Fair Work Ombudsman v Ciotti
[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) 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 BROWN:
INTRODUCTION
The Fair Work Ombudsman commenced these proceedings against the respondent Barry Ciotti on 2 September 2021.[1] The proceedings are instituted pursuant to the provisions of the Fair Work Act 2009 (Cth).[2]
[1] Hereinafter referred to as “the FWO” or “the Ombudsman”.
[2] Hereinafter referred to as “the FWA” or “the Act”.
At relevant times, the respondent operated a chauffeur-transport business under a variety of business names, including Adelaide Chauffer Company and Chauffers Adelaide. He employed Mr Michele Barison, as a casual driver, between 13 February 2021 and 5 March 2021. Mr Barison’s employment was covered by the provisions of the Passenger Vehicle Transportation Award 2020.[3]
[3] Hereinafter referred to as “the Award”; see Statement of Claim of the Fair Work Ombudsman filed 2 September 2021 at [3]-[5].
On 17 March 2021, Mr Barison contacted the FWO to enquire whether he had been properly paid by Mr Ciotti. The Ombudsman appointed a Fair Work Inspector to investigate Mr Barison’s complaint of being underpaid.
Ultimately, the relevant Fair Work Inspector concluded that Mr Barison was entitled to be paid a 25% loading on the minimum hourly rate, given his classification under the applicable award and Mr Ciotti had breached other provisions of the Award in respect of underpaying Mr Barison for the work which he performed.
In these circumstances, the FWO determined to issue a Compliance Notice directed towards Mr Ciotti on 14 April 2021 pursuant to the provisions of section 716(2) of the FWA.[4] In general terms, the relevant Compliance Notice required Mr Ciotti to make good the underpayment to Mr Barison no later than 17 May 2021 and provide written proof to the Ombudsman that this had been done.[5]
[4] See Statement of Claim of the Fair Work Ombudsman filed 2 September 2021 at [7].
[5] See Statement of Claim of the Fair Work Ombudsman filed 2 September 2021 at [8].
It is the Ombudsman’s position that Mr Ciotti did not comply with the Compliance Notice. Thereafter, on 3 August 2021, the Ombudsman forwarded a further letter to Mr Ciotti, that provided him a further opportunity to rectify his non-compliance with Compliance Notice.[6] In this document, the Ombudsman itself had calculated the sums due to Mr Barison arising from the Award breach. The amount in question was one of $939.70 and provided Mr Ciotti with more time to make good the monies owed by him to Mr Barison.[7]
[6] See Statement of Claim of the Fair Work Ombudsman filed 2 September 2021 at [10].
[7] See Statement of Claim of the Fair Work Ombudsman filed 2 September 2021 at [10].
In addition, the Ombudsman has provided evidence that its Fair Work Inspectors regularly corresponded with Mr Ciotti, both by email and telephone, after the relevant complaint had been made in order to provide information to him, regarding the applicable award and his obligations pursuant to it. These interventions did not result in the relevant payments being made to Mr Barison.
It was against this background that the FWO has commenced proceedings against Mr Ciotti, in this court, which occurred on 2 September 2021. The FWO seeks the imposition of a monetary penalty on Mr Ciotti, pursuant to section 716(5) of the FWA, for failing to comply with the relevant Compliance Notice, together with further orders directing that Mr Barison be paid his wage entitlements.
The relevant Statement of Claim was personally served on Mr Ciotti, at his business address in suburban Adelaide, on 6 September 2021.[8] Thereafter, Mr Ciotti has failed to file any Response or a Defence to the Statement of Claim, or take any active role in the proceedings.
[8] See Affidavit of Service of Matthew Stephens filed 20 September 2021.
In November 2021, the FWO’s solicitor contacted Mr Ciotti to ascertain whether he would be prepared to take part in a process to agree a statement of facts which could be presented to the court to negate the need to have a liability hearing in the case. These overtures were unsuccessful.[9]
[9] See Affidavit of Daniel Isaac Welsh filed 14 December 2021.
In these circumstances, on 22 February 2022, default judgment, in respect of the issue of liability, was entered against Mr Ciotti.[10] On this date, a formal order was made requiring Mr Ciotti to make good the monies which he owed to Mr Barison. These orders were made pursuant to the provisions of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth), on the basis that Mr Ciotti had not taken any steps in the proceedings and axiomatically had failed to defend them with due diligence.[11]
[10] See orders of Judge Brown dated 22 February 2022.
[11] See Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) rr 13.04(2)-13.05(2).
Thereafter, the proceedings were adjourned until 1 April 2022. On this occasion, it was directed that the court would hear submissions as to the appropriate penalty to be imposed. I am satisfied that Mr Ciotti has also been advised of this penalty hearing but, once again, has elected not to take part in it.
In these circumstances, I acknowledge that I have no information regarding Mr Ciotti’s financial circumstances or whether there are any mitigating factors, from his perspective, which ameliorate his failure to pay Mr Barison his wage entitlements. However, in my view it is clear that the person solely responsible for this omission, is Mr Ciotti himself.
It is the position of the FWO that Mr Barison’s wage entitlements remain outstanding. In these circumstances, it is the submission of counsel for the Ombudsman, Mr Paul, that although the amount of wages outstanding is a relatively modest amount and the period of default a brief one, the overall breach itself must be considered a serious one, particularly given Mr Ciotti’s total absence of cooperation with the compliance and regulatory process.
THE RELEVANT LEGISLATIVE PROVISIONS
The objects of the FWA are contained in section 3. They include the provision of an industrial safety net, for Australian employees, which is maintained through the enforcement of a system of minimum terms and conditions specified in the modern award system.
The Office of the Fair Work Ombudsman is created by section 681 of the FWA. One of the functions of the Ombudsman under section 682 of the FWA is to enforce compliance with the Act, including any workplace obligations residing on employers, as a consequence of relevant industrial awards, mandating rates of pay and conditions of employment.
In turn, the FWO may appoint Fair Work Inspectors, who are authorised to utilise what are characterised as compliance powers.[12] In general terms, inspectors are directed to investigate complaints in respect of breaches of the industrial law and are authorised to enter workplaces and determine whether an employer has contravened the law, including in respect of the application of any relevant modern award or otherwise failed to comply with the industrial safety net.
[12] See Fair Work Act 2009 (Cth) s 706.
In addition, the FWO has a responsibility to educate, advise and assist, both employers and employees, in respect of their respective obligations, arising under the Act and, if necessary, commence proceedings, in appropriate courts, to enforce the provisions of the FWA.
Pursuant to section 701 of the Act, the FWO is also a Fair Work Inspector. The FWA empowers the Ombudsman to delegate its statutory responsibilities to Fair Work Inspectors. The Act confers upon such inspectors a number of powers in order to ensure compliance with provisions of the Act. Among other things, inspectors can enter the work place and require the production of employee records.[13]
[13] See Fair Work Act 2009 (Cth) s 712(1).
In addition, the FWO, as a consequence of its status as a Fair Work Inspector, has statutory authority to bring proceedings under the Act and seek the imposition of penalties, if breaches of the FWA are established.[14]
[14] See Fair Work Act 2009 (Cth) s 539(2).
Section 716 of the Act provides that, if an inspector believes, on reasonable grounds, that a person has contravened a term of a modern award, the inspector concerned may issue that person with a ‘Compliance Notice’ requiring the person nominated to take action to remedy the contravention in question.
In the current matter, I have read the affidavit of Edward Martin Hoare,[15] who is a Fair Work Inspector and has had the carriage of the investigation into Mr Barison’s complaint, in conjunction with his former colleague, Andrew Morel, who was formerly a Fair Work Inspector. It was Mr Morel to whom Mr Barison’s complaint was allocated to and had the initial dealings with Mr Ciotti.
[15] See Affidavit of Edward Martin Hoare filed 23 March 2022.
On the basis of Mr Hoare’s evidence, I am satisfied that Mr Barison’s employment was covered by the provisions of the Passenger Vehicle Transportation Award 2020, and on the basis of the hours worked by him for Mr Ciotti, between 14 February 2021 and 7 March 2021, he was underpaid an amount of $939.70. In these circumstances, I am satisfied that Mr Morel validly issued the applicable Compliance Notice to Mr Ciotti on 14 April 2021.
Pursuant to the applicable legislation, any Compliance Notice must provide particulars of the contraventions of the Act alleged and outline any rights of review that arise under the Act. There is no issue in the present case other than that the Compliance Notice in question complies with the provisions contained in sections 716(2) and 716(3) of the FWA.
Sections 716(1) and 716(2) of the Act delineates the criteria, which must be satisfied before an inspector may issue a Compliance Notice. Firstly, the power itself is a discretionary one and like all administrative decisions must be exercised reasonably.
Whether a discretion, conferred by statute, is exercised in a legally reasonably manner, it must be determined by reference to the statute itself, particularly its ‘subject-matter, scope and purpose’.[16] In this particular case, as indicated above, one of the purposes of the FWO is to provide an industrial safety net, for workers, so far as the application of industrial awards is concerned, as well as to educate employers in regard to their industrial responsibilities.
[16] See Minister for Immigration & Citizenship v Li (2013) 249 CLR 332, 370-1 [90] (Gageler J).
Secondly, the discretion may be exercised only once a reasonable belief is formed by the relevant inspector. The discretion must be exercised appropriately and not in an arbitrary, illogical or capricious manner.
The exercise of the relevant discretion cannot be disproportionate to the issue raised. To be exercised reasonably, it must be possible to glean from the relevant decision record ‘an evident and intelligible justification’ for the pertinent decision.[17]
[17] See Minister for Immigration & Citizenship v Li (2013) 249 CLR 332, 370-1 367 [76] (Hayne, Kiefel & Bell JJ).
Given the evidence available from Mr Hoare, I am satisfied that there is no issue regarding the reasonableness of the belief of the FWO that Mr Ciotti had breached the applicable provisions of the Award, and it was therefore entitled to issue the Compliance Notice, which it did.
In addition, in light of its educative role and obligation to promote cooperative workplace relations,[18] it was, in my view, clearly appropriate for the FWO, through the agency of both Mr Morel and its solicitor to attempt to engage in correspondence with the respondent in order to see whether the underpayment of Mr Barison could be resolved between the parties without recourse to litigation.
[18] See Fair Work Act 2009 (Cth) s 682(1)(a)(i).
In this context, the application of a Compliance Notice issued under section 716 must be considered. In Fair Work Ombudsman v Matcraft Pty Ltd & Ors,[19] Judge Kendall explained the legislative intention of a Compliance Notice, as an alternative to litigation, in the following terms:
As explained in the Explanatory Memorandum to the Fair Work Bill 2008 (Cth), the purpose of s 716 of the Act is to provide an alternative to litigation. Section 716 is an informal mechanism whereby the applicant can identify potential contraventions of the Act and seek rectification without an employer having to admit liability.
One of the objects of the Act is to provide accessible and effective procedures to resolve grievances and disputes and provide effective compliance mechanisms. Section 716 encapsulates this objective by allowing employees to make a request for assistance which the applicant can then resolve through the use of s 716.[20]
[19] See Fair Work Ombudsman v Matcraft Pty Ltd & Ors [2021] FCCA 272.
[20] See Fair Work Ombudsman v Matcraft Pty Ltd & Ors [2021] FCCA 272 at [34]-[35] (Kendall J).
As indicated above, it is the central submission of the FWO that, in the present case, there has been a singular and significant failure on Mr Ciotti’s part to engage with the Compliance Notice procedure, which has resulted in Mr Barison being totally deprived of his entitlements and for the public purse being put to the expense of the Ombudsman having to pursue this litigation.
As such, the provisions of section 716 of the Act, which is potentially helpful to both errant employers and the industrial regulator, have been entirely circumvented and therefore the court should consider a significant penalty as a matter of both general and specific deterrence, given the interest the community has in ensuring that there is compliance with relevant legislation, and protecting the rights of employees to be paid what they are entitled.
As a consequence of the default judgment entered against the respondent on 22 February 2022, it has been formally found that the Compliance Notice in question was legally valid and properly issued and it has not been complied with because Mr Ciotti:
·failed to take the specified action by the date and time specified in it; and
·did not produce to Mr Morel or the FWO reasonable evidence of his compliance with the Notice by the date and time specified.
Accordingly, it has been established that the relevant provision of the FWA relating to non-compliance with the relevant Notice have been contravened and therefore attracts a penalty pursuant to the Act. These reasons for judgment relate to the calculation of that penalty and what are the relevant factors which should inform it.
This contravention engages the provisions of section 716(5) of the Act, which renders it a civil remedy provision if a person fails to comply with a Compliance Notice.
Pursuant to section 539, a breach of section 716(5) potentially attracts a fine of up to 30 penalty units. At relevant times, a penalty unit amounted to $222.00.[21] Accordingly the maximum penalty liable to be imposed on the respondent is one of $6,660.00.
[21] See Crimes Act 1914 (Cth) s 4AA; see Outline of Submissions of the Fair Work Ombudsman filed 23 March 2022 at [3].
It is the submission of the FWO that the respondent’s conduct warrants a penalty of 80% of the maximum penalty, which would result in a penalty being imposed on Mr Ciotti of $5,328.00.[22]
[22] See Outline of Submissions of the Fair Work Ombudsman filed 23 March 2022 at [3].
The FWO concedes that Mr Ciotti is not previously known to it as a consequence of any past breaches of the industrial law. However, its understanding is that he continues to trade in the chauffer/ride share industry, and therefore potentially other of his employees may be at risk of underpayment. In these circumstances, it submits that there is a need for specific deterrence.
In addition, it contends that a significant penalty is required because of the following factors:
·The need for general deterrence, given the prevalence of pay disputes, within the passenger transport industry and the dispersed nature of many of its employees;
·The lack of cooperation demonstrated by Mr Ciotti, who was given support by the FWO in respect of the calculation of the monies due but has failed to pay Mr Barison his entitlements, which remain outstanding approximately 12 months after they were brought to the respondent’s attention;
·The nature of the loss sustained by Mr Barison, who is to be characterised as a vulnerable employee, working in an industry with the potential to be rife with employee exploitation by unscrupulous employers, particularly given that it is a cottage type industry in which individual employees provide their services away from the scrutiny of others.
LEGAL PRINCIPLES APPLICABLE TO PENALTY HEARINGS
The approach, which the court is required to take, in respect of these contravention proceedings, has been delineated in a number of decisions of the Federal Court.[23] The process can be summarised as follows:
·The court should identify each separate contravention, arising from a breach of either the applicable award or the FWA itself. Pursuant to section 539(2) each such contravention is a distinct incident for penalty purposes;
·The court should determine whether any of these incidents arise in a single course of conduct, within the terms envisaged by section 557(1);
·Then give consideration as to whether any of these contraventions contain elements and factor this into considering what is an appropriate penalty, in all the circumstances, for each contravention;
·Thereafter, the court should fix an appropriate penalty for each single or group contravention, taking into account all relevant circumstances;
·Finally, the court should apply the totality principle. This final step constitutes a review of the aggregate penalty calculated, and envisages a consideration of whether such a penalty is an appropriate response to the conduct, which lead to the various contraventions in question. This case has been described as a process of intuitive synthesis.[24]
[23] See Fair Work Ombudsman v Lifestyle SA Pty Ltd [2014] FCA 1151 at [42] (Mansfield J), citing Fair Work Ombudsman v Kentwood Industries Pty Ltd (No 3) [2011] FCA 579 at [10] (McKerracher J).
[24] See Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 at [55] (Graham J).
The totality principle arises when a court is called upon to sentence an individual, as here, in respect of a number of identifiable offences. It is directed to review the penalties imposed, in total, in respect of individual offences to determine whether those penalties, in aggregate, constitute a just and appropriate penalty, in all the circumstances arising. As indicated earlier, it has been characterised as a process of intuitive synthesis best summarised in the well-known line from The Mikado “the punishment must fit the crime.”
Gray J in Australian Ophthalmic Supplies Pty Ltd said as follows:
What [is required is] to determine an appropriate level of penalty for each contravention, as if it were a separate offence, and then look at the aggregate of those penalties in the light of the overall conduct of the [offender], to form a view as to whether that aggregate [is] out of proportion to that overall conduct.[25]
[25] See Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 at [23] (Gray J).
Regardless of these considerations, the fundamental task, for the court, is to determine, from all the factual circumstances arising, the gravity or seriousness of the offending, which it is called upon to penalise. There are several considerations relevant to this task, which has been delineated in a number of decisions of both this court and the Federal Court.[26] The considerations are as follows:
[26] See Mason v Harrington Corporation Pty Ltd [2007] FMCA 7; Kelly v Fitzpatrick [2007] FCA 1080 at [14]. (Tracey J); Blandy v Coverdale NT Pty Ltd [2008] FCA 1533 at [23] (Reeves J).
•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 or damage sustained as a result of the breaches;
•Whether there has been similar previous conduct by the respondent;
•Whether the breaches were properly distinct or arose out of the 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 breaches has exhibited contrition;
•Whether the party committing the breaches has taken corrective action;
•Whether the party committing the breaches has cooperated with the enforcement authorities;
•The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
•The need for specific and general deterrence.
The court needs to be careful not to apply a formulaic approach to the imposition of penalties or attempt to extrapolate the penalties imposed in one case to the circumstances of another. Each case involving the imposition of a civil penalty warrants an idiosyncratic approach and a careful analysis of all relevant circumstances. As was stated in Australian Ophthalmic Supplies:
Penalties are not a matter of precedent. The choice of penalty must be dictated by the individual circumstances of a case, not by a line by line comparison with another case.[27]
[27] See Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 at [12] (Graham J).
Clearly the check-list, as enumerated above, is useful. However, it is not to be regarded as an exhaustive list of factors to be considered. The ultimate control on any sentence is that it must be proportionate to the offence committed. A court is not permitted to impose a sentence greater than is warranted by the objective circumstances of the offending.[28]
[28] See Veen v R (No 2) (1988) 164 CLR 465, 472 (Mason CJ, Brennan, Dawson, and Toohey JJ).
However, in the context of the significant interest the public has in ensuring that employees are paid their proper entitlements and are accorded the protection of the industrial safety net envisaged by the legislature, the court cannot lose sight of the importance of deterrence, both in a specific and general sense.
Penalties have to be fixed at a meaningful level, not set at a level at which their imposition, on an errant employer, can be seen as an acceptable cost of doing business for the employer. In short, penalties must hurt so that others who are considering cutting corners, so far as the payment and protection of their employees are concerned, will be deterred from doing so.
In addition, in this context, the essential purpose of Compliance Notices must be considered. Prompt compliance with their terms can result in a win/win situation for all concerned. The industrial regulator and the public purse is not put to the expense of a hearing; an underpaid employee can be reimbursed promptly; and an errant employer is spared the bother and embarrassment of public prosecution, and is given an opportunity to learn about and rectify past failings for the good of all concerned.
DISCUSSION
Deterrence
As I have already observed deterrence has two aspects – general deterrence directed towards the community as a whole, and specific deterrence directed towards the individual concerned whose conduct is to be sanctioned.
Evidence provided by the FWO indicates that the passenger transport industry experiences a moderate rate of disputes, which calculates to be 28 disputes per 1000 business.[29] In these circumstances, it submits as follows:
Contraventions relating to wages and conditions are of particular concern in this industry accounting for 13% of all contraventions in the period of July 2017 to December 2021. The Applicant submits that this data indicates there is a need for general deterrence in the passenger transport industry.[30]
[29] See Outline of Submissions of the Fair Work Ombudsman filed 23 March 2022 at [30].
[30] See Outline of Submissions of the Fair Work Ombudsman filed 23 March 2022 at [30].
In these circumstances, I accept the Ombudsman’s submission that the penalty in this matter must be set at a sufficient level to deter others, within the passenger transport industry, from underpaying their employees.
In particular, the relevant penalty must be of sufficient magnitude that it will not be perceived by others as the cost of doing business or a calculated risk that can be taken. Breaches of Compliance Notices must be seen to have meaningful consequences, which owe weight the potential benefits of errant employers attempting to fly under the radar.
Given that Mr Ciotti has failed to take part in the proceedings, I know little, if anything about his personal circumstances, other than that it is the understanding of the FWO that he continues to engage in business in the chauffer and passenger car industry. In these circumstances, aspects of specific deterrence are relevant. The court must send a message to Mr Ciotti not to engage, with other employees in future, which results in such employees not receiving their proper entitlements pursuant to the applicable award.
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.
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.
I certify that the preceding sixty-four (64) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Brown. Associate:
Dated: 5 April 2022
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