Fair Work Ombudsman v Designer Projects Victoria Pty Ltd
[2022] FedCFamC2G 959
Federal Circuit and Family Court of Australia
(DIVISION 2)
Fair Work Ombudsman v Designer Projects Victoria Pty Ltd [2022] FedCFamC2G 959
File number(s): MLG 826 of 2022 Judgment of: JUDGE MANSINI Date of judgment: 9 November 2022 Catchwords: INDUSTRIAL LAW – FAIR WORK – pecuniary penalty – admitted contraventions of the Fair Work Act 2009 (Cth) – failure to comply with compliance notice – failure to provide payslips – where proceedings brought against first respondent company and second respondent – where second respondent was a person involved within s.550 in the contravention of s.716(5) and s.536(1) – penalty determined. Legislation: Building and Construction General On-site Award 2020
Corporations Act 2001 (Cth)
Fair Work Act 2009 (Cth) ss.536(1), 539(2), 546(1), 550(2), 557, 716(5).
Cases cited: Australian Building and Construction Commissioner v Pattinson [2019] FCA 1654.
Australian Building and Construction Commissioner v Pattinson [2022] HCA 13.
Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25.
CFMMEU v ABCC [2018] FCAFC 97.
Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46.
Fair Work Ombudsman v Tester [2021] FCCA 771.
Flight Centre Ltd v Australian Competition and Consumer Commission (No 2) [2018] FCAFC 53.
Markarian v The Queen [2005] HCA 25.
Trade Practices Commission v CSR Ltd [1990] FCA 762; [1991] ATPR 41-076.
Wong v The Queen [2001] HCA 64; (2001) 207 CLR 582, 61.
Division: Division 2 General Federal Law Number of paragraphs: 43 Date of last submission/s: 7 November 2022 Date of hearing: 9 November 2022 Place: Melbourne Solicitor for the Applicant: HWL Ebsworth Lawyers First Respondent No appearance Second Respondent Appeared in person ORDERS
MLG 826 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: DESIGNER PROJECTS VICTORIA PTY LTD (ACN 623 768 294)
First Respondent
VISNA THANTHRIGE
Second Respondent
order made by:
JUDGE MANSINI
DATE OF ORDER:
9 NOVEMBER 2022
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
(Delivered Ex Tempore – Revised From Transcript)Judge Mansini
These are the written reasons for the judgment that was delivered ex tempore on 9 November 2022, at the request of the Second Respondent who desired a decision and orders on that day. The transcript of reasons has been amended in minor respects and only to correct typographical errors, insert headings and citations and to reflect the intention of the Court, as follows.
IN SUMMARY
Before the Court is an application by the Fair Work Ombudsman (Applicant) for declarations and pecuniary penalty against Designer Projects Victoria Pty Limited (First Respondent) and Mr Visna Thanthrige (Second Respondent) (collectively, Respondents) for: the First Respondent’s contravention of s.716(5) of the Fair Work Act 2009 (Cth) (Act) , for failing to comply with the compliance notice issued under the Act (compliance notice contravention); the First Respondent’s contravention of s.536(1), for failing to give payslips within one day of the performance of work or at all (payslip contravention); and the Second Respondent’s involvement in those contraventions, pursuant to section 550(2) of the Act (collectively, the contraventions).
The Respondents agreed that the Court should make declarations to this effect and order that pecuniary penalties be imposed for the contraventions of the First and Second Respondents, but the value of those penalties was ultimately and properly left for the Court to determine.
CONTEXT
Procedural
Briefly, these proceedings were commenced on 14 April 2022, by way of application and a statement of claim. Those originating documents were served on the First Respondent by express post and email on 3 May 2022, and the Second Respondent was personally served on 6 May 2022. The originating documents included notice that a response was to be filed and served within 28 days of receipt of the application.
On 31 May 2022, procedural orders were made by consent listing the matter for penalty hearing on 27 October 2022. The orders required that the Respondents file and serve a notice of address for service by 3 June 2022 and provided a program for the filing of supporting material.
On 24 June 2022, the parties filed an agreed statement of facts.
The Respondents haD otherwise not filed any supporting material or defence in this proceeding.
On 17 October 2022, the matter was relisted for hearing on 9 November 2022.
The materials before the Court included those filed by agreement – the agreed statement of facts, to which I have already referred, and the following filed by the Applicant:
(a)an affidavit of Melinda Tran, dated 1 September 2022;
(b)an affidavit of Renae Karakinos, dated 2 September 2022; and
(c)an outline of submissions on penalty, dated 26 September 2022.
At the hearing, the Respondents did not file any material or seek to tender any material before the Court, but made oral submissions.
Factual
The relevant background was not in contest, but for present purposes:
(a)the Applicant is the Fair Work Ombudsman;
(b)the First Respondent is the operator of a residential construction company in the State of Victoria and incorporated under the Corporations Act 2001 (Cth) and registered since 11 January 2018; and
(c)the Second Respondent is and was the director and company secretary of the first respondent since 11 January 2018 and he has admitted that he was the person with the actual or apparent responsibility for the operation, management and control of the First Respondent, and for ensuring the First Respondent complied with its legal obligations under the Act.
The Respondents did not seek to join any other directors to these proceedings.
The contraventions being admitted in the agreed statement of facts, it is not strictly necessary to repeat what is said about the background to those contraventions in the materials that appear before the Court. While the Second Respondent indicated at the hearing that he might have, he did not, file any evidence before the Court to the contrary, and he accepted that the contraventions have occurred, and accepted his involvement in the agreed statement of facts, and so I have relied on those matters.
APPROACH TO THE DETERMINATION OF PENALTIES
The Court’s power to impose pecuniary penalties in respect of the established contraventions resides in section 546(1) of the Act. That section permits the Court to impose a pecuniary penalty “that the court considers is appropriate, if the court is satisfied that the person has contravened a single remedy provision”.
By the admissions of the Respondents in this matter, that state of satisfaction exists. It falls then to determine what level of penalty, if any, is appropriate as against the Respondents, in light of the established contraventions.
The factors that might be relevant to the court’s discretion are that which I will address next. As recently affirmed by the High Court of Australia, the purpose of a civil penalty under the regime provided by the Act is primarily, if not wholly, protective in the promotion of the public interest, in compliance with the provisions of the Act, and in general and specific deterrents of further contraventions.[1] An “appropriate” penalty, being one in which, as the Court in that case said, “strikes a reasonable balance between oppressive severity and the need for deterrents in a particular case”.[2]
[1] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, [15]-[16] (Pattinson )citing the plurality in (the Agreed Penalties Case) and French J in Trade Practices Commission v CSR Ltd [1990] FCA 762.
[2] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13, [41].
The principles that inform the exercise of the discretion in determination of appropriate penalties in a particular case are well established. In Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown, Bromwich J endorsed the following five step approach:
(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 (as permitted by Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482 (CFMEU Civil Penalties Case) at [64]) 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: see Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14 at [30]; Australian Ophthalmic Supplies Pty Ltd v McAlry-Smith [2008] FCAFC 8; 165 FCR 560 at [23], [71] and [102].[3]
[3] [2017] FCA 1301; 275 IR 148 at [36].
The task of assessing what amount to impose involves the selection of a figure taking into account all factors relevant to the particular case.[4] The oft cited decision of French J in Trade Practices Commission v CSR Ltd[5] listed those factors relevant to an overall assessment of penalty, restated by the Full Court in CFMMEU v ABCC:
..the nature, character and seriousness of the conduct; the loss and damage caused; the circumstances in which the conduct took place; the size of the contravener and its degree of power; the deliberateness of the conduct and the time over which it occurred; the degree of involvement of senior officials or management; the culture of the organisation as to compliance or contravention; and, any co-operation with the regulator and contrition.[6]
[4] Wong v The Queen [2001] HCA 64; (2001) 207 CLR 582, 611, [75] (Gaudron, Gummow and Hayne JJ); Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357, 373-375, [37] (Gleeson CJ, Gummow, Hayne and Callinan JJ); Flight Centre Ltd v Australian Competition and Consumer Commission (No 2) [2018] FCAFC 53; (2018) 260 FCR 68, 84, [55] (Allsop CJ, Davies and Wigney JJ); Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25, 36 [44] (Jagot, Yates and Bromwicgh JJ) as cited by Snaden J at [26] in Australian Building and Construction Commissioner v Pattinson [2019] FCA 1654.
[5] [1990] FCA 762; [1991] ATPR 41-076 at [42].
[6] [2018] FCAFC 97 at [20].
This is not an exhaustive list. Further, each case 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.[7]
[7] Australian Opthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCA 8 at [12] (Graham J).
In Fair Work Ombudsman v Tester,[8] the Court considered the discretion to group separate contraventions together in the context of an employer’s failure to comply with two compliance notices and ultimately held it was not appropriate in that case.
[8] Fair Work Ombudsman v Tester [2021] FCCA 771.
I considered the present matter in light of those well-established principles.
Fix an appropriate penalty for each single or group contravention, taking into account all relevant circumstances
At the relevant times, a penalty unit was $222.[9] Pursuant to s.539(2) of the Act, the maximum penalty applicable to the First Respondent is one of 150 penalty units, equalling a maximum penalty of $33,300 for the compliance notice contravention, and 300 penalty units equalling a maximum of $6600 for the payslip contravention. That is $99,900 of a maximum penalty in total.
[9] See s.12 of the Act and s.4AA of the Crimes Act 1914 (Cth).
The maximum penalty applicable to the Second Respondent in respect of his involvement in the compliance notice contravention is one of 30 penalty units, equalling $6,660, and 60 penalty units, equalling a maximum of $13,320 for his involvement in the payslip contravention. That would be a total of $19,980 in maximum penalty as against the Second Respondent.
However, the Applicant does not here seek the maximum penalties. Rather, it recommends that the Court impose penalties in the range of 60 to 70 per cent of the maximum in each case, with a discount of 15 per cent in each case.
Section 557 of the Act enables certain types of multiple contraventions to be taken to constitute a single contravention. That is, if the contraventions are committed by the same person and the contraventions arose out of the course of conduct by that person. In the present case, the contraventions of the First and Second Respondents are therefore to be treated as separate. The contraventions of the First Respondent in the contravention of the compliance notice and the the payslips contravention are separate matters, and I am satisfied ought be treated as separate contraventions, and cannot be grouped within the scope of s.557 of the Act. And it follows that the contraventions by the Second Respondent for his involvement in those contraventions cannot be grouped.
Nature of the contraventions
The relevant conduct in the present case is the First Respondent’s failure to comply with the compliance notice and to provide payslips, and the Second Respondent’s involvement in those contraventions. The compliance notice was issued following the Applicant’s investigation and based on the Fair Work inspector’s reasonable belief that the First Respondent had contravened the Building and Construction General On-site Award 2020, in respect of Mr Borg’s (the former Employee) entitlement to payment of annual leave on termination (that was accrued but unused).
The materials before the Court established multiple attempts by the Applicant to follow up with the Second Respondent regarding compliance of the First Respondent with the compliance notice, and that the Second Respondent evinced an intention to rectify the matter, certainly seeking more time on at least two occasions. And, on one such occasion in early January 2022, giving the reason that more time was needed because he had been required overseas for a family emergency. An infringement notice then issued in relation to the payslip failures on 11 January 2022. At the time of delivering this judgment, there was still no evidence of compliance with the compliance notice and the underlying underpayment had not been rectified. I note the infringement notice was subsequently withdrawn, but was still the subject of a contravention here.
The materials before the Court also demonstrated that the Respondents were given multiple warnings by the Applicant about the possible consequences and likely consequences of failure to comply, and encouraged to seek independent advice on numerous occasions. As a result of the contraventions, the precise value of the underpayment owed to the former Employee was not able to be calculated at the time of the hearing. The Respondents had many months to comply with their obligations under the Act, and there was no evidence before the Court that they have attempted to do so.
Ultimately, these failures had resulted in the former Employee being denied his entitlement to unused but accrued annual leave, and to understanding the precise value of what is owed to him. The circumstances which give rise to the contraventions are also relevant, and to be taken into account.
Deliberateness, cooperation and contrition
In all of the circumstances of this case, I am satisfied that the Respondents were aware of the need to comply with the compliance notice and then the infringement notice, and of the consequences of a failure to comply. That the First Respondent did not comply, I consider on the materials before the Court, to be deliberate.
There was no evidence of corrective action taken, but the Applicant properly accepted that the contrition and cooperation of the Respondents in this matter might warrant the application of a discount. Having heard from the Second Respondent at the hearing on behalf of both Respondents, that contrition and willingness to cooperate is a matter for which I will apply significant weight in particular toward the Second Respondent.
Compliance with minimum standards
The importance of compliance with minimum standards is a further important consideration in this case – that is, the need for compliance with the statutory framework. The framework concerning compliance notices and infringement notices is an important mechanism for a Fair Work inspector to deal with non-compliance with minimum entitlements and its directions, as an alternative to commencing litigation. It also provides a means of early resolution and rectification without penalty. The substantial penalties that are set by the legislature for such contraventions of the Act demonstrate the importance that Parliament places on employers complying with their minimum obligations. The compliance with minimum standards is an important consideration in the present case, to ensure that the preservation of effective safety net for employee entitlements, and effective enforcement mechanism.
I accept the Applicant’s contention that the Respondents’ failures to comply in this case and the contraventions in this case essentially undermine the enforcement framework and the safety net of entitlements that it is designed to protect.
Size of the business and financial resources
In terms of the size of the business and financial circumstances, I also accept the Applicant’s submission that there simply is not any evidence before the Court to demonstrate financial hardship, whether related to the pandemic or otherwise.
And, even if I were minded to take judicial notice of the fact of the pandemic (which the Second Respondent referred to in oral submissions and about which there was no evidence put before the Court), that would not be something that I would necessarily be persuaded had a terribly adverse effect in the context of this (the building and construction) industry.
In any event, there was no evidence about size and financial circumstances, and those matters would not excuse or explain breaches of the workplace laws.
I accept the submission that was received - although again, there was just no evidence about it, that the First Respondent might not employ anyone at the moment. But the simple fact on the evidence before the Court is that the First Respondent company still continues to operate, and the Second Respondent continues to be a director of that company, and so I consider there is a need for specific deterrence in this case, at a level that deters the Respondents from again contravening the workplace laws and any notices that might be issued by the Applicant, and of sufficient severity to send a message to employers, that a failure to comply will not be tolerated by the Applicant, the courts, the community, and to impress upon other employers the importance of complying with their legal obligations to their employees.
Fix the penalty
Being satisfied that there is a need for specific deterrence in this case, as well as the need for general deterrence, I turn to how to go about fixing the penalty. The Applicant’s recommended penalty – as earlier foreshadowed, in respect of the contraventions of the Respondents, was a range of 60 to 70 per cent and factored into its calculations were a 15 per cent discount, those recommendations (not being read into the transcript) being as follows:[10]
[10] Applicant’s Outline of Submissions dated 26 September 2022, [67].
Respondent Contravention Maximum penalty Recommended penalty range Penalty amounts less 15% discount Designer Projects Section 716(5) of the Act $33,300 60%-70% $16,983 - $19,814 Section 536(1) of the Act $66,600 60%-70% $33,966 - $39,627 Mr Thanthrige Section 716(5) of the Act $6,600 60% - 70% $3,396.60 - $3,963 Section 536(1) of the Act $13,320 60% - 70% $6,793.20 - $7,925
Weighing the various competing factors in this case, and in the particular circumstances of this case, I considered it appropriate to fix the penalty for each contravention as follows:
(a)for the First Respondent’s compliance notice contravention, at 40 per cent of the maximum, which comes to a total of $13,320;
(b)for the First Respondent’s payslips contravention, at 40 per cent of the maximum, which comes to a total of $26,640;
(c)for the Second Respondent’s involvement in the compliance notice contravention, at 20 per cent of the maximum, which comes to $1,332; and
(d)for the Second Respondent’s involvement in the payslips contravention, at 20 per cent of the maximum, which comes to $2,664.
In arriving at this penalty, I have taken into account that there was no evidence before the Court of any prior contraventions of this kind, and applied a substantial discount for the cooperation and contrition that was demonstrated by the Respondents and have placed particular emphasis on those factors as relates to the Second Respondent (reflecting the difference between the percentages arrived at above).
Totality principle
I have turned my mind to the totality principle, which requires that I ask myself, before imposing anything, whether the total of the penalties that I would impose might amount to a disproportionate response to the wrongdoing.
Having considered them in their totality, I am satisfied that the penalties totalling $39,960 against the First Respondent and $3,996 against the Second Respondent are a proportionate response to each Respondent’s wrongdoing, and an appropriate level to achieve a deterrent objective to which the civil penalties are directed.
For the above reasons delivered ex tempore on 9 November 2022, orders were made on 9 November 2022 and included an order – as the parties had agreed, that the former Employee who is ultimately the subject of the underlying contraventions, be repaid, and that those calculations be delivered. It was ordered that the former Employee be paid within 28 days, with the remaining penalties to be paid on the longer timeframe (which was not opposed by the Applicant) of within 180 days, and to be paid in instalments if the Respondents reach agreement about instalments with the Applicants.
I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Mansini. Associate:
Dated: 9 November 2022
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