Fair Work Ombudsman v Greenan (No 2)
[2017] FCCA 2059
•31 August 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v GREENAN (No 2) | [2017] FCCA 2059 |
| Catchwords: PENALTIES – egregious behaviour by placement agency – whether any contrition – none shown – no remorse – maximum penalty imposed. REFERRAL FOR PROSECUTION – case referred to Commonwealth Director of Public Prosecutions. |
| Legislation: Fair Work Act 2009 (Cth), ss.44, 45, 99, 116, 535(1), 709, 716(5) Fair Work Regulations 2009 (Cth), regs.3.32, 3.40 |
| Cases cited: Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 Stuart-Mahoney v Construction, Forestry, Mining and Energy Union [2008] FCA 1426 |
| Applicant: | FAIR WORK OMBUDSMAN |
| Respondent: | LEONARD GREENAN |
| File Number: | MLG 122 of 2017 |
| Judgment of: | Judge Wilson |
| Hearing date: | On the papers |
| Date of Last Submission: | 26 July 2017 |
| Delivered at: | Melbourne |
| Delivered on: | 31 August 2017 |
REPRESENTATION
| Solicitors for the applicant: | Solicitor for Fair Work Ombudsman |
| No appearance by the respondent |
I ORDER THAT -
Pursuant to s.546(1) of the Fair Work Act 2009 (Cth) (“FWA”) the respondent pay the following penalties –
(a)in the amount of $5,400.00 in respect of the respondent’s contravention of s.716(5) of FWA by failing to comply with a compliance notice dated 26 July 2016; and
(b)in the amount of $5,400.00 in respect of the respondent’s contravention of s.535(1) of FWA by failing to make and keep, for a period of seven years, employee records of the kind prescribed by regulations 3.32 and 3.40 of the Fair Work Regulations 2009 (Cth) (“the regulations”),
as declared in the orders made by his Honour Judge Wilson on
28 June 2017.
Pursuant to s.546(3) of FWA, an order that the penalties set out above be paid within 28 days of the date of this order to the Consolidated Revenue Fund of the Commonwealth.
In the alternative to order 2 herein, should the respondent be unable to comply with orders 3 and 4 of the orders of his Honour Judge Wilson on 28 June 2017 by reason of personal insolvency, the penalties be paid as follows –
(a)any penalty payable by the respondent be paid to the employee, Mr Waseem Adil, up to the amount of $7,222.82; and
(b)any remaining monies be paid to the Consolidated Revenue Fund of the Commonwealth.
The applicant has liberty to apply on 7 days’ notice.
The Principal Registrar sends forthwith a copy of these
Reasons for Judgment to the Commonwealth Director of
Public Prosecutions.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 122 of 2017
| FAIR WORK OMBUDSMAN |
Applicant
And
| LEONARD GREENAN |
Respondent
REASONS FOR JUDGMENT
Introduction
On 28 June 2017 I handed down reasons for judgment in the
application by FWO for declaratory relief and interlocutory default judgment against the respondent.[1] In these reasons I have adopted the same abbreviations as were used in my previous judgment in this proceeding.
[1] [2017] FCCA 1453.
When handing down my previous judgment, I gave directions for the filing of affidavits and submissions on the issue of a penalty.
FWO complied with those directions. The respondent did not. For that matter, despite being served with all relevant documentation at every stage of this litigation, the respondent has taken no step whatsoever to participate in this proceeding. Of course, a respondent is entitled to adopt that stance. When a respondent adopts such a stance, FWO is nevertheless required to make out its case for the imposition and amount of all applicable penalties.
In this case FWO alleged, and I found, that the respondent
contravened –
a)section 716(5) of the FWA by failing to comply with a particular compliance notice; and
b)section 535(1) of the FWA by failing to keep such records as were prescribed by regulations 3.32 and 3.40 of the FWR.
The maximum penalty for each of the three contraventions alleged was $16,200.00 being $5,400.00 per contravention. FWO submitted that the imposition of a penalty between $8,100.00 and $9,720.00 was appropriate, representing penalties in the order of 50% to 60% of the aggregated maximum.
Synopsis
For the reasons that follow, in my judgment the conduct of the respondent was egregious. I impose the full penalty, but in respect of two contraventions, as the record-keeping contraventions must be grouped.
A short factual examination
The relevant facts on which FWO moved for the imposition of penalties were recorded in the affidavits of –
a)Kez Yu Ma affirmed 18 July 2017; and
b)Waseem Adil affirmed 26 July 2017.
Underpinning FWO’s application to this court was a claim that
Mr Adil, an employee over a three-month period between January and March 2016 with a motor vehicle retailer, had not been adequately paid. In the statement of claim FWO alleged that the respondent was the proprietor of the labour hire business that provided labour in the motor vehicle repair industry. FWO also alleged that the respondent held a labour hire contract with Sterling Consolidated Pty Ltd,
the trustee of the Sterling Trust that traded as “Melbourne City Renault” (“MCR”).
In the statement of claim FWO contended that the respondent employed Mr Adil as a casual employee as a mechanic on terms incorporating the Vehicle Manufacturing, Repair, Services and Retail Award 2010. FWO further alleged that the respondent failed to pay
Mr Adil the sum of $7,066.49 and that in consequence of that failure, on 26 July 2016 FWO served a compliance notice on the respondent requiring him to make good that failure. FWO alleged the respondent failed to comply with the compliance notice. FWO also alleged that the respondent did not keep records relating to Mr Adil as the FWR required.
In his affidavit, Mr Adil affirmed that –
a)he was a 29-year-old Pakistani national having resided in Australia on a bridging C visa since 2012;
b)
the respondent operated a consulting business known as
“United Consulting”;
c)
he (Mr Adil) retained the respondent to obtain a visa to enable
Mr Adil to complete an additional 110 hours of work beyond the hours already worked in his previous job so as to qualify for a temporary graduate (subclass 485) visa;
d)
in November 2015 Mr Adil discussed with the respondent
Mr Adil’s goal of acquiring temporary residence in Australia in response to which the respondent told Mr Adil that he
(the respondent) could arrange sponsorship upon Mr Adil paying the respondent $12,000.00;
e)pursuant to that arrangement, the respondent provided Mr Adil with an invoice dated 27 November 2015 in the sum of $12,000.00;
f)between 27 November 2015 and 1 February 2016 Mr Adil paid instalments totalling $9,500.00 in reduction of the invoiced sum of $12,000.00, all of which funds Mr Adil borrowed;
g)the respondent did not progress Mr Adil’s visa application and in April 2016, upon his contacting the Department of Immigration and Border Protection, Mr Adil learned that the respondent had not lodged Mr Adil’s visa application;
h)in the period when Mr Adil worked at MCR the respondent did not pay Mr Adil any amount and, despite Mr Adil constantly calling the respondent and sending text messages, the respondent sent an email to Mr Adil stating that he (the respondent) would “sort some money out”[2] for Mr Adil, no payment having been thereafter made;
i)Mr Adil’s services at MCR were terminated on 23 March 2016; and
j)since then, Mr Adil has been homeless, of unstable mental condition and physically unwell.
[2] Affidavit of Waseem Adil affirmed 26 July 2017 at [20].
Mr Adil exhibited to his affidavit a detailed collection of copy text messages over the period 17 December 2015 to 6 April 2016 between the respondent and Mr Adil. Given the desperate financial circumstances in which he found himself, Mr Adil’s text communications with the respondent were remarkably polite and restrained.
Mr Ma affirmed that he was an inspector appointed by FWO. So far as was relevant, Mr Ma stated –
a)on 16 May 2016 Mr Adil filed a request for registration with FWO, described in paragraph 9 of Mr Ma’s affidavit as a “complaint” and a “Request for Assistance”;
b)
on 18 May 2016 FWO served on the proper officer, MCR,
the Trustee for the Sterling Trust a notice in writing requiring production of specified documents under s.709 of the FWA relating to Mr Adil’s employment by the Sterling Trust, his pay records and his leave records;
c)on 19 May 2016 an FWO inspector attended at the premises of MCR and spoke to two MCR employees, namely Ann Smith and Chris Linn;
d)MCR has needed casual workers and sought assistance from United Consulting to find those casual workers;
e)Mr Linn said Mr Adil was not a good worker, often arriving late for work or not attending work at all, as a result of which his employment at MCR was terminated;
f)United Consulting would have sponsored Mr Adil had he been a good employee but his sponsorship application did not proceed because Mr Adil did not pass the three-month trial period;
g)Mr Linn told the FWO inspector that MCR did not maintain time records for the hours worked by Mr Adil;
h)Mr Linn also said United Consulting sent MCR invoices for the hours Mr Adil worked, that MCR received those invoices, checked them and passed them to MCR finances for payment;
i)Ms Smith told the FWO inspector that the invoices had not been paid because the respondent had purchased a car from MCR and it was agreed between the respondent and Gary, the owner of MCR, that the invoices for Mr Adil’s wages would be deducted from the money the respondent owed for the car, there being no written agreement recording that arrangement;
j)
when FWO served a notice to produce (also called the “requirement to produce records or documents”) on MCR,
Ms Smith refused to sign by way of acknowledgment.
On 23 May 2016 FWO served a notice to produce records or documents upon the respondent in this proceeding. FWO relied on a different section of FWA for service of the notice to produce upon the respondent than it did when serving MCR. At all events, the documents sought from the respondent related mostly to Mr Adil’s engagement by United Consulting Services Pty Ltd.
The respondent did not comply with that notice.
On 23 May 2016 FWO offered the respondent an opportunity to participate in a voluntary interview with an FWO inspector.
The respondent did not take up that invitation.
On 3 June 2016 MCR responded to the requirement to produce records served earlier by FWO by producing a copy of –
a)a placement agreement between MCR and United Consulting Services dated 22 January 2013;
b)the respondent’s vehicle debtor account showing entries between November 2015 and 30 March 2016 as follows[3] –
[3] Exhibit “KM-7” to the affidavit of Kez Yu Ma affirmed 18 July 2017.
| Date | Detail |
| 19/11/15 | -10138.00 |
| 23/02/16 | - 6077.50 |
| 01/03/16 | 6077.50 |
| 11/04/16 | - 625.70 |
| - 10763.70 | |
| 05/02/16 | - 649.00 |
| 05/02/16 | - 2249.50 |
| 05/02/16 | - 1507.00 |
| 22/02/16 | - 1672.00 |
| 29/03/16 | - 5720.00 |
| 29/03/16 | - 1672.00 |
| 29/03/16 | - 1504.80 |
| 31/03/16 | 9522.50 |
| 31/03/16 | 16215.50 |
| 25738.00 | |
| 0.00 |
The “deal date” recorded on the corresponding invoice was
16 November 2015. In that invoice United Consulting Services was shown as having purchased a 2014 Renault station wagon, the sale price of which was $25,738.00.
Under the service agreement between United Consulting and MCR, United Consulting was responsible for payment of worker entitlements.
The respondent provided certain information to FWO in response to the notice to produce served upon him. In particular, he provided –
a)four invoices from United Consulting to Mr Linn and MCR, all of which showed a zero amount due; and
b)an undated two-and-a-half page document, addressed “To whom it may concern”.[4]
[4] Exhibit “KM-8” to the affidavit of Kez Yu Ma affirmed 18 July 2017.
It is useful to set out the precise terms of that document verbatim –
Waseem Adil
To whom it may concern.
This is my statement regarding the employment of Waseem Adil and any payments made to him and hours worked by him.
To my knowledge these are true and correct.
Mr Waseem Adil became a candidate of United Consulting on the 27th of November 2015.
He had applied for a mechanic’s position that we had advertised at the time.
He was taken originally for an interview in Mildura, however this was unsuccessful as the clients in that particular dealership decided not to consider him for the job.
I then met Waseem myself and spoke to him about another option, this option was Melbourne City Renault, this was going to be short term to start as Waseem wanted to work in a regional area.
So after Waseem met the employer at Melbourne city Renault they agreed to take him on.
This was going to be on a casual basis until both parties were comfortable.
So we (United Consulting Service) would invoice hours worked on a Tuesday following the working week.
Waseem told us on the 3rd of February 2016 that he was struggling a bit for money, it was then that he asked if we could pay him cash. Against my better judgement [sic] I said yes and this is how we ended up in this predicament.
I know that this was a big mistake on my part, but I felt that it would help him out.
So on the 9th of February he was given $1000 in cash by us, we also gave him $500 on the 2nd of March 2016 and $500 again on the 10th of March 2016.
I have included some transactions when it was withdrawn from our account.
I realize now that I should not have sanctioned such an act and I am now sorry I did.
I have noted the dates so that I can let my accountant know what it was for, so any penalties due I will be paying.
Now when Waseem was working for Renault I met him in there a few times, he was not only struggling with the job but in general.
Unfortunately, on the 18th of March 2016 Renault decided that due to Waseems ability and time keeping they didn’t need him anymore.
This was a very unfortunate thing as they had even agreed to sponsor him as he needed sponsorship.
The nomination had been done and they were willing to follow through with the application up until his last week there.
He was spoken to about his time keeping and general demeanour but unfortunately it didn’t help him.
They notified me that they wouldn’t require him any more due to a list of things.
I spoke to Waseem and told him the bad news, the service manager had tried to speak with him but Waseem either didn’t understand or wasn’t listening to what was getting told to him.
Waseem had asked me to get him another job, which I tried but after finding out about his work and demeanour unfortunately we couldn’t do anything for him.
I told him this on the 20th of March, at around the same time I had heard he was sleeping in a car.
I offered to put him up in a house (free of charge) until he sorted himself out.
The only thing I couldn’t do was get him another position as a mechanic as he couldn’t do the basics of the job.
Now all up we paid him $2,000 in cash, the reason it was only $2,000 was he owed $2,500 so this was deducted.
We are not in the business of not paying anyone what they are owed, this is not something I would like done to me, so I would never do it to anyone else.
I used to get 10-15 calls from Waseem every day, wanting us to find him a job, could we help him with money ect.
In the end up it was too much, as much as I sympathise with his predicament I could not help any more.
We are a recruitment company and we do get people jobs, these jobs will come with a company willing to sponsor the candidates.
At the end of the day the candidate must be able to do the basics of the job, if not then they won’t be in employment very long. This is the case in any walk of life unfortunately.
We made a mistake of paying him in cash which is very regrettable and it will never happen again, for this I am very sorry.
I have included in this the invoices for Waseem, these indicate the hours worked and dates.
Also there are copies of with drawls from my account, the other $1,000 I had sitting in petty cash in the office so it wasn’t a withdrawal.
As he was getting paid cash we never had a casual employment contract with him, these are things that should not have happened and I am very remorseful.
I will give any more information that is needed and try and help sort this matter out once and for all.
Regards
Leonard Greenan
Waseem Started
18/1/16 finished 18/3/16
Total hours worked were 288.9
For total $5778
02 Mar 2016 WITHDRAWAL AT HANDYBANK ROSEBUD
1 05124176 02/03/16 Card No. ~523802 - $500.00
10 Mar 2016 WITHDRAWAL AT HANDYBANK MCCRAE PLZ O/S 17426206 10/03/16 Card No. ~523802 - $500.00
No mention was made in that document to the respondent’s purchase of the car nor to the information given by Ms Smith and Mr Linn to the FWO inspector, especially invoice amounts used as deductions from sums due in respect of the car’s purchase price. The respondent did not file affidavit material in this case so his version of events was not given nor could it have been tested.
On 7 June 2016 an FWO inspector sent an email to the respondent requiring him to comply with the notice to produce. On the same day the respondent sent an email to the FWO inspector.[5] It is useful to set it out verbatim –
[5] Exhibit “KM-10” to the affidavit of Kez Yu Ma affirmed 18 July 2017.
To whom it may concern, we never sought any of the following from Waseem:
1. Tax file declarations
2. Employment contract, as we had him on casual basis it was a verbal agreement.
3. Hours worked, ie time sheets were phoned through by the dealership where he was working.
4. The termination was told to me when I went into the dealership, as he hadn’t been at work. They said they had given him some time to come back but when they had called him he didn’t answer and when he did, he said he would be there, only he never turned up. There was no written termination, as he was casual I had met up with him and told him the reasons why. I also asked for his feedback on why it had happened, he told me he was working nights as well as the day and he was tired. He stated that was why he made mistakes and ultimately why he was late too.
I realise now that I was in breach of employment conditions and I am very sorry for this. It won’t happen again; I was trying to help him out as I had been led to believe he had problems.
I know this is a very serious matter, all I can do is apologise profusely and learn from this massive error that was made on our part.
Regards
Leonard Greenan
An FWO inspector requested a meeting with the respondent by email dated 20 July 2016. The respondent did not reply to that invitation.
On 26 July 2016 FWO representatives attended at the respondent’s last-known residential address and served a compliance notice upon the respondent’s wife. In it Mr Ma identified two alleged contraventions of the FWA namely –
a)
contravention 1 - underpayment of ordinary hourly rate
($19.57 per hour) from 1 July 2016 over 288.90 hours making a total amount unpaid of $5,653.77; and
b)contravention 2 - unpaid casual loading entitlement at the rate of 25% of the ordinary hourly rate over 288.90 hours making a total amount unpaid of $1,412.72.
In the compliance notice FWO required payment of the total sum of $7,066.49 to be made within seven days. FWO sent an email to the respondent on 3 August 2016 informing him that the compliance notice had been left with Dianne Greenan at the respondent’s last-known residential address and electronically attached a copy of the notice.
On 9 August 2016 the respondent sent an email to FWO.[6] It was short. In it he stated as follows –
[6] Exhibit “KM-14” to the affidavit of Kez Yu Ma affirmed 18 July 2017.
Hi Kez
I received it from Dianne on Friday.
I have asked my lawyer for some advice on this, as I had already paid him what I owed him.
I do realize it was done all wrong and I will accept any punishment that is due.
I just want this all sorted out.
Now if I pay all this amount what else will I be liable for?
Thanks
Lenny
On 7 September 2016 a different FWO inspector sent an email to the respondent telling him she was present when the compliance notice was served at the respondent’s residential address, that the respondent had not complied with the notice and that the inspector attached to the email a seven day letter stating that the respondent had seven days within which to give a reasonable excuse for not complying with the compliance notice and that a failure to comply with the compliance notice was a contravention of s.716(5) of the FWA.
On 8 September 2016 the respondent requested two further weeks to raise funds to meet the amount in the contravention notice.
He mentioned 23 September 2016. FWO agreed, telling the respondent he had until 24 September 2016 by which proof of payment had to be demonstrated.
The amount was not paid by 26 September 2016. On that day FWO sent an email to the respondent telling him FWO was considering its enforcement options.
There being no response from the respondent, FWO served a copy of my previous judgment on him, notifying him of the orders that were made against him. Mr Ma affirmed that as at 18 July 2016,
the respondent had not complied with the compliance notice.
Having made the orders and declarations recorded in my previous judgment, it is now necessary to address matters relevant to penalty.
Separate contraventions
FWO contended that three separate contraventions were involved in the circumstances of this case, namely –
a)a failure to make and keep employee records as prescribed by regulation 3.32 of the FWR;
b)a failure to make and keep employee records as prescribed by regulation 3.40 of the FWR; and
c)a failure to comply with the compliance notice as required by s.716(5) of the FWA.
FWO urged me to proceed on the basis that three separate breaches were involved and therefore that I should apply three separate penalties.
I reject the submission of FWO to the effect that in respect of the failure to comply with record-keeping obligations, multiple contraventions occurred. True, different regulations were breached.
But the relevant act that grounded the failure to comply with the record-keeping obligations was the same. Put most simply, the relevant act was a failure to keep records. Whether that conduct caused two regulations to be contravened was largely beside the point. One activity was involved – failing to keep records.
In the course of its written submissions,[7] FWO relied on various decisions of other judges of this court, supposedly providing support for the proposition that no course of conduct can be shown where there is a contravention of different obligations. Of that let me say the following.
[7] Applicant’s submissions on penalty filed 26 July 2017.
First, in this case the respondent failed to keep records. No real doubt exists about that. For that matter, in the respondent’s two written pieces he provided to FWO, he conceded as much and apologised.
The question became whether one or several acts occurred making up that contravention, relevantly here, of record-keeping requirements.
To my mind, the answer must be a single act. The respondent did not keep records. FWR provide that such failure represents two separate obligations breached. I accept that two regulations were involved.
Yet the act was still the one act – failure to keep records.
Second, it scarcely needs pointing out that a decision of one judge of this court does not bind me nor does any such decision compel me to follow a decision of some other judge of this court. No authority binding upon me says to the contrary, at least none of which I am presently aware.
Third, FWO relied on the decision of the Full Court of the
Federal Court of Australia in Rocky Holdings Pty Ltd v Fair Work Ombudsman[8] (“Rocky Holdings”). In that case, the Full Court was concerned with contraventions of ss.44, 45, 99 and 116 of the FWA and contraventions of not less than five separate clauses of modern awards. The Full Court addressed what it termed “the appellant’s alternative contention” and condensed the argument as being one that treated ss.44 and 45 of the FWA as a reference not to the substance but to the mere existence of the provision irrespective of the nature of the contravention the provision created. Ultimately, the Full Court rejected the appellant’s alternative construction. The court referred to Jessup J’s decision in Murrihy v Betezy.com.au Pty Ltd (No 2)[9] (“Murrihy”) holding that the reference in the FWA to a civil remedy provision in the singular was a conscious, specific one and that the section should not be given a broader operation than that for which the legislature expressly provided. In Rocky Holdings, the Full Court held that the substance, not the mere existence of the civil penalty provision, must be considered. That decision as well as Jessup J’s decision in Murrihy binds me. Each is unarguably correct. In any event, whether five, two or any number of sections, regulations or clauses of modern awards were identified as having been contravened, here the substance of the act was a single act – failure to keep records.
[8] (2014) 221 FCR 153.
[9] (2013) 221 FCR 118.
In those circumstances, the contraventions in this case must be grouped. In my view, only two contraventions should be the subject of my imposition of a penalty. They relate to the breach of record-keeping obligations and they relate to a failure to comply with the compliance notice.
Let me now turn to certain legal principles applicable to penalties.
Legal principles relevant to the imposition of penalties
In the course of making submissions about penalties, FWO provided recommendations in respect of the appropriate range of penalties to be imposed in this case. That was consistent with the observations of the High Court in Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate; Construction, Forestry, Mining and Energy Union v Director, Fair Work Building Industry Inspectorate.[10]
[10] [2015] HCA 46.
The authorities in this field of jurisprudence are well-ploughed.
They may be briefly stated –
a)
first, any penalty to be imposed should be an appropriate
response to what the respondent did. So much was held by the Full Court of the Federal Court of Australia in
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith;[11]
[11] [2008] FCAFC 8.
b)
second, it is necessary for me to have regard to the maximum penalties that apply. That is because of the observations of the High Court in Markarian v R[12] (“Markarian”) where the
[12] (2005) 228 CLR 357 at [31].
High Court held that maximum penalties are to be taken into account and balanced with all other relevant factors so as to provide a yardstick;
c)
third, in Kelly v Fitzpatrick[13] (“Kelly”) Tracey J embraced a
[13] [2007] FCA 1080.
10-point non-exclusive list of factors relevant to the imposition of a penalty. His Honour held to like effect in Stuart-Mahoney
v Construction, Forestry, Mining and Energy Union.[14][14] [2008] FCA 1426 at [40].
Those points provide a useful list of factors that assist in weighing up key considerations. While useful, that list does not restrict the court about the matters that can be taken into account as was held in Sharpe v Dogma Enterprises Pty Ltd.[15] To some extent, the 10 points overlap and can be truncated, as I held in Fair Work Ombudsman v Raimondi Investments Pty Ltd& Anor[16] (“Raimondi”);
d)
fourth, each contravention is a separate contravention to be separately considered, as was held in Re Stephen Gibbs v the Mayor, Councillors and Citizens of the City of Altona[17] and
McIver v Healey;[18] and
e)fifth, to the extent that two or more contraventions have common elements, that is a matter to be taken into account in considering the appropriateness of the penalty in all the circumstances, reflective of the concept that a respondent should not be penalised more than once for the same conduct.
[15] [2007] FCA 1550.
[16] [2016] FCCA 1398.
[17] [1992] FCA 553 at [21].
[18] [2008] FCA 425 at [16].
Issues relating to general and specific deterrence are considered below.
Let me now address the factors relevant to penalty as embraced by Tracey J in Kelly.
Nature, extent and circumstances of the contravening conduct
The relevant contravening conduct was the respondent’s failure to keep records and respondent’s failure to comply with the compliance notice.
FWO argued that the contraventions were serious, especially the record keeping contraventions. I agree, and for the reasons that follow, in my view the circumstances of the contraventions place this case in the upper range of cases warranting sanguine treatment by the court.
It must not be forgotten that Mr Adil approached the respondent for sponsorship in connection with his visa. The respondent invoiced
Mr Adil $12,000.00 but by sheer dint of circumstance, Mr Adil was able to pay the respondent $9,500.00, not the full $12,000.00. Expecting a visa or a good deal of activity associated with the visa’s production, Mr Adil derived nothing for his payment of $9,500.00. Then, rather than the respondent paying Mr Adil his wages, the respondent invoiced MCR, allegedly for Mr Adil’s wages but in reality for the progressive down payment of the purchase price for an expensive Peugeot motor vehicle. This smacked of serious nefarious conduct. It had the hallmarks of exploitation. It had the attributes of obtaining a financial advantage by deception, a crime in most states. I formed a very dim view of the respondent’s conduct, amplified by his two written pieces described above in each of which he apologised for bad behaviour.
Mr Adil was not paid amounts he should have been paid. Whether the respondent is to be accepted in his assertions that he paid Mr Adil amounts totalling $2,500.00 is uncertain. No documentation was put forward to prove the fact and amount of any such payment. I am none the wiser about the matter. So far as I can see, based on Mr Adil’s affidavit as well as Mr Ma’s, no amount has been paid to Mr Adil. In assessing the penalty to be imposed in this case, I have proceeded on the basis that no amount was paid to Mr Adil.
Mr Adil said his life has been difficult since the events of this case. I accept that. The respondent apologised for his role in making Mr Adil’s life so difficult.
Size of the business
No evidence was before me about the size of the respondent’s business.
The “size of the business” considerations relevant include –
a)the size of the business’s assets and undertaking;
b)its turnover;
c)its payroll;
d)the number of its employees;
e)the location at which it operates; and
f)its client base.
Ordinarily those matters go to establishing the size of any business. There was no evidence before the court on those matters.
Insofar as “size of the business” considerations incorporate a consideration of the respondent’s financial position, two decisions of the Federal Court of Australia are relevant for the purposes of the imposition of a penalty. The first is Cotis v MacPherson[19] and the second is Kelly. In both of those cases it was held that an employer’s financial position at the time of contravention was not relevant to the question of penalty. To my mind, that reflects the good sense that all employers, irrespective of their size and financial position, are bound by the same workplace laws. As I held in Raimondi, it is no more an answer to a failure to comply with workplace laws by contending that the business is small and impecunious than it is to contend the business is large and wealthy. Publicly listed companies that are employers must comply with workplace laws in precisely the same way as must natural persons who are employers.
[19] (2007) 169 IR 30 at [16].
At all relevant times the respondent was either the owner or a director of the entity he ran. He may have been the guiding mind of the company, although a reference was made to a person called “Gary” of MCR. I find it more probable than not that United Consulting could only do or refrain from doing any act if done or not done by the respondent.
Involvement of senior management
This factor addressed the involvement of senior management in the conduct leading to the orders about which complaint is now made in this proceeding.
Insofar as this factor points to any nefarious conduct being known to, acquiesced in or actively promoted by senior management, then that is one of a litany of factors that I must take into account which I have done in this case. However, the point assumes no stand-alone significance. But in this case the respondent was the owner or a responsible person in the control of United Consulting, being the entity responsible for Mr Adil.
Contrition
FWO made a great deal of the absence of any contrition on the part of the respondent. FWO used the absence of contrition as a significant argument in support of its overall contentions that I should visit upon the respondent the upper range of penalties.
I agree. The only contrition exhibited by the respondent lay in his being caught. In my view, there was no real contrition in this case.
Corrective measures
FWO pointed out that no amount of the sum due has been paid. I have taken that into account.
Deliberateness
The question of the deliberateness of the contravention was one of the factors to which Tracey J referred in Kelly. I have taken into account any deliberateness in the relevant contraventions, especially the failure to comply with the compliance notice.
General and specific deterrence
The need for specific and general deterrence is a factor relevant to the imposition of a penalty, a proposition well-established by authority of the Federal Court of Australia, including the decision of Tracey J in Meadley v Sort Worx Pty Ltd.[20]
[20] [2013] FCA 1012.
So far as specific deterrence is concerned, specific deterrence focuses on the likelihood of the infringing party being involved in a similar breach in the future as was held in Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union[21] (“Plancor”).
[21] (2008) 171 FCR 357.
No material was before me about the likelihood of the respondent engaging in similar conduct in the future. Coupled with the absence of evidence about any similar previous conduct, it seemed to me to be a fair construction of the facts of this case that this was a one-off incident.
An examination of the contraventions in greater detail
The record-keeping contraventions were said by FWO to have serious consequences including –
a)frustration of the ability of the regulator to investigate employees’ entitlements; and
b)“[creating] a structure within which breaches of the industrial laws can be easily perpetrated”.[22]
[22] Applicant’s submissions on penalty filed 26 July 2017 at [46].
FWO called in aid of those submissions decisions of this court and of magistrates. I will not follow a magistrate’s decision. As for a decision of another judge of this court, it does not bind me.
But those two submissions suffered from other vices. Subject to what Katzmann J held on point, I have trouble accepting a blanket proposition that a regulator is “frustrated” in its investigations by a person failing to keep records. If a person fails to keep the records the FWA and the FWR require, certain consequences follow. Whatever might be the forensic consequence of the failure to keep records is subsumed by the legislative consequence of that failure. In other words, a penalty flows from proven failure to comply with record-keeping requirements. I do not accept that FWO’s ability to investigate is diminished or frustrated by a person’s failure to keep records. But even if it were a consequence, any impediment to FWO’s ability to discharge its statutory function was addressed by the range of penalties that a court may impose.
Next, I do not accept FWO’s submission that a failure to keep records creates a “structure within which breaches of industrial laws can be easily perpetrated”. I was unable to follow what that submission actually meant once the emotion was removed from it. It could not be sensibly contended that an industrial environment is somehow created giving rise to easy perpetration of breaches of the industrial law merely when records are not kept. Records are not kept either deliberately or inadvertently. Intent might be relevant to penalty. But the fact of records not being kept, especially inadvertently, does not create a “structure” (whatever that is in context) in which industrial laws can easily be breached. Does the failure to keep records lead to an industrial environment where there is an easy perpetration of strikes, lockouts, boycotts, picketing, unlawful industrial behaviour, harassment, bullying and so on? The answer must be in the negative.
However, I do accept Katzmann J’s observations in Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) -
Without accurate and complete records, the extent to which an employer is complying with its other obligations is difficult, if not impossible, to determine. The failure to make and keep proper records can frustrate the operation of the Act.[23]
[23] [2017] FCA 557 at [545].
Next, a specific provision is made in the FWA that deals with a failure to keep records. If a contravention of that provision is admitted or proved, then the contravener must be dealt with for the contravention and a civil penalty must be imposed. Whether the contravention has impeded the FWO and its work can only ever be relevant, if relevant at all, to the penalty to be imposed. And in any consideration of that matter, cogent evidence would be needed to show precisely how FWO’s work was in fact linked, at a causal level, to the failure to keep records. On the facts of this case, the respondent apologised twice for his acts. Far from that impeding FWO in this case, his apologies represented concessions of wrongdoing and they reduced the scope and intricacy of FWO’s investigations.
The submissions in paragraph 46 of the FWO’s written submissions filed on 26 July 2017 were not particularly helpful.
FWA contended that the respondent’s disregard for the compliance notice was intentional, demonstrating an unwillingness to comply with his legal obligations. FWO contended that such a stance was an aggregating factor in assessing penalty.
It seemed to me that was a considerable overstatement of the position.
The fact remained that the respondent did not comply with the compliance notice. In other words, he committed the contravention
(in respect of which default interlocutory judgment was entered on
28 June 2016) and in this proceeding he stands to be penalised for that contravention. Whether the respondent’s non-compliance indicated,
as FWO submitted, “a complete unwillingness to comply with his legal obligations”[24] was not to the point.
[24] Applicant’s submissions on penalty filed 26 July 2017 at [36].
It seemed to me that other matters were vastly more important in this case and that they went directly to penalty. Let me recount them, although not necessarily in order of importance.
The agreement between MCR required United Consulting Services to meet the wages of persons placed, as was Mr Adil. That obligation did not fall on the shoulders of MCR.
The evidence of payments was less exact than it might have been having regard to the respondent’s assertions that he provided certain amounts to Mr Adil. Whether that was true or not was not easily verified, mainly because the only meaningful information the respondent gave in this case was confessional in nature in which he apologised and admitted to the matters alleged by FWO. Conversely, Mr Adil affirmed he had not been paid. Other evidence revealed that Mr Adil paid $9,500.00 for his visa, that those funds went to
United Consulting, that Mr Adil was not refunded the money he paid for the visa yet the money Mr Adil actually paid was intended for a purpose that never eventuated.
Then there was the evidence about the invoices and the apparent contra in relation to the car. It will be recalled that MCR employees Ms Smith and Mr Linn met with an FWO inspector during which they discussed payment to Mr Adil. In answer to the FWO inspector’s question about invoices between United Consulting Services and MCR in respect of Mr Adil’s wages, Ms Smith told the FWO inspector the following –
[T]he invoices had not been paid as [the respondent] had purchased a car from [MCR] and it was agreed that the invoices were to be deducted off monies owed by [the respondent] for the car.[25]
[25] Exhibit “KM-4” to the affidavit of Kez Yu Ma affirmed 18 July 2017.
Four of those invoices were exhibited by Mr Ma to his affidavit affirmed 18 July 2017. When a reconciliation of the amounts on those four invoices was undertaken against the computer vehicle debtor’s account in relation to United Consulting Service, the amounts on those four invoices were recorded as credit items on the vehicle debtor account. More specifically, the vehicle debtor account showed –
a)a payment or credit entry on 5 February 2016 for $1,507.00, corresponding to United Consulting Services invoice 0100 dated 5 February 2016, the amount due on which invoice was shown as zero;
b)a payment or credit entry on 22 February 2016 for $1,672.00, corresponding to United Consulting Services invoice 0103 dated 19 February 2016, the amount due on which invoice was shown as zero;
c)a payment or credit entry on 29 March 2016 for $1,672.00, corresponding to United Consulting Services invoice 0108 dated 4 March 2016, the amount due on which invoice was shown as zero; and
d)a payment or credit entry on 29 March 2016 for $1,504.00, corresponding to United Consulting Services invoice 0109 dated 18 March 2016, the amount due on which invoice was shown as zero.
The fact that the respondent neither explained those entries to FWO representatives nor gave evidence about the matter in this proceeding made the task of definitively resolving the issue difficult, to say the least. However, those four entries on the MCR vehicle debtor account, their precise correspondence with matching amounts mentioned on United Consulting Services invoices 0100, 0103, 0108 and 0109 as well as the statements of Ms Smith and Mr Linn to the
FWO investigator demonstrated to me on the balance of probabilities that the respondent had falsely invoiced MCR for those amounts and that those amounts had been deducted from amounts the respondent owed for his car rather than being paid to Mr Adil for work he did.
That conduct was at the uppermost end of culpability for the imposition of a civil penalty. Those four invoices and their treatment within MCR, revealed calculated and deliberate acts over several months to personally benefit the respondent and to deny Mr Adil payment of amounts properly due to him. The law must set its face against such conduct, as I have done when imposing the penalties in this case.
In arriving at a conclusion in this case, I have carefully considered two matters that may appear to tell against the severity of any sanctions in this case, namely –
a)the respondent’s assertion that he paid random amounts at sporadic intervals to Mr Adil with a view to alleviating the hardship from which Mr Adil was suffering; and
b)the respondent’s assertions of remorse.
Let me take each in turn.
No bank statement, cash withdrawal documentation, payment slip or other form of paperwork was put forward in this case by way of verification of the respondent’s assertion that in fact he paid Mr Adil any amount, whether on the sporadic basis asserted or at all. In short,
I was not satisfied that the respondent’s assertion that he paid Mr Adil various unequal amounts at sporadic intervals was true.
As to the remorse the respondent said he showed, any remorse exhibited by the respondent must be genuine if it is to count in any way in his favour. Otherwise it is likely to be viewed as being hollow, given only with a view to exculpation. I was not persuaded that the respondent’s so-called remorse was genuine. If anything, I was persuaded that the respondent’s regrets in the events of this case lay in his own detection. It must not be overlooked that he made investigations in this case difficult, he did not respond to FWO’s invitation to meet, he did not explain the true situation in relation to his acquisition of the car (especially the four invoices that seemingly reduced his indebtedness to MCR) and the respondent has at no stage complied with the compliance notice. The amounts unpaid were of similar amounts to the amounts on the four invoices mentioned above.
The respondent could have but failed to offer a repayment regime.
He could have but failed to make any payments to Mr Adil.
The respondent’s behaviour in this case has been extremely poor.
It warrants condemnation by the imposition of penalties for the brazen attitude that the respondent adopted.
In Mornington Inn Pty Ltd v Jordan,[26] the Full Court of the
Federal Court of Australia held as follows –
… a discount should not be available simply because a respondent has spared the community the cost of a contested trial. Rather, the benefit of such a discount should be reserved for cases where it can be fairly shown that an admission of liability: (a) has indicated an acceptance of wrongdoing and suitable and credible expression of regret; and/or (b) has indicated a willingness to facilitate that course of justice.[27]
[26] [2008] FCAFC 70.
[27] [2008] FCAFC 70 at [76].
The Full Court of the Federal Court of Australia has provided guidance in relation to general and specific deterrence in the following terms in Ponzio v B & P Caelli Constructions Pty Ltd,[28] stating that a penalty –
should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like minded persons or organisations.[29]
[28] [2007] FCAFC 65.
[29] [2007] FCAFC 65 at [93].
To like effect, Marshall J held in Fair Work Ombudsman v Maclean Bay Pty Ltd (No 2)[30] as follows –
It is important to ensure that the protections provided by the Act to employees are real and effective and properly enforced.
The need for general deterrence cannot be understated. Rights are a mere shell unless they are respected.[31]
[30] [2012] FCA 557.
[31] [2012] FCA 557 at [29].
In Plancor the Full Court of the Federal Court of Australia held as follows in relation to specific deterrence –
Much will depend on the attitude expressed by that party as to things like remorse and steps taken to ensure that no future breach will occur.[32]
[32] [2008] FCAFC 170 at [37].
Maximum penalties
Maximum penalties are to be taken and balanced with all other factors as to provide a yardstick, according to the High Court of Australia in Markarian. In this case, given that I have grouped the record-keeping contraventions, there are two relevant breaches. The first was for a contravention of s.535(1) of the FWA and regulations 3.32 and 3.40 of the FWR. The second was for a contravention of s.716(5) of the FWA. The maximum penalty units are 30 for each. Between 31 July and
30 June 2017 the value of the penalty unit was $180.00. Here, the total maximum number penalty units for the contraventions was 60 at $180.00 each, making a total dollar amount of $10,800.00.
I take the view that in this case the conduct of the respondent was appalling. The respondent wholly failed in his responsibilities to
Mr Adil. He personally benefited out of Mr Adil’s service, rather than paying Mr Adil, wholly antithetical to his role in placing Mr Adil and to his obligations under the FWA. No meaningful remorse or contrition was shown. True, the respondent expressed remorse but I view that as being his remorse at being detected.
A full penalty must be imposed.
I order the respondent pay the maximum penalty on each contravention, making $10,800.00 in all.
In view of my observations that aspects of the respondent’s acquisition of his car using money due to Mr Adil might be criminal in nature,
I have referred this case to the Commonwealth Director of
Public Prosecutions.
I certify that the preceding ninety-three (93) paragraphs are a true copy of the reasons for judgment of his Honour Judge Wilson
Date: 31 August 2017
16
3