Fair Work Ombudsman v Devine Marine Group Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Fair Work Ombudsman v Devine Marine Group Pty Ltd [2015] FCA 370

Citation: Fair Work Ombudsman v Devine Marine Group Pty Ltd [2015] FCA 370
Parties: FAIR WORK OMBUDSMAN v DEVINE MARINE GROUP PTY LTD, BRETT BARRY DEVINE and ARTHUR BOUCAUT-JONES
File number: SAD 209 of 2013
Judge: WHITE J
Date of judgment: 22 April 2015
Catchwords:

INDUSTRIAL LAW – Penalty – involvement in contraventions of modern award – effect of s 557 of Fair Work Act 2009 (Cth) in relation to multiple contraventions of multiple provisions in award – assessment of penalty – contraventions part of deliberate strategy – contraventions occurred throughout period of employment – no cooperation with investigation or expression of contrition from self-represented respondent – respondent now bankrupt – whether particular vulnerability of foreign employees was exploited – application of totality principle

PRACTICE AND PROCEDURE – Costs – application for costs of proceeding under the Fair Work Act 2009 (Cth) – whether proceedings instituted without reasonable cause – legal position having been clarified by decisions delivered after commencement of proceedings

Legislation: Fair Work Act 2009 (Cth) ss 45, 539, 546, 550, 557, 570
Cases cited: Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; (2008) 165 FCR 560
Australian Workers’ Union v Leighton Contractors Pty Ltd (No 2) [2013] FCAFC 23
Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (AMWU) v John Holland Pty Limited ACN 004 282 268 [2009] FCA 274; (2008) 180 IR 350
Baker v Patrick Projects Pty Ltd (No 2) [2014] FCAFC 166
Cahill v Construction, Forestry, Mining and Energy Union (No 4) [2009] FCA 1040, (2009) 189 IR 304
Fair Work Ombudsman v Access Embroidery (Australia) Pty Ltd [2012] FMCA 835
Fair Work Ombudsman v Al Hilfi [2012] FCA 1166
Fair Work Ombudsman v Devine Marine Group Pty Ltd [2013] FCA 1135
Fair Work Ombudsman v Devine Marine Group Pty Ltd [2014] FCA 1365
Fair Work Ombudsman v Kingsford Carwash Pty Ltd [2012] FMCA 464
Fair Work Ombudsman v Kingsford Carwash Pty Ltd (No 2) [2012] FMCA 1210
Hanssen Pty Ltd v Jones [2009] FCA 192; (2009) 179 IR 87
Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357
Modern Awards Review 2012‑Penalty Rates [2013] FWCFB 1635
Potter v Fair Work Ombudsman [2014] FCA 187
R v Moore; Ex parte Federated Miscellaneous Workers’ Union of Australia (1978) 140 CLR 470
Rafferty v Madgwicks [2012] FCAFC 37; (2012) 203 FCR 1
Restaurant and Catering Association Victoria [2014] FWCFB 1996
Rocky Holdings Pty Ltd v Fair Work Ombudsman [2014] FCAFC 62; (2014) 221 FCR 153
Stuart-Mahoney v Construction, Forestry, Mining and Energy Union [2008] FCA 1426; (2008) 177 IR 61
Temple v Powell [2008] FCA 714; (2008) 169 FCR 169
Weeks v Commissioner of Taxation (No 2) [2013] FCAFC 22
Yorke v Lucas (1984) 158 CLR 661
Date of hearing: 29 January 2015 and 4 March 2015
Place: Adelaide
Division: FAIR WORK DIVISION
Category: Catchwords
Number…
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Details
Case
[2015] FCA 370
Decision Date

CaseChat Overview and Summary

The Fair Work Ombudsman (FWO) brought proceedings against Devine Marine Group Pty Ltd (DMG) in the Federal Circuit Court, alleging contraventions of minimum wage rates and penalty rates under the Marine Industry (General) Award 2010. The primary dispute centred on whether DMG, under the control of its director Capt Devine, had deliberately underpaid employees by exploiting their vulnerability as foreign workers, thereby contravening the protections afforded by the Fair Work Act 2009 (Cth) and the Award. The legal issues revolved around the assessment of penalties for multiple contraventions of different provisions within the Award and whether the totality principle should apply to the penalty assessment. The court was also required to consider the lack of cooperation from DMG during the investigation and whether the vulnerability of foreign employees had been exploited.

The Court found that each contravention was a form of underpayment, but the minimum hourly rates and weekend penalty rates were separate parts of the safety net established by the FW Act and the Award. The court emphasised the importance of minimum wage rates as a base entitlement and the appropriateness of penalty rates for weekend work, as affirmed by the Full Bench of the Fair Work Commission. The Court concluded that DMG, at the instigation of Capt Devine, engaged in a deliberate strategy to obtain labour at a lower cost by bringing Fijian workers to Australia under the guise of a training program. The Court further found that Capt Devine had acknowledged that DMG could not afford to engage workers as employees due to regulatory burdens. The Court assessed the culpability of Capt Devine for these contraventions, taking into account the totality of the conduct. In light of the findings, the Court imposed a penalty of $4,000 for the contravention of clause 24.1(a) of the Award, and penalties of $2,000 each for the contraventions of clauses 40.7 and 40.8. The pecuniary penalties were ordered to be paid to the affected employees, Mr Alopisia Kouka and Mr Andrew James. The claim against Arthur Boucaut-Jones was dismissed, and the proceedings were otherwise dismissed with no order as to the costs of the proceedings.

Orders

Orders of the court

2. A penalty of $4,000 be imposed on the Second Respondent in respect of the contravention of cl 24.1(a) of the Award.

3. Penalties of $2,000 be imposed on the Second Respondent in respect of each of the contraventions of cll 40.7 and 40.8 of the Award.

4. Pursuant to s 546(3) of the FW Act, the pecuniary penalties imposed under the above orders be paid by payments to Mr Alopisia Kouka and Mr Andrew James of $4,000 each.

5. The claim against the Third Respondent, Arthur Boucaut‑Jones be dismissed.

6. The proceedings otherwise be dismissed.

7. There be no order as to the costs of the proceedings.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

The Court is to determine an appropriate penalty in each case by a process of instinctive synthesis after taking into account all relevant factors: Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8, (2008) 165 FCR 560 at [27], [55]; Markarian v The Queen [2005] HCA 25, (2005) 228 CLR 357 at [37]‑[39]. The need for deterrence, both personal and general, is usually a prominent consideration in the determination of penalty.Consideration of penalty It can be said that each contravention was a form of underpayment so that to that extent they have a commonality. However, I accept the submission of the FWO that the minimum hourly rates and weekend penalty rates are separate parts of the safety net established by the FW Act and the Award. A guaranteed minimum rate of pay for all hours of work is central to the Australian workplace relations system. It is the base entitlement of employees. Weekend penalty rates compensate employees for the disadvantages of working on weekends. The Full Bench of the Fair Work Commission has recently affirmed the appropriateness of penalty rates for weekend work. In Modern Awards Review 2012‑Penalty Rates [2013] FWCFB 1635 at [218] the Full Bench held that the continuation of penalty rates for weekend work was appropriate as “there are disabilities associated with work at unsociable times”. The higher rate for Sunday work reflects the greater disadvantages in working on Sundays. Thus, in Restaurant and Catering Association Victoria [2014] FWCFB 1996, the Full Bench referred to the “contemporary general assessment of the disabilities associated with working on Sundays as compared to other days of the week” as supporting the continuation of penalty rates for Sunday work. Although that conclusion was expressed in relation to an industry quite different from that in which DMG operated, it is reasonable to suppose that the same considerations underpin the prescription in the Award for all work performed on Sundays. Thus, as the FWO submitted, cll 24.1(a), 40.7 and 40.8 serve separate and distinct purposes. This understanding should underpin the assessment of the culpability of Capt Devine for the contraventions. It is evident that DMG, at the instigation of Capt Devine, engaged in a deliberate strategy by which to obtain labour at less cost. I repeat in this respect part of my finding at [195] in the principal reasons:… DMG, controlled by Capt Devine, had arranged to bring the Fijians, and in particular Mr James and Mr Kouka, to Australia as apparent participants in a training program when, in reality, it intended that they should carry out productive work. The evident purpose of the strategy was to avoid DMG having to pay the rates which would otherwise be applicable to the performance of that work by local employees. The FWO also referred to the evidence of Capt Devine that DMG could not afford to engage workers as employees and, instead, preferred to engage them as contractors “because of WorkCover, Fair Work and over regulation of this country … in the Marine Industry in particular.”