Fair Work Ombudsman v Niyamat Pty Ltd
[2023] FedCFamC2G 1080
•24 November 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Niyamat Pty Ltd [2023] FedCFamC2G 1080
File number: MLG 955 of 2023 Judgment of: JUDGE TAGLIERI Date of judgment: 24 November 2023 Catchwords: INDUSTRIAL LAW – penalty hearing – contraventions of Fair Work Act 2009 (Cth) – determination of quantum of penalties to be paid to Commonwealth – penalty orders made Legislation: Corporations Act 2011 (Cth) s 471B
Fair Work Act 2009 (Cth) ss 550, 716(1), 716(2), 716(5)
Restaurant Industry Award 2020
Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3
Fair Work Ombudsman v NSH North Pty Ltd [2017] FCA 1301
Kelly v Fitzpatrick [2007] FCA 1080
Stuart-Mahoney v Construction, Forestry, Mining and Energy Union [2008] FCA 1426
Division: Division 2 General Federal Law Number of paragraphs: 28 Date of hearing: 31 October 2023 Place: Hobart Solicitor for the Applicant: Ms Vassallo, Fair Work Ombudsman For the Respondents: The Second Respondent in person ORDERS
MLG 955 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: NIYAMAT PTY LTD (ACN 621 370 081)
First Respondent
MATHEW D'ROZARIO
Second Respondent
ORDER MADE BY:
JUDGE TAGLIERI
DATE OF ORDER:
24 NOVEMBER 2023
THE COURT ORDERS THAT:
1.Pursuant to section 546(1) of the Fair Work Act 2009 (Cth) (“the Act”), the Second Respondent pay pecuniary penalties of $2,830.50 in respect of the contraventions set out in the Orders of 25 September 2023.
2.Pursuant to section 546(3) of the Act, the penalty amounts referred to in Order 1 above be paid to the Consolidated Revenue Fund of the Commonwealth within 90 days of the date of these Orders.
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 Taglieri
These proceedings relate to contraventions of s 716(5) of the Fair Work Act 2009 (Cth) (“the Act”) on the part of the Respondents for non-compliance with a compliance notice issued by the Applicant and given on 21 March 2022 (“the Compliance Notice”).
Liability was admitted by the Respondents in an agreed Statement of Agreed Facts filed 22 September 2023. Consequently, by consent, the Court made orders on 25 September 2023 in the following terms:
THE COURT DECLARES BY CONSENT THAT:
1.The First Respondent contravened s.716(5) of the Fair Work Act 2009 (Cth) (“the Act”) by failing to comply with the compliance notice issued on 21 March 2022 pursuant to s.716(2) of the Act (“the compliance notice”).
2.The Second Respondent was involved, within the meaning of s.550(2) of the Act, in the First Respondent’s contravention of s.716(5) of the Act by failing to comply with the compliance notice and is taken by s.550(1) of the Act to have contravened s.716(5) of the Act.
THE COURT ORDERS BY CONSENT THAT:
3.The directions hearing listed on 26 September 2023 at 9.30am be vacated.
4.Orders 4, 5 and 6 of the Orders made by Judge Taglieri on 17 July 2023 be vacated.
5.By 4pm on 9 October 2023, the Applicant file and serve evidence and submissions in relation to penalty.
6.By 4pm on 23 October 2023, the Respondents file and serve evidence and submissions in relation to penalty.
7.By 4pm on 26 October 2023, the Applicant file and serve any reply evidence and submissions in relation to penalty.
THE COURT ORDERS THAT:
8.The penalty hearing listed on 31 October 2023 at 10am proceed by audio visual link and leave is granted to the parties to appear by Microsoft Teams.
AND THE COURT NOTES THAT:
A.The matter remains listed for a penalty hearing (with an estimated duration of half a day) on 31 October 2023 at 10am.
The proceedings were adjourned to 31 October 2023 for a hearing in respect of the question of penalty. At that time, the Applicant’s solicitor Ms Vassallo relied on:
(a)The Application and Statement of Claim filed on 30 May 2023;
(b)The Statement of Agreed Facts filed on 22 September 2023 (“SOAF”); and
(c)The Affidavit of Fair Work Inspector Jake Timothy Logan (“FWI Logan”) affirmed and filed on 6 October 2023 (“the FWI Affidavit”), which was taken as read in evidence.
The Second Respondent, who was at material times a director and secretary of the First Respondent,[1] appeared at the hearing for both Respondents. He made submissions to the Court as to penalty, which are referred to below. He did not contest any of the agreed facts or evidence contained in the FWI Affidavit, subject to one exception.
[1] SOAFS at [7].
On 16 November 2023, the Applicant provided written email advice to Chambers of the First Respondent’s insolvency and an updated company search reflecting that status for the company. The email copied to the Second Respondent and the Liquidator.
The Applicant’s submission now is that it only seeks that the proceedings continue against the Second Respondent, noting the terms of s 471B of the Corporations Act 2011 (Cth). Accordingly, no order will be made in respect of the First Respondent and the reasons that follow are confined to the Court’s reasoning for the penalty to be imposed against the Second Respondent.
FINDINGS BASED ON AGREED FACTS
I find the following on the basis of agreed facts and unchallenged evidence:
(a)The Respondents had operated a restaurant and café in the state of Victoria;[2]
(b)In December 2022, FWI Logan commenced an investigation into the First Respondent’s compliance with the Act in respect of the Dumeshika Marasinghe (“the Employee”).[3] The Employee was on a student visa during her employment with the First Respondent;[4]
(c)During his investigation, FWI Logan corresponded with the Respondents,[5] and on the basis of information obtained in the course of that investigation, formed a reasonable belief within the meaning of s 716(1) of the Act that the First Respondent had contravened provisions of the Restaurant Industry Award 2020 in respect of the Employee;[6]
(d)On 21 March 2022, FWI Logan provided the First Respondent with the Compliance Notice pursuant to s 716(2) of the Act, by post to the First Respondent’s registered office and by email;[7]
(e)The Compliance Notice required the First Respondent to calculate and pay the amount owing to the Employee with respect to the identified contraventions by 29 April 2022, and provide evidence of compliance to the Applicant by 6 May 2022;[8]
(f)Had the First Respondent complied with the Compliance Notice, it would have paid $7,250.30 plus superannuation, to the Employee;[9]
(g)The First Respondent failed to comply with the Compliance Notice within the timeframe for compliance;[10]
(h)On or around 13 May 2022, the First Respondent partially rectified its non-compliance with the Compliance Notice by paying the amount of $3,665.85 to the Employee;[11]
(i)After the commencement of these proceedings, the First Respondent took further steps to rectify its non-compliance with the Compliance Notice by payment of $3,584.45 to the Employee and providing the Applicant with reasonable evidence of the payment;[12] and
(j)As at the date of the hearing, there was some apparent dispute about whether the outstanding superannuation contributions had been paid to the Employee’s superannuation fund as required by the Compliance Notice.
[2] SOAF at [6(d)].
[3] FWI Affidavit at [5].
[4] FWI Affidavit at Annexure JTL-02.
[5] FWI Affidavit at [6].
[6] FWI Affidavit at [7].
[7] FWI Affidavit at [8].
[8] SOAF ay [15].
[9] SOAF ay [25].
[10] SOAF ay [17].
[11] SOAF ay [20].
[12] FWI Affidavit at [24] and [25].
As the Respondents at no time have provided evidence that the superannuation contributions have been paid, despite being ordered to file and serve evidence it sought to rely on for the penalty issues, I infer that the superannuation has not been paid despite the confusing submissions made about this topic by the Second Respondent at the hearing.
APPLICABLE LEGAL PRINCIPLES
In Fair Work Ombudsman v NSH North Pty Ltd [2017] FCA 1301 at [36], Bromwich J summarised the approach to determining an appropriate penalty as follows:
(a)Identify the separate contraventions involved, where each contravention of each separate obligation in the Act is a separate contravention;
(b)Consider whether any of the contraventions arising from the above constitute a single course of conduct within the meaning of s 557(1) of the Act;
(c)Consider the extent to which two or more of the contraventions have common elements, where the penalties imposed should be an appropriate response to the conduct of the respondent;
(d)Consider the appropriate penalty for each contravention and, if relevant, each group of contraventions; and
(e)Finally, assess whether the overall penalty is an appropriate and proportionate response to the conduct as a whole which led to the contraventions. This is the application of the “totality principle”.
More recently the High Court has further explained, in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3 at [116], that the “principal object” of deterrence depends on a penalty having the necessary “sting or burden” to secure “the specific and general deterrent effects that are the raison d’être of its imposition”.
Courts have recognised the following factors as relevant to the imposition of a penalty in an industrial regulatory context:[13]
[13] This list was adopted by the Federal Court in Kelly v Fitzpatrick [2007] FCA 1080 at [14] and Stuart-Mahoney v Construction, Forestry, Mining and Energy Union [2008] FCA 1426 at [40].
·The need for general deterrence;
·The need for specific deterrence;
·The nature and extent of the conduct which led to the contraventions;
·The circumstances in which that conduct took place;
·The nature and extent of any loss or damage sustained as a result of the contraventions;
·Whether there has been similar previous conduct by the respondent;
·Whether the contraventions were properly distinct or arose out of the one course of conduct;
·The size of the business enterprise involved;
·Whether or not the contraventions were deliberate;
·Whether senior management was involved in the contraventions;
·Whether the party committing the contraventions has exhibited contrition;
·Whether the party committing the contraventions has taken corrective action;
·Whether the party committing the contraventions has co-operated with the enforcement authorities; and
·The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements.
While the above factors are well settled, they are not a “rigid catalogue of matters for attention”[14] and ought not restrict the Court’s discretion.[15]
[14] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13.
[15] Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (No 2) (2015) 234 FCR 451 at [91].
APPLICANT’S SUBMISSIONS
The Applicant made extensive and helpful written submissions about the facts relevant to the contravention of the Compliance Notice and the surrounding circumstances.[16] Those submissions and the oral submissions of Ms Vassallo at the hearing emphasised the purpose of the compliance notice regime under the Act and the importance of this in ensuring minimum standards are met by employers.
[16] Written submissions filed 6 October 2023 at [20] to [59].
It is unnecessary to repeat the detail of the Applicant’s submissions and suffice to say that I accept them.
The Applicant submits that a penalty against the Second Respondent in the range of between $2,830.50 and $3,396.60, being 50 per cent to 60 per cent of the maximum penalty with a discount of 15 per cent, is appropriate.
In view of the email of 16 November 2023 from the Applicant to Chambers, the submissions directed to a penalty to be imposed against the First Respondent are now irrelevant.
SECOND RESPONDENT’S SUBMISSIONS
The Second Respondent claimed in oral submissions that he had offered to pay the superannuation and done everything asked by the Applicant. His submissions about why payment of the superannuation due was unsuccessful did not make sense.
The Second Respondent also denied that he was entrepreneurial and operated other businesses that would employ persons, countering the Applicant’s submission that the risk of repeat contraventions was real.
In mitigation of the underpayments and contraventions, the Second Respondent claimed that his daughter was ill and then passed away, and since 2019 he has been struggling and left it to his business partner to run the business. He stated that the business had since closed.
The Second Respondent submitted that the imposition of a penalty against him would be very hard, the inference being he was in financial difficulty. He indicated that he would need time to pay any penalty imposed.
REPLY SUBMISSIONS
In reply, Ms Vassallo submitted on behalf of the Applicant that little weight should be given to the Second Respondent’s submissions as there was no evidence before the Court to support them.
Notwithstanding this, she submitted that, in light of the Second Respondent’s submissions the lower range of penalty sought would be reasonable and that it would not oppose an order that there be 90 days allowed for payment of the penalties.
PENALTY?
The Second Respondent admits his involvement in the relevant contravention within the meaning of s 550 of the Act. Accordingly, the only question is what quantum of penalty should be imposed based the findings I have made and the relevant legal principles to which I have referred at [9] to [12] of these reasons.
As the First Respondent is no longer trading, the need for specific deterrence to be achieved through penalising the Second Respondent is somewhat reduced. However, he does remain involved as a director in another company S & S Hospitality Group P/L.[17] Further, has been involved in a number of businesses[18] and I accept the submission that he is entrepreneurial, and that specific deterrence remains an important consideration in this case. The prospect of the Second Respondent employing other persons is real.
[17] FWI Affidavit at Annexure JTL-19.
[18] FWI Affidavit at Annexure JTL-19.
General deterrence is at least equally and likely more important, given the rate of non-compliance by employers in the hospitality industry.[19]
[19] FWI Affidavit at [19] and [20] and at Annexure JTL-20.
I accept that only one employee appears to have been affected, that the business was relatively small, and has largely rectified the underpayments to the Employee. However, I am not satisfied that the superannuation contributions have been paid and this is an aggravating factor, given the evidence about the attempts by the Applicant to have this addressed even after liability was conceded and orders made on 22 September 2023.[20]
[20] FWI Affidavit at [25].
Balancing the relevant considerations in respect of the single contravention of failing to comply with the compliance notice, I consider that the 50 per cent of maximum penalty sought is reasonable and proper in all the circumstances in light of the level of involvement of the Second Respondent.
There will be an order for the Second Respondent to pay the sum of $2,830.50, which is to be paid within 90 days of the date of the orders.
I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Taglieri. Associate:
Dated: 24 November 2023
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