Fair Work Ombudsman v Corinthian Capital Pty Ltd
[2022] FedCFamC2G 309
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Corinthian Capital Pty Ltd [2022] FedCFamC2G 309
File number(s): SYG 1681 of 2021 Judgment of: JUDGE MANOUSARIDIS Date of judgment: 29 April 2022 Catchwords: INDUSTRIAL LAW – assessment of pecuniary penalties for contraventions of s 716(5) of the Fair Work Act 2009 (Cth). Legislation: Crimes Act 1914 (Cth) s 4AA
Fair Work Act 2009 (Cth) ss 12, 90(2), 539(1), 539(2), 546, 550(1), 550(2), 557(1), 557(2), 557A, 700, 716(2), 716(5)
Restaurant Award 2010 cls 13.1, 13.3, 20.1, 34.1
Restaurant Award 2020 cls 11.2, 11.4, 18.1, 24.2
Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (The BKH Contractors Case) (No 2) [2018] FCA 1563
Australian Competition and Consumer Commission v Yazaki Corporation [2018] FCAFC 73
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8
Bevis v VA Holdings Pty Ltd trading as Granton Homes & Ors [2020] FCCA 2082
Contin v The Queen [2012] VSCA 247
Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCAFC 59
Fair Work Ombudsman v Dingwall Hilder Nominees Pty Ltd [2022] FedCFamC2G 76
Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301
Fair Work Ombudsman v Statewide Security (WA) Pty Ltd [2022] FedCFamC2G 194
Fair Work Ombudsman v Tester [2021] FCCA 771
Fair Work Ombudsman v Viper Industries Pty Ltd [2015] FCCA 492
Fair Work Ombudsman v VS Investment Group Pty Ltd [2013] FCCA 208
Kelly v Fitzpatrick [2007] FCA 1080
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70
R v Holder & Johnston [1983] 3 NSWLR 245
Royer v Western Australia [2009] WASCA 139
Trade Practices Commission v Bata Shoe Company of Australia Pty Ltd [1980] FCA 47; (1980) 44 FLR 149; (1980) ATPR 40-161
Division: Fair Work Number of paragraphs: 41 Date of last submission/s: 13 April 2022 Date of hearing: 29 March 2022 Place: Sydney Counsel for the Applicant: Mr D Fuller, by telephone Solicitor for the Applicant: Office of the Fair Work Ombudsman The Respondents: No appearance by, or on behalf of, the respondents ORDERS
SYG 1681 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: CORINTHIAN CAPITAL PTY LTD (ACN 636 589 789)
First Respondent
RICHARD JAMES TRAINER
Second Respondent
ORDER MADE BY:
JUDGE MANOUSARIDIS
DATE OF ORDER:
29 APRIL 2022
THE COURT ORDERS THAT:
1.Pursuant to s 546(1) of the Fair Work Act 2009 (Cth) (FW Act) the first respondent pay pecuniary penalties in the sum of $64,935 for its contraventions of s 716(5) of the FW Act as declared in the orders made on 25 November 2021.
2.The first respondent pay the pecuniary penalties referred to in order 1 to the Commonwealth by 27 May 2022.
3.Pursuant to s 546(1) of the FW Act the second respondent pay pecuniary penalties in the sum of $12,987 for his involvement in the first respondent’s contraventions of s 716(5) of the FW Act as declared in the orders made on 25 November 2021.
4.The second respondent pay the pecuniary penalties referred to in order 3 to the Commonwealth by 27 May 2022.
5.The parties have liberty to apply on 7 days’ notice in relation to any question that may arise concerning the implementation of these orders.
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
INTRODUCTION
The applicant (FWO) applies under s 546 of the Fair Work Act 2009 (Cth) (FW Act) for orders that the first respondent, Corinthian Capital Pty Ltd (CC), and the second respondent, Mr Trainer, pay pecuniary penalties because CC contravened s 716(5) of the FW Act by failing to comply with three compliance notices (Compliance Notices) given under s 716(2), and Mr Trainer was involved in CC’s contraventions of s 716(5) of the FW Act and, because of s 550(1), is himself taken to have contravened s 716(5) of the FW Act.
PROCEDURAL HISTORY
The FWO commenced this proceeding on 8 September 2021 by filing an application and a statement of claim. On 27 September 2021 the FWO filed an application in a proceeding for an order for substituted service on Mr Trainer. That application came before me on 29 September 2021, but Mr Trainer did not appear. The FWO’s application was supported by an affidavit made by the FWO’s lawyer, Mr Bradfield, in which he deposed to the efforts that had been made to serve the application and statement of claim on Mr Trainer. On 29 September 2021 I ordered that:
(a)the originating application and statement of claim is deemed to have been served on Mr Trainer on 20 September 2021 by email;
(b)by 27 October 2021, CC and Mr Trainer each file and serve a notice of address for service, a response, and, if a response is filed and served, a defence; and
(c)if the respondents do not comply with (b) the FWO may file and serve an application for default judgment, with such application being made returnable on 25 November 2021.
The respondents did not comply with the orders of 29 September 2021; and on 11 November 2021 the FWO filed an application in a proceeding for default judgment that was made returnable before me on 25 November 2021. Neither CC nor Mr Trainer appeared, and I heard the FWO’s application for default judgment on that day. I made a number of orders, including a declaration that CC contravened s 716(5) of the FW Act by failing to comply with the requirements of each of the Compliance Notices dated 16 December 2020, and that Mr Trainer was involved, within the meaning of s 550(2) of the FW Act, in each of the contraventions. I then set the matter down for hearing on the question of penalty on 23 February 2022.
On 18 February 2022 Mr Bradfield emailed my associate and requested that the hearing on 23 February 2022 be vacated to consider the impact, if any, of two recent High Court of Australia decisions on the proceeding.[1] On that day, at my direction, my associate sent an email to Mr Bradfield, and to an email address to which the FWO had been sending correspondence to the respondents, confirming that the hearing that had been listed for 23 February 2022 had been vacated, and that the matter had been relisted for hearing at 10:15 am on 29 March 2022. At the hearing on 29 March 2022, counsel for the FWO appeared but, again, there was no appearance by or on behalf of the respondents. Counsel for the FWO submitted the two High Court decisions were not relevant to the question of penalty. I accept counsel’s submission.
[1] These being Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1, and ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2
At the conclusion of the hearing I reserved judgment and listed the matter for judgment at 9:30 am on 8 April 2022. In the course of preparing my reasons for judgment, questions arose in relation to which I formed the view the FWO should be invited to make submissions, and, on 4 April 2022, my associate sent to Mr Bradfield an email identifying the questions, and inviting the FWO to make submissions on those questions. Mr Kelly from the office of the FWO responded by email requesting that the judgment listing be vacated, and that I extend the time by which the FWO may file submissions. I granted the extension and vacated the 8 April 2022 listing for judgment.
FACTS
I made the declarations on 25 November 2021 on the basis of the allegations of fact made in the statement of claim which, given the respondents’ default, were taken to have been admitted by the respondents. The allegations are as follows:
(a)CC is and was at all relevant times the company that operated the restaurant trading as “Galangal Award Winning Thai Cuisine” in Perth, Western Australia (Restaurant).
(b)Mr Trainer is and was at all relevant times: the sole director of CC; the person responsible for the overall operation, management, and control of CC; and responsible for ensuring that CC complied with its legal obligations under the FW Act.
(c)On or about 1 May 2020, Mr Roberts (FWI), a Fair Work Inspector appointed under s 700 of the FW Act, commenced an investigation into CC’s compliance with the FW Act, after which the FWI formed a belief that:
(i)CC employed:
(A)Lauran O’Reilly in the period 20 February 2020 and 16 March 2020;
(B)Christina Brown in the period 16 April 2020 and 20 April 2020;
(C)Pisacha Buamuang in the period 26 February 2020 and 26 March 2020;
(D)Malin Holmgren in the period 14 April 2020 and 26 April 2020;
(E)Lina Ho in the period 6 March 2020 and 7 March 2020;
(F)Jessica Bond in the period 17 April 2020 and 20 April 2020;
(G)Porntip Tittipornwattanakun in the period 8 February 2020 and 29 February 2020;
(H)Scott Maher in the period 20 April 2020 to 16 May 2020;
(I)Ashish Peter in the period 24 April 2020 to 7 June 2020;
(J)Bharat Kumar in the period 4 May 2020 to 6 July 2020; and
(K)Yang Lui in the period 8 May 2020 to 28 June 2020 (Employees);
(ii)the Restaurant Award 2010 (2010 Award) and the Restaurant Award 2020 (2020 Award) covered and applied to each of the Employee’s employment with CC;
(iii)during her respective employment, Lauran O’Reilly (Full-time Employee): worked full-time; was classified as a “Level 2 Food and Beverage Attendant” pursuant to the 2010 Award; worked on weekdays, Saturdays, Sundays, and one public holiday; was paid an amount by CC for work performed that did not meet each of her entitlements pursuant to the 2010 Award; and did not receive any payment from CC for her accrued annual leave on termination pursuant to s 90(2) of the FW Act;
(iv)during their respective employment period, Christina Brown, Pisachu Buamuang, Malin Holmgren, Lina Ho, Jessica Bond, Porntip Tittipornwattanakun (Casual Employees), Bharat Kumar, Yang Lui, Scott Maher, and Ashish Peter (Casual Driver Employees) were engaged by CC as casual employees;
(v)during her respective employment period, Christina Brown: was classified as a “Level 2 Food and Beverage Attendant” pursuant to the 2010 Award; worked on weekdays, one Saturday, and one Sunday; and did not receive any payment from CC for work performed;
(vi)during his respective employment period, Pisacha Buamuang: was classified as an “Introductory Level employee” pursuant to the 2010 Award; worked on weekdays and Saturdays; and did not receive any payment from CC for work performed;
(vii)during her respective employment period, Malim Holmgren: was classified as a “Level 2 Food and Beverage Attendant” pursuant to the 2010 Award; worked on weekdays, Saturdays, Sundays, and one public holiday; and did not receive any payment from CC for work performed;
(viii)during her respective employment period, Lina Ho: was classified as a “Level 1 Food and Beverage Attendant” pursuant to the 2010 Award; worked on one weekday and one Saturday; and did not receive any payment from CC for work performed;
(ix)during her respective employment, Jessica Bond: was classified as a “Level 2 Food and Beverage Attendant” pursuant to the 2010 Award; worked on weekdays, one Saturday, and one Sunday; and did not receive any payment from CC for work performed;
(x)during her respective employment period, Porntip Tittipornwattanakunn: was classified as a “Level 2 Food and Beverage Attendant” pursuant to the 2010 Award; worked on weekdays and Saturdays; and was paid an amount by CC for work performed that did not meet each of her entitlements pursuant to the 2010 Award;
(xi)during their respective employment periods, the Casual Driver Employees: were each classified as “Level 2 Food and Beverage Attendants” pursuant to the 2010 and 2020 Awards; worked on weekdays, Saturdays, Sundays, and (with the exception of Bharat Kumar) public holidays; were each paid an hourly rate of $20 for all hours worked; and were each paid amounts by CC for work performed that did not meet their entitlements pursuant to the 2010 and 2020 Awards;
(xii)by reason of (iii) CC contravened cl 20.1 of the 2010 Award, cl 34.1 of the 2010 Award, and s 90(2) of the FW Act in relation to the Full-time Employee;
(xiii)by reason of (iv) to (x) CC contravened cl 13.1 and cl 20.1 of the 2010 Award and cl 34.1 of the 2010 Award in relation to the Casual Employees; and
(xiv)by reason of (iv) to (xi) CC contravened cl 13.1 and cl 20.1 of the 2010 Award, cl 11.2 and cl 18.1 of the 2020 Award, cl 13.3 of the 2010 Award and cl 11.4 of the 2020 Award, and cl 34.1 of the 2010 Award and cl 24.2 of the 2020 Award in relation to the Casual Driver Employees.
(d)On 16 December 2020, pursuant to s 716(2) of the FW Act, the FWI gave to CC by mail addressed to CC’s registered office the Compliance Notices: one in relation to the Full-time Employee (Full-time Compliance Notice); another in relation to the Casual Employees (Casual Compliance Notice); and the third in relation to the Casual Driver Employees (Casual Driver Compliance Notice).
(e)On 16 December 2020 the FWI emailed the Compliance Notices to Mr Trainer.
(f)The Full-time Compliance Notice, in relation to the Full-time Employee, required CC to:
(i)identify:
(A)the number of hours worked in respect of each entitlement required to be paid pursuant to the 2010 Award and the FW Act; and
(B)the amount CC paid in respect of each entitlement, having regard to the number of hours worked;
(ii)calculate:
(A)the amount the Full-time Employee was entitled to have been paid in respect of each entitlement pursuant to the 2010 Award and the FW Act;
(B)the difference between the amount she was paid and the amount she was entitled to be paid (Full-time Underpayment); and
(C)any superannuation payable on the Full-time Underpayment;
(iii)make payment of the Full-time Underpayment and any applicable superannuation to the Full-time Employee by 17 March 2021;
(iv)prepare a schedule containing the information at paragraphs (f)(i) and (f)(ii); and
(v)provide to the FWO a copy of the schedule and reasonable evidence of payment of the Full-time Underpayment and any superannuation by 31 March 2021.
(g)The Casual Compliance Notice, in relation to each of the Casual Employees, required CC to:
(i)identify:
(A)the number of hours worked in respect of each entitlement required to be paid pursuant to the 2010 Award; and
(B)the amount CC paid in respect of each relevant entitlement, having regard to the number of hours worked;
(ii)calculate:
(A)the amounts that the Casual Employees were entitled to be paid in respect of each relevant entitlement pursuant to the 2010 Award;
(B)the difference between the amount paid and the amount they were entitled to be paid (Casual Underpayment); and
(C)any superannuation payable on the Casual Underpayment;
(iii)make payment of the Casual Underpayment and any applicable superannuation to the Casual Employees by 17 March 2021;
(iv)prepare a schedule containing the information at paragraphs (g)(i) and (g)(ii); and
(v)provide to the FWO, a copy of the schedule and reasonable evidence of the payment of the Casual Underpayment and any superannuation by 31 March 2021.
(h)The Casual Driver Compliance Notice, in relation to each of the Casual Driver Employees, required CC to:
(i)identify:
(A)the number of hours worked in respect of each entitlement required to be paid pursuant to the 2010 Award and/or the 2020 Award; and
(B)the amount CC paid in respect of each relevant entitlement, having regard to the number of hours worked;
(ii)calculate:
(A)the amounts that the Casual Driver Employees were entitled to be paid in respect of each relevant entitlement pursuant to the 2010 Award and/or the 2020 Award;
(B)the difference between the amount paid and the amount entitled to be paid (Casual Driver Underpayment); and
(C)calculate any superannuation payable on the Casual Driver Underpayment.
(iii)make payment of the Casual Driver Underpayment and any superannuation to the Casual Driver Employees by 17 March 2021;
(iv)prepare a schedule containing the information at paragraphs (h)(i) and (h)(ii); and
(v)provide to the FWO a copy of the schedule and reasonable evidence of the payment of the Casual Driver Underpayment and any superannuation by 31 March 2021.
(i)CC did not take the specified action in relation to the Compliance Notices set out in paragraphs (f), (g), and (h) by 17 March 2021, and CC did not produce to the FWO reasonable evidence as pleaded in paragraphs (f)(v), (g)(v), and (h)(v) of compliance with the Compliance Notices by 31 March 2021. For these reasons, CC contravened s 716(5) of the FW Act on each occasion it failed to comply with the Full-time Compliance Notice, the Casual Compliance Notice, and the Casual Driver Compliance Notice.
(j)Given the matters referred to in (b), (e), and (i) Mr Trainer: had knowledge that the Compliance Notices were given to CC; had knowledge of the requirement that CC had to comply with each of the Compliance Notices; had actual knowledge of CC’s failure to comply with the Compliance Notices; and was an intentional participant in CC’s failure to comply with the Compliance Notices. For those reasons, Mr Trainer was a person involved, within the meaning of s 550(2) of the FW Act, in each of CC’s contraventions of s 716(5) of the FW Act.
The FWO also relied on a number of affidavits, including an affidavit made by the FWI.[2]
PRINCIPLES
[2] Affidavit of J Roberts 20.01.2022
Power
Subsection 546(1) of the FW Act provides that this Court may, on application, order a person to pay a pecuniary penalty the Court considers is appropriate if the Court is satisfied the person has contravened a “civil remedy provision”.[3] That expression is defined in s 539(1) of the FW Act to include the provisions identified in column 1 of the table to s 539(2) of the FW Act. Subsection 716(5) is in column 1 of the table to s 539(2) of the FW Act.
[3] I reviewed the relevant principles in Bevis v VA Holdings Pty Ltd trading as Granton Homes & Ors [2020] FCCA 2082, at [33]-[38]
Subsection 546(2) of the FW Act provides that the pecuniary penalty the Court may impose must not, where the person is an individual, be more than “the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2)” and, if the person is a body corporate, must not be more than five times “the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2)”.
The maximum penalty units for a contravention of s 716(5) of the FW Act as at 31 March 2021, being the day by which CC was required to carry out all of the actions specified in the Compliance Notices, are 30 penalty units for an individual, and 150 penalty units for a body corporate. (This excludes “serious contraventions”, as defined in s 557A of the FW Act.) Section 12 of the FW Act provides that “penalty unit” has the meaning given by s 4AA of the Crimes Act 1914 (Cth). The penalty unit provided for by s 4AA of that Act as at 31 March 2021 was $222. Thus, $33,300 is the maximum penalty a company may be ordered to pay for its contravention of s 716(5) of the FW Act; and $6,660 is the maximum penalty for an individual.
Assessing penalties for multiple contraventions
The FWO correctly submits that CC’s failure to comply with the Compliances Notices constitutes three separate contraventions of s 716(5) of the FW Act. That means I am required to assess penalties for multiple contraventions of s 716(5) of the FW Act.
The approach to assessing penalties for multiple contraventions of provisions of the FW Act was outlined by Bromwich J in Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown (New Shanghai) as follows (emphasis in original):[4]
(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 FW 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 . . . 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 . . . .
[4] Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301, at [36]
It is unnecessary to apply the second of the five steps Bromwich J identifies in this passage to the respondents’ contraventions because s 716(5) of the FW Act is not mentioned in s 557(2) of the FW Act and, for that reason, s 557(1) does not apply to multiple contraventions of s 716(5) of the FW Act. The third step, however, is relevant; it requires the application of what is often referred to as the “one transaction principle”. Owen JA gave a useful statement of the principle in Royer v Western Australia:[5]
At its heart, the one transaction principle recognises that, where there is an interrelationship between the legal and factual elements of two or more offences with which an offender has been charged, care needs to be taken so that the offender is not punished twice (or more often) for what is essentially the same criminality. The interrelationship may be legal, in the sense that it arises from the elements of the crimes. It may also be factual, because of a temporal or geographical link or the presence of other circumstances compelling the conclusion that the crimes arise out of substantially the same act, omission or occurrences.
[5] Royer v Western Australia [2009] WASCA 139, at [22]
Lockhart J stated the principle in the context of the imposition of penalties for contraventions of provisions of the Trade Practices Act 1974 (Cth) in Trade Practices Commission v Bata Shoe Company of Australia Pty Ltd:[6]
Guidance is given in the field of sentencing for criminal offences by the well-known principle that where several offences are heard together and arise out of the same transaction it is a sound working rule that the sentences imposed for those offences should be made concurrent; it is inappropriate to sentence consecutively when the offences were all really involved in the same episode . . .
[6] Trade Practices Commission v Bata Shoe Company of Australia Pty Ltd [1980] FCA 47; (1980) 44 FLR 149; (1980) ATPR 40-161, at 42, 277
The Full Federal Court confirmed the relevance of the “one transaction principle” in the assessment of multiple contraventions of a single civil remedy provision in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union:[7]
There is no doubt that, in an appropriate case involving multiple contraventions, the Court should consider whether the multiple contraventions arose from a course or separate courses of conduct. If the contraventions arose out of a course of conduct, the penalties imposed in relation to the contraventions should generally reflect that fact, otherwise there is a risk that the respondent will be doubly punished in respect of the relevant acts or omissions that make up the multiple contraventions.
[7]Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113, at [148] (Dowsett, Greenwood, and Wigney JJ)
There are two matters to note about the application of the “one transaction principle”. First, the principle does not relieve the Court from assessing a penalty for each contravention, even if the contravention arose out of a course of conduct. The “one transaction principle” is applied only after a penalty has been (provisionally) assessed for each contravention. That is apparent from the fourth step Bromwich J identifies in New Shanghai, namely, the consideration of “the appropriate penalty in respect of each final individual group of contraventions, taken in isolation” (emphasis added).[8] Second, “even if the contraventions are properly characterised as arising from a single course of conduct, a judge is not obliged to apply the principle if the resulting penalty fails to reflect the seriousness of the contraventions”.[9]
[8] Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301, at [36]
[9] Australian Competition and Consumer Commission v Yazaki Corporation [2018] FCAFC 73, at [235] (Allsop CJ, Middleton and Robertson JJ)
The final step Bromwich J identifies in New Shanghai is the application of a related, but distinct,[10] principle known as the “totality principle”. Under that principle a sentencing judge is required “to impose a sentence or sentences which reflect the overall criminality of the offending for which the offender has been convicted”.[11] In R v Holder & Johnston Street CJ described the principle as follows:[12]
The principle of totality is a convenient phrase, descriptive of the significant practical consideration confronting a sentencing judge when sentencing for two or more offences. Not infrequently a straight-forward arithmetical addition of sentences appropriate for each individual offence considered separately will arrive at an ultimate aggregate that exceeds what is called for in the whole of the circumstances. In such a situation the sentencing judge will evaluate, in a broad sense, the overall criminality involved in all of the offences and, having done so, will determine what, if any, downward adjustment is necessary, whether by telescoping or otherwise, in the aggregate sentences in order to achieve an appropriate relativity between the totality of the criminality and the totality of the sentences.
[10] Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70, at [42], Stone and Buchanan JJ said: “For the purpose of the present discussion the general principle which appears to be relied upon by the appellant [i.e., the “one transaction principle”] may be accepted, although it is important to distinguish it from the application of the totality principle which is a final check to be applied to ensure that a final, total or aggregate, penalty is not unjust or out of proportion to the circumstances of the case.”
[11] Contin v The Queen [2012] VSCA 247, at [38]
[12] R v Holder& Johnston [1983] 3 NSWLR 245, at page 260
The “totality principle” has been held to apply to the assessment of pecuniary penalties.[13] The application of the “totality principle” to the assessment of pecuniary penalties was confirmed by the Full Federal Court in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union:[14]
The totality principle, like the course of conduct principle, has its origins in criminal sentencing. . . .
The totality principle is sometimes confused or conflated with the course of conduct principle. That is perhaps not surprising because application of the totality principle may again result in a court adjusting what would otherwise have been consecutive or cumulative sentences to sentences that are wholly or partially concurrent. The proper approach, however, is to first consider the course of conduct principle and determine whether the sentences should be consecutive, or wholly or partly concurrent. Once that is done, the Court should then review the aggregate sentence to ensure that it is just and appropriate. That may require a further adjustment of the sentences: either by ordering further concurrency or, if appropriate, lowering the individual sentences below what would otherwise be appropriate.
While, in the criminal sentencing context, the totality principle is generally applied in cases involving sentences of imprisonment, it has been held to apply to the fixing of fines . . . . In the case of fines, the Court must fix a fine for each offence and then review the aggregate to ensure that it is just and appropriate. If the result of the aggregation of multiple fines is that the penalty is excessive, that may lead to the moderation of the fine imposed in respect of each offence . . . .
Once again, the important point to emphasise is that, in the criminal sentencing context, application of the totality principle does not authorise or permit the sentencing court to impose a single sentence for multiple offences.
[13] Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCAFC 59, at [41]
[14] Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113, at [116]-[119] (Dowsett, Greenwood, and Wigney JJ) (citations omitted)
Assessing penalty for single contravention – object of assessment
When assessing the amount of the pecuniary penalty that the Court should order be paid, it is useful to distinguish between the purpose or purposes for which pecuniary penalties are to be imposed and, given that purpose or purposes, the matters that may be relevant to assessing the penalty. As for the purpose of imposing pecuniary penalties, the Full Federal Court in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union said:[15]
Whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty is primarily, if not wholly, protective in promoting the public interest in compliance. The principal object of a pecuniary penalty is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravener and by others who might be tempted to contravene; both specific and general deterrence are important. A pecuniary penalty for a contravention of the law must be fixed with a view to ensuring that the penalty is not to be regarded by the offender or others as an acceptable cost of doing business. In relation to general deterrence, it is important to send a message that contraventions of the sort under consideration are serious and not acceptable.
The question whether a pecuniary penalty involves an element of punishment remains somewhat controversial. To a certain extent, that debate appears to be more semantic or philosophical than real. It is sufficient to say that, accepting that the primary purpose of imposing a pecuniary penalty is to protect and deter, that purpose is achieved by imposing a punishment in the form of a pecuniary penalty.
[15] Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113, at [98], [99] (citations omitted)
That the principal purpose of making an order for the payment of a pecuniary penalty is deterrence was confirmed by the plurality in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (references omitted):[16]
[T]he principal object of an order that a person pay a pecuniary penalty under s 546 is deterrence: specific deterrence of the contravener and, by his or her example, general deterrence of other would-be contraveners.
[16] Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3, at [116] (Keane, Nettle and Gordon JJ) (citation omitted)
Assessing penalty for single contravention – factors
The approach of most judges when assessing penalties for a single contravention of a provision of the FW Act is to take into account the non-exhaustive considerations Tracey J identified in Kelly v Fitzpatrick,[17] which his Honour adopted from the judgment of Mowbray FM in Mason v Harrington Corporation Pty Ltd.[18] Those considerations are:
[17] Kelly v Fitzpatrick [2007] FCA 1080, at [14]
[18] Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
(a)the nature and extent of the conduct which led to the breaches;
(b)the circumstances in which that conduct took place;
(c)the nature and extent of any loss or damage sustained as a result of the breaches;
(d)whether there had been similar previous conduct by the respondent;
(e)whether the breaches were properly distinct or arose out of the 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 the enforcement authorities;
(l)the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
(m)the need for specific and general deterrence.
Although these factors have been identified and applied as relevant to the assessment of penalties, they do not constitute a “rigid catalogue of matters for attention”.[19]
[19] Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8, at [91] (Buchanan J)
Also relevant is the maximum penalty for the contravention provided for by the FW Act; and here I refer to the following passage from the judgment of Flick J in The BKH Contractors Case (No 2):[20]
In undertaking the task of assessing and quantifying the penalties to be imposed, the maximum penalty prescribed by the Commonwealth legislature for a specific contravention serves as a “yardstick” against which the assessment of penalties is generally to proceed . . . .
[20] Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (The BKH Contractors Case) (No 2) [2018] FCA 1563, at [19]
ASSESSMENT OF PENALTY
Although I am required to separately assess a penalty for each of CC’s and Mr Trainer’s three contraventions of s 716(5) of the FW Act, it would be convenient if I discuss the contraventions together.
Nature, extent, circumstances and deliberateness of the contravening conduct
Each of the contraventions consisted in CC not complying with a compliance notice. The FWI gave CC each of the Compliance Notices on 16 December 2020, and CC was given until 31 March 2021 to carry out all of the actions identified in each of the Compliance Notices. The FWI provided CC with documents to help assist CC in undertaking calculations, and the FWI attempted to contact Mr Trainer before compliance was due to assist him. CC failed to comply, and CC and Mr Trainer ceased communicating with the FWO after 15 January 2021.[21] CC’s failure to comply with the Compliance Notices was deliberate. Given Mr Trainer was the controller of CC, his involvement in CC’s failure to comply with the Compliance Notices was also deliberate.
[21] Affidavit of J Roberts 20.01.2022, [20]
The following passage from the judgment of Judge Emmett in Fair Work Ombudsman v Viper Industries Pty Ltd applies to the nature of CC’s contravention of s 716(5) of the FW Act, and Mr Trainer’s involvement in that contravention.[22]
The Respondents’ 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.
[22] Fair Work Ombudsman v Viper Industries Pty Ltd [2015] FCCA 492, at [7]
These are matters that point to the assessment of penalty at the higher end of the scale.
Nature and extent of loss
The Full-time Compliance Notice related to one full time employee, the Casual Compliance Notice related to 6 employees, and the Casual Driver Compliance Notice related to 4 employees. By failing to comply with the Compliance Notices, each of the Employees have been denied rectification of their minimum entitlements under the FW Act and under the 2010 and 2020 Awards. That, too, is a matter that points to assessing penalty at the higher end of the scale.
Deliberateness and lack of contrition and corrective action
I have found that CC’s failure to comply with the requirements of each of the Compliance Notices was deliberate, as was Mr Trainer’s failure to cause CC to comply with the requirements of each of the Compliance Notices. Neither CC nor Mr Trainer have taken or attempted to take any corrective action. That, too, points to assessing penalty at the higher end of the scale.
General deterrence
The FWO relies on data contained in an industry profile of the “Cafes and Restaurants” industry, and submitted that the industry dispute rate is high and “from July 2017 to June 2021, 21.3% of all compliance notices issued concern the hospitality industry”.[23] On that basis, the FWO submits there is a need to send a message to employers generally, and to the hospitality industry in particular, that a failure to comply with a compliance notice will not be tolerated by the FWO, the community, or the courts.
[23] Applicant’s Submissions on Penalty, [32]
I adopt what Judge Jarret said in Fair Work Ombudsman v VS Investment Group Pty Ltd:[24]
The failure to comply with a notice properly issued by the applicant in the course of its investigations and the discharge of its statutory functions is serious. Recipients of such notices should be left under no misapprehension about their obligations to comply with those notices.
[24] Fair Work Ombudsman v VS Investment Group Pty Ltd [2013] FCCA 208, at [51]
Specific deterrence
The FWO submits that the penalties imposed on CC and Mr Trainer should be meaningful enough to ensure the parties are deterred from engaging in such conduct in the future. The evidence suggests that, at least by the end of June 2021, CC has ceased trading as the Restaurant. CC, however, remains registered, and Mr Trainer remains its sole director.[25] Further, since April 2021 CC has registered four new business names.[26] Given this evidence, the penalty should reflect an element of specific deterrence.
[25] Affidavit of J Bradfield 15.09.2021, [2]; annexure “JB-1”
[26] Affidavit of J Roberts 20.01.2022, [22]-[23]; annexure “JR-18”
Assessment (before adjustment)
The FWO submits that the appropriate penalty to be imposed on both CC and Mr Trainer is: 55% of the maximum for failure to comply with the Full-time Compliance Notice ($18,315; $3,663); 70% of the maximum for failure to comply with the Casual Compliance Notice ($23,310; $4,662); and 70% of the maximum for the failure to comply with the Casual Compliance Notice ($23,310; $4,662).[27] This translates to the Court ordering that CC pay pecuniary penalties of $64,935,[28] and that Mr Trainer pay pecuniary penalties of $12,987.[29]
[27] Applicant’s Submissions on Penalty, [35]
[28] $18,315 + $23,310 + $23,310 = $64,935
[29] $3,663 + $4,662 + $4,662 = $12,987
I am satisfied that, given the matters I have identified, it is appropriate that each amount for which the FWO submits a penalty should be assessed is appropriate for each contravention, considered alone.
Adjustments?
The final question I must consider is whether any adjustment should be made, first, because of the “one transaction principle” and, second, because of the “totality principle” (being the fifth step identified in the passage in New Shanghai set out above).
At this point of my consideration of what penalties the respondents should be ordered to pay it occurred to me that it would have been open to the FWI to have issued one compliance notice for the Employees, in which case, there would have only been one contravention of s 716(5) of the FW Act. The FWI, however, issued three compliance notices with the consequence there are three contraventions of s 716(5) of the FW Act. That led me to instructing my associate to send the following email to Mr Bradfield on 4 April 2022:
His Honour would appreciate receiving a submissions on the following questions:
1)Would it have been open to the Fair Work Inspector to have issued only one compliance notice in relation to all of the Employees, rather than having issued three compliance notices, one for each class of Employee?
2)If so, would that be a relevant matter to take into account to reduce the penalty that would otherwise be appropriate for each contravention, either under the one transaction principle, or the totality principle, or under some other principle?
3)If 2) is answered in the affirmative, how should the matters referred to in 1) be taken into account?
4)If 2) is answered in the negative, why should the matters identified in 1) not be relevant to the assessment of penalty for each contravention?
His Honour would appreciate receiving submissions by 5:00 pm on 6 April 2022. If that will not be possible, his Honour will vacate the listing on 8 April 2022 for the delivery of judgment, and relist the matter for judgment after his Honour receives and considers submissions in response to this email.
On 13 April 2022 the FWO, by her counsel, provided written submissions in which she submits as follows:
(a)As a matter of power, it was open to the FWI to issue three compliance notices rather than one compliance notice.
(b)The fact it may have been open to the FWI to issue a smaller number of compliance notices does not warrant a reduction in penalties because:
(i)CC’s failure to comply with each of the Compliance Notices, constitutes three distinct contraventions of s 716(5) of the FW Act;
(ii)the onus is on the respondents to show there is an overlap between the contraventions such as to warrant some form of grouping, but the respondents have not done so;
(iii)in any event, the relevant principles relating to grouping do not require any adjustment because there are no, or there are insufficient, temporal, or geographic links or other circumstances that could compel the conclusion that the contraventions arose out of substantially the same act, omission, or occurrences; and[30]
(iv)in several recent cases Judges of this Court have not grouped contraventions of separate compliance notices in similar circumstances as in this case.[31]
To the extent it is relevant, it was reasonably open to the FWO to issue three compliance notices, rather than one.[32]
(c)Although it may be open to adjust the penalties under the “totality principle”, it would not be warranted to do so in this case because the amount of each penalty the FWO submitted took into account the particular circumstances of each contravention, and the level of the penalties would be neither crushing nor oppressive.[33]
[30] Note in Response to Questions From His Honour, [14], relying on Royer v Western Australia (2009) 197 A Crim R 319; [2009] WASCA 139, at [22] (Owen JA)
[31] Note in Response to Questions From His Honour, [19] referring to Fair Work Ombudsman v Statewide Security (WA) Pty Ltd [2022] FedCFamC2G 194, at [35] (Judge Ladhams); Fair Work Ombudsman v Dingwall Hilder Nominees Pty Ltd [2022] FedCFamC2G 76, at [45] (Judge Kendall); Fair Work Ombudsman v Tester [2021] FCCA 771, at [14]-[15] (Judge Jarrett)
[32] Note in Response to Questions From His Honour, [20]
[33] Note in Response to Questions From His Honour, [18]
On reading the FWO’s submissions my initial view was that, although it may be accepted a Fair Work Inspector has a discretion in relation to the number of compliance notices he or she may give, the FWO’s submissions overlooked the statement of claim, and the affidavit of the FWI which, to me, pointed to their being a “temporal or geographical link” between CC’s contraventions of s 716(5) of the FW Act such as to compel “the conclusion that” CC’s contraventions arose “out of substantially the same act, omission or occurrences”;[34] or “out of the same transaction”;[35] or “out of a course of conduct”.[36] I was dissuaded from adopting this initial view, however, after I read the judgment of Judge Jarrett (as his Honour then was) in Fair Work Ombudsman v Tester.[37] In that case the FWO issued two notices to the same employer at the same time in relation to two employees, but his Honour held it was not appropriate to group the two contraventions resulting from the employer failing to comply with each compliance notice. Judge Jarrett said:[38]
Notwithstanding that, the Court has a discretion to group separate contraventions together where the contraventions may be said to overlap with each other or involve the potential double punishment of a respondent for the same or substantially similar conduct. The onus to demonstrate such overlap or commonality of factual substratum is on the respondent and there is no evidence before the Court that the respondent’s failure to comply with the two notices arose from the one transaction or decision such that they should be grouped together.
Moreover, each of the notices related to different employees engaged under different awards and identified different contraventions. Each notice required the respondent to take action specific to the employees and contraventions identified in that notice. I accept that for that reason, the obligations imposed by each notice were wholly separate and distinct. I am satisfied that the respondent’s decisions not to comply with each notice did not constitute a single transaction.
[34] Royer v Western Australia [2009] WASCA 139, at [22]
[35] Trade Practices Commission v Bata Shoe Company of Australia Pty Ltd [1980] FCA 47; (1980) 44 FLR 149; (1980) ATPR 40-161, at 42, 277
[36]Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113, at [148] (Dowsett, Greenwood, and Wigney JJ)
[37] Fair Work Ombudsman v Tester [2021] FCCA 771
[38] Fair Work Ombudsman v Tester [2021] FCCA 771, at [14]-[15]
What Judge Jarrett said in these passages substantially apply to the circumstances of the case before me. I am therefore not satisfied that the “one transaction principle” applies to the circumstances of this case to lead me to reduce the penalties that would otherwise be appropriate in relation to each of CC’s and Mr Trainer’s contraventions of s 716(5) of the FW Act.
The last question to consider is whether ordering CC to pay penalties totalling $64,935, and Mr Trainer to pay penalties totalling $12,987, are just and appropriate responses to CC’s and Mr Trainer’s contravening conduct as a whole. I am satisfied they are and, for that reason, I do not propose to make any further adjustment by applying the “totality principle”.
DISPOSITION
I also propose to order that:
(a)CC pay pecuniary penalties in the amount of $64,935;
(b)Mr Trainer pay pecuniary penalties in the amount of $12,987;
(c)CC and Mr Trainer pay the pecuniary penalties to the Commonwealth within 28 days after the day I pronounce my orders; and
(d)the parties have liberty to apply on 7 days’ notice in relation to any question that may arise concerning the implementation of the orders I propose to make.
I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Manousaridis. Associate:
Dated: 29 April 2022
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