Fair Work Ombudsman v JMSL Pty Ltd

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Federal Circuit and family Court of Australia

(division 2)

Fair Work Ombudsman v JMSL Pty Ltd [2023] FedCFamC2G 195

File number: MLG 2951 of 2019
Judgment of: HER HONOUR JUDGE C. E. KIRTON KC
Date of judgment: 16 March 2023 
Catchwords: INDUSTRIAL LAW – pecuniary penalties – appropriate penalties – admitted contraventions of Fair Work Act 2009 (Cth) – declarations made by consent in respect of the Respondents – quantum of penalty in dispute
Legislation:

Crimes Act 1914 (Cth) s 4AA

Fair Work Act 2009 (Cth) ss 45, 535, 536, 539, 546, 550, 682, 683, 700, 712, 718A

Fair Work Regulations 2009 (Cth)
Cases cited:

Australian Building & Construction Commissioner v Construction, Forestry, Mining and Energy Union (No.2) [2010] FCA 977

Australian Building and Construction Commissioner v Construction, Forestry, Mining and Engineering Union [2017] FCAFC 113

Australian Competition & Consumer Commission v ACN 135 183 372 (in liquidation) (formerly known as Energy Watch Pty Ltd) [2012] FCA 749

Australian Opthalmic Supplies Pty Ltd (2008) 165 FCR 560; [2008] FCAFC 8

Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46

Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39

Fair Work Ombudsman v AJR Nominees Pty Ltd (No 2) [2014] FCA 128

Fair Work Ombudsman v Bound for Glory Enterprises & Anor [2014] FCCA 432

Fair Work Ombudsman v Desire Food Pty Ltd & Anor [2019] FCCA 2979

Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557

Fair Work Ombudsman v JS Top Pty Ltd & Anor [2017] FCCA 1689

Fair Work Ombudsman v Lohr [2018] FCA 5

Fair Work Ombudsman v Mai Pty Ltd & Anor [2016] FCCA 1481

Fair Work Ombudsman v NHS North Pty Ltd [2017] FCA 131

Fair Work Ombudsman v Priority Matters Pty Ltd & Anor (No 5) [2020] FCCA 901

Fair Work Ombudsman v Pulis Plumbing Pty Ltd & Anor [2019] FCCA 3192

Fair Work Ombudsman v Wynn Sichuan Pty Ltd & Ors and FWO v Nine Dragons Pty Ltd & Ors [2020] FCCA 1358

Ghimire v Karriview Management Pty Ltd (No 2) [2019] FCA 1627

Glenn Jordan v Mornington Inn Pty Ltd [2007] FCA 1384

Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080

Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383; [2008] FCAFC 70

R v White (BC9101745, NSWCCA, 25 July 1991, unreported)

Rocky Holdings Pty Limited v Fair Work Ombudsman [2014] FCAFC 62

Stuart-Mahoney v Construction, Forestry, Mining and Energy Union [2008] FCA 1426

Wong v R (2001) 207 CLR 584; [2001] HCA 64
Number of paragraphs: 128
Division: Division 2 General Federal Law
Date of last submission/s: 13 November 2020
Date of hearing: 13 November 2020
Place: Melbourne (via video conference)
Solicitor for the Applicant:  Ms P Cookesley of the Office of the Fair Work Ombudsman
Counsel for the Respondents:  Mr A Berger

ORDERS

MLG 2951 of 2019

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

BETWEEN:

FAIR WORK OMBUDSMAN

Applicant
AND:
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Details
Case
[2023] FedCFamC2G 195
Decision Date

CaseChat Overview and Summary

In the Federal Court of Australia, the Fair Work Ombudsman brought proceedings against JMSL Pty Ltd (the "First Respondent") and its sole director (the "Second Respondent") for various contraventions of the Fair Work Act 2009 (Cth) and the Restaurant Award. The primary issues before the Court were to determine the appropriate penalties for the contraventions and the timeframe for the Respondents to pay the penalties to the Commonwealth of Australia. The contraventions related to underpayments of minimum wage rates, casual loadings, and penalty rates to two employees over a specified period.

The Court considered various factors in determining the penalties, including the seriousness and gravity of the contraventions, the culpability of the Respondents, and the degree of cooperation with enforcement authorities. The Court found that the contraventions were deliberate and extensive, with significant underpayments to the employees. The Second Respondent, as the sole director and person principally in control, was found to be responsible for the First Respondent's compliance with its legal obligations. The Court also noted that the Respondents had cooperated with the Fair Work Ombudsman and made early admissions of liability, which warranted some reduction in the penalty.

Based on the findings, the Court ordered that the First Respondent pay a penalty of $96,336.00 and the Second Respondent pay a penalty of $19,267.20 within 28 days of the Court's orders. The Court concluded that the penalties reflected the seriousness of the contraventions and the culpability of the Respondents, while also taking into account the degree of cooperation and early admissions of liability.

Orders

Orders of the court

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Background

Background to the litigation

The issues that the Court must therefore determine are:(a)The penalty that is appropriate in the circumstances of this case with respect to each of the First Respondent and the Second Respondent; and (b)The timeframe within which the Respondents would be required to pay such penalty to the Commonwealth of Australia.BACKGROUND The First Respondent is a company which at all relevant times operated the Business.[7] The Second Respondent is the sole director of the First Respondent.[8] The Employees were employed at the Business by the First Respondent during the following times within the Contravention Period: (a)Mr Benjamin Hodgson (Mr Hodgson) from 2 May 2016 until 6 August 2017; and (b)Ms Sachini Bamunuwitage (Ms Bamunuwitage) from 3 September 2018 until 4 November 2018.[9][7] Statement of Agreed Facts, [2]. [8] Statement of Agreed Facts, [3]. [9] Statement of Agreed Facts, [4]. During the Contravention Period the Employees were each junior employees for the purposes of cl 15.1 of the Restaurant Award because:(a)Mr Hodgson was:(i)From 2 May 2016 to 12 November 2016, 19 years of age; and(ii)From 13 November 2016 to 6 August 2017, 20 years of age; and(b)Ms Bamunuwitage was from 3 September 2018 to 4 November 2018, 20 years of age.[10][10] Statement of Agreed Facts, [10]. During the Contravention Period the Employees:(a)Were employed by the First Respondent as casual employees within the meaning of cl 13 of the Restaurant Award; (b)Worked irregular hours ranging between 6 to 42 hours per week;(c)Were paid a flat rate of $15.00 per hour for all hours of work, except on public holidays for which Mr Hodgson received an additional $50.00 per day; and (d)Were paid in cash or by electronic transfer.[11][11] Statement of Agreed Facts, [5] and [9]. During the Contravention Period:(a)The First Respondent was required to pay the Employees the junior minimum hourly rates of pay for ordinary hours of work, pursuant to cls 15.1, 20.1 and 20.3 of the Restaurant Award (Junior Minimum Hourly Rates); (b)The Employees worked a total of 1,528.99 ordinary hours and the First Respondent:(i)Was required to pay the Employees a total of $27,493.33 to satisfy their Junior Minimum Hourly Rates entitlement; and(ii)Paid the Employees a total of $22,863.54, resulting in a total underpayment of their Junior Minimum Hourly Rates entitlement of $4,629.79;(c)By reason of the matters set out in sub-paragraphs (a) and (b) the First Respondent contravened cl 20.3 of the Restaurant Award and thereby s 45 of the FW Act;[12][12] Statement of Agreed Facts, [15]-[17].(d)The First Respondent was required to pay the Employees a casual loading of 25% for all hours of work performed between Monday to Friday, pursuant to cl 13.1 of the Restaurant Award (Casual Loading); (e)The Employees worked a total of 1,528.99 ordinary hours between Monday to Friday and the First Respondent:(i)Was required to pay the Employees a total of $6,875.79 to satisfy their Casual Loading entitlement; and(ii)Paid the Employees a total of $68.15, resulting in a total underpayment of their Casual Loading entitlement of $6,807.64;(f)By reason of the matters set out in sub-paragraphs (d) and (e) the First Respondent contravened cl 13.1 of the Restaurant Award and thereby s 45 of the FW Act;[13][13] Statement of Agreed Facts, [15]-[17]. (g)The First Respondent was required to pay the Employees Saturday penalty rates for ordinary hours of work performed on a Saturday, pursuant to cl 34.1 of the Restaurant Award (Saturday Penalties); (h)The Employees worked a total of 160.75 ordinary hours on a Saturday and the First Respondent:(i)Was required to pay the Employees a total of $4,418.41 to satisfy their Saturday Penalties entitlement; and(ii)Paid the Employees a total of $2,411.25, resulting in a total underpayment of their Saturday Penalties entitlement of $2,007.16;(i)By reason of the matters set out in sub-paragraphs (g) and (h) the First Respondent contravened cl 34.1 of the Restaurant Award and thereby s 45 of the FW Act;[14][14] Statement of Agreed Facts, [18]-[20].(j)The First Respondent was required to pay the Employees Sunday penalty rates for ordinary hours of work performed on a Sunday, pursuant to cl 34.1 of the Restaurant Award (Sunday Penalties); (k)The Employees worked a total of 106 ordinary hours on a Sunday and the First Respondent:(i)Was required to pay the Employees a total of $2,853.72 to satisfy their Sunday Penalties entitlement; and(ii)Paid the Employees a total of $1,590.00, resulting in a total underpayment of their Sunday Penalties entitlement of $1,263.72;(l)By reason of the matters set out in sub-paragraphs (j) and (k) the First Respondent contravened cl 34.1 of the Restaurant Award and thereby s 45 of the FW Act;[15](m)The First Respondent was required to pay Mr Hodgson public holiday penalty rates for ordinary hours of work performed on a public holiday, pursuant to cl 34.1 of the Restaurant Award (Public Holiday Penalties); (n)Mr Hodgson worked a total of 28 ordinary hours on a public holiday and the First Respondent:(i)Was required to pay Mr Hodgson a total of $1,323.84 to satisfy his Public Holiday Penalties entitlement; and(ii)Paid Mr Hodgson a total of $620.00, resulting in a total underpayment of his Public Holiday Penalties entitlement of $703.84; and(o)By reason of the matters set out in sub-paragraphs (m) and (n) the First Respondent contravened cl 34.1 of the Restaurant Award and thereby s 45 of the FW Act;[16][15] Statement of Agreed Facts, [21]-[23].[16] Statement of Agreed Facts, [24]-[26].

Evidence

Evidence Before The Court

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Decision

Reasons for decision

Accordingly, orders will be made that the Respondents pay the penalties to the Commonwealth of Australia within 28 days of the Court’s orders.conclusion The Court finds that a penalty of $96,336.00 is to be paid by the First Respondent to the Commonwealth of Australia for the Contraventions within 28 days of the date of the Court’s orders. The Court also finds that a penalty of $19,267.20 is to be paid by the Second Respondent to the Commonwealth of Australia within 28 days of the date of the Court’s orders.

Ratio Decidendi

Legal Principle Established

The Second Respondent was at all material times the sole director of the First Respondent and the person principally in control of the overall direction, management and supervision of the First Respondent. The Second Respondent was responsible for the First Respondent’s industrial arrangements, including the creation and keeping of the Employees’ time and pay records. The Second Respondent was thereby responsible for ensuring that the First Respondent complied with its legal obligations under the FW Act and the FW Regulations. The Second Respondent was consequently at the highest level of the First Respondent’s operations and has admitted that he was involved in each of the Contraventions.[43] [43] Statement of Agreed Facts, [47] and [48].Corrective action, cooperation with enforcement authorities and contrition In the Peng Affidavit at [16] and [17] the Second Respondent deposed that he caused the First Respondent to fully repay: Mr Hodgson between 14 November 2018 and 15 January 2019; and Ms Bamunuwitage between 3 October 2019 and 8 January 2020. The Second Respondent also deposed in the Peng Affidavit at [18] that on or about 12 February 2020 he registered an Account on the Applicant’s website and accessed and completed the Record-Keeping and Payslips Course and the Hiring Employees Course. Copies of the Certificates of Completion of these courses, dated 12 February 2020 were annexed to the Peng Affidavit in Annexure “EP-3”. The Application and the Statement of Claim were filed on 6 September 2019. On 31 October 2019 the Applicant emailed to the Respondents’ then lawyers a draft statement of agreed facts.[44] The First Respondent agreed with the draft statement of agreed facts and on 13 November 2019 the Statement of Agreed Facts was filed. The Respondents have therefore cooperated with the Applicant, to the extent that they made early admissions as to liability from shortly after the commencement of the proceeding. [44] Peng Affidavit, [14] and Annexure “EP-2”. Where a respondent cooperates and makes admissions early in the course of an investigation or soon after the commencement of proceeding, it may be appropriate to allow a discount on penalty. In Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383; [2008] FCAFC 70; the Full Federal Court stated at [76] and [77]:76[…] a discount should not be available simply because a respondent has spared the community the cost of a contested trial. Rather, the benefit of such a discount should be reserved for cases where it can be fairly said that an admission of liability: (a) has indicated an acceptance of wrongdoing and a suitable and credible expression of regret; and/or (b) has indicated a willingness to facilitate the course of justice.77A respondent who admits liability will spare itself the unnecessary cost of a contested hearing. Its motivation, therefore, should not be regarded as unduly altruistic. […] The Court accepts that the admissions made by the Respondents had the effect of narrowing the issues in dispute and to facilitate the course of justice. This warrants some reduction.