Fair Work Ombudsman v Cooper
[2024] FedCFamC2G 76
•2 February 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Cooper [2024] FedCFamC2G 76
File number: MLG 921 of 2023 Judgment of: JUDGE FORBES Date of judgment: 2 February 2024 Catchwords: FAIR WORK – failure to comply with compliance notice issued by Fair Work Ombudsman – Statement of Agreed Facts - admitted involvement by director and shareholder of employing company - accessorial liability – pecuniary penalty for involvement in contravention – appropriateness of agreed penalty Legislation: Fair Work Act 2009 (Cth) s 30N, 90, 539, 550, 546, 716 Cases cited: Agreed Penalties Case (2015) 258 CLR 482
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3
Division: Division 2 General Federal Law Number of paragraphs: 45 Date of hearing: On the papers Place: Melbourne Solicitor for the Applicant: Fair Work Ombudsman Respondent: Michael Cooper ORDERS
MLG 921 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: MICHAEL COOPER
Respondent
ORDER MADE BY:
JUDGE FORBES
DATE OF ORDER:
2 FEBRUARY 2024
THE COURT DECLARES THAT:
1.The Respondent was involved, within the meaning of section 550(2) of the Fair Work Act 2009 (Cth) (FW Act), in the contravention by Rhino Machinery Maintenance Pty Ltd (in liquidation) (ACN 160 748 658) of section 761(5) of the FW Act by failing to comply with the Compliance Notice issued on 20 July 2022, and is taken, by section 550(1) of the FW Act to have contravened section 716(5) of the FW Act.
THE COURT ORDERS THAT:
2.Pursuant to section 546(1) of the FW Act, the Respondent pay a pecuniary penalty of $3,596.00 to the Commonwealth for his involvement (within the meaning of section 550(2) of the FW Act) in the contravention declared in Order 1 above.
3.The Respondent pay the amount ordered in Order 1 by way of equal monthly instalments over a six month period from the date of these orders.
4.The Applicant has 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 FORBES
INTRODUCTION
In this matter, the Fair Work Ombudsman (the Ombudsman) seeks the imposition of pecuniary penalties pursuant to section 546(1) of the Fair Work Act 2009 (Cth) (the FW Act) against the respondent, Mr Michael Cooper, for his admitted involvement in a contravention of section 716(5).
By way of a Statement of Agreed Facts (SOAF) filed on 21 July 2023, Mr Cooper admits that, within the meaning of section 550(2) of the FW Act, he was involved in the failure of Rhino Machinery Maintenance Pty Ltd (in liquidation) (ACN 160 748 658) (the Company) to comply with a compliance notice issued on 20 July 2022 (the Compliance Notice).
The Compliance Notice relates to the underpayment in the amount of $15,961.62 to an employee of the company, Mr Riley Hall.
At all relevant times, Mr Cooper was the sole director, secretary and shareholder of the Company, until it was placed into voluntary liquidation in November 2022[1].
[1] Statement of Agreed Facts dated 21 July 2023 at [22]
In light of admissions made by the respondent in the SOAF, this proceeding was listed for a penalty hearing on 29 January 2024.
Prior to the hearing the Ombudsman filed a written Outline of Submission on penalties and an affidavit of Fair Work Inspector Christine Cox (FWI Cox) affirmed on 21 August 2023, which deposed to the circumstances of the contravention and other relevant matters. The Ombudsman submitted that Mr Cooper’s admitted contravention warranted a pecuniary penalty of 60% of the statutory maximum, less a discount of 10% to recognise Mr Cooper’s cooperation with the regulator. Ultimately, the Ombudsman seeks a penalty of 54% of the maximum which amounts to $3,596.40.
On 25 January 2024, the parties advised my chambers via a joint communication that the respondent had considered the Ombudsman’s submission on penalty and agreed that it was an appropriate amount. I was informed that Mr Cooper did not otherwise intend on filing any response to the penalty submissions. As the penalty hearing would not to be contested, the parties proposed and I agreed that the hearing would be vacated and the question of penalties would be determined on the papers, taking into account the filed materials.
BACKGROUND
This brief background is derived from the Ombudsman’s submission on penalty, the SOAF and the affidavit of FWI Cox affirmed on 21 August 2023.
At all relevant times, Rhino Machinery Maintenance Pty Ltd (in liquidation) (ACN 160 748 658) operated a business in Victoria engaged in the repair and maintenance of vehicles. The business traded under the name Bairnsdale Hydraulics.
Mr Cooper was the Company’s sole director, secretary and shareholder. He was responsible for the operation, management and control of the Company and for ensuring that the Company complied with all legal obligations imposed by fair work instruments[2].
[2] Applicant’s Submission on Penalty at [22]
The Company was a “national system employer” for the purpose of section 30N(1) of the FW Act. The Company was covered by the Vehicle Repair, Service and Retail Award 2020 (the Award) in respect of its employees.
Between October 2018 until 16 October 2021 the Company employed the employee, Mr Hall, as a full-time “Vehicle Industry RS&R-tradesperson or equivalent Level I R6” under the Award.
Throughout his employment period, Mr Hall was paid a base rate of $34 per hour and accrued 399.54 hours of untaken leave.
Upon the cessation of his employment, the Company failed to pay Mr Hall his accrued untaken annual leave (together with annual leave loading under clauses 29.4(a) and 29.13 of the Award) as required by section 90(2) of the FW Act. It is common ground that the company was required to pay Mr Hall $15,961.62.
On 24 January 2022 the Ombudsman received a request for assistance from Mr Hall. In or around February 2022, the Ombudsman commenced an investigation into the Company’s compliance with fair work instruments (the Investigation)[3].
[3] Affidavit of FWI Cox affirmed on 21 August 2023 at [4]-[5]
Throughout the Investigation, the Ombudsman’s communicated with the Company via Mr Cooper. On 15 February 2022, Mr Cooper provided a witness statement where he admitted to owning Mr Hall accrued annual leave on termination and indicated that he may be able to pay it off in monthly instalments. No payments were made to Mr Hall.
As a result of the Investigation, on 20 July 2022 FWI Cox issued the company with a Compliance Notice pursuant to section 716(2) of the FW Act. The Compliance Notice required the Company to calculate and pay the outstanding amount of annual leave and loading owed to Mr Hall by no later than 22 August 2022 and to provide the Ombudsman with reasonable evidence of the amounts calculated and paid by 29 August 2022.
The Company did not comply with the Compliance Notice by the required date, or at all.
On 23 November 2022, the Company was placed into voluntary liquidation.
The Ombudsman instigated these proceedings on 26 May 2023.
On 6 July 2023, the matter came before me for a first return date. Mr Vas, solicitor appeared on behalf of the Ombudsman and Mr Cooper appeared in person. The parties indicated that they intended to file a SOAF. On that day the parties jointly filed a SOAF.
A few weeks later, on 21 July 2023 the parties file a subsequent a further SOAF, as the earlier one appeared to contain formatting errors in relation to the numbering of paragraphs.
PENALTIES SOUGHT
Respondent’s involvement in the contravention
The Company, as the employer, is the primary contravenor. The Company has been placed in liquidation and it is not a party to these proceedings.
The Ombudsman seeks a penalty against Mr Cooper by reason of his involvement in the Company’s contravention of 716(5). The Ombudsman made the following submission in relation to Mr Cooper’s involvement:
(1)Mr Cooper was the Company’s sole director, secretary and shareholder. At all material times Mr Cooper was responsible for the operation, management and control of the Company and for ensuring that the Company complied with its legal obligations under the FW Act[4];
(2)Mr Cooper was aware that the Compliance Notice has been issued to the Company, as evidenced by a phone call with an agent of the Ombudsman in July 2022[5];
(3)it is not contested that numerous opportunities were extended to the Company to comply with its obligations under the Compliance Notice and that it failed to do so[6]; and
(4)Mr Cooper admitted that:
(a)he has actual knowledge of the Compliance Notice that was issued to the Company;
(b)he has actual knowledge of the Company’s failure to comply with the Compliance Notice; and
(c)he was an intentional participant in the Company’s failure to comply with the Compliance Notice.
[4] Applicant’s Submission on Penalty at [22]
[5] Applicant’s Submission on Penalty at [23]
[6] Applicant’s Submission on Penalty at [24]
Based on those admissions within the SOAF, I am satisfied that Mr Cooper was involved in the Compliance Notice contravention, within the meaning of section 550 of the FW Act, and that Mr Cooper is taken to have committed the Compliance Notice contravention as if he was a contravenor himself.
Penalty range sought by the applicant
The Ombudsman seeks the imposition of pecuniary penalties against the respondent pursuant to the admitted contravention of sub-section 716(5).
Sub-section 545 of the FW Act grants power to this Court to order that a person pay a pecuniary penalty where it is satisfied that a person has contravened a civil remedy provision. Under section 539(2) of the FW Act, s 716(5) is a civil remedy provision.
Pursuant to section 539(2) and 546(2) of the FW Act, the maximum penalty that the Court may impose on the respondent for the admitted contravention is $6,660.00[7].
[7] Applicant’s Submission on Penalty at [32]
As mentioned above, in written submissions, the Ombudsman seeks the imposition of penalties of 60% of the statutory maximum would be appropriate. The Ombudsman also submits that a discount of 10% would appropriately acknowledge Mr Cooper’s cooperation throughout these proceedings. The total about of penalty sought equals 54% of the maximum, which in dollar term is $3,596.00.
The respondent does not oppose the penalty amount sought.
Notwithstanding the parties’ agreed position, the amount of penalty to be determined remains at the independent discretion of the Court. The Court must be persuaded that the penalties proposed are ‘within range’ in the sense of not being manifestly inadequate or manifestly excessive. In determining the appropriateness of the parties’ agreed position, I have had regard to all the materials filed in this case.
CONSIDERATIONS
In its written submission on penalty, the Ombudsman sets out the well-known principles which instruct the Court on the preferred approach when determining an appropriate penalty amount[8]. Those principles are frequently rehearsed in penalty cases prosecuted by the Ombudsman and I do not propose repeating them here. Suffice to say the Ombudsman’s submission is a correct statement of the principles.
[8] Applicant’s Submission on Penalty [27]-[31]
In justifying the basis for imposing this penalty amount, the Ombudsman submits that pursuant to his admissions in the SOAF, Mr Cooper was aware of the Compliance Notice and the actions required of the Company to comply with it. The Ombudsman submits that the Court should consider that it was incumbent on Mr Cooper, as the controlling mind of the Company, to ensure that that the Company complied with this Notice. Further, Mr Cooper, knowing of the contravention, did not pay the amount owed to Mr Hall any time before the Company entered voluntary administration in November 2022.
Accordingly, the Ombudsman posits, and I agree, that Mr Cooper’s contravention was not inadvertent, and should be taken as demonstrating a disregard for his obligation under the FW Act. Mr Cooper’s conduct as the human agent for the Company should also be seen as undermining the authority of the Ombudsman as the regulator of Commonwealth workplace laws.
Deterrence, both general and specific, is the principal objective of an order which requires a person to pay a pecuniary penalty under section 546 of the FW Act[9]. The Ombudsman submits that the overall efficacy of the compliance notice regime may be undermined if non-compliance does not carry a meaningful consequence[10]. The penalty for non-compliance should be set at a level which demonstrates the severity of the conduct and deters others like-minded individuals from engaging in similar conduct.
[9] Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3 at [116]
[10] Applicant’s Submission on Penalty [40]
The Ombudsman further submits that there is a need to specifically deter Mr Cooper as he was the operating mind of the Company at the time of the contravention. However, the Ombudsman conceded that specific deterrence is less pressing in these circumstances as there is no evidence that Mr Cooper is currently operating any business or employing any employees[11].
[11] Applicant’s Submission on Penalty [43]
The Company’s failure to comply with the Award and the Compliance Notice resulted in a loss to the employee. Mr Hall has not yet received the $15,961.62 owed to him, despite having ceased working with the Company well over two years ago.
The Ombudsman asserts that Mr Cooper’s non-compliance with the Compliance Notice also gives rise to a public loss as the regulator and the Court were required to spend time and public funds to deal with this proceeding. This unnecessary expense and use of resources could have been avoided had Mr Cooper ensured the Company complied with the Notice.
The Ombudsman asserts that the size and financial circumstances of a respondent may be relevant in the determination of penalty. It is known that the primary contravenor is in liquidation, however there is no evidence of Mr Cooper’s current financial position.
Relevantly, the Ombudsman submitted that Mr Cooper has cooperated consistently throughout these proceedings by making full admissions in the SOAF. He also agreed to the penalty amount sought by the Ombudsman resulting in the penalty hearing being vacated. This has saved the Court and the Ombudsman time and resources.
Further, the Ombudsman acknowledged that prior to the Company’s liquidation, Mr Cooper undertook some non-pecuniary steps stipulated by the Compliance Notice by calculating the amount of annual leave owing to the employee.
CONCLUSION
Agreed penalties serve an important public policy goal of promoting predictability of outcomes in civil penalty proceedings. This encourages parties to acknowledge contraventions, which, in turn, assists in avoiding lengthy and complex litigation and the associated use of resources. It is entirely consistent with the nature of civil proceedings for a Court to make orders by consent and to approve a compromise of proceedings on terms proposed by the parties, provided the court is persuaded that what is proposed is appropriate[12].
[12] Agreed Penalties Case (2015) 258 CLR 482
Having regard to the factual circumstances outlined above and the Ombudsman’s submission on penalty, I am minded to make orders in the terms proposed jointly by the parties. I consider the proposed penalty of 54% of the maximum strikes the right balance between deterrence and not being oppressive or crushing. The penalty recognises the concessions made by the respondent and his cooperation with the regulator, including in relation to these proceedings.
Pursuant to the admissions made by the respondent within the SOAF, the Court will make declarations that the respondent was involved in the Company’s contravention of section 716(5) of the FW Act by failing to comply with the Compliance Notice, and by virtue of s 550(1) of the FW Act, is taken to have contravened s 716(5) of the FW Act.
I will order that that the respondent is to pay a pecuniary penalty in the amount of $3,596.00. As agreed between the parties, this penalty is to be paid in equal monthly instalments over a period of six months.
I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Forbes. Associate:
Dated: 2 February 2024
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