Fair Work Ombudsman v Joe Antonios Carpentry and Woodwork Pty Ltd (No 2)
[2023] FedCFamC2G 232
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Joe Antonios Carpentry and Woodwork Pty Ltd (No 2) [2023] FedCFamC2G 232
File number(s): SYG 828 of 2022 Judgment of: JUDGE LAING Date of judgment: 24 March 2023 Catchwords: FAIR WORK – failure to comply with a compliance notice – admissions made – orders proposed by consent, including as to penalties – whether proposed penalties are appropriate – proposed consent orders made. Legislation: Fair Work Act 2009 (Cth) ss 90, 117, 546, 550, 716 Cases cited: Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; (2022) 399 ALR 599
Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; (2015) 258 CLR 482
Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (The Non-Indemnification Personal Payment Case) [2018] FCAFC 97; (2018) 264 FCR 155
Fair Work Ombudsman v Hess [2021] FCCA 1883
Fair Work Ombudsman v Joe Antonios Carpentry and Woodwork Pty Ltd [2022] FedCFamC2G 756
Fair Work Ombudsman v Yogurberry World Square Pty Ltd [2016] FCA 1290; (2016) 68 AILR
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
Trade Practices Commission v CSR Ltd [1990] FCA 762; [1991] ATPR 41-076
Division: Division 2 General Federal Law Number of paragraphs: 41 Date of hearing: Determined on the papers Place: Sydney Solicitor for the Applicant: Minna Zhang, Office of the Fair Work Ombudsman Solicitor for the First and Second Respondents Stewart Gough, Matthews Folbigg Lawyers ORDERS
SYG 828 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: JOE ANTONIOS CARPENTRY AND WOODWORK PTY LTD (ACN 607 181 411)
First Respondent
MR JOSEPH ANTONIOS
Second Respondent
order made by:
JUDGE LAING
DATE OF ORDER:
24 march 2023
BY CONSENT, THE COURT DECLARES 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.
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 at paragraph 1 above.
BY CONSENT, THE COURT ORDERS THAT:
3.The matter be determined on the papers.
4.Pursuant to section 546(1) of the FW Act, within 28 days of these orders, the First Respondent pay a pecuniary penalty of $4,000.00 to the Commonwealth for the contravention declared at paragraph 1 above.
5.Pursuant to section 546(1) of the FW Act, within 28 days of these orders, the Second Respondent pay a pecuniary penalty of $1,000.00 to the Commonwealth for the contravention declared at paragraph 2 above.
6.The Applicant has liberty to apply on 7 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 LAING
INTRODUCTION
By an Application and Statement of Claim filed in this Court on 10 June 2022, the applicant (FWO) seeks relief against the first respondent (Company) and the second respondent (Mr Antonios) in respect of non-compliance with a compliance notice (Compliance Notice) in contravention of s 716(5) of the Fair Work Act 2009 (Cth) (FW Act).
The parties are in agreement regarding the orders proposed in relation to both liability and relief, including as to penalties. A Statement of Agreed Facts was filed on 24 November 2022 (Agreed Facts). By that document, the parties have agreed a substantial proportion of the factual background contended by the FWO. This is summarised below. The Company has admitted to contravening s 716(5) of the FW Act by failing to comply with the Compliance Notice. Based upon the admissions contained within the Agreed Facts, I accept that this has occurred.
Mr Antonios has admitted his involvement in the breaches within the meaning of s 550(2) of the FW Act, by reason of which he is taken to have also contravened s 716(5). Again, based upon these admissions and their factual underpinnings in the Agreed Facts, this is accepted.
The parties are in agreement that certain declarations ought to be made recording the conceded breaches of the FW Act. I accept that this is appropriate. Additionally, the parties agree that orders ought to be made, pursuant to s 546(1) of the FW Act, requiring the Company to pay a pecuniary penalty in the amount of $4,000 to the Commonwealth and Mr Antonios to pay a pecuniary penalty in the amount of $1,000 to the Commonwealth.
The parties have sought for the proceedings to be determined on the papers. Although orders are proposed by consent, the Court is still obliged to determine whether the agreed amounts are reasonable and appropriate considering the circumstances of the matter.
For the following reasons, I am willing to make orders in accordance with those sought by the parties.
BACKGROUND
The following factual summary is taken from the Agreed Facts which has been prepared by the parties.
The Company is the operator of a business trading as “Wastewood”, a recycled timber store operating from various premises in Sydney. Mr Antonios is its sole director, secretary and shareholder.
In or around July 2021, the FWO commenced an investigation into the Company in respect of the employment of a particular employee (Employee). As a result of the investigation, a Fair Work Inspector formed a reasonable belief pursuant to s 716(1)(a) of the FW Act that the Company contravened the following sections of the FW Act in respect of the Employee:
(a)section 90(2) by failing to pay accrued but unused annual leave on termination (Annual Leave Contravention); and
(b)sections 117(2)(b) and 117(3)(a) by failing to make payment in lieu of notice of termination (PILN Contravention).
On 15 September 2021, the FWO issued the Company with the Compliance Notice in respect of the Annual Leave Contravention and the PILN Contravention, pursuant to s 716(2) of the FW Act.
The Compliance Notice required the Company to remedy the effects of the contraventions by 13 October 2021, by making outstanding payments to the Employee and making records in relation to same (Specified Action). The Compliance Notice also required the Company to provide a schedule of calculations and payments made to the Employee, as well as evidence of the requisite amounts having been paid, to the FWO by 20 October 2021.
Between 16 September 2021 and 9 October 2021, Mr Antonios (on behalf of the Company) sent several emails to a Fair Work Officer regarding:
(a)the reasons why the Company believed that the Employee was not entitled to payment in lieu of notice of termination; and
(b)the reasons why the Company considered that it was unable to calculate and pay the correct amount of the Employee’s accrued but unused annual leave either accurately or at all, in accordance with the Compliance Notice.
On 18 October 2021, the Fair Work Officer responded by email to Mr Antonios informing that:
(a)the explanations did not change the FWO’s position in respect of the Compliance Notice; and
(b)the Company was required to provide evidence of compliance with the Compliance Notice by 20 October 2021.
Between 18 October 2021 and 22 October 2021, Mr Antonios wrote to the Fair Work Officer stating that:
(a)the Company was unable to comply with the Compliance Notice because it was believed that the payroll records created and maintained by the Employee during her employment were unreliable; and
(b)the Company was committed to paying all its employees (including the Employee) but required time to learn how to administer the Company’s payroll system.
The Company did not take the Specified Action in accordance with the Compliance Notice by the required date. Nor did it produce, by the required date, reasonable evidence to the FWO of compliance with the Compliance Notice.
On 10 January 2022, the FWO sent a pre-litigation letter to the Company by way of express post and email (Pre-Litigation Letter). The Pre-Litigation Letter enclosed a document setting out the FWO’s calculations of the monies required to be paid to the Employee under the Compliance Notice and provided the Company with an opportunity to rectify its non-compliance with the Compliance Notice.
THE CURRENT PROCEEDINGS
As noted above, the FWO commenced the current proceedings on 10 June 2022. There was no appearance for either respondent at the first court date. Mr Antonios subsequently filed a response and made an application to represent the Company in these proceedings. That application was dismissed on 28 July 2022: Fair Work Ombudsman v Joe Antonios Carpentry and Woodwork Pty Ltd [2022] FedCFamC2G 756.
A mediation was subsequently conducted, following which a number of issues were substantially resolved. Agreed Facts were filed on 24 November 2022. Submissions and evidence relevant to the question of penalties were subsequently filed. With the submissions, consent orders were proposed to the Court quantifying the penalties proposed.
PRINCIPLES
The principles regarding imposition of penalties were considered by the High Court in Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; (2022) 399 ALR 599 (Pattinson). There, it was stated that “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” (at [9] per Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ). The “real task” of the Court was therefore described as “fixing the penalty which it considers fairly and reasonably to be appropriate to protect the public interest from future contraventions of the Act” (at [71]).
A number of potentially relevant considerations have been identified in such cases as Trade Practices Commission v CSR Ltd [1990] FCA 762; [1991] ATPR 41-076 at [42]; Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (The Non-Indemnification Personal Payment Case) [2018] FCAFC 97; (2018) 264 FCR 155 at [20] and Mason v Harrington Corporation Pty Ltd [2007] FMCA 7. However, it is to be borne in mind that such recitations of potentially relevant considerations are not to be used as if they “were a legal checklist”: Pattinson at [19]. The Court’s task is to determine the appropriate penalties by reference to the particular circumstances of each case.
It is open to parties to make submissions regarding appropriate penalty ranges, including by agreement. The Court is nonetheless required to satisfy itself that the submitted penalties are appropriate.
However, where the agreed penalties proposed are within an appropriate, permissible range the Court will not depart from the agreed upon figure “merely because it might otherwise have been disposed to select some other figure”: Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; (2015) 258 CLR 482 at [47]-[48] per French CJ, Kiefel J (as her Honour was) and Bell, Nettle and Gordon JJ. Provided that the proposed settlement is based upon an accurate account of the circumstances and appropriate, it has been recognised that it is “highly desirable in practice for the court to accept the parties' proposal and therefore impose the proposed penalty”: Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; (2015) 258 CLR 482 at [58]-[59].
PENALTIES
Material relied upon
The following evidence has been relied upon by the parties on the question of penalties:
(a)An affidavit affirmed by Mr Antonios on 20 December 2022; and
(b)An affidavit affirmed by Fair Work Inspector Nicholas Whyte on 20 January 2023.
Circumstances surrounding the contravention and subsequent action
The circumstances surrounding the contravention are set out, to some extent, in the Agreed Facts summarised above.
Mr Antonios, in his affidavit, additionally sought to provide context to the contravention. It is apparent that Mr Antonios blames, to a significant extent, the Employee whom he says was responsible for managing the payroll including her final pay. Mr Antonios claims that the unsatisfactory state in which the Employee left his business records hindered his ability to determine what was owing and to comply with the Compliance Notice.
The Employee may well have a different view of the situation, which may or may not be the correct one. As there is limited evidence before me regarding the extent of the opportunity she has been given to participate in these proceedings, I have not identified her by name in this judgment.
Mr Antonios also referred in his affidavit to personal difficulties he experienced, both personally and relating to the Company, which he says impacted upon his response to the Compliance Notice.
Mr Antonios has not been cross examined on his evidence. The FWO accepts that I may take into account Mr Antonios’ views regarding his dispute with the Employee. I therefore accept that compliance may have been hindered, to some extent, by the Employee’s management of the records and that there may have been some dispute between the Employee and Mr Antonios regarding the extent of the Employee’s outstanding entitlements. That dispute has now substantially been resolved.
I accept that Mr Antonios’ personal and professional issues in the relevant period may have had some impact upon his response to the Compliance Notice.
Mr Antonios also appears to have considered that the FWO’s conduct of the investigation did not provide him with the opportunities that he would have wished in which to comply with the FWO’s requirements. There appears to be some factual dispute between Mr Antonios and Fair Work Inspector Nicholas Whyte as to what occurred in this regard. Both have provided affidavits. Neither were required for cross examination.
Regardless, in written submissions the parties agreed that the Company was given numerous opportunities, including at the investigation phase, to rectify its non-compliance and yet failed to do so. The parties agreed that the Respondents’ failure to rectify the non-compliance gave the FWO no other option than to commence proceedings at the public’s expense to recover the amounts owed to the Employee and uphold compliance with the FW Act. These concessions, ultimately made by Mr Antonios and the Company, were appropriate.
Of significance to my acceptance of the penalties proposed are the Respondents’ subsequent actions. I accept that by admitting the contraventions, agreeing to the FWO’s calculation of monies owing under the Compliance Notice and paying the required amounts to the Employee, the Respondents have reduced the cost and complexity of the proceedings. Their actions have removed the need for a hearing, or any significantly contested dispute. I accept that a substantial discount on the penalties that might otherwise have been awarded is warranted on account of these actions.
Nature and extent of loss
As noted above, the failure to comply with the Compliance Notice has resulted in the need for the FWO to institute these proceedings, resulting in public cost. The Respondents’ willingness to substantially settle the dispute with the FWO at a reasonably early stage after the commencement of the proceedings has, however, mitigated costs to a considerable extent.
The delay in the Company undertaking the actions required under the Compliance Notice has meant that the Employee has experienced delay in receiving her statutory entitlements. This is a relevant loss flowing from the failure to comply with the notices: Fair Work Ombudsman v Hess [2021] FCCA 1883 at [35]. That said, I have also taken into account in this matter and placed weight upon the payments to the Employee that were ultimately made on behalf of the Company.
Involvement of senior management
Mr Antonios was the sole director of the Company. He accepts that he was, at all relevant times, responsible for ensuring the Company’s compliance with the Compliance Notice.
Deterrence
It has been repeatedly emphasised in penalty cases that general deterrence must serve a purpose that ensures that any penalty imposed is not seen as “the cost of doing business”: see for example Fair Work Ombudsman v Yogurberry World Square Pty Ltd [2016] FCA 1290; (2016) 68 AILR 102–690 at [27]. Penalties must be set at a level which demonstrates that there are serious consequences for non-compliance, to deter others from failing to comply.
The FWO has observed that the Company operates in the carpentry services industry (Industry). That industry has been submitted to involve a moderate rate of disputes, a significant proportion of which relate to payment of wages on termination and accrued annual leave. These matters are of particular concern to the FWO.
I also accept that there is a need for specific deterrence. This is in circumstances where the Company remains registered and is likely to continue to operate with Mr Antonios as its director. The materials indicate limited personal remorse on the part of Mr Antonios, who appears to blame others to a considerable extent for the non-compliance. This is perhaps best demonstrated by the descriptions that he chose to accompany the payments made to the Employee, which were “Fix error made by [the Employee]”. This has given me significant pause in considering whether the penalties he has agreed with the FWO are sufficient to effect specific deterrence, or whether higher amounts may be appropriate. The maximum penalties that may be imposed in this case are $33,300 in respect of the Company and $6,660 in respect of Mr Antonios. The penalties that have been proposed by consent are, clearly enough, at the lower end of what may be imposed.
Ultimately, however, I have determined to accept the penalties proposed by consent. In coming to this decision, I have been influenced by the fact that it does not appear to be alleged that either the Company or Mr Antonios have engaged in previous instances of non-compliance. The unchallenged evidence before me is that the Company is unprofitable, and is significantly funded by Mr Antonios personally towards altruistic and socially desirable ends. It is unclear whether the Company will be able to continue its operations if larger penalties are imposed, which may ultimately result in such penalties being unsatisfied.
Having regard to what has been put before me regarding the Company and Mr Antonios’ personal circumstances, I accept that the proposed penalties, when considered in the context of the payments that have now been made to the Employee and the costs of the respondents’ legal representation, are likely to have a specific deterrent effect against future non-compliance. This is also supported by Mr Antonios’ apparent eagerness to resolve the dispute at an early stage rather than to incur the costs of fully contested proceedings. Such an approach was sensible and, to my mind, indicates that greater caution is likely to be taken by the Company and Mr Antonios in the future. This will be in the knowledge that any further contraventions are likely to result in significantly greater penalties than those that I have accepted ought to be imposed in the present case.
CONCLUSION
I will therefore make orders in accordance with those which have been proposed by the parties by consent.
I certify that the preceding forty-one (41) paragraphs are a true copy of the reasons for judgment of Judge Laing. Associate:
Dated: 24 March 2023
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