Fair Work Ombudsman v Melotte

Case [2024] FedCFamC2G 1318

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Fair Work Ombudsman v Melotte [2024] FedCFamC2G 1318

File number(s): MLG 717 of 2023
Judgment of: JUDGE RILEY
Date of judgment: 4 December 2024
Catchwords: INDUSTRIAL LAW – Fair Work – penalties – the respondents were involved in contraventions by a corporation, which is now in liquidation – quantum of penalties agreed by the parties.    
Legislation: Fair Work Act 2009 ss. 539(2), 546(2)(b), 557
Cases cited:

Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450; (2022) 175 ALD 383; (2022) 399 ALR 599; (2022) 314 IR 301; [2022] HCA 13

Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (CFMEU) (2018) 262 CLR 157; (2018) 351 ALR 190; (2018) 92 ALJR 219; (2018) 273 IR 211; [2018] HCA 3

Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482; (2015) 90 ALJR 113; (2015) 255 IR 87; (2015) 326 ALR 476; [2015] HCA 46

Community and Public Sector Union v Telstra Corporation Limited (2001) 108 IR 228; [2001] FCA 1364

Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 2) [2017] FCA 557

Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown (2017) 275 IR 148; [2017] FCA 1301

Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080

Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383; (2008) 247 ALR 714; (2008) 171 IR 455; [2008] FCAFC 70

Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543; (2007) 162 IR 444; [2007] FCAFC 65

Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412

Division: Division 2 General Federal Law
Number of paragraphs: 72
Hearing date: Determined on the papers
Date of last submissions: 15 November 2024
Place: Melbourne
Solicitor for the Applicant: Fair Work Ombudsman
Solicitor for the First and Second Respondents: Madgwicks Lawyers

ORDERS

MLG 717 of 2023

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN:

FAIR WORK OMBUDSMAN

Applicant
AND:

LOUISE MAREE MELOTTE

First Respondent

TRAVIS FRANCIS MELOTTE

Second Respondent

ORDER MADE BY:

JUDGE RILEY

DATE OF ORDER:

4 DECEMBER 2024

THE COURT ORDERS THAT:

1.By 4pm on 4 March 2025, pursuant to s.546(1) of the Fair Work Act2009 (“the Act”), the first respondent pay to the Consolidated Revenue Fund of the Commonwealth pecuniary penalties in the sum of $95,000 in respect of the contraventions in declaration 1 made on 7 August 2024.

2.By 4pm on 4 March 2025, pursuant to s.546(1) of the Act, the second respondent pay to the Consolidated Revenue Fund of the Commonwealth pecuniary penalties in the sum of $9,000 in respect of the contraventions in declaration 2 made on 7 August 2024.

3.The applicant have liberty to apply on three days’ notice in the event that either of the preceding orders are not complied with.

Note:…

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AGLC
Fair Work Ombudsman v Melotte [2024] FedCFamC2G 1318
Case
[2024] FedCFamC2G 1318
Decision Date

CaseChat Overview and Summary

In the matter of Fair Work Ombudsman v Melotte, the respondents were involved in contraventions by a corporation, which is now in liquidation. The Fair Work Ombudsman (FWO) sought penalties against the respondents, who jointly sought an agreed penalty on the papers. The court was required to determine the quantum of penalties agreed by the parties, considering the admitted contraventions by the company during a specified period. These contraventions included failure to pay overtime, penalties, and minimum wages, as well as requesting unreasonable additional hours for certain employees. The respondents admitted to their involvement in these contraventions, leading to significant underpayments to employees.

The court examined the submissions from the FWO and the respondents, who agreed on the penalties. The FWO argued for penalties based on the severity and culpability of the contraventions, while the respondents submitted that the agreed penalties reflected their respective involvement and the agreed quantum. The court considered the admitted contraventions, the roles of the respondents, and the agreed penalties, determining that the penalties should reflect the agreed terms. The primary focus was on ensuring that the penalties were appropriate and reflected the agreed submissions.

The court concluded that the agreed penalties were appropriate, considering the admitted contraventions and the roles of the respondents. The First Respondent's penalty was reduced to $95,000, while the Second Respondent's penalty remained at $9,000. The court accepted the agreed penalties as they appropriately reflected the circumstances of the case. Consequently, the court made orders accordingly, fixing the penalties as agreed by the parties.

Orders

Orders of the court

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Background

Background to the litigation

The parties asked the court to fix the penalties on the papers. They jointly sought an agreed penalty for each respondent. BACKGROUND In her submissions on penalty filed on 19 September 2024, the FWO provided the following background to this matter: 8. During the period 1 May 2017 to 28 July 2019 (Assessment Period) Loelal Pty Ltd ACN 604 512 558 (in liquidation) (Company), operated a hotel, café and restaurant at 82 Vincent Street, Daylesford, Victoria, trading as “Hotel Frangos” and “Café Koukla” (Business). 9. This matter involves three distinct cohorts of the Company’s employees:(a)the ASA Employees – 11 employees who were paid an annual salary which was at least 25% above the rate prescribed for their classification in the Award. By payment of these salaries, the Company attracted the operation of clause 27.1 of the Award, which would relieve them of the obligation to pay on a weekly basis the penalty rates, overtime and other monetary entitlements arising under the Award provided that the salary paid over a year (or lesser period if employment ended before the end of the year) was sufficient to cover all amounts to which the employee was entitled. In the case of the ASA Employees, their salaries were not sufficient to cover their full Award entitlements;(b) the Non-ASA Employees – 17 employees who were paid an annual salary which was less than 25% above the rate prescribed for their classification. Clause 27.1 of the Award did not apply to these employees and the Company was not relieved of the obligation to pay on a weekly basis the penalty rates, overtime and other monetary entitlements arising under the Award. The amounts paid to the Non-ASA employees did not satisfy their weekly Award entitlements; and(c) the Casual Employees – 74 employees who were employed on a casual basis. 10. Over the Assessment Period, relevant to these proceedings, the Company employed a total of 97 employees across the three cohorts (Employees). The majority of ASA Employees worked as cooks in the kitchen (seven of the 11 ASA Employees) with the remainder working as food and beverage attendants. Just over half of the Non-ASA Employees worked as food and beverage attendants (10 of the 17 Non-ASA Employees) with the remainder working in the kitchen. 71 of the 74 Casual Employees worked as food and beverage attendants, with the remaining three working in the hotel.11. During the Assessment Period, the First Respondent was the sole director of the Company; she was the controlling mind of the Company and responsible for the overall direction, control, management and supervision of the Company. She was a person responsible for:(a) engaging employees;(b) setting the rates of pay for the employees; (c) accessing, approving and modifying employee timesheets;(d) reviewing and processing payroll; and (e) maintaining the Company’s records including records of hours of work and leave and issuing pay slips.12. The Second Respondent was a person responsible for the day to day management of the Business; he was involved in creating staff rosters, and accessing, approving and modifying employees’ timesheets.13.In the 2FAD [the second further amended defence], the Respondents admitted that during the Assessment Period, the Company contravened the FW Act and various clauses of the Award by failing to: (a) comply with clauses 27.1(b)(ii) and 27.1(c) of the Award and failing to pay overtime, public holiday penalties and/or no break penalties to the ASA Employees;(b) pay minimum wages, overtime, penalties, no break penalties and/or annual leave to the Non-ASA Employees; (c) pay minimum wages, casual loading, minimum engagement, overtime, penalties and/or no break penalties to the Casual Employees; and (d) comply with section 62(1) of the FW Act for two employees, by requesting or requiring Mr Subash Shrestha and Mr Suraj Bartaula to work unreasonable additional hours in excess of 38 hours per week.14. In total, the Company’s contraventions resulted in admitted underpayments of $321,202.48 (Underpayment) to the Employees across the three cohorts. On 7 July 2022, prior to these proceedings being commenced, the Company was placed in voluntary liquidation.15. In the 2FAD, the Respondents admitted that:(a) the First Respondent was involved, within the meaning of section 550(2)(c) of the FW Act, in all of the admitted contraventions. The matters for which the First Respondent was responsible and of which she admits having knowledge are at paragraphs 142 to 144 of the FASOC; and (b) the Second Respondent was involved in the admitted contraventions of section 62(1) of the FW Act by requesting or requiring Mr Shrestha and Mr Bartaula to work unreasonable additional hours in excess of 38 hours per week. The matters for which the Second Respondent was responsible and of which he admits having knowledge are at paragraphs 148 and 149 of the FASOC.16. Pursuant to section 550(1) of the FW Act, a person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.17. Prior to the commencement of the liability hearing in this matter, the parties reached agreement with respect to all aspects of liability and the proposed civil remedies. (footnotes omitted)LIABILITY DECLARATIONS AND COMPENSATION FOR LOSS

Evidence

Evidence Before The Court

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Decision

Reasons for decision

I accept that submission. The effect of that submission is that Ms Melotte’s total penalty will be reduced to $95,000. Mr Melotte’s penalty will remain at $9,000. CONCLUSION There will be orders accordingly.

Ratio Decidendi

Legal Principle Established

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