Fair Work Ombudsman v Gothic Downs Pty Ltd (No 2)

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FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

Fair Work Ombudsman v Gothic Downs Pty Ltd (No 2) [2023] FedCFamC2G 359

File number: MLG 2176 of 2020
Judgment of: JUDGE RILEY
Date of judgment: 10 May 2023
Catchwords: INDUSTRIAL LAW – penalties for failure to comply with compliance notices.  
Legislation: Fair Work Act 2009 ss. 539(2), 546, 550, 557(1), 716(5)
Cases cited:

Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (CFMEU) (2018) 262 CLR 157; (2018) 351 ALR 190; (2018) 92 ALJR 219; (2018) 273 IR 211; [2018] HCA 3

Australian Building and Construction Commissioner v Pattinson (2022) 175 ALD 383; (2022) 399 ALR 599; (2022) 314 IR 301; [2022] HCA 13

Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 90 ALJR 113; (2015) 255 IR 87; (2015) 326 ALR 476; [2015] HCA 46

Community and Public Sector Union v Telstra Corporation Limited (2001) 108 IR 228; [2001] FCA 1364

Fair Work Ombudsman v Gothic Downs Pty Ltd [2022] FedCFam2G 21

Fair Work Ombudsman v NSH North Pty Ltd t/as New Shanghai Charlestown (2017) 275 IR 148; [2017] FCA 1301

Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080

Mason v Harrington Corporation Pty Ltd [2007] FMCA 7

Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357; (2008) 177 IR 243; [2008] FCAFC 170

Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543; (2007) 162 IR 444; [2007] FCAFC 65

Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412

Division: Division 2 General Federal Law
Number of paragraphs: 63
Date of hearing: 17 February 2023 
Place: Melbourne
Counsel for the Applicant: Jack Tracey
Solicitor for the Applicant: Office of the Fair Work Ombudsman
Advocate for the Respondents: Azwar Koya
Solicitor for the Respondents: Koya & Co

ORDERS

MLG 2176 of 2020

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

BETWEEN:

FAIR WORK OMBUDSMAN
Applicant

AND:

GOTHIC DOWNS PTY LTD
(ACN 006 552 058)
First Respondent

GIUSEPPE CONFORTO
Second Respondent

order made by:

JUDGe riley

DATE OF ORDER:

10 may 2023

THE COURT ORDERS THAT:

1.Within 28 days, pursuant to s.546 of the Fair Work Act 2009 (“the Act”), the first respondent pay pecuniary penalties fixed in the sum of $50,400 to the Commonwealth, for the first respondent’s contraventions set out in declaration 1 made on 24 January 2022.

2.Within 28 days, pursuant to s.546 of the Act, the second respondent pay pecuniary penalties fixed in the sum of $10,080 to the Commonwealth for the second respondent’s involvement, within the meaning of s.550 of the Act, in the first respondent’s contraventions as set out in declaration 2 made on 24 January 2022.

3.The applicant have liberty to apply on seven days’ notice in the event that any of the preceding orders are not complied with.

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

Note: The…

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Details
Case
[2023] FedCFamC2G 359
Decision Date

CaseChat Overview and Summary

The case involves the Fair Work Ombudsman, acting on behalf of certain employees, suing Gothic Downs Pty Ltd and its sole director, Mr. Conforto, for underpayment of wages and superannuation contributions. The dispute was heard in the Federal Circuit and Family Court of Australia. The court was tasked with determining whether Gothic Downs Pty Ltd and Mr. Conforto had contravened the Fair Work Act by underpaying wages and superannuation for certain employees and, if so, what penalties should be imposed.

The primary legal issue was whether the respondents demonstrated contrition, corrective action, and cooperation with the authorities. The respondents argued that they had rectified the underpayments by making the required payments to the affected employees shortly before the liability hearing. However, they admitted that these payments were made very late. The court also considered whether the respondents' failure to file affidavit evidence and their submissions on liability, which were filed on the morning of the liability hearing, demonstrated a lack of cooperation and contrition.

The court found that the respondents did not demonstrate sufficient contrition for their actions. They did not file any affidavit evidence and filed their submissions on liability very late, frustrating the progress of the matter. Additionally, the respondents' late payments to the affected employees were seen as an attempt to minimize consequences rather than a demonstration of contrition. The court accepted the Ombudsman's submission that there was no evidence of Mr. Conforto expressing any contrition or that the company had amended its work practices to prevent future contraventions. As such, the court ruled that there was no warrant for applying a discount on penalty for cooperation.

The court ordered that Gothic Downs Pty Ltd pay the Fair Work Ombudsman's costs of and incidental to the proceeding on the standard basis.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

The respondents did not suggest that senior management was not involved in the breaches. They did not suggest, for example, that there was a computer glitch or an incompetent bookkeeper. Mr Conforto was the sole director of Gothic at all material times. I am satisfied that he was completely in control of the calculation of payments to employees and their superannuation funds. I am satisfied that he was heavily involved in the breaches. i. contrition, corrective action and co-operation with the authorities In her written submissions on penalty filed on 21 February 2022, the Ombudsman said: 38.Where a corporate respondent is involved, an expression of contrition is most clearly seen by the way that the corporation takes steps to correct its wrongdoing and change its behaviour.39.The Respondents made certain qualified admissions during the course of these proceedings.40.The Respondents, however, failed to file any affidavit evidence and then filed submissions with respect to liability for the first time on 29 November 2021 (the morning of the liability hearing). These actions of the Respondents, which did not comply with the Court’s orders and directions, have frustrated the efficient progress of this matter.41.The Respondents’ qualified admissions and rectification of non-compliance with the Compliance Notices by way of payments to Ms Kaur and Ms Abdulkarim after proceedings were commenced should therefore be given reduced weight, especially when consideration is also given to the fact that the matter proceeded to a defended hearing in respect of liability and the Respondents sought to raise for the first time at that hearing a defence which was not pleaded in their defence.42.There is no evidence before the Court that Mr Conforto has expressed any contrition in respect of the failure to comply with the Compliance Notices nor evidence that Gothic Downs and Mr Conforto have amended their work practices to ensure that the contraventions are not committed in respect of future employees.43.In all these circumstances, there is no warrant for the Court to apply a discount on penalty for co-operation, of the kind that is sometimes applied where full admissions are made by a respondent (which plainly did not occur in this proceeding where liability was contested).(citations omitted) I accept the Ombudsman’s submissions on this factor. At the penalty hearing, the respondents submitted that Gothic had rectified the underpayments by making the required payments to Ms Kaur and Ms Abdulkarim. However, they admitted that those payments were made “very late”. The rectification in fact occurred about one week before the liability hearing. The respondents, through their solicitor, told the court that they regretted making the payments late. That regret falls a long way short of actually being sorry for the harm the respondents caused Ms Kaur, Ms Abdulkarim and the Ombudsman. The rectification payments cannot be seen as a demonstration of contrition. Rather, they can best be seen as an attempt to minimise the consequences for the respondents.