Fair Work Ombudsman v Hospitality 3564 Pty Ltd
[2022] FedCFamC2G 1035
Federal Circuit and Family Court of Australia
(DIVISION 2)
Fair Work Ombudsman v Hospitality 3564 Pty Ltd [2022] FedCFamC2G 1035
File number: MLG 2261 of 2021 Judgment of: JUDGE FORBES Date of judgment: 14 December 2022 Catchwords: INDUSTRIAL LAW – Fair Work - failure to comply with Compliance Notice – importance of statement of agreed facts – involvement in contravention – cooperation with regulator and contrition - penalties pursuant to s 546 Fair Work Act 2009 (Cth) Legislation: Crimes Act 1914 (Cth) s 4AA
Evidence Act 1995 (Cth) s 191
Fair Work Act 2009 (Cth) s 48, 539, 546, 550, 716, 717
Cases cited: ACE Insurance Limited v Trifunovski (No 2) [2012] FCA 793
Australian Building and Construction Commissioner v Pattinson [2022] HCA 13
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) FCR 560
Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46
Fair Work Ombudsman v AJR Nominees Pty Ltd (No 2) [2014] FCA 128
Fair Work Ombudsman v Extrados Solutions Pty Ltd [2014] FCCA 815
Fair Work Ombudsman v Hess [2021] FCCA 1883Fair Work Ombudsman v NSH North Pty Ltd t/as New Shanghai Charlestown (2017) 275 IR 148
Fair Work Ombudsman v Rika Foods North Melbourne Pty Ltd [2022] FedCFamC2G 768
Fair Work Ombudsman v Soma Kitchen Pty Ltd & Anor (No 2) [2020] FCCA 2583
Fair Work Ombudsman v Sun Sea Equity Pty Ltd [2021] FCCA 104
Fair Work Ombudsman v Yogurberry World Square Pty Ltd [2016] FCA 1290
Kelly v Fitzpatrick [2007] FCA 1080
Markarian v The Queen [2005] HCA 25
Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543
Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357
Trade Practices Commission v CSR Ltd [1990] FCA 521
Division: Division 2 General Federal Law Number of paragraphs: 102 Date of hearing: On the papers Place: Melbourne Solicitor for the Applicant: HWL Ebsworth Solicitor for the Respondents: Employsure Law ORDERS
MLG 2261 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: HOSPITALITY 3564 PTY LTD
First Respondent
DAVID BOWMAN
Second Respondent
order made by:
JUDGE FORBES
DATE OF ORDER:
14 December 2022
THE COURT DECLARES BY CONSENT THAT:
1.
The First Respondent (Company) contravened section 716(5) of the Fair Work Act 2009 (Cth) (FW Act) by failing to comply with the Compliance Notice issued on
19 October 2020.
2.The Second Respondent (Mr Bowman) was involved in, within the meaning of section 550(2)(c) of the FW Act, the contravention of section 716(5) of the FW Act by the Company.
THE COURT ORDERS THAT:
3.Pursuant to section 546(1) of the FW Act:
(a)the Company pay a pecuniary penalty of $14,985.00 for the Company’s contravention of section 716(5) of the FW Act; and
(b)Mr Bowman pay a pecuniary penalty of $2,997.00 for his involvement in the contravention by the Company of section 716(5) of the FW Act.
4.Pursuant to section 546(3)(a) of the FW Act that any pecuniary penalties ordered to be paid by the Respondents be paid to the Consolidated Revenue Fund of the Commonwealth within 28 days.
5.Pursuant to section 547(2) of the FW Act that the Company pay interest on the amounts set out at paragraph 14(a)(i) of the Statement of Agreed Facts filed on 12 January 2022 to the Employee's respective bank accounts within 28 days.
6.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 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 FORBES
INTRODUCTION
In this matter, the Ombudsman seeks the imposition of pecuniary penalties against Hospitality 3564 Pty Ltd (Hospitality 3564) and the company's sole director Mr David Bowman in relation to an admitted contravention of section 716(5) of the Fair Work Act 2009 (Cth) (the FW Act) being the company's failure without reasonable excuse to comply with a compliance notice issued on 19 October 2020.
In considering the penalties which should be ordered in respect of the contravention, the Court has the benefit of a statement of agreed facts (the Statement of Agreed Facts) which was made between the parties for the purposes of s 191 of the Evidence Act 1995 (Cth). Through the Statement of Agreed Facts, Hospitality 3564 admitted to contravening section 716(5) of the FW Act and Mr Bowman admitted that he was relevantly involved in that contravention within the meaning of section 550(2)(c) of the FW Act. In the face of those admissions, for which there is supporting evidence, the Court accepts that the respondents are liable for the contravening conduct.
The Ombudsman seeks declarations which record the company's contravention of s 716(5) of the FW Act and Mr Bowman's involvement in that contravention. Having regard to the admissions of the respondents, I accept that declarations should be made in the terms of the proposed order annexed as Annexure A to the Ombudsman's Reply Submissions on Penalty dated 18 February 2022.
The Ombudsman also seeks orders for the imposition of pecuniary penalties under section 546(1) of the FW Act in respect of the respondents' admitted contraventions.
It has been agreed between the parties that I should determine the question of penalties on the papers, having regard to their respective written submissions and filed affidavit evidence[1]. The agreement to determine penalties in this manner was generally reflective of the level of cooperation between the parties during the course of these proceedings.
[1] On 15 March 2022, I made orders by consent that the Court would determine the matter on the papers, including the question of penalties.
The Ombudsman contends that the Court should impose pecuniary penalties against both the company and Mr Bowman in the range of 70-80% of the maximum but subject to a 20% discount to account for the respondents' early admissions, the corrective action taken by them in relation to underpayments of wages and superannuation, Mr Bowman's contrition and his cooperation with the regulator. The Ombudsman accordingly seeks penalties in the range of $18,648.00-$21,312.00 against the corporate respondent Hospitality 3564 and $3,729.00-$4,262.00 against its director.
The respondents concede that penalties should be imposed in respect of their contraventions. However they contend that penalties in the range of 50-60% of the maximum, subject to a higher discount of 25%, would be a more appropriate and proportionate response to the contravening conduct, having regard to their circumstances and the purposes of general and specific deterrence. The respondents submit that penalties should be in the range of $12,488.00-$14,985.00 for Hospitality 3564 and $2,498.00-$2,997.00 for its director.
For the reasons discussed below, I have determined that a penalty of sixty per cent of the maximum for each respondent reflects the objective seriousness of the contravention. However, I accept the respondent's submission that a discount of 25% is warranted in the circumstances. Accordingly, I will make orders that Hospitality 3564 pay a pecuniary penalty of $14,985.00 and Mr Bowman pay a pecuniary penalty of $2,997.00.
BACKGROUND
The circumstances giving rise to the respondents' admitted contraventions are summarised below. This summary is derived from the statement of claim, the Statement of Agreed Facts and uncontested evidence contained in affidavits filed by the parties.
The Business and employee entitlements
Hospitality 3564 carried on a café business named "Café 3564" in Echuca, Victoria, near the New South Wales border. The company has been registered since 23 July 2015. At all material times the company was a "National System Employer" within the meaning of section 14 of the FW Act. As a national system employer, Hospitality 3564 was obliged to adhere to the provisions of the FW Act.
Mr Bowman was the sole director of Hospitality 3564. Mr Bowman acknowledges that he was:
(a)responsible for the operation, control and management of the company;
(b)responsible for ensuring that the company complied with its legal obligations under the FW Act; and
(c)a person whose conduct within the scope of his actual or apparent authority is taken to be conduct engaged in by Hospitality 3564, by virtue of section 793(1) FW Act.
Employees of the company performing work at the café were entitled to be paid according to the Restaurant Industry Award 2010 (the Award). The Award covered and applied to Hospitality 3564 within the meaning of section 48 of the FW Act. Various employee entitlements were prescribed by the Award, including minimum wages, meal breaks, payments for overtime, penalties and allowances for work performed outside ordinary hours and paid leave.
In September 2017, Mr Zhi Cheng commenced employment with Hospitality 3564. Mr Cheng was employed as a qualified cook on a full time basis. Under the Award, he performed work classified as a Level 4 - Cook grade 3 (tradesperson).
On or about 5 September 2019, Mr Cheng ceased working for Hospitality 3564.
Compliance Notice under s 716 FW Act
In or around 21 December 2019, Mr Cheng sought the assistance of the Ombudsman in relation to his employment with Hospitality 3564. Acting on that request, the Ombudsman appointed Fair Work Inspector (FWI) Luke Ryan to commence an investigation into Hospitality 3564's compliance with fair work instruments.
In September 2020, FWI Luke Cushing took carriage of and completed the Ombudsman's investigation. The Statement of Agreed Facts filed by the parties summarises what then followed[2] (omitting footnotes):
[2] Statement of Agreed Facts pages 3-4
11As a result of the Investigation, FWI Cushing formed a reasonable belief, within the meaning of s 716(1) of the FW Act, that, at all relevant times during the period from 20 September 2017 to 5 September 2019 (Period):
(a) the First Respondent employed the Employee;
(b) the Award covered and applied to the First Respondent in respect of the Employee;
(c) the Employee performed work on a full time basis as a qualified cook and was classified as a Level 4 - Cook grade 3 (tradesperson) under the Award;
(d) the hours that the Employee worked included weekends and public holidays, overtime hours, broken work days, and also included the Employee not taking meal breaks when the Employee worked in excess of six hours;
(e) the Employee was paid flat hourly rates of pay which were below the minimum hourly rates applicable to the Employee under the Award during the Period (save for the period between 22 August 2018 to 11 December 2018);
(f) payments for periods of annual leave taken during the Period were paid below the minimum hourly rate applicable to the Employee under the Award; and
(g) when the employment of the Employee ended on 5 September 2019, the First Respondent did not pay the Employee for the Employee's accrued but untaken annual leave.
12.By reason of the matters set out in paragraph 11 above, FWI Cushing formed a reasonable belief, within the meaning of s 716(1) of the FW Act, that the First Respondent contravened the following terms of the Award and the FW Act in respect of the Employee's employment during the Period:
(a) Clause 20.1 - failing to pay the Employee the applicable minimum wage for ordinary hours worked;
(b) Clauses 33.1(a) and 33.2(a) - failing to pay the Employee the applicable overtime rate (being 150% of his ordinary base rate of pay for all overtime worked for the first two hours and 200% thereafter) for overtime worked on Monday to Friday;
(c) Clauses 33.1(a) and 33.2(b) - failing to pay the Employee the applicable overtime rate (being 175% of his ordinary base rate of pay for the first two hours of overtime and 200% thereafter) for overtime worked between midnight Friday and midnight Saturday;
(d) Clauses 33.1(a) and 33.2(c) - failing to pay the Employee at a rate of 200% of his ordinary base rate of pay for all overtime worked between midnight Saturday and midnight Sunday;
(e) Clause 34.1 - failing to pay the Employee the applicable penalty rates for hours worked on Saturdays, Sundays and Public Holidays (being 125% of the minimum wage for Saturdays, 250% for Sundays and 225% for Public Holidays);
(f)Clause 34.2(a)(i) - failing to pay the Employee an additional payment of 10% of the standard hourly rate for each ordinary hour or part thereof worked between 10pm and midnight Monday to Friday;
(g)Clause 32.4 - failing to pay the Employee, when a meal break was not taken in accordance with clause 32.1 of the Award, a penalty of 150% of his ordinary base rate from the end of six hours until either the meal break is given or the shift ends;
(h)Clause 24.2 - failing to pay the Employee an additional allowance of 0.5% of the weekly standard rate for each separate work period of two hours or more during a broken work day;
(i)Clause 35.1(a) and s 90(1) of the FW Act - failing to pay the Employee at his base rate for his ordinary hours of work when he took a period of paid annual leave;
(j)Clause 35.2(b) - failing to pay the Employee annual leave loading of an additional 17.5% of his base rate for his ordinary hours of work when he took a period of paid annual leave; and
(k)Clause 35.2(b) and s 90(2) of the FW Act - failing to pay the Employee for untaken annual leave upon termination of his employment,
(together, the Contraventions).
On 19 October 2020, FWI Cushing issued a compliance notice to Hospitality 3564 pursuant to section 716(2) of the FW Act (the Compliance Notice). The Compliance Notice was personally served on Mr Bowman at his principal place of business.
The Compliance Notice required Hospitality 3564 to undertake the following specific steps by 23 November 2020 in order to directly remedy the effects of the company's alleged contraventions:
(a)to make a rectification payment to Mr Cheng in the amount of $45,731.29 (gross). This amount represented the difference between the amount that Hospitality 3564 paid to Mr Cheng and that which it was required to pay him pursuant to the Award during the employment period;
(b)to identify the amount of annual leave entitlements that Hospitality 3564 paid Mr Cheng;
(c)to calculate the amount of annual leave entitlements that Hospitality 3564 should have paid Mr Cheng during the employment period;
(d)to make a payment to Mr Cheng of the different between the amount referred to in paragraphs (b) and (c) (Underpayment Rectification Information);
(e)to make a record of the information and amounts referred to in above paragraphs (a), (b) and (c) and the amount of Underpayment referred to in paragraph (d);
(f)to calculate and pay requisite superannuation contributions to be paid in relation to the rectification payment amount referred to in paragraph (a) and the Underpayment amount in paragraph (d); and
(g)to prepare a schedule of the Underpayment Rectification Information.
The Compliance Notice also required Hospitality 3564 to produce reasonable evidence of its compliance to the Ombudsman by 30 November 2020. This required the company to produce a copy of the Schedule of Underpayment Rectification Information as well as evidence of additional superannuation contributions and all payments made to Mr Cheng and his relevant superannuation fund.
The Compliance Notice cautioned that failure to comply with these steps on or before 23 November 2020 may result in Hospitality 3564 breaching section 716(5) of the FW Act and may lead to the commencement of legal action. The Compliance Notice also alerted the company to its statutory right to apply for a review of the Notice pursuant to section 717 of the FW Act.
After issuing the Compliance Notice on 19 October 2020, FWI Cushing made several attempts to contact Mr Bowman.
On 19 October 2020, in reply to the Ombudsman's email issuing the Compliance Notice, Mr Bowman expressed that he was not currently in a position to "get anything" to the Ombudsman. He stated that he required time, citing that he was struggling financially in "difficult times". In correspondence in reply, FWI Cushing reiterated the respondents' obligations under the Compliance Notice, again alerting Mr Bowman to the specific action that was required of him by 23 November 2022.
Throughout late October and November 2020, FWI Cushing made several attempts to call Mr Bowman to check his progress with the Compliance Notice steps. On each occasion Mr Bowman did not answer and FWI Cushing left a message. Several emails to Mr Bowman also did not receive a response.
On 23 November 2020 - the last date specified for compliance in accordance with the Notice - Mr Bowman emailed FWI Cushing. Mr Bowman explained that based on his calculations (which were set out) the outstanding amount owing to Mr Cheng was $2,860.87. Mr Bowman also attached to his email:
(a)a spreadsheet that set out calculations;
(b)a payslip for Mr Cheng for the period of 21 August 2019 to 3 September 2019; and
(c)a Superannuation Guarantee Employer Statement of Account issued by the ATO dated 11 November 2020 for Hospitality 3564.
The following day FWI Cushing replied to Mr Bowman[3], informing him, inter alia:
“David, I draw your attention to the fact that the Compliance Notice did not require you to perform any calculations other than in relation to annual leave and superannuation. The Fair Work Ombudsman (FWO) has already performed detailed calculations and determined that an amount of $45,731.29 is owed to Mr Zheng (sic), (not including the amounts for annual leave and superannuation). The Compliance notice required that this amount be paid on or before 23 November 2020."
[3] Cushing affidavit, Annexure PC-10
By 23 November 2020 Hospitality 3564 had not taken the specified steps required by the Compliance Notice. Nor did the company produce reasonable evidence of its compliance to the Ombudsman by 30 November 2020.
On 1 December 2020, FWI Cushing sent the respondent a 'Failure to comply with Compliance Notice' letter. By that Notice, the Ombudsman cautioned the company that it had failed to comply with the Compliance Notice and invited it to provide a reasonable excuse within seven days, failing which the Ombudsman may commence legal action seeking the imposition of pecuniary penalties and orders for the recovery of outstanding monies.
FWI Cushing deposes[4] that on 1 December 2020, after sending the Failure to Comply with Compliance Notice, he received three emails from Mr Bowman attaching more than one hundred emails, various payslips and timesheets relating to Mr Cheng and links to the company's payroll system.
[4] Cushing affidavit affirmed on 21 January 2022
FWI Cushing responded to Mr Bowman's emails a few days later (on 4 December 2021) and in a long communication[5], reminded him that the Compliance Notice included calculations performed by the FWO, which had been based on time records provided by the employer and payslips provided by Mr Cheng. Mr Bowman was told that the FWO calculated the outstanding amount to be $45,731.29 and that amount was required to be paid by 23 November 2020 as specified in the Compliance Notice. Mr Bowman was informed that the information provided by him did not evidence compliance with the Compliance Notice, nor a reasonable excuse as to why the Company had not complied.
[5] Cushing affidavit, Annexure PC-13
On 14 December 2020, Mr Bowman sent a "without prejudice" email[6] to FWI Cushing which stated, among other things, that:
(a)The business had no income for 6 months of the year and a slow start in September;
(b)He was working a second job to pay off the company's superannuation debt;
(c)He was involved in two court cases in VCAT after the restaurant had closed because of bad landlords;
(d)The company was not in a position to pay the Compliance Notice amount calculated by the Ombudsman because he felt it was incorrect as the employee had signed a contract based on full-time hours as a salary package; and
(e)The company would have to go into liquidation if it was fined and that it could not afford to pay because of its ATO debt.
[6] Bowman affidavit sworn 11 February 2022 at [18], Annexure DB-3, noting that Mr Bowman has waived the without prejudice status of the correspondence
Numerous documents were attached to Mr Bowman's 14 December email including company bank statements, an ATO Superannuation Guarantee Employer statement and an ATO portal extract identifying a tax liability outstanding in excess of $500,000.00[7].
[7] Bowman affidavit, annexures DB-4 to DB-7
On 3 February 2021 a team leader from the Ombudsman's enforcement branch, Lauren Kelly, emailed the company, presumably in response to Mr Bowman's without prejudice correspondence. In that email Ms Kelly informed Mr Bowman that there was court precedent finding that financial incapacity was not a reasonable excuse for failing to comply with a statutory notice. Ms Kelly also informed Mr Bowman that he had been previously advised by Fair Work Inspectors that a salaried arrangement could not be used to undercut award entitlements and even though clause 28 of the Award permitted an annualised salary, any shortfall between the salary and award entitlements had to be paid. Ms Kelly again cautioned Mr Bowman that the FWO may commence legal action for the company's failure to comply with the Compliance Notice, without further notice.
On 28 July 2021, a senior lawyer from the FWO sent a letter to Hospitality 3564, marked for the attention of Mr Bowman. The correspondence informed Mr Bowman that the company's non-compliance had been referred to the FWO's Legal Group with a view to commencing proceedings against the company and him seeking pecuniary penalties. The letter informed Mr Bowman that the Ombudsman was prepared to extend one final opportunity for Hospitality 3564 to take the action specified in the Compliance Notice and to provide reasonable evidence of compliance within 7 days. The correspondence encouraged the company and Mr Bowman to obtain independent legal advice and warned that the Ombudsman may commence legal proceedings without further notice after 5 August 2021.
On 31 July 2021 Mr Bowman sent a lengthy "without prejudice" email to the Ombudsman's legal team[8]. In that four-page email Mr Bowman explained the difficulties which had confronted him as a resident of Moama (NSW) operating a business in Echuca on the Victorian side of the state border. He explained in some detail the impact on his business of the COVID-19 pandemic and in particular the various changing lockdown regimes which had been imposed in Victoria and New South Wales respectively. He explained the impact of the pandemic on trading conditions for the café from March 2020 until July 2021, including the fact that the business had to close down and reopen on numerous different occasions, his attempts to resuscitate the business with job keeper support, the impact of reduced customer density limits, the impact of water damage to his business premises, the personal impact of the pandemic including the increase in his daily commute time from 10 minutes each way to up to 2.5 hours at the border crossing and the significant reduction in the value of his business. To that correspondence Mr Bowman again attached copies of bank statements and details of the company's outstanding tax and superannuation liabilities[9].
[8] Bowman affidavit at [21], annexure DB-11, noting that Mr Bowman has waived the without prejudice status of the correspondence
[9] Bowman affidavit, annexures DB-12 to DB-17
On 3 August 2021, Mr Bowman ‘re-sent’ his 31 July 2021 email to another officer at the Ombudsman's office[10]. Mr Bowman deposes that he did this "to make sure that a person from the FWO would see this email"[11].
[10] Bowman affidavit, annexure DB-18
[11] Bowman affidavit at [22]
Litigation background
On 8 September 2021, the Ombudsman instigated these proceedings by way of an originating application and a statement of claim.
As it had foreshadowed, the Ombudsman's application sought the making of declarations and orders including that the respondents pay pecuniary penalties pursuant to the company's alleged contravention of section 716(5) of the FW Act and Mr Bowman's alleged involvement in the company's contravention by virtue of section 550(2).
The matter was set down for a first return date on 21 October 2021. However, on 20 October 2021, at the parties' request orders were made by consent vacating the directions hearing. The Court noted by consent that the respondents intended to make admissions to the matters alleged in the statement of claim and that the parties would jointly file a statement of agreed facts. Orders were also made for the parties to file affidavits and submissions in relation to the question of penalties and the matter was listed for a penalty hearing on 28 March 2022.
At about the same time (between 18 October 2021 to 21 October 2021) Hospitality 3564 took the action required by paragraph 9(a) of the Compliance Notice and paid rectification payments to Mr Cheng totalling $45,731.29 (gross) in respect of unpaid wages.
On 21 December 2021, Hospitality 3564 took the action required by paragraphs 9(b) to (d) of the Compliance Notice and made further payments to Mr Cheng totalling $2,851.21 (gross) in respect of accrued but unpaid annual leave entitlements.
On 12 January 2022, a solicitor acting for the Ombudsman filed the Statement of Agreed Facts on behalf of all parties. The document was prepared by the Ombudsman's solicitor and was signed on behalf of the first and second respondents by Mr Bowman.
The Statement of Agreed Facts recorded that Hospitality 3564 admitted to contravening section 716(5) of the FW Act by failing to take the specific steps set out in the Compliance Notice by 23 November 2020 and by not producing reasonable evidence of its compliance to the Ombudsman by 30 November 2020.
Mr Bowman also admitted within the Statement of Agreed Facts that he was responsible for ensuring that Hospitality 3564 complied with the Compliance Notice. Mr Bowman admitted that he had actual knowledge of the Compliance Notice, had actual knowledge that the company failed to comply with the Compliance Notice and that he was an intentional participant in the company's non-compliance. By reason of those facts, Mr Bowman accepts that he was involved in, within the meaning of s 550(2)(c) of the FW Act, Hospitality 3564's contravention of s 716(5).
The parties recommended by consent that the Court make declarations against each of the respondents in respect of their contraventions. The parties also sought, by consent, that the Court make orders imposing pecuniary penalties on the respondents and requiring them to take certain remaining steps to calculate and pay any outstanding superannuation contributions (and interest) to the former employee Mr Cheng.
On 24 January 2022, the Ombudsman filed an affidavit of FWI Peter Cushing affirmed on 21 January 2022. The Ombudsman also filed an outline of submissions on penalty. In its outline the Ombudsman noted that the respondents were yet to comply with corrective action in the Compliance Notice requiring the calculation and payment of outstanding superannuation contributions to Mr Cheng's nominated superannuation fund. The Ombudsman submitted that penalties should be imposed in the range of 70%-80% of the maximum for each respondent, with a discount of 15%.
On 11 February 2022, the respondents filed an outline of submission on penalty and an affidavit of Mr David Bowman affirmed that day. Within their submission the respondents stated that they had commenced the steps required by the Compliance Notice to repay outstanding superannuation contributions to Mr Cheng's nominated superannuation fund. The respondents submitted that the appropriate penalty range should be 50%-60% of the maximum, subject to a 25% discount for cooperation and contrition.
Between 11 and 14 February 2022, the first respondent took further corrective action by calculating the outstanding superannuation contributions and paying the employee the owed amount of $2,378.13. The first respondent provided the Ombudsman with evidence of this payment.
On 18 February 2022, the Ombudsman filed a reply submission on penalty. The Ombudsman acknowledged, among other things, that by calculating and paying outstanding superannuation to Mr Cheng the company had satisfied the steps outlined in paragraphs 9(e) and (f) and 10(iv) of the Compliance Notice. The Ombudsman submitted that this further corrective action should be taken into account by the Court and that a discount of 20% (in lieu of 15%) should be applied to the headline penalties sought. The Ombudsman now seeks penalties in the range of $18,648.00 to $21,312.00 for the company and $3,729.00 to $4,262.00 in respect of Mr Bowman[12].
[12] Annexure A, Applicant’s Reply Submission on Penalty of 18 February 2022
On 15 March 2022, the Court vacated the penalty hearing listed on 28 March 2022 and ordered, by consent, that final relief be determined on the papers. This included the determination of penalties.
STATUTORY FRAMEWORK
The Court has power under sub-section 546(1) FW Act to order a person to pay a pecuniary penalty where is it satisfied that person contravened a civil remedy provision. Under 4-1 of the FW Act, subsection 716(5) is a civil remedy provision.
Pursuant to the table in section 539(2) of the FW Act, contravention of sub-section 716(5) attracts a maximum penalty of 30 penalty units. The value of a penalty unit is currently $222 for breaches occurring on or after 1 July 2020[13]. The maximum penalty amount for contravening ss 716(5) is $6,660.00.
[13] Crimes Act 1914 (Cth) s 4AA
Under ss 546(2) FW Act, when determining the amount of pecuniary penalty, a Court must not order that an individual contravener pay more than the maximum penalty amount. The maximum pecuniary penalty for an individual must not exceed $6,660.00.
For a body corporate respondent, the amount must not be more than five times the maximum penalty amount. Accordingly, the maximum penalty amount a Court may order against a body corporate in contravention of s 716(5) is $33,300.00.
It is necessary for the Court to consider the relevant maximum penalty amounts that may be imposed on a contravener. It forms part of the comparative exercise in assessing where the relevant contravention sits against the maximum "yardstick"[14].
[14] Markarian v The Queen [2005] HCA 25 at [31]
Applicable legal principles
The parties in their submissions do not cavil with the legal principles which should guide the exercise of the Court's direction in a matter such as this. Nonetheless, it serves no harm to briefly outline the approach to be taken.
The primary purpose of civil penalty provisions is to promote the public interest in compliance[15]. That purpose was recently reinforced by the High Court in Australian Building and Construction Commissioner v Pattinson (‘Pattinson’)[16], where the majority stated that the purpose of the civil remedy regime in the FW Act is the promotion of the public interest in compliance with provisions of the FW Act by way of deterrence of further contravention[17].
[15] Trade Practices Commission v CSR Ltd[1990] FCA 521; (1991) ATPR 41-076 at 52,152 [42]; Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46 at [55] (per French CJ, Kiefel, Bell, Nettle and Gordon JJ)
[16] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13 at [9]
[17] Pattinson at [71]
The Court's task is to place a fair and reasonable price on any contravention. The imposition of a financial penalty serves to promote compliance by ensuring that contravening the FW Act is perceived as an "economically irrational choice" by a potential contravener[18].
[18] Pattinson at [66]
Section 546 of the FW Act requires the Court to consider an appropriate penalty. The price of non-compliance should be both an appropriate and proportionate response to the gravity of the offence. An appropriate penalty is one which strikes a reasonable balance between oppressive severity and the need for deterrence[19]. To that end, the Court must take into account the surrounding circumstances of the contravenor's conduct in order to determine its objective seriousness.
[19] Pattinson at [41]
In assessing the gravity and seriousness of the contravening conduct, the Court must have regard to all relevant factual circumstances. The factors relevant to this task are well known and frequently cited[20]. They include:
[20] Trade Practices Commission v CSR Ltd (1991) ATPR 41-076; [1990] FCA 521 at [42]; see also Pattinson at [18]; Kelly v Fitzpatrick [2007] FCA 1080 at [14]
·The nature and extent of the conduct which led to the breach;
·The circumstances in which the conduct took place;
·The nature and extent of any loss or damage sustained as a result of the breach;
·Whether there has been similar previous conduct by the respondent;
·Whether the breach was properly distinct or arose out of one course of conduct;
·The size of the business enterprise involved;
·Whether or not the breach was deliberate;
·The involvement of senior management in the breach;
·Whether the party committing the breach has shown contrition;
·Whether the party committing the breach has taken corrective action;
·Whether the party committing the breach has cooperated with enforcement authorities;
·The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
·The need for specific and general deterrence.
While this extensive list is well-settled, it is not to be interpreted by the Court as a "rigid catalogue of matters for attention"[21]. In Pattinson, the High Court reiterated that this list of possible relevant considerations ought not to be treated as a checklist. The Court may take into consideration matters relevant to both the character of the contravening conduct and of the contravenor[22].
[21] Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) FCR 560; [2008] FCAFC 8 [91]
[22] Pattinson at [19]
Ultimately, the Court's task is and remains the determination of a penalty that is most appropriate given all of the relevant circumstances of the case[23]. Each case demands an idiosyncratic approach, not a line by line comparison with other cases. Moreover, when determining the penalties that ought to be imposed on a contravenor, the Court should apply an "instinctive synthesis" when assessing the proportionality of the penalties as a response to the conduct[24].
CONSIDERATION
[23] Pattinson at [68]
[24] Australian Ophthalmic Supplies at [46]
Deterrence
As stated above, the central purpose of the civil remedy provisions in the FW Act is deterrence[25], general and specific. General deterrence concerns the message that is sent to the community at large about contravening conduct. Specific deterrence refers to the individual contravener and the particular circumstances surrounding the contravention, including the likelihood of similar conduct recurring. The Court must have regard for both general and specific deterrence when determining the imposition of pecuniary penalties[26].
[25] Agreed Penalties Case (2015) 258 CLR 482 at 506 [55] (per French CJ, Kiefel, Bell, Nettle and Gordon JJ)
[26] Fair Work Ombudsman v NSH North Pty Ltd t/as New Shanghai Charlestown (2017) 275 IR 148; [2017] FCA 1301 at [98]
General Deterrence
A fundamental purpose of imposing a penalty should be to send a message to the wider community that the contravening conduct is unacceptable and offends the standards expected of those who are bound by workplace laws. A penalty should act as a deterrent to prevent "similar contraventions by like-minded persons or organisations"[27].
[27] Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543; [2007] FCAFC 65, [93] (per Lander J)
I accept the Ombudsman's submission that there is a need for general deterrence to encourage compliance with the statutory notice scheme given its legislative purpose. Compliance notices provide a mechanism for the efficient and cost-effective rectification of identified contraventions of the FW Act, including underpayments to employees. Compliance notices are an important tool of the regulator which operate to obviate the need for unnecessary and costly legal proceedings or the imposition of penalties by the Court.
The Ombudsman submits, and I accept, that the efficacy of statutory notices will be hindered if employers perceive that a failure to comply carries no meaningful consequence. Non-compliance must attract a sanction which sends a message to others who operate within the realm of the legislative scheme. A penalty should deliver sufficient sting to ensure that it is not perceived as "the cost of doing business"[28].
[28] Fair Work Ombudsman v Yogurberry World Square Pty Ltd [2016] FCA 1290 at [27]
Citing Fair Work Ombudsman v Sun Sea Equity[29] and relying on statistical data drawn from the Ombudsman's Industry Profile for the café and restaurant industry, the Ombudsman submits that general deterrence is especially important in cases involving employees in the hospitality industry where non-compliance with minimum wages requirements is said to be notorious. The Ombudsman submits that there is a particular need to send a message to all employers in that industry to record that a failure to comply with a compliance notice will not be tolerated by the Ombudsman, the community or the Courts.
[29] Fair Work Ombudsman v Sun Sea Equity [2021] FCCA 104
I accept the proposition put by the Ombudsman that objectively the level of non-compliance in the café and hospitality is disproportionately higher than in many other industries, representing more than 20% of all compliance notices issued by the FWO, with a particularly high incidence of disputation in Victoria. Those statistics might fairly underpin its submission that non-compliance in the industry is notorious, but the Court should proceed cautiously before giving too much weight to this factor. It is equally notorious that certain industries are more vulnerable than others to fluctuating economic conditions and that certain industries have been more severely impacted by the COVID-19 pandemic than others. The number of disputes raised by hospitality employees with the Ombudsman may be a function of some of these factors and not necessarily reflective of a culture of serial non-compliance.
The Court should be careful not to punish a respondent beyond what is proportionate, by reason only of the industry in which they operate. As I recently observed in Fair Work Ombudsman v Rika Foods North Melbourne Pty Ltd[30], the Court should be cautious not to tar all industry participants with the same brush. It is incumbent on the Court, if it is to exercise its discretion properly and fairly, to have regard to whether a particular respondent is an appropriate vehicle for the message of general deterrence to an industry as a whole. The objective of pulling others into line should not overwhelm consideration of the particular circumstances of the contravention and how that conduct should be judged against community expectation.
[30] Fair Work Ombudsman v Rika Foods North Melbourne Pty Ltd [2022] FedCFamC2G 768 at [60]
Specific Deterrence
Specific deterrence is directed to precluding a certain contravener from engaging in the same contravening conduct[31].
[31] Fair Work Ombudsman v AJR Nominees Pty Ltd (No 2) [2014] FCA 128 at [50]
The Ombudsman submits that there is a particular need to deter Hospitality 3564 from engaging in the same conduct in the future, noting at the time of its written submission on penalties, that the company remained registered and was operating the café business. The Ombudsman submits that the respondents have demonstrated a disregard for their obligations under the FW Act and that a penalty should be fixed at a level which deters them from doing so again.
The respondents assert, and I agree, that specific deterrence must focus on the party on whom the penalty is to be imposed and the likelihood of that party being involved in a similar breach in the future[32]. They submit that the need for specific deterrence is reasonably low and that the likelihood of them being involved in future contravening conduct is remote, having regard to the following:
(a)the contravention occurred in special and particularly trying economic and trading circumstances;
(b)Hospitality 3564 has now complied with all steps stipulated in the Compliance Notice;
(c)Hospitality 3564 and Mr Bowman admitted to engaging in the contravening conduct at an early stage of the proceedings; and
(d)Mr Bowman has demonstrated sincere contrition for the conduct of Hospitality 3564, has apologised to the Court for his own conduct and has affirmed that the respondents will take appropriate and tangible measures to ensure that no such conduct occurs in the future.
[32] Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357 at [37]
This is the respondents' first Compliance Notice contravention and no evidence has been put before the Court to suggest that it has any history of non-compliance with workplace laws. That said, the respondent has admitted its conduct, acknowledged that it was a serious contravention and accepted that there was no reasonable excuse for its non-compliance.
Having read Mr Bowman's affidavit and the respondent's submissions and having regard to the cooperative and compliant conduct of the respondents since the commencement of proceedings, I consider that there is a low risk that the respondents will reoffend. It seems to me that Mr Bowman is embarrassed and genuinely contrite about the company's contravention, he has endeavoured to make amends and that the risk of he and the company engaging in similar conduct, in light of this litigation, is of a low order.
Nature, circumstances and deliberateness of the contravening conduct
The Ombudsman's written submission addressed this consideration as follows (omitting footnotes):
27.The contravention of section 716(5) of the FW Act took place against a background where:
(a) the Respondents were on notice from 19 October 2020:
(i) of the due date for compliance with the Compliance Notice;
(ii) that failure to comply with the Compliance Notice may lead to the FWO commencing proceedings seeking civil penalties and orders for compliance;
(b)the Company admits it did not have a reasonable excuse for non-compliance with the Compliance Notice;
(c)the Company did not back pay the Employee's unpaid wages of $45,731.29 (gross) until 18 to 21 October 2021, approximately 12 months after compliance was required under the Compliance Notice and 6 weeks after these proceedings were commenced;
(d)the Company did not back pay the Employee's unpaid annual leave entitlements of $2,851.21 (gross) until 21 December 2021, approximately 14 months after compliance was required under the Compliance Notice and 14 weeks after these proceedings were commenced; and
(e)the Company has still not taken the remaining steps required by the Compliance Notice as outlined at paragraph 9(b) above.
28.Prior to the FWO commencing these proceedings on 8 September 2021, the Company had substantial opportunity over a period of more than 9 months to rectify its non-compliance with the Compliance Notice. In that period, the FWO attempted to engage with Mr Bowman on numerous occasions and clearly informed him that failure to comply with the Compliance Notice may lead to the FWO commencing proceedings.
29.As a result of the Company's failure to comply with the Compliance Notice, the FWO was required to bring proceedings seeking orders to remedy the contravention.
30.The Company's conduct in failing to comply with the Compliance Notice demonstrates a deliberate disregard for its obligations under the FW Act and the authority of the FWO as a regulator of Commonwealth workplace laws.
In reply to the Ombudsman, the respondents' submission on penalty detailed a number of specific and unique surrounding circumstances which they say contributed to the contravening conduct. Citing directly from their submissions, the respondents say:
25.The Respondents submit that there are special circumstances providing reason as to why the Company did not comply with the Compliance Notice. In particular:
(a)in May 2019, the Respondents received proceedings from Company's landlord in the Victorian Civil and Administrative Tribunal (VCAT Proceedings), significant delays in the VCAT Proceedings occurred due to Victorian state lockdowns;
(b)in June 2019, the Company's lease was terminated by its landlord prior to the fixed termination date, resulting in significant financial losses;
(c) the Company was under significant financial distress;
(d)the Respondents engaged legal representation to assist in the VCAT Proceedings, resulting in legal costs being incurred by the Company;
(e)the Victorian state underwent significant lockdown periods in which the Company's business could not operate;
(f)David [Bowman] obtained money from his father in the amount of $25,000 based on financial hardship; and
(g)David and his wife sold their residential property to alleviate financial pressure of outstanding debts.
26.The Company, and David, made the Applicant aware of the VCAT Proceedings and its financial circumstances.
27.Further, David had and continues to have personal financial commitments, which contributed to the delay in complying with the Compliance Notice, where David has to:
(a) financially provide for his wife and three children;
(b)pay in excess of approximately $3,000 per year in schooling-related expenses; and
(c)pay approximately $90,600 per year in mortgage repayments for two properties.
28.The Respondents submit that the above factors must be taken into consideration by the Court, as they have significant bearing upon the reasons for the occurrence of contravening conduct by the Company.
The Court has some sympathy for the financial difficulties faced by the respondents. A profit and loss spreadsheet and balance sheet for the period 2016 to 2020 would appear to show the company to be loss-making for some period and in negative equity[33]. It is likely that some of those difficulties are attributable to or were exacerbated by the COVID-19 pandemic, which no doubt had a significant impact on a small business in a regional town that was dependent on patronage from tourists. But other financial and business difficulties, including the respondents' dispute with the landlord, pre-date the pandemic and are of a different origin and character.
[33] Bowman affidavit, annexure DB-8
Moreover, it is to be recalled that Mr Cheng ceased employment with the company in September 2019, some months before the pandemic. The underpayment of wages and other entitlements, including superannuation, was conduct which took place well before Victoria went into lockdowns.
While these circumstances are put forward by the respondents as matters which should be taken into account, I cannot ignore the respondents' admission that they had no reasonable excuse for not complying with the Compliance Notice. Furthermore, the respondents' disagreement with the Compliance Notice is not an excuse. The respondents could have sought a review of the Compliance Notice pursuant to section 717 of the FW Act, but they did not exercise that statutory right. I must find that the respondents' failure to comply with the Compliance Notice was deliberate and not accidental.
Nature and extent of loss
The Ombudsman rightly submits that Mr Cheng suffered a substantial loss due to the company's failure to comply with the Compliance Notice. By reason of the company's failure to observe the Award and the subsequent Compliance Notice Mr Cheng was denied:
(a)unpaid wages of $45,731.29 until on or around 18 October 2021, approximately 25 months after his employment ceased;
(b)unpaid annual leave entitlements of $2,851.21 until on or around 21 December 2021, approximately 27 months after his employment ceased; and
(c)unpaid superannuation contributions until on or around 11 February 2022, approximately 29 Months after his employment ceased.
The Ombudsman submits that the delay in receiving these entitlements is a relevant loss flowing from the respondents' failure to comply with the Compliance Notice[34] and that the loss suffered by Mr Cheng should be regarded as substantial. I agree.
[34] Fair Work Ombudsman v Hess [2021] FCCA 1883 at [35]
There is no evidence before the Court about Mr Cheng's personal circumstances, but I am satisfied that the loss suffered by him was significant. He was not paid nearly $50,000.00 he was entitled to receive under the provisions of the applicable Award. Wages and entitlements were not paid to him when they fell due and his loss was exacerbated and compounded by the substantial delay he had to endure before there was rectification. The respondents do not cavil with the Ombudsman's assertion that the contravening conduct is of a "higher level of serious"[35].
[35] Respondents outline at [23]
The Ombudsman also submits that the respondents' failure to comply with the statutory scheme occasions a broader public loss, citing Fair Work Ombudsman v Soma Kitchen Pty Ltd & Anor (No 2)[36] where it was held that:
[…] the purpose of s.716 is to provide an alternative to litigation. That is, it is designed to prevent litigation. Litigation is timely and expensive. It is also not controversial that Court resources are limited and this Court actively promoted alternative methods in order to reduce unnecessary expenditure. Here, the purpose has been systemically undermined.[37]
[36] Fair Work Ombudsman v Soma Kitchen Pty Ltd & Anor (No 2) [2020] FCCA 2583
[37] Fair Work Ombudsman v Soma Kitchen Pty Ltd & Anor (No 2) [2020] FCCA 2583 at [39]
Compliance with minimum standards
The Ombudsman's written submission on penalty addressed this consideration as follows (footnotes excluded):
39.One of the principal purposes of the FW Act is to provide a guaranteed safety net of fair, relevant, and enforceable minimum terms and conditions for all employees. To be able to enforce these terms, FWIs must be able to exercise their compliance powers effectively. The purpose of the powers conferred on FWIs is to provide the Applicant with an effective means of investigating and enforcing compliance with minimum standards and industrial instruments.
40.The Company's failure to comply with the Compliance Notice undermines the FW Act's enforcement framework and the safety net of entitlements it is designed to protect, and reflects a prioritisation of the Respondents' own interests at the expense of the Employee's minimum entitlements.
41.The failure to comply with a statutory notice properly issued by the FWO is serious. The efficacy of statutory notices such as compliance notices will be hindered or made redundant if recipients perceive that a failure to comply carries no meaningful consequences.
The respondents' submission on penalty concede the objective seriousness of their contravening conduct and their failure to comply with these minimum standards. But their submission cites the specific circumstance surrounding the conduct which, as discussed above, the respondents assert should mitigate the amount of penalty imposed.
I accept the Ombudsman's submission. The respondents' failure to comply with the Compliance Notice undermined the enforcement framework established in the FW Act, the purpose of which is to protect employees. By ignoring the specific action required of the Compliance Notice by the relevant date the respondents demonstrated a disregard for the minimum standards.
Size of business
The financial circumstances or size of a corporate contravener do not excuse or exculpate contraventions of Fair Work instruments. An employer is obligated to comply with Commonwealth workplace laws regardless of its size and financial resources[38]. Whether or not a business has capacity to pay a penalty amount is not as germane as the objective of general deterrence[39].
[38] Fair Work Ombudsman v Extrados Solutions Pty Ltd [2014] FCCA 815 at [10]
[39] Kelly at [28]
The Ombudsman submits that the respondents have not put any evidence before the Court that related to the size of the first respondent or its financial circumstances, although the Ombudsman did acknowledge within its submission that the business was likely impacted by COVID-19 restrictions in 2020.
Although the respondent's submission on penalty did not specifically address the size of the café business, the Court infers from material annexed to Mr Bowman's affidavit that Hospitality 3564 was a business of some substance. As mentioned earlier a financial analysis profit and loss spreadsheet and balance sheet for the period 2016 to 2020 would appear to show the company was loss-making for some period and in negative equity, but its revenue was sizeable and growing until the tenancy dispute and the pandemic.
I accept the Ombudsman's submission. As stated above, the financial circumstance or size of a business do not free a contravener of the consequences of non-compliance with the FW Act.
In Kelly v Fitzpatrick [2007] FCA 1080, Justice Tracey stated:
No less than large corporate employers, small businesses have an obligation to meet minimum employment standards and their employees, rightly, have an expectation that this will occur. When it does not it will, normally, be necessary to mark the failure by imposing an appropriate monetary sanction. Such a sanction "must be imposed at a meaningful level[40]
[40] Kelly v Fitzpatrick [2007] FCA 1080 at [28]; see also Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412
Corrective action, cooperation with the FWO and contrition
All parties contend that the respondents should be afforded the benefit of a "discount" on account of their contrition, admissions, cooperation and rectification of the underpayments. The Ombudsman submits that the Court should allow 20% and the respondents contend for 25%.
An expression of contrition is most clearly evinced by a corporate respondent where it has taken steps to change its behaviour and correct its wrongdoing[41]. The Court will also place weight on any cooperation by a respondent which is meaningful, active or early.
[41] ACE Insurance Limited v Trifunovski (No 2) [2012] FCA 793 at [113]-[114]
The Ombudsman made submissions about how the Court should assess the respondent's overall cooperation and corrective behaviour[42]. It accepts that the Respondents have cooperated with the Applicant, and that they have made admissions, albeit after the commencement of these proceedings.
[42] Applicant’s Reply Submission on Penalty of 18 February 2022
The Ombudsman asserts that by agreeing to the making of the Statement of Agreed Facts at an early stage in these proceedings, the respondents have reduced the complexity and costs of this litigation. Of that I have no doubt. By making an agreed statement of facts in which liability was admitted, the respondents have obviated the need for a contested trial. It is also notable that this matter has moved to judgment and penalty without the parties appearing before the Court. All procedural directions have been by consent and I am satisfied that the respondents have been cooperative throughout the litigation.
Further, the Ombudsman agrees that the Court should take into account the corrective action taken by the respondents. As has been mentioned, soon after this litigation commenced, Hospitality 3564 undertook specific action stipulated within the Compliance Notice by paying Mr Cheng $45,731.29 (gross) representing the unpaid wages and $2,851.21 (gross) representing unpaid annual leave entitlements. Subsequently in February this year, the respondents corrected the underpayment of superannuation contributions. Neither of those steps cure the non-compliance, but I am satisfied that these actions reflect an intention on the part of the respondents to rectify their wrongdoing and ameliorate any further impact on the Employee. They are mitigating steps relevant to penalty and merit a discount.
Further, the respondents' cooperation and eventual compliance with the steps of the Compliance Notice further reinforce their remorse and contrition for their actions. In his affidavit Mr Bowman has apologised to the Court. While an early admission of liability may sometimes be self-serving, the Ombudsman has chosen not to challenge Mr Bowman's evidence and the Court accepts his expression of regret as genuine.
I note also that Mr Bowman's expression of remorse is cast against a background where he and his family have recently endured particularly difficult financial circumstances and business misfortune. The COVID 19 pandemic does not excuse the respondent's non-compliance, but its impact can hardly have been felt more acutely than by those operating a business in one state and living in another where severe and unpredictable lockdown rules differed in each location. Mr Bowman has pointed to these external factors as relevant context to explain the respondent’s non-compliance with the Compliance Notice but he has not hidden from his wrongdoing. I consider that should be reflected in my assessment of penalty.
DISPOSITION
Employers who receive Compliance Notices should be under no misapprehension about what is required of them. Non-compliance must attract a sufficient sanction to meet the objectives of general and specific deterrence.
The discretion conferred by section 546, like any discretionary power conferred by statute on a Court, is to be exercised judicially, that is, fairly and reasonably having regard to the subject matter, scope and purpose of the legislation. If deterrence is the object, the penalty should not be greater than is necessary to achieve this object; severity beyond that would be oppression[43].
[43] Pattinson at [40] citing NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 293
A penalty must be fixed that is proportionate to the objective gravity of the contravening conduct, which the respondent accepts was serious. The penalty should be meaningful to ensure the objective of general deterrence. But the penalty should not be crushing and I do not consider specific deterrence should weigh heavily in this case.
Having regard to and weighing the considerations discussed above and applying the Court’s instinctive synthesis, I have determined that each of the respondents should pay a penalty set at sixty per cent of the maximum, with a discount of 25%, calculated as follows:
Respondent Contravention Maximum Penalty 60% of the Maximum Penalty Penalty after 25% discount Hospitality 3564 s.716(5) $33,300.00 $19,980.00 $14,985.00 Mr Bowman s.716(5) $6,660.00 $3,996.00 $2,997.00
Accordingly, I fix a penalty for Hospitality 3564 in respect of its contravention of s 716(5) of the FW Act of $14,985.00. I fix a penalty for Mr Bowman in respect of his contravention of s 716(5) of the FW Act (which he is taken to have committed by reason of s 550(1) of the Act) of $2,997.00.
I certify that the preceding one hundred and two (102) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Forbes. Associate:
Dated: 14 December 2022
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