Fair Work Ombudsman v McDonald
[2024] FedCFamC2G 321
•11 April 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v McDonald [2024] FedCFamC2G 321
File number(s): SYG 710 of 2023 Judgment of: JUDGE GOODCHILD Date of judgment: 11 April 2024 Catchwords: INDUSTRIAL LAW – Fair Work – application for default judgment pursuant to rule 13.05(2)(c) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) – Applicant seeking declaration of contravention of the Fair Work Act 2009 (Cth) by reason of failure of the Respondent to comply with compliance notice – failure of the Respondent to file and serve a notice of address for service, response and defence – declarations made – orders made requiring Respondent to comply with the requirements of the compliance notices and for payment of interest – penalty. Legislation: Fair Work Act 2009 (Cth) ss.539, 545, 546, 687, 700, 701, 716.
Federal Circuit and Family Court of Australia Act 2021 (Cth) s.141.
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) rr.4.03, 4.04, 6.01(1), 13.04, 13.05.
Cases cited: Fair Work Ombudsman v IE Enterprises Proprietary Limited [2020] FCA 848 Division: Division 2 General Federal Law Number of paragraphs: 89 Date of hearing: 25 October 2023 Place: Sydney Solicitor for the Applicant: Fair Work Ombudsman Respondent: The Respondent appearing in person ORDERS
SYG 710 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: TREVOR MCDONALD
Respondent
ORDER MADE BY:
JUDGE GOODCHILD
DATE OF ORDER:
11 APRIL 2024
THE COURT DECLARES THAT:
A.Upon the admissions that the Respondent is taken to have made, consequent upon his default pursuant to Rule 13.04(2) of the Rules, the Respondent contravened section 716(5) of the Fair Work Act 2009 (Cth) (FW Act) by failing to comply with the compliance notice given to the Respondent on 3 December 2021.
THE COURT ORDERS THAT:
1.Default judgment be entered for the Applicant against the Respondent pursuant to r.13.05(2)(c) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Rules), by reason of the default of the Respondent pursuant to r.13.04(2) of the Rules, by his failure to:
(a)file and serve a notice of address for service in accordance with r.6.01(1) of the Rules;
(b)file and serve a response and defence in accordance with rr.4.03(3) and 4.04(3) of the Rules; and
(c)comply with an order of the Court in the Proceeding.
2.Pursuant to s.545(1) of the FW Act, the Respondent, within 28 days of this order:
(a)pay $5,541.63 (less applicable tax) to Mr Bunney; and
(b)calculate and pay into Mr Bunney's nominated superannuation fund the additional superannuation contributions required to be paid on the amount set out in paragraph 3(a) above.
3.Pursuant to s.547(2) of the FW Act, the Respondent pay interest at the applicable rate prescribed by the Federal Court of Australia to be applied from 1 May 2023 (the date the contravention proceedings were commenced) to 25 October 2023 (the date of the hearing of the default judgement application) to Mr Bunney on the amounts owed to him pursuant to paragraph 2(a), within 28 days of this order.
4.Pursuant to s.546(1) of the FW Act, within 28 days, the Respondent pay a pecuniary penalty of $3,000 to the Commonwealth in respect of the contravention declared in paragraph 1 above.
5.The Applicant have liberty to apply on seven days’ notice in the event that any of the above 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 GOODCHILD:
INRODUCTION
The Applicant (the FWO) applies under r.13.05(2)(c) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (the Rules) for default judgment against the Respondent, Trevour McDonald (the Respondent) in the proceeding the FWO has brought under the Fair Work Act 2009 (Cth) (Act).
The FWO claims that the Respondent contravened s.716(5) of the Act by failing to comply with the Compliance Notice dated 3 December 2021.
BACKGROUND
The Respondent owns and runs a hospitality business in rural New South Wales (the business).
On 25 May 2021, the FWO received a Request for Assistance from Mr Bunney (the Employee) in relation to his former employer, the Respondent.
In or around June 2021, the FWO commenced its investigations in relation to the employment of the employee.
On 3 December 2021, the Respondent was issued with a Compliance Notice pursuant to s.716(5) of the Act (the Compliance Notice), by way of pre-paid post to his business address in NSW.
The Compliance Notice
The Compliance Notice required the Respondent to:
(a)Take the following actions to remedy the direct effects of the Contraventions by 31 January 2022 (Specified Action):
(i)Identify the number of hours the employee had worked during the Employment Periods;
(ii)Identify the amounts the Respondent had paid to the employee for each of his casual loading, Saturday, and Sunday penalty rate entitlements during the Casual Employment Period (Casual Employment Entitlements);
(iii)Identify the amounts the Respondent had paid to the employee for each of his Sunday, public holiday, evening work, overtime, and weekend penalty rate entitlements during the Full-Time Employment Period (Full-Time Employment Entitlements);
(iv)calculate the amounts the Respondent should have paid to the employee for each of the entitlements mentioned in subparagraphs (ii) – (iii);
(v)make a payment to the employee of the difference between the amounts referred to in paragraphs (ii) – (iii), and (iv);
(vi)calculate the number of untaken annual leave hours the employee had accrued on the date his employment was terminated, this being 13 January 2021;
(vii)calculate and pay to the employee the full amount he should have been paid for his accrued but untaken annual leave balance upon the termination of his employment, including a 17.5% annual leave loading derived from clause 30.3 of the Hospitality Industry (General) Award 2020 (“the Award”) (Annual Leave Entitlement);
(viii)make a record of the information and amounts referred to in paragraphs (i) – (vii) above (Underpayment Rectification Information); and
(ix)calculate and pay any additional superannuation contributions required in respect of the amounts owed to the employee; and
(b)produce reasonable evidence to the Applicant of the Respondent’s compliance with the Compliance Notice by 7 February 2022, by producing:
(i)the Underpayment Rectification Information, as well as any information relating to additional superannuation contributions made; and
(ii)proof that full payment had been made to the employee as required by paragraphs (v), (vii), and (ix) above.
The Compliance Notice detailed two particular dates:
(a)By 31 January 2022, the Respondent was required to calculate and rectify the underpayments to the employee; and
(b)By 7 February 2022, the Respondent was required to produce to the FWO a schedule of calculations, payments and accompanying evidence that payment had been made to the employee.
Correspondence post issue of Compliance Notice
On 10 December 2021, the FWO emailed the Respondent at the relevant email address (the McDonald email address), offering assistance with understanding the contents of the Compliance Notice, and the ways in which it can be rectified.
On 14 January 2022, the FWO emailed the Respondent at the McDonald email address, as well as his accountant, Gaertner & Associates (the Respondent’s accountant), offering to assist with the calculation and underpayments owed to the employee.
On 24 January 2022, the Respondent emailed the FWO, alleging the FWO had not explained the underpayments to him in an understandable way.
On 25 January 2022, the FWO received an email from the Respondent’s accountant, stating they were waiting for the Respondent to supply them with documentation needed to perform calculations.
On the same day, the FWO emailed the Respondent at the McDonald email address, requesting that he provide the Respondent’s accountant with the documentation required, as well as again offering him assistance.
On 31 January 2022, the FWO had a discussion with the Respondent’s accountant via telephone, in relation to performing calculation as required by the Compliance Notice.
On 1 February 2022, the FWO emailed the Respondent’s accountant a copy of the employee’s time and wage records.
On 31 March 2022, the employee informed the FWO that he had been partially back paid by the Respondent, by an amount of approximately $700.00 across 2 separate payments, on a date before 25 December 2021.
On 5 May 2022, the FWO called the Respondent, requesting him to rectify the Compliance Notice, and suggesting to him he seek independent legal advice.
On 6 May 2022, the FWO sent the Respondent a failure to comply letter by email to the McDonald email address. In that correspondence, the FWO advised the Respondent that if he did not provide a reasonable excuse for his failure to comply with the Compliance Notice, the FWO may commence legal action against him without any further notice. The FWO also encouraged the Respondent to seek independent legal advice.
On 9 May 2022, the FWO emailed the Respondent’s accountant further documentation provided by the employee, to assist with the calculation of the underpayment amount.
On the same day, the Respondent’s accountant, responded by way of a phone call, informing the FWO that they were close to finalising the underpayment calculations.
On 13 May 2022, the FWO received an email from the Respondent alleging that he did not understand the underpayment contraventions as stated within the Compliance Notice, and that he would be lodging a “counterclaim”. The Respondent also stated that he had already made full payment to the employee.
On 16 May 2022, a Senior Compliance Notice Officer employed by the FWO (FWO Officer), explained to the Respondent the basis of the FWO’s reasonable belief in respect of the contraventions set out in the Compliance Notice.
On 30 May 2022, the Respondent’s accountant sent to the FWO underpayment calculations on behalf of the Respondent (the Respondent’s calculations). The Respondent’s accountant had calculated the underpayment shortfall in the amount of $8,219.12, not including superannuation payable, was owed to Mr Bunney.
On 31 May 2022, the FWO Officer sent an email to the Respondent’s accountant explaining that the Respondent’s calculations were inaccurate, and that adjustments were required.
On 21 June 2022, the FWO emailed the Respondent’s accountants following up on the revised calculations.
On 15 September 2022, the FWO sent a letter, to the business’s address of the Respondent informing him that the matter had been referred to the FWO’s Legal Compliance and Enforcement Branch and provided the Respondent with a further opportunity to rectify the Compliance Notice.
On 1 February 2023, the FWO received a handwritten letter from the Respondent dated 17 January 2023, informing them that he believed the employee had been paid in full.
On 27 March 2023, the FWO calculated the underpayment still owed to the Employee to be in the amount of $5,541.63.
On the same date, the FWO sent a letter to the Respondent, informing him litigation may be commenced against him if he did not rectify the Compliance Notice or otherwise provide a reasonable excuse. No response was received by the FWO from the Respondent to this correspondence.
PROCEDURAL HISTORY
On 1 May 2023, the FWO filed in this Court an Originating Application and Statement of Claim, alleging that the Respondent was in contravention of s 716(5) of the Act, for failing to comply with the Compliance Notice.
On 20 June 2023, the FWO filed an Affidavit of Service evidencing that service by hand on Respondent by the FWO had taken place on 12 May 2023 at 12:20 pm at the business’s address.
26 June 2023 Court directions
The matter was listed in person before me for a first court date on 26 June 2023. On this date, the Respondent did not appear in person. Before I came to the bench, my associate was able to contact the Respondent with the assistance of the Applicant’s representative using the Respondent’s mobile number and an audio-visual link.
On this date I made the following orders (the June orders):
(a)The Respondent file and serve a Notice of Address of Service by 24 July 2023;
(b)The Respondent file and serve any Response and any Defence by 7 August 2023;
(c)The Applicant file and serve any Reply by 21 August 2023; and
(d)The proceedings are listed for direction before Judge Goodchild at 10.15 am on 22 August 2023.
From the Applicant’s representatives Affidavit affirmed on 5 October 2023 (the Mak Affidavit), it is apparent that the Applicant served a copy of the June orders on the Respondent by:
(a)Causing a copy to be sent by post to the business’s address on 27 June 2023; and
(b)Sending a copy by email on 27 June 2023 to the McDonald email address (see Annexure AAM-2 of the Mak Affidavit).
22 August 2023 Court directions
The matter was next due before me on 22 August 2023 as per Order 4 of the June orders. The Respondent appeared without legal representation. I brought to the Respondent’s attention that per Orders 1 and 2 of the June orders he was to have filed the respective documents. The Respondent confirmed that he had not filed any documentation in the matter.
The FWO indicated it wished to move for Default Judgment. The FWO submitted that the Respondent had not complied with orders 1 and 2 of the June orders, nor had he filed any documentation to date.
On this date I made the following orders (the August orders):
(a)The Respondent file and serve any Response and any Defence by 12 September 2023;
(b)The Applicant file and serve any Reply by 26 September 2023; and
(c)The proceedings are listed for further directions before Judge Goodchild at 9:30am on 11 October 2023.
On 5 October 2023, the default judgment application was filed. By an Affidavit of Service affirmed on 12 October 2023, it is apparent that the default judgment application, the FWO’s written outline of submissions on default judgment and penalty filed with the Court on 11 October 2023, along with the supporting Affidavits were served on the Respondent by email to the relevant McDonald email address, and also via post to the business’ address.
On 6 October 2023, I vacated the directions listed for 11 October 2023, and on 12 October 2023, I listed the matter for directions on 17 October 2023.
On 9 October 2023, the Respondent sent via email to my Chambers a statutory declaration signed on 9 October 2023, as well as a piece of correspondence comprised of 6 paragraphs of the same date. There was however, an omittance on the Respondent’s behalf of his signature on the letter. The statutory declaration was signed by 6 other persons who were witnesses to an apparent open conversation between the Respondent and the Employee as described in the letter.
This statutory declaration was not filed or served on the FWO and its representatives. The FWO was not copied into this correspondence. My Chambers forwarded this statutory declaration to the FWO’s representatives on 17 October 2023.
17 October 2023 Court directions
On 17 October 2023, there was no appearance in person or by electronic means by or on behalf of the Respondent. On this occasion I made the following order:
1.The matter be adjourned to 2:15pm on 25 October 2023 for hearing of the Applicant’s application for default judgment.
DEFAULT JUDGMENT APPLICATION
On the day of the hearing of the default judgment application, the FWO appeared in person represented by a solicitor and the Respondent appeared unrepresented via telephone. As at the date of hearing, the Respondent had still filed no material with the Court beyond the abovementioned statutory declaration and letter.
The Respondent submitted as per the letter, that the employee was on a salary of $1,000 per week not a wage. When I asked for clarification of what the Respondent believes the difference is between an employee being on a salary as compared to a wage, he responded that being on a wage includes employee benefits such as overtime rates, and public holiday rates.
He further submitted that the $1,000 per week covered the Award rate for the hours the employee worked which were 50 hours per week as per the statutory declaration.
With respect to the default judgment application the Respondent was not able to provide any explanation as to why he had not put on any responsive material.
With regards to the penalty, the Respondent submitted that he was “barely staying afloat”. He submitted that the business he runs is in a small town 40km west of Casino, and that he has a dependant wife and child. However, he did not produce any evidence including financial evidence.
The FWO submitted that the material provided by the Respondent was not relevant to the proceeding before me as the material related to circumstances surrounding the underlying contraventions, not the issue of failing to comply with the Compliance Notice.
The FWO further submitted that the matter has been on foot since May of 2023, and that the Respondent had failed to comply with the June orders and the August orders, requiring the Respondent to file and serve documents in the course of these proceedings and to date that the Respondent had not provided any material beyond the statutory declaration and letter.
In response to the assertions made by the Respondent that the employee was subject to a salary arrangement, the FWO submitted that any such salary arrangement was subject to the requirements of the relevant Award and that following the FWO’s investigation it was determined that the Respondent had not complied with the requirements of the Award, and that the salary arrangement was not compliant.
The FWO denied the opportunity, when I presented it to them, to cross examine the Respondent at the hearing. The FWO did however accept the personal circumstances and the circumstances of the business detailed by the Respondent above at [47].
BASIS OF DEFAULT
Under r.13.04(2) of the Rules a Respondent is in default if the Respondent has not satisfied the Applicant’s claims and the Respondent has failed to do one or more of the things identified in r.13.04(2)(b) of the Rules. The matters identified in r.13.04(2)(b) that are relevant in the application before me include has not satisfied the Applicants claim (r.13.04(2)(a)); has failed to give an address for service before the time for the Respondent to give an address has expired (r.13.04(2)(b)(i)); failed to file a response before the time for the Respondent to file a response has expired (r.13.04(2)(b)(ii)); failed to comply with an order of the Court in the proceedings r.13.04(2)(b)(iii)) and the failed to defend the proceedings with due diligence (r.13.04(2)(b).
A default judgment may be entered where a party’s participation in the proceedings indicates an inability or unwillingness to cooperate with the Court and the Applicant within an acceptable period, and that there is non-compliance which continues to occasion unnecessary delay and expense as per Fair Work Ombudsman v IE Enterprises Proprietary Limited [2020] FCA 848.
When a Respondent is in default the Court may make one of the orders set out in r.13.05(2) of the Rules. Relevant to the application before me is r.13.05(2)(c) which provides that the Court may:
(2)(c)if the proceeding was started by an application is supported by a statement of claim or the Court has ordered that the proceeding continue on pleadings-give judgment against the Respondent for the relief that:
(i) the Applicant appears entitled to and the statement of claim; and
(ii) the Court is satisfied it has the power to grant.
The Respondent has failed to:
(a)file and serve a notice of address for service as required by r 6.01(1) of the Court Rules;
(b)file and serve any Response or any Defences required by r 4.03(3) and r 4.04(3) of the Court Rules; and
(c)comply with any order of the Court in the proceeding (rule 13.04(2)(iii).
I am satisfied that the Respondent is in default within the meaning of r.13.04(2) of the Rules.
LEGAL PRINCIPLES
The principles guiding the exercise of the Court’s power in relation to default judgment and similar powers available to the Federal Court of Australia under its rules are well-settled and were usefully summarised by Judge Symon in Fair Work Ombudsman v Turn-Key Fitout Pty Ltd [2023] FedCFamC2G 384 at [22]. These principles include:
(a)First, r.13.05(2)(c) of the Rules “does not require proof of the claim by evidence, but only requires that – on the face of the statement of claim – there is a claim for the relief sought”;
(b)Second, before the Court may make an order under r.13.05(2)(c) of the Rules it must be satisfied that the document, which the Applicant has filed with the application, is on its face “a statement of claim”. A statement of claim is a pleading, which means it must comply with the rules of pleading;
(c)Third, it follows from (b) that the statement of claim must plead at least one reasonable cause of action that supports the granting of the relief the Applicant seeks in the application. More particularly, “each element of the relevant civil wrong” of which the Applicant complains must be “properly and discretely pleaded in the statement of claim”;
(d)Fourth, although r.13.05(2)(c) of the Rules does not require proof of the claim by evidence, it is permissible for the Applicant to adduce evidence that is relevant to the relief sought; and
(e)Finally, the Court retains a discretion not to make an order under r.13.05(2)(c) of the Rules even if the preconditions for making an order are satisfied:
(citations omitted)
ENTITLEMENT TO RELIEF
The FWO Statement of Claim pleads the following:
1. … the Fair Work Ombudsman, is and was at all relevant times:
(a)a statutory appointee of the Commonwealth appointed by the Governor-General by written instrument pursuant to section 687(1) of the Fair Work Act 2009 (Cth) (FW Act);
(b)a Fair Work Inspector (FWI) pursuant to section 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 section 539(2) of the FW Act.
2.FWI Suzanne Lecia Stephens (FWI Stephens) is and was at all relevant times a FWI appointed by the Applicant under section 700 of the FW Act.
…
4.In or around February 2021, the FWO commenced an investigation into the Respondent in respect of the employment of the Employee (the Investigation).
...
6. Following the investigation, FWI Stephens formed a belief that:
(a) the Respondent employed the Employee:
(i)from 26 July 2020 to 15 August 2020 as a casual Food and Beverage Attendant Level 2 (Casual Employment Period); and
(ii)from 16 August 2020 to 16 January 2021 as a full-time assistant manager (classified under the Award as “managerial staff – hotels”) (Full-time Employment Period);
(together, the Employment Periods);
(b)the FW Act covered and applied to the Respondent in respect to his employment of the Employee;
(c)by reason of the matters pleaded in paragraphs A.33 and 6(a) and its clause 4, the Award, a modern award under the FW Act:
(i)covered the Respondent within the meaning of section 48 of the FW Act; and
(ii)applied to the Respondent within the meaning of section 47 of the FW Act during the Employment Periods in respect of the Employee’s employment;
(d) during the Casual Employment Period, the Employee was not paid:
(i)the minimum casual loading for ordinary hours worked Mondays to Fridays as a Food and Beverage Food Attendant Level 2;
(ii)the Saturday penalty rate for ordinary hours worked on Saturdays as a casual Food and Beverage Attendant Level 2; and
(iii)the Sunday penalty rate for ordinary hours worked on Sundays as a casual Food and Beverage Attendant Level 2;
(e) during the Full-time Employment Period, the Employee was not paid:
(i)the Sunday penalty rate for ordinary hours worked on Sundays as an employee classified as “managerial staff – hotels”;
(ii)the public holiday penalty rate for ordinary hours worked on public holidays as an employee classified as “managerial staff – hotels”;
(iii)the additional evening amount for an employee classified as “managerial staff – hotels” and who performed work from 7.00pm to midnight, Mondays to Fridays;
(iv)the applicable overtime rate for the first 2 hours of overtime work performed during Mondays to Fridays as an employee classified as “managerial staff – hotels”;
(v)the applicable overtime rate for overtime work in excess of 2 hours performed on Mondays to Fridays by an employee classified as “managerial staff – hotels”; and
(vi)the overtime penalty rate for work performed from midnight Friday to midnight Sunday by an employee classified as “managerial staff – hotels”;
(f)the Employee’s employment was terminated on 13 January 2021; and
(g)on termination of his employment, Mr Bunney was not paid his accrued annual leave and the applicable annual leave loading.
7.By reason of the matters referred to in the preceding paragraph, FWI Stephens formed a reasonable belief pursuant to s 716(1) of the FW Act that the Respondent:
(a) during the Casual Employment Period:
(i)had contravened clause 18.1 and (former) clause 11.2 of the Award by failing to pay the Employee the applicable casual loading for a Food and Beverage Attendant Level 2; and
(ii)had contravened 29.2(b) of the Award by failing to pay the Employee the applicable Saturday and Sunday penalty rates for work performed on Saturdays and Sundays by a Food and Beverage Attendant Level 2.
(the Casual Contraventions)
(b) during the Full-time Employment Period:
(i)had contravened 29.2(a) of the Award by failing to pay the Employee the applicable penalty rates for an employee classified as “managerial staff – hotels” for work performed:
A. on Sundays;
B. during public holidays; and
C. from 7.00pm to 12.00am on Mondays to Fridays; and
(ii)had contravened 28.4 of the Award by failing to pay the Employee the applicable penalty rates for an employee classified as “managerial staff – hotels” for:
A.the first 2 hours of overtime work he performed each shift;
B.overtime work he performed in excess of 2 hours each shift; and
C.work he performed between midnight Friday and midnight Sunday; and
(the Full-time Contraventions)
(c)upon termination of Mr Bunney’s employment, contravened a term of the National Employment Standards, being section 90(2) of the FW Act, by failing to pay out the Employee’s untaken balance of annual leave hours and associated annual leave loading.
(the Annual Leave Contravention)
(together, the Contraventions)
On 3 December 2023, FWI Stephens gave the Respondent a compliance notice in respect of the Contraventions pursuant to s.716(2) of the Act. The Compliance Notice required the Respondent to take certain actions to remedy the direct effects of the Contraventions by 31 January 2022 and produce reasonable evidence to the FWO of the Respondent’s compliance with the Compliance Notice by 7 February 2022.
The Respondent did not take such actions in time and had not done so as at the date of the default hearing. By failing to do so, the Respondent contravened s.716(5) of the Act.
I am satisfied that it is appropriate to make the orders sought by the Respondent for the payment of the amount to the Employee including the calculation and payment of additional superannuation contributions required to be paid to the Employee’s nominated superannuation fund.
power to make orders that it considers appropriate if satisfied of a contravention under the Act, including:
(a)declarations pursuant to s.141 of the Federal Circuit and Family Court of Australia Act 2021;
(b)remedial and compensatory orders under s.545 of the Act (see Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157); and
(c)pecuniary penalties pursuant to s.546 of the Act.
DECLARATIONS
The Court has a wide discretionary power to make declarations. The Applicant submits that there is a public interest in making the declaration sought, in that it will:
(a)help educate employers about their obligations to comply with compliance notices;
(b)warning employers of the consequences of failing to comply with compliance notices;
(c)assist in achieving general deterrence; and
(d)mark the Court’s disapproval of the contravening conduct.
It has been recognised that appropriate caution needs to be exercised when considering declaratory relief and in application for default judgment as judgment is given on the basis of the claim is pleaded by the Applicant and in the absence of a defence or contradictory evidence. Accordingly, it is appropriate to make clear, that there has been no adjudication on the merits of the Applicant’s claim by including wording in the declaration to the effect that the declarations are made “upon admissions which the Respondent in question is taken to have made consequent upon their non-compliance with the requirements of the rules of Court”, as suggested by Kiefel J (as her Honour then was), in Australian Competition and Consumer Commission v Dateline.net.au Pty Ltd [2006] FCA 1427 at [59].
I am satisfied that this is an appropriate case for declaratory relief if for no other reason than to mark the Courts disapproval of the contravening conduct. Numerous opportunities were provided by the Applicant to the Respondent to explain and clarify the nature of the asserted breach and to remedy the breach. This Court also provided to the Respondent a number of opportunities for him to appropriately respond to the FWO claim, to obtain legal advice, to put on material in response.
INTEREST
The Court also has the power to order interest at such rate, and for such period, as the Court sees fit. The Applicant seeks an award of interest at the applicable pre-judgement interest rate prescribed by the Federal Court of Australia, to be applied from 1 May 2023 (the date these proceedings were commenced) to the date default judgement is entered.
I am satisfied that this is an appropriate case to award interest, at the applicable pre-judgement interest rate prescribed by the Federal Court of Australia to be applied from 1 May 2023 (the date the contravention proceedings were commenced) to 25 October 2023 (the date of the hearing of the default judgement application).
PENALTY
The Applicant submits that a pecuniary penalty of $4,662 and $5,328 being 70% to 80% of the maximum penalty for a contravention of s.716 (5) of the FW Act by the Respondent, is appropriate.
The law on the assessment of pecuniary penalty has been set out thoroughly. In Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3, the High Court said:
As has been observed, the principal object of an order that a person pay a pecuniary penalty under s 546 is deterrence: specific deterrence of the contravener and, by his or her example, general deterrence of other would-be contraveners. According to orthodox sentencing conceptions as they apply to the imposition of civil pecuniary penalties[97], specific deterrence inheres in the sting or burden which the penalty imposes on the contravener. Other things being equal, it is assumed that the greater the sting or burden of the penalty, the more likely it will be that the contravener will seek to avoid the risk of subjection to further penalties and thus the more likely it will be that the contravener is deterred from further contraventions; likewise, the more potent will be the example that the penalty sets for other would-be contraveners and therefore the greater the penalty's general deterrent effect. Conversely, the less the sting or burden that a penalty imposes on a contravener, the less likely it will be that the contravener is deterred from further contraventions and the less the general deterrent effect of the penalty. Ultimately, if a penalty is devoid of sting or burden, it may not have much, if any, specific or general deterrent effect, and so it will be unlikely, or at least less likely, to achieve the specific and general deterrent effects that are the raison d'être of its imposition.
The High Court has reaffirmed this principle in Australian Building and Construction Commissioner v Pattinson & Anor [2022] HCA 13 (Pattinson). In Pattinson the majority upheld the Commissioner’s appeal and confirmed that the purpose of a civil penalty is primarily, if not solely, the promotion of the public interest in compliance with the provisions of the FW Act by the deterrence of further contraventions of the FW Act. The Court rejected the approach implicit in the decision of the Full Court (the subject of the appeal) that a penalty must be proportionate to the seriousness of the conduct that constituted the contravention. The majority held instead that “[t]he power conferred by s 546 of the Act is not subject to constraints drawn from the criminal law and there is no place for a “notion of proportionality”...in a civil penalty regime”: Pattinson [10]. However, the Court did accept that s 546 requires the Court to ensure that any penalty “strikes a reasonable balance between deterrence and oppressive severity”: Pattinson [41]. It was only in this more qualified sense that the conception of “proportionality” had any role to play.
The High Court also referred to the several factors identified by French J in Trade Practices Commission v CSR Ltd [1990] FCA 521 which informed the assessment of a penalty of an appropriate deterrent value. Both the circumstances of the contravenor and the circumstances of the contravention may be relevant to the assessment of whether the maximum level of deterrence is called for: Pattinson [57]. However, the Court repeated the caution that the list of possible relevant considerations should not be approached as a “rigid catalogue of matters for attention” and instead the task of the court remains to determine what is an “appropriate” penalty in the circumstances of the particular case: Pattinson [18] and [19].
Deterrence
In respect of general deterrence, the FWO submitted that in order to be an effective general deterrent, the penalty must be fixed - by reference to the maximum penalty – at a level high enough to prevent such penalties from being regarded as part of the “acceptable cost of doing business”: Pattinson [17] citing Singtel Optus Pty Ltd v Australian Competition and Consumer Commission (2012) 287 ALR 249; [2012] FCAFC 20 [62].
The FWO submitted that the efficacy of statutory notices such as compliance notices would be hindered if recipients perceive that a failure to comply carries no meaningful consequences.
The FWO submitted that there is a need in this case to deter the Respondent from engaging in future contravening conduct given that the Compliance Notice has not been complied with, the Respondent has failed to seriously engage in these proceedings as required by the Court Rules, and there is an absence of contrition on the part of the Respondent.
I accept the Applicant’s submissions. The Respondent in these proceedings has maintained at every opportunity that he paid to the Employee the appropriate entitlements, despite evidence to the contrary.
The nature, circumstances and deliberateness of this contravention
The Applicant submitted that the Compliance Notice sought to address the underpayment of the Employee arising from contraventions of the Award and the FW Act. The Compliance Notice gave the Respondent an opportunity to rectify the contravention and therefore be protected from civil remedy proceedings. The Applicant submitted that it made extensive efforts to engage with the Respondent for the purposes of seeking compliance with the Compliance Notice in an attempt to avoid instituting court proceedings.
I accept the Applicant’s submissions with respect to the efforts that it went to, to engage with the Respondent in the numerous attempts to clarify the quantum of underpayment including communicating with the Respondent’s accountant.
As already referred to, the Respondent’s failure to comply with the Compliance Notice in addition to his failure to engage in these proceedings reflects adversely on the Respondent. The Applicant submits that the Respondent has demonstrated a lack of regard to his obligations under the FW Act which has necessitated litigation in an effort to achieve compliance.
Nature and extent of loss
The Applicant submits that the Employee was impacted by the Respondent’s failure to comply with the Compliance Notice and has suffered loss. The Employee has not received full payment of his entitlements assessed at $5541.63.
Compliance with minimum standards
The Applicant submits that one of the principal purposes of the FW Act is to provide a guaranteed safety net of fair, relevant, and enforceable minimum terms and conditions to all employees. The Applicant submits that the Respondent’s failure to comply with the Compliance Notice undermines the enforcement framework established by the FW Act, and the safety net of entitlements it is designed to protect. The Applicant submits that the penalty should be set at a level that reflects the seriousness of a failure to comply with the statutory notice.
Cooperation, contrition, and corrective action
The Applicant points to the Respondent’s accountant sending underpayment calculations totalling $8219.12 some four months after payment was due pursuant to the Compliance Notice. In any event, the Respondent had not made any payments pursuant to those calculations. The Applicant submits that the Respondent has failed to meaningfully engage in these proceedings despite being given numerous opportunities. The Applicant submits that the Respondent has demonstrated a lack of cooperation and contrition.
Clearly the Respondent has not taken any corrective action. He is not contrite because he is of the view that he has paid the employee the appropriate entitlements. The Respondent has been unrepresented in these proceedings.
Financial circumstances
The Applicant submits that the Respondent has not adduced any evidence that establishes that the Compliance Notice was not complied with because of financial hardship. There is no evidence of the Respondent’s income or assets.
The Applicant submits that it is well-established that capacity to pay the penalty is of less relevance than the objective of general deterrence when determining penalty: Glenn Jordan v Mornington Inn Pty Ltd [2007] FCA 1384 [99].
CONSIDERATION
In fixing a penalty for the Compliance Notice Contravention I have taken account of the following circumstances. I accept that there is a need to give effect to the primary objective of deterrence. I accept that there is a need to send a message to other employers especially those operating within the hospitality industry that a failure to comply with a Compliance Notice without reasonable excuse is a serious matter that warrants condemnation. I have no information as to the personal circumstances of the Employee. I understand that this person was employed at a hotel in a small town in rural New South Wales.
The attitude of the Respondent to these proceedings, specifically to the fact of the asserted contraventions leads me to conclude that there is the potential for the Respondent to engage in similar conduct in the future. There is no evidence however from the FWO that the Respondent is currently trading or employing staff.
The Respondent has taken no corrective action.
The Respondent submitted orally without any corroborative evidence, that he is of limited financial resources and struggling with paying bills. He says that he has a wife and dependent child.
As noted earlier, the FWO seeks a penalty in the amount of $4662 - $5328. However, I consider that a penalty in the amount of $3000 is a proportionate response to the matters identified above and will make an order for payment accordingly.
90 I certify that the preceding eighty-nine (89) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Goodchild.
Dated: 11 April 2024
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