Fair Work Ombudsman v Jacz Holdings Pty Ltd
[2024] FedCFamC2G 108
•14 February 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v JACZ Holdings Pty Ltd [2024] FedCFamC2G 108
File number(s): MLG 186 of 2023 Judgment of: DEUPTY CHIEF JUDGE MERCURI Date of judgment: 14 February 2024 Catchwords: INDUSTRIAL LAW – FAIR WORK – parties by consent seek declaration of contraventions of the Fair Work Act 2009 (Cth) – failure to comply with compliance notice issued under FW Act – key issue as to appropriate level of penalty to be imposed – consideration of weight to be given to second respondent’s health conditions and difficult personal circumstances – need for general and specific deterrence – declaration of contraventions and penalty orders made. Legislation: Crimes Act 1914 (Cth), s 4AA
Fair Work Act 2009 (Cth), ss 12, 546, 550, 716, 793
Building and Construction General On-site Award 2010
Building and Construction General On-site Award 2020
Cases cited: Australian Building and Construction Commissioner v Pattinson and Anor [2022] HCA 13
Fair Work Ombudsman v Extrados Solutions Pty Ltd [2014] FCCA 815
Fair Work Ombudsman v NSH North Pty Ltd [2017] FCA 1301
Fair Work Ombudsman v Rum Runner Pty Ltd & Anor [2018] FCCA 1129
Fair Work Ombudsman v Soma Kitchen Pty Ltd & Anor (No 2) [2020] FCCA 2583
Fair Work Ombudsman v Yogurberry World Square [2016] FCA 1290
Kelly v Fitzpatrick [2007] FCA 1080
Trade Practices Commission v CSR Ltd [1990] FCA 762
Division: Division 2 General Federal Law Number of paragraphs: 69 Date of last submission/s: 6 October 2023 Date of hearing: 6 October 2023 Place: Melbourne Solicitor for the Applicant: Mr L Reece of Fair Work Ombudsman Solicitor for the Respondents: Mr M Woda of Bevan-Rhys James, Solicitor ORDERS
MLG 186 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: JACZ HOLDINGS PTY LTD
First Respondent
CHRIS DOUVOS
Second Respondent
ORDER MADE BY:
DEPUTY CHIEF JUDGE MERCURI
DATE OF ORDER:
14 FEBRUARY 2024
THE COURT DECLARES BY CONSENT THAT:
1.The first respondent contravened section 716(5) of the Fair Work Act 2009 (Cth) (‘FW Act’) by failing to comply with the Compliance Notice issued on 8 July 2022.
2.The second respondent was involved, within the meaning of section 550(2) of the FW Act, in the contravention by the first respondent of section 716(5) of the FW Act declared in order 1(a) above.
AND THE COURT ORDERS BY CONSENT THAT:
3.Pursuant to section 545(1) of the FW Act, the first respondent take the steps that were required by the Compliance Notice, within 28 days from the date of this order, by:
(a)calculating and paying to Mr Moutidis the outstanding amounts required by the Compliance Notice (‘Outstanding Amounts’); and
(b)preparing and producing to the applicant a schedule outlining the Outstanding Amounts and providing proof that these amounts have been paid.
4.Pursuant to section 547(2) of the FW Act, the first respondent pay interest on the Outstanding Amounts to Mr Moutidis, at the applicable pre-judgment interest rate, within 28 days of this order.
BY ORDER OF THE COURT:
5.Pursuant to section 546(1) of the FW Act, within 28 days of this order:
(a)the first respondent pay a pecuniary penalty in the sum of $16,500 to the Consolidated Revenue Fund of the Commonwealth for its contravention set out at order 1 above; and
(b)the second respondent pay a pecuniary penalty in the sum of $3,300 to the Consolidated Revenue Fund of the Commonwealth for its involvement in the first respondent’s contravention set out at order 2 above.
BY CONSENT:
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
DEPUTY CHIEF JUDGE MERCURI:
INTRODUCTION
Before the court is an application initiated by the applicant on 8 February 2023 claiming that the first respondent contravened section 716(5) of the Fair Work Act 2009 (Cth) (‘FW Act’) by failing to comply with a compliance notice issued by the applicant on 8 July 2022.[1]
[1] Statement of Claim filed on 9 February 2023 at paragraph [8] and following.
The compliance notice related to an alleged underpayment to Mr Alex Moutidis, an apprentice employed by the first respondent. The compliance notice alleged contraventions of the Building and Construction General On-site Award 2010 (‘2010 award’) and the Building and Construction General On-site Award 2020 (‘2020 award’) as in force during Mr Moutidis’ employment.[2] The alleged underpayment related to the reimbursement of training fees, minimum rates of pay and failure to pay Mr Moutidis during certain periods.
[2] Affidavit of Mr Joseph Benson affirmed and filed on 19 June 2023 at Annexure JB-3.
The applicant also claims that the second respondent, who is the sole director of the first respondent, was involved in the first respondent’s contravention under section 550 of the FW Act.[3]
[3] Statement of Claim filed on 9 February 2023 at paragraph [14] and following.
ISSUE IN DISPUTE
On 29 May 2023, the parties entered into an agreed statement of facts in which the respondents admitted the alleged contraventions.
The parties have agreed to declarations regarding the admitted contraventions and have sought orders by consent, save for the level of the penalty to be imposed. Consequently, the only issue before the court is the level of penalty to be imposed consequent upon the admitted contraventions.
FACTUAL BACKGROUND
The following summary of the background is largely taken from the agreed statement of facts filed by the parties and is largely uncontroversial.
At all relevant times, the first respondent operated a residential building business trading as JACZ Holdings.[4] As at 14 June 2023, the first respondent remained registered and there is no evidence before the court to suggest that it is has ceased operation.[5]
[4] Statement of Agreed Facts filed on 29 May 2023 at paragraph [4].
[5] Affidavit of Mr Joseph Benson affirmed and filed on 19 June 2023 at paragraph [18]; Annexure JB-9.
The second respondent was, at all relevant times, the sole director and shareholder of the first respondent and was responsible for the overall management of the first respondent and ensuring that the first respondent complied with its legal obligations under the FW Act.[6] The second respondent was also the person who communicated with the applicant on behalf of the first respondent and whose conduct (engaged in on behalf of the first respondent and within the scope of his actual or apparent authority) is taken to be that of the first respondent within the meaning of section 793(1) of the FW Act.
[6] Statement of Agreed Facts filed on 29 May 2023 at paragraph [5].
FWO investigation
Following an investigation by the applicant into the first respondent’s compliance with the FW Act in relation to Mr Moutidis’ employment, Fair Work Inspector (‘FWI’) Benson formed a belief that:
(a)the first respondent employed Mr Moutidis as a second year full-time bricklaying apprentice between 2 March 2021 and 9 January 2022;
(b)the first respondent failed to reimburse Mr Moutidis training fees that he had incurred in the course of his apprenticeship; and
(c)the first respondent did not pay Mr Moutidis the minimum hourly rate of pay for his classification under the relevant applicable award for all work performed between 1 March 2021 and 9 January 2022.[7]
[7] Statement of Agreed Facts filed on 29 May 2023 at paragraph [8].
Upon forming a reasonable belief that the first respondent had contravened clause 15.6(a) of the 2010 Award and clauses 14.6(a)(i) and 19.7(b)(i)(B) of the 2020 Award, on 8 July 2022, FWI Benson issued the first respondent with a compliance notice pursuant to section 716(2) of the FW Act.[8] The compliance notice set out the steps required of the first respondent in order to comply with the FW Act.
[8] Statement of Agreed Facts filed on 29 May 2023 at paragraph [10].
The first respondent failed to comply with the compliance notice.[9]
[9] Statement of Agreed Facts filed on 29 May 2023 at paragraph [14].
The first respondent agrees that it therefore contravened section 716(5) of the FW Act by its failure to comply with the compliance notice.[10]
[10] Statement of Agreed Facts filed on 29 May 2023 at paragraph [15].
As at 29 May 2023, the first respondent had not yet made any payments to Mr Moutidis as required by the compliance notice,[11] although by July 2023, the first respondent had paid Mr Moutidis $444 by way of reimbursement of his training fees.[12] As the respondents had not provided a reconciliation of reimbursement of any training fees, the applicant maintains that it is not possible to know whether this is the full amount owing by way of reimbursement of training fees or whether there is an amount owing outstanding.[13]
[11] Statement of Agreed Facts filed on 29 May 2023 at paragraph [16].
[12] Affidavit of Mr Christo Douvos sworn and filed on 24 July 2023 at paragraph [6]; Annexure CD2.
[13] Applicant’s Outline of Submissions filed on 7 August 2023 at paragraph [38].
The respondents have not paid Mr Moutidis any amount in respect of the claimed underpayment amount or a reconciliation of the pay received by Mr Moutidis.
Accessorial liability of the second respondent
As stated, it is agreed that the second respondent was involved in the first respondent’s contravention of section 716(5) of the FW Act, within the meaning of section 550(2) of the FW Act.[14] Consequently, by virtue of section 550(1) of the FW Act, the second respondent is taken to have himself committed that contravention.
[14] Statement of Agreed Facts filed on 29 May 2023 at paragraph [19].
PENALTY
As noted above, the only issue between the parties is the level of penalty that ought to be imposed consequent upon the first and second respondents’ agreed contraventions.
The parties largely agree on the legal principles which apply to the determination of penalties for contraventions of the FW Act, and in particular, in relation to a contravention of section 716.[15] The difference between the parties is how those principles should be applied in the present case.
[15] See Applicant’s Outline of Submissions filed on 7 August 2023 at paragraph [18] and following.
Statutory framework
Before turning to the general principles which apply in fixing a penalty a contravention of the FW Act, it is appropriate to say something about the statutory framework for the issuing of compliance notices.
Section 716(5) of the FW Act provides that a person must not fail to comply with a compliance notice properly given. The section is a civil remedy provision. The power to issue a compliance notice was introduced as an alternative mechanism to deal with an employer’s failure to meet their minimum entitlement obligations, without the need to commence litigation.[16]
[16] Explanatory Memorandum, Fair Work Bill 2008 (Cth) 402 [2673].
The court has previously recognised that compliance notices provide an efficient mechanism to rectify identified contraventions by an employer, including the underpayment of minimum entitlements to employees, without the need for costly and often time-consuming litigation.[17]
[17] See, for example, Fair Work Ombudsman v Blu Hornsby Pty Ltd & Anor [2016] FCCA 1150 at [29].
Relevantly, section 716(4B) of the FW Act provides:
(4B)A person who complies with a notice in relation to a contravention of a civil remedy provision is not taken:
(a) to have admitted to contravening the provision; or
(b) to have been found to have contravened the provision.
Had the respondent complied with the compliance notice, these proceedings would not have been necessary, and moreover, there would have been no finding of a contravention or the capacity to impose a penalty on the respondent.
Penalty range
The applicant seeks the imposition of a penalty within the range of $17,982 and $20,979 with respect to the first respondent and a penalty within the range of $3,596 to $4,195 with respect of the second respondent. This is in the context where the maximum penalty that could be imposed on the first respondent is $33,300 and $6,600 on the second respondent.[18]
[18] Applicant’s Outline of Submissions filed on 7 August 2023 at paragraph [50].
The respondents seek a penalty at the lower end of the range, although they do not expressly articulate the level of penalty that should be imposed.[19]
[19] See Court transcript at pages 10 to 11.
Evidence on penalty
On 24 April 2023, orders were made by consent of the parties for the matter to be listed for a penalty hearing on 6 October 2023 and for various procedural orders, which included a timetable for the parties to file, among other things, affidavit evidence with respect to penalty.[20]
[20] Orders of Deputy Chief Judge Mercuri dated 24 April 2023.
The timetable provided for the applicant to file any such affidavit material first, followed by the respondents and then for the applicant to file any reply affidavit. The time for compliance with these orders was extended on two occasions by consent of the parties.[21] Notwithstanding those orders, and the extension given by consent to the respondents, the respondents did not file any affidavit material with regard to the issue of penalty save for an affidavit filed by the second respondent on 24 July 2023.
[21] Orders of Deputy Chief Judge Mercuri dated 11 July 2023; Orders of Deputy Chief Judge Mercuri dated 28 July 2023.
In his affidavit sworn on 24 July 2023, the second respondent deposes to being authorised to make the affidavit on behalf of both respondents.[22]
[22] Affidavit of Mr Christo Douvos sworn and filed on 24 July 2023 at paragraph [1].
Relevantly the second respondent then goes on to say:
2.I have conceded the allegations that have been made against me in this matter, pursuant to the Statement of Agreed Facts that was filed on my behalf on 29 May 2023. I have done this in an attempt to assist the parties involved to achieve an early resolution of this matter, and to avoid the anticipated stress and considerable cost of protracted Court proceedings.
3.In respect to my personal circumstances, since 2021 I have had issues with my health and mental well being. I had an operating in 2021 for what I thought was a pinched nerve to my neck C4/5. I was eventually diagnosed with Parkinson’s Disease, and have been dealing with an uncertain future for myself. I have been in regular consultation with my General Practitioner, Dr Paul O’Halloran from Wingrove Medical Clinic. Now produced and shown to me and marked with the letters ‘CD1’ is a letter from Dr Paul O’Halloran dated 13 July 2023, about my medical conditions and circumstances. (emphasis in original)
4.I have been seeing a therapist to help me deal with my health battles, while attempting to run my business and support my family. I have found this to be a struggle. In turn I have not been able to keep on top with a lot of things, including various matters relating to my business and everyday matters. As a result of all these things, I have not been coping well with administrative responsibilities over the past year, and I have not been coping well with stress factors in my life. I did not act on the Compliance Notice in a timely manner for these reasons, which has unfortunately led to this matter proceeding to Court.
5.I have also in recent years been looking after and caring for my elderly parents, especially my father, who has had a couple of near death health issues recently.
6.I made a direct payment to … Mr … Moutidis, in the sum of $444 on 10 July 2023 … towards rectifying the fees the Employee paid to the Registered Training Organisation in respect of the training fees associated with the Employee’s apprenticeship, as referred to in the FWO Compliance Notice …
7.I respectfully ask this Honourable Court to take my personal circumstances into consideration, when determining this matter.
Aside from the fact that Dr O’Halloran’s ‘report’ at Annexure CD1 to the second respondent’s affidavit is not in affidavit form, it is similarly brief and simply states:
Chris … has been having health issues over the past 18 months with his new diagnosis of Parkinson’s and titrating his medications.
Chris has also having (sic) mental health issues with his own stressors and having to care for his father.
The applicant relies upon the affidavit of Mr Joseph Benson affirmed on 19 June 2023 and the affidavit of Ms Rachael Seaforth affirmed on 7 August 2023.[23]
[23] Court transcript at page 4.
Both the applicant and the respondents filed written submissions which they each rely upon.
LEGAL PRINCIPLES
Relevantly, the court has a broad discretion when determining the appropriate penalty to impose. It can make any order it considers appropriate if satisfied that a person has contravened a civil remedy provision of the FW Act, including the imposition of a pecuniary penalty pursuant to section 546(1).
Section 546 of the FW Act relevantly provides:
(1)The … Court … may, on application, order a person to pay a pecuniary penalty that the court considers is appropriate if the court is satisfied that the person has contravened a civil remedy provision.
(2) The pecuniary penalty must not be more than:
(a)if the person is an individual – the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2); or
(b)if the person is a body corporate – 5 times the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2).
The principles which apply to a case such as the present were recently summarised by Justice Bromwich in Fair Work Ombudsman v NSH North Pty Ltd [2017] FCA 1301 where five steps were identified at paragraph [36]. Relevantly for present purposes, these include:
(a)the need to identify each separate contravention; and
(b)assess the appropriate penalty in respect of each contravention of section 716(5).
The manner in which a penalty under the FW Act is to be determined has recently been the subject of consideration by the High Court in Australian Building and Construction Commissioner v Pattinson and Anor [2022] HCA 13 (‘Pattinson’). Relevantly, at paragraph [9], the plurality (Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ) said:
9.… Under the civil penalty regime provided by the Act, the purpose of a civil penalty is primarily, if not solely, the promotion of the public interest in compliance with the provisions of the Act by the deterrence of further contraventions of the Act. …
After listing various factors identified by Justice French in Trade Practices Commission v CSR Ltd [1990] FCA 762,[24] which informed the court in that case in assessing an appropriate penalty under the Trade Practices Act 1974 (Cth), the plurality in Pattinson went on to say:
19.It may readily be seen that this list of factors includes matters pertaining both the character of the contravening conduct … and to the character of the contravenor … It is important, however, not to regard the list of possible relevant considerations as a ‘rigid catalogue of matters for attention’ as if it were a legal checklist. The court’s task remains to determine what is an ‘appropriate’ penalty in the circumstances of the particular case. (emphasis added)
[24] See Australian Building and Construction Commissioner v Pattinson and Anor [2022] HCA 13 at [18].
The plurality also noted that whilst deterrence remains the primary motivator in fixing and imposing a civil penalty, consideration needs also to be given to other relevant factors on a case-by-case basis.[25]
[25] See Australian Building and Construction Commissioner v Pattinson and Anor [2022] HCA 13 at [47].
Both parties submit, by reference to the reasoning in Pattinson, that an appropriate penalty:
4.… is to be determined with a view to what the Court ‘… considers fairly and reasonably to be appropriate to protect the public interest from future contraventions of the Act’ … and also that the [penalty imposed] does not exceed what is reasonably necessary to achieve the purpose of s546: the deterrence of future contraventions of a like kind by the contravener and by others’.[26]
[26] Respondents’ Outline of Submissions filed on 8 September 2023 at paragraph [4].
As stated, in this case, the maximum penalty which the court can impose on the first respondent is $33,000 and the maximum penalty which the court can impose on the second respondent, an individual, is $6,600.[27]
[27] Fair Work Act 2009 (Cth), s 12; Crimes Act 1914 (Cth) s 4AA.
Deterrence and nature, circumstances and deliberateness of contravening conduct
It is submitted for the applicant that a penalty ought to be imposed at a level likely to deter both the respondents themselves from further contraventions, but also others from engaging in similar contraventions.[28] The latter can only be achieved if the penalty is set at a level which will not be seen by others as simply ‘the cost of doing business’.[29]
[28] Applicant’s Outline of Submissions filed on 7 August 2023 at paragraph [24] and following.
[29] Fair Work Ombudsman v Yogurberry World Square [2016] FCA 1290 at [27].
Whilst the respondents concede that the High Court has stated that deterrence, both general and specific, is a significant consideration in penalty proceedings, such as these, they say that in the particular circumstances in this case, this factor is less significant than it might otherwise be.[30] The respondents submit that the contraventions occurred in the context of the second respondent suffering significant health issues which, whilst not excusing his behaviour, explains it such the need for specific deterrence is lessened.
[30] Respondents’ Outline of Submissions filed on 8 September 2023 at paragraph [7] and following.
Specific deterrence
In support of this submission, the second respondent relies upon an affidavit sworn by him on 24 July 2023. In that affidavit, as outlined above, the second respondent deposes to suffering from poor health since 2021. He states that he had an operation in 2021 for what he believed was a pinched nerve to his neck, however, he was ultimately diagnosed with Parkinson’s Disease and had therefore been dealing with an uncertain future since that diagnosis.[31]
[31] Court transcript at page 8; Affidavit of Mr Christo Douvos sworn and filed on 24 July 2023 at paragraph [3].
The second respondent further states that he has also been seeing a ‘therapist’ to help deal with his health issues, and that as a result, he has not been able to ‘keep on top with a lot of things, including various matters relating to my business and everyday matters’.[32]
[32] Affidavit of Mr Christo Douvos sworn and filed on 24 July 2023 at paragraph [4].
In addition, the second respondent deposes to having to deal with his elderly parents who have themselves suffered health issues during this period.[33]
[33] Affidavit of Mr Christo Douvos sworn and filed on 24 July 2023 at paragraph [5].
The applicant submits that there is no clear evidence of the impact of the second respondent’s medical condition on his ability to comply with the compliance notice.[34] In particular, there is no evidence before the court that the second respondent’s condition meant that he was unable to take any of the steps in the compliance notice or cause the first respondent to do so.
[34] Applicant’s Outline of Submissions filed on 7 August 2023 at paragraph [34].
The applicant further submits that even if the second respondent was unable to comply with the notice within the specified time frame, the respondents have had ample time to comply with the compliance notice since and their failure to do so is also relevant to the question of specific deterrence, notwithstanding the health issues that the second respondent faced.[35]
[35] Applicant’s Outline of Submissions filed on 7 August 2023 at paragraph [33].
Following the issuing of the compliance notice on 8 July 2022,[36] the respondents were provided with over a month within which to comply.[37] Moreover, another officer of the applicant, Fair Work (‘FW’) Officer Whetlor, corresponded with the second respondent in the period between 22 July 2022 and 29 August 2022 about the steps that the respondents needed to take in order to comply with the compliance notice.[38]
[36] Affidavit of Mr Joseph Benson affirmed and filed on 19 June 2023 at paragraph [7].
[37] Affidavit of Mr Joseph Benson affirmed and filed on 19 June 2023 at paragraph [8].
[38] Affidavit of Mr Joseph Benson affirmed and filed on 19 June 2023 at paragraph [10].
When the respondents did not comply within the specified time frame, a letter was sent to the second respondent on 30 August 2022 noting the non-compliance.[39] The second respondent then sought an extension of time to comply on the basis of the second respondent’s personal circumstances.[40]
[39] Affidavit of Mr Joseph Benson affirmed and filed on 19 June 2023 at paragraph [12]; Annexure JB-5.
[40] Affidavit of Mr Joseph Benson affirmed and filed on 19 June 2023 at paragraph [13]; Annexure JB-6.
Relevantly, in that letter, the second respondent acknowledged that he had every intention of complying and that he was taking steps to comply including by engaging with his lawyer and accountant. The second respondent sought more time within which to comply.
There was a follow up telephone call between the second respondent and FW Officer Whetlor on 13 September 2022, in which the second respondent made similar comments.[41] By this time, the respondents had been on notice of their obligations for over two months.
[41] Affidavit of Mr Joseph Benson affirmed and filed on 19 June 2023 at paragraph [14]; Annexure JB-7.
In addition, with regard to specific deterrence, the respondents submit that this proceeding itself has been a ‘significant learning experience’ for the respondents about their obligations.[42]
[42] Respondents’ Outline of Submissions filed on 8 September 2023 at paragraph [9].
Notwithstanding this submission, as noted, the first respondent remains registered and appears to continue to operate. Moreover, the second respondent continues to have responsibility for employing staff and ensuring that their entitlements are met by the first respondent. Importantly, notwithstanding any learning that the respondents have gained from this process, the second respondent has still not complied with the notice other than the payment of $440 in made in July 2023. Moreover, the respondents have not produced any evidence that they have changed their systems or introduced different practices to ensure that a similar issue does not arise in the future.
General deterrence
It has been long accepted that a penalty must be set at a level which would encourage other employers to take timely action to comply with a compliance notice issued under the FW Act by an inspector.[43]
[43] See, for example, Fair Work Ombudsman v Rum Runner Pty Ltd & Anor [2018] FCCA 1129 at [121].
The applicant submits that the compliance notice process was introduced as a means of dealing more efficiently with alleged non-compliance by employers and as a quick and efficient alternative to the need to commence litigation in respect of each underlying contravention.[44] There is therefore a real need to deter employers from forming the view that there are little or no real consequences to failing to comply with a compliance notice, thereby hindering the very efficiency of the compliance notice process. There is much force to this submission.
[44] Applicant’s Outline of Submissions filed on 7 August 2023 at paragraph [26].
Context of offending
It was submitted for the respondents that in considering an appropriate penalty in this matter, the court should have regard to the second respondent’s health concerns ‘and future uncertainty, including in relation to the future of the business’.[45]
[45] Respondents’ Outline of Submissions filed on 8 September 2023 at paragraph [11].
Whilst it is appropriate to give some weight to the fact that the second respondent experienced some health difficulties as well as other personal difficulties at the time that the compliance notice was issued, as noted, there is no evidence about the impact that these matters had on the second respondent’s ongoing difficulties in complying with the notice.
Corrective action, cooperation and contrition
The applicant concedes that the respondents admitted the alleged contraventions early in the proceedings, thereby avoiding unnecessary costs and delay.[46] The applicant also accepts that the respondents have made a single payment of $444 to Mr Moutidis.
[46] Applicant’s Outline of Submissions filed on 7 August 2023 at paragraph [47].
The applicant’s early admissions and the part-payment are factors which the court can properly regard in the respondent’s favour in determining an appropriate penalty. However, these matters must be weighed against the fact that the respondents have continued to fail to take any other action to comply with the compliance notice, including calculating Mr Moutidis’ entitlements. The respondents have also not indicated if or when such calculations will be provided and full outstanding payments to Mr Moutidis made.[47]
[47] Affidavit of Rachael Deborah Seaforth affirmed and filed on 7 August 2023 at paragraph [1]; Annexure RS-1.
Nature and extent of the loss
In terms of the nature and extent of the loss, the court’s focus must remain on the failure to comply with the compliance notice, rather than the underlying contraventions.[48] As stated by his Honour Judge Kendall in Soma at paragraph [39]:
39.… the ‘loss’ that is most relevant in this case is that which relates to the frustration and stultification of the statutory purpose behind s 716 of the Act. As noted above, 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. … Here, that purpose has been systematically undermined.
[48] Fair Work Ombudsman v Soma Kitchen Pty Ltd & Anor (No 2) [2020] FCCA 2583 at [38] (‘Soma’).
The respondents’ failure to comply with the compliance notice has resulted in the need to commence litigation. Whilst, as stated above, the respondents’ early concessions and admissions have reduced the cost and delay, they have nonetheless frustrated the purpose of section 716 which is intended to provide a quick and inexpensive method of enforcement.
Moreover, as noted, whilst the applicant acknowledges that the respondents have paid Mr Moutidis $444 for training fees incurred, in the absence of the calculation required by the compliance notice, it is not clear whether this is the total amount of training fees to be paid.[49] Moreover, this amount was paid over two years after the compliance notice was issued, thus requiring the commencement of these proceedings.
[49] Applicant’s Outline of Submissions filed on 7 August 2023 at paragraph [38].
Size and financial circumstances of the business
The respondents have not produced any evidence as to the first respondent’s size or their resources. Nor have they produced any evidence as to the financial position of the second respondent. At its highest, it would appear that the second respondent engaged the services of an accountant, although the extent of that retainer is not clear.[50]
[50] See, for example, Affidavit of Mr Joseph Benson affirmed and filed on 19 June 2023 at Annexure JB-4.
But in any event, even if the court were to accept that the first respondent is a small business, that does not absolve it of the need to comply with its obligations under the FW Act. It is well settled that the need to comply with obligations under the FW Act applies to all businesses irrespective of size, unless the legislation expressly excludes businesses on the basis of size.[51] There is no such exclusion in relation to the obligation to comply with a compliance notice under section 716 of the FW Act.
[51] Fair Work Ombudsman v Extrados Solutions Pty Ltd [2014] FCCA 815 at [10]; Kelly v Fitzpatrick [2007] FCA 1080 at [28].
Other relevant matters
It is also relevant to note that the Compliance Notice Scheme does not just benefit the applicant or the employees seeking to recover unpaid entitlements. There are also benefits for a respondent, namely, that if the notice has been complied with, the FWO cannot then seek the imposition of a penalty in respect of the underlying contravention.
Moreover, as noted above, a person who complies with a compliance notice is not taken to have contravened the underlying provision nor is the person taken to be found to have contravened the underlying provision.[52]
[52] Fair Work Act 2009 (Cth), s 716(4B).
CONSIDERATION AND FINDINGS
Having regard to all of these factors, the applicant seeks the imposition of a penalty in the range of 60% to 70% of the maximum in respect of each of the respondents, plus a further 10% discount for early admissions and co-operation.[53]
[53] Applicant’s Outline of Submissions filed on 7 August 2023 at paragraphs [49] and [50].
As noted, in their written submissions, the respondents did not identify a particular penalty figure which they seek to be imposed, nor did counsel for the respondent have a particular figure to put to the court in oral submissions.
Having regard to each of the matters discussed above, I find that a penalty in the sum of $16,500 for the first respondent and $3,300 for the second respondent are just and appropriate.
CONCLUSION
For these reasons, I therefore make the declarations and orders set out at the commencement of these reasons.
I certify that the preceding sixty-nine (69) numbered paragraphs are a true copy of the Reasons for Judgment of Deputy Chief Judge Mercuri. Associate:
Dated: 14 February 2024
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