Fair Work Ombudsman v McIvor
[2022] FedCFamC2G 664
Federal Circuit and Family Court of Australia
(DIVISION 2)
Fair Work Ombudsman v McIvor [2022] FedCFamC2G 664
File number(s): BRG 376 of 2021 Judgment of: JUDGE VASTA Date of judgment: 29 July 2022 Catchwords: INDUSTRIAL LAW – Contraventions of Fair Work Act 2009 (Cth) – pecuniary penalty – deterrence Legislation: Fair Work Act 2009 (Cth): s 716(5)
Federal Circuit And Family Court Of Australia (Division 2) (General Federal Law) Rules 2021 (Cth): r 13.06(1)(e)
Cases cited: Australia Building and Construction Commissioner v Pattinson [2022] HCA 13
Australian Building and Construction Commissioner v Construction Forestry, Mining and Energy Union [2018] HCA 3
Mason v Harrington Corporation Proprietary Limited, trading as Pangaea Restaurant and Bar [2007] FMCA 7
Division: Division 2 General Federal Law Number of paragraphs: 17 Date of last submission/s: 29 July 2022 Date of hearing: 29 July 2022 Place: Brisbane Solicitor for the Applicant: Fair Work Ombudsman ORDERS
BRG 376 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: JAME ROBERT MCIVOR
Respondent
order made by:
JUDGE VASTA
DATE OF ORDER:
29 JULY 2022
THE COURT ORDERS THAT:
1.Pursuant to section 546 of the Fair Work Act 2009 (Cth) (FW Act), the Respondent pay a pecuniary penalty to the Commonwealth with respect to its contravention of section 716(5) of the FW Act in the amount of $5,000 within 28 days of this order.
2.The Applicant have liberty to apply on seven days’ notice in the event that the above order is not complied with.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
(Ex Tempore)JUDGE VASTA
On 26 August 2021, the Fair Work Ombudsman filed an originating application in this Court. That application asks this Court to make orders for declarations that the Respondent, Jame Robert McIvor, had contravened the Fair Work Act 2009 (Cth) (“the FW Act”) by failing to comply with a compliance notice pursuant to s 716(5) of the FW Act. It asked that, upon the Court being satisfied that there had been a contravention, this Court impose pecuniary penalties upon Mr McIvor for that contravention.
The background to the matter is this. The Respondent, Mr McIvor, was the operator of a business called Mack Engineering & Site Services. They carried out work in the heavy fabrication, construction, mining, transport and logistics industries. The business was run as a principal place of business from an address at 81 Daintree Drive, Logan Village.
On 13 January 2021, Mr McIvor employed a person by the name of Martin Kjer. Mr Kjer was employed pursuant to the Manufacturing and Associated Industries and Occupations Award. He performed duties which included welding, grinding, sanding, bending metal for dog trays, trailers, tray backs and trucks. He was employed on a casual basis.
During his employment, which was for a period of 16 days, he did work in excess of eight hours per day on Sundays. He worked on a Saturday. He worked on a Sunday. He worked on a public holiday. When he had finished his employment on 29 January 2021, some 16 days after he began, he was paid a total of $1,339.
He asked for assistance from the Fair Work Ombudsman. A Fair Work Inspector Lakevold commenced an investigation in February 2021. The Fair Work Inspector concluded that there were contraventions of the casual minimum wage, the Saturday penalty rate, the Sunday penalty rate, the public holiday penalty rate, the overtime rate for the first three hours and for after three hours and a Sunday overtime rate.
On 4 March 2021, Mr McIvor made a further payment of $810 to the employee, Mr Kjer. That still did not satisfy what Mr McIvor owed Mr Kjer for his employment.
Because of this the Fair Work inspector issued a compliance notice. This was given to Mr McIvor by posting it to his business address. The compliance notice required Mr McIvor to identify the employee’s classification, identify the number of hours he worked, identify the amount paid to the employee during the employment period, calculate the amount that Mr McIvor should have paid to him during the employment period and to pay the difference and to make a record of the information so that that could then be given to the Fair Work Ombudsman. He was asked to comply with those actions by 14 June 2021 and to give to the Fair Work Ombudsman reasonable evidence of the compliance by 21 June 2021.
Mr McIvor did not comply with the notice. He didn’t take the specified actions and he didn’t produce the reasonable evidence of compliance.
On 9 August 2021, the Fair Work Ombudsman sent Mr McIvor a letter providing a further and final opportunity to rectify his non-compliance by making a payment of $1,530.70 to Mr Kjer. Mr McIvor failed to do that.
In looking at the history of the matter, the only times that Mr McIvor seemed to actually engage with the Fair Work Ombudsman, were a series of communications between Fair Work Inspector Lakewold and a person purporting to be the secretary of Mr McIvor. Those communications were phone calls by the Fair Work inspector to Mr McIvor answered by the secretary. The first phone call had the secretary saying, “Mr McIvor was sick and that he would call the next day” to which the Fair Work Inspector replied, “Well, I can’t take that tomorrow because I’m not rostered to work. Can we do this another day?” The second phone call had the secretary saying, “Look, he’s still sick and he can’t get back to you.” This is what’s known in the vernacular as “phone tiggy”. Suffice it to say there was no communication after mid-June of 2021.
When Mr McIvor did not comply with this final notice, the Fair Work Ombudsman launched the present proceedings.
Mr McIvor did not appear on the first court date which was 5 October 2021. I was satisfied that Mr McIvor had been served and that he knew of these proceedings and I said I gave him until 19 November to engage with these proceedings or that the Court would make default orders. He didn’t engage. He didn’t appear on 19 November 2021.
I ordered (by default) and made the declaration that Mr McIvor had contravened the FW Act by failing to comply with a compliance notice pursuant to s 716(5) of the FW Act. That contravention being a civil penalty provision.
I set the matter down for assessment of pecuniary penalties today, 29 July 2022.
Mr McIvor has not appeared. I do have an affidavit from a subagent who was engaged by the Fair Work Ombudsman to ensure that they had done everything to let Mr McIvor know of what was happening.
The Respondent, Mr McIvor, is still at 81 Daintree Drive, Logan Village. The subagent went to that address on Friday 8 July at 9.05 am. He spoke to a male at the address and asked to speak to Mr McIvor. That male replied, “He will be here around lunchtime.” A calling card was left to pass on.
The agent re-attended on 14 July at 12.32 pm. There was a security camera at the front of the premises. There was no response to knocking. When there was no response to a second round of knocking, the front door opened wide. The agent did not go in but called out. There was no response to the calling out. He closed the front door and left a calling card on it. That meant that if the door was opened again the calling card would fall down and obviously whoever opened the door would see the calling card.
The agent re-attended at the address on 21 July at 4.48 pm. The previous calling card had been removed. The agent had no response to knocking and calling out to the driveway side of the premises.
Having regard to the whole history, it is clear that not only is Mr McIvor not engaging with the process, he is actively avoiding the process. It is for this reason that the Court really has no option but to proceed pursuant to r 13.06(1)(e) of the Federal Circuit And Family Court Of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) and hear the matter on the evidence and make a determination on the evidence.
As I’ve said, it is clear that there has been a contravention of s 716(5). Mr Kjer is still owed the $1,530 that has been calculated by the Fair Work Ombudsman. I have made the declaration to that effect. It’s now for me to assess the pecuniary penalty that should be awarded.
The law in relation to the assessment of pecuniary penalties has really been laid down quite comprehensively. The High Court in Australian Building and Construction Commissioner v Construction Forestry, Mining and Energy Union [2018] HCA 3 said at paragraph 116 of that judgment:
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[95]. According to orthodox sentencing conceptions[96] 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 reaffirmed that principal very recently in the matter of Australia Building and Construction Commissioner v Pattinson [2022] HCA 13. The High Court said at paragraph 46:
It does not follow, as the Full Court suggested and as the CFMMEU argued in this Court, from the rejection of the Full Court's "notion of proportionality" that s 546 must be taken to require the imposition of a penalty approaching the maximum in relation to any and every contravention by a recidivist offender. It is important to recall that an "appropriate" penalty is one that strikes a reasonable balance between oppressive severity and the need for deterrence in respect of the particular case. A contravention may be a "one‑off" result of inadvertence by the contravenor rather than the latest instance of the contravenor's pursuit of a strategy of deliberate recalcitrance in order to have its way. There may also be cases, for example, where a contravention has occurred through ignorance of the law on the part of a union official, or where the official responsible for a deliberate breach has been disciplined by the union. In such cases, a modest penalty, if any, may reasonably be thought to be sufficient to provide effective deterrence against further contraventions. It is sufficient to say that a Court empowered by s 546 to impose an appropriate penalty must act fairly and reasonably for the purposes of protecting the public interest by deterring future contraventions of the Act.
In Mason v Harrington Corporation Proprietary Limited, trading as Pangaea Restaurant and Bar [2007] FMCA 7, which is known as the Pangaea case, the court went through, in effect, a number of factors the court should be mindful of when imposing pecuniary penalties. One must be careful though in looking at the Pangaea case (Supra) that one does not simply look at those matters as some form of checklist to see whether or not the facts of the case or the particular factors either aggravate or mitigate the penalty. As such, the list compiled in Pangaea case (Supra) is extremely useful but it should not be a formula used by the court to slavishly come up with some sort of almost mathematical guide for the imposition of penalties. Notwithstanding, what has been said in Pattinson (Supra) the principles in Pangaea case (Supra) are still apposite when looking at the circumstances of the contravention as well as the circumstances of the contravener.
In this case it is difficult to imagine a more blatant example of a refusal to comply with the compliance notice. The sum may, in some ways, be seen as a minor amount but it is not a minor amount to the employee, Mr Kjer. It is important to drive home the necessity for employers to comply with a compliance notice. A compliance notice, in the end, will allow a rectification of a contravention with no adverse consequences to the respondent. It is for this reason that a contravention of s 716(5) is viewed as serious by these Courts.
There is nothing on record to explain any of the circumstances of the contravener. Mr McIvor has been given ample opportunity to engage in this process and to allow the Court to have some understanding of the circumstances in which the contravention occurred, however, he has failed to do that. The fact that there was a payment in March some five or so weeks after the conclusion of Mr Kjer’s employment, albeit, after the Fair Working Inspector had begun their investigations, shows that there had been some acknowledgment that Mr McIvor had underpaid Mr Kjer.
However, as I’ve said, the deterrence factor looms large. Whilst the sum that would have to have been paid pursuant to the compliance notice is a factor, the gravamen of this contravention is the failure to comply with the notice.
In balancing all of the matters that I have needed to do, I have decided that the appropriate penalty is one of $5,000.
I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Vasta. Associate:
Dated: 29 July 2022
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