Fair Work Ombudsman v Logan City Electrical Division Pty Ltd

[2019] FCCA 996

FEDERAL CIRCUIT COURT OF AUSTRALIA

FAIR WORK OMBUDSMAN v LOGAN CITY ELECTRICAL DIVISION PTY LTD & ANOR [2019] FCCA 996

Catchwords:
INDUSTRIAL LAW – Imposition of pecuniary penalty – totality principle – proposed penalty schedules helpfully provided – penalties imposed.

Legislation:

Fair Work Act 2009 (Cth), ss.394, 405, 545, 546 547, 550, 570

Cases cited:

Kelly v Fitzpatrick [2007] FCA 1080.

Fair Work Ombudsman v Promoting You Pty Ltd [2012] FMCA 58.

Applicant: FAIR WORK OMBUDSMAN

First Respondent: LOGAN CITY ELECTRICAL SERVICE DIVISION PTY LTD

Second Respondent: PETER BURNITT

File Number: BRG 271 of 2018

Judgment of: Judge Egan

Hearing date: 9 April 2019

Date of Last Submission: 9 April 2019

Delivered at: Brisbane

Delivered on: 9 April 2019

REPRESENTATION

Counsel for the Applicant: Ms A. Coulthard

Solicitors for the Applicant: Office of the Fair Work Ombudsman

Counsel for the Respondents: Mr M. Rawlings

Solicitors for the Respondents: Simmonds Crowley & Galvin Solicitors

IT IS DECLARED THAT:

1. Logan City Electrical contravened section 405 of the Fair Work Act2009 (Cth) (‘the Act’) by contravening a term of the FWC order made on 21 July 2017.

2. Mr Burnitt was involved in, within the meaning to section 550 of the Fair Work Act, Logan City Electrical’s contravention of section 405 of the Fair Work Act.

AND IT IS ORDERED THAT:

1. Pursuant to section 546 of the Act, Logan City Electrical pay a pecuniary penalty in respect of the contraventions referred to in paragraph 1 hereof to the Consolidated Revenue Fund of the Commonwealth in the amount of $32,760.00 within 28 days of the date of these orders.

2. Pursuant to section 546 of the Fair Work Act, Mr Burnitt pay a pecuniary penalty in respect of the contraventions set out in paragraph 2 hereof to the Consolidated Revenue Fund of the Commonwealth in the amount of $6,552.00 within 28 days of the date of these orders.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT BRISBANE

BRG 271 of 2018

FAIR WORK OMBUDSMAN

Applicant

And

LOGAN CITY ELECTRICAL SERVICE DIVISION PTY LTD
PETER BURNITT

First Respondent

PETER BURNITT

Second Respondent

REASONS FOR JUDGMENT

1. In this matter, the applicant, Fair Work Ombudsman, sought relief in paragraph 19 of its statement of claim filed on 19 March 2018.  The relief sought was as follows:

   a) A declaration that Logan City Electrical contravened section 405 of the FW Act by contravening a term of the FWC Order.

   b) A declaration that Mr Burnitt was involved in, within the meaning of section 550 of the FW Act, Logan City Electrical's contravention of section 405 of the FW Act.

   c) An order pursuant to subsection 545(2) of the FW Act that Logan City Electrical and Mr Burnitt, jointly and severally, pay within 28 days of the Court's orders:

   i) $19,640.00 to Mr Antonarakis; and

   ii) $1,865.80 to Mr Antonarakis's superannuation fund.

   d) An order pursuant to subsection 547(2) of the FW Act, that Logan City Electrical

   and Mr Burnitt, jointly and severally, pay interest at the applicable pre−judgment rate on the amounts in paragraph 19(c)above.

   e) An order pursuant to section 546 of the FW Act that Logan City Electrical pay a pecuniary penalty in respect of the contraventions set out in paragraph 19(a) to the Consolidated Revenue Fund of the Commonwealth within 28 days of these orders.

   f) An order pursuant to section 546 of the FW Act that Logan City Electrical pay a pecuniary penalty in respect of the contraventions set out in paragraph 19(a) to the Consolidated Revenue Fund of the Commonwealth within 28 days of these orders.

   g) An order under section 570 of the FW Act that the First Respondent pay the Applicant's costs of these proceedings.

2. The applicant has subsequently withdrawn its application for costs as sought in paragraph 19(g) of its statement of claim.  A statement of agreed facts was signed by each of the legal representatives for the parties on 9 November 2018.  That statement of agreed facts is as follows:

   1. This Statement of Agreed Facts is made by each of the parties in the proceedings for the purposes of section 191 of the Evidence Act 1995 (Cth).

   2. The Fair Work Ombudsman (FWO) commenced these proceedings by Application and Statement of Claim on 19 March 2018 (the proceedings). In the proceedings, the FWO alleges that the First Respondent contravened s. 405 of the Fair Work Act 2009 (Cth) (FW Act) by failing to comply with an order of the Fair Work Commission made on 21 July 2017 (FWC Order) and, that the Second Respondent was involved in the contravention because he was knowingly concerned in the contravention within the meaning of s. 550 of the FW Act.

   3. The FWO has standing and authority to bring the proceedings and to seek orders under the FW Act in respect of the contraventions alleged in the proceedings.

   4 In respect of the alleged contraventions, the FWO seeks the following orders against the Respondents:

   a) a declaration that the First Respondent contravened section 405 of the FW Act by contravening a term of the FWC Order;

   b) a declaration that the Second Respondent was involved in, within the meaning of section 550 of the FW Act, the First Respondent's contravention of section 405 of FW the Act;

   c) an order pursuant to section 546 of the FW Act that the First Respondent pay a pecuniary penalty in respect of its contravention of section 405 of the FW Act, to the Consolidated Revenue Fund of the Commonwealth 28 days of these orders; and

   d) an order pursuant to section 546 of the FW Act that the Second Respondent pay a pecuniary penalty in respect of his contravention of section 405 of the FW Act, to the Consolidated Revenue Fund of the Commonwealth within 28 days of these orders.

   (the relief sought)

   5. The First Respondent consents to the relief sought in paragraph 4(a) above;

   6. The Second Respondent consents to the relief sought in paragraph 4(b) above;

   7. The First Respondent admits that it contravened section 405 of the FW Act by failing to comply with the FWC Order

   8. The Second Respondent admits that he had knowledge that the FWC Order was made.

   9. The Second Respondent admits that he was involved, within the meaning of section 550 of the Act, in the First Respondent's contravention of section 405 of the FW Act.

   THE BUSINESS OF THE FIRST RESPONDENT & THE ROLE OF THE SECOND RESPONDENT

   10. The First Respondent, Logan City Electrical Service Division Pty Ltd, operates a domestic electrical and air conditioning business (Business). It operates the Business out of premises at 30A Randall Street, Slacks Creek, Queensland, 4127 (Business Address).

   11. During the period from at least 31 January 2017 to at least 19 March 2018 (relevant period), the First Respondent received postal correspondence addressed to it at the Business Address.

   12. During the relevant period, the First Respondent sent and received emails through the email address [email protected] (Company Email). The Company Email is a general email usually used for receiving and sending quotes and for receiving and similar enquiries.

   13. The Second Respondent, Mr Peter Burnitt, was, from 13 June 2016 to 22 June 2018:

   a) the sole director and sole secretary of the First Respondent;

   b) the controlling mind of the First Respondent; and

   c) responsible for the management and day to day operation of the First Respondent.

   14. All mail received by the First Respondent at the Business Address was delivered to the Second Respondent personally each day.

   15. The Second Respondent had access to the Company Email, and, from time to time, reviewed emails sent to the Company Email or, those emails were brought to his attention.

   THE FIRST RESPONDENT'S EMPLOYMENT OF MR CHRISTOPHER ANTONARAKIS & THE UNFAIR DISMISSAL PROCEEDINGS IN THE FAIR WORK COMMISSION

   16. On or about 6 March 2012, Christopher Antonarakis commenced employment with the First Respondent as an air−conditioning mechanic.

   17. On 17 January 2017, the First Respondent terminated Mr. Antonarakis' employment.

   18. On 31 January 2017, Mr Antonarakis filed an unfair dismissal application with the Fair Work Commission (FWC) (Unfair Dismissal Application).

   19. Prior to hearing the Unfair Dismissal Application, the FWC sent a number of emails to the Company Email and letters to the Business Address including:

   a) sending a copy of the Unfair Dismissal Application to the First Respondent;

   b) informing the First Respondent about the conciliation of the Unfair Dismissal Application and directions for its conduct;

   c) sending a Notice of Listing for hearing to the First Respondent.

   20. The Unfair Dismissal Application was heard by the FWC on 20 July 2017 (the hearing). The First Respondent did not appear at the hearing.

   21. On 21 July 2017, Commissioner Simpson handed down the decision in Christopher Antonarakis v Logan City Electrical Service Division Pty Ltd [2017] FWC 3801 (FWC Decision) and made the FWC Order pursuant to section 390 of the FW Act.

   22. The FWC Order required the First Respondent to pay to Mr Antonarakis within 21 days from the date of the FWC Order:

   a) $19,640.00 gross, taxed according to law; and

   b) $1,865.80 to Mr Antonarakis's superannuation fund, being 9.5% of $19,640.00.

   23. On 21 July 2017, the FWC sent a copy of the FWC Order and the FWC Decision, addressed to both the First and Second Respondents, to the Company Email and to the Business Address.

   THE FIRST RESPONDENT DID NOT COMPLY WITH THE FWC ORDER

   24. The First Respondent did not pay any amount to Mr Antonarakis in respect of the FWC Order within 21 days of the FWC Order being made.

   25. On 4 October 2017, FWI Cunningham telephoned the Second Respondent on 0418 728 393 (Second Respondent's Mobile) and spoke to the Second Respondent, who said he could not hear FWI Cunningham properly. The telephone line then disconnected. FWI Cunningham telephoned the Second Respondent's Mobile again and left a voice message.

   26. On 6 October 2017, FWI Cunningham received a telephone call from the Second Respondent, and had a conversation with him in which she told him:

   a) about the FWC Order; and

   b) that the FWO would be issuing a Contravention Letter to the First Respondent which would outline what may happen if the First Respondent did not comply with the FWC Order.

   27. On 9 October 2017 at 3:49 pm, FWI Cunningham sent an email to the Company Email, addressed to the Second Respondent, attaching a letter headed "Findings of Contravention", the FWC Order and the FWC Decision (9 October email).

   28. Thereafter, the First Respondent continued not to comply with the FWC Order.

   THE PROCEEDINGS IN THE FEDERAL CIRCUIT COURT

   29. On 19 March 2018, the Applicant commenced the proceedings by filing an Application and Statement of Claim.

   30. On 26 March 2018, the Application and Statement of claim was posted to the First Respondent's registered address at Emirates House, Level 9, 167 Eagle Street Brisbane QLD 4000 and posted to the Business Address.

   31. On 27 March 2018, the First and Second Respondent engaged solicitors.

   32. On 18 May 2018, the First and Second Respondents filed a Response and Defence in the proceedings (Defence). In the Defence, the First Respondent alleged (inter alia) that it had a defence to the Unfair Dismissal Application and intended seeking leave to appeal the FWC Decision and FWC Order (appeal).

   33. Consequent upon correspondence between the solicitors for the Respondents and the Applicant, on 25 May 2018, the Applicant agreed to stay of the proceedings upon certain terms including confirmation of filing of the appeal and the payment of the sum of $21,505.80 to be deposited to the Respondents solicitors trust account.

   34. On 28 May 2018, the First Respondent paid $21,505.80 to their solicitors' trust account as security for the amount under the FWC Order payable to Mr Antonarakis pending the hearing of the First Respondent's appeal.

   35. On 31 May 2018, the First Respondent filed an appeal of the FWC Decision.

   36. On 11 July 2018, in Logan City Electrical Service Division Pty Ltd t/a Logan City Electrical v Christopher Antonarakis [2018] FWCFB 3815, a Full Bench of the FWC refused leave to extend the time for filing the appeal.

   37. On 11 July 2018, the Respondents solicitors advised the Applicant of the Full Bench decision and requested advices as to the arrangements the Applicant required to be made to pay moneys held in trust in the sum of $21,505.80 to Mr Antonarakis.

   38. On Friday 13 July 2018, payment details were delivered by the Applicant.

   39. On Monday 16 July 2018, the First Respondent directly paid Mr Antonarakis $13,355.20, being $19,640.00 taxed according to law.

   40. On 25 July 2018, the First Respondent paid $1,865.80 to Mr Antonarakis's superannuation fund via the quarterly Quick Super clearing house process and thereafter moneys released from trust with the authority of the Applicant.

3. The applicant relied upon an affidavit of the dismissed worker filed on 11 December 2018. That affidavit relevantly provided that the worker had his employment terminated on January 2017. It is clear that the first respondent and the second respondent did not participate in Fair Work Commission hearings which led to the making of an order pursuant to the provisions of s. 394 of the Act for the payment of money by way of compensation to the worker. The termination of the worker’s employment, though, did not prevent the worker setting up his own air-conditioning installation and refrigerator servicing business within a month of his termination.

4. He carries on that business to this day, albeit that it is asserted that he does so for only two days a week.  The circumstances in which his termination occurred were never the subject of a determination by the Fair Work Commission.  It is to be noted that the worker deposed to his having suffered some financial and emotional hardship as a result of the failure of the first respondent to pay him what was ordered to be paid pursuant to the Fair Work Commission order made on 21 July 2017. 

5. It is the case that not until early to mid-2018 did the respondents seek legal advice concerning their rights in the matter.  Though they initially exercised the right to seek leave to extend time to appeal against the order of the Fair Work Commission, that application which was subsequently dismissed.  It became apparent that the respondents, having received the benefit of legal, regularised their position. 

6. That regularising of position resulted in the first respondent paying the sum of $21,505.80 to its solicitor’s trust account on 28 May 2018 as security for the payment of the amount of the Fair Work Commission order.  After dismissal of the first respondent’s application for leave to appeal, the first respondent caused the amounts of money ordered to be paid to the worker to be paid directly to the worker in accordance with the order of the Fair Work Commission. 

7. The applicant has submitted that the worker was caused stress and financial hardship as a result of the actions of the first respondent, and that regard should be had to the effect upon the worker when the court imposed a pecuniary penalty.  It is further submitted on behalf of the applicant that the failure to comply with the Fair Work Commission order by the first respondent demonstrated a disregard for the authority of the Fair Work Commission.  The extent of the loss pointed to by the applicant was the loss of use of funds due to the worker as ordered by the Fair Work Commission. 

8. The money owed was paid about one year after it was ordered to be paid by the Fair Work Commission.  The comments of Tracy J in Kelly v Fitzpatrick in relation to the obligation on the part of all businesses, big and small, to comply with workplace relations legislation are apt, namely: [1] 

   28. No less than large corporate employers, small businesses have an obligation to meet minimum employment standards and their employees, rightly, have an expectation that this will occur. When it does it will, normally, be necessary to mark the failure by imposing an appropriate monetary sanction. Such a sanction “must be imposed at a meaning level”: see Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd [2001] ATPR 41-815 at [13].

   [1]        Kelly v Fitzpatrick [2007] FCA 1080 at [28].

9. When addressing the issue of totality, the court was encouraged to fix an appropriate penalty for each contravention, and then look at the aggregate penalty to determine whether such penalty reflected the imposition of an appropriate pecuniary penalty in the circumstances. 

10. It was submitted by the applicant that whilst the penalty imposed must not be crushing or oppressive, it must be commensurate with the seriousness of the conduct engaged in by the respondents. [2] It is clear in this case that the first respondent, by failing to have regard to important correspondence sent to it by the Fair Work Commission, and by failing to seek timely legal advice, unnecessarily delayed the payment of moneys ultimately found to be due to the dismissed worker.  So much was conceded by counsel for the first respondent.  The first respondent has paid the full amount ordered to be paid to the worker and it has co-operated in bringing the question of the imposition of a pecuniary penalty to a head.  Proper concessions were made by Mr Rawlings of counsel, as and when required, in that regard. 

    [2]        Fair Work Ombudsman v Promoting You Pty Ltd [2012] FMCA 58.

11. It is significant, in the Court’s view, that matters were regularised after the first respondent engaged legal practitioners to assist it and the second respondent in addressing the issues at hand.  It is not uncommon that unrepresented parties act in ways which disadvantage them in the absence of such provision of proper legal advice.  There is, in the Court’s view, contrition demonstrated on the part of the first and second respondent, both in relation to the payment of the moneys ordered to be paid, as well as in relation to the conduct of the proceedings by the lawyers on behalf of the first respondent and the second respondent. 

12. The Court is not of the view that any good will come of being unduly harsh in penalising the first respondent or the second respondent in circumstances such as the present.  Neither the first respondent, nor the second respondent, have been the subject of any prior conviction.  The concession that a pecuniary penalty was payable was properly made, and will serve to act as an appropriate deterrent. 

13. The parties have helpfully provided to the Court schedules, which they respectively submit ought to reflect the appropriate pecuniary penalty which should be imposed in respect of both the first respondent and the second respondent. 

14. The Court is of the view that this is an appropriate case where a penalty equating to 65% of the maximum penalty, as discounted by 20 per cent, ought to be imposed in respect of the first respondent.  As to the second respondent, it is conceded that accessorial liability attaches to the second respondent.  It is appropriate that in respect of the second respondent, the penalty to be imposed ought to be 65 per cent of the maximum penalty of $12,600, discounted by 20 per cent.

I certify that the preceding fourteen (14) paragraphs are a true copy of the reasons for judgment of Judge Egan

Date: 26 April 2019