Fair Work Ombudsman v Nimos Leisure Pty Ltd
[2023] FedCFamC2G 391
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Nimos Leisure Pty Ltd [2023] FedCFamC2G 391
File number(s): SYG 904 of 2022 Judgment of: JUDGE MANOUSARIDIS Date of judgment: 12 May 2023 Catchwords: INDUSTRIAL LAW – assessment of pecuniary penalties for contraventions of s 716(5) of the Fair Work Act 2009 (Cth). Legislation: Crimes Act 1914 (Cth) s 4AA
Fair Work Act 2009 (Cth) ss 12, 90(2), 539(1), 539(2), 546, 550(1), 550(2), 557A, 700, 716(2), 716(5)
Hospitality Industry (General) Award 2010 cls 27.2, 32.1, 33.3(a)(ii)
Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (The BKH Contractors Case) (No 2) [2018] FCA 1563
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8
Bevis v VA Holdings Pty Ltd trading as Granton Homes & Ors [2020] FCCA 2082
Fair Work Ombudsman v Viper Industries Pty Ltd [2015] FCCA 492
Fair Work Ombudsman v VS Investment Group Pty Ltd [2013] FCCA 208
Kelly v Fitzpatrick [2007] FCA 1080
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
Division: Fair Work Number of paragraphs: 30 Date of hearing: 16 December 2022 Place: Sydney Solicitor for the Applicant: Mr B Lodge of the Office of the Fair Work Ombudsman, by telephone The First and Second Respondents: No appearance by, or on behalf of, the respondents ORDERS
SYG 904 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: NIMOS LEISURE PTY LTD (ACN 608 893 590)
First Respondent
MOHAN LAL SIRIBADDANA
Second Respondent
order made by:
JUDGE MANOUSARIDIS
DATE OF ORDER:
12 may 2023
THE COURT ORDERS THAT:
1.Pursuant to s 546(1) of the Fair Work Act 2009 (Cth) (FW Act) the first respondent pay a pecuniary penalty in the sum of $16,650 for its contravention of s 716(5) of the FW Act as declared in the orders made on 4 October 2022.
2.The first respondent pay the pecuniary penalties referred to in order 1 to the Commonwealth within 28 days after the day on which these orders are pronounced.
3.Pursuant to s 546(1) of the FW Act the second respondent pay a pecuniary penalty in the sum of $3,330 for his involvement in the first respondent’s contraventions of s 716(5) of the FW Act as declared in the orders made on 4 October 2022.
4.The second respondent pay the pecuniary penalties referred to in order 3 to the Commonwealth within 28 days after the day on which these orders are pronounced.
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
INTRODUCTION
The applicant (FWO) applies under s 546 of the Fair Work Act 2009 (Cth) (FW Act) for orders that the first respondent, Nimos Leisure Pty Ltd (Nimos), and the second respondent, Mr Siribaddana, pay pecuniary penalties because Nimos contravened s 716(5) of the FW Act by failing to comply with a compliance notice dated 27 July 2021 (Compliance Notice) given under s 716(2), and Mr Siribaddana was involved in Nimos’ contraventions of s 716(5) of the FW Act and, because of s 550(1), is himself taken to have contravened s 716(5) of the FW Act.
PROCEDURAL HISTORY
The FWO commenced this proceeding on 27 June 2022 by filing an application and a statement of claim.
On 20 July 2022, shortly before the first court date, Mr Siribaddana sent an email to my Associate and the lawyer for the FWO in which he stated as follows (errors in original):
Kindly find the attached documents of proof of payments to Buddhika Wijesekara. Please make arrangements to withdraw the case. Superannuation payments also done. Please dont hesitate to contact me for any clarification you may need.
There are three attachments to Mr Siribaddana’s email which purport to prove payments made to a Mr Wijesekara. The first document is headed “Employee Superannuation Advice [Summary]” and records that from 1 to 20 July 2022 Mr Wijesekara received $683.37 in superannuation. The second document is a “Payroll Advice” in relation to Mr Wijesekara for 14 to 20 July 2022 that includes the following:
Description Hours Calc. Rate Amount YTD Type Back Pay $6,755.36 $6,755.36 Wages Base Hourly 20 $21.9 $438.00 $438.00 Wages PAYG Withholding -$2,818.00 ($2,818.00) Tax Superannuation Guarantee $683.37 $683.37 Superannuation Expenses The third document is a receipt from the Commonwealth Bank which records that on 20 July 2022 “Nimos Healthcare Pty Ltd” paid $4,375.36 to Mr Wijesekara.
On 20 July 2022, at my direction, my Associate sent an email to Mr Siribaddana and the lawyer for the FWO, stating that “[t]he matter will remain listed at 9:30 am on 26 July 2022 unless both parties agree that the proceeding be dismissed or unless the applicant files a notice of discontinuance before 26 July 2022”. No notice of discontinuance was filed. Accordingly, the matter came before me for a first court date on 26 July 2022. The respondents, however, did not appear. I nevertheless:
(a)ordered that the respondents each file and serve a notice of address for service and any response and defence;
(b)listed the matter for a directions hearing at 9:30 am on 13 September 2022; and
(c)noted that if the respondents do not file and serve a notice of address for service and any response and defence as provided for by (a), the FWO would be at liberty at the directions hearing referred to in (b) to apply for default judgment.
On 9 August 2022 Mr Siribaddana emailed my associate a notice of address for service and a response. On my instruction, my Associate requested that the Registry file the notice of address for service and the response. In the response, under the heading “The respondent/s oppose the making of the following orders sought in the application” there appear the handwritten words “Further hearing as I have alreddy [sic] paid the full amount”.
The respondents did not appear at the directions hearing on 13 September 2022. At that directions hearing the lawyer for the FWO submitted that the FWO had been unsuccessful in engaging with the respondents, and requested that I make orders 1, 2, and 3 of the proposed orders emailed to my associate on 12 September 2022, and that I list the matter for a directions hearing. Accordingly, on 13 September 2022 I made the following orders:
1.The first respondent file and serve a notice of address for service on or before 20 September 2022.
2.The respondents file and serve properly particularised responses and defences on or before 20 September 2022.
3.The applicant file and serve any reply on or before 27 September 2022.
4.The matter is listed for a directions hearing at 9:30 am on 4 October 2022.
5.The parties have liberty to apply on such notice as the circumstances warrant.
THE COURT NOTES THAT:
6.If the respondents or any of them fail or fails to comply with any of orders 1 or 2 the applicant will be at liberty to apply at the directions hearing referred to in order 4 for default judgment or for such other relief as the applicant may be advised to apply for.
The respondents failed to comply with orders 1 and 2 of the above orders, and they did not appear at the directions hearing on 4 October 2022. On 4 October 2022 I therefore heard the FWO’s application for default judgment and, at the conclusion of the hearing, I made a number of orders, including declarations that Nimos contravened s 716(5) of the FW Act by failing to comply with the requirements of the Compliance Notice, and that Mr Siribaddana was involved, within the meaning of s 550(2) of the FW Act, in Nimos’ contravention. I then ordered that the FWO and the respondents file and serve affidavit evidence and submissions on the question of penalty, and listed the matter for a directions hearing on 16 December 2022. I also noted that if the respondents do not file and serve affidavit evidence and submissions on penalty, the FWO will be at liberty, at the directions hearing on 16 December 2022, to have heard an application for orders under s 546(1) of the FW Act.
The respondents did not file and serve affidavit evidence and submissions on penalty, nor did they appear at the directions hearing on 16 December 2022. Accordingly, on 16 December 2022, I heard the FWO’s submissions on the question of penalty.
FACTS
I made the declarations on 4 October 2022 on the basis of the allegations made in the statement of claim which, given the declarations made, are taken to be admitted by the respondents. Those allegations are as follows:
(a)Nimos is and was at all relevant times the operator of a bed and breakfast accommodation in Tenterfield, New South Wales (Business).
(b)Mr Siribaddana is and was at all relevant times: a director and company secretary of Nimos; responsible for the overall operation, management, and control of Nimos; and responsible for ensuring Nimos complied with its legal obligations under the FW Act.
(c)In or around March 2021, Ms Gribben (FWI), a Fair Work Inspector appointed under s 700 of the FW Act, commenced an investigation into Nimos in relation to the employment of Mr Wijesekara (Investigation).
(d)As a result of the Investigation, the FWI formed a reasonable belief that: between 25 December 2017 to 10 January 2019 Nimos employed Mr Wijesekara to work at the Business (Relevant Period); the Hospitality Industry (General) Award 2010 (Award) applied to Nimos in relation to Mr Wijesekara; Mr Wijesekara was employed as a “Level 2, Food and Beverage Attendant Grade 2” on a part-time basis between 25 December 2017 to 7 January 2018, on a full-time basis between 8 January 2018 to 21 October 2018, and on a part-time basis between 22 October 2018 to 10 January 2019; and Nimos did not pay Mr Wijesekara his entitlements under the Award and under the National Employments Standards.
(e)As a result of the matters in subparagraph (d), the FWI formed the reasonable belief that Nimos, during the Relevant Period, contravened cl 32.1 and cl 33.3(a)(ii) of the Award, and s 90(2) of the FW Act, in relation to Mr Wijesekara (Contraventions).
(f)On 27 July 2021 the FWI gave Nimos the Compliance Notice pursuant to s 716(2) of the FW Act in relation to the Contraventions. The Compliance Notice was also sent to the email address [xx@xx] on 27 July 2021, and on 5 November 2021 the FWI received an email from Mr Siribaddana in relation to the Compliance Notice.
(g)The Compliance Notice required Nimos to:
(i)take the following actions to remedy the direct effects of the Contraventions (Specified Action) by 18 November 2021:
(A)pay Mr Wijesekara $492.80 in relation to public holiday entitlements, $2,603.78 in relation to Saturday and Sunday overtime entitlements, and $3,965.38 in relation to annual leave on termination entitlements (Underpayment Amounts);
(B)calculate and pay any additional superannuation contributions required by cl 27.2 of the Award in relation to the Underpayment Amounts; and
(ii)produce reasonable evidence to the FWO of compliance with the Compliance Notice by 25 November 2021.
(h)Nimos did not take the Specified Action by 18 November 2021, and did not produce reasonable evidence of compliance with the Compliance Notice by 25 November 2021. Nimos instead paid Mr Wijesekara $65.70 on 9 August 2021, and the same amount on 5 November 2021.
(i)For the reasons in (h), Nimos failed to comply with the Compliance Notice.
(j)For the reasons in (h) and (i), Nimos contravened s 716(5) of the FW Act.
(k)On or around 8 June 2022 Nimos paid Mr Wijesekara $87.60, and on or around 10 June 2022 Nimos paid Mr Wijesekara the same amount.
(l)By reason of the amounts paid by Nimos to Mr Wijesekara referred to in subparagraphs (h) and (j), the outstanding amount required to be paid to Mr Wijesekara in relation to the Underpayment Amounts is $6,755.36 (Amount Owing).
(m)Given the matters referred to in subparagraph (b) Mr Siribaddana was responsible for ensuring that Nimos complied with the Compliance Notice.
(n)Given the matters referred to in subparagraphs (b), (f), (h), and (i) Mr Siribaddana: had actual knowledge of the Compliance Notice that was given to Nimos; had actual knowledge that Nimos failed to comply with the Compliance Notice; and was an intentional participant in Nimos’ failure to comply with the Compliance Notice. For those reasons, Mr Siribaddana was involved, within the meaning of s 550(2) of the FW Act in Nimos’ contravention of s 716(5) of the FW Act, and because of s 550(1) of the FW Act, Mr Siribaddana is taken to have contravened s 716(5) of the FW Act.
The FWO read a number of affidavits at the hearing on penalty.
Rectification of underpayment
Mr Siribaddana has made the following payments to Mr Wijesekara:[1]
[1] Affidavit of Jodi Lee Gribben 28.10.22, [31]
1 09-August-2021 $65.70 2 05-November-2021 $65.70 3 23-November-2021 $65.70 4 28-November-2021 $65.70 5 17-December-2021 $43.80 6 08-June-2022 $87.60 7 10-June-2022 $87.60 8 20-June-2022 $65.70 9 28-June-2022 $65.70 10 20-July-2022 $7,193.36 $7,806.56 PENALTY
Power and principles
Subsection 546(1) of the FW Act provides that this Court may, on application, order a person to pay a pecuniary penalty the Court considers is appropriate if the Court is satisfied the person has contravened a “civil remedy provision”.[2] That expression is defined in s 539(1) of the FW Act to include the provisions identified in column 1 of the table to s 539(2) of the FW Act. Subsection 716(5) is in column 1 of the table to s 539(2) of the FW Act.
[2] I repeat in this and the following 4 paragraphs much of what I said in Bevis v VA Holdings Pty Ltd trading as Granton Homes & Ors [2020] FCCA 2082, at [33]-[38]
Subsection 546(2) of the FW Act provides that the pecuniary penalty the Court may impose must not, where the person is an individual, be more than “the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2)” and, if the person is a body corporate, must not be more than five times “the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2)”. The maximum penalty units for a contravention of s 716(5) of the FW Act as at 18 November 2021, being the day by which Nimos was required to carry out the Specified Action, are 30 penalty units for an individual, and 150 penalty units for a body corporate. (This excludes “serious contraventions”, as defined in s 557A of the FW Act.) Section 12 of the FW Act provides that “penalty unit” has the meaning given by s 4AA of the Crimes Act 1914 (Cth). The penalty unit provided for by s 4AA of that Act as at 18 November 2021 was $222. Thus, $33,300 is the maximum penalty Nimos may be ordered to pay for its contravention of s 716(5) of the FW Act, and $6,660 is the maximum penalty Mr Siribaddana may be ordered to pay for Nimos’ contravention of s 716(5) of the FW Act.
The approach of most judges when assessing penalties for a single contravention of a provision of the FW Act is to take into account the non-exhaustive considerations Tracey J identified in Kelly v Fitzpatrick,[3] which his Honour adopted from the judgment of Mowbray FM in Mason v Harrington Corporation Pty Ltd. [4] Those considerations are:
[3] Kelly v Fitzpatrick [2007] FCA 1080, at [14]
[4] Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
(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.
Although these factors have been identified and applied as relevant to the assessment of penalties, they do not constitute a “rigid catalogue of matters for attention”.[5]
[5] Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8, at [91] (Buchanan J)
Also relevant is the maximum penalty for the contravention provided for by the FW Act; and here I refer to the following passage from the judgment of Flick J in The BKH Contractors Case (No 2):[6]
In undertaking the task of assessing and quantifying the penalties to be imposed, the maximum penalty prescribed by the Commonwealth legislature for a specific contravention serves as a “yardstick” against which the assessment of penalties is generally to proceed . . . .
[6] Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (The BKH Contractors Case) (No 2) [2018] FCA 1563, at [19]
Nature, extent, circumstances, and deliberateness of the contravening conduct
I accept the FWO’s submission that the respondents “were well aware of their obligations upon receipt of the [Compliance Notice] and were given many opportunities to rectify the breach before the [FWO] commenced proceedings”;[7] and that the FWO made extensive efforts to induce the respondents to comply with the Compliance Notice, and thus avoid the FWO instituting court proceedings.[8]
[7] Applicant’s Outline of Submissions on Penalty, [22]
[8] Affidavit of Jodi Lee Gribben 28.10.22
The following passage from the judgment of Judge Emmett in Fair Work Ombudsman v Viper Industries Pty Ltd applies to the nature of Nimos’ contravention of s 716(5) of the FW Act, and Mr Siribaddana’s involvement in that contravention.[9]
The Respondents’ intentional failure to comply with a mandatory notice issued by the workplace regulator is “conduct ... [which] undermines the utility and effectiveness of a fundamental object” [of] the FW Act. The failure to comply undermines and frustrates the powers conferred on Fair Work Inspectors, which are conferred for the purposes of providing an effective means of enforcing compliance with lawful minimum entitlements. There is a significant cost to the public by reason of the need to bring this matter before the court to enforce compliance.
[9] Fair Work Ombudsman v Viper Industries Pty Ltd [2015] FCCA 492, at [7]
These matters point to assessing penalty at the higher end of the scale.
Nature and extent of loss occasioned by contravention
Mr Wijesekara did not receive full payment until 20 July 2022, roughly 8 months after compliance with the Compliance Notice was due. This represents a loss flowing from Nimos’ failure to comply with the Compliance Notice.
Deterrence
Nimos remains registered, and Mr Siribaddana remains one of its directors. The penalty, therefore, should include an element for specific deterrence.
As for general deterrence, I refer to what Judge Jarrett said in Fair Work Ombudsman v VS Investment Group Pty Ltd:[10]
The failure to comply with a 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.
[10] Fair Work Ombudsman v VS Investment Group Pty Ltd [2013] FCCA 208, at [51]
The FWO relies on data contained in an industry profile for the “Accommodation” industry (Industry) from July 2017 to June 2022.[11] The FWO submits that the Industry “has a high workplace dispute rate” and “between 19% and 43% of all industry disputes each year related to visa holders”. On that basis, the FWO submits that there is a need to send a message to employers in the Industry that non-compliance with statutory notices issued to recover visa worker entitlements, such as Mr Wijesekara, will not be tolerated.[12]
[11] Affidavit of Benjamin Lodge 29.11.22, [4]; annexure “BL-27”
[12] Applicant’s Outline of Submissions on Penalty, [13]-[16]
The penalty should be set at a level which demonstrates to employers in general, and to employers in the Industry in particular, that they would be faced with a meaningful penalty if they fail to comply with a compliance notice.
Deliberateness and lack of contrition and corrective action
The FWO, in its written submissions, acknowledges that Nimos paid $7,193.36 to Mr Wijesekara on 20 July 2020, and paid $613.20 in instalments between 9 August 2021 and 28 June 2022, which exceeds the entitlements owed to Mr Wijesekara under the Compliance Notice. The rectification of underpayments, however, occurred 8 months after compliance with the Compliance Notice was due, and was unaccompanied by any expression of regret or remorse. Further, the respondents have failed to meaningfully engage in the proceedings.
Assessment
The FWO submits that, given the FWO was required to commence proceedings in circumstances where litigation could have been avoided, the need for specific and general deterrence, and the lack of contrition displayed by the respondents, 60-70% of the maximum amount would be an appropriate penalty.
The penalty the FWO submits I should set does not sufficiently reflect the relevance of the respondents having done what the Compliance Notice required Nimos to do, albeit more than 8 months after the day by which Nimos was required to comply with the Compliance Notice. Having failed to comply with the requirements of a compliance notice, all incentive to comply with it, albeit after the time for compliance has passed, ought not be removed. The penalty should be set at a level that would deter employers from not complying with a compliance notice, but not at a level that would signal to employers that there would be no benefit in complying with a compliance notice after the time for doing so has passed.
The appropriate penalty is 50% of the maximum for each of Nimos’ and Mr Siribaddana’s contraventions of s 716(5) of the FW Act. I therefore find that $16,650 is an appropriate penalty for Nimos’ contravention of s 716(5) of the FW Act, and $3,330 is an appropriate penalty for Mr Siribaddana’s involvement in Nimos’ contravention of s 716(5) of the FW Act.
DISPOSITION
I propose to order that:
(a)Nimos pay a pecuniary penalty of $16,650;
(b)Mr Siribaddana pay a pecuniary penalty of $3,330; and
(c)Nimos and Mr Siribaddana pay the pecuniary penalties to the Commonwealth within 28 days after the day I pronounce my orders.
I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Manousaridis. Associate:
Dated: 12 May 2023
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