Fair Work Ombudsman v Mobile Food Vans and Trucks Pty Ltd (No 2)
[2021] FCCA 1742
•29 July 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
Fair Work Ombudsman v Mobile Food Vans & Trucks Pty Ltd (No 2) [2021] FCCA 1742
File number(s): MLG 4043 of 2020 Judgment of: JUDGE O'SULLIVAN Date of judgment: 29 July 2021 Catchwords: INDUSTRIAL LAW – Application for civil penalty – penalty hearing – failure to obey compliance notice under Fair Work Act 2009 (Cth) – appropriate penalty. Legislation: Corporations Act 2001 (Cth) s.500
Federal Circuit Court Rules 2001 rr.13.03A, 13.03B, 13.03C
Fair Work Act 2009 (Cth) ss. 539, 546, 550, 716
Crimes Act 1914 s.4AA
Cases cited: 1 Fair Work Ombudsman v Zurel Pty Ltd & Anor [2020] FCCA 2884
2 Fair Work Ombudsman v Mobile Food Vans & Trucks Pty Ltd & Gelgel [2021] FCCA 882
3 Kelly v Fitzpatrick [2007] FCA 1080
4 Fair Work Ombudsman v Yogurberry World Square [2016] FCA 1290
5 Fair Work Ombudsman v Maclean Bay Pty Ltd (No.2) [2012] FCA 557
6 Fair Work Ombudsman v Trucking Services Pty Ltd [2021] FCCA 760
Number of paragraphs: 42 Date of last submission/s: 29 July 2021 Date of hearing: 29 July 2021 Place: Melbourne Counsel for the Applicant Ms Willoughby Solicitor for the Applicant Fair Work Ombudsman First Respondent No appearance Second Respondent No appearance ORDERS
MLG 4043 of 2020 BETWEEN: FAIR WORK OMBUDSMAN
ApplicantAND: MOBILE FOOD VAN & TRUCKS PTY LTD
First Respondent
YENER GELGEL
Second Respondent
ORDER MADE BY:
JUDGE O'SULLIVAN
DATE OF ORDER:
29 JULY 2021
THE COURT ORDERS THAT:
1.The applicant have leave to proceed on an undefended basis pursuant to Rule 13.03A(a)(2)(i)(ii)(iii)(vii), Rule 13.03B(2)(d) and Rule 13.03C(1)(e) of the Federal Circuit Court Rules 2001 (“the Rules”).
2.Pursuant to section 546(1) of the Fair Work Act 2009 (“the FW Act”), the second respondent pay, within 28 days, a pecuniary penalty of $4,410.00 to the Commonwealth for his involvement in, within the meaning of section 550(2) of the FW Act, the first respondent’s contravention of section 716(5) of the FW Act, as declared by this Court at paragraph 4(b) of the order dated 28 April 2021.
3.The applicant serve a copy of these orders on the second respondent by same means as specified in order 2 of the orders of 16 February 2021.
4.The applicant have liberty to apply.
REASONS FOR JUDGMENT
(Revised from transcript)There are potentially serious consequences for failing to abide by a compliance notice issued under s.716 of the Fair Work Act 2009 (Cth) (“the FW Act”) in circumstances where compliance in the first place would have avoided the consequences of failing to heed the warning these notices provide. This is a case where that warning went unheeded.[1]
[1] Fair Work Ombudsman v Zurel Pty Ltd & Anor [2020] FCCA 2884.
On 28 April 2021 the Court granted default judgment and made various declarations against the respondents in this proceeding: see Fair Work Ombudsman v Mobile Food Vans & Trucks Pty Ltd & Gelgel [2021] FCCA 882 (“the first judgment”).
These reasons, in which the parties will be referred to in the same terms (and which should be read in conjunction with the first judgment) concern the civil penalties which the applicant seeks against those respondents as a consequence of the contraventions found to be proven by the Court in these proceedings.
BACKGROUND
The first judgment set out the background to these proceedings at paragraphs [2] to [9] which for the sake of brevity will not be rehearsed.
For the reasons set out at paragraphs [10] to [22] in the first judgment on 28 April 2021 the following orders were made:
1.The applicant have leave to proceed on an undefended basis pursuant to Rule 13.03A(a)(2)(i)(ii)(iii)(vii), Rule 13.03B(2)(d) and Rule 13.03C(1)(e) of the Federal Circuit Court Rules 2001 (“the Rules”).
2.Pursuant to rule 7.01(1) of the Federal Circuit Rules 2001 (Cth), the name of the second respondent be amended to read “Yener Gelgel”.
3.Default judgment be entered for the applicant against the first respondent and the second respondent pursuant to Rule 13.03B(2)(c) of the Rules by reason of the first and second Respondents’ default pursuant to Rule 13.03A(2) of the Rules by their failure to each:
(a)file a Notice of Address for Service as required by rule 6.01 of the Rules;
(b)file any response or a defence within 28 days of service as required by rules 4.03 and 4.05(3)(a) of the Rules; file and serve a Notice of Address for Service by 23 February 2021 in accordance with Order 3 of the orders of the Court dated 16 February 2021;
(c)file and serve any response and defence by 16 March 2021 in accordance with Order 4 of the orders of the Court dated 16 February 2021; and
(d) defend the proceeding with due diligence.
THE COURT DECLARES THAT:
4.Upon admissions that the first and second Respondents are taken to have made, consequent upon non-compliance with the Rules and orders of the Court, the Court declares that:
(a)the first respondent contravened section 716(5) of the Fair Work Act 2009 (Cth) (“FW Act”) by failing to comply with a compliance notice given to the first respondent on 7 April 2020 (“Compliance Notice”); and
(b)the second respondent was involved in, within the meaning of section 550(2) of the FW Act, the contravention by the first respondent of section 716(5) of the FW Act and is taken to have contravened section 716(5) of the FW Act.
THE COURT ORDERS THAT:
5.
(a)pursuant to section 545(1) of the FW Act, the first respondent take the steps that were required by the Compliance Notice within 28 days of this order, by:
(i)calculating and paying to Nildipkumar Gajera (“Mr Gajera”) the outstanding entitlements that the first respondent was required to pay as specified in the Compliance Notice;
(ii)calculating and paying superannuation contributions into Mr Gajera’s nominated superannuation fund for the additional superannuation contributions required to be paid on the outstanding entitlements referred to in paragraph 5(a)(i) above;
(iii)preparing and producing to the applicant a schedule outlining the calculation of the outstanding entitlements and the additional superannuation contributions referred to at paragraphs 5(a)(i) and 5(a)(ii) above; and
(iv)providing evidence to the applicant that the outstanding entitlements and the additional superannuation contributions referred to at paragraphs 5(a)(i) and 5(a)(ii) above have been rectified;
(b)pursuant to sections 545(1) and 547(2) of the FW Act, the first respondent pay interest calculated in accordance with the applicable pre-judgment interest rates prescribed by the Federal Court of Australia to:
(i)Mr Gajera on the amount owed to Mr Gajera pursuant to paragraph 5(a)(i) above; and
(ii)Mr Gajera’s nominated superannuation fund on the additional superannuation contributions required to be paid pursuant to paragraph 5(a)(ii) above,
within 28 days of this order.
(c)the applicant serve a copy of these orders within 7 days:
(i)on the first respondent by posting it to the first respondent at its registered office and principal place of business at 24 Gasoline Way, Craigieburn, Victoria 3064; and
(ii)on the second respondent by the means specified in order 2 of the Court’s orders of 16 February 2021;
(d)the matter is adjourned to 29 July 2021 commencing at 10.00am at the Federal Circuit Court at Melbourne for a further hearing in respect of the applicant’s claim for penalties to be imposed on the respondents for the contraventions declared at paragraph 4 above;
(e)evidence in chief on the question of penalty be by way of affidavit;
(f)the applicant files and serves evidence and submissions relating to penalty by no later than 35 days prior to the date of the hearing fixed pursuant to paragraph 5(d);
(g)the respondents file and serve evidence and submissions relating to penalty no later than 21 days prior to the date of the hearing fixed pursuant to paragraph 5(d);
(h)the parties have liberty to apply.
Following the hearing on 28 April 2021 the first respondent was placed under external administration and as a result these proceedings are stayed as against the first respondent by operation of s.500 of the Corporations Act 2001 (Cth).
The orders made on 28 April 2021 provided for the applicant to serve the second respondent. The affidavits of Laura Willoughby filed on 25 June 2021 and 23 July 2021 makes clear those orders and the material relied on were served on the second respondent.
On 29 July 2021 Ms Willoughby appeared on behalf of the applicant. There was no appearance by or on behalf of either of the respondents.
In relation to the first respondent that is explicable given the above. However, there was no contact made with the Court by or on behalf of the second respondent. The second respondent failed to comply with the above mentioned orders and there was no application for an adjournment of the penalty hearing by or on his behalf.
Accordingly, the penalty hearing today proceeded in the absence of the second respondent given those defaults pursuant to rr.13.03A(2)(a)(b)(iii), (vii), 13.03B(2)(d) and 13.03C(1)(e) of the Federal Circuit Court Rules 2001.
MATERIAL RELIED ON
The applicant relied on the following documents:
(a)application and statement of claim filed on 19 November 2020 (Exhibit A1);
(b)affidavit of Laura Willoughby filed on 11 February 2021 (Exhibit A2);
(c)affidavit of Laura Willoughby filed on 31 March 2021 (Exhibit A3);
(d)affidavit of Laura Willoughby filed on 23 April 2021 (Exhibit A4);
(e)affidavit of Laura Willoughby filed on 25 June 2021 (Exhibit A5);
(f)affidavit of Fair Work Inspector Yoomin Lee filed on 25 June 2021 (Exhibit A6);
(g)affidavit of Laura Willoughby filed on 23 July 2021 (Exhibit A7)
RELEVANT PROVISIONS OF THE FW ACT
Section 716 of the Fair Work Act 2009 (Cth) (“FW Act”) provides:
716 Compliance notices
Application of this section
(1) This section applies if an inspector reasonably believes that a person has contravened one or more of the following:
(a) a provision of the National Employment Standards;
(b) a term of a modern award;
…
Giving a notice
(2) The inspector may, except as provided by subsection (4), give the person a notice requiring the person to do either or both of the following within such reasonable time as is specified in the notice:
(a) take specified action to remedy the direct effects of the contravention referred to in subsection (1);
(b) produce reasonable evidence of the person’s compliance with the notice.
(3) The notice must also:
(a) set out the name of the person to whom the notice is given; and
(b) set out the name of the inspector who gave the notice; and
(c) set out brief details of the contravention; and
(d) explain that a failure to comply with the notice may contravene a civil remedy provision; and
(e) explain that the person may apply to the Federal Court, the Federal Circuit Court or an eligible State or Territory Court for a review of the notice on either or both of the following grounds:
(i) the person has not committed a contravention set out in the notice;
(ii) the notice does not comply with subsection (2) or this subsection; and
(f) set out any other matters prescribed by the regulations.
…
Relationship with civil remedy provisions
(4A) An inspector must not apply for an order under Division 2 of Part 4‑1 in relation to a contravention of a civil remedy provision by a person if:
(a) the inspector has given the person a notice in relation to the contravention; and
(b) either of the following subparagraphs applies:
(i) the notice has not been withdrawn, and the person has complied with the notice;
(ii) the person has made an application under section 717 in relation to the notice that has not been completely dealt with.
Note: A person other than an inspector who is otherwise entitled to apply for an order in relation to the contravention may do so.
(4B) A person who complies with a notice in relation to a contravention of a civil remedy provision is not taken:
(a) to have admitted to contravening the provision; or
(b) to have been found to have contravened the provision.
Person must not fail to comply with notice
(5) A person must not fail to comply with a notice given under this section.
Note: This subsection is a civil remedy provision (see Part 4‑1).
(6) Subsection (5) does not apply if the person has a reasonable excuse.
The issuing of compliance notices is a power given to Fair Work Inspectors which is designed to be a method by which non-compliance with obligations imposed by the FW Act can be enforced as an alternative to court proceedings.[2] The failure to comply with a notice given under s.716 of the FW Act is a civil remedy provision. “Civil remedy provision” is defined in s.539(1) to mean the provisions referred to in column 1 of an item in the table in s.539(2) of the FW Act.
[2] See Fair Work Ombudsman v Absynthe Restaurant Pty Ltd & Anor [2015] FCCA 58 at [36].
It is not only the person who has contravened a civil remedy provision who may be liable to an order for the payment of a pecuniary penalty as s.550 of the FW Act provides that:
Involvement in contravention treated in same way as actual contravention
(1) A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.
(2) A person is involved in a contravention of a civil remedy provision if, and only if, the person:
(a) has aided, abetted, counselled or procured the contravention; or
(b) has induced the contravention, whether by threats or promises or otherwise; or
(c) has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d) has conspired with others to effect the contravention.
APPROACH TO PENALTY PROCEEDINGS
The power for the Court to order the imposition of a civil penalty against the respondents for their involvement in and contraventions of the FW Act by failing to abide by the compliance notice (“the Notice”) arises under s.546 of the FW Act.
The approach of the Court in determining penalties involves the following steps:
a)the Court is to identify the separate contraventions involved. For the purposes of s.539(2), each contravention of an obligation located in the FW Act constitutes a separate contravention of a civil remedy provision of the FW Act;
b)the Court should consider whether any of the breaches taken together constitute a single course of conduct pursuant to s.557(1) such that multiple contraventions should be treated as a single contravention;
c)to the extent that two or more contraventions have common elements, this should be taken into account in considering what an appropriate penalty is in all the circumstances for each contravention. The respondents should not be penalised more than once for the same conduct. The penalties imposed by the Court should be an appropriate response to the respondents’ actions. Importantly, this third task is distinct from, and in addition to, the final application of the “totality principle”;
d)the Court will consider an appropriate penalty to impose in respect of each contravention, whether a single contravention, a course of conduct, or group of contraventions, having regard to all of the circumstances of the case; and
e)having fixed an appropriate penalty for each contravention, the Court should then review the aggregate penalty so as to determine whether it is an appropriate response to the contravening conduct. In doing so, the Court should apply an “instinctive synthesis” in making this assessment. This final step is commonly known as the “totality principle”.
The process set out above is facilitated by addressing the non-exhaustive considerations Tracey J identified in Kelly v Fitzpatrick [2007] FCA 1080, which were 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 respondents;
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 co-operated 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.
CONSIDERATION
The maximum penalty for a breach of s.716(5) of the FW Act is specified in the table in s.539 of the FW Act as 30 penalty units. Subsection 546(2) of the FW Act provides that individuals, such as the second respondent, are to receive a penalty of no more than the maximum number of penalty units set out in the table in s.539(2) of the FW Act.
At the time of the breach in the present case, a penalty unit was defined in s.4AA of the Crimes Act 1914 to be worth $210. Thirty penalty units are therefore worth $6,300.
I have considered the submissions made on behalf of the applicant in relation to each of the relevant factors for determining the appropriate penalty to be imposed on the second respondent in this case.
The relevant single breach has been referred to above. As there was only one contravention it is not necessary to consider the second or third steps set out above. Therefore it is now necessary to consider the appropriate penalty in the context of the following relevant factors.
The nature, extent and circumstances of the conduct which led to the breaches
The applicant’s amended written submissions filed on 20 July 2021 (Exhibit A8) addressed this consideration at paragraphs [17] to [21] and it is also referred to in the material relied on.
The applicant in her written submissions sets out the first respondent’s failure to comply with the Notice. It was only after the applicant had issued the Notice and the respondents’ failed to comply with that Notice that the applicant commenced these proceedings against the respondents.
The applicant also addressed in her submissions that the second respondent was aware of the requirement to comply with the Notice as he had received a copy of the Notice by email, and was also informed by the Fair Work Inspector during a telephone conversation on 20 May 2020 that the first respondent was required to comply with that Notice. The second respondent was also aware that the first respondent failed to comply with the Notice as he had received a copy of the failure to comply letter on 12 June 2020.[3]
[3] See Affidavit of Yoomin Lee filed on 25 June 2021.
The nature and extent of any loss or damage sustained as a result of the breaches
It appears that the employee concerned is still waiting for the entitlements which should have been paid in the first place. It is noted that the employee was deprived of the benefit of the entitlements owed to him by the first respondent and not complying with the Notice.
The non compliance by the first respondent with the Notice and the second respondent’s involvement in that conduct has resulted in the applicant spending time and public funds commencing civil remedy proceedings.
Whether there has been similar previous conduct by the respondents
The applicant did not address this consideration in their submissions but there is no evidence of similar previous conduct.
The size of the business enterprise involved and capacity to pay
The applicant’s amended written submissions filed on 20 July 2021 addressed this consideration at paragraphs [24] to [25].
The applicant in her amended written submissions noted that the second respondent had advised the officers of the applicant that the first respondent was not going to comply with the Notice as it would be bankrupt.[4]
[4] See Affidavit of Yoomin Lee filed on 25 June 2021.
It is noted in the applicant’s amended written submissions that the size and financial circumstances of an employer do not excuse the contravention breaches and that capacity to pay a penalty is of less relevance than a general deterrence objective. It was also noted that there was no evidence before the Court regarding the second respondent’s financial circumstances.
Whether or not the breaches were deliberate
The applicant did not address this consideration in her submissions.
Contrition, corrective action and co-operation
The applicant’s amended written submissions filed on 20 July 2021 addressed this consideration at paragraphs [26] to [29].
The applicant in her amended written submissions noted that the second respondent has shown no contrition, taken no steps to cooperate with the applicant and failed to engage with the Court in these proceedings.
The applicant noted that following the issue of the Notice the second respondent engaged with the Fair Work Inspector on only one occasion to advise that the first respondent would not comply with the Notice. Once proceedings had been issued by the applicant there had been no meaningful engagement with the applicant or the Court by the second respondent.
In the circumstances, the applicant submitted, and I accept, there should be no discount on penalty for these factors.
The need to ensure compliance with minimum standards
The applicant’s amended written submissions filed on 20 July 2021 addressed this consideration at paragraphs [30] to [32].
The applicant submitted, and I accept, that the first respondent’s failure (and the second respondent’s involvement in that failure) undermines the FW Act and shows a disregard for the applicant’s authority as a regulator.
The need for specific and general deterrence
The applicant’s amended written submissions filed on 20 July 2021 addressed this consideration at paragraphs [33] to [36] and referred to what was said about these factors in the authorities in Fair Work Ombudsman v Yogurberry World Square [2016] FCA 1290 and Fair Work Ombudsman v Maclean Bay Pty Ltd (No.2) [2012] FCA 557.
The applicant submitted, and I accept, that the penalties that should be imposed on the second respondent must be at an amount that shows that this behaviour is unacceptable and will not be tolerated by the Court, and also to serve as a deterrent to any future contravenors.
CONCLUSION
The applicant submitted (and I accept given the above) that a penalty of $4,410.00, being 70% of the maximum penalty of $6,300.00 would be an appropriate penalty for the second respondent.
In Fair Work Ombudsman v Trucking Services Pty Ltd [2021] FCCA 760 at paragraph 21 it was said:
As other judges of this Court have observed, the efficacy of statutory notices such as compliance notices will be hindered or made redundant if recipients perceive that a failure to comply carries no meaningful consequences. Given the importance of a Fair Work Inspector’s power to issue compliance notices, and that compliance with such notices avoids the need for litigation or the imposition of any penalties, penalties for non-compliance should be set at a level which demonstrates there are serious consequences for failing to comply with a compliance notice. In doing so, the Court will deter other parties from failing to comply with compliance notices.
The failure to comply with the Notice properly issued by the applicant in the course of its investigations and the discharge of its statutory functions is serious. Recipients of such notices should be left under no misapprehension about their obligations to comply with those notices.
Therefore, the Court:
a)is directed by the relevant authorities to consider what is appropriate in all the circumstances of this case; and
b)in its discretion in relation to penalty is not fettered by a checklist of mandatory criteria; and
c)is satisfied in the light of the above considerations the penalty set out above is just and appropriate;
there will be orders as set out in the beginning of these reasons for decision.
I certify that the preceding forty-two (42) numbered paragraphs are a true copy of the Reasons for Judgment of Judge O'Sullivan. Associate:
Dated: 29 July 2021
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