Fair Work Ombudsman v Dingwall Hilder Nominees Pty Ltd
[2022] FedCFamC2G 76
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Dingwall Hilder Nominees Pty Ltd [2022] FedCFamC2G 76
File number: PEG 306 of 2020 Judgment of: JUDGE KENDALL Date of judgment: 17 February 2022 Catchwords: INDUSTRIAL LAW – Penalty hearing – factors for consideration – the need for specific and general deterrence – the nature, circumstances and extent of the contravention – the degree of contrition shown, corrective action taken and cooperation demonstrated – the need to ensure compliance with minimum standards – no effective engagement by respondents. Legislation: Crimes Act 1912 (Cth), s.4AA
Fair Work Act 2009 (Cth), ss.90, 539, 545, 546, 550, 557, 682 and 716
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth), r.13.06
Federal Circuit Court Rules 2001 (Cth), r.13.03
Restaurant Industry Award 2020, cll.22.4, 30.2 and Schedule ACases cited: ACE Insurance Limited v Trifunovski (No 2) [2012] FCA 793
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113
Australian Building and Construction Commissioner v J Hutchinson Pty Ltd T/A Hutchinson Builders (Hutchinson) [2019] FCA 667
Australian Securities and Investments Commission v Southcorp Ltd (No 2) (2003) 130 FCR 406
Darna Pty Ltd & Anor v Fair Work Ombudsman [2014] FCCA 1106
Director of Consumer Affairs Victoria v Gibson (No 3) [2017] FCA at [83]
Fair Work Ombudsman v First Group of Companies Pty Ltd (Deregistered) & Others [2018] FCCA 1228
Fair Work Ombudsman v Matcraft Pty Ltd [2021] FCCA 272
Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301
Fair Work Ombudsman v Soma Kitchen Pty Ltd & Anor [2020] FCCA 2358
Kelly v Fitzpatrick [2007] FCA 1080
Mornington Inn v Jordan [2008] FCAFC 70
Plancor Pty Ltd v Liquor; Hospitality and Miscellaneous Union [2008] FCAFC 170
Ponzio v B&P Caelli Constructions Pty Ltd (20070 158 FCR 543Division: Division 2 General Federal Law Number of paragraphs: 100 Date of hearing: 3 November 2021 Place: Perth Counsel for the Applicant: Ms S Anicic Solicitor for the Applicant: Australian Government Solicitor First Respondent: No appearance Second Respondent: No appearance ORDERS
PEG 306 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: DINGWALL HILDER NOMINEES PTY LTD
First Respondent
MICHELLE DAWN HILDER
Second Respondent
ORDER MADE BY:
JUDGE KENDALL
DATE OF ORDER:
17 FEBRUARY 2022
THE COURT ORDERS THAT:
1.Orders 2-4 of the orders dated 10 August 2021 be vacated.
2.Pursuant to section 545(1) of the Fair Work Act 2009 (Cth) (the “FW Act”), the First Respondent, within 28 days of the order, take the steps that were required by the compliance notice dated 21 January 2020 (the “First Compliance Notice”) and the compliance notice dated 17 June 2020 (the “Second Compliance Notice”) (collectively, the “Notices”) by:
(a)calculating for each of the employees specified in the Notices:
(i)the amount each of the employees should have been paid in respect of each of the entitlements and for the periods specified in the Notices;
(ii)the amount each of the employees should have been paid in respect of additional superannuation contributions for the periods specified in the Notices;
(b)paying the outstanding amount of entitlements it was required to pay the employees referred to in paragraph (a)(i) above to the employees;
(c)paying the additional superannuation contributions it was required to pay on behalf of the employees referred to in paragraph (a)(ii) above into the nominated Superannuation Fund of each of the employees (or in the event that an employee has not made a nomination, to a fund in accordance with clause 22.4 of the Restaurant Industry Award 2020); and
(d)preparing and producing to the Applicant a schedule or schedules outlining its calculations of the outstanding entitlements and superannuation contributions it was required to pay the employees as a result of paragraph (a) above and providing proof of any amounts paid as a result of paragraphs (b) and (c) above.
3.Pursuant to section 547(2) of the FW Act, the First Respondent pay interest to the employees on the amounts owed pursuant to paragraph 2(a)(i) above within 28 days of the order.
4.In the event that any of the employees cannot be located or if for any reason payment cannot be made to any of the employees within 180 days, then any such payment is to be made to and retained by the Commonwealth of Australia in accordance with section 559 of the FW Act.
5.Pursuant to section 546(1) of the FW Act:
(a)the First Respondent pay a pecuniary penalty of $22,050 for its declared contravention of section 716(5) of the FW Act and the Compliance Notice dated 21 January 2020 within 28 days of the date of the order;
(b)the First Respondent pay a pecuniary penalty of $23,310 for its declared contravention of section 716(5) of the FW Act and the Compliance Notice dated 17 June 2020 within 28 days of the date of the order;
(c)the Second Respondent pay a pecuniary penalty of $4,410 in respect of her involvement in the declared contravention of the First Respondent of section 716(5) of the FW Act and the Compliance Notice dated 21 January 2020 within 28 days of the date of the order; and
(d)the Second Respondent pay a pecuniary penalty of $4,662 in respect of her involvement in the declared contravention of the First Respondent of section 716(5) of the FW Act and the Compliance Notice dated 17 June 2020 within 28 days of the date of the order.
6.Pursuant to section 546(3)(a) of the FW Act, the pecuniary penalties ordered to be paid by the Respondents in order 5 above be paid to the Commonwealth of Australia.
7.The Applicant have liberty to apply on 7 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 KENDALL:
INTRODUCTION
On 15 October 2020, the Applicant (the Fair Work Ombudsman) filed an application (the “substantive application”) and a statement of claim in this Court, alleging that the First Respondent (Dingwall Hilder Nominees Pty Ltd) had contravened s 716(5) of the Fair Work Act 2009 (Cth) (the “FW Act”).
The substantive application related to two notices issued under s 716 of the FW Act on 21 January 2020 and 17 June 2020 (collectively, the “Compliance Notices”) in relation to First Respondent’s employment of several employees under the Restaurant Industry Award 2010 (the “Award”) at a restaurant trading as “Quarterdeck Dining”, located in Mandurah, Western Australia.
The Applicant also alleged that the Second Respondent, Michelle Dawn Hilder (“Ms Hilder”), was involved in these contraventions. Ms Hilder was, at the relevant time, a director of the First Respondent and largely responsible for the overall operation, management and control of the First Respondent.
On 10 August 2021, on application by the Applicant, this Court entered default judgment for the Applicant against the Respondents pursuant to r 13.03B(2)(d) of the Federal Circuit Court Rules 2001 (Cth) (the “Rules”) (being the rules in place at the time of the orders). The Court declared that the:
(a)First Respondent contravened section 716(5) of the FW Act by failing to comply with the compliance notice dated 21 January 2020 (the “First Compliance Notice”);
(b)First Respondent contravened section 716(5) of the FW Act by failing to comply with the compliance notice dated 17 June 2020 (the “Second Compliance Notice”);
(c)Second Respondent was involved, within the meaning of section 550(2) of FW Act, in the contravention by the First Respondent of section 716(5) of the FW Act in respect of the First Compliance Notice; and
(d)Second Respondent was involved, within the meaning of section 550(2) of the FW Act, in the contravention by the First Respondent of section 716(5) of the FW Act in respect of the Second Compliance Notice.
The Respondents did not appear at the default hearing on 10 August 2021.
The Respondents are deemed to have admitted the relevant fair work contraventions by reason of the Respondents’ defaults under r 13.03A(2) of the Rules (as per the orders of this Court dated 10 August 2021).
A penalty hearing occurred on 3 November 2021. As will be discussed below, the Respondents also failed to appear at that hearing.
This judgment concerns the appropriate penalty to be imposed for admitted fair work contraventions by the respondents in relation to the Compliance Notices.
BACKGROUND
Documents before the Court
This matter has a lengthy procedural history. While the Court is reluctant to “copy and paste” large sections of the pleadings filed in a matter, sometimes doing so is helpful. This approach is particularly useful when, as here, the Respondents failed to attend either the default hearing or the penalty hearing. In this matter, the relevant pleadings outline the nature of the contraventions and detail a failure on the part of the Respondents to engage with the Applicant, the Court and, indeed their own lawyers (despite the best efforts of those lawyers).
The Respondents were represented by Ryan & Durey Solicitors from 11 January 2021 to 18 June 2021. The only document the Respondents filed was a Response dated 25 January 2021. This was filed whilst the Respondents were legally represented. Their solicitors were removed as solicitors on 18 June 2021.
The materials relied on for the purposes of this judgment are thus limited to:
(a)an Application and a Statement of Claim filed on behalf of the Applicant on 15 October 2020;
(b)two affidavits of service of Cheryl Lorraine Harrison sworn and filed on behalf of the Applicant on 26 October 2020;
(c)a Response filed on behalf of the Respondents on 25 January 2021;
(d)a Notice of Withdrawal of Solicitor filed on behalf of the Respondents on 18 June 2021;
(e)an Application in a Case for Default Judgment and supporting affidavit of Sara Anicic affirmed and filed on behalf of the Applicant on 23 July 2021;
(f)an affidavit of service of Dawn Plenk affirmed and filed on behalf of the Applicant on 30 July 2020;
(g)written submissions filed on behalf of the Applicant on 8 September 2021;
(h)an affidavit of Jodi Lee Gribben affirmed and filed on behalf of the Applicant on 8 September 2021;
(i)an affidavit of Jodi Lee Gribben affirmed and filed on behalf of the Applicant on 27 October 2021; and
(j)email correspondence tendered by the Applicant at the penalty hearing comprising an email from the Australian Government Solicitor to the known email addresses of the Respondents dated 11 August 2021 attaching a letter of even date and an email from the Australian Government Solicitor to the known email addresses of the Respondents dated 28 October 2021 attaching a letter of even date (together marked as Exhibit 1).
The Contraventions and Compliance Notices
By way of background, the Court notes the contents of the Statement of Claim filed on 15 October 2020. That document details the relevant contraventions under section 716(5) of the FW Act. It notes, relevantly, that from July 2019 to January 2020, Fair Work Inspector Jodi Gribben (“FWI Gribben”) undertook an investigation into the First Respondent’s compliance with Commonwealth workplace laws (the “First Investigation”).
The particulars of the First Investigation are then detailed in the Statement of Claim as follows:
PARTICULARS
The First Investigation commenced following requests for assistance made to the Applicant from employees of the First Respondent, including Clive Munn and Toni Simpson (the First Compliance Notice Employees).
6.During the course of the First Investigation, FWI Gribben had a telephone conversation with, or corresponded with, the Second Respondent in relation to some or all of the First Compliance Notice Employees.
7.As a result of the First Investigation, FWI Gribben formed a reasonable belief, within the meaning of section 716(1) of the FW Act, that at all relevant times:
(a)the Restaurant Industry Award 2010 (the Award) covered and applied to the First Respondent in respect to the employment of the First Compliance Notice Employees;
(b)during the period between 19 June 2017 and 8 June 2019 the First Respondent employed Clive Munn (the Munn Period);
(c)during the Munn Period, Clive Munn performed work as a cook for the First Respondent on a full-time basis, specifically as a Cook Grade 5 under the Classification Structure in Schedule A to the Award;
(d)during the period between 9 December 2017 and 25 November 2018 the First Respondent employed Toni Simpson (the Simpson Period);
(e)during the Simpson Period, Toni Simpson performed work as Food and Beverage Attendant on a casual basis, specifically as a Food and Beverage Attendant Grade 2 under the Classification Structure in Schedule A to the Award;
(f) the First Respondent failed to pay Clive Munn:
(i)his annual leave entitlements accrued during his period of employment upon cessation of his employment with the First Respondent;
(ii)the minimum rate of pay applicable to him under the Award for overtime worked;
(iii)the minimum rate of pay applicable to him under the Award for ordinary hours worked on a public holiday;
(g) the First Respondent failed to pay Toni Simpson:
(i)the minimum casual rate of pay applicable to her under the Award;
(ii)the minimum rate of pay applicable to her under the Award for ordinary hours worked on a Saturday and Sunday; and
(iii)the minimum rate of pay applicable to her under the Award for ordinary hours worked on a public holiday.
8.By reason of the matters pleaded in paragraph 7 above, FWI Gribben formed a reasonable belief, within the meaning of section 716(1) of the FW Act, that the First Respondent had contravened the following in respect of the First Compliance Notice Employees in respect of the Munn Period and Simpson Period:
(a)Clause 34.1 – failing to pay the First Compliance Notice Employees their applicable rates for ordinary hours worked on a public holiday;
(b)Section 90(2) of the FW Act and clause 35.2(b) – failing to pay Clive Munn accrued untaken annual leave entitlements on termination of his employment;
(c)Clauses 33.1(a), 33.2(a), 33.2(b), and 33.2(c) – failing to pay Clive Munn his applicable overtime rates (150% for the first two hours and 200% thereafter for overtime worked on a weekday, 175% for the first two hours and 200% thereafter for overtime worked on Saturdays and 200% for overtime work on a Sunday);
(d)Clauses 13.1 and 20 – failing to pay Toni Simpson her applicable base rate and 25% casual loading; and
(e)Clause 34.1 – failing to pay Toni Simpson her applicable penalty rate of 150% for ordinary hours worked on a Saturday and Sunday.
(together, the First Compliance Notice Entitlements).
The First Compliance Notice
9.On 21 January 2020, FWI Gribben gave the First Respondent a notice pursuant to section 716(2) of the FW Act (the First Compliance Notice) by:
(a)posting the First Compliance Notice to the registered office of the First Respondent located at [omitted] (the Registered Office); and
(b)sending an email to the Second Respondent at [omitted] and attaching a copy of the First Compliance Notice.
10.The First Compliance Notice was delivered to the Registered Office on 23 January 2020.
11.Pursuant to section 716(2) of the FW Act, the First Compliance Notice required the First Respondent to:
(a)remedy the direct effects of the contraventions pleaded at paragraph 8 above by 14 February 2020 by taking the following specified action in respect of the First Compliance Notice Employees (the First Specified Action):
(i)identify the number of hours (the Hours) worked by each First Compliance Notice Employee during their employment periods in respect of which the First Compliance Notice Entitlements were required to be paid under the Award;
(ii) identify the amount the First Respondent paid to each First Compliance Notice Employee during their employment periods in respect of the First Compliance Notice Entitlements (having regard to the Hours, where applicable);
(iii) calculate the amount the First Respondent should have paid each First Compliance Notice Employees during their employment periods in respect of the First Compliance Notice Entitlements (having regard to the Hours, where applicable);
(iv)make a payment to each First Compliance Notice Employee of the difference between the amounts identified by the actions in paragraphs 11(a)(ii) and 11(a)(iii) above;
(v)make a record of the information and amounts identified as a result of the actions in paragraphs 11(a)(i) to 11(a)(iii) above and the amount of payment identified as a result of paragraph 11(a)(iv) above;
(vi)calculate and pay any additional superannuation contributions required by clause 30.2 of the Award in respect of the amounts required to be paid to the First Compliance Notice Employees by the First Respondent as a result of the steps taken at paragraphs 11(a)(i) to 11(a)(v) above to the Superannuation Fund chosen by each of the First Compliance Notice Employees; and
(b)produce to the Applicant reasonable evidence of its compliance with the First Compliance Notice by producing a schedule of underpayments and proof that full payment was made to the First Compliance Notice Employees by 21 February 2020.
12.The First Compliance Notice met the requirements of section 716(3) of the FW Act.
13.On 11 February 2020, FWI Gribben reminded the First Respondent of the due date for compliance with the First Compliance Notice by sending an email to the First Respondent at [omitted] attaching a copy of the First Compliance Notice. The email address of [omitted] is listed on the First Respondent’s website at [omitted] under the ‘Contact’ tab.
Failure to comply with the First Compliance Notice
14. The First Respondent did not:
(a) take the First Specified Action by 14 February 2020 or at all; or
(b)produce to the Applicant any evidence of compliance with the First Compliance Notice by 21 February 2020 or at all.
15.By reason of the matters pleaded in paragraph 14 above, the First Respondent failed to comply with the First Compliance Notice and thereby contravened section 716(5) of the FW Act.
The Statement of Claim then outlines a second investigation (the “Second Investigation”) conducted by FWI Gribben from October 2019 to June 2020, the particulars of which are detailed as follows:
PARTICULARS
The Second Investigation commenced following requests for assistance made to the Applicant from employees of the First Respondent, including Jolene Angel, Karrigan Banyard, Raymond Ellory and Monique Scott (the Second Compliance Notice Employees).
17.During the course of the Second Investigation, FWI Gribben had a telephone conversation with, or corresponded with, the Second Respondent in relation to some or all of the Second Compliance Notice Employees.
18.As a result of the Second Investigation, FWI Gribben formed a reasonable belief, within the meaning of section 716(1) of the FW Act, that between 3 March 2019 and 26 December 2019 (the Second Compliance Period):
(a)the Award covered and applied to the First Respondent in respect of the employment of the Second Compliance Notice Employees;
(b)the First Respondent employed the Second Compliance Notice Employees;
(c)the Second Compliance Notice Employees performed work for the First Respondent on a casual basis and performed work covered by the Classification Structure in Schedule A to the Award as follows:
(i) Jolene Angel – Food and Beverage Attendant Grade 2;
(ii) Karrigan Banyard – Cook Grade 1;
(iii) Raymond Ellory – Food and Beverage Attendant Grade 2;
(iv) Monique Scott – Cook Grade 3;
(d)the First Respondent failed to pay the Second Compliance Notice Employees their applicable minimum wage plus casual loading of 25% in respect of ordinary hours worked;
(e)the First Respondent failed to pay Karrigan Banyard her minimum rate applicable for ordinary hours worked on a Saturday and Sunday;
(f) the First Respondent failed to pay Raymond Ellory:
(i)his minimum rate applicable for ordinary hours worked on a Saturday and Sunday; and
(ii)his minimum rate applicable for ordinary hours worked on a public holiday.
(g) the First Respondent failed to pay Jolene Angel:
(i)her minimum rate applicable for ordinary hours worked on a Saturday and Sunday; and
(ii)her minimum rate applicable for ordinary hours worked on a public holiday.
(h) the First Respondent failed to pay Monique Scott:
(i)her minimum rate applicable for ordinary hours worked on a Sunday; and
(ii)her minimum rate applicable for ordinary hours worked on a public holiday.
19.By reason of matters pleaded in paragraph 18 above, FWI Gribben formed a reasonable belief, within the meaning of section 716(1) of the FW Act, that the First Respondent had contravened the following terms of the Award with respect to the employment of the Second Compliance Notice Employees during the Second Compliance Period:
(a)Clauses 13.1 and 20 – failing to pay the Second Compliance Notice Employees their applicable minimum wage plus casual loading of 25% in respect of ordinary hours worked;
(b)Clause 34.1 – failing to pay the Second Compliance Notice Employees their applicable rate for ordinary hours worked on a Sunday;
(c)Clauses 34.1 – failing to pay Karrigan Banyard, Raymond Ellory and Jolene Angel their minimum rate applicable for ordinary hours worked on Saturday; and
(d)Clause 34.1 – failing to pay Monique Scott, Raymond Ellory and Jolene Angel their minimum rate applicable for ordinary hours worked on a public holiday.
(together, the Second Compliance Notice Entitlements).
The Second Compliance Notice
20.On 17 June 2020, FWI Gribben gave the First Respondent a notice pursuant to section 716(2) of the FW Act (the Second Compliance Notice) by:
(a) posting the Second Compliance Notice to the Registered Office; and
(b)sending an email to the Second Respondent at [omitted] and the First Respondent at [omitted] (the Business’ email address) and attaching a copy of the Second Compliance Notice.
21.The Second Compliance Notice was delivered to the Registered Office on 22 June 2020.
22.Pursuant to section 716(2) of the FW Act, the Second Compliance Notice required the First Respondent to:
(a)remedy the direct effects of the contraventions at paragraph 19 above by 15 July 2020 by taking specified action in respect of the Second Compliance Notice Employees (the Second Specified Action):
(i)identify the number of hours (the Further Hours) each of the Second Compliance Notice Employees worked during the Second Compliance Period in respect of which the Second Compliance Notice Entitlements was required to be paid by the Award;
(ii)identify the amount the First Respondent paid to each Second Compliance Notice Employee during the Second Compliance Period in respect of the Second Compliance Notice Entitlements (having regard to the Further Hours, where applicable);
(iii)calculate the amount the First Respondent should have paid to each Second Compliance Notice Employee during the Second Compliance Period in respect of the Second Compliance Notice Entitlements (having regard to the Further Hours, where applicable);
(iv)make payment to each Second Compliance Notice Employee of the difference between the amount identified as a result of the action at paragraph 22(a)(ii) above and the amount calculated as a result of the action at paragraph 22(a)(iii) above;
(v)make a record of the information and amounts identified as a result of action at paragraph 22(a)(i) to 22(a)(iii) above and the amount of the payment as a result of paragraph 22(a)(iv) above;
(vi)calculate and pay any additional superannuation contributions required by clause 30.2 of the Award in respect of the amounts required to be paid to the Second Compliance Notice Employees by the First Respondent as a result of the steps taken at paragraphs 22(a)(i) to 22(a)(v) above to the Superannuation Fund chosen by each of the Second Compliance Notice Employees; and
(b)produce to the Applicant reasonable evidence of its compliance with the Second Compliance Notice by producing a schedule of underpayments and proof that full payment was made to the Second Compliance Notice Employees by 22 July 2020.
23.The Second Compliance Notice met the requirements of section 716(3) of the FW Act.
Failure to comply with the Second Compliance Notice
24. The First Respondent did not:
(a) take the Second Specified Action by 15 July 2020; or
(b)produce to the Applicant any evidence of compliance with the Second Compliance Notice by 22 July 2020 or at all.
25.By reason of the matters pleaded in paragraph 24 above, the First Respondent failed to comply with the Second Compliance Notice and thereby contravened section 716(5) of the FW Act.
The Statement of Claim then details the role and liability of the Second Respondent, as follows:
ACCESSORIAL LIABILITY OF MICHELLE DAWN HILDER
26.By reason of the matters pleaded in paragraph 3, the Second Respondent was responsible for ensuring that the First Respondent complied with the First Compliance Notice and the Second Compliance Notice.
27.By reason of the matters pleaded in paragraphs 3, 6, 9, 13, 17, 20 and 26 above, the Second Respondent:
(a)had actual knowledge that the First Compliance Notice and the Second Compliance Notice was given to the First Respondent, including the requirement that the First Respondent comply with the First Compliance Notice and Second Compliance Notice within the timeframes specified;
(b)had actual knowledge of the First Respondent’s failure to comply with the First Compliance Notice and the Second Compliance Notice; and
(c)was an intentional participant in the First Respondent’s failure to comply with the First Compliance Notice and the Second Compliance Notice.
28.By reason of the matters pleaded in paragraphs 26 and 27 above, the Second Respondent:
(a)was involved, within the meaning of section 550(2)(c) of the FW Act, in the contraventions by the First Respondent of section 716(5) of the FW Act; and
(b)by reason of section 550(1) of the FW Act is taken to have contravened section 716(5) of the FW Act.
It appears that shortly after the Statement of Claim was filed, the Respondents retained legal assistance.
A brief Response was then filed on 25 January 2021. As the relevant contraventions are now deemed to have been admitted it is not necessary to outline the contents of that document in detail. What is noted, however, is that it is evident from the filing of this document that the Respondents did initially attempt to engage with the Applicant and, as will be discussed below, this is relevant, to some extent, to the issue of penalty. Further, it is noted that, in the Response, although the Respondents dispute ever having received the First Compliance Notice and Second Compliance Notice, they did agree to the making of various orders sought by the Applicant.
Application in a Case for Default Judgment
On 15 June 2021, chambers received email correspondence from the Applicant’s representative which stated that the parties had been unable to reach agreement on any statement of agreed facts (as required by order 2 of the orders made by this Court on 11 May 2021) as “the Respondents’ legal representatives had been unable to obtain instructions from the Respondents in relation to which matters the Respondents would or would not agree to”. The Applicant's representative also noted that the Respondent’s legal representative had advised that they would no longer act for the Respondents. The Applicant’s representative also indicated that they would seek to confer with the Respondents directly once their legal representatives were no longer acting.
On 18 June 2021, the Respondents’ representative filed a notice of withdrawal of lawyer on behalf of the Respondents.
On 23 July 2021, the Applicant’s representative contacted Chambers and advised that they had written directly to the Respondents on 23 June 2021. It was noted that, at the time of writing, the Respondents had not returned a signed statement of agreed facts or filed and served a defence. The Applicant’s representative also noted it had not received any communication from the Respondents to correspondence from the Applicant dated 23 June 2021 (or at all).
The Applicant’s representative foreshadowed the filing of an application in a case and supporting affidavit for default judgement to be entered against the Respondents. That application in a case and a supporting affidavit were filed on 23 July 2021.
It is evident that, after filing their Response on 25 January 2021, the Respondents basically ceased engaging with the Applicants or their own lawyers.
As noted above, this failure to engage lead the Applicant to file an application in a case for default judgment dated 23 July 2021.
The application for default judgment was accompanied by an affidavit of Sara Anicic affirmed 23 July 2021. Relevantly, that affidavit outlines the Applicant’s attempts to liaise with the Respondents (and their solicitors) and the service of documents generally. Relevantly, it provides:
5.On 24 October 2020, Dingwall Hilder Nominees Pty Ltd and Ms Hilder were served by a process server handing the Application and Statement of Claim dated 15 October 2020 to Ms Hilder, details of which are contained in the Affidavits of Cheryl Lorraine Harrison sworn and filed on 26 October 2020.
History of proceedings
Respondents’ required to file a Defence and Response
6.On 3 November 2020, the proceeding was listed for a directions hearing before Judge Kendall. I appeared for the Applicant via telephone and Ms Hilder appeared in person and on behalf of Dingwall Hilder Nominees Pty Ltd (with leave). At the directions hearing, Judge Kendall made orders that included requiring the Respondents to file and serve a Defence on or before 1 December 2020.
7.On 3 December 2020, I received an email from Jarrod Ryan of Ryan & Durey Solicitors advising me that Ryan & Durey Solicitors had ‘just been instructed by the First and Second Respondents to represent them’, and were currently obtaining instructions. Mr Ryan requested the FWO's consent to an amended timetable for the filing of a Defence and Reply, stating that Ryan & Durey Solicitors can prepare consent orders if the FWO was agreeable to the dates proposed. Annexed and marked ‘SA-1’ is a copy of this email correspondence dated 3 December 2020.
8.Over the course of 8 to 16 December 2020, I followed up Jarrod Ryan of Ryan & Durey Solicitors regarding the provision of consent orders in the terms described in his email of 3 December 2020. On 22 December 2020, Mr Ryan sent me an email stating that they had ‘finally received our cost agreement back and instructions to act’ and suggested a further amended timetable for the filing of a Defence and Reply. Annexed and marked ‘SA-2’ is the email correspondence between myself and Mr Ryan from 3 December 2020 to 22 December 2020 (without attachments).
9.On 11 January 2021, Ryan & Durey Solicitors filed Notices of Address for Service on behalf of the Respondents.
10.On 12 January 2021, the Court made orders by consent amending the timetable for the filing of a Defence and Reply. Order 1 required the Respondents to file and serve a Defence on or before 25 January 2021.
11. On 25 January 2021, the Respondents filed a Response.
12.On 8 February 2021, I wrote to Ryan & Durey Solicitors. In that letter, I drew to the Respondents attention that the Respondents had failed to file a Defence. I also raised a number of matters that were set out in the Respondents’ Response that did not enable the FWO to understand the Respondents’ position. I requested that the Respondents file a Defence by 17 February 2021 if the Respondents denied any of the allegations contained in the Statement of Claim. Annexed and marked ‘SA-3’ is a copy of the letter dated 8 February 2021.
13.On 17 February 2021, Alyce Cassettai of Ryan & Durey Solicitors sent me an email stating that they had ‘been unable to obtain instructions’ and were ‘endeavouring to obtain instructions’ in order to respond to our letter dated 8 February 2021 and would do so once they had instructions. Annexed and marked ‘SA-4’ is a copy of the email correspondence dated 17 February 2021.
14.On 18 February 2021, I corresponded with Alyce Cassettai of Ryan & Durey Solicitors, seeking the Respondents’ response to the matters outlined in my letter dated 8 February 2021 (referred to in paragraph 12 above).
15.I did not receive a response to the matters outlined in my letter dated 8 February 2021.
16.On 9 March 2021, the Court made orders by consent amending the timetable for the filing of a Defence and Reply. Order 2 required the Respondents to file and serve a Defence on or before 25 March 2021.
17.On the same day, Ryan & Durey Solicitors emailed me a letter dated 9 March 2021. In that letter, Ryan & Durey Solicitors stated that their “client will proceed with the ... proceedings without opposition" and that, as such, “the Respondents consent to each of declarations sought in paragraph 29 of the Statement of Claim”. Annexed and marked ‘SA-5’ is a copy of the letter dated 9 March 2021.
Attempts to agree to Statement of Agreed Facts
18.On 18 March 2021, I sent a letter enclosing a draft Statement of Agreed Facts and draft consent orders to Ryan & Durey Solicitors. I requested that Ryan & Durey Solicitors advise us if any amendments were sought to the draft Statement of Agreed Facts and draft consent orders or, if no amendments were sought, to return the signed Statement of Agreed Facts and consent orders on or before 29 March 2021. Annexed and marked ‘SA-6’ is a copy of the email correspondence and letter dated 18 March 2021 (without attachments).
19.From 29 March 2021 to 28 April 2021, I corresponded with Ryan & Durey Solicitors to follow up on the Respondents’ position regarding the draft Statement of Agreed Facts and draft consent orders. On each occasion, I was advised by Ryan & Durey Solicitors that they were unable to obtain instructions from the Respondents. I also telephoned Ryan & Durey Solicitors on 28 April 2021 to follow up on the Respondent's .position and was advised by Alyce Cassettai that Ryan & Durey Solicitors were clarifying their client's instructions. Annexed and marked ‘SA-7’ is a copy of the email correspondence between 18 March 2021 and 28 April 2021.
20.On 6 May 2021, following an email of 5 May 2021 to the parties from the Court, Ryan & Durey Solicitors emailed me stating that they were still unable to obtain instructions from the Respondents, but asked that I advise whether the FWO would be agreeable to amended draft consent orders. I responded on the same day, providing further amended draft consent orders and seeking the Respondents' consent to those orders by 7 May 2021. I did not receive a response regarding the amended draft consent orders.
21.On 11 May 2021, Jarrod Ryan of Ryan & Durey Solicitors and I attended a directions hearing during which orders were made by Judge Kendall. Order 2 required the parties to file a Statement of Agreed Facts on or before 25 May 2021.
22.On 18 May 2021, I received an email from Jarrod Ryan of Ryan & Durey Solicitors stating that Ryan & Durey Solicitors were still finalising instructions but provided some comments to the draft Statement of Agreed Facts that were still subject to the Respondents' instructions. Annexed and marked ‘SA-8’ is a copy of the email correspondence dated 18 May 2021 (without attachment).
23.On 20 May 2021, I sent a letter to Ryan & Durey Solicitors advising of the FWO’s position in respect of the Respondents’ proposed amendments to the draft Statement of Agreed Facts and requested a response by 10am AWST on 24 May 2021 . Annexed and marked ‘SA-9’ is a copy of letter dated 20 May 2021.
24.On 25 May 2021, I received an email from Alyce Cassettai of Ryan & Durey Solicitors stating that Ryan & Durey Solicitors were “endeavouring to speak to our client in order to obtain instructions to respond”. On 26 May 2021, I sent a letter to Ryan & Durey Solicitors following up a response to the draft Statement of Agreed Facts and requesting a response by 10am AWST on 3 June 2021. Annexed and marked ‘SA-10’ is a copy of the email correspondence dated 25 May 2021 and letter dated 26 May 2021.
25.By telephone on 10 June 2021, Alyce Cassettai of Ryan & Durey Solicitors advised me of their intention to withdraw as solicitors.
26. On 15 June 2021, I emailed Judge Kendall’s Chambers regarding the orders made by his Honour on 11 May 2021 and the status of the proceeding. Annexed and marked ‘SA-11’ is a copy of the email correspondence, and a subsequent exchange of 16 June 2021. Ryan & Durey Solicitors were copied into this email correspondence.
27.On 18 June 2021, Ryan & Durey Solicitors filed a Notice of Withdrawal as Lawyer on behalf of the Respondents. Attached to this notice was the Notice of Intention to Withdraw as Lawyer Ryan & Durey Solicitors stated they had served on the Respondents. That notice identified the following email and postal address of the Respondents, and gave the Respondents notice that the ·court and parties could use these addresses as their address for service, until they appointed another lawyer or fi led a Notice of Address for Service:
Respondents' contact email: [omitted] and [omitted]. Respondents’ last known address: [omitted].
Respondents’ last known address: [omitted].
28.To date, the Respondents have not given notice that they have appointed another lawyer, and have not filed or served a Notice of Address for Service.
Attempts to contact Respondents
29.On 23 June 2021, I sent a letter to the Respondents setting out a summary of the recent events in the proceeding, enclosing prior correspondence with Ryan & Durey Solicitors, and requesting that the Respondents advise me of their position by 7 July 2021 by either returning a signed Statement of Agreed Facts or filing and serving a Defence. I sent the letter and its enclosures to the 2 email addresses listed in the Notice of Withdrawal as Lawyer dated 18 June 2021. Annexed and marked ‘SA-12’ is a copy of the email and letter dated 23 June 2021 (without attachments).
30.I caused a copy of the letter dated 23 June 2021 and its enclosures to be express posted to the postal address listed in the Notice of Withdrawal as Lawyer dated 18 June 2021. The tracking number for that correspondence shows that it was delivered and left in a safe place on 24 June 2021. Annexed and marked
‘SA-13’ is a screenshot from the Australia Post website showing the tracking results for this correspondence.
31.I also caused a copy of the letter dated 23 June 2021 and its enclosures to be express posted to [omitted]. This address is the registered office of Ink Rims Pty Ltd, a registered Australian proprietary company of which the Second Respondent is the sole director. The tracking number for that correspondence shows that it was delivered and left in a safe place on 24 June 2021. Annexed and marked ‘SA-14’ is a copy of a Company Extract Current & Historical for Ink Rims Pty Ltd dated 23 June 2021 and a screenshot from the Australia Post website showing the tracking results for the correspondence.
32.As at the date of this affidavit, I have not received any communication from the Respondents in response to the letter dated 23 June 2021 or at all.
33. To my knowledge, the Respondents have not filed a Defence.
34.I verily believe that the parties were not able to comply with order 2 of the orders of Judge Kendall dated 11 May 2021 (the May Orders) requiring the parties to file a Statement of Agreed Facts because Ryan & Durey Solicitors were unable to obtain instructions from the Respondents and, once the Respondents became self-represented, the Respondents did not respond to our letter dated 23 June 2021. In particular my belief is based on the following matters:
34.1.I provided a draft Statement of Agreed Facts to Ryan & Durey Solicitors on 18 March 2021, as described in paragraph 18 above;
34.2.The only substantive response I received was the one described in paragraph 22 above, which Ryan & Durey Solicitors stated was sent without confirming instructions from the Respondents;
34.3.I further provided a copy of the draft Statement of Agreed Facts directly to the Respondents on 23 June 2021, as described in paragraphs 29-31 above, and to date have received no response.
35.The FWO was granted leave to not comply with order 4 of the May Orders as set out in paragraph 26 above, and annexure SA-11.
36.To my knowledge, the Respondents have not filed or served any evidence on which the Respondents propose to rely in accordance with order 4 of the May Orders.
Default Judgment
Having received the application for default judgment and accompanying affidavit, the Court wrote to the parties on 23 July 2021 advising them that the matter had been listed for an interlocutory hearing on 10 August 2021.
On 10 August 2021, the matter was called 3 times. The Respondents did not attend and no explanation had been given for the non-attendance.
The Court was satisfied that the Respondents had been placed on notice of the day and time of this listing. The Court was also satisfied that the Respondents were aware that if there was a failure to appear judgment may be entered against them. There was no appearance.
The Court noted further that the principles and rules which govern default judgment in the matter as set out by this Court in Fair Work Ombudsman v Soma Kitchen Pty Ltd & Anor [2020] FCCA 2358 (“Soma Kitchen”) as follows:
17.Rule 13.03A(2) of the Rules provides that a respondent is in default as when the following occurs:
For rule 13.03B, a respondent is in default if the respondent:
(a) has not satisfied the applicant’s claim; and
(b) fails to:
(i)give an address for service before the time for the respondent to give an address has expired; or
(ii)file a response before the time for the respondent to file a response has expired; or
(iii) comply with an order of the Court in the proceeding; or
(iv) file and serve a document required under these Rules; or
(v) produce a document as required by Part 14; or
(vi) do any act required to be done by these Rules; or
(vii) defend the proceeding with due diligence.
18.As can be seen from the use of the word “may” in r.13.03B(2), the power to award default judgment is discretionary.
19.In this regard, the Court notes that the power to award default judgment should be exercised with caution: Speedo Holdings BV v Evans (No 2) [2011] FCA 1227 at [20]. However, the discretion is unfettered save for the requirement that the party be in default.
In light of the evidence before it, the Court determined that the Respondents had failed to comply with the Court's orders and were therefore in default pursuant to r 13.03B(2)(b)(iii) of the Rules.
In light of the above, the Court elected to award default judgment. In that regard, the Court noted the principles outlined in Darna Pty Ltd & Anor v Fair Work Ombudsman [2014] FCCA 1106 (relevantly, at paragraph [15]), as follows:
15.A failure by a company that is party to civil litigation to appoint legal representation has been considered both a failure to do an act required by the FCC Rules and a failure to prosecute the proceedings with due diligence. It is appropriate that the Court exercise its discretion to dismiss the application insofar as it relates to the First Applicant. The First Applicant has failed to comply with r.9.04 of the FCC Rules and thus has failed to do any act required to be done by the FCC Rules. The First Applicant has also failed to prosecute these proceedings with due diligence and has demonstrated an unwillingness and inability to cooperate with the Court and the Respondent to progress the proceedings.
It was clear to the Court that the Respondents had not complied with orders of this Court, had not provided their former legal representatives with instructions to enable the case to progress and had failed repeatedly to respond to communications from the Applicant’s legal representative. The Court determined that the Respondents appeared to have abandoned the proceedings and were playing no part in defending the claim.
In the circumstances, the Court determined that the Respondents’ failure to comply with Court orders and failure to defend the claim was of sufficient severity and impact on the Applicant that it hindered (or was prejudicial to) a fair hearing.
Overall, the Court was satisfied, on the evidence before it, that it was appropriate to exercise the discretion to award default judgment.
The Court found for the Applicant and handed down an ex tempore judgment on the basis of the principles outlined above.
The Court ordered and declared as follows:
Based upon the admissions which the Respondents are deemed to have made, by reason of their defaults under r 13.03A(2) of the Federal Circuit Court Rules 2001 (Cth) (the “Rules”) THE COURT DECLARES THAT:
A.the First Respondent contravened s 716(5) of the Fair Work Act 2009 (Cth) (the “FW Act”) by failing to comply with the compliance notice dated 21 January 2020 (the “First Compliance Notice”);
B.the First Respondent contravened s 716(5) of the FW Act by failing to comply with the compliance notice dated 17 June 2020 (the “Second Compliance Notice”);
C.the Second Respondent was involved, within the meaning of s 550(2) of FW Act, in the contravention by the First Respondent of s 716(5) of the FW Act in respect of the First Compliance Notice; and
D.the Second Respondent was involved, within the meaning of s 550(2) of the FW Act, in the contravention by the First Respondent of s 716(5) of the FW Act in respect of the Second Compliance Notice.
THE COURT ORDERS THAT:
1.Default judgment is entered for the Applicant against the Respondents pursuant to r 13.03B(2)(d) of the Rules.
2.Pursuant to s 545(1) of the FW Act, the First Respondent, within 28 days, take the steps that were required by the First Compliance Notice and the Second Compliance Notice (collectively, the “Notices”) by:
2.1 calculating for each of the employees specified in the Notices:
2.1.1the amount each of the employees should have been paid in respect of each of the entitlements and for the periods specified in the Notices;
2.1.2the amount each of the employees should have been paid in respect of additional superannuation contributions for the periods specified in the Notices;
2.2paying the outstanding amount of entitlements it was required to pay the employees referred to in paragraph 2.1.1 above to the employees;
2.3paying the additional superannuation contributions it was required to pay on behalf of the employees referred to in paragraph 2.1.2 above into the nominated Superannuation Fund of each of the employees (or in the event that an employee has not made a nomination, to a fund in accordance with clause 22.4 of the Restaurant Industry Award 2020); and
2.4preparing and producing to the Applicant a schedule or schedules outlining its calculations of the outstanding entitlements and superannuation contributions it was required to pay the employees as a result of paragraph 2.1 above and providing proof of any amounts paid as a result of paragraphs 2.2 and 2.3 above.
3.Pursuant to s 547(2) of the FW Act, the First Respondent pay interest to the employees on the amounts owed pursuant to paragraph 2.1.1 above within 28 days of the order.
4.In the event that any of the employees cannot be located or if for any reason payment cannot be made to any of the employees within 180 days, then any such payment is to be made to and retained by the Commonwealth in accordance with s 559 of the FW Act.
5.The Applicant have liberty to apply on seven days’ notice in the event that any of the preceding orders are not complied with.
6.The matter remain listed on 3 November 2021 at 10.00am, to determine the amount of the pecuniary penalty to be paid by the First and Second Respondents.
7.The Applicant file and serve any affidavit evidence and an outline of submissions on penalty by 8 September 2021.
8.The Respondents file and serve any affidavit evidence and an outline of submissions on penalty by 6 October 2021.
9.The Applicant file and serve any outline of submissions in reply by 20 October 2021.
10.Each party notify the other parties of any witnesses required for cross-examination, and any proposed objections to evidence on or before 20 October 2021.
AND IT IS NOTED THAT: the Court will not provide a written version of the reasons for judgment as delivered today, unless the Court receives a request in writing from either party seeking that written reasons be published.
The parties were sent copies of these orders on 10 August 2021. As discussed further below, the Respondents have not contacted the Applicant or chambers since that time and have continued to play no role in this proceeding.
Penalty Hearing – 3 November 2021
The matter was listed for a penalty hearing at 10.00am on 3 November 2021.
Exhibit 1 provides evidence that the Respondents were notified on two separate occasions by the Applicant’s representative of the date and time of the penalty hearing.
No appearance was entered by or for the Respondents at the penalty hearing.
In the circumstances, the Court was satisfied that the Respondents had been notified of the date and time of the penalty hearing and, had they wanted to participate in that hearing, they could have done so or contacted the Court in relation to the matter.
No correspondence was received by the Court from the Respondents in relation to the penalty hearing the subject of this judgment. As discussed above, the Respondents have not played an active role in this proceeding. Indeed, the only document filed by or on behalf of the Respondents in this matter (save for notices of address for service and a notice of withdrawal of solicitor) is a brief Response dated 25 January 2021.
In the circumstances, the Court proceeded with the hearing in the Respondents’ absence pursuant to rule 13.06(1)(e) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) and an order was made on 3 November 2021 in that regard.
CONSIDERATION
Relevant Legal Principles
As per s 546(1) of the FWA, this Court can impose a penalty in relation to a contravention or contraventions of a civil remedy provision. Section 716(5) of the FCA is a “civil remedy provision”.
As detailed by the Applicant in written submissions on penalty filed on 8 September 2021 (at [19]), the appropriate steps for this Court to consider in determining an appropriate penalty are as summarised in Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301:
(a)identify each separate contravention involved. A contravention of each separate obligation imposed by the FW Act is a separate contravention of a civil remedy provision for purposes of section 539(2) of the FW Act;
(b)consider whether any of the contraventions identified in the first step should be dealt with independently or with some degree of aggregation for those contraventions arising out of a course of conduct, noting that section 557(1) of the FW Act does not apply to contraventions of section 716(5) of the FW Act but that the general law principles of course of conduct need to be considered;
(c)consider whether there should be a further adjustment to ensure that, to the extent 2 or more of the contraventions have common elements, there is no double penalty imposed and that the penalty is an appropriate response to what each Respondent did;
(d)consider the appropriate penalty in respect of each final individual group of contraventions, taken in isolation; and
(e)consider the overall penalties arrived at 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.
In this regard, the Court also notes the Applicant’s written submission as to whether the two contraventions in this matter should be grouped together. Those submissions, with which the Court agrees, contend that no “consolidation” should occur in relation to the two contraventions here. As submitted by the Applicant:
26.Notwithstanding that section 557(1) does not apply, 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 the same conduct (as per Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39; (2010) 269 ALR 1 at [41]-[42] and [47]; Rocky Holdings Pty Ltd v Fair Work Ombudsman [2014] FCAFC 62 at [18]-[23]. The onus to demonstrate such overlap or commonality of factual substratum is on the respondent (as per Fair Work Ombudsman v Tester [2021] FCCA 771 at [14]).
27.Each of the Compliance Notices related to different groups of employees and identified different contraventions. Each Compliance Notice required the First Respondent to take action specific to the employees and contraventions identified in that notice (as per Fair Work Ombudsman v Tester [2021] FCCA 771 at [15]; Fair Work Ombudsman v A to Z Catering Solution Pty Ltd & Anor (No 3) [2018] FCCA 3574 at [49]). Further, the Compliance Notices were issued, and fell due for compliance, nearly 6 months apart.
28.The obligations imposed by each Compliance Notice were wholly separate and distinct. The First Respondent’s decision, or failure, to comply with each Compliance Notice did not constitute a single transaction.
Having determined that each contravention should be assessed individually (and for each Respondent), the Court must now turn its attention to sections 539(2) and 546(2) of the FW Act, which outline the “maximum” penalty units which can be imposed on an individual and on a corporate entity.
The maximum penalty is used as a “yardstick” with the maximum amount being reserved for only the most severe circumstances: Mornington Inn v Jordan [2008] FCAFC 70 (“Mornington Inn”) at [41]-[46].
Section 539 of the FW Act details the maximum penalties that can be imposed by reference to “penalty units”. The Court must determine the amount of the “penalty unit” at the time the contravention occurred. That is, the Court must determine what the relevant penalty unit was at the time the Respondents failed to comply with the Compliance Notices (not when proceedings were commenced or when this matter was heard).
As accurately detailed by the Applicant in its written submissions on penalty (at 22] to [25]), in this matter, the “maximum” penalty that can be applied is to be determined on the basis of the following statutory and factual background.
Relevantly, s 4AA of the Crimes Act 1912 (Cth) defined a ‘penalty unit’ as the following:
(a)at the time the Respondents failed to comply with the First Compliance Notice – $210; and
(b)at the time the Respondents failed to comply with the Second Compliance Notice – $222.
Section 546(2)(a) of the FW Act provides that the maximum penalty for an individual is the maximum number of penalty units referred to in the relevant item in column 4 of the table in section 539(2) of the FW Act. Item 33 relates to section 716(5) of the FW Act, which provides (in column 4) that the maximum penalty is 30 penalty units.
Accordingly, the maximum penalties for the Second Respondent would be as follows:
(a)for the First Compliance Notice – $6,300; and
(b)for the Second Compliance Notice – $6,660.
Section 546(2)(b) of the FW Act provides that the maximum penalty for a body corporate is five times the maximum number of penalty units referred to in the relevant item in column 4 of the table in section 539(2) of the FW Act. In this matter, this would be 150 penalty units.
Accordingly, the maximum penalties for the First Respondent would be as follows:
(a)for the First Compliance Notice – $31,500; and
(b)for the Second Compliance Notice – $33,300.
Hence, the aggregate maximum penalties which the Court could impose are:
(a)First Respondent – $64,800; and
(b)Second Respondent – $12,960.
As outlined previously by this Court in Soma Kitchen and Fair Work Ombudsman v Matcraft Pty Ltd [2021] FCCA 272 (“Matcraft”), in determining the appropriate penalty, this Court will consider any penalty imposed by the Applicant. In this matter (pursuant to section 546(1) of the FW Act), the Applicant submits that a total pecuniary penalty of between $38,880 and $45,360 for the First Respondent and a pecuniary penalty of between $7,776 and $9,072 for the Second Respondent should be imposed by the Court (representing 60% to 70% of the maximum penalties).
Overall, the Court will have regard to a variety of factors and circumstances when determining an appropriate penalty: Kelly v Fitzpatrick [2007] FCA 1080. While there are no “fixed” factors, and the Court ought not to adopt a “checklist” approach, the following factors are relevant in relation to this matter:
(a)the need for specific and general deterrence. Relevantly, the Court must take note of the fact that, while deterrence is the “principal object” of imposing a penalty, the imposition of a penalty is not intended to serve a retributive function: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113;
(b)the nature, circumstances and extent of the conduct;
(c)nature and extent of the loss that arose from the contraventions;
(d)the degree of contrition shown, corrective action taken and cooperation demonstrated; and
(e)the need to ensure compliance with minimum standards.
The need for specific and general deterrence
As explained by this Court in Matcraft, the primary objective of a penalty in a proceeding such as this is deterrence, and any penalty imposed should reflect the need for both general and specific deterrence.
In relation to general deterrence, it is important to send a message that contraventions of the sort under consideration here are serious and not acceptable: Australian Securities and Investments Commission v Southcorp Ltd (No 2) (2003) 130 FCR 406 at 418. In this regard, any penalty imposed should “be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like-minded persons or organisations”: Ponzio v B&P Caelli Constructions Pty Ltd (20070 158 FCR 543 at [93].
As stressed by this Court in Soma Kitchen and Matcraft, any contravention of s 716 of the FW Act undermines the purpose of the provision itself (to avoid litigation and foster compliance informally and more efficiently). It also undermines the Applicant’s effectiveness as a regulator. Compliance notices are a means by which the Applicant can carry out its statutory function without having to litigate.
Accordingly, a penalty must be sufficient to reinforce the role of the regulator and encourage timely corrective action and compliance with notices issued under s 716 of the FW Act.
In this matter, there was a failure to comply with two Compliance Notices. That failure cannot be seen as anything but serious and must carry consequences. Otherwise, the refusal and failure to comply risks being seen by employers as an “alternative” to compliance with their statutory obligations and the obligations they (and all who stand in their shoes) have to their (often vulnerable) employees.
A penalty in the mid to high range will achieve the required level of general deterrence. This will make clear the consequences of failing to comply with requirements of the FW Act and compliance notices of the type seen here.
Accordingly, in relation to general deterrence, a penalty in the mid range is appropriate.
In relation to specific deterrence, the Court notes the following evidence and argument outlined by the Applicant at [38] to [41] in written submissions filed on 8 September 2021:
(a)the Second Respondent is the current director of:
(i)the First Respondent;
(ii)Ink Rims Pty Ltd (ACN 648486382); and
(iii)Total Family Pty Ltd (ACN 633445511);
(b)it appears that the First Respondent’s restaurant is no longer operating. However, there is no evidence before the Court that this is necessarily a permanent state of affairs or that the First Respondent is being wound up. Hence, there remains a risk that the First Respondent will employ employees in the future. Specific deterrence against the First Respondent therefore remains relevant;
(c)further, the Second Respondent has two additional companies. There is currently a strike-off action in progress in respect of Total Family Pty Ltd. Further, Ink Rims Pty Ltd operates in the cafe and restaurant industry, as evidenced by its business name of ‘Bistro53’. A Facebook page with the same name indicates that Bistro53 is a restaurant in Mandurah, Western Australia, which was advertising for an employee to work as a chef as of 19 July 2021 and 17 August 2021. Ink Rims Pty Ltd was registered on 6 March 2021, with the Second Respondent as the sole director. This was at a time when the Respondents’ solicitors were unable to obtain instructions from the Second Respondent; and
(d)there is thus evidence that the Second Respondent is currently involved in the employment of employees in the restaurant and hospitality industry.
In assessing the need for specific deterrence, it is often relevant to look at any remedial steps taken by Respondents to ensure that no contravention will occur in the future: Plancor Pty Ltd v Liquor; Hospitality and Miscellaneous Union [2008] FCAFC 170 at [37].
Here, as will be discussed further below, no steps of any sort have been taken. This leaves the Court in a position where it is unable to say unequivocally that, were the same course of events to occur, the Respondents would not act in the same way. In this matter, on the evidence, it cannot be said that the Respondents have shown any remorse for what has occurred or will do what needs to be done to ensure similar conduct won’t occur again. This is particularly troubling in circumstances where the Second Respondent remains active in the restaurant business and seems to have registered a new business at a time when the investigations in this matter were well and truly underway. The fact that she seems to have put her own business interests ahead of the interests of her previous employees (to whom payments remain outstanding) requires a sufficient penalty to ensure that similar actions do not occur again: Australian Building and Construction Commissioner v J Hutchinson Pty Ltd T/A Hutchinson Builders (Hutchinson) [2019] FCA 667.
A penalty in the mid range is appropriate to deter the Respondents from future non-compliance with Australia’s workplace laws.
Nature, circumstances and extent of the contravention
As this Court has previously noted in Soma Kitchen, s 716 of the FW Act was enacted to provide an alternative to litigation. In effect, s 716 of the FW Act offers an informal mechanism through which the Applicant can undertake its functions pursuant to s 682 of the FW Act and seek compliance with minimum entitlements without having to commence court proceedings. The section allows the Applicant to carry out its statutory function and remedy potential contraventions of the FW Act. It also provides an employer (or alleged contravener) the opportunity to rectify any contraventions without any admission or finding of liability.
In this matter, the First Compliance Notice was issued on 21 January 2020. It asked that evidence of compliance with this notice be provided by 21 February 2020.
The Second Compliance Notice was issued on 17 June 2020. It asked that evidence of compliance with this notice be provided by 22 July 2020.
As evidenced by the materials before the Court, the Respondents took no steps to comply or “action” the Compliance Notices.
This led to the Applicant commencing proceedings in this Court in relation to the Compliance Notices on 15 October 2020.
There seems to be some suggestion from the Respondents (noting the contents of the Response dated 25 January 2021) that they did not receive or were not made aware of either Compliance Notice. The Court has no reason to believe that this is the case. The processes undertaken by FWI Gribben in relation to both of the Compliance Notices is best described as forensic. No errors in relation to the service of documents or consultation throughout the entire period of these proceedings can be identified. Everything that needed to be done by FWI Gribbin was done.
As detailed by the Applicant in written submissions on penalty dated 8 September 2021:
45.In the present case, the Compliance Notices clearly set out the specified actions the First Respondent was required to take to remedy the direct effects of the contraventions identified by the Compliance Notices.
46.There is no evidence that the First Respondent took any steps to comply with the Compliance Notices.
47.The Second Respondent’s involvement in the First Respondent’s failure to comply with the Compliance Notice over an extended period of time is serious, and demonstrates a disregard for her company’s obligations under the FW Act. This submission is supported by the following:
(a)there were clear steps available to the First Respondent to comply with the Compliance Notices, which the First Respondent did not take; and
(b)there was no attempt by the First Respondent whatsoever to quantify or rectify any of the contraventions referred to in the Compliance Notices.
The Respondents were given ample opportunity to comply with the Compliance Notices. Proceedings in this Court were not commenced until almost three months after the time in which the Respondents had to comply with the Second Compliance Notice and there is nothing before this Court that leads it to conclude that what the Compliance Notices required of the Respondents was in any way onerous.
To date, the Respondents have not complied with the Compliance Notices and, although they initially “engaged” with the matter via the use of lawyers, they now seem to have walked away entirely from the matter without any intention of complying with what is legally required of them. The contraventions remain ongoing and their employees (who, frankly, deserve much better) have been left “wondering” what will be done to assist them. It is clear that the Respondents have, in effect, abandoned these proceedings. Although they initially engaged lawyers to assist them, it is clear that their lawyer’s own efforts were frustrated by the Respondents’ decision to, in effect, ignore their legal obligations. The only conclusion that this Court can come to in the circumstances of this case is that the Respondents deliberately did what they could do to avoid their workplace obligations. They continue to do so to this day.
The nature, extent and circumstances surrounding the contravention warrant a penalty in the mid to high range.
In relation to the loss arising, the Court notes the Applicant’s written submissions on penalty as follows:
49.The employees the subject of the Compliance Notices have been denied their entitlements as a result of the contraventions of the Award and FW Act identified in the Compliance Notices. Due to the First Respondent’s non-compliance with the Compliance Notices, the effects of these contraventions has not been remedied. The First Respondent has had the benefit of the wages otherwise owed to their employees. That is the wages of 6 employees employed by the First Respondent for various periods over 2.5 years.
In relation to the employees involved in this matter, the Court is sympathetic to the financial losses that they have experienced and, of course, any resulting stress caused by the Respondents’ failure to do the right thing. However, as explained by the Court in Soma Kitchen, the losses experienced by the employee is not a “loss” of the sort this Court aims to address here. This Court is not considering the underlying contraventions that caused the Compliance Notices to be issued. Rather, the loss that is relevant is that which relates to the frustration and stultification of the statutory purpose behind s 716 of the FW Act.
Here, as in Soma Kitchen, that purpose has been undermined. As effectively argued by the Applicant in its written submissions on penalty:
50.…. the First Respondent has occasioned a more public loss, in that the First Respondent’s failure to comply with the Compliance Notices, and the Second Respondent’s involvement in those failures, has caused the FWO as the workplace regulator to spend time and public funds, and will cause the Court to spend time and public funds, dealing with proceedings which would not have been required had compliance occurred. The Respondents’ failure left the FWO with no other option than to commence these proceedings at the public’s expense in order to recover the outstanding amounts owed to the 6 employees.
51.This was exacerbated by the Respondents lack of engagement in the proceeding, resulting in further cost having been incurred in making an application for default judgment to be entered against the Respondents. This application was made after many months of attempts to negotiate and progress the proceeding.
52.This is contrary to the objective of a compliance notice. The Courts have recognised that compliance notices provide a mechanism for an efficient and cost effective alternative to commencing litigation for each underlying contravention, however, that is only the case where compliance notices are complied with.
The extent of the loss in this regard warrants a penalty in the mid to high range.
The degree of contrition shown, corrective action taken and cooperation demonstrated
Although the Respondents did appear, at least initially, to engage with the Applicant (noting that they engaged lawyers and filed a Response), it is clear that since that time the Respondents have done nothing to address the violations outlined in the Compliance Notices and avoid litigation. Nor has contrition of any sort been demonstrated – as best evidenced by the First Respondent’s refusal to take any steps to address the mistakes detailed in the Compliance Notices: ACE Insurance Limited v Trifunovski (No 2) [2012] FCA 793 at [113] to [114].
As detailed by the Applicant in written submissions on penalty:
55.Some 18 months after the First Compliance Notice fell due and more than 11 months after these proceedings were filed, there is no evidence that the First Respondent has satisfied the Compliance Notices.
56.At the date of these submissions, the Respondents have not cooperated with the FWO. The Anicic Affidavit details the attempts and efforts that were made by the FWO for the parties to conclude a Statement of Agreed Facts. The affidavit deposes to Ms Anicic’s belief that an order of the Court that the parties file a Statement of Agreed Facts could not be complied with because the Respondents’ solicitors were unable to obtain instructions from the Respondents and, once the Respondents were no longer legally represented, the Respondents did not respond to the FWO’s correspondence. It is evident from the Anicic Affidavit that the Respondents’ lack of engagement in the proceeding hindered the FWO’s attempts to progress the matter.
57.Further, the Respondents have shown a disregard for this proceeding. This resulted in it becoming necessary for the FWO to file an application for default judgment, for that application to be heard by the Court and orders to be made against the Respondents.
In light of the evidence before the Court, the only conclusion that can be drawn is that the Respondents have shown no contrition, have taken no action to comply with the Compliance Notices and avoid costly litigation and have ignored concerted efforts on the part of the Applicant to resolve this entire matter. Relevantly, the Court notes as follows in this regard:
(a)the Second Respondent (acting in her own right and on behalf of the First Respondent) has never issued an apology or indicated that she regrets what has occurred. Rather, she now seems to have “moved on” and appears intent on starting a new business venture in the same industry;
(b)although the Respondents seemed initially (in their Response) to want to address (via their lawyers) some of the concerns raised in the Compliance Notices, the Respondents then (despite the granting of numerous extensions of time by the Applicant within which to comply with court orders) seem to have stopped communicating all together with their lawyers – leaving those lawyers with no choice but to withdraw as solicitors for the Respondents; and
(c)nothing has been received from the Respondents since that time, despite the Applicant’s best efforts. This again shows a complete lack of contrition (as per Director of Consumer Affairs Victoria v Gibson (No 3) [2017] FCA at [83] and [84]) and a disregard for the Court’s processes and the need to facilitate the course of justice: Mornington Inn at [76].
In the circumstances, a penalty in the mid to high range is warranted.
The need to ensure compliance with minimum standards
The Court again stresses the objectives of s 716 of the FW Act as discussed above. In that context, this Court is struck by the Respondents’ failure to at least attempt to resolve this matter and their continued failure to comply with the Compliance Notices.
Overall, the Respondent’s actions demonstrate an unacceptable disregard for the FW Act’s objective to ensure that employees receive minimum standards and entitlements.
In relation to this issue, a penalty in the mid to high range is appropriate.
Assessment of Penalty and Totality
In the circumstances of this matter, the Applicant argues that the following pecuniary penalties are appropriate:
(d)a penalty of between $18,900 and $22,050 for the First Respondent in respect of the First Compliance Notice;
(e)a penalty of between $19,980 and $23,310 for the First Respondent in respect of the Second Compliance Notice;
(f)a penalty of between $3,780 and $4,410 for the Second Respondent in respect of the First Compliance Notice; and
(g)a penalty of between $3,996 and $4,662 for the Second Respondent in respect of the Second Compliance Notice.
These penalty ranges reflect 60% to 70% of the maximum penalty applicable for each of the contraventions committed by the Respondents as detailed throughout this judgment.
Addressing the principles outlined in Mornington Inn, the Applicant argues that no discount on penalty is appropriate in circumstances where the Respondents failed to actively engage in the proceedings, have not rectified their non-compliance with the Compliance Notices and not expressed any regret in relation to the failure to comply with the Compliance Notices.
In light of the Court’s findings above in relation to the Respondents’ conduct in this matter, the Court agrees with the Applicant in this regard. No discount on penalty is warranted.
It thus remains for this Court to fix a penalty for each of the declared contraventions which pays appropriate regard to the circumstances in which the contraventions occurred. In this regard, it is stressed by the Applicant that “an appropriate penalty is one that is not crushing or oppressive, is proportionate to the conduct engaged in, and does not have the effect of exonerating that conduct”: Fair Work Ombudsman v First Group of Companies Pty Ltd (Deregistered) & Others [2018] FCCA 1228 at [77].
Having taken onto account the Applicant’s proposed penalty, the Court considers that a penalty of 70 per cent of the maximum penalty is appropriate.
Accordingly, the following pecuniary penalties will be ordered:
(a)a penalty of $22,050 for the First Respondent in respect of the First Compliance Notice;
(b)a penalty of $23,310 for the First Respondent in respect of the Second Compliance Notice;
(c)a penalty of $4,410 for the Second Respondent in respect of the First Compliance Notice; and
(d)a penalty of $4,662 for the Second Respondent in respect of the Second Compliance Notice.
In circumstances where the Respondents have shown no contrition and their contravention remains ongoing, the penalty determined by the Court is fair and not oppressive. Rather, it reflects a meaningful penalty and sends a clear message that a failure to address contraventions of the FW Act of the sort seen here brings with it very real consequences.
No reduction pursuant to the principle of totality is warranted.
CONCLUSION
The Court concludes that the appropriate penalty for each of the Respondents is as follows:
(a)a penalty of $22,050 for the First Respondent in respect of the First Compliance Notice;
(b)a penalty of $23,310 for the First Respondent in respect of the Second Compliance Notice;
(c)a penalty of $4,410 for the Second Respondent in respect of the First Compliance Notice; and
(d)a penalty of $4,662 for the Second Respondent in respect of the Second Compliance Notice.
The Court’s remaining orders are as set out in the Applicant’s Annexure A to the Applicant’s written Submissions on Penalty dated 8 September 2021.
I certify that the preceding one hundred (100) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Kendall. Associate:
Dated: 17 February 2022
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