Fair Work Ombudsman v Lovely Care Pty Ltd (No.2)
[2020] FCCA 257
•13 February 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v LOVELY CARE PTY LTD (No.2) & ANOR | [2020] FCCA 257 |
| Catchwords: INDUSTRIAL LAW – Breaches of civil remedy provisions of the Workplace Relations Act 1996, the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 and the Fair Work Act 2009 – imposition of pecuniary penalties – relevant considerations – course of conduct principle – grouping principle. |
| Legislation: Workplace Relations Act 1996, ss.182, 185, 719, 728 Fair Work (Transitional Provisions and Consequential Amendments) Act 2009, item 5 and item 16 of sch.16 Fair Work Act 2009, ss.45, 539, 546, 550, 556, 557 Crimes Act 1914, s.4AA |
| Cases cited: Fair Work Ombudsman v Lovely Care Pty Ltd & Anor [2019] FCCA 25 Gibbs v Mayor, Councillors and Citizens of City of Altona (1992) 37 FCR 216 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | LOVELY CARE PTY LTD |
| Second Respondent: | ELIZABETH BONILLA |
| File Number: | SYG 2407 of 2013 |
| Judgment of: | Judge Cameron |
| Hearing date: | 13 August 2019 |
| Date of Last Submission: | 13 August 2019 |
| Delivered at: | Sydney |
| Delivered on: | 13 February 2020 |
REPRESENTATION
| Solicitors for the Applicant: | Mr M. Vincent, Office of the Fair Work Ombudsman |
| Counsel for the Respondents: | Mr J. Pearce |
| Solicitors for the Respondents: | Williamson Barwick |
DECLARATIONS
The first respondent contravened the following provisions of the Workplace Relations Act 1996 (“WR Act”), the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (“FW (TPCA) Act”) and the Fair Work Act 2009 (“FW Act”):
(a)subsection 182(1) of the WR Act by failing to pay Mrs Yan Wang the guaranteed rate of pay under the Australian Pay and Classification Scale (“SACS Pay Scale”) derived from the Social and Community Services Employees (State) Award for every hour worked during the period 8 October 2007 to 30 June 2009;
(b)section 185(2) of the WR Act by failing to pay Mrs Wang the guaranteed casual loading contained in the SACS Pay Scale for every hour worked during the period 8 October 2007 to 30 June 2009;
(c)item 5 of schedule 16 of the FW (TPCA) Act by failing to pay Mrs Wang and Dr Naim Samaan (“Employees”) the guaranteed rate of pay under the SACS Pay Scale for every hour worked during the period 1 July 2009 to 31 December 2009 (by continuation of section 182(1) of the WR Act);
(d)item 5 of schedule 16 of the FW (TPCA) Act by failing to pay the Employees the guaranteed casual loading contained in the SACS Pay Scale for every hour worked during the period 1 July 2009 to 31 December 2009;
(e)section 45 of the FW Act by failing to pay the minimum hourly rate of pay to the Employees in accordance with clause A.2.3 of the Social, Community, Home Care and Disability Services Industry Award 2010 (“Modern Award”) during the period 1 January 2010 to 19 July 2011;
(f)section 45 of the FW Act by failing to pay the minimum casual loading to the Employees in accordance with clause A.5.2 of the Modern Award during the period 1 January 2010 to 19 July 2011; and
(g)section 45 of the FW Act by failing to pay a sleepover allowance to the Employees in accordance with clause 25.7 of the Modern Award during the period 1 January 2010 to 19 July 2011
ORDERS
The first respondent pay penalties totalling $36,000.
The second respondent pay penalties totalling $5,580.
The penalties be paid to the Commonwealth within twenty-eight days.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 2407 of 2013
| FAIR WORK OMBUDSMAN |
Applicant
And
| LOVELY CARE PTY LTD |
First Respondent
| ELIZABETH BONILLA |
Second Respondent
REASONS FOR JUDGMENT
INTRODUCTION
The first respondent (“Lovely Care”) ran Elizabeth Cottage, a centre which provided emergency and respite care accommodation as well as personal care and supervisions of persons with a disability. The second respondent (“Ms Bonilla”) was, during the relevant period, the director, secretary and shareholder of Lovely Care.
On 8 October 2013, the Fair Work Ombudsman (“Ombudsman”) commenced this proceeding, alleging that Lovely Care had, by failing to pay two employees minimum rates of pay, casual loading and sleepover entitlements under the Australian Pay and Classification Scale derived from the Social and Community Services Employees (State) Award (“SACS Pay Scale”) and/or the Social, Community, Home Care and Disability Services Industry Award 2010 (“Modern Award”) variously contravened the Workplace Relations Act 1996 (“WR Act”), the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (“FW (TPCA) Act”) and the Fair Work Act 2009 (“FW Act”). The Ombudsman also alleged that Ms Bonilla had been involved in these contraventions.
By way of a statement of agreed facts (“SOAF”) and a further statement of agreed facts (“FSOAF”) filed by the parties on, respectively, 9 October 2015 and 16 November 2015 Lovely Care admitted that it had contravened the following provision of the WR Act, the FW (TPCA) Act and the FW Act:
(a)subsection 182(1) of the WR Act by failing to pay Mrs Wang the guaranteed rate of pay under the SACS Pay Scale for every hour worked during the period 8 October 2007 to 30 June 2009;
(b)section 185(2) of the WR Act by failing to pay Mrs Wang the guaranteed casual loading contained in the SACS Pay Scale for every hour worked during the period 8 October 2007 to 30 June 2009;
(c)item 5 of Schedule 16 of the Transitional Act by failing to pay Mrs Wang and Dr Samaan the guaranteed rate of pay under the SACS Pay Scale for every hour worked during the period 1 July 2009 to 31 December 2009 (by continuation of section 182(1) of the WR Act);
(d)item 5 of Schedule 16 of the Transitional Act by failing to pay the Employees the guaranteed casual loading contained in the SACS Pay Scale for every hour worked during the period 1 July 2009 to 31 December 2009 (by continuation of section 185(2) of the WR Act);
(e)section 45 of the FW Act by failing to pay the minimum hourly rate of pay [to] the Employees in accordance with clause [A.2.3] of [the] Modern Award during the period 1 January 2010 to 19 July 2011;
(f)section 45 of the FW Act by failing to pay the minimum casual loading to the Employees in accordance with clause [A.5.2] of the Modern Award during the period 1 January 2010 to 19 July 2011;and
(g)section 45 of the FW Act by failing to pay the sleepover allowance to the Employees in accordance with clause 25.7 of the Modern Award during the period 1 January 2010 to 19 July 2011.
Lovely Care was required to make compensatory payments totalling $84,450.87 to the relevant employees, Mrs Yan Wang and Dr Naim Samaan, by way of orders dated 12 November 2015.
The extent to which Ms Bonilla had been involved in the contraventions was in issue at trial. In Fair Work Ombudsman v Lovely Care Pty Ltd & Anor [2019] FCCA 25, (“First Judgment”) the Court declared that Ms Bonilla had been involved in the following contraventions:
(a)s.182(1) of the WR Act by failing to pay Yan Wang the guaranteed rate of pay under the Australian Pay and Classification Scale derived from the Social and Community Services Employees (State) Award (“SACS Pay Scale”) for every hour worked during the period 8 October 2007 to 30 June 2009;
(b)s.185(2) of the WR Act by failing to pay Yan Wang the guaranteed casual loading contained in the SACS Pay Scale for every hour worked during the period 8 October 2007 to 30 June 2009;
(c)item 5 of sch.16 to the FW (TPCA) Act by failing to pay Yan Wang and Naim Samaan the guaranteed rate of pay under the SACS Pay Scale for every hour worked during the period 1 July 2009 to 31 December 2009; and
(d)item 5 of sch.16 to the FW (TPCA) Act by failing to pay Yan Wang and Naim Samaan the guaranteed casual loading contained in the SACS Pay Scale for every hour worked during the period 1 July 2009 to 31 December 2009.
These reasons concern the penalties to be imposed on Lovely Care and Ms Bonilla for their respective contraventions. As no declarations were made at the time of the First Judgment concerning Lovely Care’s contraventions, it is appropriate to include such declarations in these reasons as sought by the Ombudsman.
FACTS AND FINDINGS
Lovely Care
In respect of Lovely Care, a comprehensive summary of the agreed facts can be found at paragraphs [8] to [25] of the First Judgment and therefore do not need to be reproduced in full. The facts relevant to the these reasons can be summarised as follows:
a)Lovely Care was the sole employer of Mrs Wang during the period of 24 June 2006 to 15 July 2011 and of Dr Samaan during the period 3 August 2009 to 19 July 2011. Mrs Wang and Dr Samaan were employed as “Disability Support Workers” on a casual basis.
b)Ms Bonilla was the “controlling mind”, director, secretary and a shareholder of Lovely Care and consequently had ultimate responsibility for Mrs Wang and Dr Samaan’s employment conditions and pay rates.
c)during the relevant period the following legislation and industrial instruments applied to Mrs Wang and Dr Samaan’s employment:
i)the WR Act applied to Mrs Wang’s employment prior to 1 July 2009;
ii)between 1 July 2009 to 31 December 2009 the FW (TPCA) Act applied to both employees; and
iii)on and from 1 January 2010 the FW Act applied to both employees.
d)Mrs Wang and Dr Samaan each typically worked a minimum 15-hour shift between 6am to 9pm. Throughout their employment they were not paid casual loading and were paid less than the minimum wage.
e)five to six days per week, Mrs Wang and Dr Samaan stayed overnight, sometimes attending to clients during the night, and then worked a minimum 15-hour overnight shift from 6am to 9pm. Occasionally they worked additional hourly shifts. Throughout their employment they were paid less than the minimum wage and were not paid casual loading entitlements. From 1 January 2010 neither was paid a sleepover allowance.
f)Lovely Care failed to pay Mrs Wang her minimum rates of pay and casual loading entitlements amounting to underpayments of $42,658.88. From 1 January 2010 Lovely Care had, on 311 occasions, failed to pay her a sleepover allowance amounting to $11,456.33 in underpayments.
g)Lovely Care failed to pay Dr Samaan his minimum rates of pay and casual loading entitlements amounting to underpayments of $19,298.52. From 1 January 2010 Lovely Care had, on 300 occasions failed to pay Dr Samaan a sleepover allowance amounting to $11,037.14 in underpayments.
Ms Bonilla
In the First Judgment it was found that Ms Bonilla had been involved in Lovely Care’s contraventions of the SACS Pay Scale but not of the Modern Award. It was found that she had had knowledge of the essential facts and had been an intentional participant in the contraventions because:
a)she had knowledge of the 24-hour shifts because they were recorded in the “calendars”, which Ms Bonilla had compiled;
b)Ms Bonilla had admitted during an interview with Fair Work Inspector Rajagopalan (“FWI Rajagopalan”) that she had been aware that employees were undertaking 24-hour shifts at Elizabeth Cottage since late 2006 or 2007;
c)even if Ms Bonilla had not personally undertaken payroll duties, she had known employees’ hours and pay rates at some point in time during each of the statutory regimes and therefore “at the material times knew the essential facts which constituted the contraventions”; and
d)because Ms Bonilla was the person ultimately responsible for Lovely Care’s payment of employees she was an “intentional participant in the contraventions”.
Additionally, Ms Bonilla had known that the SACS Pay Scale applied to Mrs Wang and Dr Samaan’s employment.Ms Bonilla knew that Mrs Wang and Dr Samaan were to be paid minimum rates of pay and were to be paid in accordance with the SACS Award and that this constituted sufficient knowledge of the relevant industrial instrument to amount to intentional participation in Lovely Care’s contraventions.
The evidence did not support a finding that Ms Bonilla had been aware of the existence of the Modern Award and she was therefore not an accessory to Lovely Care’s contravention of the FW Act.
APPLICANT’S EVIDENCE
Jason Lam
Mr Lam is a Fair Work Inspector. In his affidavit affirmed 29 March 2019 he deposed to matters relating to the Ombudsman’s investigation of Lovely Care:
a)the Ombudsman commenced an investigation of Lovely Care after she received two workplace complaints from Mrs Wang and Dr Samaan on 18 January 2012;
b)on 20 April 2012 FWI Rajagopalan issued two Notices to Produce (“NTPs”) to Lovely Care;
c)on 13 May 2012 Ms Taylor, the operations manager of Lovely Care, provided documents in partial compliance with the two NTPs. There was subsequent correspondence between FWI Rajagopalan and Ms Taylor and Ms Bonilla between 22 May 2012 and 27 June 2012 in relation documents not supplied in answer to the two NTPs and in seeking various submissions and responses from Ms Bonilla in relation to issues that arose during the investigation;
d)on 1 August 2012 further documentation was requested by FWI Rajagopalan which was provided by Lovely Care’s tax agent on 21 August 2012. Two further NTPs were issued on 29 October 2019 following a meeting attended by FWI Rajagopalan and Ms Bonilla;
e)on 16 May 2013 Ms Bonilla attended an interview with FWI Rajagopalan;
f)by way of a Determination of Contravention Letter dated 6 June 2013, FWI Rajagopalan notified Ms Bonilla that by underpaying Mrs Wang and Dr Samaan she had contravened the WR Act, the FW (TPCA) Act and the FW Act; and
g)on 13 September 2013 Ms Bonilla’s then-legal representative notified FWI Rajagopalan of her intention to review the Determination of Contravention finding. A review was filed with the Ombudsman’s review team on 23 September 2013.
RESPONDENT’S EVIDENCE
Ms Bonilla
Ms Bonilla is the director of Lovely Care. She deposed that she had read and accepted the findings made in the First Judgment in respect of her involvement in Lovely Care’s contraventions of the WR Act and the FW (TPCA) Act.
Ms Bonilla said that Lovely Care was the trading name but that most of the employees had been employed by Lovely Care’n Respite Pty Ltd.
Ms Bonilla deposed that Lovely Care had admitted the contraventions prior to the hearing and had paid the full sum owing in respect of the underpayments, including interest, to Mrs Wang and Dr Samaan.
Ms Bonilla deposed that Lovely Care had not been trading and had not employed any staff since March 2015 and that Elizabeth Cottage had transitioned clients into a home managed by Aging, Disbility and Home Care. She deposed she was going to deregister the company after these penalty proceedings were finalised.
Ms Bonilla deposed that Lovely Care had employed six employees in 2015 but that from 2015 there were no employees employed. Lovely Care’s annual turnover in 2015 was $365,116.38 (including GST) and was $612,162.11 (including GST) in 2016.
Ms Bonilla deposed that:
I have learnt a great deal from these proceedings and in future will be more careful and attentive to compliance with modern awards and the Fair Work Act when being involved in employing staff.
Character references
The affidavit of Adrian Barwick sworn 1 March 2019 annexed a number of character references in respect of Ms Bonilla. These references attested to her being an “honest businesswoman” and that the underpayment would have been unintentional.
RELEVANT LEGISLATION:
Prior to 1 July 2009, s.719 WR Act provided that a breach of an “applicable provision” might result in the imposition of a penalty by a Court. It relevantly provided that:
719Imposition and recovery of penalties
(1)An eligible court may impose a penalty in accordance with this Division on a person if:
(a)the person is bound by an applicable provision; and
(b)the person breaches the provision.
…
(4)The maximum penalty that may be imposed under subsection (1) for a breach of an applicable provision is:
(a)60 penalty units for an individual; or
(b)300 penalty units for a body corporate.
…
Section 546(1) of the FW Act applies to contraventions of s.45 of the FW Act and item 5 of sch.16 to the FW (TPCA) Act: s. 539(2) of the FW Act, item 16 of sch.16 of the FW (TPCA) Act. It provides as follows:
546 Pecuniary penalty orders
(1)The Federal Court, the Federal Magistrates Court or an eligible State or Territory 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.
…
At all relevant times:
a)the maximum pecuniary penalty for a breach of s.45 of the FW Act and item 5 of sch.16 of the FW (TPCA) Act was 60 penalty units for an individual and 300 penalty units for a corporation: s.539(2), s.546(2)(b) of the FW Act and item 16 of sch.16 to the FW (TPCA) Act; and
b)a penalty unit was worth $110: s.4AA of the Crimes Act 1914.
CONSIDERATION
The question of penalty is to be determined as follows:
a)the Court is to identify the separate contraventions involved. Each contravention of a separate obligation in:
i)the SACS Pay Scale and the WR Act or the FW (TPCA) Act; and
ii)the Modern Award and the FW Act;
is a separate contravention: Gibbs v Mayor, Councillors and Citizens of City of Altona (1992) 37 FCR 216 at 223; Kelly v Fitzpatrick (2007) 166 IR 14 at 17 [11]; McIver v Healey [2008] FCA 425 at [16]; Rocky Holdings Pty Ltd v Fair Work Ombudsman (2014) 221 FCR 153 at 159 [13]; Fair Work Ombudsman v Lohr [2018] FCA 5 at [29].
b)the Court should consider whether contraventions resulting from any particular course of conduct ought to be treated as a single contravention under s.719(2) of the WR Act, item 16(1)(a) and (f) of sch.16 to the FW (TPCA) Act and s.557(1) of the FW Act or any of them (“course of conduct”);
c)because a contravener should not be penalised twice for what is, in substance, the same conduct, to the extent that two or more contraventions arise out of the same course of conduct or the one transaction, that fact should be taken into account when considering whether a “concurrent” or single penalty should apply to those contraventions: Johnson v The Queen (2004) 78 ALJR 616 at [4]-[5]; Fair Work Ombudsman v Lifestyle SA Pty Ltd [2014] FCA 1151 at [61] - [63]. Australian Competition and Consumer Commission v Yazaki Corporation (2018) 262 FCR 243 at 294-296 [226]-[234], (the “course of conduct” principle). These considerations are distinct from the totality principle: Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 at 396 – 398 [41]-[46] (per Stone and Buchanan JJ);
d)to the extent that particular conduct may attract penalties under two or more Federal statutory provisions, the Court should have regard to the operation of s.556 of the FW Act which protects parties from civil double jeopardy: see Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner [2019] FCAFC 201. The parties did not contend that s.556 was engaged in this case;
e)the Court should determine an appropriate penalty to impose in respect of each contravention that is to be penalised (whether a single contravention, a course of conduct or group of contraventions) having regard to all of the circumstances of the case; and
f)having fixed an appropriate penalty for each contravention or group of contraventions, the Court should consider the aggregate penalty to determine whether it is an appropriate response to the contravening conduct: Kelly v Fitzpatrick at 21 - 22 [30]; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560, (the “totality principle”).
As Tracey J said in Kelly v Fitzpatrick at 18-19 [14], in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 Mowbray FM identified “a non-exhaustive range of considerations to which regard may be had in determining whether particular conduct calls for the imposition of a penalty, and if it does the amount of the penalty”. Justice Tracey adopted those considerations, describing them as follows:
· The nature and extent of the conduct which led to the breaches.
· The circumstances in which that conduct took place.
· The nature and extent of any loss or damage sustained as a result of the breaches.
· Whether there had been similar previous conduct by the respondent.
· Whether the breaches were properly distinct or arose out of the one course of conduct.
· The size of the business enterprise involved.
· Whether or not the breaches were deliberate.
· Whether senior management was involved in the breaches.
· Whether the party committing the breach had exhibited contrition.
· Whether the party committing the breach had taken corrective action.
· Whether the party committing the breach had cooperated with the enforcement authorities.
· The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements and
· The need for specific and general deterrence.
Considerations relevant to this case are:
a)the nature and extent of the conduct which led to the breaches and the circumstances in which the conduct took place;
b)whether the breaches were properly distinct or arose out of the one course of conduct;
c)whether any of the contraventions should be grouped together;
d)the nature and extent of any loss or damage sustained as a result of the breaches;
e)whether the breaches were deliberate;
f)the size of the business enterprise involved;
g)contrition, corrective action and co-operation with the enforcement authorities;
h)compliance with minimum standards; and
i)the need for specific and general deterrence.
Nature and extent of the conduct which led to the breaches and the circumstances in which the conduct took place
The nature and extent of the contravening conduct, which involved payment for ordinary hours worked being at rates less than those prescribed, the failure to pay casual loadings and the failure to pay a sleepover allowance, and the circumstances in which it took place were set out in the First Judgment. The underpayments arose out of the respondents’ practice of paying Mrs Wang and Dr Samaan a flat daily rate without regard to the fact that they generally worked 15 hours per day and often stayed at the Lovely Care premises overnight. This practice meant that Lovely Care did not pay them the wages and allowances entitlements prescribed by the instruments referred to in the First Judgment.
I have regard to Ms Bonilla’s evidence at the contravention hearing in which she made it clear that Mrs Wang and Dr Samaan were paid for the hours they were perceived to be required to perform “hand-on” work rather than the hours that they in fact worked, which were agreed in the FSOAF.
Relevant to the underpayments is the fact that Mrs Wang and Dr Samaan were recent arrivals to Australia whom, it can reasonably be inferred, were unfamiliar with their rights under Australian industrial laws and instruments and so at a disadvantage in the labour market and in the workplace. That being so, the respondents should have paid greater attention to ensuring that Mrs Wang and Dr Samaan were paid correctly.
Were the breaches were properly distinct or arose out of the one course of conduct?
The Ombudsman conceded that the respondents were entitled to the benefit of the course of conduct provisions of the WR Act and the FW Act such that:
a)multiple contraventions of a given provision of the SACS Pay Scale prior to 1 July 2009 were to be treated as one course of conduct under the WR Act;
b)multiple contraventions of a given provision of the SACS Pay Scale between 1 July 2009 and 31 December 2009 were to be treated as one course of conduct under the FW (TPCA) Act; and
c)multiple contraventions of a given provision of the Modern Award were to be treated as one course of conduct under the FW Act.
The Ombudsman submitted that that the matter was to be determined on the basis that there had been seven contraventions by Lovely Care and four contraventions by Ms Bonilla. The respondents agreed. Those contraventions are set out above at [3] and [5].
Should any of the contraventions be grouped together
The Ombudsman further submitted that it was open to the Court to consider whether the contraventions should be further grouped together on the basis that to treat the same offending conduct occurring over more than one statutory regime as more than one contravention would involve the respondents being penalised more than once for the same conduct. The Ombudsman put it as follows:
15.…
(a)the seven contraventions that Lovely Care committed fall into three groups, those groups being the failure to pay the applicable minimum rate of pay (three contraventions), casual loading (three contraventions) and sleepover allowance (one contravention) to the Employees during their respective periods of employment; and
(b)the four contraventions Ms Bonilla committed (by way of accessorial liability under s.728(1) of the WR Act and s.550 of the FW Act) fall into two groups, those groups being the failure to pay the applicable minimum rate of pay (two contraventions) and failure to pay casual loading (two contraventions) to the Employees during their respective periods of employment until 31 December 2009. (emphasis in original)
The fact that the respondents’ conduct spanned three legislative regimes was a matter of chance and reflected no more than the fact that the particular courses of conduct were of some duration. If they had all occurred under one statutory regime each particular sort of conduct would properly have been considered to be one course of conduct and penalised as such. Consequently, such contraventions as occurred under more than one legislative regime should be grouped together as one contravention so that the respondents are not penalised more than once for the same conduct. As each set of grouped contraventions only formed part of a single incursion into contravening conduct: Mornington Inn v Jordan at 397 [41], it is appropriate as well as convenient to impose one aggregate penalty for each group of contraventions.
In such circumstances it would also be appropriate, when setting the penalties to be imposed in this matter, to have regard to the value of a penalty unit at the end of the period of contravention in respect of which this proceeding was brought: Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557 per Katzmann J at [396]–[401]. In this case, however, the value of a penalty unit was $110, throughout the period of contravention.
Nature and extent of any loss or damage sustained as a result of the breaches
The loss and damage in issue in this case are the underpayments quantified earlier in these reasons. They were a significant proportion of what should have been paid to Mrs Wang and Dr Samaan. The respondents’ submission that the “employees suffered ultimately no financial loss” misses the point. Mrs Wang and Dr Samaan should not have suffered loss at any point as a result of the respondents’ mismanagement of their wage payments.
The evidence suggested that Mrs Wang and Dr Samaan’s work hours and conditions caused them psychological injuries or problems. However, these contentions were not put to the test in this proceeding and so I have placed little weight on them.
Were the breaches deliberate?
All the relevant actions were intentional and not accidental. Further, for the reasons given in the First Judgment at [123] – [124] I find that Ms Bonilla’s conduct was deliberate. As she was the controlling mind of Lovely Care, as agreed by the parties and recorded in the First Judgment at [9], I find that the relevant conduct was deliberate on the part of Lovely Care too.
The size of the business enterprise involved
It was expressly not submitted that Lovely Care lacked “capacity to pay”. Nor was it suggested that the decision to pay wages of a fixed, flat amount was the product of an incapacity to ascertain what Lovely Care’s obligations to Mrs Wang and Dr Samaan were.
Contrition, corrective action and co-operation with the enforcement authorities
In ACE Insurance Ltd v Trifunovski (No 2) (2012) 215 IR 206 Perram J said, in comments which were not in issue on the subsequent appeal:
It is not clear to me how an artificial construct such as a corporation can experience the complex human emotion of contrition made up, as it is, of an amalgam of distinctly human emotions such as regret, shame and sympathy. I do not doubt that a corporation may exhibit signs of regret but it is too much to expect that such an artificial construct can be meaningfully contrite.
For civil penalty cases involving corporations it would be more coherent to ask only whether the corporation has changed its behaviour. Nothing more can be expected; a person who does not literally or physically exist may not wear sackcloth. (at 228-229 [113]-[114])
However, it should also be recorded that in Fair Work Ombudsman v Jetstar AirwaysLtd [2014] FCA 33 at [36]-[37], Buchanan J approached the issue differently, concluding that the absence of expressions of contrition by corporate respondents meant that no occasion arose to consider, on the basis of such expressions, any discounting of a penalty that was otherwise appropriate.
In this case, the underpayments were made good but that step occurred less than a week before the contraventions hearing that led to the First Judgment. It was also only at that late stage that the respondents conceded the Ombudsman’s principal allegations against Lovely Care. However, no apology or expression of contrition was made by either of the respondents although Ms Bonilla did state in her affidavit of 4 March 2019 that she would be more careful in the future.
Discounts for co-operation are not allowed simply because enforcement proceedings have been made less complicated and less expensive by appropriate concessions. 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: Mornington Inn Pty Ltd v Jordan at 405 [76] per Stone and Buchanan JJ; Cameron v R (2002) 209 CLR 339 at 343 [11] – [14] per Gaudron, Gummow and Callinan JJ. As far as the litigation is concerned, I am not persuaded that either of the respondents has done more than accept the reality that they contravened the Acts and instruments as found in the First Judgment and in these reasons. They have saved the community the expense of a contested hearing in relation to Lovely Care but that is all. No discount of the penalties to be imposed will be allowed in connection with the belated payments and admissions.
Even so, the evidence indicates that the respondents provided significant co-operation to the Ombudsman in the course of her investigation. They supplied significant documentation to the Ombudsman as well as participating in meetings and affording an interview with Ms Bonilla. This co-operation should be recognized. In that connection a discount on penalty of 10% will be allowed in respect of each respondent.
Compliance with minimum standards
An object of industrial legislation is to provide a safety net of minimum terms and conditions of employment. Another is to provide a level playing field for employers in relation to employment costs. The respondents’ conduct in issue in this case undermined the attainment of those objectives in the circumstances under consideration.
The need for specific and general deterrence
In her affidavit of 4 March 2019 Ms Bonilla deposed that Lovely Care has ceased operations and existed solely to await this judgment. In those circumstances, it is not necessary to include an amount for specific deterrence in the penalties to be imposed on that company. However, an inference to be drawn from Ms Bonilla’s affidavit is that she continues to employ staff. An amount for specific deterrence should therefore be included in the penalties to be imposed on her to discourage her from contravening the FW Act and modern awards in the future.
In order to discourage others from repeating the conduct the subject of this proceeding the penalties to be awarded should include an element for general deterrence. Pecuniary penalties for conduct such as that seen in this case should not be seen as the price of doing business and should be set at a level which makes the risk of their imposition disconcerting and discouraging.
PENALTIES
In determining the penalties to be imposed I have had regard to the principle of proportionality, the purposes of sentencing and the task of instinctive synthesis of various factors into a single result which were discussed by Barker J in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) (2010) 199 IR 373 at 376 [4]-[7]. I consider the appropriate penalties to be:
LOVELY CARE
Contravention
Nature of contravention (number of employees affected)
Gross Penalty
Penalty after 10% discount
Section 182(1) of the WR Act - failure to comply with the SACS Pay Scale
Failure to pay minimum rate of pay (1 employee)
$20,000
$18,000
Item 5 of sch.16 to the FW (TPCA) Act - failure to comply with the SACS Pay Scale
Failure to pay minimum rate of pay (2 employees)
Section 45 of the FW Act - contravention of clause A.2.3 of the Modern Award
Failure to pay minimum rate of pay (2 employees)
Section 185(2) of the WR Act - failure to comply with the SACS Pay Scale
Failure to pay guaranteed casual loading (1 employee)
$10,000
$9,000
Item 5 of sch.16 to the FW (TPCA) Act - failure to comply with the SACS Pay Scale
Failure to pay guaranteed casual loading (2 employees)
Section 45 of the FW Act - contravention of clause A.5.2 of the Modern Award
Failure to pay casual loading (2 employees)
Section 45 of the FW Act - contravention of clause 25.7 of the Modern Award
Failure to pay sleepover allowance (2 employees)
$10,000
$9,000
TOTAL
$40,000
$36,000
ELIZABETH BONILLA
Contravention
Nature of contravention (number of employees affected)
Gross Penalty
Net Penalty after 10% discount
Section 182(1) of the WR Act - failure to comply with the SACS Pay Scale
Failure to pay minimum rate of pay (1 employee)
$4,000
$3,600
Item 5 of sch.16 to the FW (TPCA) Act - failure to comply with the SACS Pay Scale
Failure to pay minimum rate of pay (2 employees)
Section 185(2) of the WR Act - failure to comply with the SACS Pay Scale
Failure to pay guaranteed casual loading (1 employee)
$2,200
$1,980
Item 5 of sch.16 to the FW (TPCA) Act - failure to comply with the SACS Pay Scale
Failure to pay guaranteed casual loading (2 employees)
TOTAL
$6,200
$5,580
The penalties total $36,000 in respect of Lovely Care and $5,580 in respect of Ms Bonilla. I believe that such totals are just and appropriate.
Those amounts are to be paid to the Commonwealth within twenty-eight days.
I certify that the preceding forty-six (46) paragraphs are a true copy of the reasons for judgment of Judge Cameron
Associate:
Date: 13 February 2020
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