Fair Work Ombudsman v Double Hao International Pty Ltd (No 2)
[2024] FedCFamC2G 943
•6 September 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Double Hao International Pty Ltd (No 2) [2024] FedCFamC2G 943
File number: SYG 2072 of 2021 Judgment of: JUDGE FORBES Date of judgment: 6 September 2024 Catchwords: FAIR WORK – failure to comply with Compliance Notice – accessorial liability of business owner – penalties – order permitting portion of penalty paid by primary contravenor to be remitted to former employee Legislation: Fair Work Act 2009 (Cth) s 546, 550, 716
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) r 13.05
Cases cited: Fair Work Ombudsman v Double Hao International Pty Ltd [2024] FedCFamC2G 343
Sayed v Construction, Forestry, Mining and Energy Union [2016] FCAFC 4
Division: Division 2 General Federal Law Number of paragraphs: 32 Date of hearing: 6 September 2024 Place: Melbourne Solicitor for the Applicant: Mr Fiorenza; Fair Work Ombudsman Respondents: In person ORDERS
SYG 2072 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: DOUBLE HAO INTERNATIONAL PTY LTD (ACN 623 230 160)
First Respondent
RONG LIU
Second Respondent
ORDER MADE BY:
JUDGE FORBES
DATE OF ORDER:
6 SEPTEMBER 2024
THE COURT ORDERS THAT:
1.Pursuant to section 546(3) of the Fair Work Act 2009 (Cth) (FW Act), the Applicant remit $3,970.38, from the penalty paid by the First Respondent, to Ms Madeleine Mitchell, within 180 days of this order.
2.Pursuant to section 546(1) of the FW Act, the Second Respondent, Mr Rong Liu pay a pecuniary penalty of $2,000.00 in respect of his involvement in the First Respondent’s contravention of section 716(5) of the FW Act, within 28 days of this order.
3.Pursuant to section 546(3)(a) of the FW Act the pecuniary penalty ordered to be paid by Mr Liu in Order 2 be paid by the Second Respondent to the Consolidated Revenue Fund of the Commonwealth within 28 days.
4.The Applicant have liberty to apply on 7 days’ notice in the event that any of the preceding orders are not complied with.
5.Any other extant orders made with respect to the Compliance Notice issued on 11 August 2021 are otherwise vacated.
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
(ex tempore revised from transcript)JUDGE FORBES
Introduction
In these proceedings, the Fair Work Ombudsman has sought various declarations and the imposition of pecuniary penalties against the first respondent, Double Hao, and the second respondent, Mr Liu, in relation to contraventions of section 716 of the Fair Work Act 2009 (Cth) (the Fair Work Act).
On 7 February 2023, default judgment was entered for the Ombudsman against Double Hao pursuant to rule 13.05(2)(c) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth). On that occasion, the Court made a declaration that Double Hao had contravened section 716(5) of the Fair Work Act by failing to comply with a compliance notice which had been issued to the company on 11 August 2021. On that occasion, the Court also ordered Double Hao to take steps to comply with the compliance notice, including by calculating and paying any outstanding entitlements owed to a former employee, Ms Madeleine Mitchell.
Subsequently, on 25 August 2023, I heard the Ombudsman’s application for pecuniary penalties against Double Hao and submissions seeking an order that Mr Liu be found to have been involved in Double Hao’s contravention. During the course of that hearing, a number of legal issues were raised, and I invited further written submissions.
On 19 April this year, I issued my judgment in Fair Work Ombudsman v Double Hao International Pty Ltd [2024] FedCFamC2G 343. In that judgment I found that Mr Liu, the second respondent, was relevantly “involved” in the contravention by Double Hao within the meaning of section 550 of the Fair Work Act. I ordered that Double Hao pay a pecuniary penalty of $9,990 for its contravention and listed the matter to a later date to hear an application by the Ombudsman for a penalty against Mr Liu personally.
These ex tempore reasons explain the penalty to be imposed on Mr Liu for his involvement and other orders which will finalise this long running litigation between the Fair Work Ombudsman and the respondents.
Further orders sought
This case involves a single contravention of section 716 of the Fair Work Act. The background to the litigation up to the date of my April 2024 judgment is set out at paragraphs [8] to [35] of the published reasons.
On 30 April, I made further orders, requiring the Ombudsman to file and serve an outline of submissions and any affidavit relating to his claim for penalties against Mr Liu. That was to be done by 7 June 2024. In those same orders, I ordered Mr Liu to file and serve an outline of submissions and any affidavit material on which he sought to rely by no later than 5 July 2024.
Pursuant to those orders, the Ombudsman did file an outline of submissions and a further affidavit of Fair Work Inspector Toby Chapman, affirmed on 7 June 2020. Mr Fiorenza, who appeared on behalf of the Ombudsman today, submitted from the bar table, and I accept, that the Ombudsman’s outline and the further affidavit of Mr Chapman were served upon Mr Liu by email and by express post. In any event, those materials were also included in a court book which was sent to Mr Liu on 27 August, just over a week ago.
Mr Liu has not formally filed any submissions or affidavit material in response.
Payment of penalty to former employee
I now turn to the subject matter of today’s hearing and the orders that have been sought by the Ombudsman. Firstly, the Fair Work Ombudsman seeks an order pursuant to section 546(3) of the Fair Work Act that the Ombudsman be authorised to remit $3,970.38 from the penalty paid by Double Hao to the former employee, Ms Mitchell, within 180 days. In simple terms, what the Ombudsman seeks is that a portion of the penalty which has already been paid by Double Hao should be able to be remitted by the Ombudsman to the former employee.
In my 19 April judgment, at paragraphs [125] to [132], I explained why I was not prepared to make an order for compensation be paid by Double Hao to Ms Mitchell. I was not satisfied on the evidence before the Court that I could properly do so. I also expressed the view and gave reasons why I was not satisfied that the Court had the power to make such a compensatory order.
What the Ombudsman now seeks is that I make an order that an amount which equates to the alleged underpaid wages be paid to Ms Mitchell from proceeds already received from the penalty paid by Double Hao.
Mr Fiorenza submitted today that the Court has power to make such an order and that it should be seen as different to a compensatory order. Mr Fiorenza submitted that the Court has power under section 546(3)(c) of the Fair Work Act to make an order that some or all of a pecuniary penalty be directed to a person other than the Fair Work Ombudsman.
I have previously ordered Double Hao to pay a pecuniary penalty of $9,900 for its contravention of s 716. That order was made pursuant to my power to do so under s 546(1) of the Fair Work Act. In relation to the payment of penalties, section 546(3)(c) of the Fair Work Act provides as follows:
Payment of penalty
(3)The court may order that the pecuniary penalty, or a part of the penalty, be paid to:
(a) the Commonwealth; or
(b) a particular organisation; or
(c) a particular person.
The Full Court of the Federal Court in Sayed v Construction, Forestry, Mining and Energy Union [2016] FCAFC 4 makes clear that a pecuniary penalty order is to be distinguished from a compensation order. I am satisfied that having found that a pecuniary penalty should be paid to the Fair Work Ombudsman, I have the discretion to authorise the redirection of some of that penalty to another person if I am satisfied that there is an appropriate reason to do so.
In my primary judgment, as I have said, I was not satisfied that there was sufficient evidence before the Court to quantify loss or order compensation be paid to Ms Mitchell, and I expressed doubts about my power to do so. However, I did find in my judgment that there was sufficient evidence to infer that Ms Mitchell had suffered some financial loss as a result of Double Hao’s failure to take the steps required by the compliance notice.
The Ombudsman seeks an order that it be permitted to redirect some of the proceeds of the penalty to Ms Mitchell. The Ombudsman submits that an appropriate amount should be the loss it estimates that Ms Mitchell has suffered. I do not accept that it is possible to fully quantify that loss, but I do accept the estimate that the Ombudsman has made. I accept that it is appropriate, at the Ombudsman’s request, for that amount to be remitted to Ms Mitchell.
For the sake of clarity for Mr Liu (who is self-represented and assisted by a Mandarin interpreter), that does not require any action to be taken on your part. It is simply a redirection of some of the penalty to Ms Mitchell.
Mr Liu’s involvement
The next matter that I have to deal with today is the claim for an imposition of a penalty against Mr Liu for his involvement.
The legal principles which dictate the approach the Court should take to imposing a penalty are very well known, and, indeed, those legal principles have been set out in some detail in my previous judgment regarding Double Hao. Those principles require the Court to take into consideration the primary objective of deterrence, that is, ensuring that Mr Liu does not do the same or similar thing again, and also, at a general level, to ensure that the community is aware that non-compliance with the Fair Work Act will attract a penalty.
The Court is also required to take into account the circumstances and the deliberateness of the contravenor’s conduct, the nature and extent of any loss which has been caused, whether there has been cooperation with the authorities and the personal and financial circumstances of Mr Liu.
In written submissions, which were supported by oral submissions made today by Mr Fiorenza, the Ombudsman seeks an order imposing a penalty against Mr Liu of between $3,996 and $4,662. That is a penalty in the range of 60 to 70 per cent of the maximum penalty. The reasons for that penalty are set out in some detail in the written submissions filed by the Ombudsman, and I will not go through those in detail.
In his oral submissions today, Mr Fiorenza reiterated that the Court had already made a finding that Mr Liu was involved in Double Hao’s contravention. That is a finding I have made. He submitted that deterrence is the overriding principle. Mr Fiorenza pointed out that Mr Liu continues to be a director of Double Hao and that it continues to trade and that, therefore, it is important that Mr Liu, as a current or future employer, understands that a contravention of the Fair Work Act will attract a penalty. Mr Fiorenza said that no evidence had been filed by Mr Liu. He submitted that Mr Liu had conducted himself in disregard of the Commonwealth workplace laws, that he had contested these proceedings from beginning to end and that Mr Liu had not shown any remorse or contrition for his actions.
In relation to Mr Liu’s financial position and capacity to pay a penalty, Mr Fiorenza relied upon the affidavit of Mr Chapman and various annexures which suggest that Mr Liu appears to be involved as a shareholder with other companies and that he is the proprietor or joint proprietor of up to seven properties. Mr Fiorenza has said that Mr Liu appears to have sufficient financial resources to be able to obtain legal advice and that he could have avoided the contraventions with the benefit of advice. He conceded that Mr Liu’s conduct should not be regarded as blatant disregard of the Fair Work Act, but, nonetheless, Mr Liu could have obtained advice, and he could have challenged the contravention notice in the proper way had he been properly advised. In essence, I take it that the Ombudsman is saying that Mr Liu is, at least in part, an architect of his own situation.
Mr Liu, through his interpreter, also made submissions today. Mr Liu denied that he had six different properties and said none of them belonged to him. Mr Liu repeated the submissions that he had made previously in this Court. He said that at all times he reasonably believed that Ms Mitchell was a part-time employee, not a casual employee. He reiterated that he believed that he had paid Ms Mitchell above the part-time rate under the relevant award and that he had taken on Ms Mitchell from the previous owner of the business on a part-time basis.
Mr Liu also raised with the Court what he believed to be an inconsistency between Ms Mitchell’s conduct in going to the Fair Work Commission in relation to an unfair dismissal claim and also her claiming that she was owed long service leave. Mr Liu submitted that the former employee conducted herself as a part-time employee, yet the contravention notice was issued on the basis that she was a casual.
Those matters are, as far as the contravention of the compliance notice is concerned, really water under the bridge. I have accepted in my primary judgment that there may have been confusion on Mr Liu’s part, but, nonetheless, that cannot excuse the breach of the compliance notice. I previously commented upon Mr Liu’s confusion and his attempts to raise questions with and get answers from the Fair Work Ombudsman. In my view, Mr Liu’s conduct should not be regarded as blatant disregard for the Act. I accept that confusion on his part and his limited English-speaking capacity played its part in the contravention. I am not prepared to find that this was a case where Mr Liu entirely turned his nose up at the Ombudsman, but, notwithstanding that, I have found that there was a contravention and that Mr Liu was involved in that contravention.
In relation to other issues, such as the size of the business, the potential loss that flows from the contravention, I refer to the comments that I have made in the primary judgment which imposed a penalty on Double Hao.
In relation to Mr Liu’s financial circumstances, I do have material before me which suggests that Mr Liu may be involved with companies other than Double Hao and that a Mr Liu owns a number of properties. The evidence before me has not been contradicted by Mr Liu other than from the bar table today, and he has been aware of it for some time. Mr Liu has had an opportunity to put evidence before me but has not. In any event, even if I accept Mr Liu’s submission regarding the properties and reject the inference the Ombudsman asks me to draw about his financial capacity, I still, otherwise, have no information before me which would suggest an incapacity to pay a penalty.
Taking into account all the circumstances of this case, including the written and oral submissions from the Ombudsman and the oral submissions from Mr Liu today, I have decided to impose a penalty on Mr Liu of $2,000. That amount is a little more than 30 per cent of the maximum penalty.
In setting that penalty, I have taken into account the principle of parity. I previously determined that Double Hao should be penalised at 30 per cent of the maximum. In the case of a small business where the company and the proprietor are virtually one and the same, it seems to me even more difficult to distinguish the conduct of the first respondent, Double Hao, and the second respondent, Mr Liu. To all intents and purposes, Double Hao conducts itself under the control of Mr Liu. It seems to me that it would be incongruous for me to find that Double Hao should be penalised at 30 per cent and for Mr Liu to be penalised more severely.
I accept the Ombudsman’s submission that I have the power to impose a more significant penalty, but I am not going to do so. It seems to me that the appropriate penalty for Mr Liu should accord with the penalty opposed to Double Hao and be 30 per cent of the maximum available. In saying 30 per cent of the maximum, I intend to slightly round that up to the figure of $2,000.
I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Ex Tempore Reasons for Judgment of Judge Forbes. Associate:
Dated: 24 September 2024
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