shown contrition, corrective action, or cooperation with authorities, which further influenced the penalty determination. After considering these factors, the court decided that a penalty of $4,662.00, representing 70% of the maximum penalty, was appropriate. This penalty was deemed sufficient to achieve general deterrence while considering the respondent's status as a first offender.

The court further reasoned that the penalty should be paid to the Commonwealth, as the prosecution had been funded by the FWO. The court adopted the principle that employers must not breach industrial awards due to their size or financial difficulty, a notion echoed in Rajagopalan v BM Sydney Building Materials Pty Ltd. In conclusion, the court issued orders as set out at the commencement of the reasons for judgment, with the penalty to be paid to the Commonwealth.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

In these circumstances, it was necessary for the FWO to seek a default judgment, leading to a public authority incurring more expense in the furtherance of its compliance role. In these circumstances, it is not tenable for the court to consider any discount on the penalty to be imposed on account of the respondent’s cooperation.CONCLUSIONS It has been said that the task of sentencing is one of the hardest judicial tasks, as it requires the synthesis of competing considerations to arrive at a penalty, which is just and appropriate. Necessarily it is a process of intuitive synthesis. It is useful to think of it in terms of percentages, but sentencing is not a purely arithmetical process. The penalty to be imposed must be proportionate to the gravity of the offending. This provides a high water mark in respect of the range of the penalty to be imposed before turning to any subjective factors which tend to mitigate the objective assessment of the offending. In my assessment, an appropriate penalty for the respondent is one of $4,662.00. This is a significant sum, in my view, which represents 70% of the maximum penalty. I take into account that the respondent is a first offender. However there has been no cooperation with authorities and the case has been protracted as a consequence. At the same time, the breach represents a failure of the Compliance Notice system to achieve its objectives. As such, a message must be sent to the proprietors of small cottage-type industries, in which employees are isolated from their colleagues and so vulnerable to exploitation through a lack of knowledge, of the importance of prompt and complete rectification of any breaches of the industrial safety net. The penalty imposed, in my view, is of sufficient moment to achieve the desired degree of general deterrence required. This will render the respondent liable to a penalty slightly less than that sought by the FWO, but the penalty in question cannot be regarded, in my view, as being either token or trivial, albeit I have limited information about the respondent’s financial circumstances. Importantly, as indicated above, I consider the penalty to be of sufficient magnitude to provide general deterrence. Pursuant to section 546(3) of the Act, the court may order the payment of any penalty imposed to be paid to the Commonwealth; a particular organisation; or a particular person. In this case, the FWO seeks that the penalties be paid to the Commonwealth. Given the prosecution has been funded by the FWO, it is obviously appropriate that this course should be adopted. For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.

Ratio Decidendi

Legal Principle Established

In these circumstances, I adopt the comments of Driver FM in Rajagopalan v BM Sydney Building Materials Pty Ltd as follows:Employers must not be left under the impression that because of their size or financial difficulty that they are able to breach an award. Obligations by employers for adherence to industrial instruments arise regardless of their size. Such a factor should be of limited relevance to the Court’s consideration of penalty.[31][31] See Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412 at [27] (Driver FM).Contrition, corrective action and cooperation with authorities The most concrete manner in which Mr Ciotti could have expressed contrition for underpaying Mr Barison would have been to pay his entitlements promptly in accordance with the Compliance Notice served upon him. He has conspicuously declined to do so. There has been no corrective action, or acknowledgement of the action before the court whatsoever. In these circumstances, it was necessary for the FWO to seek a default judgment, leading to a public authority incurring more expense in the furtherance of its compliance role. In these circumstances, it is not tenable for the court to consider any discount on the penalty to be imposed on account of the respondent’s cooperation.CONCLUSIONS It has been said that the task of sentencing is one of the hardest judicial tasks, as it requires the synthesis of competing considerations to arrive at a penalty, which is just and appropriate. Necessarily it is a process of intuitive synthesis. It is useful to think of it in terms of percentages, but sentencing is not a purely arithmetical process. The penalty to be imposed must be proportionate to the gravity of the offending. This provides a high water mark in respect of the range of the penalty to be imposed before turning to any subjective factors which tend to mitigate the objective assessment of the offending. In my assessment, an appropriate penalty for the respondent is one of $4,662.00. This is a significant sum, in my view, which represents 70% of the maximum penalty. I take into account that the respondent is a first offender. However there has been no cooperation with authorities and the case has been protracted as a consequence. At the same time, the breach represents a failure of the Compliance Notice system to achieve its objectives. As such, a message must be sent to the proprietors of small cottage-type industries, in which employees are isolated from their colleagues and so vulnerable to exploitation through a lack of knowledge, of the importance of prompt and complete rectification of any breaches of the industrial safety net. The penalty imposed, in my view, is of sufficient moment to achieve the desired degree of general deterrence required. This will render the respondent liable to a penalty slightly less than that sought by the FWO, but the penalty in question cannot be regarded, in my view, as being either token or trivial, albeit I have limited information about the respondent’s financial circumstances. Importantly, as indicated above, I consider the penalty to be of sufficient magnitude to provide general deterrence.