Fair Work Ombudsman v Goldream Pty Ltd

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FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Fair Work Ombudsman v Goldream Pty Ltd [2021] FedCFamC2G 61

File number(s): MLG 666 of 2020
Judgment of: JUDGE A KELLY
Date of judgment: 21 September 2021
Catchwords: INDUSTRIAL LAW – Penalties – admitted contraventions of Fair Work Act 2009 (Cth) – underpayment of wages to employees – failure to comply with compliance notice – where proceedings brought against respondent company and second respondent – where second respondent is sole director and shareholder of respondent company – where second respondent was a person ‘involved’ within the meaning of s 550 in the contravention of s 716(5) of the Fair Work Act 2009 by respondent company – appropriate penalty to be imposed – applicable principles – penalty determined.
Legislation:

Fair Work Act 2009 (Cth) ss 539, 546, 550, 716
Restaurant Industry Award 2010 cll 13.1, 13.5, 33.2, 20.1, 34.1

Explanatory Memorandum, Fair Work Bill 2008 (Cth) par 2673

Cases cited:

A & L Silvestri Pty Limited v Construction, Forestry, Mining and Energy Union [2008] FCA 466

Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157

Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2014] FCA 1405

Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560

Australian Securities and Investments Commission v Allianz Australia Insurance Limited [2021] FCA 1062

Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482

Fair Work Ombudsman v Austrend International Pty Ltd (No 2) [2020] FCA 1193

Fair Work Ombudsman v Blu Hornsby Pty Ltd & Anor [2016] FCCA 1150

Fair Work Ombudsman v IE Enterprises Pty Ltd [2021] FCA 60

Fair Work Ombudsman v Lifestyle SA Pty Ltd [2014] FCA 1151

Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown (2017) 275 IR 148

Kelly v Fitzpatrick (2007) 166 IR 14

Pattinson v Australian Building and Construction Commissioner (2020) 384 ALR 75

Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550

Trade Practices Commission v CSR Ltd (1990) 12 AAR 343

Volkswagen Aktiengesellschaft v Australian Competition and Consumer Commission (2021) 151 ACSR 407
Division: Division 2 General Federal Law
Number of paragraphs: 38
Place: Melbourne
Solicitor for the Applicant: Australian Government Solicitor
Solicitor for the Respondents: HR Legal

ORDERS

MLG 666 of 2020

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

BETWEEN:

FAIR WORK OMBUDSMAN

Applicant
AND:

GOLDREAM PTY LTD (ACN 168 958 772)

First Respondent

BARRY GOLD

Second Respondent

ORDER MADE BY:

JUDGE A KELLY

DATE OF ORDER:

21 SEPTEMBER 2021

THE COURT DECLARES THAT:

1.The second respondent, Barry Gold, the sole director and shareholder of the first respondent, was, within the meaning of ss 550(1) and 550(2)(c) of the Fair Work Act 2009 (Cth) (Act) a person involved in contraventions by the first respondent, Goldream Pty Ltd (ACN 168 958 772), in taking action as required by a compliance notice dated 26 August 2019 issued pursuant to s 716(2) of the Act and in…

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Details
Case
[2021] FedCFamC2G 61
Decision Date

CaseChat Overview and Summary

Fair Work Ombudsman v Goldream Pty Ltd is a case in which the Fair Work Ombudsman brought proceedings against Goldream Pty Ltd and its sole director, Mr Gold, for contraventions of the Fair Work Act 2009 (Cth). The proceedings were in respect of underpayment of wages to employees and failure to comply with a compliance notice. The Fair Work Ombudsman had conducted an audit of cafes in Melbourne in 2018, during which the two companies the subject of these proceedings were audited. On 26 August 2019, an inspector issued a compliance notice to each company in respect of an alleged contravention of the Restaurant Industry Award 2010. The contraventions were alleged to have been committed over the period 18 December 2017 to 17 June 2018. The inspector handed each notice to Mr Gold. The companies took some steps in responding to those notices, but it is common ground that neither company responded in a manner which satisfied the requirements of the respective notice and that each company lacked a reasonable excuse for having failed to do so. The court had to determine the appropriate penalty to be imposed on Mr Gold, the sole director and shareholder of Goldream Pty Ltd. The court found that Mr Gold was a person ‘involved’ within the meaning of s 550 in the contravention of s 716(5) of the Fair Work Act 2009 by Goldream Pty Ltd. The court considered the principles applicable in determining the penalty, including the primary purpose of civil penalties which is to promote the public interest in compliance and to attempt to put a price on a contravention that is sufficiently high to deter repetition by the contravener and by others who are in a position to contravene legislation. The court also considered the nature and extent of the conduct which led to the breaches, the circumstances in which that conduct took place, the size of the business and the enterprise involved, and whether there had been similar previous conduct by the respondent. The court agreed in the parties’ joint proposal in each proceeding and imposed a pecuniary penalty of $3,150 on Mr Gold in each case. The court also declared that Mr Gold was a person involved in contraventions by Goldream Pty Ltd in taking action as required by a compliance notice and in failing to produce evidence as required in compliance with such notice. The court ordered that Mr Gold pay a penalty in the sum of $3,150 forthwith.

Orders

Orders of the court

HE COURT DECLARES THAT:

1. The second respondent, Barry Gold, the sole director and shareholder of the first respondent, was, within the meaning of ss 550(1) and 550(2)(c) of the Fair Work Act 2009 (Cth) (Act) a person involved in contraventions by the first respondent, Goldream Pty Ltd (ACN 168 958 772), in taking action as required by a compliance notice dated 26 August 2019 issued pursuant to s 716(2) of the Act and in failing to produce evidence as required in compliance with such notice.

2. The second respondent, Barry Gold, is taken, pursuant to s 550(1) of the Act to have personally contravened s 716(5) of the Act.

THE COURT ORDERS THAT:

3. The second respondent, Barry Gold, pay a penalty in the sum of $3,150.

4. The penalty payable pursuant to paragraph (3) of this Order be paid forthwith.

Note: The form of the order is subject to the entry in the Court’s records.

Background

Background to the litigation

For the reasons which follow, I agree in the parties’ joint proposal in each proceeding and upon that basis a pecuniary penalty of $3,150 will be imposed on Mr Gold in each case.Background Mr Gold is the sole director, Secretary and shareholder of Goldream Pty Ltd (in liquidation) and Plushbear Pty Ltd (in liquidation), companies that existed in part for the purpose of providing labour hire services for restaurants which were operated by those respective companies. It is agreed Mr Gold was the operative and controlling mind of each company with responsibility for their overall operation, management and control including in the manner in which each company responded, or failed to respond, to the compliance notices in issue. Goldream conducted its restaurant in Richmond, in the state of Victoria and traded under the name ‘Friends of Mine’ while Plushbear, also conducted a restaurant in Richmond and traded under the name ‘Tall Timber’ (restaurants). During 2018, the Fair Work Ombudsman undertook an audit of cafes in Melbourne. Each of the companies the subject of these proceedings were audited. On 21 and 25 June 2018 respectively, inspectors authorised by the Fair Work Ombudsman (inspectors) conducted site visits of the restaurants and determined that the labour engaged by the companies respectively at those workplaces were being paid at a flat hourly rate for all hours being worked, whether from Monday to Sunday inclusive. Additionally, the inspectors identified each company engaged in a practice of paying the labour that had been engaged by way of direct crediting to bank accounts of the persons providing their labour and at the same time paying other monies in cash to those persons. On 26 August 2019, an inspector issued a compliance notice to each company in respect of an alleged contravention of the following provisions of the Restaurant Industry Award 2010 (Award) and constituting a failure to pay: (1) casual loading (cl 13.1); (2) overtime rates (cll 13.5 and 33.2 ); (3) minimum wages (cl 20.1), and; (4) casual weekend on public holiday penalties (cl 34.1). The contraventions were alleged to have been committed over the period 18 December 2017 to 17 June 2018. The inspector handed each notice to Mr Gold. Evidence filed for the purpose of the present application included the matters discussed by the inspector with Mr Gold at the time he was given each notice and what was expected of each company. In their terms each compliance notice required the respective company to take certain action with a view to remedying the direct effects of the alleged contraventions and to do so within 30 days. The notices also required the production of certain evidence. While the companies took some steps in responding to those notices, it is common ground that neither company responded in a manner which satisfied the requirements of the respective notice and that each company lacked a reasonable excuse for having failed to do so. It is agreed each company contravened s 716(5) of the Act in failing to comply with such notices.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Likewise, I agree in the need for general deterrence as a significant factor. Upon the evidence, of all compliance notices issued by the regulator in the 2019-2020 financial year, no less than 25.6% of such notices were issued in relation to the café and restaurant industry. Whether that data is in part a reflex of the regulator’s decision to audit that sector of industry is not known.Conclusion Orders will be made in the terms sought.

Ratio Decidendi

Legal Principle Established

I agree in the submission that where, as here, there is only a single contravention of a civil remedy provision as opposed to a course of conduct such as in each of the present proceedings, the second and third steps stated by his Honour are not applicable.Consideration I am satisfied, upon the principles considered above, that the compromise which has been put before the court by the parties as an agreed, appropriate approach to the determination of relief. In expressing that conclusion I do not ignore that the court is not bound by a proposed penalty as agreed between parties and that it “should only impose the recommended penalty insofar as it is satisfied that it is appropriate in all the circumstances of the case”: Australian Securities and Investments Commission v Allianz Australia Insurance Limited [2021] FCA 1062, [126] and cases cited (Allsop CJ). I note the parties were able to achieve their compromise following the institution of the proceeding and that such compromise was obtained at arms’ length and in circumstances where each of them has had the benefit of independent legal advice. The Court may impose maximum penalties of 30 penalty units which translates to a maximum penalty of $6,300 in each proceeding (based on the value of the penalty unit at the relevant time): Act, s 539. Consideration of the maximum penalty that could be imposed on Mr Gold is appropriate as providing an indication of the view taken by the legislature of the consequences of having engaged in contravening conduct. It is also appropriate in a comparative exercise of locating where the contraventions sit as against a maximum yardstick. The primary purpose of civil penalties is to promote the public interest in compliance and to attempt to put a price on a contravention that is sufficiently high to deter repetition by the contravener and by others who are in a position to contravene legislation: Cth v DFWBII at [55] citing Trade Practices Commission v CSR Ltd (1990) 12 AAR 343, [40]. Both specific and general deterrence are the principal (and perhaps only) object of the civil penalties in the Act. In amplification of the primary purpose of deterrence, the High Court has underlined that the achievement of that purpose necessarily depends upon a penalty having the necessary ‘sting or burden’ to secure ‘the specific and general deterrent effects that are the raison d’être of its imposition’: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157, [116]. Beyond those important statements of principle, a panoply, non-exhaustive and non-rigid list of other factors have been repeatedly adopted include the following and are recognised as being of potential relevance only in as much as providing assistance in setting a penalty which properly reflects an appropriate deterrent value. The catalogue of potentially relevant factors were endorsed in Kelly v Fitzpatrick (2007) 166 IR 14 at [14] by Tracey J:a) the nature and extent of the conduct which led to the breaches;b) the circumstances in which that conduct took place;c) the nature and extent of any loss sustained as a result of those breaches;d) whether there has been similar previous conduct by the respondent;e) whether the breaches were distinct or arose out of one course of conduct;f) the size of the business and the enterprise involved;g) whether or not the breaches were deliberate;h)whether senior management was involved in the breaches;i)whether the party committing the breach had exhibited contrition, taken corrective action and cooperated with enforcement authorities;j)the need to ensure compliance with minimum standards by provision of effective means of investigation and for specific deterrence.