Fair Work Ombudsman v G & G Group Trading Pty Ltd
[2021] FedCFamC2G 105
•5 October 2021
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v G & G Group Trading Pty Ltd [2021] FedCFamC2G 105
File number(s): BRG 153 of 2021 Judgment of: JUDGE VASTA Date of judgment: 5 October 2021 Catchwords: INDUSTRIAL LAW – Penalty hearing – where the Respondent was ordered to pay compensation by the Fair Work Commission – where the Respondent failed to pay the compensation within the time specified – where this constitutes a breach of s 405 of the Fair Work Act 2009 (Cth) – where compensation paid after commencement of these proceedings Legislation: Fair Work Act 2009 (Cth): s 392, s 405, s 550 Cases cited: Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46
Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301
Fair Work Ombudsman v Port Douglas Investments As Trustee for the Theo Sourlos Family Trust and Anor [2018] FCCA 488
Fair Work Ombudsman v Priority Matters Pty Ltd(No 5) [2020] FCCA 901
Mason & Harrington Corporation Pty Ltd t/as Pangea Restaurant & Bar [2007] FMCA 7
Number of paragraphs: 48 Date of last submission/s: 20 September 2021 Date of hearing: IN CHAMBERS ON THE PAPERS Place: Brisbane Solicitor for the Applicant: Mr Goldston Solicitor for the Fair Work Ombudsman Solicitor for the First and Second Respondents: Mr Sciacca for Sciacca & Associates Pty Ltd Solicitors ORDERS
BRG 153 of 2021 BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: G & G GROUP TRADING PTY LTD
First Respondent
GUISEPPE VIRZI
Second Respondent
ORDER MADE BY:
JUDGE VASTA
DATE OF ORDER:
5 OCTOBER 2021
THE COURT DECLARES THAT:
1. The First Respondent contravened s 405 of the Fair Work Act 2009 (Cth) (“the FW Act”) by contravening terms of an order made by the Fair Work Commission on 7 September 2020 (and as amended on 23 March 2021) pursuant to s 392 of the FW Act; and
2. The Second Respondent was involved, within the meaning of s 550 of the FW Act, in the contravention by the First Respondent of s 405 of the FW Act referred to in paragraph 1 above.
THE COURT ORDERS THAT:
3. Pursuant to s 546(1) of the FW Act:
a. the First Respondent pay a pecuniary penalty of $30,000.00 to the Commonwealth within 28 days of this order; and
b. the Second Respondent pay a pecuniary penalty of $6,000.00 to the Commonwealth within 28 days of this order;
in respect of the contraventions of s 405 of the FW Act the subject of the declarations made on 5 October 2021 and set out in paragraphs 1 and 2 above.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review 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 VASTA
INTRODUCTION
On 7 September 2020, the Fair Work Commission (“the FWC”) ordered the First Respondent, G & G Group Trading Pty Ltd (“G & G”) to pay an employee compensation in the gross amount of $5,096.14 and superannuation in the sum of $677.78. These sums were to be paid by 28 September 2020.
The First Respondent did not pay those sums by that date. Section 405 of the Fair Work Act 2009 (Cth) (“the FW Act”) says that a person to whom an order applies, must not contravene a term of the order. By failing to pay the compensation by the due date, the First Respondent has contravened this section of the FW Act and therefore is liable to pay a pecuniary penalty.
The Fair Work Ombudsman (“the FWO”) brought action against the First Respondent (and the Second Respondent who is the guiding mind of the First Respondent) for contravening the section. The First Respondent admitted liability and then made good on the payments. But there must still be a penalty imposed by the Court because of the contravention of s 405 of the FW Act. The parties asked the Court to decide the penalty “on the papers”.
Background
The First Respondent is a company that, at the time had three business names; BarSpritz, Bar Spritz Kangaroo Point and the Cliffs Café. The only director of the company, who is also the secretary of the company, is Giuseppe Verzi, the Second Respondent.
Ms Mylie Woodland had been employed by the First Respondent in the position of Head Barista from 2014.
According to evidence given to the FWC by Ms Woodland, the business was run by the Second Respondent and his son, Sam Verzi. Often present was the father of the Second Respondent who also had the name Sam Verzi. Ms Woodland reported to the younger Sam Verzi.
Ms Woodland was “summarily dismissed” on 12 November 2019. Notwithstanding the dismissal being characterised as “summary”, Ms Woodland was paid an extra two weeks wages (presumably as a payment in lieu of notice). She filed a claim for unfair dismissal with the FWC.
The FWC attempted to contact the Second Respondent but the Second Respondent did not engage with the process. The FWC heard the claim on 17 June 2020. The FWC noted that, after they had completed the hearing, there was a voicemail message received by the commission from the Second Respondent. When the phone call was returned, the Second Respondent did not answer and a voicemail message was left for the Second Respondent informing him that the hearing had concluded and that the decision was reserved.
The FWC handed down its decision on 7 September 2020 and published its reasons on 8 September 2020. It concluded that Ms Woodland had been unfairly dismissed and calculated that Ms Woodland would have been continually employed for the next seven weeks. As Ms Woodland had already been paid two weeks wages, the FWC calculated that the First Respondent should pay the amount of $5,096.14 and superannuation in the sum of $677.78. The commission ordered that such payments were to be made within 21 days of the order (i.e.; by 28 September 2020).
The proceedings before the FWC had incorrectly noted the First Respondent as G & G Group Trading Pty Ltd and The Trustee for the KPC Trust whereas the First Respondent is properly identified as G & G Group Trading Pty Ltd as trustee for The Trustee for KPC Trust. The FWC issued a correction on 23 March 2021.
Involvement of the Fair Work Ombudsman
On 29 September 2020, the day after the payments were to have been made, Ms Woodland contacted the FWO because there had been no payment made. On 5 October 2020, Fair Work Inspector (“FWI”) Gareth Dylan Evans began his investigation into whether the First Respondent had failed to comply with the FWC order.
On 8 October 2020, FWI Evans telephoned the Second Respondent without success and then sent him an email asking the Second Respondent to contact him. Later that day, the Second Respondent telephoned FWI Evans. The Second Respondent said that he had read the decision of the FWC. FWI Evans informed the Second Respondent that there had been no compliance with the FWC order and that this was a breach of the FW Act.
In response, the Second Respondent told FWI Evans that “I don’t care about breaching the act” and “the FWO can come after me”. The Second Respondent explained that his businesses had now closed and that he was a 69-year-old pensioner who had no money. He said that he didn’t have the money to pay Ms Woodland but that she did not deserve the money anyway.
FWI Evans explained to the Second Respondent that if he failed to comply with the FWC order, he would be exposing himself to a further penalty.
On 15 October 2020, FWI Evans sent a contravention letter to both Respondents. The contravention letter stated that there had been non-compliance with the order of the FWC and outlined what the possible maximum penalties were for breaching s 405 of the FW Act. The letter required that the Respondents rectify the failure to comply with the FWC order.
On 23 October 2020, the Second Respondent sent an email to FWI Evans. It read as follows:
Good morning Dylan
I am surprised of the money I have to pay for doing the right thing.
Miley Woodland was fairly dismissed, I want to appeal as there are all the rest of my ex-staff that I can bring as witnesses that will vouch for just dismissal.
I have lost the tender of the restaurant and am a pensioner now and I would in no way in the world in these day and time is of the covid 19 be able to pay that kind of money. Therefore I would like to appeal as I know I am honest in what I have said.
Yours sincerely
Giuseppe
FWI Evans replied to that email on 27 October 2020. He referred to his earlier letter of 15 October 2020 and also advised the Second Respondent that if he wished to dispute the findings in the contravention letter he could do so by 11 November 2020 by detailing his dispute in providing supporting evidence of same.
On 6 November 2020, FWI Evans telephoned the Second Respondent. He told the Second Respondent of the different ways in which the First Respondent could rectify compliance with the FWC order. The Second Respondent told FWI Evans that he was unable to do this as he was a pensioner who was no longer running his business and that “you cannot get more blood from a stone”.
The Second Respondent indicated to FWI Evans that he may be able to propose a payment plan of $150 a month. FWI Evans said that the FWO might be willing to accept such a plan if Ms Woodland agreed to such a plan but the Second Respondent said that he did not wish to speak to Ms Woodland. FWI Evans reiterated to the Second Respondent that he required evidence of compliance with the contravention letter or evidence of a reasonable excuse by 11 November 2020.
The payment plan was not spoken of again. The FWO did not receive any evidence by that date of 11 November 2020. On 16 November 2020, FWI Evans sent an email to the Second Respondent attaching a failure to comply with contravention letter. It gave the First Respondent a further opportunity, by 23 November 2020, to advise the FWO if the First Respondent had a reasonable excuse for not complying with the contravention letter.
The Second Respondent replied, by email, asking for the phone number of FWI Evans so that he could call. Nothing came of that. On 23 November 2020, FWI Evans sent another email to the Second Respondent asking for him to contact FWI Evans as soon as possible. The email noted, as a reminder, that this day (23 November 2020) was the last day for the First Respondent to respond to the failure to comply with the contravention letter that had been sent on 16 November 2020.
FWI Evans had no further contact with the Second Respondent.
These Proceedings
As earlier recounted, the FWC issued a correction as to the name of the First Respondent on 23 March 2021. At that time, there still had not been compliance with the order of the FWC.
On 15 April 2021, the FWO commenced proceedings against the First Respondent in contravention of s 405 of the FW Act and the involvement of the Second Respondent within the meaning of s 550 of the FW Act.
On 14 June 2021, the First Respondent paid the amount of $5,773.92 to Ms Woodland. Technically, there should have been two payments; one to the employee as a gross amount of wages and another payment to the superannuation fund of the employee. Notwithstanding this technicality, the First Respondent has now complied with the FWC order.
The parties to these proceedings have consented to the Court making declarations that the First Respondent contravened s 405 of the FW Act by contravening the terms of the FWC order and that the Second Respondent was involved in that contravention pursuant to s 550 of the FW Act. On the facts of this case, such declarations are well and truly warranted.
Factors to take into account when assessing Pecuniary Penalty
The law in relation to assessment of pecuniary penalties has really been laid down quite comprehensively. The High Court, in Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46, said, at paragraph 55 of that judgment,
No less importantly, whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty, as French J explained in Trade Practices Commission v CSR Ltd, is primarily if not wholly protective in promoting the public interest in compliance:
“Punishment for breaches of the criminal law traditionally involves three elements: deterrence, both general and individual, retribution and rehabilitation. Neither retribution nor rehabilitation, within the sense of the Old and New Testament moralities that imbue much of our criminal law, have any part to play in economic regulation of the kind contemplated by Pt IV [of the Trade Practices Act]. ... The principal, and I think probably the only, object of the penalties imposed by s 76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the Act.”
In Mason & Harrington Corporation Pty Ltd t/as Pangea Restaurant & Bar [2007] FMCA 7 (“the Pangea Case”), the Court went through, in effect, a number of factors that Courts should be mindful of when imposing pecuniary penalties. One must be careful though, in looking at the Pangaea case, that one doesn’t simply look at those matters as some form of checklist to see whether or not the facts of the case, with the particular factors, either aggravate or mitigate the penalty.
As such, the list compiled in Pangaea is extremely useful, but it should not be a formula used by the Court to slavishly come up with some sort of almost mathematical guide for the imposition of penalties.
The Specific Matters in this Case
The gravamen of the contravention of the FW Act is that the Respondents have “snubbed their noses” at the authority of the FWC. The Second Respondent acknowledged that he had read the judgement of the FWC and understood the order that had been made but, to all intents and purposes, intended to ignore it.
The Second Respondent questioned the authority of the FWC and disparaged the “deservedness” that Ms Woodland had to obtain an award from the FWC. He even dared the FWO to take action against him to enforce the order of the FWC.
It was not until the FWO commenced action in this Court, and the Second Respondent received proper legal advice, that the Second Respondent actually decided to comply with an order with which he should have complied almost 9 months before.
In Fair Work Ombudsman v Port Douglas Investments As Trustee for the Theo Sourlos Family Trust and Anor [2018] FCCA 488, an analogous situation arose. In that matter, the Court said that:-
…. the overriding consideration here, notwithstanding everything that has been said and everything I have already mentioned, is that this was a deliberate defiance of an order of the Fair Work Commission.
The Fair Work Commission is set up to ensure that there is a harmonious industrial relation regime in this country. It is meant to be a Commission that can sort out the sort of problems that arose between the First and Second Respondent and Ms Baker.
Whilst people may not always agree or like the decisions of such a Commission, it is an integral part of not only the industrial relations landscape but also of the Rule of Law. Respect for the institution is paramount and where there has been disrespect, the sort of matters that the High Court have spoken of are absolutely paramount.
The Court must, in imposing penalty, make a very loud statement that the Fair Work Commission must be respected. Section 405 must be a section by which the Court shows its absolute displeasure at any disrespect shown by any party towards the Fair Work Commission.
The other factors that I take into account are that the First Respondent is no longer trading and that the Second Respondent said that he was a pensioner. I also note that the Respondents have had no previous breaches of the FW Act.
I take into account that the Respondents remedied the breach after the commencement of proceedings and very soon after they retained legal representatives. I accept that such behaviour does display cooperation and, in some ways, contrition.
I take into account that there was great cooperation in the very prompt filing of an agreed statement of facts and that these proceedings were able to be dealt with “on the papers” which has saved the community a great deal of time and money.
The Respondents have submitted to me that they have had negative publicity and shaming on the public record because of the order of the FWC and have had to undertake the burden of engaging and paying for legal representation. I cannot accept that those matters are matters that are properly the subject of mitigation but they are factors with which the Court notes and takes into its overall assessment as to what is the appropriate penalty.
There are two submissions made by the Respondents with which I cannot agree.
The first is, if the Court orders a pecuniary penalty against the First Respondent and also against the Second Respondent, that this would amount to “double punishment”. The Court dealt with this argument in Fair Work Ombudsman v Priority Matters Pty Ltd (No.5) [2020] FCCA 901.
In analysing the authorities (especially Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301), the Court noted that “real” Respondents can choose to avail themselves of the advantages of a corporate structure, which include such things as limited liability, asset protection and tax advantages but that there is a limit to which they can then seek to rely upon the disadvantages of that structure in circumstances where it has been the primary vehicle by which they have engaged in serious contraventions of workplace laws.
In rejecting the argument that double punishment would ensue if the Court would order pecuniary penalties against both the First Respondent (the corporate entity) and the Second Respondent (the “real” entity), the Court said that the proper course was to take into account the relationship between the individual and the company, but for that relationship to have a limited effect on the ultimate penalty to be imposed.
It is this principle that has been the cornerstone for the Courts to award pecuniary penalties against corporate offenders and also against the “real” persons who are engaged in that contravention pursuant to s 550 of the FW Act.
For those reasons, I will be awarding a pecuniary penalty against the First Respondent as well as against the Second Respondent.
The second submission made by the Respondents, with which I disagree, is a contention (at paragraph 33 of the submissions) that the “breaches arose from inattention and not deliberate malfeasance”. Having outlined in quite some detail the facts of this matter, it could never be countenanced that the breach of s 405 of the FW Act committed by the Respondents was anything other than a very deliberate course of conduct showing contempt for the FWC process.
It seems to me that deterrence looms large in this case.
Quantum
The FWO has submitted that the Court should approach the quantum of the penalty in this way: assess the maximum penalty, assess the range of seriousness for the breach, apply that range to the maximum penalty and then apply any discount to that sum. Upon that formula, the appropriate penalty can then be easily ascertained.
The Respondents have submitted that one simply looks at the range of the “criminality” of the breach and applies that calculation to the maximum penalty.
I have instead been conscious of the maximum penalty of $66,600 for the First Respondent and $13,320 for the Second Respondent. Taking into account the gravity of the offence and all of the factors I have already mentioned, I am of the view that the appropriate penalty is a pecuniary penalty of $30,000 for the First Respondent and $6,000 for the Second Respondent.
I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Vasta. Dated: 5 October 2021
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