Fair Work Ombudsman v Lobos (No 2)
[2023] FedCFamC2G 285
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Lobos (No 2) [2023] FedCFamC2G 285
File number(s): SYG 504 of 2022 Judgment of: JUDGE GIVEN Date of judgment: 20 April 2023 Catchwords: INDUSTRIAL LAW – imposition of penalty for failure to comply with notice for unpaid annual leave entitlements – lack of contrition and failure to engage in proceedings Legislation: Crimes Act 1914 (Cth) s 4AA
Fair Work Act2009 (Cth) ss 90, 546, 550, 716
Road Transport and Distribution Award 2020
Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157
Australian Building and Construction Commissioner v Pattinson (2022) 399 ALR 599
Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560
Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482
Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46
Cotis (Office of Workplace Services) v Pow Juice Pty Ltd [2007] FMCA 140
Cousins v Merringtons Pty Ltd (No 2) [2008] VSC 340
Director of Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union(No 2) (2015) 234 FCR 451
Fair Work Ombudsman v Ciotti [2022] FedCFamC2G 243
Fair Work Ombudsman v Extrados Solutions Pty Ltd [2014] FCCA 815
Fair Work Ombudsman v Hiyi Pty Ltd [2016] FCCA 1634
Fair Work Ombudsman v Jetstar Airways Ltd [2014] FCA 33
Fair Work Ombudsman v Kleen Group Pty Ltd & Anor [2016] FCCA 278
Fair Work Ombudsman v Lobos [2022] FedCFamC2G 596
Fair Work Ombudsman v NSH North Pty Ltd t/a New Shanghai Charlestown (2017) IR 148
Fair Work Ombudsman v Priority Matters Pty Ltd (No.5) [2020] FCCA 901
Fair Work Ombudsman v Soma Kitchen Pty Ltd (No 2) [2020] FCCA 2583
Fair Work Ombudsman v VS Investment Group Pty Ltd (in liq) [2013] FCCA 208
Fair Work Ombudsman v Yogurberry World Square Pty Ltd [2016] FCA 1290
Kelly v Fitzpatrick (2007) 166 IR 14
Mason v Harrington Corporation Pty Ltd t/as Pangea Restaurant & Bar [2007] FMCA 7
Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383
Division: Division 2 General Federal Law Number of paragraphs: 71 Date of hearing: 21 October 2022 Place: Sydney Solicitor for the Applicant: Ms Zhang of the Office of the Fair Work Ombudsman The Respondents: No appearance ORDERS
SYG 504 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: MARIANO EZEQUIEL LOBOS
First Respondent
JAMIE LOBOS
Second Respondent
order made by:
JUDGE GIVEN
DATE OF ORDER:
20 April 2023
THE COURT ORDERS THAT:
1.Pursuant to s 546(1) of the Fair Work Act 2009 (Cth) (Act):
(a)the first respondent pay a pecuniary penalty of $5,661 for his contravention of s 716(5) of the Act, as declared by the Court on 15 July 2022; and
(b)the second respondent pay a pecuniary penalty of $5,661 for her involvement, within the meaning of s 550(2) of the Act, in the first respondent’s contravention of s 716(5) of the Act, as declared by the Court on 15 July 2022.
2.Pursuant to s 546(3)(a) of the Act, the pecuniary penalty ordered to be paid by the respondents by order 1 above, is to be paid by each of them to the Consolidated Revenue Fund of the Commonwealth of Australia within 28 days of these orders.
3.The applicant has liberty to apply on 7 days’ notice in the event that either or both of orders 1 and 2 above is 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 GIVEN:
The applicant in these proceedings, who is the Fair Work Ombudsman (FWO), seeks imposition of pecuniary penalties pursuant to s 546(1) of the Fair Work Act2009 (Cth) (Act) on Mr Mariano Ezequiel Lobos and Ms Jamie Lobos for a contravention of s 716(5) of the Act, which relevantly provides.
Compliance notices
…
(5) A person must not fail to comply with a notice given under this section.
Note: This subsection is a civil remedy provision (see Part 4-1).
On 15 July 2022, at the conclusion of an application for default judgment, this Court delivered reasons for judgment (see Fair Work Ombudsman v Lobos [2022] FedCFamC2G 596 (default judgment)) and made orders (July Orders) and declarations that by reason of the respondents’ default:
(a)the first respondent had contravened s 716(5) of the Act by failing to comply with a compliance notice given to him on 14 September 2021 (Compliance Notice); and
(b)the second respondent was involved, within the meaning of s 550(2) of the Act, in the first respondent’s contravention, thereby contravening s 716(5) herself.
The Compliance Notice required the first respondent to calculate and pay certain minimum entitlements under s 90(2) of the Act and the Road Transport and Distribution Award 2020 (Award) to a former employee, Mr Larkin (employee).
By the July Orders (inter alia) the:
(a)proceedings were adjourned to 10.15am on 21 October 2022 before me for further hearing in respect of the applicant’s claim under to s 546(1) of the Act, for civil pecuniary penalties for the declared contraventions; and
(b)the applicant was required to serve a sealed copy of the July Orders on the respondents by close of business on 15 July 2022, by methods previously ordered by the Court to constitute substituted service in the absence of the second respondent having filed a Notice of Address for Service in the proceedings: see default judgment at [15] to [16]
At the commencement of the hearing on 21 October 2022 there was no appearance by, or on behalf of the respondents, in the Microsoft Teams forum. Out of an abundance of caution, I had my Associate call the matter outside the Court, which also yielded no appearance.
The solicitor for the applicant tendered three documents which were received into evidence, namely:
(a)an email chain between the solicitor for the applicant to the respondents spanning 8 July 2022 to 14 July, which was marked Exhibit “1A”;
(b)a letter from lawyers for the applicant to the respondents dated 15 July 2022 serving the July Orders, which was marked as Exhibit “2A”; and
(c)emails from the solicitor for the applicant to the respondents dated 15 July 2022, 9 September 2022 and 18 October 2022, which was marked Exhibit “3A”.
From an email dated 15 July 2022 (which is the last email in Exhibit “3A”) together with Exhibit “2A” (which was the attachment thereto) I am satisfied that the respondents were served with the July Orders and were therefore on notice of the penalty hearing on 21 October 2022. I am also satisfied from the content of Exhibit “2A”, that salient parts of the July Orders were highlighted to the respondents as requiring their attention, namely that any Affidavit evidence or written submissions on the issue of penalty should be filed and served three weeks before the hearing, being 30 September 2022. The respondents did not avail themselves of that opportunity and have filed no further documents in the proceedings.
From Exhibit “3A” the respondents were again reminded to the date, time and location of the penalty hearing. The solicitor for the applicant informed the Court at the hearing that no correspondence had been received from the respondents in response to any of the emails or letters which form Exhibits “2A” or “3A”.
In addition to the Exhibits referred to above, at the hearing the applicant read the Affidavit of Fair Work Inspector (FWI) Amey Jambekar, affirmed 8 September 2022 (Jambekar Affidavit).
Background
The first respondent is a sole trader operating a furniture delivery business under the registered business name “RBE Transport” (Business) in Gillieston Heights, New South Wales.
The employee was employed by the first respondent on a full-time basis between 22 December 2020 and 10 July 2021 (employment period).
On 4 August 2021, the applicant received a request for assistance from the employee, regarding unpaid annual leave entitlements. As a result of this request, in September 2021, the applicant conducted an investigation of the first respondent’s compliance with Commonwealth workplace laws regarding the employee’s employment.
Following the applicant’s investigation, FWI Jambekar gave the first respondent the Compliance Notice on 14 September 2021, having formed the reasonable belief that the first respondent had contravened s 90(2) of the Act by failing to pay accrued but untaken annual leave to the employee when his employment ended on 10 July 2021, including by failing to pay leave loading of 17.5% in accordance with cl 24.4 of the Award.
The Compliance Notice required that the first respondent calculate and rectify any underpayments to the employee by 10 November 2021, and thereafter to produce evidence to the applicant of his compliance by 17 November 2021.
The first respondent did not comply with the Compliance Notice by the required dates, or at all. As a result, the applicant commenced these proceedings on 5 April 2022. The respondents have failed to file any response or defence, or attend any hearings after the first Court date.
On 15 July 2022, the Court entered the default judgment.
Approach to penalty
The Court may impose penalties pursuant to s 546 of the Act if it is satisfied that a person has contravened a civil remedy provision (including s 716(5)).
The primary purpose of civil penalties is to promote the public interest in compliance and to attempt to impose a price on a contravention that is sufficiently high as to deter repetition by the contravener and by others who might be tempted to contravene the legislation: Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 (Commonwealth v FBII) at [55] and [110]. To achieve this end, the Court should fix a penalty that “it considers fairly and reasonably to be appropriate to protect the public interest from future contraventions of the Act”: Australian Building and Construction Commissioner v Pattinson (2022) 399 ALR 599 (Pattinson) per Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ at [71].
The fact that the Court has a broad discretion to assess the appropriate penalty, and the factors the Court may take into account when setting a penalty for a contravention of a civil remedy provision are well established see Kelly v Fitzpatrick (2007) 166 IR 14 at [30] (Kelly), Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at [23], [71] and [102]; and Mason v Harrington Corporation Pty Ltd t/as Pangea Restaurant & Bar [2007] FMCA 7, see Fair Work Ombudsman v Jetstar Airways Ltd [2014] FCA 33 at [28], Fair Work Ombudsman v NSH North Pty Ltd t/a New Shanghai Charlestown (2017) IR 148 at [36] and Commonwealth v FBII (supra) at [64].
Each penalty factor has the potential to have a contributory or mitigating impact on determining the appropriate penalty to be imposed: see Director of Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (No 2) (2015) 234 FCR 451 at [91] per Tracey J. The High Court has confirmed that the primary purpose of pecuniary penalties is to achieve deterrence, both specific and general: see FW Building Industry Inspectorate at [55]).
Pursuant to ss 546(2) and 539(2) of the Act, the maximum penalties that the Court may impose on each individual respondent for a contravention of s 716(5) of the Act is $6,660 (see [65] below).
It is appropriate for the Court to consider the maximum penalties that could be imposed on each respondent as an indication of the legislature’s view of the conduct and as part of the comparative exercise of determining where the contraventions sit: see Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 at [88] per Stone and Buchanan JJ.
The maximum penalty is a consideration but “does not constrain the exercise of the discretion under s 546…beyond requiring ‘some reasonable relationship between the theoretical maximum and the final penalty imposed’”: Pattinson at [55], citing Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25 at [155] to [156] per Jagot, Yates and Bromwich JJ. The “reasonable relationship” should be considered by reference to the need for deterrence (see Pattinson at [55]).
In determining the appropriate penalties to be imposed, it was submitted by the applicant that the factors set out below are the most relevant to the present case.
Deterrence
The High Court has confirmed that deterrence, both specific and general, is the sole (or at least) primary objective of civil penalties: see Pattinson; Commonwealth v Director, FW Building Industry Inspectorate at 506 at [55] per French CJ, Kiefel, Bell, Nettle and Gordon JJ, see also at 513 at [79] per Keane J (agreeing with the plurality). Further, as can be seen from the decision of Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157 at [116] per Keane, Nettle and Gordon JJ, the “principal object” of deterrence depends on a penalty having the necessary “sting or burden” to secure the specific and general deterrent effects that are the raison d’etre of its imposition.
General deterrence
As addressed at paragraphs [17] and [18] above, penalties are to be set at a level that would be likely to act as a deterrent to others.
General deterrence is directed at ensuring that the penalty will act as a deterrent to others who might be likely to offend. It must serve such a purpose that the penalty is not seen by employers as just “the cost of doing business”: Fair Work Ombudsman v Yogurberry World Square Pty Ltd [2016] FCA 1290 at [27] per Flick J.
The applicant’s ‘Industry Profile and FWO Interactions – Road Freight Transport’ report shows a moderate dispute rate in this industry with 627 disputes completed in the financial year ending 30 June 2022, accounting for 23 disputes per 1000 businesses in the industry, mostly concentrated in New South Wales (Jambekar Affidavit at Annexure “AJ-16”). Contraventions relating to termination and wages are of particular concern apparently accounting for 16 to 18% of all contraventions in this industry (Jambekar Affidavit at page 56). The applicant submitted that this data indicates a need for general deterrence in the road freight transport industry.
It was further submitted that there is a need to send a message to employers generally (and to the road freight transport industry more specifically) that a failure to comply with a compliance notice will not be tolerated by the applicant, the community, or the Courts.
Likewise, there is said by the applicant to be a need to send a message to individuals who are involved in the management of businesses that employ persons that, there will be a significant penalty to pay if they do not comply, or take steps necessary to ensure they comply, with provisions of the Act. As stated by Judge Jarrett (as his Honour was then) in Fair Work Ombudsman v VS Investment Group Pty Ltd (in liq) [2013] FCCA 208 at [51], the penalty for a contravention needs to be such that recipients of compliance notices should be left under no misapprehension about their obligations to comply.
I accept that the first respondent’s failure to comply with the Compliance Notice, and the second respondent’s involvement therein, negatively impacts the applicant’s ability to fulfil its statutory function by regulating the industry in question and by avoiding the costs of litigation. It was submitted by the applicant that such conduct effectively thwarts the powers given to the applicant as a regulatory authority: see Fair Work Ombudsman v Kleen Group Pty Ltd & Anor [2016] FCCA 278 at [25] per Judge Emmett. I agree.
Specific deterrence
Specific deterrence focuses on the party against whom the penalty is to be imposed and the likelihood of that party being involved in a similar breach in the future.
As at the date upon which the submissions of the first respondent were filed, being 9 September 2022, the Business was still registered to the first respondent (see Jambekar Affidavit at Annexure “AJ-15”).
It is the position of the applicant that there is a particular need to deter the instant respondents from engaging in the same contravening conduct in the future, because:
(a)the first respondent has demonstrated a disregard for his obligations under the Act. and as an employer under Commonwealth workplace laws, by failing to comply with the Compliance Notice;
(b)the respondents may continue to have responsibility for employing employees or overseeing employees’ entitlements in the future, including in circumstances where the first respondent’s failure to rectify non-compliance with the Compliance Notice has continued (Jambekar Affidavit at [26]); and
(c)it was only after proceedings commenced that the respondents made a payment of $500 towards the amount owed to Mr Larkin under the Compliance Notice, demonstrating a significant absence of any real contrition or remorse on the part of the respondents.
The applicant submitted that a penalty should be fixed at a level which specifically deters the first respondent and the second respondent from engaging in further contravening conduct. I agree.
Vulnerability of the employee
The employee was between 18 to 19 years of age during the period of his employment by the first respondent (Jambekar Affidavit at [10] and Annexure “AJ-2”).
The Court may take judicial notice of the fact that young employees are persons “who would not have been experienced in workplace matters or their rights under the law…” and who “…are potentially capable of being taken advantage of”, relative to a more experienced workforce: see Cotis (Office of Workplace Services) v Pow Juice Pty Ltd [2007] FMCA 140 at [57] per Lloyd-Jones FM (as his Honour then was).
This is said to be particularly the case for the transport industry which falls within a class of “small cottage-type industries, in which employees are isolated from their colleagues and so vulnerable to exploitation through lack of knowledge, of the importance of prompt and complete rectification of any breaches of the industrial safety net”: see Fair Work Ombudsman v Ciotti [2022] FedCFamC2G 243 at [61] per Judge Brown.
The power imbalance between the employee and the first respondent is said by the applicant to be evident in the second respondent’s response, namely, “it’s with the accountants to sort out”, when he first attempted to resolve the underpayment with her in as early as August 2021 (Jambekar Affidavit at Annexure “AJ-2”).
Overall, I do not consider that there was any specific vulnerability on the part of the employee relative to the respondents, other than that the respondents conduct towards him reflects that they do not take the contravention particularly seriously, and that they took the view that any contravention can be rectified in due course (see [49] and [50] below).
Nature, extent and circumstances of the contravening conduct
The contravention in the present case is constituted by the first respondent’s failure to comply with the requirements of the Compliance Notice and the second respondent’s involvement therein. The Compliance Notice set out the actions required of the first respondent to remedy the direct effects of the contravention identified in the Compliance Notice (see statement of claim filed by the Applicant on 5 April 2022 at [9] and Jambekar Affidavit at Annexure “AJ-4”).
The conduct of the respondents in failing to resolve the outstanding entitlements directly with the employee, or when first contacted by the applicant (a Fair Work officer first contacted the Second Respondent on 10 September 2021: see Jambekar Affidavit at Annexure “AJ-3”) demonstrates what the applicant has described as a disregard by the respondents for their obligations under the Act, which resulted in the applicant having to spend time and public resources issuing a compliance notice to the first respondent.
In correspondence which occurred between 20 September 2021 and 9 November 2021, the second respondent gave numerous indications that she would take steps to facilitate compliance with the Compliance Notice, including by agreeing to the calculations conducted by a Fair Work Officer, and confirming that the Business would make arrangements to pay the sum owed to the employee pursuant to the Compliance Notice (Jambekar Affidavit at Annexures “AJ-5” to “AJ-7” and in particular pages 22, 23, 26, and 29).
Despite raising claims of financial hardship (by her email on 18 November 2021), the second respondent did not produce any evidence of this hardship to the applicant (see Jambekar Affidavit at Annexures “AJ-9” to “AJ-10”, and in particular pages 36 to 37, and 40). The respondents failed to provide any reasonable excuse to the applicant for non-compliance and failed to provide to the applicant any calculations or evidence of full rectification before the due date of the Compliance Notice on 10 November 2021. I accept the conduct of the first respondent in failing to comply with the Compliance Notice left the applicant with no options other than to institute proceedings at the public’s expense, or abandon the matter.
Had the first respondent complied with the Compliance Notice, the applicant would have been prevented from bringing civil remedy proceedings in respect of the underlying contraventions (see s 716(4A) of the Act). As such, these proceedings are a direct result of the first respondent’s failure to comply with the Compliance Notice.
To date, there has been no satisfactory explanation from the first respondent as to why he has not rectified the underpayments.
The Jambekar Affidavit outlines the applicant’s efforts to assist the second respondent by reminding and encouraging her to take prompt action in respect of the Compliance Notice, even after the due date for compliance had passed (see Jambekar Affidavit at [18] to [24]).
Despite the information provided to the respondents (Jambekar Affidavit at Annexures “AJ-8” to “AJ-12” and in particular pages 36, 40, 43 to 44, and 46), the second respondent took no further steps to comply with, or facilitate compliance, with the Compliance Notice.
The applicant accepts that the $500 payment received the employee in early May 2022 should be characterised as partial rectification of the amount owed under the Compliance Notice. However, this only took place after proceedings were commenced, and the respondents failed to produce any evidence of the payment to the applicant when requested (see Affidavit of Minna Zhang affirmed 7 July 2022 at [12] to [17]). Further, by an email from the second respondent to Ms Zhang dated 10 July 2022 (sent in advance of the July hearing which resulted in the default judgment), the second respondent stated “I am happy to make a payment to him but I am unable to pull money from the air” (see Exhibit “1A”).
The applicant submitted that the Court may take this conduct into account as demonstrating a pattern of ignoring the applicant’s requests. I accept that characterisation but to it I would add that that there is a careless tenor to the email which gives the impression that somehow unreasonable demands were being placed on the respondents by the employee, or by the applicant. This disregard by the respondents for the substance of the contravention or their own obligations is a matter of moment and also relates to the consideration of contrition (see [57] below).
By the July Orders the first respondent was required to take the actions specified in the Compliance Notice within 28 days.
As at the date of the penalty hearing, the applicant had not received from any calculations or evidence of payment of amounts owing under the Compliance Notice. The applicant submitted that this is a factor which to be taken into account in relation to the contravention, and to penalty. I agree.
Deliberateness and contrition
I find the respondents’ conduct in this matter to be intentional.
By the email to an officer of the applicant on 18 November 2021 the second respondent stated that the Business did not have the money to pay the employee (see Jambekar Affidavit at [19] and at Annexure “AJ-2” at page 12).
The respondents were aware of the obligation to pay the employee but did not do so.
The second respondent had clear knowledge of the Compliance Notice, and the first respondent’s obligations under it (Jambekar Affidavit at Annexures “AJ-6” and “AJ-7” at 26 and 29), and there is no doubt that her failure to cause compliance with the Compliance Notice is deliberate.
The respondents having failed almost entirely to engage with these proceedings. There has been no material advanced at any time to indicate that either respondent has remorse in respect of the contraventions. The somewhat flippant nature of the email referred to at [49] to [50] above is a small glimpse into the mindset of (at least the second of) the respondents. The deliberateness and lack of contrition is a matter which is of considerable weight in the present case.
Size and financial resources of the business
It is well established that the obligation to comply with the Act applies to small corporations, small businesses, and individuals just as it does to large employers or businesses (Fair Work Ombudsman v Extrados Solutions Pty Ltd [2014] FCCA 815 at [10]).
While size and financial circumstances of a respondent’s business “does not exculpate conduct by employers contravening the Act”, the applicant accepted that it may be a relevant consideration in determining the appropriate penalty where appropriate evidence is put forward (see Fair Work Ombudsman v Hiyi Pty Ltd [2016] FCCA 1634 at [47]). However, in this matter, there is no evidence before the Court regarding either the first respondent or second respondent’s financial circumstances. As noted above, the respondents have had a proper opportunity to place any mitigating material before the Court, and have elected not to avail themselves of it.
The applicant says that little weight should be given to the fact that the business in this case is not sizeable, because the authorities make clear that a respondent’s financial circumstances and resultant capacity to pay any penalty imposed should be given limited weight. That is because the primary consideration is the setting of a penalty which will provide effective deterrence: see Fair Work Ombudsman v Priority Matters Pty Ltd (No.5) [2020] FCCA 901 at [114] per Judge Driver and the authorities cited therein.
In the present case, I am not persuaded that there is anything specifically arising from the size and/or financial resources of the business or the respondents personally which would weigh in their favour when assessing penalty.
Nature and extent of loss
The employee was been denied an entitlement of approximately $2,216.64 because of the first respondent’s failure to comply with the Compliance Notice. Mr Larkin remains without $1,716.64 of his entitlement.
Further, the conduct of the first respondent has occasioned a public loss. As the Court explained in Fair Work Ombudsman v Soma Kitchen Pty Ltd (No 2) [2020] FCCA 2583 at [39] per Judge Kendall:
[T]he 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 promotes alternative resolution methods in order to reduce unnecessary expenditure. Here, that purpose has been systematically undermined.
The applicant, as the workplace regulator, has been required by the circumstances of this case to spend time and public funds bringing, and pursuing, these proceedings to enforce the Compliance Notice, and has used Court time and further public funds, which would not have been required had the action required by the Compliance Notice been taken. That is moreso when the defaults of the respondents in the proceedings (see default judgment) led to the applicant first needing to attend to multiple hearing events and eventually file an application in a proceeding seeking default judgment, before proceeding to a separate hearing on penalty.
Recommendation as to penalty amount
The applicant submitted that, in the all the circumstances of this case and given the nature of the contravention, the factual basis which informed the Compliance Notice being issued, and the absence of contrition and corrective action on behalf of the first respondent, penalties fixed at 70% of the maximum would be appropriate.
Pursuant to s 4AA of the Crimes Act 1914 (Cth), a single penalty unit as at the date of the contraventions (and currently) has a value of $222 per unit. The maximum penalty for an individual is 60 penalty units. The maximum penalty for a body corporate, which I accept the respondents are not, is five times the maximum set out (see s 546(2)(b) of the Act).
Accordingly, the maximum penalty which can be ordered in respect of the respondents is 60 penalty units, being a maximum total of $13,320 for each contravention.
The applicant contends that on the basis of a reduction to 70% of maximum penalty gives rise to a total of $9,324, being $4,662 in respect of each respondent.
I disagree with the discount which has been advanced by the applicant. In the present case, having regard to the principles of deterrence but also the deliberateness, lack of full corrective action and lack of contrition warrant penalty being set higher than 70%. In my view, even accepting that the respondents are individuals, the appropriate penalty is 85% of the maximum, being $11,322, resulting in $5,661 imposed against each respondent.
Appling to the “totality principle” I am satisfied that no further reduction is warranted in the present case. I am satisfied that the penalty above strikes a reasonable balance between deterrence and oppressive severity (Pattinson at [41]), particularly where there is no evidence to suggest the penalty sought would be either crushing or oppressive, despite the respondents having had ample opportunity to furnish that and speak to all other relevant factors: see Kelly at [30]; Cousins v Merringtons Pty Ltd (No 2) [2008] VSC 340 at [23] per Gray J, [71] per Graham J, [102] per Buchanan J; FWO v Promoting U Pty Ltd & Anor [2012] FMCA 58.
Lastly, the applicant seeks the order that the pecuniary penalty be paid to the Commonwealth pursuant to s 546(3)(a) of the Act. In the present case I consider that to be the appropriate course and will order that the penalty be paid within 28 days.
I certify that the preceding seventy-one (71) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Given. Associate:
Dated: 20 April 2023
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