Fair Work Ombudsman v Helix Bianca Nominees Pty Ltd
[2021] FCCA 1351
•8 June 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
Fair Work Ombudsman v Helix Bianca Nominees Pty Ltd [2021] FCCA 1351
File number(s): MLG 166 of 2021 Judgment of: JUDGE MCNAB Date of judgment: 8 June 2021 Catchwords: INDUSTRIAL LAW – Fair Work application – default judgment – failure to comply with a compliance notice pursuant to section 716(5) of the Fair Work Act 2009 (Cth) – non-exhaustive list of factors relevant to the imposition of a penalty – failure to cooperate with the enforcement authorities – failure to participate in proceedings – no evidence of prior failures to comply – general and specific deterrence – imposition of penalty to discourage similar conduct Legislation: Fair Work Act 2009 (Cth) ss 90, 539, 546, 716
Federal Circuit Court Rules 2001 (Cth) rr 13.03A, 13.03B
Health Professionals and Support Services Award 2010 cl 10.4(b), 15
Cases cited: Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8
Fair Ombudsman v Hiyi Pty Ltd [2016] FCCA 1634
Fair Work Ombudsman v New South Wales Motel Management Services Pty Ltd & Ors [2019] FCCA 2638
Kelly v Fitzpatrick [2007] FCA 1080
Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7
Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550
Number of paragraphs: 26 Date of hearing: 8 June 2021 Place: Melbourne Solicitor for the Applicant: The Office of the Fair Work Ombudsman The Respondent: No Appearance ORDERS
MLG 166 of 2021 BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: HELIX BIANCA NOMINEES PTY LTD
Respondent
ORDER MADE BY:
JUDGE MCNAB
DATE OF ORDER:
8 JUNE 2021
THE COURT DECLARES THAT:
1.Upon admissions taken to have been made by reason of the Respondent’s default, the Respondent contravened section 716(5) of the Fair Work Act 2009 (Cth) (“FW Act”) by failing to comply with a compliance notice given to the Respondent on 20 October 2020 (“Compliance Notice”).
THE COURT ORDERS THAT:
2.Default judgment be entered for the Applicant against the Respondent pursuant to rule 13.03B(2)(c) of the Federal Circuit Court Rules 2001 (Cth) (“Rules”).
3.Pursuant to section 545(1) of the FW Act, the Respondent take the steps that were required by the Compliance Notice within 28 days of this order, by:
(i)Calculating and paying to the Applicant the outstanding entitlements the Respondent was required to pay to Aliullah Aman and Santo Giuffrida (“Employees”);
(ii)Calculating and paying superannuation contribution into the Employees’ nominated superannuation fund for any additional superannuation contribution it was required to pay under clause 23.2 of the Health Professionals and Support Services Award 2010; and
(iii)Preparing and producing to the Applicant a schedule outlining its calculation of the outstanding entitlements calculated and paid in accordance with paragraph 3((a)(i) and 3(a)(ii).
4.Pursuant to section 547(2) of the FW Act, the Respondent pay interest on the amount owed to the Employees pursuant to paragraph 3(a)(i) above to the Applicant within 28 days of this order.
5.The Applicant distribute to each of the Employees the amounts paid pursuant to paragraphs 3(a)(i) and 4 above within 90 days of the payment being made.
6.Pursuant to section 546(1) of the FW Act, the Respondent pay a pecuniary penalty of $16,500 to the Commonwealth with respect to the contravention declared in paragraph 1 above within 28 days of the this order.
7.The Applicant have liberty to apply on seven days’ notice in the event that any of the above orders are not complied with.
AND THE COURT NOTES THAT:
A.Pursuant to Rule 16.05 of the Federal Circuit Court Rules 2001 (“the Rules”) the Respondent may seek leave to set aside these orders within 28 days upon filing an application and affidavit setting out their failure to participate in the proceeding and why these orders should be set aside.
REASONS FOR JUDGMENT
(Delivered Ex Tempore – Revised From Transcript)Judge McNab:
INTRODUCTION
This matter comes before the Court by way of an application filed on 4 February 2021. By that application, the Applicant seeks pecuniary relief in respect of a contravention by the Respondent of s716(5) of the Fair Work Act 2009 (Cth) (“the FW Act”), in failing to comply with a compliance notice issued by the Applicant on 20 October 2020. The Applicant also seeks, by way of an application in a case filed on 14 May 2021, that default judgment be entered against the Respondent pursuant to r13.03B(2)(c) of Federal Circuit Court Rules 2001 (Cth) (“the Rules”). Default judgment is sought on the basis of the Respondent’s default, pursuant to r13.03A(2) of the Rules, by its failure to:
(1)attend the first Court date on 15 March 2021;
(2)file a notice of address for service in accordance with r6.01 of the Rules;
(3)file a response and any defence in accordance with r4.03 and r4.05(3)(a) of the Rules;
(4)comply with an order of the Court in these proceedings, being order 1 of the orders of the Court made on 15 March 2021, in accordance with r13.03A(2)(b)(iii) of the Rules; and
(5)defend the proceedings with due diligence in accordance with r13.03A(2)(b)(vii) of the Rules.
The matter came before the Court on 8 June 2021 for hearing in respect of the application for default judgment and whether any pecuniary penalty should be imposed against the Respondent should default judgment be entered against it. The Applicant was legally represented at the hearing and there was no appearance on behalf of the Respondent.
BACKGROUND
The Respondent operates a Dental Clinic trading as the Seaford Dental Clinic in Seaford, Victoria (“the business”).
In support of its application, the Applicant relies on an affidavit of Fair Work Inspector Corn (“FWI Corn”) filed on 14 May 2021. By that affidavit, FWI Corn deposes that on 13 May 2021 he consulted the database held by the Australian Securities and Investment Commission, which shows that the Respondent is currently registered. I accept the evidence that the Respondent is registered and is still operating.
FWI Corn deposes that in or around February 2020, the Applicant commenced an investigation into the business in relation to the employment of Mr Aliullah Aman and Mr Santo Giuffrida (collectively, “the employees”).
FWI Corn goes on to say that, on 20 October 2020, FWI Keene, under the supervision of FWI Corn, served a compliance notice on the Respondent on the basis that the Respondent had contravened:
(1)clauses 15 and 10.4(b) of the Health Professionals and Support Services Award 2010 (“the Health Award”), by failing to pay Mr Aman at the rate of 1/38 of the weekly rate appropriate to his classification, with a loading of 25% of that rate during the period from at least 25 February 2019 to 11 January 2020; and
(2)section 90(2) of the FW Act, by failing to pay Mr Giuffrida accrued but untaken annual leave when his employment ceased (collectively, “the contraventions”).
The compliance notice required the Respondent to take specified action by 20 November 2020 to remedy the direct effects of the contraventions, by calculating and paying to the employees the difference between what they were each entitled to be paid and what they were paid. The Respondent was also required to produce evidence to the Applicant of the Respondent’s compliance with the notice by producing a copy of the schedule of calculations and payments, and evidence that the amounts owing had been paid to the employees by 20 November 2020.
On 20 October 2020, FWI Keene received a process server report which states that a Process Server attended at the business’ address and served a copy of the compliance notice documents. The report also states that the Process Server attended the residential address of the Director of the Respondent, Mr Simon Phillips, and that the compliance documents were left at the front entrance of the property.
On 21 October 2020, FWI Keene made a call to the business, and spoke to a person who identified herself as ‘Rhee’. Rhee stated to FWI Keene that Mr Phillips and Ms Kelly Phillips, Practice Manager of the business, no longer worked at the business during the day, but confirmed that she had received a copy of the documents from the Process Server on 20 October 2020, and that she had provided those documents to Ms Phillips.
Paragraph 10 of the statement of claim filed on 4 February 2021 states that the Respondent did not take the actions specified in the compliance notice by 20 November 2020 or provide reasonable evidence to the Applicant of compliance with the notice, including evidence of any calculations or payments been made to the employees.
By way of FWI Corn’s affidavit filed on 14 May 2021, FWI Corn deposes that:
(1)on 23 November 2020, FWI Keene made a telephone call to the business, spoke to the person known as Rhee, and asked that a message be passed on to Mr Phillips or Mrs Philips that the compliance notice was not complied with on 20 November 2020;
(2)on 23 November 2020, Ms Philips sent an email to FWI Keene stating that Mr Philips had been in the Fulham Correctional Centre since August 2020, and that she did not know when he would be released: see FWI Corn’s affidavit filed on 14 May 2021, annexure AC-10; and
(3)on 24 November 2020, FWI Keene sent an email to Ms Phillips seeking further information in respect of Mr Phillip’s custody and it was requested she advise who was in charge of running the business while Mr Philips was in jail. It appears that on the basis of the evidence of FWI Corn that the business is still operating and taking patients at the clinic.
On 4 February 2021 proceedings were commenced by the Applicant seeking orders that the Respondent remedy the contravention of s716(5) of the FW Act and pay a pecuniary penalty in respect of the contravention.
I note that, by his affidavit, FWI Corn deposes that as at 28 April 2021 and 29 April 2021 respectively, Mr Aman and Mr Giuffrida confirmed by email to FWI Keene that they had not received any payment from the Respondent pursuant to the requirements of the compliance notice: see FWI Corn’s affidavit filed on 14 May 2021, annexures AC-12, AC-13.
CONSIDERATION
Default Judgment
For the reasons which follow, it is appropriate that default judgment be entered against the Respondent pursuant to r13.03B(2)(c) of the Rules.
The Applicant appears to be entitled to the relief set out in the statement of claim. Further the Respondent is in default on the basis that:
(1)I am satisfied that the originating application filed on 4 February 2021 and the application in a case filed on 14 May 2021 were properly served upon the Respondent in accordance with the Rules;
(2)no representative, on behalf of the Respondent, attended the first Court date on 15 March 2021 or the second Court date on 13 April 2021;
(3)the Respondent has not filed an address for service and has not filed any defence (or indeed any material) in accordance with the Rules;
(4)the Respondent has failed to comply with an order of the Court made on 15 March 2021 and failed to appear on this day.
I am satisfied that default judgment should be entered against the Respondent and the Applicant is entitled to the relief sought, including a declaration that the Respondent contravened the provisions of the Health Award and the FW Act.
Pecuniary Penalty
The Applicant has filed and served submissions on penalty, and I have regard to those submissions. As set out above, a declaration will be made that the Respondent contravened s716(5) of the FW Act by failing to comply with the compliance notice issued by the Applicant. On the basis of the Respondent’s contravention, the Applicant is seeking the imposition of a pecuniary penalty pursuant to s546(1) of the FW Act.
The Applicant submits that a penalty of $26,640 is appropriate, in circumstances where the maximum penalty the Court may impose for a contravention of s716(5) of the FW Act by a corporation is $33,000.
I have been referred to authorities by the Applicant, in particular the decision of Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8. I also have regard to a non-exhaustive list of factors relevant to the imposition of a penalty which was usefully summarised by Mowbray FM (as he then was) in Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7 at [26] to [59]. Those factors include:
(1)the nature and extent of the conduct which led to the breaches;
(2)the circumstances in which that conduct took place;
(3)the nature and extent of any loss or damage sustained as a result of the breaches;
(4)whether there had been similar previous conduct by the Respondent;
(5)whether the breaches were properly distinct or arose out of the one course of conduct;
(6)the size of the business enterprise involved;
(7)whether or not the breaches were deliberate;
(8)whether senior management was involved in the breaches;
(9)whether the party committing the breach had exhibited contrition, taken corrective action and co-operated with the enforcement authorities;
(10)the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
(11)the need for specific and general deterrence.
This summary was adopted by Tracey J in Kelly v Fitzpatrick [2007] FCA 1080 at [14]. While the summary is a convenient checklist, it does not prescribe or restrict the matters which may be taken into account in the exercise of the Court’s discretion: see Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550. The discretion remains at large.
There is a single contravention alleged against the Respondent and pursuant to s539(2) and 546(2)(a) of the FW Act, the Applicant seeks the Court impose a pecuniary penalty in the sum of $26,640, being 80% of the maximum penalty.
The Respondent has entirely failed to participate in these proceedings, and has failed to appear at the hearing today. Unfortunately, there is little evidence before the Court as to the circumstances of the Respondent and the Court is somewhat restricted in terms of assessing the circumstances in which the Respondent’s failure to comply has occurred. However, this issue is brought about by the Respondent’s failure to participate in the proceedings and the Respondent should not benefit from that failure to participate.
It appears that the business is small in size, being a suburban dental practice. The employees affected by the matters raised by the contravention notice were employed by the business as a Dental Technician and as a Prosthesis Technician. Evidently the employees were employed by the business, but I am not in a position to determine the value of the revenue of the Respondent or the number of employees engaged by the Respondent. The fact that it is a small business does not mean that it is immune from the requirements to comply with provisions of the FW Act: see Fair Ombudsman v Hiyi Pty Ltd [2016] FCCA 1634 at [47]; Fair Work Ombudsman v New South Wales Motel Management Services Pty Ltd & Ors [2019] FCCA 2638 at [28]. Additionally, small business have the same obligations as larger employers to meet minimum employment standards: see Kelly v Fitzpatrick [2007] FCA 1080 at [28].
There is no evidence of any corrective action or cooperation on the part of the Respondent, indeed, there is ample evidence of a serious lack of cooperation by the Respondent. I accept that the Respondent’s failure to comply with the compliance notice undermines the enforcement framework set out in the FW Act and the necessity of ensuring that safety net entitlements are paid. This is an industry which is heavily regulated, and which requires that businesses be conducted by people of good character.
I note that in the course of the hearing today, the Applicant informed the Court that there is no evidence of a history of non-compliance by the Respondent. However, there is a need for general and specific deterrence. Any penalty imposed must be directed at ensuring compliance with minimum standards. The penalty that is imposed must be fixed at a rate which is meaningful and acts as a deterrent so that other companies served with a compliance notice have a real incentive to comply. To fix the penalty at too low a rate would, in effect, undermine the efficacy of the system.
I have regard to the fact that there is a maximum penalty of $33,000, and that the Applicant seeks orders that the penalty imposed be 80% of the maximum penalty. However, I am not minded to impose a penalty at the rate of 80% of the maximum penalty. There is no evidence before the Court as to the exact quantum of the underpayments, but I accept the Applicant’s submission that the onus of calculating those amounts was placed on the Respondent by way of the compliance notice.
I will fix the penalty in the sum of $16,500, being 50% of the maximum penalty. That penalty is imposed on the basis of the Respondent’s failure to comply with the notice and the undermining effects of that conduct, rather than the quantum of any alleged underpayment. There has been no evidence adduced of any previous failure to comply. On that basis, I am not minded to make an order for a penalty against the Respondent which is near to the maximum. I am of the view that the penalty I have imposed is significant and appropriate in the circumstances of this matter and fulfils the need to act as a specific and general deterrent.
I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment of Judge McNab. Associate:
Dated: 18 June 2021
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