Fair Work Ombudsman v F.L. Press Pty Ltd and Anor (No.3)
[2018] FCCA 3339
•23 November 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v F.L. PRESS PTY LTD & ANOR (No.3) | [2018] FCCA 3339 |
| Catchwords: INDUSTRIAL LAW – Breaches of civil remedy provisions of the Fair Work Act 2009 – penalties – pecuniary penalties – relevant considerations. |
| Legislation: Acts Interpretation Act 1901, s.23 |
| Cases cited: Australian Building & Construction Commissioner v Construction, Forestry, Mining & Energy Union (No 2) (2010) 199 IR 373 Fair Work Ombudsman v AJR Nominees Pty Ltd (No 2) [2014] FCA 128 Fair Work Ombudsman v A Dalley Holdings Pty Ltd [2013] FCA 509 Fair Work Ombudsman v FL Press Pty Ltd & Anor [2015] FCCA 1578 Fair Work Ombudsman v FL Press Pty Ltd & Anor (No 2) [2015] FCCA 2967 Fair Work Ombudsman v Kentwood Industries Pty Ltd (No 3) [2011] FCA 579 Fair Work Ombudsman v Lifestyle SA Pty Ltd [2014] FCA 1151 Fair Work Ombudsman v Ramsey Food Processing Pty Ltd (No 2) [2012] FCA 408 Kelly v Fitzpatrick (2007) 166 IR 14 Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 Murrihy v Betezy.com.au Pty Ltd (No 2) (2013) 221 FCR 118 Sayed v Construction, Forestry, Mining & Energy Union [2015] FCA 338 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | F.L. PRESS PTY LTD (ACN 003 627 325) |
| Second Respondent: | THEODORE SKALKOS |
| File Number: | SYG 1437 of 2012 |
| Judgment of: | Judge Cameron |
| Hearing date: | 4 November 2015 |
| Date of Last Submission: | 17 March 2016 |
| Delivered at: | Sydney |
| Delivered on: | 23 November 2018 |
REPRESENTATION
| Counsel for the Applicant: | Mr J. Darams |
| Solicitors for the Applicant: | Office of the Fair Work Ombudsman |
| Counsel for the Respondents: | Mr R. Moore |
| Solicitors for the Respondents: | Koutzoumis Lawyers |
THE COURT DECLARES THAT:
The second respondent was involved, within the meaning of s.550(2) of the Fair Work Act 2009 (“FW Act”), in the contravention by the first respondent of s.340 of the FW Act by taking adverse action against Nikola Jovic by:
(a)on 11 January 2011, dismissing him for reasons which included his exercise of a workplace right to make a complaint or enquiry with the applicant and possession of workplace rights to redundancy pay and written notice or payment in lieu of notice of termination (“Employee Entitlements”); and
(b)engaging in the following conduct in relation to Nikola Jovic:
(i)on 15 April 2010, threatening to injure him in his employment and to alter his position to his prejudice;
(ii)on 19 April 2010, threatening to injure him in his employment and to alter his position to his prejudice;
(iii)on 27 April 2010, threatening to injure him in his employment and to alter his position to his prejudice; and
(iv)from 2 to 6 September 2010, threatening to injure him in his employment and to alter his position to his prejudice;
for reasons which included that he had exercised a workplace right to make a complaint or enquiry with the applicant, and had workplace rights to the Employee Entitlements.
THE COURT ORDERS THAT:
The second respondent pay penalties, pursuant to s.546(1) of the FW Act, in the total amount of $27,500 in respect of his involvement in the first respondent’s contraventions of s.340 of the FW Act, which is made up of:
(a)a penalty of $5,500 in respect of his involvement in the contravention identified in declaration 1(a);
(b)a penalty of $5,500 in respect of his involvement in the contravention identified in declaration 1(b)(i);
(c)a penalty of $5,500 in respect of his involvement in the contravention identified in declaration 1(b)(ii);
(d)a penalty of $5,500 in respect of his involvement in the contravention identified in declaration 1(b)(iii); and
(e)a penalty of $5,500 in respect of his involvement in the contravention identified in declaration 1(b)(iv).
The second respondent pay the penalties referred to in order 1 to the applicant within 28 days.
Within 14 days of receipt of payment of the penalties referred to in order 1, the applicant pay those penalties to Nikola Jovic.
If Nikola Jovic cannot be located within the 28 day period set out in order 2 the applicant remit any penalty amount payable to Nikola Jovic to the Consolidated Revenue Fund of the Commonwealth within 14 days of the expiry of that 28 day period.
The applicant have liberty to apply on seven days’ notice in the event that any of the preceding orders are not complied with.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 1437 of 2012
| FAIR WORK OMBUDSMAN |
Applicant
And
| F.L. PRESS PTY LTD (ACN 003 627 325) |
First Respondent
| THEODORE SKALKOS |
Second Respondent
REASONS FOR JUDGMENT
INTRODUCTION
From 1 July 2003 until 11 January 2011 Nikola Jovic was employed by the first respondent (“FL Press”) on its Serbian language newspaper, the Novosti. In reasons published on 18 June 2015, Fair Work Ombudsman v FL Press Pty Ltd & Anor [2015] FCCA 1578 (“first judgment”), I relevantly found that:
a)Mr Jovic’s evidence was to be preferred to that of Mr Skalkos, the second respondent and proprietor of FL Press, and Raymond Wong, FL Press’s payroll officer;
b)Mr Jovic worked for the Novosti as a journalist, reporting on events, taking photographs, making discretionary decisions of an editorial nature concerning the newspaper’s layout, content and presentation;
c)Mr Jovic’s full-time employment and its associated contract of employment were terminated by FL Press in April 2010 in circumstances amounting to a redundancy and so he was entitled to redundancy pay and, in the circumstances, to payment in lieu of notice. Mr Jovic subsequently worked on a part-time basis until his employment was terminated finally on 11 January 2011;
d)on 15 April and 19 April 2010 Mr Skalkos threatened Mr Jovic by saying that he would not be paid anything by way of accrued entitlements if he did not agree to having the entitlements, which FL Press considered had accrued to him upon the change in employment, paid in instalments;
e)on 27 April 2010 Mr Wong, FL Press’s payroll officer, threatened Mr Jovic with non-payment of his entitlements if he did not sign a statement, drafted for him, stating that he had requested and agreed to FL Press terminating his full-time position and having his entitlements paid in instalments;
f)from 2 September 2010 to 6 September 2010 Mr Skalkos forced Mr Jovic to assume an increased workload by instructing him to perform the editor’s duties when the latter was on leave and threatened him with dismissal if he was unable to complete his and the editor’s duties in his usual fifteen hours of work;
g)on 11 January 2011 FL Press dismissed Mr Jovic from his employment; and
h)each of the acts referred to above at (d) to (g) amounted to “adverse action” for the purposes of the Fair Work Act 2009 (“FW Act”) and each was taken for a reason which was proscribed by the FW Act.
I further relevantly found that FL Press had contravened:
a)s.340 of the FW Act by taking adverse action against Mr Jovic on 15 April 2010 by threatening to injure him in his employment and to alter his position to his prejudice;
b)s.340 of the FW Act by taking adverse action against Mr Jovic on 19 April 2010 by threatening to injure him in his employment and to alter his position to his prejudice;
c)s.340 of the FW Act by taking adverse action against Mr Jovic on 27 April 2010 by threatening to injure him in his employment and to alter his position to his prejudice;
d)s.340 of the FW Act by taking adverse action against Mr Jovic from 2 to 6 September 2010 by threatening to injure him in his employment and to alter his position to his prejudice; and
e)s.340 of the FW Act by taking adverse action against Mr Jovic on 11 January 2011 by dismissing him from his employment;
and that Mr Skalkos was involved in that conduct such that he was an accessory to FL Press’s contraventions of the FW Act’s general protections provisions and so is taken to have contravened them himself.
On 4 November 2015 in Fair Work Ombudsman v FL Press Pty Ltd & Anor (No 2) [2015] FCCA 2967 (“second judgment”), I found that Mr Jovic was entitled to compensation for unpaid wages, unpaid redundancy pay and unpaid pay in lieu of notice in the total sum of $83,210.34 together with interest of $44,693.73.
FL Press went into external administration on 26 May 2016 at which point the proceeding became stayed against it. It has subsequently been deregistered.
These reasons concern what penalties are to be imposed on Mr Skalkos for the contraventions in which he was found to have been involved.
In determining penalties in a matter such as this:
a)the Court should identify the separate contraventions involved;
b)the Court should consider whether contraventions resulting from any particular courses of conduct should be treated as a single contravention under s.557(1) of the FW Act;
c)to the extent that two or more contraventions have common elements, the Court should take this into account when considering an appropriate penalty for those contraventions;
d)the Court should determine an appropriate penalty to impose in respect of each contravention having regard to all of the circumstances of the case; and
e)having fixed an appropriate penalty for each contravention or group of contraventions, the Court should consider the aggregate penalty to determine whether it is an appropriate response to the contravening conduct.
EVIDENCE
Applicant
Sally McLeod
Ms McLeod is the Fair Work Inspector who latterly had carriage of this matter on behalf of the applicant (“Ombudsman”). In support of the Ombudsman’s case on penalties, she deposed that as part of the investigation into Mr Jovic’s complaint, on 30 August 2010 the Ombudsman sent Mr Skalkos a letter inviting him to participate in an electronically recorded interview. By letter dated 9 September 2010 Mr Skalkos declined to participate in such an interview.
Ms McLeod deposed that on 27 March 2012 Narelle Northwood, a Fair Work Inspector who had carriage of the matter between October 2010 and September 2012, sent to Mr Skalkos a contravention letter notifying him that the Ombudsman had concluded that FL Press had contravened workplace legislation and certain industrial instruments. In a further letter dated 16 April 2012 Ms Northwood advised Mr Skalkos that FL Press was required to remedy the identified contraventions within seven days. The letter also advised Mr Skalkos that court proceedings might be commenced in relation to the contraventions. On 9 May 2012 Ms Northwood and another inspector, Helen Yuen, visited Mr Skalkos at FL Press’s principal place of business. A file note of that visit was attached to Ms McLeod’s affidavit and recorded that during the visit Mr Skalkos stated his belief that Mr Jovic was not a journalist.
Ms McLeod deposed that on 21 October 2015 the Ombudsman’s office conducted a number of searches of the records of the Australian Securities and Investment Commission and NSW Land and Property Information in relation to FL Press and Mr Skalkos. She deposed that on reviewing the results of those searches she observed that:
a)Mr Skalkos had been the sole director of FL Press since 11 October 2008. He was also a director in the period from 26 October 1988 to 25 June 2004 and the secretary from 26 October 1988 to 25 June 2004 and on 6 December 2004;
b)a company called Denbutton Pty Ltd held all the shares in FL Press;
c)Mr Skalkos was a director and secretary of five other Australian proprietary companies, including Denbutton Pty Ltd;
d)Denbutton Pty Ltd was the registered proprietor of FL Press’s principal place of business; and
e)Mr Skalkos was a director of two other companies and a shareholder of three companies.
Second Respondent
Theodore Skalkos
At the hearing into penalties Mr Skalkos said that a company called Foreign Language Press Pty Ltd, of which he was the sole director, had taken over the operation of FL Press’s newspaper business but he could not remember if it had paid to acquire the business. He said that he had restructured the business on the advice of his accountant, Shannon Cavanagh. Mr Skalkos said that he followed whatever advice he received from Mr Cavanagh and that if at some stage in the future Mr Cavanagh advised him to wind up FL Press he would do so. He said that he had no knowledge of FL Press’s capacity to pay its liabilities. Mr Skalkos deposed that although he remained a director of FL Press, he was no longer directly involved in its day to day management and had been progressively handing over control of the business to his daughter. He deposed that he suffered from a number of medical conditions and because of that fact, coupled with his age, he intended to cease any involvement with the business.
Mr Skalkos apologised for his conduct towards Mr Jovic. He deposed to having believed that Mr Jovic was an award-free employee and not employed as a journalist or covered by the relevant award. Mr Skalkos deposed that FL Press had at all times acted consistently with that view and had sought to comply fully with what it viewed as its obligations by issuing Mr Jovic with pay slips, maintaining appropriate employment records and recording all the payments made to him in its payroll system.
Mr Skalkos deposed that when the Ombudsman’s investigation commenced, he had instructed FL Press’s payroll officer, Mr Wong, to provide the Ombudsman with all the required records and to comply with any other requests made by the Ombudsman. He deposed to his understanding that FL Press’s agents had co-operated with the Ombudsman during the course of the investigation. Mr Skalkos also deposed that he had personally been courteous and open in his dealings with the Ombudsman and that although he had declined to participate in a recorded interview, he had advised the Ombudsman to put any questions to him in writing and had indicated his willingness to provide any documents requested. Thereafter the Ombudsman wrote to Mr Skalkos seeking a response from him on a certain issue and he had responded in writing.
Mr Skalkos deposed that he had not considered the Ombudsman’s contravention letter of 27 March 2012 binding on FL Press. He deposed that in circumstances where he, on behalf of FL Press, had disputed the Ombudsman’s claims, he had considered that only a court could make a binding determination. He deposed that following the issuing of that letter he met with Ms Northwood and Ms Yuen and advised them of his view that Mr Jovic had not been employed as a journalist and was not covered by an award.
Shannon Cavanagh
Mr Cavanagh was FL Press’s accountant. He deposed that on 1 September 2015 FL Press ceased operating its newspaper business and transferred it to Foreign Language Press Pty Ltd. However, Foreign Language Press Pty Ltd did not employ any staff and FL Press continued to employ its employees and provide labour and related services to Foreign Language Press Pty Ltd in return for remuneration.
Mr Cavanagh deposed that at the time he swore his affidavit of 6 October 2015 he had not finalised FL Press’s financial and tax affairs for the year ending 30 June 2015 but he had prepared a spreadsheet which set out FL Press’s position for that financial year. The spreadsheet indicated that FL Press incurred a loss of $450,970 and had net liabilities of $1,303,809.
Mr Cavanagh deposed that FL Press remained solvent and was able to trade and pay its debts as they fell due only by reason of financial support it received from related parties. He deposed to his view that if that financial support was withdrawn or unable to be maintained, absent a significant turnaround FL Press would have to consider ceasing operations.
Mr Cavanagh’s affidavits were sworn before the second judgment was handed own. In his first affidavit sworn on 6 October 2015, he deposed to his understanding that FL Press would be ordered to pay Mr Jovic almost $126,000 in compensation, plus any post-judgment interest. He deposed that given its trading and financial position, FL Press would be unable to pay that amount as a lump sum and would need to enter into an arrangement to pay it in $10,000 monthly instalments. He estimated that the amount would be paid off within a period of eighteen to twenty-four months. He deposed that if FL Press was ordered to pay pecuniary penalties the instalment plan he had identified would have to be varied.
Dimitra Skalkos
Ms Skalkos deposed to being FL Press’s Operations Manager and to having overseen and managed FL Press’s day to day operations with Mr Cavanagh’s assistance since late 2013. She deposed that her father had become less and less involved with FL Press’s business and expressed the view that he would have vacated his office as a director if not for his ongoing involvement with this proceeding.
Ms Skalkos deposed that FL Press had been in a difficult trading position for a number of years. She deposed that she intended to continue to operate the business and although she had been successful in growing FL Press’s revenue, its costs had also increased significantly. Ms Skalkos deposed that she had been advised by FL Press’s accountants that it would be unable to pay any compensation as a lump sum and would need to enter into an arrangement to pay it in instalments.
Ms Skalkos deposed that FL Press employed twenty employees and asked the Court to consider its financial position and not impose a level of penalty which would adversely affect its continued viability.
SUBMISSIONS
Applicant
The Ombudsman submitted that each occasion of the respondents’ conduct in relation to the adverse action contraventions took a different form and constituted a separate contravention. Referring to Sayed v Construction, Forestry, Mining & Energy Union [2015] FCA 338, the Ombudsman submitted that the three instances of adverse action in April 2010 had been the result of three separate and distinct decisions. The Ombudsman also pointed to the course of conduct provisions in s.557 of the FW Act and to Murrihy v Betezy.com.au Pty Ltd (No 2) (2013) 221 FCR 118 at 138 [76] and submitted that s.557 did not apply to s.340 and could thus not operate to reduce the five adverse action contraventions into one.
In relation to a submission by the respondents that only one adverse action contravention had been pleaded, the Ombudsman submitted that she had pleaded all of the adverse action contraventions and that, in any event, the first judgment had found five separate adverse action contraventions and it was those findings which were relevant to the issue of penalty.
The Ombudsman submitted that separate penalties should be imposed on Mr Skalkos for each of the adverse action contraventions referred to above.
Relevant factors
The Ombudsman submitted that the following factors were particularly relevant to the issue of penalty in this case:
a)the deliberate and serious nature of the contraventions;
b)the context in which the contraventions arose, that is following a complaint to the FWO;
c)the significant nature and extent of Mr Jovic’s loss;
d)the lack of any contrition, corrective action and co-operation with authorities by the respondents; and
e)the need for general and specific deterrence.
Nature and extent of conduct
The Ombudsman submitted that the adverse action contraventions were extremely serious and had the consequence that Mr Jovic was terminated for his exercise of his workplace rights. She submitted that prior to terminating him, the respondents had also threatened Mr Jovic’s employment on numerous occasions when he sought to exercise his workplace rights. The Ombudsman submitted that the contraventions were also serious in light of the great public importance of employees being able to approach her office without suffering adverse consequences as a result.
Nature and extent of loss
The Ombudsman submitted that Mr Jovic had suffered significant loss as a result of the adverse action contraventions. In particular, his termination had ended his twenty year association with the Novosti and Mr Skalkos’s conduct had left him feeling intimidated and threatened. The Ombudsman submitted that Mr Jovic had also been unsuccessful in obtaining other employment and had suffered physiologically, including suffering deep depression and anxiety, tremors in his hands and voice, constant stomach pain, chest pain and a racing heart.
Deliberateness of conduct
The Ombudsman submitted that the respondents’ conduct in relation to the adverse action contraventions had been consciously and deliberately carried out in retribution for Mr Jovic’s complaint. The Ombudsman submitted that the adverse action contraventions had occurred almost immediately after Mr Jovic advised the respondents of the results of his enquiries. She submitted that pt.3-1 of the FW Act was directed at protecting exactly what Mr Jovic had sought to do in this case and, in those circumstances, the adverse action contraventions were serious and deliberate. The Ombudsman submitted that substantial penalties should be imposed so as to send a message to the public about the importance of workplace rights.She submitted that the deliberateness of the conduct was an aggravating factor which should be taken into account when setting penalties.
Contrition, corrective action and co-operation with authorities
The Ombudsman submitted that Mr Skalkos had not expressed any contrition and had not taken any corrective action to rectify the underpayments or ameliorate the impact of the adverse action. She submitted that Mr Skalkos had not participated in a record of conversation and that the respondents’ refusal to accept liability had resulted in a four day hearing. She submitted that the respondents were thus not entitled to any discount on penalty in mitigation.
The Ombudsman also submitted that despite the second judgment, which was delivered on 4 November 2015 and required FL Press to pay Mr Jovic $83,210.34 in compensation and $44,693.73 in interest within twenty-eight days, FL Press had only made a single payment of $5,000 on 3 December 2015. The Ombudsman submitted that although the respondents claimed that Mr Skalkos had become less involved in FL Press’s day-to-day management, he was still its sole director and secretary and no evidence had been adduced of his personal financial situation or his ability to pay any debt arising out of this proceeding. It was submitted that the fact that Mr Skalkos had not sought to rectify the underpayment indicated that he was not contrite.
Ensuring compliance with standards
The Ombudsman referred to Fair Work Ombudsman v A Dalley Holdings Pty Ltd [2013] FCA 509 where it was held that penalties should reinforce the fundamental importance of compliance with the safety net entitlements of the National Employment Standards and the general protection provisions of the FW Act. The Ombudsman submitted that the respondents had failed to comply with those minimum standards by underpaying Mr Jovic and taking adverse action against him. She submitted that penalties should be imposed at a meaningful level to ensure compliance with minimum standards.
Deterrence
The Ombudsman also submitted that the need for specific deterrence was high because of the deliberate nature of the conduct and Mr Skalkos’s lack of contrition or remorse. She submitted that there was a need to send a serious message to him that the underpayment of employees would not be tolerated and that employees’ exercise of workplace rights would be protected.
Accessorial liability
The Ombudsman referred to Fair Work Ombudsman v Ramsey Food Processing Pty Ltd (No 2) [2012] FCA 408 and submitted that the connection between FL Press and Mr Skalkos should not reduce the amount of the penalty for the adverse action contraventions. She submitted that as FL Press’s active mind and the person responsible for ensuring its compliance with workplace laws, Mr Skalkos was directly involved in its contraventions and should be individually penalised in a meaningful way.
Other matters
The Ombudsman submitted that the fact that the threats making up the first four adverse action contraventions had not been carried out did not diminish the seriousness of those contraventions. She submitted that the definition of adverse action in s.342(2) included threats and so it was ultimately irrelevant whether the threats were carried out. The Ombudsman also submitted that the seriousness of a contravention was determined in part by the maximum penalty ascribed in legislation and in that respect the seriousness of the threats was similar to the seriousness of the final termination as they were ascribed the same maximum penalty. In relation to the respondents’ submission that Mr Jovic had not suffered any monetary loss because the threats were never carried out, the Ombudsman submitted that the authorities indicated that a prejudicial alteration to an employee’s position was more than just a legal or compensable injury.
Totality
The Ombudsman submitted that after fixing an appropriate penalty for each contravention, the Court should take a final look at the aggregate penalty to determine whether it is an appropriate response to the breaches and is not oppressive or crushing. She submitted that the penalty had to bear relativity to the seriousness of the respondents’ conduct and that a total penalty of $27,060 should be imposed on Mr Skalkos.
Respondents
Loss
The respondents submitted that apart from Mr Jovic’s unemployment following his termination, the adverse action contraventions had not led to any tangible loss for Mr Jovic. They submitted that the submissions made by the Ombudsman in relation to any physical or psychological impact suffered by Mr Jovic should not be accepted and that any monetary loss suffered by Mr Jovic had been addressed by the making of compensation orders.
Contrition
The respondents submitted that Mr Skalkos had been under no obligation to participate in a recorded interview with the Ombudsman’s inspectors and his election not to do so had been within his rights. They submitted that that matter could not be taken into account in determining whether to impose a penalty or in determining the level of penalty to be imposed on them. The respondents submitted that during the course of the Ombudsman’s investigation they had provided all the required information and had co-operated with the investigation.They submitted that Mr Skalkos’s expression of contrition in his affidavit was genuine.
Threats not carried out
The respondents submitted that the threats made to Mr Jovic in April and September 2010 had never been carried out and that by September 2010 Mr Jovic had in fact been paid the entitlements FL Press considered were his due.
The respondents accepted that the threats which took place in April 2010 should not have occurred and were open to censure. However, they submitted that the conduct was not of a kind which warranted any substantial or significant penalty because the threatened conduct was not carried out and did not cause Mr Jovic any distinct monetary loss. While accepting that threatened conduct and actual actions were both treated as adverse action under the FW Act, the respondents submitted that there were differences between them which were a proper consideration in determining penalties. The respondents submitted that a substantial penalty should not be imposed for being injudicious in their use of words. The respondents submitted that a low level penalty should be imposed for the threatened action in April 2010.
In relation to the threats in September 2010, the respondents again accepted that such conduct should not have occurred but submitted that the threatened action had not been carried out, that the dispute had been resolved quickly and that Mr Jovic had thereafter continued working on a part-time basis. The respondents requested that no separate penalty be imposed for that contravention.
The respondents accepted that the adverse action by way of dismissal was the most serious of the adverse action contraventions and should not have occurred. They submitted that it warranted sanction by way of an appropriate penalty but further submitted that unlike the situation in Fair Work Ombudsman v AJR Nominees Pty Ltd (No 2) [2014] FCA 128 they had not dishonestly tried to deny Mr Jovic’s rights by claiming that he had resigned. They submitted that they had held a genuine belief that Mr Jovic had resigned and that although it had been found in the first judgment that Mr Jovic had been terminated, there had been no finding that their view that he had resigned had been a deliberate falsehood. They submitted that the penalty for Mr Jovic’s final termination should be in the mid-range because their actions did not have the same aggravating factors as in Fair Work Ombudsman v AJR Nominees.
Grouping
The respondents submitted that the Ombudsman had only pleaded a single adverse action contravention under s.340(1) of the FW Act but sought penalties for five separate adverse action contraventions. They referred to s.23 of the Acts Interpretation Act 1901 and submitted that it was a question of statutory interpretation whether “adverse action” as defined in s.342 of the FW Act could relate to conduct or a course of conduct. They also submitted that Murrihy v Betezy.com.au (No 2) did not preclude the grouping of several acts with a common element into a single contravention.
The respondents submitted that given that the Ombudsman had only pleaded a single adverse action contravention under s.340, a single penalty should be imposed for the whole conduct found to be adverse action.
The respondents submitted as a further alternative that the three threats concerning Mr Jovic’s entitlements which occurred in April 2010 should be taken to be a single contravention, the threats in September 2010 as a second contravention and the termination a third contravention. They submitted that the threats in April 2010 had taken place in a compressed timeframe and had been intimately connected by one key element, the question of what payments were owed to Mr Jovic as a result of the change to his employment.They submitted that for those reasons, those contraventions should be grouped together as they arose from a single course of conduct and had common elements.
Totality
The respondents submitted that the total penalties imposed on Mr Skalkos should not exceed $8,000.
CONSIDERATION
As Tracey J said in Kelly v Fitzpatrick (2007) 166 IR 14 at 18-19 [14], in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 Mowbray FM identified “a non-exhaustive range of considerations to which regard may be had in determining whether particular conduct calls for the imposition of a penalty, and if it does the amount of the penalty”. Tracey J adopted those considerations, describing them as follows:
· The nature and extent of the conduct which led to the breaches.
· The circumstances in which that conduct took place.
· The nature and extent of any loss or damage sustained as a result of the breaches.
· Whether there had been similar previous conduct by the respondent.
· Whether the breaches were properly distinct or arose out of the one course of conduct.
· The size of the business enterprise involved.
· Whether or not the breaches were deliberate.
· Whether senior management was involved in the breaches.
· Whether the party committing the breach had exhibited contrition.
· Whether the party committing the breach had taken corrective action.
· Whether the party committing the breach had cooperated with the enforcement authorities.
· The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements and
· The need for specific and general deterrence.
Considerations relevant to this case are:
a)the nature and extent of the conduct;
b)the nature and extent of any loss or damage sustained as a result of the breaches;
c)whether the breaches were properly distinct or arose out of the one course of conduct;
d)the deliberateness of the breaches;
e)contrition, corrective action and co-operation with the enforcement authorities;
f)compliance with minimum standards; and
g)the need for specific and general deterrence.
Nature and extent of the conduct
As set out in the first judgment, Mr Jovic performed journalistic tasks throughout his employment with FL Press but was not paid as such. Further, when his superior Mr Gajeskov left work, pressure was placed on Mr Jovic, at the instigation of Mr Skalkos, to work harder or his employment would be imperilled. Threats were also made to Mr Jovic once he revealed that he had made enquiries of the Ombudsman’s office.
Nature and extent of the loss
The evidence supports a conclusion that, although it was not quantified, Mr Jovic suffered material financial loss resulting from unemployment following his departure from FL Press in January 2011.
I accept that Mr Jovic also lost his peace of mind. At [101] of the first judgment it was recorded that:
Mr Jovic deposed that as a result of the events at the Novosti he suffered from deep depression and anxiety, had a permanent tremor in his hands, a tremor in his voice, constant stomach pain, chest pain and a racing heart. He deposed that since he ceased working for Mr Skalkos his chest pain had improved but he continued to experience the other problems.
Overall, I have preferred the evidence of Mr Jovic and I accept the evidence just quoted.
Whether the breaches arose out of one course of conduct
The respondents’ submission that the Ombudsman had only pleaded a single adverse action contravention under s.340(1) of the FW Act was not correct. Although the adverse action allegations were all grouped in the statement of claim under one heading, “Contravention 6: Adverse Action (contravention of subsection 340(1) of the FW Act)”, allegations of discrete breaches of s.340(1) were made in paras.56 and 60 of the pleading, albeit that the pleading could have been clearer. Further, the summary of the Ombudsman’s submissions found at [172] and [173] of the first judgment records that the allegations of contravention by adverse action were matters in issue at that first stage of the proceeding. In any event, the Court made findings on those issues and it is those findings which are the basis of the present consideration. For those reasons, the adverse action contraventions should not be grouped together for penalty purposes because of the way the statement of claim was drawn.
The respondents’ other arguments that the adverse action contraventions should be grouped together had two potential elements. In relation to the first, the respondents argued, by reference to the Macquarie Dictionary, that as “action” can mean “habitual or usual actions; conduct” and that as s.23 of the Acts Interpretation Act 1901 provides relevantly that words in the singular includes the plural and vice versa, it was a question of statutory interpretation whether “adverse action” as defined in s.342 of the FW Act could relate to conduct or a course of conduct. The argument was not further developed. I am unpersuaded by it because each of the adverse actions which have been found to have occurred was a discrete event and could not be characterised as an example of habitual or usual actions or conduct.
The argument in relation to the second potential element of the respondents’ grouping submissions was based on the common law concept of grouping like offences or contraventions together when determining penalties. The only substantial argument made was that the threats of April 2010 were all related to the question of what payments were owed to Mr Jovic as a result of the change to his employment. The contention made no reference to authorities such as Fair Work Ombudsman v Lifestyle SA Pty Ltd [2014] FCA 1151 at [61]-[64] or Fair Work Ombudsman v Kentwood Industries Pty Ltd (No 3) [2011] FCA 579 at [32]-[34]. The grouping principle was described by Mansfield J in Fair Work Ombudsman v Lifestyle SA Pty Ltd at [63]:
Although the Course of Conduct provisions apply where the WR Act (which applied to the Pre-Modern Award period) and the FW Act (which applied in the Modern Award Period) have mirror provisions, the Grouping Principle applies to those contraventions that relate to the same conduct, regardless of the legislative regime that was operative at the time. Thus, contraventions arising out of materially the same conduct ought to be grouped, such as the failure to pay penalty rates during each period.
The essence of the grouping principle is that a contravener should not be penalised twice for what is, in substance, the same conduct. The fact that s.557 of the FW Act, which provides that in identified circumstances repetitive conduct in contravention of specified provisions of the Act is to be taken to be a single contravention, makes no reference to s.340 does not prevent the application of the common law principle: Murrihy v Betezy.com.au (No 2).
Notwithstanding the respondents’ submissions, in my view each of the adverse action contraventions, including the ones arising out of the threats made in April 2010, was separate and distinct. Mr Jovic’s evidence satisfies me that Mr Skalkos’s threats of 15 and 19 April 2010 to pay him nothing, although repetitious, were not in substance the same conduct. They arose out of different circumstances in that on each occasion they were made in response to something Mr Jovic said. Mr Wong’s threat of 27 April 2010 also arose in discrete circumstances, albeit that the termination of Mr Jovic’s full-time employment was the factual background to all these events. The events of September 2010 and January 2011 were plainly distinct from the other occasions of adverse action and from each other.
Consequently, the adverse action contraventions will not be grouped together or treated as combined courses of action.
Deliberateness of the breaches
The nature of Mr Skalkos’s bullying and intimidatory behaviour which is in issue at this point really leaves no room to doubt that it was deliberate.
Contrition, corrective action and co-operation with authorities
FL Press and Mr Skalkos did co-operate with the Ombudsman’s office during its investigation. However, no concessions were made in the proceedings and, upon the contraventions having been proved, no real contrition was demonstrated by Mr Skalkos. In particular, I do not accept his apology which was based on the contention that he had not believed that Mr Jovic had been employed as a journalist, a version of events which I have rejected. In the circumstances, a discount on the penalties for co-operation and contrition is not appropriate.
Further, although the matter was mentioned recently so that the parties might advise the Court of any relevant developments which have occurred since judgment was reserved, Mr Skalkos has not taken the opportunity to advise the Court whether Mr Jovic has been paid the amounts due to him. Given that at the time of the penalty hearing FL Press had only paid Mr Jovic $5,000 of that amount and went into external administration not long after that hearing, I infer that Mr Skalkos had nothing new to say on that subject. However, I have come to the conclusion that whether or not Mr Skalkos did anything or nothing to facilitate the payment of such of Mr Jovic’s entitlements as may remain outstanding is not a matter relevant to the contraventions which are presently in issue and, in particular, what penalties should be imposed for the adverse action contraventions in which Mr Skalkos has been found to have been involved.
Ensuring compliance with minimum standards
It is important that employees be able to report matters to the Ombudsman without fear of the sort of threats of reprisal which Mr Jovic suffered and in which Mr Skalkos was personally involved. This is a minimum expectation in order that the system of industrial law can operate effectively and employees have a fair opportunity to have industrial wrongs righted by the regulator. The fact that the threats were not carried out is of little significance. If any one had been, a different contravention or contraventions would have occurred and additional penalties might have been imposed.
Mr Skalkos’s behaviour fell far short of the relevant minimum standard.
Deterrence
I accept that Mr Skalkos is close to the end of his business career. I do not think that the penalty to be imposed need comprise a significant element for specific deterrence.
However, it should include a large component for general deterrence to make clear the Court’s disapproval of Mr Skalkos’s conduct towards Mr Jovic. The penalty should be at a level which gives pause to others who might be considering repeating Mr Skalkos’s conduct.
Penalties
The maximum penalty for each contravention is $6,600 (see first judgment at [33]).
I have taken into consideration the matters considered earlier in these reasons when determining the appropriate penalties to be imposed on Mr Skalkos. I have also had regard to the principle of proportionality, the purposes of sentencing and the task of instinctive synthesis of various factors into a single result which were discussed by Barker J in Australian Building & Construction Commissioner v Construction, Forestry, Mining & Energy Union (No 2) (2010) 199 IR 373 at 376 [4]-[7]. I consider the appropriate penalties to be:
a)$5,500 for his involvement in FL Press’s contravention of s.340 of the FW Act on 15 April 2010;
b)$5,500 for his involvement in FL Press’s contravention of s.340 of the FW Act on 19 April 2010;
c)$5,500 for his involvement in FL Press’s contravention of s.340 of the FW Act on 27 April 2010;
d)$5,500 for his involvement in FL Press’s contravention of s.340 of the FW Act from 2 to 6 September 2010; and
e)$5,500 for his involvement in FL Press’s contravention of s.340 of the FW Act on 11 January 2011.
Those penalties total $27,500. I believe that such a total is just and appropriate given Mr Skalkos’s central role in the management of FL Press.
I note that the Ombudsman submitted that the penalty for the unlawful dismissal of Mr Jovic from his employment ought to be greater than the other penalties but I am not persuaded that the suffering which I accept Mr Skalkos’s behaviour caused to Mr Jovic was of less seriousness or that those contraventions were of less overall importance than the dismissal.
I certify that the preceding sixty-six (66) paragraphs are a true copy of the reasons for judgment of Judge Cameron
Date: 23 November 2018
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