Fair Work Ombudsman v Mackies Asia Pacific Pty Ltd
[2021] FedCFamC2G 364
•16 December 2021
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Mackies Asia Pacific Pty Ltd [2021] FedCFamC2G 364
File number(s): SYG 1173 of 2021 Judgment of: JUDGE OBRADOVIC Date of judgment: 16 December 2021 Catchwords: INDUSTRIAL LAW – FAIR WORK – Penalty hearing – admissions to contraventions of the Fair Work Act 2009 (Cth) – agreed facts – where Respondents have shown contrition, co-operation and have taken corrective action – declarations made – penalties ordered. Legislation: Fair Work Act 2009 (Cth) ss 12, 14, 90, 539,546, 550, 701, 716
Evidence Act 1995 (Cth) s.191Cases cited: Australian Building and Construction Commission v Construction, Forestry, Mining and Energy Union [2018] HCA 3
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8
Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46
Fair Work Ombudsman v Absynthe Restaurant Pty Ltd [2015] FCCA 58 at [36])
Fair Work Ombudsman v Daladontics (Vic) Pty Ltd [2014] FCCA 2571
Fair Work Ombudsman v Kentwood Industrial Pty Ltd (No.3) [2011] FCA 579
Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301
Fair Work Ombudsman v Promoting U Pty Ltd & Anor [2012] FMCA 58
Fair Work Ombudsman v Rum Runner Trading Pty Ltd [2018] FCCA 1129
Fair Work Ombudsman v The Syndicate Group Pty Ltd [2015]] FCCA 2847
Fair Work Ombudsman v Viper Industries Pty Ltd [2015] FCCA 492
Kelly v Fitzpatrick [2007] FCA 1080
Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7
NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission [1996] FCA 1134
Trade Practices Commission v CSR Ltd [1990] FCA 521Division: Division 2 General Federal Law Number of paragraphs: 51 Date of last submission/s: By written submissions on 1 November 2021 Date of hearing: On the papers Place: Parramatta Solicitors for the Applicant: Maddocks Solicitors for the First and Second Respondents: HWL Ebsworth Lawyers ORDERS
SYG 1173 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: MACKIES ASIA PACIFIC PTY LTD ACN 131 762 091
First Respondent
DMITRY MYNDRESKOU
Second Respondent
ORDER MADE BY:
JUDGE OBRADOVIC
DATE OF ORDER:
16 DECEMBER 2021
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 issued on 25 February 2021.
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.
THE COURT ORDERS THAT:
3.Pursuant to section 546(1) of the FW Act, the First Respondent pay a pecuniary penalty of $11,322.00 in respect of the contravention of section 716(5) of the FW Act.
4.Pursuant to section 546(1) of the FW Act, the Second Respondent pay a pecuniary penalty of $2,264.40 in respect of the contravention of section 716(5) of the FW Act.
5.Pursuant to section 546(3)(a) of the FW Act, any pecuniary penalties ordered to be paid by the First and Second Respondents be paid to the Commonwealth within 28 days.
6.The Applicant has liberty to apply on seven 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 OBRADOVIC:
These are reasons for judgement in relation to the imposition of pecuniary penalties for admitted contraventions of s.716(5) of the Fair Work Act 2009 (Cth) (“FW Act”).
The parties jointly rely on an Agreed Statement of Facts, for the purposes of s.191 of the Evidence Act 1995 (Cth).
Findings of Fact in Accordance with Agreed Statement of Facts
The Applicant, the Fair Work Ombudsman, is and was at all relevant times:
a.statutory appointee of the Commonwealth appointed by the Governor-General by written instrument pursuant to s 687(1) of the FW Act;
b.Fair Work Inspector (“FWI”) pursuant to s.701 of the FW Act; and
c.a Person with standing to bring these proceedings and to apply for orders for contraventions of civil remedy provisions pursuant to s 539(2) of the FW Act.
The First Respondent, Mackies Asia Pacific Pty Limited (ACN 131 762 091), is and was at all relevant times:
a.a company incorporated under the Corporations Act 2001 (Cth) and registered since 20 June 2008;
b.a “constitutional corporation” within the meaning of s 12 of the FW Act;
c.a “national system employer” within the meaning of s 14 of the FW Act;
d.a manufacturer and supplier of bakeware equipment and tools, whose business address is 112-116 Canterbury Road, Bankstown NSW 2200, in the State of New South Wales (“Business”); and
e.by reason of the matters agreed in paragraphs 2.b and 2.c, covered by the FW Act in respect of its employees.
The Second Respondent, Mr Dmitry Myndreskou (“Mr Myndreskou”), is and was at all relevant times:
a.a natural person capable of being sued;
b.a director of the First Respondent;
c.responsible for the direction, control, management and supervision of the First Respondent’s operations in relation to the Business;
d.responsible for ensuring the First Respondent complied with its legal obligations under the FW Act; and
e.a person whose conduct (engaged in on behalf of the First Respondent and within the scope of his actual or apparent authority) is taken to be that of the First Respondent under s 793(1) of the FW Act
On 25 February 2021, Fair Work Inspector Louise Casey issued upon the First Respondent a compliance notice in respect of the First Respondent’s failure to pay Mr William Rigg (“Employee”) the full amount that would have been payable to him had the Employee taken his accrued but untaken annual leave owing when his employment ended on 31 December 2020, in contravention of s.90(2) of the FW Act (“Contravention”), pursuant to s.716(2) of the FW Act (“Compliance Notice”).
Pursuant to s.716(2) of the FW Act, the Compliance Notice required the First Respondent to:
a.in respect of the Contravention and Employee, by 26 March 2021:
(i)calculate the full amount of accrued but untaken annual leave owed to the Employee upon termination of employment;
(ii)make a payment to the Employee in respect of the accrued but untaken annual leave owed to him;
(iii)make a record of the information and amount referred to in (i) and the amount of the payment referred to in (ii) immediately above; and
b.produce reasonable evidence to the Applicant of its compliance with the Compliance Notice by 2 April 2021, by producing a copy of the schedule in relation to the Employee outlining the calculations and payments made, and evidence that the amount owed had been paid to the Employee, such as a bank transfer or payroll records.
The Compliance Notice met the requirements of s.716(3) of the FW Act.
The First Respondent did not take the specified action set out at paragraph 7(a) of the Compliance Notice by 26 March 2021.
The First Respondent did not produce to the Applicant evidence of compliance with the Compliance Notice as set out at paragraphs 8 and 9 of the Compliance Notice by 2 April2021.
On 25 June 2021, the Applicant commenced proceedings against the First and Second Respondents for failing to comply with the Compliance Notice, in contravention of s.716(5) of the FW Act.
On 30 June 2021, the First Respondent was served with the Application and Statement of Claim.
On 23 July 2021, the Second Respondent was served with the Application and Statement of Claim.
On 19 July 2021, the First Respondent made payment to the Employee in the amount of $9,421.10 (gross) by way of bank transfer (“Payment”) being the amount owed to the Employee which was identified in the Compliance Notice.
On 21 July 2021, the Second Respondent informed the Applicant's legal representative, that the First Respondent had made the Payment to the Employee and provided evidence to the Applicant's legal representative of the Payment. However, they did not provide written evidence of the breakdown of the Payment.
On 25 October 2021, the Respondents' legal representative produced to the Applicant's legal representative a schedule which provided written evidence of the breakdown of the Payment.
As at 25 October 2021, the First Respondent has taken the steps required under the Compliance Notice.
The First Respondent did not comply with the Compliance Notice by the required time frames as set out at paragraph 5 above and contravened s.716(5) of the FW Act.
The Second Respondent was responsible for ensuring that the First Respondent complied with the Compliance Notice, and admits that the Compliance Notice was given to the First Respondent.
The Second Respondent was involved, within the meaning of s.550(2) of the FW Act, in the contravention by the First Respondent of s.716(5) of the FW Act, and is taken to have contravened s.716(5) of the FW Act.
Principles Relevant to the Determination of Penalty
The primary purpose of a pecuniary penalty is to promote the public interest in compliance. It is “to put a price on contravention that is sufficiently high to deter repetition by the contravener and by others who might be tempted to contravene the Act” (Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46 (“FW Building Industry Inspectorate”) at [55], citing Trade Practices Commission v CSR Ltd [1990] FCA 521). The “price” must be such that it is not regarded by the contravener as an “acceptable cost of doing business” (FW Building Industry Inspectorate at [55] and [59]).
The greater the impact of the penalty on the contravener, the more potent will be the example that the penalty sets for other potential contraveners. Likewise, it will be more likely that the contravener will seek to avoid the risk of subjection to further penalties and be deterred from further contravention (Australian Building and Construction Commission v Construction, Forestry, Mining and Energy Union [2018] HCA 3 at [116]).
Penalties should however be just and appropriate (Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 (“McAlary-Smith”) at [23]-[25]), and a penalty should not be oppressive or crushing (Kelly v Fitzpatrick [2007] FCA 1080 (“Kelly”) at [30]).
An appropriate method to determine the question of penalty may be summarised as follows:
a.identify the separate contraventions;
b.consider whether each separate contravention should be dealt with independently or whether separate contraventions constitute a single course of conduct within the meaning of s.557(1) FW Act;
c.consider whether the contraventions should be further grouped;
d.consider an appropriate penalty as to each contravention (i.e. each final individual group of contraventions, taken in isolation); and
e.review the aggregate penalty by application of the “totality principle”.
(Fair Work Ombudsman v Kentwood Industrial Pty Ltd (No.3) [2011] FCA 579 at [10]; Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301 (“NSH North”) at [36]).
Factors Relevant to Penalty
The relevant factors going to penalty have been identified as follows:
a.The nature and extent of the conduct which led to the breaches.
b.The circumstances in which that conduct took place.
c.The nature and extent of any loss or damage sustained as a result of the breaches.
d.Whether there had been similar previous conduct by the respondent.
e.Whether the breaches were properly distinct or arose out of the one course of conduct.
f.The size of the business enterprise involved.
g.Whether or not the breaches were deliberate.
h.Whether senior management was involved in the breaches.
i.Whether the party committing the breach had exhibited contrition.
j.Whether the party committing the breach had taken corrective action.
k.Whether the party committing the breach had cooperated with the enforcement authorities.
l.The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
m.The need for specific and general deterrence.
(Kelly at [14] adopting Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7 at [26]-[59])
Consideration of the well-known penalty factors is to be undertaken within the overarching consideration of what penalty will achieve the principal object of deterrence, both specific and general. These factors are well-settled, but not a “rigid catalogue of matters for attention” (McAlary-Smith at [88] to [91]).
The identified factors while a convenient checklist, do not restrict the Court in the exercise of its discretion.
Determination as to Penalty
The parties have agreed that, in the circumstances, penalties of $11,322 for the First Respondent and $2,264.40 for the Second Respondent, are appropriate. The agreed penalties in respect of each of the Respondents represents a mid-range penalty equivalent to 40% of the maximum penalties which may be imposed under ss.539(4) and 546(2) of the FW Act, which includes a 15% discount applied for the Respondents’ admissions, contrition, corrective action taken and co-operation.
In FW Building Industry Inspectorate (at [46]), the High Court held that in determining a civil penalty courts are entitled to have regard to the parties’ submissions on agreed penalty. The Court is however not bound to impose the penalty agreed between the parties and the Court must be satisfied that the submitted penalty is appropriate (at [48] citing NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission [1996] FCA 1134; 71 FCR 285 at 291).
The nature, extent and circumstances of the conduct which led to the breaches
The contravention concerns a single employee and relates to a period of time after the employee ceased working for the First Respondent, and specifically to the employee’s accrued and unpaid annual leave. It is one distinct contravention arising out of a single course of conduct.
This was not a systematic problem across the business, but rather arose as a result of a dispute between the First Respondent and the employee, which resulted in the First Respondent deliberately withholding the payments due to the Employee.
The Respondents were given numerous opportunities, including during the investigation phase and prior to the commencement of the proceedings, to rectify the contraventions and comply with the Compliance Notice. They did not do so.
Neither of the Respondents has ever been involved in similar proceedings in respect of a contravention of the FW Act or other workplace laws.
The nature and extent of any loss or damage sustained as a result of the breaches
The quantum of the underpayment, $9,421.10 (gross), for accrued and untaken annual leave at the time of termination of employment is a substantial amount owing to one employee.
Payment was not made for over 6 months after the Employee ceased working for the First Respondent, almost 3 months after the date required by the Compliance Notice, and shortly after proceedings were commenced in this Court.
One of the principal objects of the FW Act is to provide a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions for all employees. A compliance notice is intended to act as a means of ensuring compliance with the FW Act without the need to go to Court (Fair Work Ombudsman v Rum Runner Trading Pty Ltd [2018] FCCA 1129 (“Rum Runner”) at [86] citing Fair Work Ombudsman v The Syndicate Group Pty Ltd [2015]] FCCA 2847 at [27]; Fair Work Ombudsman v Absynthe Restaurant Pty Ltd [2015] FCCA 58 at [36]). Where a person does not comply with a compliance notice, they undermine that purpose (Rum Runner at [110]) and can be seen as “undermin[ing] the FW Act’s enforcement framework, and the safety net of entitlements it is designed to protect” (Fair Work Ombudsman v Viper Industries Pty Ltd [2015] FCCA 492 at [78]. See also Fair Work Ombudsman v Daladontics (Vic) Pty Ltd [2014] FCCA 2571 at [23]).
Compliance notices provide a mechanism for the efficient and cost effective rectification of identified contraventions of the FW Act, including the non-payment of entitlements to employees.
There has been an expenditure of public money and time, not only by the Applicant, but also by the Court, which would not have been required had compliance with the statutory notice occurred. The failure to comply with a statutory notice occasions a more public loss.
The size of the business enterprise involved
The First Respondent does not engage a specialist in human resources and/or industrial relations. It is the Second Respondent who takes on all of these responsibilities.
Whether senior management was involved in the breaches
The Second Respondent is and was at all relevant times, a director of the First Respondent who was responsible for the management of its business and ensuring compliance with its statutory obligations, including its compliance with the Compliance Notices.
Contrition, Corrective action and Co-Operation
The Respondents took corrective action in relation to failure to comply with the Compliance Notice on 19 July 2021 when payment was made to the employee, and on 21 July 2021 when evidence of payment was provided. While this occurred some months after the Compliance Notice was issued, it occurred very soon after proceedings were commenced.
There has been co-operation by the Respondents by making admissions as to their failures to comply with the Compliance Notice. Agreed Facts have been submitted, which not only make important admissions as to contravening s.716(5) of the FW Act, but also significantly reduced the need for further application of public funds and resources in respect of a liability hearing.
The Second Respondent has expressed personal contrition, as well as contrition on behalf of the First Respondent.
The need for specific and general deterrence
The First Respondent continues to operate its business and employ staff.
The Second Respondent continues to hold his position as director and manager of the First Respondent, and continues to have responsibility for overseeing employee’s entitlements.
Specific deterrence is therefore relevant.
General deterrence is also an important factor for the Court’s consideration. It is vital for the purposes of the FW Act that the public is left in no doubt as to there being positive obligations to comply with statutory notices issued by the Applicant, such as compliance notices.
Penalty Imposed
Whilst the penalty imposed must not be crushing or oppressive, it must be proportionate to the conduct engaged in by the Respondents and not have the effect of exonerating the conduct (Kelly at [30]; McAlary-Smith at [23] per Gray J, at [66]-[73] per Graham J, at [98]-[102] per Buchanan J; Fair Work Ombudsman v Promoting U Pty Ltd & Anor [2012] FMCA 58 at [55]-[57].)
The Court finds that the conduct of the Respondents is serious, and that the penalties imposed should be in the mid-range of available penalties, and that there should be a discount for contrition, co-operation and corrective action taken.
The Court finds that the agreed penalties are in all of the circumstances appropriate.
For all of those reasons, orders as set out at the forefront of these Reasons for Judgement will be made.
52 I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Obradovic.
Associate:
Dated: 16 December 2021
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