Fair Work Ombudsman v Henshaw
[2021] FedCFamC2G 222
•27 October 2021
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Henshaw [2021] FedCFamC2G 222
File number(s): SYG 746 of 2021 Judgment of: JUDGE STREET Date of judgment: 27 October 2021 Catchwords: INDUSTRIAL LAW – FAIR WORK – penalty hearing – where the respondent did not appear before the Court and has not participated in the proceedings – order to proceed made under 13.06(1)(e) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) – where the respondent has not complied with prior orders for payment made by the Court – where the respondent has made a partial payment – specific and general deterrence – whether a penalty would be crushing or oppressive in the circumstances – penalty awarded Legislation: Fair Work Act 2009 (Cth), ss 3, 539, 545, 546, 547, 566, 716
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth), r 13.06(1)(e)
Cases cited: Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301 Division: Division 2 General Federal Law Number of paragraphs: 28 Date of hearing: 27 October 2021 Place: Sydney Solicitor for the applicant: Ms V Anderson Solicitor for the respondent: No appearance ORDERS
SYG 746 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: MICHAEL JAMES HENSHAW ABN 40 569 450 309
Respondent
ORDER MADE BY:
JUDGE STREET
DATE OF ORDER:
27 OCTOBER 2021
THE COURT ORDERS THAT:
1.The hearing proceed despite the absence of the respondent, pursuant to r 13.06(1)(e) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
2.Pursuant to s 545(1) of the Fair Work Act 2009 (Cth), the respondent pay $766.59 to the Consolidated Revenue Fund of the Commonwealth of Australia within 28 days of the date of this order.
3.Pursuant to s 547(2) of the Fair Work Act 2009 (Cth), the respondent pay interest on the amount to be paid in Order 2, being $25.54, to the Consolidated Revenue Fund of the Commonwealth of Australia within 28 days of the date of this order.
4.Upon compliance by the respondent with Orders 2 and 3, the applicant distribute the amount received to Veronica Huggins.
5.Pursuant to s 546 of the Fair Work Act 2009 (Cth), the respondent pay a pecuniary penalty of $5,328.00, in respect of the contravention of s 716(5) of the Fair Work Act 2009 (Cth), to the Commonwealth of Australia within 28 days of the date of this order.
6.The applicant is granted 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 Court may vary or set aside a judgment or order 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 STREET:
Introduction
These are proceedings within the Court's jurisdiction under s 566 of the Fair Work Act 2009 (Cth) (“the Act”), which were commenced on 30 April 2021, in which the applicant was seeking appropriate declarations and orders in respect of a failure to comply with a notice issued under s 716(5) of the Act against the respondent.
The respondent has not participated in the proceedings. The Court is clearly satisfied that the respondent has been aware of the proceedings. It appears that the respondent is in the process of steps in relation to a potential sequestration order. No sequestration order has been made at this stage and, in any event, a sequestration order would not have any application to the pursuit of the penalty hearing which was fixed for today.
Because of the respondent’s failure to appear on 18 September 2021, the Court made orders, in effect, treating the facts pleaded in the amended statement of claim filed on 19 July 2021 as being admitted. The Court also made declarations in respect of the contravention and made an order that the respondent is liable for compensation, which would be determined today, and fixed the hearing for today, for both the amount of compensation and also a penalty hearing.
The applicant has tendered correspondence, which had been marked Exhibit 1, notifying the respondent and reminding him of today's hearing date. The Court is satisfied that the respondent was aware of today's hearing date and makes an order under r 13.06(1)(e) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (“the Rules”) for the proceedings in respect of compensation and penalty to continue before the Court, notwithstanding the failure of the respondent to appear.
Compensation
Given the admitted facts and the evidence before the Court, being that of the affidavit of Ms Andersen sworn on 10 June 2021, the Court is satisfied that the appropriate amount of compensation to order under s 545 of the Act, given the part-payment made by the respondent, is $766.59. The Court will make orders in the form of orders 1, 2 and 3 annexed to the applicant's submissions in respect of the compensation and interest that is still payable by the respondent, in respect of the failure to pay the full entitlements to a particular employee.
Background to the Contravention
The compliance notice was issued in relation to entitlements arising under the Cleaning Services Award 2010 in s 90(2) in respect of a particular employee. The respondent is the sole trader who operated a cleaning business. The applicant formed a belief that the underpayments owing amounted to $1,016.59, and the notice was served by a particular Fair Work inspector on the respondent's last known address and also emailed to the respondent. The compliance notice required the respondent to calculate the amounts owing and to rectify them by 19 February 2021 and to provide proof of evidence of rectification by 26 February 2021.
The respondent was given numerous opportunities, including the investigation phase, to rectify the contraventions and comply with the notice, which he has not done. The continued failure by the respondent to engage with the applicant in response to these proceedings is an aggravating factor in respect of the issue of penalty, which the Court will take into account.
On 30 April 2021, the applicant commenced these proceedings in respect of the breach. The applicant then filed an amended statement of claim on 19 July 2021. The Court made orders and declarations on 8 September 2021.
Before the Court
The applicant seeks a mid to high range penalty of between $4,662.00 and $5,328.00 as a range in respect of the respondent's contravention, being 70 to 80 percent of the maximum penalty which can be awarded under s 539(2) and s 546(2)(a) of the Act.
The Court accepts the submissions of the applicant, that the failure to comply with the statutory notice is serious, and that there are no records that have been produced by the employer to, in fact, identify the correct amount outstanding in respect of the employee. The Court accepts the submissions of the applicant that there was no step taken, other than a partial payment of $250 in respect of the amount identified as being outstanding. That part-payment occurred on 5 July 2021 after the commencement of these proceedings.
However, the respondent has failed to comply with an Order made by the Court on 8 September 2021, which required the filing of an affidavit in respect of the issue of compensation and penalty on or before 20 October 2021. The failure to comply with the Court order is a further aggravating factor in relation to the issue of penalty.
The Court accepts the force of the applicant’s submissions that there is both a need in the present case for general deterrence and, given the failure to engage, a real need in respect of specific deterrence in determining the amount of penalty.
The compliance notice procedure is a very important mechanism to assist with the enforcement of the obligations imposed upon employers under the Act. The failure to comply with a compliance notice is a serious contravention of an important provision of the Act. The provision is an important and core mechanism to advance enforcement of the Act and to promote the purposes of the Act, as identified in the objects contained in s 3 of the Act. Whilst the amount which is the subject of these proceedings is not substantial, the obligation of an employer to comply with the notice, and the failure to do so, defeats this important mechanism provided by the Act to ensure compliance with Fair Work obligations. This is an enforcement mechanism to advance those objects without the need to commence proceedings.
The contravention is one in respect of which the maximum penalty for the respondent for the time of the failure to comply was $6,660.00. The Court has taken into account the approach to determine penalty identified by the learned Bromwich J in Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301 at 36, 89-91. The Court has taken into account the objects of the penalty provisions being to protect the public by appropriate penalty that acts as a deterrence, both specific and general. The penalty must have the necessary sting to secure both the specific and general deterrent effects that underlie the object of the penalty provisions. The Court must also take into account the various factors identified in paragraph 19 of the applicant’s submissions.
In relation to the nature and circumstances of the conduct, it is apparent that the respondent, despite the opportunity to do so, has not engaged meaningfully with the applicant and has only made a partial payment in response to the notice that was seeking to ensure the correct identification of the outstanding entitlements. The failure to produce the documents required in accordance with the notice has meant that neither the applicant nor the Court can verify what, in fact, were the correct outstanding entitlements in respect of the particular employee. It is also apparent that the respondent was informed of the importance of compliance with the notice by the inspector who served the same on the respondent.
The Court accepts that the failure to engage by the respondent with the applicant gave rise to little choice other than for the commencement of these proceedings at the public's expense, in order to ensure compliance with the employer's obligations as well as, more generally for all employers, to advance the obligation of compliance with the Act.
As indicated above, the Court has also taken into account the respondent’s failure to engage in these proceedings and that there have been numerous attempts by the applicant to engage with the respondent, including the Orders made by this Court. Those attempts have not resulted in the respondent rectifying the non‑compliance beyond a partial payment of $250, leaving the employee with an amount still outstanding, together with interest, of $766.59.
There is no current evidence before the Court of any continuing intention by the respondent to comply with the Court's orders, other than what appears to be steps being taken for the respondent to be made the subject of a sequestration order. Those are not steps which comply with the outstanding requirements in respect of the notice.
Further, as indicated above, the respondent did not comply with the orders made by this Court in respect of the respondent on 8 September 2021. The respondent has now had some eight months to comply with the notice since the commencement of these proceedings and the service of the notice. The respondent has not done so.
In these circumstances, the Court finds that the respondent has deliberately disregarded his obligations under the Act, has deliberately defied the statutory authority given to the applicant and the inspector, and has deliberately defied the authority of this Court in respect of the order that was made requiring an affidavit to be filed by the respondent. The deliberateness of that conduct are all aggravating factors in respect of the determination of the amount of the penalty. The respondent’s initial suggestion that he would be more than happy to make arrangements to rectify the amount outstanding has not been reflected in steps taken to attend to the same beyond the part-payment of $250.
So far as action and cooperation is concerned, given the respondent’s failure to engage and the continuing non‑compliance beyond the partial payment of $250, the Court is not satisfied that there is any genuine contrition by the respondent. The respondent has failed to take proper corrective action and, for the reasons identified, has failed to cooperate with the applicant, either prior to or after the commencement of these court proceedings. However, the Court does regard the small level of cooperation as a factor to take into account in determining whether or not the maximum penalty should be imposed in the circumstances of this case.
The Court has also taken into account the applicant’s submissions that the appropriate penalty range is, in light of that engagement, in the order of 70 to 80 percent. The Court has taken into account the loss or damage sustained as a result of the contravention, insofar as they could be identified, reflecting an outstanding entitlement of $1,016.59 at the time of the relevant notice in respect of which there has been a subsequent payment of $250. However, the Court and the applicant are not in a position to verify, for the reason of the failure to comply with the notice, whether that was, in fact, the whole of the amounts outstanding.
It was because the Court was giving the respondent a further opportunity to comply with the notice by the orders it made on 8 September 2021 that it stood over the issue of the amount of compensation to today. This was so that the Court could to take into account any steps taken by the respondent to comply with the notice so as to facilitate verification of the correct amount outstanding and, if the correct amount outstanding was found to be less or more, facilitating the making of the appropriate order. The ongoing failure of the respondent to comply with the notice in that regard, or to comply with the Court's orders, means that the Court has been deprived of the ability to verify that the true amount outstanding, and not more, is that identified by the applicant. This failure to engage must be taken into account in respect of the determination of penalty.
In relation to the size of the respondent’s business and financial circumstances, the Court is willing to infer that the respondent’s circumstances are parlous and it appears that the business may well have collapsed. This is supported by the steps referring to bankruptcy that have been identified by the applicant, albeit, on the evidence before the Court, there has not yet been any sequestration order made. The Court accepts that, notwithstanding the small nature of the cleaning business, its cessation, and the parlous nature of the respondent, the penalty that should be imposed must be at a meaningful level for both specific and general deterrence.
In relation to the concept of general deterrence, as has been identified, the compliance notice is an important provision in relation to the mechanism of enforcement of the Act. There is an obvious need to ensure compliance by all employers with this important provision of the Act. The failure to comply adversely affects the applicant’s ability to effectively and efficiently regulate and administer Australian workplaces and compliance with the Act. The determination of the amount of penalty in the present case does have an important general deterrent effect that must be taken into account.
Turning to specific deterrence, the deliberateness of the conduct of the respondent, and the failure to engage, all reinforce the need for a level of specific deterrence to be taken into account in determining the penalty amount. This is not a case where the respondent has belatedly recognised the need to comply with the Act and cooperated with the applicant, or complied with the orders of the Court. The failure to do so and the finding of deliberateness, on one view, would warrant the maximum penalty being imposed. However, the Court accepts that, in all the circumstances, a penalty in the order of 80 percent, being the sum of $5,328.00, is appropriate.
The Court is satisfied that the amount is neither crushing nor oppressive and, given the conduct referred to, that it reflects the relative seriousness of the conduct engaged in by the respondent. The Court is satisfied that, in all the circumstances, the amount of $5,328.00 is appropriate within s 546(1) of the Act, reflecting 80 percent of the maximum penalty that could have been imposed on the respondent.
In these circumstances, the Court is satisfied that it is also appropriate to make orders against the respondent in respect of the payment to be made to the Commonwealth in the form of the orders sought in paragraphs 4 and 5 of the short minutes of order attached to the applicant’s submissions.
I certify that the preceding twenty-eight (28) paragraphs are a true copy of the settled transcript of the published oral reasons for judgment of Judge Street delivered in open Court on 27 October 2021 and the parties were sent a sealed copy of the Court’s orders. Associate:
Dated: 9 November 2021
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