Fair Work Ombudsman v Nobrace Centre Pty Ltd (in Liquidation)
[2019] FCCA 2970
•22 October 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
FAIR WORK OMBUDSMAN v NOBRACE CENTRE PTY LTD (IN LIQUIDATION) (ACN 121 556 447) & ORS (No.2) [2019] FCCA 2970
Catchwords:
INDUSTRIAL LAW – Application for imposition of pecuniary penalties – multiple contraventions of a civil penalty provision – liability established against principal contravenor which is placed in voluntary liquidation – accessory liability established against second and third respondents – accessories found liable as being involved in contraventions to differing extents – contraventions involved failure to pay minimum weekly wages, overtime, weekend loading, public holiday rates, holiday penalty rates, annual leave and leave loading – where respondents and employee participated in sham to obtain working visa and ENS visa for permanent residence – applicable principles – penalties imposed.INDUSTRIAL LAW – Application for award of compensation – jurisdictional requirement that a person has contravened a civil remedy provision – findings made against principal contravenor – other respondents found to have been involved in contraventions – person involved in contravention taken to have contravened civil remedy provision – court must be satisfied it is appropriate to make order of the kind sought – applicable principles – compensation ordered.
INDUSTRIAL LAW – Application for orders that first and second respondent be jointly and severally liable for compensation – where accessories found liable to differing extents – whether open or appropriate to make orders that accessories are jointly liable – where not impracticable to give separate judgements against accessories for their respective liabilities for compensation and interest – orders conditioned on terms to prevent double recovery.
Legislation:
Acts Interpretation Act 1901 (Cth), ss.10, 15AB
Corporations Act 2001 (Cth), s.500
Crimes Act 1914 (Cth), s.12
Fair Work Act 2009 (Cth), ss.3, 44, 45, 90, 134, 323, 535, 536, 539, 545, 546, 547, 550, 557, 557A, 682, 712, 716
Fair Work Regulations 2009 (Cth), regs.3.33, 3.44, 3.36, 4.01A
Federal Circuit Court Act 1999 (Cth), s.76
Cases cited:
ACE Insurance Limited v Trifunovski (No.2) [2012] FCA 793
Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 162 CLR 157
Australian Building and Construction Commissioner v Huddy (No.2) [2017] FCA 1088
Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd [2006] FCA 21
Australian Competition and Consumer Commission v HJ Heinz Company Australia Ltd (No.2) [2018] FCA 1286
Australian Licensed Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd [2011] FCA 333
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560
Blandy v Coverdale NT Pty Ltd [2008] FCA 1533
Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482
Construction, Forestry, Mining and Energy Union v Cahill (2010) 269 ALR 1
Construction, Forestry, Mining and Energy Union v Pilbara Iron Company (Services) Pty Ltd (No.3) [2012] FCA 697
Fair Work Ombudsmanv ACN 146435118 Pty Ltd & Anor (No.2) [2013] FCCA 1270
Fair Work Ombudsman v Al Hilfi [2016] FCA 193
Fair Work Ombudsman v Amritsaria Four Pty Ltd and Anor [2016] FCCA 986
Fair Work Ombudsman v Australian Shooting Academy Pty Ltd [2011] FCA 1064
Fair Work Ombudsman v Blue Impression Pty Ltd & Ors (No.2) [2017] FCCA 2797
Fair Work Ombudsman v Construction, Forestry, Maritime, Mining and Energy Union [2019] FCAFC 69
Fair Work Ombudsman v Crystal Carwash Pty Ltd (No.2) [2014] FCA 827
Fair Work Ombudsman v Dosanjh [2016] FCCA 923
Fair Work Ombudsman v EJ Group International Pty Ltd & Anor [2017] FCCA 997
Fair Work Ombudsman v Go Yo Trading Pty Limited & Anor [2012] FMCA 865
FairWork Ombudsman v Grouped Property Services Pty Ltd (No.2) [2017] FCA 557
Fair Work Ombudsman v Han Investments Pty Ltd [2017] FCA 263
Fair Work Ombudsman v Hiyi Pty Ltd and Ors [2016] FCA 1634
Fair Work Ombudsman v Jay Group Services Pty Ltd and Others [2014] FCCA 2869
Fair Work Ombudsman v Jetstar Airways Ltd [2014] FCA 33
Fair Work Ombudsman v JPA Manchester Pty Ltd & Anor [2018] FCCA 845
Fair Work Ombudsman v Kentwood Industries Pty Ltd (No.2) [2010] FCA 1156
Fair Work Ombudsman v Kleen Group Pty Ltd & Anor [2016] FCCA 278
Fair Work Ombudsman v Koojedda Carpentry Pty Ltd ACN 111 218 476 ATF
The Gumley Trust & Ors (No.2) [2017] FCCA 2577
Fair Work Ombudsman v Liquid Fuel Pty Ltd(No.2) [2015] FCCA 3139
Fair Work Ombudsman v Lohr [2018] FCA 5
Fair Work Ombudsman v Lu's Healthcare Pty Ltd (No.2) [2016] FCCA 506
Fair Work Ombudsman v Maclean Bay Pty Ltd (No.2) [2012] FCA 557
Fair Work Ombudsman v Mai Pty Ltd & Anor [2016] FCCA 1481
Fair Work Ombudsman v Mhoney Pty Ltd [2017] FCCA 811
Fair Work Ombudsman v Nerd Group Australia Pty Ltd (No.3) [2012] FMCA 891
Fair Work Ombudsman v NoBrace Centre (2018) 329 FLR 385
Fair Work Ombudsman v NSH North Pty Ltd [2017] FCA 1301
Fair Work Ombudsman v Offshore Marine Services Pty Ltd [2012] FCA 498
Fair Work Ombudsman v Ohmedia Melbourne Pty Ltd & Anor [2015] FCCA 50
Fair Work Ombudsman vOliver Brown SoulPty Ltd & Anor [2017] FCCA 3061
Fair Work Ombudsman v Promoting U Pty Ltd [2012] FMCA 58
Fair Work Ombudsman v Rainbow Paradise Preschool & Anor [2015] FCCA 1652
Fair Work Ombudsman v Ramsey Food Processing Pty Ltd (No.2) [2012] FCA 408
Fair Work Ombudsman v Rubee Enterprises Pty Ltd [2016] FCCA 3456
Fair Work Ombudsman v Samurais Paradise Pty Ltd [2017] FCCA 2013
Fair WorkOmbudsman v Something Aussie Pty Ltd [2017] FCCA 186
Fair Work Ombudsman v South Jin Pty Ltd (No.2) [2016] FCA 832
Fair Work Ombudsman vStep Ahead Security Services [2016] FCCA 1482
Fair Work Ombudsman v Viper Industries Pty Ltd & Anor [2015] FCCA 492
Fair Work Ombudsman v Yogurberry World Square Pty Ltd [2016] FCA 1290
Gibbs v The Mayor, Councillors and Citizens of City of Altona (1992) 37 FCR
216
Hansen v Mt Martha Community Learning Centre Inc (No.2) [2015] FCA 1283
Kelly v Fitzpatrick, (2007) 166 IR 14
Markarian v R [2005] HCA 25
Maslen v Core Drilling Services Pty Ltd & Anor (No.2) [2015] FCCA 290
Mason v Harrington Corporation Pty Ltd t/as Pangea Restaurant and Bar [2007] FMCA 7
McIver v Healey [2008] FCA 425
Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (No.2) [2014] NSWCA 425
Murrihy v Betezy.com.au Pty Ltd (No.2) (2013) 221 FCR 118
Newcrest Mining Ltd v Thornton (2012) 248 CLR 555
Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union [2008] FCAFC 170
Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543
R v White (BC9101745, NSWCCA, 25 July 1991, unreported)
Redding v Lee (1983) 151 CLR 117
Registered Organisations Commission v Transport Workers’ Union of Australia [2018] FCA 32
Rocky Holdings Pty Limited v Fair Work Ombudsman [2014] FCAFC 62
Sayed v Construction, Forestry Mining and Energy Union (No.2) [2015] FCA 338
Seymour v Stawell Timber Industries Pty Ltd (1985) 9 FCR 241
Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550
Singtel Optus Pty Ltd v Australian Competition and Consumer Commission (2012) 287 ALR 249
Veeraragoo v Goldbreak Holdings Pty Ltd (No.2) [2018] FCA 1448
Workplace Ombudsman v Securit-E Holdings Pty Ltd (in liq) (2009) 187 IR 330
XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd (1985) 155 CLR
448
Other texts cited:
Barker and Grantham, Apportionment in Private Law, (Hart Studies in Private Law) (2018)Dietrich and Ridge, Accessories in Private Law, Cambridge University Press (2015)
Applicant: FAIR WORK OMBUDSMAN
First Respondent: NOBRACE CENTRE PTY LTD (IN LIQUIDATION) (ACN 121 556 447)
Second Respondent: CHRISTINE LINDA MASTERS
Third Respondent: ARI MASTERS
File Number: MLG 1981 of 2015
Judgment of: Judge A Kelly
Hearing date: 1 August 2018
Date of Last Submission: 27 March 2019
Delivered at: Melbourne
Delivered on: 22 October 2019 REPRESENTATION
Counsel for the Applicant: Mr J. McKenna
Solicitors for the Applicant: Office of the Fair Work Ombudsman
Solicitor-advocate for the Respondents: Mr J. Hassett
Solicitors for the Respondents: Hassett Lee & Co Lawyers ORDERS
Compensation and interest
(1)Subject to paragraph 3 of this Order, pursuant to s 545(2)(b) of the Fair Work Act 2009 (Cth) (Act), the second respondent, Christine Linda Masters, pay compensation to the Fair Work Ombudsman in the sum of $34,057.
(2)Subject to paragraph (3) of this Order, pursuant to ss 547(2) and 547(3) of the Act and s 76 of the Federal Circuit Court of Australia Act 1999 (Cth), the second respondent, Christine Linda Masters, pay to the Fair Work Ombudsman the sum of $10,000 representing pre-judgment interest on the said sum of $34,057.
(3)The Fair Work Ombudsman not be at liberty to enforce payment of the sums payable pursuant to paragraphs (1) or (2) of this Order without leave of the Court.
(4)Pursuant to s 545(2)(b) of the Act, the third respondent, Ari Masters, pay compensation to the Fair Work Ombudsman in the sum of $66,945.
(5)Pursuant to ss 547(2) and 547(3) of the Act and s 76 of the Federal Circuit Court of Australia Act 1999 (Cth), the third respondent, Ari Masters, pay to the Fair Work Ombudsman the sum of $20,940 representing pre-judgment interest on the said sum of $66,945.
(6)The sums payable pursuant to paragraphs (4) and (5) of this Order be paid to the Fair Work Ombudsman within 28 days of this Order.
(7)Within 30 days of receipt of the sums payable pursuant to paragraphs (1), (2), (4) or (5) of this Order, or any part thereof, the Fair Work Ombudsman pay such sums to Ms Arang Lee.
Penalties
(8)Pursuant to ss 545(1) and 546(1) of the Act, the second respondent, Christine Linda Masters, pay penalties in the amount of $18,000 for her involvement in the contraventions of the Act as set out in paragraphs (1) and (2) of the Order made on 22 February 2018.
(9)Pursuant to ss 545(1) and 546(1) of the Act, the third respondent, Ari Masters, pay penalties in the amount of $55,000 for his involvement in the contraventions of the Act as set out in paragraphs (1) and (3) of the Order made on 22 February 2018.
(10)Pursuant to s 546(3)(a) of the Act, all penalties imposed on the second and third respondents be paid to the Commonwealth of Australia.
FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNEMLG 1981 of 2015
FAIR WORK OMBUDSMAN Applicant
And
NOBRACE CENTRE PTY LTD (IN LIQUIDATION)
(ACN 121 556 447)First Respondent
CHRISTINE LINDA MASTERS Second Respondent
ARI MASTERS Third Respondent
REASONS FOR JUDGMENT
Introduction
1.These reasons for judgment explain orders that are made on the application of the Fair Work Ombudsman (FWO) seeking the imposition of penalties upon, and ancillary orders against, the second respondent, Christine Linda Masters (Mrs Masters), and the third respondent, Dr Ari Masters (Dr Masters) for their involvement in contraventions by the first respondent, NoBrace Centre Pty Ltd (In liquidation) (NoBrace), of the Fair Work Act 2009 (Cth) (Act) the Health Professionals and Support Services Award 2010 (Award) and the Fair Work Regulations 2009 (Cth) (Regulations). They should be read with the reasons for judgment in Fair Work Ombudsman v NoBrace Centre Pty Ltd[1] (Liability judgment).
[1] (2018) 329 FLR 385.
2.The proceeding related to a total underpayment of $66,945 to Ms Arang Lee (Ms Lee), a Korean national. Ms Lee was engaged by NoBrace to work as a laboratory technician at its dental practice in Melbourne from about 2 April 2011 to 2 February 2014. Dr Masters was the principal dental surgeon of that practice. Mrs Masters was his wife.
3.By the Liability judgment, the court found that NoBrace had contravened the Act or Regulations in failing to pay Ms Lee her minimum weekly wages, overtime, weekend loading, public holiday and holiday penalty rates, annual leave and annual leave loading. Furthermore, the court found that NoBrace had made unauthorised deductions from her pay, failed to keep records as required by the Act and Regulations and further, kept records which were known to be false and misleading. The court also found that NoBrace had failed to provide Ms Lee with payslips and failed to comply with a notice to produce records and documents. The court further found that Dr Masters and Mrs Masters were involved in certain of such contraventions, albeit to differing extents. Penalties are sought respecting those contraventions. Orders for the payment of compensation are also sought.
4.NoBrace, which is now in voluntary liquidation, progressively admitted the majority[2] of the alleged contraventions. While Dr Masters and Mrs Masters contested liability, their defences were largely rejected.
[2] In particular, NoBrace maintained its denial of the alleged record keeping contraventions.
5.Contextually, the circumstances in which the respondents adopted their respective positions at the liability hearing may be explained in part by the fact that, while NoBrace was a service company for Dr Master’s dental practice, the Masters maintained that they believed Ms Lee was being paid at above award rates including by reason of NoBrace having engaged a bookkeeper, Ms Wong, to take effective responsibility for its employees’ remuneration, entitlements and associated recordkeeping.[3]
[3] Liability judgment, [388].
6.Dr Masters operated the dental practice at all relevant times and was the sole director and secretary of NoBrace from 31 October 2012. Dr Master’s defence was, in substance, grounded upon his evidence that his time was dedicated almost exclusively to the discharge of his professional responsibilities, his belief that the NoBrace employees were paid at above award rates and that Ms Wong ensured that this occurred.
7.Mrs Masters was the sole director and secretary of NoBrace until 31 October 2012 which appeared to coincide with the failure of her relationship with Dr Masters. Mrs Masters’ evidence demonstrated that she had no relevant experience in the conduct of a dental practice or related accounting responsibilities and had largely relied upon Ms Wong for regulatory compliance concerning the remuneration of employees and related recordkeeping. The position of Mrs Masters was further complicated by the fact that, with the breakdown of her relationship with Dr Masters, she had ‘checked out.’ Although she did not resign her role as director and secretary until 31 October 2012, she had in truth ceased to be involved in the day-to-day operations of the dental practice for some time, having dedicated herself to the care of her three children.[4]
[4] Liability judgment, [405].
8.FWO made allegations of accessorial liability against the Masters. The defences raised by the Masters were largely rejected. The court found that NoBrace contravened each of the provisions as alleged and that Dr Masters was involved as an accessory in all such contraventions. As concerned Mrs Masters, the court found that she had been involved in certain contraventions occurring in the period to 31 October 2012.
9.FWO provided by way of annexure to submissions a series of tables respecting the proposed penalties that were submitted to be appropriate as against each of NoBrace, Dr Masters and Mrs Masters respectively. A copy of each annexure is provided with this judgment.
Background
10.Ms Lee first arrived in Australia in 2008 on a holiday working visa. In the period December 2008 to March 2011, Ms Lee held a student visa, during which period she obtained a diploma of dental technology. In June 2010, Ms Lee commenced employment with NoBrace and worked as a laboratory technician.
11.Although Dr Masters made the decision to employ Ms Lee, the day-to-day supervision of her duties fell to the laboratory supervisor, Mr Shyles. In late 2010, some six months before the expiry of her student visa, Ms Lee approached Mr Shyles and expressed her interest in obtaining a subclass 457 working visa. Ms Lee then approached Dr Masters directly to implore that NoBrace would sponsor her application for a 457 visa. Ms Lee agreed that she had so implored Dr Masters. While Dr Masters accepted ultimate responsibility to support that visa application, he delegated the task of doing so to both Mrs Masters and the migration lawyer who conducted a legal practice in the same building as the dental practice. In the event, Mrs Masters and Ms Lee attended the migration lawyer to obtain assistance in relation to the application. When Mrs Masters recounted to Dr Masters the information she had gleaned during her attendance on the migration lawyer, she told him “that there was $50,000 needing to be paid for the 457 visa to happen.” While Mrs Masters described the migration lawyer as talking in riddles, Dr Masters had responded that Ms Lee was then being paid $15 per hour and that $50,000 per annum did not sound right.[5]
[5] Liability judgment, [138]-[140].
12.As events evolved, the lawyer provided an employment agreement which provided for Ms Lee to be paid a salary of $50,000 per annum. When Mrs Masters gave the agreement to Ms Lee for her to sign, she did so and also reimbursed NoBrace the fees payable for that application. In cross-examination that Ms Lee suggested, for the first time, that she had only been given the final page of the agreement to sign. With the respondents support, Ms Lee obtained her 457 visa.[6] Thereafter, Ms Lee was not paid $50,000 per annum but continued to be paid at the rate of $15 per hour. She knew she was being paid at that rate and made no complaint in relation to her remuneration. While this was no answer to their involvement in the proven contraventions, I have found that both the Masters and Ms Lee well knew that the agreement was a sham.[7] There is little doubt that the bookkeeper, Ms Wong, likewise knew the arrangement was a sham designed to assist Ms Lee with her visa.[8]
[6] Liability judgment, [141]-[150], [384].
[7] Liability judgment, [149], [373]-[387].
[8] Liability judgment, [151], [161], [173].
13.In late 2012 or early 2013, Ms Lee decided that she wished to apply for permanent residency in Australia. To that end she asked Dr Masters if he would sponsor her for an ENS visa. Again, he agreed to do so and on 28 October 2013, NoBrace made application on Ms Lee’s behalf for that visa.[9] However, on 3 November 2013, NoBrace sold its dental practice. The sale agreement was operative with effect from 2 February 2014. An immediate consequence of the sale of the dental practice was that NoBrace ceased to be Ms Lee’s sponsor for the purposes of her ENS visa. The loss of her sponsorship, coupled with discovery of the fact that the dental practice had been sold, were matters of significant disappointment to Ms Lee who resigned her employment and ultimately established herself as a small business operator.[10]
[9] Liability judgment, [209]-[212].
[10] Liability judgment, [213].
14.Ms Lee later complained to FWO in relation to her employment with NoBrace. FWO initiated an investigation and then commenced this proceeding. In the course of the proceeding, FWO and NoBrace (but not Dr Masters or Mrs Masters) entered into a Statement of Agreed Facts (SOAF) by which NoBrace admitted certain of the contraventions.
Penalty recommendations
15.The maximum penalties for the subject contraventions were said to be:
a)NoBrace: $500,000[11]
b)Dr Masters: $100,000
c)Mrs Masters: $ 55,000
[11]In reply submissions FWO accepted that the figure of $500,000 should be reduced to $467,000 to make allowance for an incorrect grouping calculation.
16.The range of penalties that were recommended by FWO are:
a)NoBrace: $234,905 to $276,572.50
b)Dr Masters: $ 48,970 to $ 57,650
c)Mrs Masters: $ 25,630 to $ 40,470
The basis upon which those penalties were recommended is set out in the Annexures to these reasons for judgment as supported by the matters contained in the SOAF, the affidavits and submissions. For the purposes of the determination of penalties, the parties relied upon all evidence that had been filed in the Liability judgment, the findings in the Liability judgment, further affidavits and their extensive submissions.
17.By way of overview, FWO submitted that the respondents’ contravening conduct was serious and highly aggravating. In particular, FWO laid particular emphasis upon the following matters:
a)the alleged vulnerability of Ms Lee;
b)the significant financial loss to Ms Lee and the fact that the underpayment remains outstanding in its entirety;
c)a complete failure by the respondents to demonstrate contrition or to exhibit any corrective action;[12]
d)the objective seriousness of the contraventions which, as a whole, subverted the obligations and protections afforded by workplace laws and FWO’s investigative powers;
e)the deliberate preparation of false and misleading records by the respondents and their abstention from complying with both pay slip and record-keeping obligations (which was said to be part of a concerted effort to preserve the appearance of a sham arrangement);
f)the need for ensuring compliance with basic and minimum standards of employment;
g)a strong need for general and specific deterrence.
I address these considerations in turn.
[12] Beyond NoBrace making admissions to 10 of the 13 contraventions.
Applicable principles
18.The court is authorised to impose a penalty in respect of a contravention of a civil remedy provision of the Act.[13] Civil remedy provisions include a provision referred to in column one of the table in s 539(2) of the Act, and in column one of the table in reg 4.01A of the Regulations.
[13] Act, 546(1).
19.The purpose of imposing a civil penalty (including under this Act) is primarily protective of the public interest in securing compliance with the law and to attempt to put a price on a contravention that is sufficiently high to deter repetition by the contravenor and others who might be tempted to contravene legislation: Commonwealth v Director, Fair Work Building Industry Inspectorate (FWBII).[14] The penalty that is fixed should reflect that statutory purpose with a view to ensuring that the penalty is not regarded as merely an acceptable cost of doing business.[15]
[14](2015) 258 CLR 482, [55] (French CJ, Kiefel, Bell, Nettle and Gordon JJ); [110] (Keane J); Singtel Optus Pty Ltd v Australian Competition and Consumer Commission (2012) 287 ALR 249, [62] (Keane CJ, Finn and Gilmour JJ); Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113, [98] (Dowsett, Greenwood and Wigney JJ).
[15] Ibid.
20.In fixing the amount of the penalty, the court is required to identify and balance all relevant facts, circumstances and to make a value judgment as to what is considered to be an appropriate penalty. The court is authorised to adopt a process of instinctive synthesis which evaluates all factors that are considered relevant to the penalty, and make a value judgment as to an appropriate penalty in all the circumstances.
21.The approach to be adopted in determining penalties is well settled,[16] and was common ground. It involves the following distinct steps:
a)Step One: The court is to identify the separate contraventions involved. For the purposes of s 539(2), each contravention of an obligation located in the Act, Regulations and Award constitutes a separate contravention of a civil remedy provision of the Act;[17]
b)Step Two: The court is required to consider whether any of the breaches should be taken together to constitute a single course of conduct by operation of s 557(1), such that multiple contraventions should be treated (or grouped) as a single contravention;
c)Step Three: 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.[18] Importantly, this third task is distinct from, and in addition to, the final application of the ‘totality principle’;[19]
d)Step Four: 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)Step Five: 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.[20] In doing so, the court should apply an ‘instinctive synthesis’ in making this assessment.[21] This final step is commonly known as the ‘totality principle’.
Cf also Fair Work Ombudsman v NSH North Pty Ltd (North Shanghai)[22]
[16]Fair Work Ombudsman v Jetstar Airways Ltd [2014] FCA 33, [28] (Buchanan J); Fair Work Ombudsman v NSH North Pty Ltd [2017] FCA 1301, [36] (Bromwich J).
[17]Gibbs v The Mayor, Councillors and Citizens of City of Altona (1992) 37 FCR 216, 223 (Gray J); McIver v Healey [2008] FCA 425, [16] (Marshall J).
[18]Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560, [46], [71] (Graham J).
[19]Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383, [41]-[46] (Stone and Buchanan JJ).
[20]Kelly v Fitzpatrick (2007) 166 IR 14, [30] (Tracey J): Australian Ophthalmic Supplies, (2008) 165 FCR 560, [23] (Gray J), [71] (Graham J) and [102] (Buchanan J).
[21]Australian Ophthalmic Supplies, (2008) 165 FCR 560, [27] (Gray J), [55], [78], (Graham J).
[22] [2017] FCA 1301, [36] (Bromwich J).
Consideration
22.FWO has standing to seek penalties in respect of each of the contraventions.[23]
[23] Act, s 539(2); Regulations, reg 4.01A(2).
(1) Identified contraventions
23.The thirteen subject contraventions are set out in the Table below.
Provision Description of contravention Respondent/s Maximum
penaltyCompany
Individual
1 Act
s 45Minimum wages
Failing to pay the minimum rate of pay pursuant to clause 14.3 of the Health AwardAll $51,000 $10,200 2 Overtime
Failing to pay casual loading pursuant to clause 28.1 of the Health AwardAll $51,000 $10,200 3 Weekend loading
Failing to pay weekend loading pursuant to clause 26.1 of the Health AwardAll $51,000 $10,200 4 Public holiday penalty
Failing to pay public holiday rates pursuant to clause 32.2 of the Health AwardAll $33,000 $6,600 5 Annual leave loading
Failing to pay annual leave loading pursuant to clause 31.2 of the Health AwardFirst and Third Respondent
$33,000 $6,600 6 Act
s 44Annual leave
Failing to pay during periods of annual leave pursuant to section 90(1) FW ActAll $33,000 $6,600 7 Public holidays not worked
Failing to pay for public holidays not worked pursuant to section 116 FW ActAll $33,000 $6,600 8 Accrued annual leave on termination
Failure pay accrued annual leave on termination pursuant to section 90(2) FW ActFirst and Third Respondent
$51,000 $10,200 9 Act
s 323(1)Method and frequency of payment
Failing to pay amounts payable in the method and frequency pursuant to section 323(1) FW ActAll $51,000 $10,200 10 Act
s 535(1)
Record keeping
Failure to keep records with information prescribed by the FW RegulationsAll $25,500 $5,100 11 Act
s 536(1)
Pay slips
Failing to issue pay slips within one day of payment
All $25,500 $5,100 12 Act
s 712(3)Notice to Produce
Failure to comply with a notice to produce records or documentsFirst and Third Respondent $51,000 $10,200 13 Regs
3.44(1)False and misleading records
Failure to ensure a record required to be kept under FW Regulations was not false or misleading to its knowledge
All $11,000 $2,200
(2)-(3) Course of conduct (grouping) and common elements
24.By s 557(1) of the Act, for specified contraventions of a civil remedy provision,[24] where a contravention was committed by the same person and arose from the same course of conduct, two or more contraventions of the same civil remedy provision are taken to constitute a single contravention. Of particular relevance in this context is whether the acts arose out of the same, or separate, acts or decisions by the same respondent.[25] The range of civil remedy provisions to which s 557(1) applies include ss 44 or 45 of the Act which deal with contraventions of the National Employment Standards or a term of a Modern Award.
[24]Including contraventions of ss 45, 535 and 536, and contraventions of the civil remedy provisions prescribed by the Regulations.
[25]North Shanghai, [2017] FCA 1310, [39]; see also Australian Competition and Consumer Commission v HJ Heinz Company Australia Ltd (No.2) [2018] FCA 1286, [67]-[74]. There White J accepted that the court may take a substantial overlap into account.
25.In North Shanghai, Bromwich J drew attention to how, deciding upon the application of s 557 requires focus upon the substance of the particular obligation creating provisions and whether grouping will produce a rational outcome.[26] FWO accepted that contraventions of the same term of the Award, of ss 535(1) and 536(1) and of regs 3.44(1) and 3.44(6), in relation to multiple employees, may be treated as one contravention under s 557(1), provided that there was one course of conduct arising from a single decision of the employer.[27]
[26]See also Rocky Holdings v Fair Work Ombudsman [2014] FCAFC 62, [18] (North, Flick and Jagot JJ).
[27]Seymour v Stawell Timber Industries Pty Ltd (1985) 9 FCR 241, 266-267 (Gray J, Northrop J agreeing at 245).
26.However, by way of limitation of that principle, it was further submitted that grouping was not open on the basis of a course of conduct in cases involving the contravention of different obligations.[28] Similarly, it was further submitted that multiple contraventions of different obligations were to be considered as arising out of a single course of conduct only if they had common elements[29] in relation to the acts or omissions which led to the contraventions, and that the court was required to “recognise the existence of a course of conduct and of inter-related or overlapping elements.”[30] It was then said that in considering whether there is a course of conduct with common elements, the court is required to give weight to the separate legal character of the contraventions.[31] Nonetheless, it is open to the court to group separate contraventions together where the contraventions overlap with each other or, if treated separately, would result in the respondents being penalised twice for substantially similar conduct.[32]
[28]Gibbs v The Mayor, Councillors and Citizens of City of Altona (1992) 37 FCR 216, [24] (Gray J); Blandy v Coverdale NT Pty Ltd [2008] FCA 1533, [56].
[29]Fair Work Ombudsman v Offshore Marine Services Pty Ltd [2012] FCA 498, [7], [23]-[26] (Gilmour J).
[30]Fair Work Ombudsman v Australian Shooting Academy Pty Ltd [2011] FCA 1064, [23] (Logan J); Construction, Forestry, Mining and Energy Union v Cahill (2010) 269 ALR 1, [39] (Middleton and Gordon JJ); [7] (Moore J).
[31]Fair Work Ombudsman v Ramsey Food Processing Pty Ltd (No.2) [2012] FCA 408, [2] (Buchanan J).
[32]Australian Ophthalmic Supplies, (2008) 165 FCR 560, [46] (Graham J) citing Pearce v The Queen [1998] HCA 57, [40].
27.In Rocky Holdings Pty Limited v Fair Work Ombudsman[33] the Full Court rejected submissions that where there were two or more contraventions of s 44(1) of the Act and two or more contraventions of s 45 of the Act by each respondent, s 557(1) of the Act operated so that each contravention of s 44(1) by each respondent was to be taken as a single contravention and each contravention of s 45 by each respondent was also to be taken as a single contravention. In so holding,[34] North, Jagot and Flick JJ identified that one purpose of the Act was to ensure compliance with minimum terms and conditions and to do so through an effective penalty regime. The Full Court reasoned that it was:
. . . wrong to characterise the provision of the NES and the term of the modern award alleged to be contravened as a mere particular of the contravention of ss 44(1) and 45 and then to seek to apply that to the construction question. Whether the provision of the NES or the term of the modern award is a particular or an element of the offence is not the question. Accordingly, the concept of elevating a particular to an element of the contravention is inapt and liable to confuse the proper inquiry
[33] (2014) 153 FCR 153.
[34](2014) 153 FCR 153, [12], [24] and [26]; see also Fair Work Ombudsman v Liquid Fuel Pty Ltd(No.2) [2015] FCCA 3139, [30] (O’Sullivan J); Fair Work Ombudsman v Lu's Healthcare Pty Ltd (No.2) [2016] FCCA 506 [27]-[34] (O’Sullivan J).
The Full Court was also conscious that arbitrary and capricious results would arise from a contrary construction and that this would be avoided if s 557 was construed as operating “to group together contraventions of the same provision or term”.
28.Upon those principles, FWO accepted that the respondents were entitled to the benefit of s 557(1) of the Act for repeated breaches involving contraventions of the same term of the Award, each contravention of ss 44, 323(1), 535(1) and 536(1) of the Act respectively and reg 3.44(1) of the Regulations.
29.As applied to the present case, it was submitted that the effect of s 557(1) was to reduce the number of contraventions in this matter to 13 separate contraventions, as set out in the Table at [23] above (Table).
30.FWO accepted that the contraventions relating to the failure by NoBrace to pay Ms Lee during a period of annual leave pursuant to s 90(2) of the Act,[35] and the failure to pay her annual leave loading under cl 31.2 of the Award in respect of the same period,[36] shared common elements. That is because both contraventions shared the same factual circumstances and arose from the same decision by NoBrace to pay Ms Lee nothing during her period of leave from 14 September 2011 to 15 October 2011. To that extent, FWO accepted that those contraventions should also be grouped together for the purposes of the assessment of penalty.
[35] SOAF at [38]-[42]; Liability judgment, [53]-[54].
[36] SOAF at [43]-[45]; Liability judgment, [55]-[56].
31.FWO submitted that no further grouping of other contraventions should occur. In particular, it was said that, save for the grouping of the annual leave and leave loading contraventions, there was no basis on which the court should group those contraventions and that to do so would give insufficient weight to the separate legal character of the obligations. Particular reliance was placed upon two authorities.
32.First, in Fair Work Ombudsman v Lohr,[37] Bromwich J, held it to be erroneous to treat multiple groups of different contraventions (all arising from the payment of a flat rate of pay) as a single contravention and to proceed to an assessment of penalty on that basis. After consideration of the principles in Rocky Holdings, his Honour held:[38]
. . . , the Full Court’s decision in [Rocky Holdings] compels this outcome. Even if section 557 allows for the continued application of the course of conduct principle, which may be doubted, the application of section 557 to the facts of this case meant that there was no remaining work for the course of conduct principle to do. The fact that flat rates of pay cannot operate to deny the multiplicity of contraventions that this approach was found by his Honour to have produced. His Honour therefore erred in further consolidating the number of contraventions from 12 to one . . .
[37] [2018] FCA 5.
[38] [2018] FCA 5, [34].
33.Secondly, in Australian Building and Construction Commissioner v Huddy (No.2)[39], White J held that neither the course of conduct principle nor the totality principle permitted the court to impose a single penalty for multiple contraventions. Rather, his Honour held that the correct approach was to fix separate penalties for each separate contravention, consider whether the aggregate was excessive, and if so, adjust each separate penalty to avoid that outcome.
[39] [2017] FCA 1088, [67]-[72] and [98]-[104].
34.Upon those principles, the court should recognise that where there has been a multiplicity of different contraventions, they are to be treated separately, with penalties to be fixed for each separate contravention and with any adjustment to be made at the point where the aggregate of those penalties are examined in their totality and seen as excessive.
35.FWO correctly submitted that the respondents bore the onus of establishing the application of these principles to the contraventions.[40]
[40]Citing AMIEU v Meneling Station Pty Ltd (1987) 16 IR 245, 257 (Evatt J); see also Workplace Ombudsman v Securit-E Holdings Pty Ltd (in liq) (2009) 187 IR 330, [5] (Raphael FM).
36.By contrast, the respondents, by focussing upon the common elements of certain contraventions, sought to group them in a different manner. Contraventions that were said to have sufficient common elements were arranged in four groups. First were the contraventions listed as items 1-4 of the Table (minimum wages, overtime, weekend loading and public holiday penalty rates). Secondly, were the contraventions listed as items 5-8 of the Table (annual leave loading, annual leave, public holidays not worked and accrued annual leave). Thirdly, were the contraventions listed as items 9-12 of the Table (method of payment, record keeping, pay slips and notice to produce). Finally, the contravention listed in item 13 of the Table (false and misleading records).
37.To support this submission, reliance was placed upon Fair Work Ombudsman v Offshore Marine Services Pty Ltd.[41] There Gilmour J held:
If, as in this case, two or more contraventions have common elements, this should be taken into account in considering what is an appropriate penalty in all the circumstances for each contravention. OMS should not be penalised more than once for the same conduct. The penalties imposed by the Court should be an appropriate response to what OMS did.[42] This task is distinct from, and in addition to, the final application of the “totality principle.”[43]
[41] [2012] FCA 498, [7].
[42] Citing Australian Ophthalmic Supplies (2008) 165 FCR 560, [71].
[43]Citing Mornington Inn, (2008) 168 FCR 383, [41]-[46] (Stone and Buchanan JJ).
In my view, his Honour’s statements above should be understood as emphasising that the requirement to identify contraventions that have common elements (Step 3) is a requirement that is separate and distinct from the application of the totality principle (Step 5). They should not be seen as authorising the grouping of contraventions (Step 2) merely because they can be seen as having common elements (Step 3).
38.In Offshore Marine, Gilmour J also accepted that “in determining the appropriate penalty, the court may take into account the fact that the contraventions arose out of a single course of conduct with the same factual circumstances.”[44] In reaching that conclusion, his Honour applied the principles stated in Construction, Forestry, Mining and Energy Union v Cahill,[45]by Middleton and Gordon JJ that:
. . . where there is an interrelationship between the legal and factual elements of two or more offences for which an offender has been charged, care must be taken to ensure that the offender is not punished twice for what is essentially the same criminality. That requires careful identification of what is “the same criminality” and that is necessarily a factually specific enquiry.
[44] [2012] FCA 498, [26].
[45] (2010) 269 ALR 1, [39].
39.The quote from Cahill as extracted in Offshore Marine was incomplete in important respects. In Cahill, the plurality had further stated that:[46]
Bare identity of motive for commission of separate offences will seldom suffice to establish the same criminality in separate and distinct offending acts or omissions.
Later their Honours stated:[47]
. . . where two offences arise as a result of the same or related conduct that is not a disentitling factor to the application of the single course of conduct principle but a reason why a Court may have regard to that principle, as one of the applicable sentencing principles, to guide it in the exercise of the sentencing discretion.[48] It is a tool of analysis[49] which a Court is not compelled to utilise.[50]
[46] Ibid.
[47] (2010) 269 ALR 1, [41].
[48]Citing Johnson v The Queen(2004) 205 ALR 346 at [3]-[4] and [34]; Attorney-General v Tichy(1982) 30 SASR 84 at 92-93.
[49] Citing Tichy 30 SASR 84 at 93.
[50] Citing Royer v Western Australia[2009] WASCA 139 at [21]-[34] and [153]-[156].
In Offshore Marine, the other member of the court, Moore J, agreed with the plurality that the court was “not obliged to engage in the process of determining whether several acts constituting individual offences should be viewed as a course of conduct.”[51]
[51] (2010) 269 ALR 1, [1].
40.These authorities reinforce the need to recognise that a decision on penalty is a discretionary judgment which requires: “the weighing of elements, not the formulation of adjustable rules or benchmarks.”[52]
[52] See Construction, Forestry, Mining and Energy Union v Cahill (2010) 269 ALR 1, [42].
41.Upon those principles, FWO correctly submitted that the court could decline to undertake grouping in the exercise of discretion but that if it did so, it would be erroneous to group contraventions by the same person unless they arose from same course of conduct and involved the same civil remedy provision. It is apparent that grouping operates within relatively narrow parameters and is properly deployed as an analytical tool with the object of ensuring that a person is not punished twice for what is essentially the same unlawfulness. The grouping into the four categories as suggested by the respondents is not open. For example, the grouping of minimum wages, overtime, weekend loading and public holiday penalty rates involved contraventions that were quite distinct. They did not involve the same unlawfulness – each was a breach of a distinct law. There is no warrant for grouping those legally distinct contraventions. More broadly, the respondents’ submissions assumed that the court was obliged to undertake the analytical task of grouping, an assumption which the foregoing authorities demonstrate to be unfounded. For the same reason, the respondents’ submission that FWO’s approach conflated the applicable principles was wrong. To the contrary, it was the respondents’ submission that sought to conflate Step 2 and Step 3 of the analytical process that is required.
42.In accordance with the authorities cited above, the fact that many of the contraventions flowed from NoBrace’s decision to pay Ms Lee a flat rate of pay does not warrant the grouping of so many legally distinct contraventions. Nor should that be seen as resulting in a capricious outcome. The multiple contraventions by NoBrace involved failures to observe minimum rates of pay, pay public holiday penalty rates, weekend loading and overtime rates. None of those contraventions are treated as involving one contravention of the Act, Regulations or Award.[53] There was no attempt to penalise the respondents twice.
[53]Cf Fair Work Ombudsman v Mhoney Pty Ltd [2017] FCCA 811, [27]-[29] (Burchardt J); Fair Work Ombudsman v Samurais Paradise Pty Ltd [2017] FCCA 2013, [25] (Vasta J); Fair Work Ombudsman v Blue Impression Pty Ltd & Ors (No.2) [2017] FCCA 2797, [36] (O’Sullivan J).
43.The respondents also submitted that it was necessary to take into account that, in the case of the second and third respondents, their liability as accessories had common elements that were not being sufficiently addressed in the approach advanced by FWO. It was said to be important to give due recognition to the distinct nature of the first respondent’s direct liability for each of the contraventions and the distinct liability of the second and third respondents as accessories.
44.It may be accepted that the Masters’ liability arose from a distinct source; namely, s 550(1) of the Act which provides that a person is involved in a contravention of a civil remedy provision is taken to have contravened that provision. In turn, s 550(2) of the Act identifies the several ways in which a person may be taken to be involved. Neither the second nor the third respondent was liable as an accessory unless or until it was established that they were involved in a particular contravention. In turn, principles of accessory liability were said to invite attention to whether there were common elements to their involvement in the contraventions.
45.The respondents sought to demonstrate ‘commonality’ by reference to the elements of each contravention as involving, for example, in the case of the 1st and 2nd Contraventions,[54] that in each case it was necessary to establish that: (1) Ms Lee had performed work for NoBrace; (2) Ms Lee did so as an employee; (3) Ms Lee’s work was governed by an award; (4) the award stipulated for payment of: (i) a minimum rate of pay, and; (ii) overtime penalties respecively. This was unpersuasive. Such an approach gave practically no significance to the distinct nature, and source of liability for, each contravention.
[54] Liability judgment, [425], [465].
46.The respondents attempt to merge consideration of those contraventions that were said to contain common elements served to distract attention from the need to conduct the analysis required by Step 3 separately from Step 2 (grouping). It produced the regrettable result that consideration of those contraventions which had some common elements occurred from the perspective of analysing whether, and why, it was wrong to group such contraventions under Step 2 rather than giving consideration to common elements as the relevant criterion upon which Step 3 was focused. Nonetheless, I have concluded that the elements of some contraventions have a sufficient degree of commonality and that this circumstance should be taken into account. For example, some common elements can be identified in relation to: contraventions 1-4 (wages and remuneration): 5-8 (leave entitlements) and 9, 10 and 11 (manner of payment and record keeping). However, I do not accept the suggested commonality of contravention 12 (failure to comply with notice to produce) or 13 (production of false and misleading records) bore the commonality for which the respondents contended.
(4) Maximum Penalties
47.The maximum penalties which the court could impose, after adopting the proposed approach to course of conduct, grouping and the maximum applicable penalties for each contravention, are as set out at [16] above.
48.It is settled that careful attention must be given to the maximum penalty for at least three reasons: (1) it should be recognised that, as the legislature has fixed a maximum penalty, it is to be taken as reflecting the seriousness of the prescribed conduct; (2) the identification of that maximum penalty then permits a comparison between the worst possible case and that which the court is being asked to consider; (3) the maximum penalty should be recognised as providing a yardstick which should be taken and balanced with all other relevant factors.[55] Consideration of the maximum penalties that could be imposed on a respondent is part of the comparative exercise of assessing where the subject contraventions are located along that yardstick.[56]
[55]Australian Building and Construction Commission v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113, [106] (Dowsett, Greenwood and Wigney JJ), citing Markarian v The Queen (2005) 228 CLR 357, [31] (Gleeson CJ, Gummow, Hayne and Callinan JJ).
[56] Mornington InnPty Ltd v Jordan (2008) 168 FCR 383, [88] (Stone and Buchanan JJ).
49.Notwithstanding that a prescribed maximum penalty may be high and as reflective of the amount necessary to ensure that general deterrence is met, the amount of a penalty should not be so high as to be oppressive.[57]
[57] Supra, [2017] FCAFC 113, [107].
50.The Act also draws a distinction between the maximum penalties that are to be imposed on persons and corporations. Section 539(2) of the Act and reg 4.01A provide for the maximum penalty the court may impose against an individual respondent for each contravention. Contrastingly, by s 546(2)(b) of the Act, each of the maximum penalties set out in s 539(2) is multiplied by five for a corporate respondent.
Applicable penalty units
51.While FWO no longer pressed for relief as against NoBrace (by reason of its being placed in voluntary liquidation), it is instructive to consider the question of penalty as against all respondents. The maximum available penalties that may be imposed are, for each contravention of:
a)ss 44, 45, 323(1) and 712(3) of the Act, in the case of:
i)NoBrace: 300 penalty units
ii)Dr Masters and Mrs Masters: 60 penalty units
b)ss 535(1) and 536(1) of the Act, in the case of:
i)NoBrace: 150 penalty units
ii)Dr Masters and Mrs Masters: 30 penalty units
c)reg 3.44(1) of the Regulations, in the case of:
i)NoBrace: 100 penalty units
ii)Dr Masters and Mrs Masters: 20 penalty units
52.The quantum of a ‘penalty unit’[58] differed across the period of the subject contraventions. The contraventions in this proceeding[59] took place in the period from 2 April 2011 until 2 February 2014. FWO submitted that the court should apply the relevant penalty unit in force at the time the contraventions occurred[60] such that from:
a)1 July 2009 to 27 December 2012, a penalty unit was defined as $110 ($110 Period);
b)28 December 2012 until 19 April 2015, a penalty unit was defined as $170 ($170 Period).
[58]A ‘penalty unit’ has the same meaning as in the Crimes Act 1914 (Cth): Act, s 12.
[59] With the exception of the contravention of section 712(3) of the Act.
[60]Murrihy v Betezy.com.au Pty Ltd (No.2) (2013) 221 FCR 118, [28]; FairWork Ombudsman v Grouped Property Services Pty Ltd (No.2) [2017] FCA 557, [394]-[395].
53.FWO further submitted that, of the contraventions in this proceeding:
a)contraventions 1 to 3 and 9 to 11 in the Table occurred during both the $110 Period and the $170 Period;
b)other contraventions in this matter (contraventions 4 to 7 and 13 in the Table) occurred only during the $110 Period;
c)contraventions 8 and 12 in the Table occurred only during the $170 Period.
The circumstance that some contraventions overlap the penalty periods identified above gives rise to the question as to what penalty ought apply.
54.On orthodox principles, where contraventions occur before a penalty unit has increased upon an amending act becoming operative, the settled presumption against retrospectivity requires that the quantum of the applicable penalty should be determined at the pre-existing rate: see Murrihy v Betezy.com.au Pty Ltd (No.2).[61] The position is, however, more complex, where the contravening conduct overlapped the date on which the quantum of a penalty was increased by amending legislation.
[61](2013) 221 FCR 118, [27]-[28] (Jessup J). His Honour stated: “The point of the common law’s strong inclination against giving legislation a retrospective operation was not that the past conduct in question amounted to an offence for which a conviction could be recorded, but that the conduct was the point of reference for the imposition of a punishment.”
55.In Fair Work Ombudsman v Grouped Property Services Pty Ltd (No.2),[62] Katzmann J considered whether the higher penalty unit should apply in circumstances where contraventions occurred both before and after a penalty unit increase. Her Honour noted the observations of the Court of Criminal Appeal in R v White[63] that there was no reason why, in a criminal context, a higher penalty should apply only where the conduct being penalised first occurred after an increase. Her Honour held that “by parity of reasoning the same principle applies to contraventions of the FW Act involving a course of conduct which began both before the amendment and continued after it came into effect”[64] and so applied the increased penalty amount to each group of contraventions.
[62] [2017] FCA 557, [396]-[398].
[63] Unreported, BC9101745, NSWCCA (25 July 1991). (Gleeson CJ, Hunt J agreeing).
[64] [2017] FCA 557, [396]-[398].
56.In my view, it is not unimportant to recognise that Katzmann J was conscious that the unqualified application of sentencing principles from the criminal law to the determination of a civil penalty required some caution.[65] In particular, it is of some assistance to appreciate that in R v White, the question arose whether the maximum penalty to be applied to a continuing conspiracy was that which applied at the commencement, or the end, of such conspiracy. Gleeson J (Hunt J agreeing), considered the question to be one of statutory construction and thus to be answered by reference to the intention of the Parliament. His Honour held that there was no reason to conclude the higher penalty was to be applied only in cases where the conspiracy had been entered into after the date on which the higher penalty became operative and observed:
In particular, I can see no reason for concluding that Parliament intended that conspiracies pursued following the amendment would be punished more severely if they were entered into after the amendment, and less severely if they were entered into prior to the amendment.
[65] [2017] FCA 557, [398].
57.However, Gleeson J was fortified in that conclusion by the added degree of flexibility which the amending act conferred on the sentencing judge, and appeared to accept that such flexibility could be employed to ameliorate cases in which the later, higher, penalty was shown “in certain circumstances [to] operate unfavourably to an offender.” Lee J also considered that it would not be inappropriate for a sentencing judge to bear in mind an increase in penalty which occurred during the continuance of a conspiracy and allowed that this could be taken into account by the sentencing judge. Gleeson J and Hunt J agreed.
58.Treating the issue as one of statutory construction, neither the reasoning in R v White nor Grouped Property Services requires the conclusion that a higher penalty is to be applied inflexibly to contraventions under the Act which occurred over a prolonged period and arose from conduct that was initiated at a time when a lower penalty was applicable. Contrastingly, it is settled that “the value of a penalty unit to be applied in formulating a civil penalty is that value at the time of the contravention”: Registered Organisations Commission v Transport Workers’ Union of Australia.[66] The latter principle is dispositive of the question of the penalty unit that is applicable to Mrs Masters. However, the position respecting Dr Masters falls for consideration upon the basis that the higher penalty need not apply automatically.
[66] [2018] FCA 32, [90] (Perram J).
59.FWO submitted that the approach taken in Grouped Property Services was appropriate such that the penalty unit value of $170 should be applied to calculate the maximum penalties for contraventions which traversed the $110 Period and the $170 Period, for the following reasons:
a)to apply the lower penalty unit value would result in anomalous outcomes, such as including that:
i)the earlier, lower, previous maximum penalty would apply indefinitely to contraveners where the course of conduct continued into the period where a higher penalty applied;
ii)significantly different penalties being imposed for similar courses of conduct where one is shown to have commenced shortly before, and the other on or after, 28 December 2012;
b)adopting the higher penalty would not result in manifestly excessive penalties, as the increase of the value of a penalty unit was intended to maintain, rather than increase, the value of the maximum penalty;[67]
c)the respondents had the benefit of s 557 of the Act to group multiple contraventions of the same term as a single contravention;[68]
d)although the meaning of ‘penalty unit’ should be considered as it was from time to time,[69] this did not exclude the application of the increased penalty unit value to contraventions which were reduced by the operation of s 557 of the Act and where the contraventions comprising each course of conduct continued after the penalty unit increased;[70] and
e)the court could take into account, as a factor in mitigation of penalty, that a lower penalty applied for a not insignificant part of the contravening course of conduct.[71]
[67]In Kelly v Fitzpatrick, (2007) 166 IR 14, [29], the Court considered the issue of an increase to maximum penalties, not an increase to the value of a penalty unit. The increase in question to the maximum penalty was 330 percent.
[68]Reliance was placed upon Fair WorkOmbudsman v Something Aussie Pty Ltd [2017] FCCA 186, [15]. There Hartnett J stated: “it is at the time when the course of conduct ended that the maximum penalty crystallises.” Accepting that to be so, it does not support the broader proposition that the higher penalty must apply to contraventions that overlap the periods in which a lower then higher penalty value applies to that unlawfulness.
[69] Acts Interpretation Act 1901 (Cth), s 10(a).
[70]Citing Fair Work Ombudsman v Amritsaria Four Pty Ltd and Anor [2016] FCCA 986, [43]-[53]. There Smith J considered Murrihy v Betezy.com.au Pty Ltd (No.2) (2013) 221 FCR 118, [8]-[28] (Jessup J who followed the decision of the Full Court of the Supreme Court of South Australia in Samuels v Songaila (1977) 16 SASR 397 and made a comparison to penalties in a criminal context, citing R v White (Unreported, New South Wales Court of Criminal Appeal, 25 July 1991) (Lee, Gleeson and Hunt JJ).
[71]Citing Something Aussie, [2017] FCCA 186, [15]; Amritsaria [2016] FCCA 986, [52]-[53]; Fair Work Ombudsman v Mamak Pty Ltd & Ors, [47]; Fair Work Ombudsman v JPA Manchester Pty Ltd & Anor [2018] FCCA 845, [37].
While those considerations may attract some weight, it is notable that FWO’s other submissions denied that they applied in this case.
60.Viewed collectively, FWO’s submissions may be understood as accepting the appropriateness of preserving the flexibility of approach that was endorsed by the Court of Criminal Appeal in R v White. In addition, they may be seen as raising analogous considerations to those recognised and applied in Huddy (No.2)[72] in that White J considered it appropriate to assess whether the aggregate penalty was excessive, and to adjust each separate penalty so as to avoid that outcome. In my view, a similar approach may be applied to the imposition of penalties where the Parliament has increased the amount of a penalty during a period of contravening conduct by a respondent. In this context it is important to recognise that alleged accessories may not be proven to have been involved in all of the primary contravenor unlawful conduct. The importance of doing so stems from the fact that the position of each accessory requires separate consideration as they may have differing levels of involvement and so attract differing penalties.
[72] [2017] FCA 1088, [67]-[72] and [98]-[104].
61.The requirement that the court should consider the maximum penalties that could be imposed on each respondent assumes particular importance in light of the increase in penalties which occurred during the period of the subject contraventions, and in particular as concerns Mrs Masters. For the sake of comparison, I note that in R v White, Lee J held that when regard was had to the significant differences of the subject offenders, “there was every justification in law and in fact for a distinction to be made between the respective terms of imprisonment to be served by the two men.” Again, Gleeson and Hunt JJ agreed. So here. None of the contraventions in which Mrs Masters was found to have been involved occurred at a time after the increase in the maximum penalty.
62.Consideration of the maximum penalty that could be imposed upon each respondent forms part of the comparative exercise of determining where those contraventions are located within the spectrum of contravening conduct.[73] The maximum penalties “taken and balanced with all of the other relevant factors [provide] a yardstick” when determining the penalty that is appropriate to the circumstances of the individual case.[74]
[73] Mornington Inn, (2008) 168 FCR 383, [88] (Stone & Buchanan JJ).
[74] Markarian v R [2005] HCA 25, [31] (Gleeson CJ, Gummow, Hayne & Callinan JJ).
63.FWO correctly submitted that upon those principles and having regard to the findings made in the Liability judgment that Mrs Masters was involved in contraventions 1 to 3 and 9 to 11 in the Table, from 2 April 2011 to 31 October 2012, it was appropriate to apply the $110 penalty unit value for Mrs Masters’ involvement in those contraventions.
64.Further, and as FWO recognised, care must be taken to recognise that over the period 2012 – 2014, contraventions within the $110 period occurred during 21 months of that period while contraventions within the $170 period occurred in the remaining 13 months of that period. I agree that it is just to apply the penalty unit value of $110 to calculate the maximum penalties for contraventions in the case of Mrs Masters whose involvement ceased in 2012. For those reasons, I consider that it is appropriate in the case of both Dr and Mrs Masters that the court should take into account, as a factor in mitigation of penalty, that a $110 penalty applied for a not insignificant part of the period in which the contravening conduct occurred. Particularly is that so where, despite its submissions as to factors that were said to support application of the higher penalty, FWO was resolute that grouping of contraventions was largely unavailable in this case.
65.An important distinction should also be drawn between the basis on which penalties are imposed under the criminal law and those to be imposed by way of civil penalty. This is necessary because, the purpose of a civil penalty is primarily, if not wholly, that of promoting the public interest in compliance with the laws that have been contravened and does not engage principles of retribution or rehabilitation. Relevantly, in FWBII,[75] French CJ, Kiefel, Bell, Nettle and Gordon JJ held:
. . . whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty, as French J explained in Trade Practices Commission v CSR Ltd, is primarily if not wholly protective in promoting the public interest in compliance:
Punishment for breaches of the criminal law traditionally involves three elements: deterrence, both general and individual, retribution and rehabilitation. Neither retribution nor rehabilitation, within the sense of the Old and New Testament moralities that imbue much of our criminal law, have any part to play in economic regulation of the kind contemplated by Pt IV [of the Trade Practices Act]. . . The principal, and I think probably the only, object of the penalties imposed by s 76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the Act.”[76]
[75] (2015) 258 CLR 482, [34].
[76] FWBII, (2015) 258 CLR 482, [55]; Trade Practices Commission v CSR Ltd [1990] FCA 521.
In agreeing with French J (as his Honour then was), the Court confirmed that consideration of penalty factors,[77] was to be undertaken within the overarching consideration of determining what penalty would achieve the principal object of deterrence (both specific and general).
[77][1990] FCA 521, Mason v Harrington Corporation Pty Ltd t/as Pangea Restaurant and Bar [2007] FMCA 7.
66.Since neither retribution nor rehabilitation are relevant in the determination of a civil penalty, this intensifies the focus of a civil penalty determination upon issues of specific and general deterrence.
Relevant considerations
67.The settled,[78] but non-exhaustive catalogue, of relevant factors include:
[78]See, eg, Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560, [89] (Buchanan J); Kelly v Fitzpatrick (2007) 166 IR 14, [14] (Tracey J).
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 contraventions;
i)whether the party committing the breach had exhibited contrition, taken corrective action and cooperated with the enforcement authorities;
j)the need to ensure compliance with minimum standards by provision of effective means for investigation; and
k)the need for specific and general deterrence.
68.Although these are not the only factors and do not constitute a “rigid catalogue of matters for attention”[79] they provide a useful framework within which consideration may be given of an appropriate penalty in the circumstances of a particular case.
[79]Australian Ophthalmic Supplies (2008) 165 FCR 560, [88]-[91] (Buchanan J); Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550, [11].
(a)-(b) The nature, extent and circumstances of contravening conduct
69.FWO correctly submitted that the contraventions were objectively serious and warranted the imposition of meaningful penalties so as to reflect the gravity of the conduct.
70.Factors relating to the objective seriousness of a contravention include:
. . . the extent to which the contravention was the result of deliberate, covert or reckless conduct, as opposed to negligence or carelessness; whether the contravention comprised isolated conduct, or was systematic or occurred over a period of time; if the defendant is a corporation, the seniority of the officers responsible for the contravention; the existence, within the corporation, of compliance systems and whether there was a culture of compliance at the corporation; the impact or consequences of the contravention on the market or innocent third parties; and the extent of any profit or benefit derived as a result of the contravention.[80]
[80]Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113, [103].
Each of those factors is engaged in the present case.
71.While the various types of contravening conduct are considered below. I am satisfied that, objectively, the conduct of NoBrace, in which the Masters were involved, constituted serious contraventions of the Act.[81]
[81] See Act, s 557A(1).
(i) Vulnerability of Ms Lee
72.FWO placed considerable reliance upon its submission that Ms Lee was in a position of vulnerability which NoBrace was said to have exploited. It was submitted that such vulnerability arose from the circumstance that Ms Lee was a Korean national who had been sponsored by NoBrace for her subclass 457 visa and that, although she spoke English as a second language and had a reasonable command of that language, nevertheless, she required an interpreter for some communications. On those bases, it was submitted that “Ms Lee had all of the hallmarks of a vulnerable employee and there was a clear power imbalance in the employment relationship that was exploited by the respondents.” The submission had a conclusory quality that did not sufficiently identify all relevant facts.
73.FWO submitted that Ms Lee had been ‘instructed’ by her day-to-day manager not to talk to Dr Masters about her wages.[82] It was said that Ms Lee had been scared to complain to Dr Masters about her wages because she was worried about preserving her visa and residency status, and did not want to jeopardise her employment. FWO asserted that Ms Lee had been intimidated by Dr Masters and that she had complied with all instructions given to her in the course of her employment with NoBrace, including those which were said to be objectively unreasonable and a gross exploitation of a power imbalance (such as directions to clean the Masters’ house or iron Dr Masters’ shirts). Ms Lee said that she felt compelled to abide by these directions out of fear of being reprimanded by Dr Masters if she refused. FWO claimed that Ms Lee had ultimately acquiesced to unreasonable working conditions because she did not want to jeopardise her job.
[82]Citing the Liability judgment at [166] and [185].
74.Employees who work in Australia on visas including those with limited English skills may well be susceptible to exploitation and some may properly be characterised as vulnerable.[83] It may also be accepted that some persons, including those on visas, may have a limited ability to understand and enforce their workplace rights such that their prospective employer (and those in senior management) should have a heightened sense of awareness of the need to proactively comply with employment obligations.[84] Such circumstances may well be relevant to penalty.[85]
[83]Citing Fair Work Ombudsman v Kentwood Industries Pty Ltd (No.2) [2010] FCA 1156, [237], [246]; Fair Work Ombudsman v Crystal Carwash Pty Ltd (No.2) [2014] FCA 827, [27]-[28]; Fair Work Ombudsman v Al Hilfi [2016] FCA 193, [25], [75]; Fair Work Ombudsman v South Jin Pty Ltd (No.2) [2016] FCA 832, [28]; Fair Work Ombudsman v Yogurberry World Square Pty Ltd [2016] FCA 1290, [26].
[84]Fair Work Ombudsman v Go Yo Trading Pty Limited & Anor [2012] FMCA 865, [14]-[16].
[85]Citing Fair Work Ombudsman v Golden Vision Food and Beverage Services Pty Ltd & Anor (No. 2) [2016] FCCA 1721, [74]; Fair Work Ombudsman v Dosanjh [2016] FCCA 923, [30]; Fair Work Ombudsman v AIMG BQ Pty Ltd ACN 148 012 284 & Anor [2016] FCCA 1024, [100]; Fair Work Ombudsman v Shafi Investments Pty Ltd & Ors (No.2) [2013] FMCA 168, [17]; Go Yo Trading, [15]-[16]; Fair Work Ombudsman v Java Spice Australia Pty Ltd [2015] FCCA 2930, [96]-[97].
75.I am not prepared to accept that Ms Lee was vulnerable in the manner suggested by FWO. The penalty submissions were consistently framed from the perspective that Ms Lee was a person who had, in effect, been exploited because she held a 457 visa[86] and sought to construct a foundation upon the fact of that 457 visa as the basis for an inference that Ms Lee had then been exploited and so became at risk of losing her employment if she did not accept her employment conditions.
[86] See, eg, FWO opening submission at [3], [41].
76.FWO’s submissions left out of account that Ms Lee had commenced employment holding a student visa and had been actively supported by each of the respondents in both her application for a 457 visa so that she could work temporarily in Australia and then an ENS visa so that she could obtain permanent residency. I have found that both Dr Masters and Ms Lee well knew the agreement they executed to secure a 457 visa was a sham. As FWO accepted, the respondent’s sole motivation for entering that sham was to assist Ms Lee. Ms Lee agreed that she had not complained about her remuneration. Ultimately, the real catalyst for Ms Lee’s change of circumstances was the sale of the dental practice and her resultant loss of sponsorship for her ENS visa. It was only then that Ms Lee made any complaint about her employment.
77.I reject FWO’s broad submission that because a person is a foreign national and for whom English is a second language that they should be characterised as vulnerable in their employment or at risk of exploitation in their dealings with their employer. Australia is a country built on immigration where a great many persons of diverse ethnicity have risen to occupy prominent positions in the public and private sector including in professions, politics, industry and commerce. Ms Lee did not impress me as being in any position of vulnerability in her dealings with the respondents. To the contrary, she secured employment upon obtaining her tertiary qualification and later, when she raised her aspirations to secure NoBrace as a sponsor, she did not wait long after addressing the issue with her supervisor before taking the matter up directly with Dr Masters. Ms Lee adopted an even more direct approach when she sought his support for an ENS visa. Ms Lee had a demonstrated capacity to take initiatives in acting in her own interests and did so. Ms Lee did not stand in the same position as an unskilled labourer with little or no education or an insufficient command of English as a second language.
78.The evidence on which FWO based its submissions that Ms Lee had been ‘instructed’ not to talk to Dr Masters about her wages turned on conversations which she had held with her laboratory supervisor, Mr Shyles. It was not an instruction given to her by any respondent and the whole of the evidence demonstrated that whenever staff formed the view that they were not being paid at the ‘market’ rate, the instructions which were given by the respondents to Ms Wong resulted in her being instructed to investigate the issue both in the market and under the Award. Insofar as it was said that Ms Lee had been scared to talk or complain to Dr Masters about her wages because she was worried about preserving her visa and residency status and did not want to jeopardise her employment, I was unimpressed by that evidence. It was squarely at odds with her direct concession that she knew the rate at which she was being paid and made no complaint in relation to her remuneration. It was undermined by her clear willingness to approach Dr Masters in relation to both of her visa applications. Ms Lee remained in her employment as a dental technician for some years.
79.Nor do I accept the suggestion that Ms Lee had been intimidated by Dr Masters and that it was out of fear that she had complied with all instructions given to her in the course of her employment. I did not discern an intimidatory relationship as between these parties. Equally, while I accept that Ms Lee had also cleaned the Masters’ house and (on one occasion) ironed shirts, those activities did not constitute some gross exploitation of Ms Lee. It occurred at a time when Ms Lee returned from overseas trips with presents for the Masters. It was, in effect, a family dental practice and while there is no doubt that intimidation or exploitation may occur in some family businesses, the present case was not of that character. As stated above, the respondents actively supported Ms Lee’s visa application and did so in a way that was essentially altruistic, however misguided its implementation may have been.
80.I reject the submission that Ms Lee was vulnerable in the sense that is recognised in the authorities where that factor is properly identified as being relevant to the question of penalty. I also reject the submission that she had been exploited in the proper sense of that term. While the loss suffered by Ms Lee was the direct result of underpayment, that did not occur because of a deliberate attempt to exploit her. The broad submission that there was a power imbalance was unwarranted. It was expressed in a conclusory way that did not expose the underlying reasons why that was said to be so. I decline to accept those submissions.
(ii) Underpayment contraventions
81.The contraventions as found in the Liability judgment resulted in a total underpayment of $66,945.24[87] which sum remains unpaid.
[87] Liability judgment, [612].
82.FWO advanced its principal submission on penalty on the basis of the agreement executed in March 2011 and which was utilised by Ms Lee for the purposes of securing her 457 visa. I found the parties to that agreement knew it was a sham. Yet, FWO submitted that at no stage during her employment was Ms Lee paid $50,000 per annum as that agreement provided. As both parties knew the agreement to be a sham it follows they did not intend it to operate according to its terms.[88] While the sham did not exonerate them from liability for the underpayments not made in contravention of the Award, it served to demonstrate that no party intended Ms Lee to be paid $50,000. FWO accepted that, had Ms Lee insisted on this rate of remuneration, NoBrace would not have agreed to act as her sponsor. As the respondents submitted, in all likelihood her current visa would have expired.
[88] Liability judgment, [373].
83.While it was said that annual remuneration of $50,000 equated to an hourly rate of pay of $25.30 on the basis of a 38 hour week, Ms Lee did not work a 38 hour week. However, for the most part Ms Lee was paid a flat rate of $15 per hour for all hours worked.[89] The failure to pay Ms Lee $50,000 per annum at any stage was said to be significant in the consideration that she had performed approximately 1,344 hours of overtime work for which she was entitled to hourly overtime penalties of between $25.36 and $37.85. I do not accept that the sham agreement is relevant to the fact Ms Lee was not paid overtime. The systemic failure to pay overtime was an egregious contravention but it was not made more so by the parties’ entry into the agreement, the purpose of which had quite different motivations.
[89] SOAF, [14]; Liability judgment, [7].
84.It may also be accepted that an objective of modern awards is the need to provide additional remuneration for employees working overtime[90] and that NoBrace clearly undermined this objective; however, to employ the sham agreement for the purposes of seeking to expose the true nature of the underpayment contraventions was to ignore several matters. First is that both parties knew the agreement to be a sham – they did not intend it to operate according to its terms. Secondly, NoBrace made quarterly payments of PAYG tax on a supposed income of $50,000. It did so, to maintain the appearance of the sham – this was a matter undertaken for Ms Lee’s benefit. Thirdly, and most importantly, to approach the matter upon the basis that the agreement coloured the respondents’ conduct with a malign intent, served to distract attention from the fact that the contraventions were proved directly – and without more – by reference to Ms Lee’s rates of pay and the rates of pay to which she was entitled, including for overtime penalties, weekend loading, public holiday penalty rates, payment for absences for public holidays not worked, annual leave, leave loading and annual leave on termination. To introduce the sham agreement as the primary basis for consideration of these issues was unhelpful. Such systemic underpayment would more usefully have been demonstrated by reference to the primary facts and the length of time over which this conduct had occurred.
213.Secondly, Dr Masters and Mrs Masters had, at separate stages, each been the sole director of NoBrace. They were each materially involved in some or all of the contraventions that resulted in the underpayment amounts to Ms Lee.
214.Thirdly, the making of orders for compensation will serve to discourage the controlling minds of a corporate employer from allowing their “corporation to fail only to continue the business via a new corporation. It would encourage them to take steps to ensure the corporation they control meets its statutory obligations as they arise.”[208]
[208] Fair Work Ombudsman vStep Ahead Security Services [2016] FCCA 1482, [77].
215.Fourthly, the court has made declarations that Dr Masters and Mrs Masters were involved in all, or some, of the contraventions by NoBrace. Those contraventions led to the underpayment to Ms Lee. No attempt has been made to rectify the underpayment contraventions.
216.Fifthly, by the SOAF, NoBrace agreed to pay Ms Lee the amount of the admitted underpayments. On the first day of trial, NoBrace further admitted the contraventions involving the unauthorised deduction from Ms Lee’s gross wages by the payment of her PAYG instalments being for sums calculated by reference to the supposed $50,000 annual salary, as distinct from her actual gross wage. Next, by their opening and closing submissions, the respondents variously accepted a liability to pay such sums and said that the loss to Ms Lee would be made good and further, that Dr Masters clearly had the capacity to pay the amount owing plus interest. Why he has not done so was not adequately explained at any stage. A supposed difficulty in doing so was said to arise from uncertainty as to the respective liability of Dr Masters and Mrs Masters for the total amount of the (admitted) underpayments and interest. Reliance was placed upon the fact of the Masters’ separation, the apparent implication being that their liabilities were truly distinct. While those submissions were unpersuasive, the issue that they present has been addressed in the form that the orders will take.
217.Sixthly, in Veeraragoo,[209] Colvin J identified considerations of this kind as being sufficient to support a conclusion that for the purposes of s 545 of the Act it was appropriate to make orders for compensation.
[209] [2018] FCA 1448, [48]-[50].
218.Seventhly, the making of such orders was agreed to by the Masters.
Causation
219.The court’s power under s 545(1) to make any order the court considers appropriate includes a power to make an order awarding compensation for loss that a person has suffered but is conditioned by the requirement that such loss was “because of the contravention”: see Act, s 545(2)(b). Expressed in other terms, such compensation should be confined to that which is referrable to the conduct of the person who was involved in the contravention.[210] The nature of this causal requirement was recently addressed in Fair Work Ombudsman v Construction, Forestry, Maritime, Mining and Energy Union where Ross J said:[211]
Further, as is clear from s 545(2)(b) a necessary condition for the making of an Order for compensation is that loss is suffered because of the contravention. As Barker J put it in Australian Licenced Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd [2011] FCA 333; (2011) 193 FCR 526 at [423] (the Australian Aircraft Case), “this requires an appropriate causal connection between the contravention and the loss claimed”. (Also see Maritime Union of Australia v Fair Work Ombudsman and Skilled Offshore (Australia) Pty Ltd [2015] FCAFC 120 at [20]). It necessarily follows that any order for compensation is an order directed to compensating a person for such a loss. As Katzmann J observed in Shizas v Commissioner of Police ([2017] FCA 61 at [209]) the focus of such an order is “in a loose sense, the restoration of those affected by a contravention to the positions they would have occupied but for its occurrence”.
[210] cf Veeraragoo, [2018] FCA 1448, [51]-[58].
[211] [2019] FCAFC 69, [132], (Flick and Rangiah JJ agreeing on this issue at [4] and [192]).
220.In the present case, the loss for which compensation was sought was confined to the sum of the underpayments; namely, $66,945. FWO advanced a ‘formal’ submission that each of the Masters should be ordered to make compensation in that entire amount. This submission ignored the need to consider whether the whole of that loss had been suffered, relevantly, because of the contraventions that Mrs Masters had been involved in: Act, par 545(2)(b). Mrs Masters has not been found to have been involved in all contraventions and I do not consider that she has caused the loss that was suffered as a result of all contraventions.
It is appropriate to make orders for compensation
221.I am satisfied that it is appropriate to make compensatory orders as against each of the persons who have been declared as being involved in the contraventions by NoBrace. However, I am not satisfied that the same orders should be made as against each of them.
222.Beyond recognising that Mrs Masters had not been found to have been involved in contraventions beyond 31 October 2012, no submission was made by the respondents as to why the loss represented by those underpayments had not been caused by the contraventions by NoBrace. Instead, they agreed in the making of orders for compensation. While I am satisfied that the loss for which compensation was claimed was suffered because of those contraventions, it is necessary to make orders for payment of compensation which recognise the distinct liability of each of the persons involved in the contraventions.
223.FWO helpfully furnished a post-hearing submission that shed light upon the quantum of the underpayments that had occurred as a result of the contraventions in the period up to Mrs Masters’ resignation in 2012. Out of the total loss to Ms Lee of $66,945 the sum of the underpayments that were not paid up to the date of that resignation was $34,057. Upon the data furnished by FWO, I am satisfied that the loss which was suffered by Ms Lee because of the contraventions in which Mrs Masters had been involved was $34,057. Contrastingly, the loss which was suffered by Ms Lee because of the contraventions in which Dr Masters had been involved was $66,945. The appropriate relief should be confined to that which was referrable to the contravening conduct in which each of Dr and Mrs Masters respectively, were involved.[212]
[212] cf Veeraragoo, [2018] FCA 1448, [51].
Joint and several liability?
224.FWO next sought that the Masters should be jointly and severally liable for the payment to Ms Lee of the total amount of the underpayment and interest. For the reasons above, it is not appropriate that orders be made that they be held to be jointly and severally liable for the sum representing the whole of the underpayments.
225.Reliance was placed upon Fair Work Ombudsman v Step Ahead Security Services Pty Ltd,[213] where Jarrett J had made an order that a company and its director (who was held liable as an accessory), be jointly and severally liable for payment of the underpayments to a number of employees. His Honour considered that the order was appropriate as an order for several liability may lead to a situation where employees might receive double compensation.[214] Otherwise, his Honour does not appear to have been referred to any authority or principles as to why or when particular persons should be rendered jointly and severally liable.
[213] [2016] FCCA 1482, [69].
[214] [2016] FCCA 1482, [80].
226.The learned authors of Accessories in Private Law,[215] examine the nature of joint liability in the context of accessory liability and recognise the many issues that may arise for consideration in deciding whether joint liability exists as between a principal wrongdoer and one or more accessories. In the context of examining available remedies, the authors considered XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd, where Gibbs CJ did not consider it to be in the least impracticable to give separate judgments against two defendants.[216]
[215]Dietrich and Ridge, Accessories in Private Law, Cambridge University Press (2015), p. 93-95, 163-166; see also Barker and Grantham, Apportionment in Private Law, (Hart Studies in Private Law) (2018).
[216] (1985) 155 CLR 448, 460.
227.While no submissions were made as to the nature of joint and several liability, FWO recognised that the fact Mrs Masters had ceased involvement in the dental practice from at least 31 October 2012, coupled with the fact that she had not been found liable as an accessory for contraventions beyond that date, raised questions as to why it would be appropriate to make such an order.
228.Chapter 4 of the Act, which concerns compliance and enforcement, is arranged in two parts and comprises ss 537 – 572. In Part 4.1, which relates to civil remedies, Div 2 is concerned with Orders including those that may be made under ss 545-547. Nothing in those provisions addresses the question of making of orders that, where more than one person has been found to have been involved in the contraventions of a primary contravenor, orders may be made that those secondary participants are to be jointly, or jointly and severally, liable. Nor from my electronic search of the Act is the question of joint and several liability addressed. To say as much may only mean that the issue arises beyond the scope of the Act and is addressed by some other means.
229.However, in the absence of full argument, I am not prepared to yield to the application that Mrs Masters be held jointly liable with Dr Masters for all of the loss that was suffered as a result of the entire contraventions by NoBrace. The declarations that she has a separate and distinct liability for certain contraventions undermines a conclusion of joint liability. Such submissions as were made appeared to assume that persons found to have been involved in a contravention bore a status akin to joint tortfeasors. There seems to be no reason why that assumption must apply in every case where allegations of accessory liability under the Act are raised for determination. Viewed from another perspective, there is no reason to introduce the many possible complications[217] arising from joint liability where the Act confers a broad power to make any order it considers appropriate in relation to compensation. The claim for compensation is a statutory, not a tortious, claim.
[217] See, eg, Newcrest Mining Ltd v Thornton (2012) 248 CLR 555, [45], [76], [86], [122].
230.The respondents agreed that an order should be made against them pursuant to s 545(2)(b) for payment to Ms Lee, including as against each of the Masters. Nothing was said as to the submission that that sum should be paid within 28 days. The only apparent difficulty raised by the respondents was that they had quite different levels of culpability and for that reason, as the argument ran, there was uncertainty as to what amount each of them should pay (and when). Reliance was placed upon the fact of their separation and that they bore a substantively different legal liability for the amount of the underpayments.
231.I am only prepared to make orders that Dr Masters and Mrs Masters are liable for such loss as they had caused Ms Lee to suffer. It would be unjust to do otherwise. Any supposed difficulties such as the risk of double recovery can be addressed by an order that prevents FWO seeking to execute the order for compensation as against Mrs Masters without leave of the court. If Dr Masters is true to his submission that he will pay the compensation, no difficulty will arise. From a procedural perspective, no claim for contribution had been raised as between Dr Masters and Mrs Masters in relation to the claim for compensation. Instead, they were essentially agreed in such orders being made.
Interest on compensation
232.The respondents did not cavil with the submissions as to interest.
233.The court may make an order pursuant to s 545 of the Act for an amount of interest in relation to an amount that a person is required to pay.[218] However, the provisions relating to payment of interest do not apply to pecuniary penalties and no interest was sought in respect of them.
[218] Act, s 547(2); Federal Circuit Court Act 1999 (Cth) (FCC Act), s 76.
234.The court must, on application, include an amount of interest on a sum ordered under the Act (other than a pecuniary penalty order), unless good cause is shown to the contrary.[219] In determining the amount of interest, the court must take into account the period between the date the relevant cause of action arose and the day the order is made. [220] The court may order interest at such rate, and for such period, as the court sees fit.[221]
[219] Act, s 547(2).
[220] Act, s 547(3).
[221] FCC Act, s 76.
235.In this court, an appropriate rate for pre-judgment interest is 4% above the Reserve Bank’s prevailing cash rate. The use of a rate calculated on that basis has been endorsed as a ‘rough and ready’ guide to the prevailing market rate to be applied to pre-judgment interest.[222] I also accept FWO’s submission that one basis for the calculation of pre-judgment interest is for it to be calculated from 2 February 2014 (being the date of Ms Lee’s termination of employment), and that such interest should be calculated in accordance with the Federal Court of Australia’s Interest of Judgments Practice Note (GPN-INT); being a calculation at the prevailing Reserve Bank of Australia cash rates plus 4%.[223]
[222]Citing Management 3 Group, supra; see also Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (No.2) [2014] NSWCA 425, [18] (Macfarlan, Meagher and Barrett JJA agreeing); rev’d on appeal on other issue; (2015) 256 CLR 104.
[223] FCA General Practice Note, [2.3].
236.The view has been expressed that interest may be allowed both in relation to the sums that are unpaid in contravention of the Act together with sums that are awarded by way of compensation.[224] Despite the expression of a view to the contrary, it is also accepted that in any event, interest on compensation may be awarded under s 76 of the FCC Act.[225] No detailed submissions were made as to this issue but I will award interest on the compensation as sought.
[224] Verarargoo (No.2), [2018] FCA 1448, [59] (Colvin J).
[225]Cf Australian Licenced Aircraft Engineers Association v International Aviations Service Assistance Pty Ltd [2011] FCA 333, [452]-[460] (Barker J).
237.Over the period 2014 to date, the Reserve Bank’s cash rates have progressively decreased from 2% to 0.75%.[226] The calculations of interest that were provided by FWO were not contested. Taking into account the total interest payable on the sum of $66,945 from 2014 to date, I allow the claim for such interest in the sum of $20,940.
[226]At the relevant times, those cash rates were 2% until 3 June2 2019; 1.25% until 1 July 2019, 1.00% until 30 September 2019 and 0.75% from 1 October 2019.
238.A difficulty with FWO’s calculations is that they did not distinguish the positions of Dr Masters and Mrs Masters. Mrs Masters should not be subject to a liability to pay interest on the sum of $66,945. Her liability to pay compensation is limited to the sum of $34,057. Taking into account the period from 2014 until the day that the order is made and subject to what follows, I would allow a sum of $10,000 by way of interest on the compensation that Mrs Masters is liable to pay.
Relief
239.FWO proposed a series of orders that were submitted as appropriate to the circumstances of the case. I note that in some of the authorities,[227] the approach taken was to fix penalties for each separate contravention and make an order for the payment of each of them. No submission was made that this approach was to be adopted and instead, the submissions made proceeded on the basis that a single penalty should be fixed. In the event, the proposed orders were largely agreed in by the respondents, and subject to the following, I have made those orders.
[227] Eg, Fair Work Ombudsman v Grouped Property Services Pty Ltd (No.2) [2017] FCA 557.
240.While orders were sought that NoBrace pay compensation in the amount of $66,945.24, together with interest, in consequence upon it being placed in voluntary liquidation, no relief was now sought against it.[228] Likewise, FWO no longer pressed its application that NoBrace be ordered to pay penalties for its contraventions of the Act.
[228] The proceeding against NoBrace is stayed: Corporations Act 2001 (Cth), s 500(2).
241.Orders were sought and should be made that within 28 days of the Order, pursuant to s 546 of the Act, each of Dr Masters and Mrs Masters pay to the Commonwealth penalties for their respective involvement, within the meaning of s 550 of the Act, in the contraventions by NoBrace.
242.Further agreed orders were that pursuant to par 545(2)(b) of the Act, each of Dr Masters and Mrs Masters pay compensation in such amounts as the court deemed just. I have determined the amounts of compensation, together with interest, that should be paid. Orders were sought and should be made for such payment within 28 days of the Order. It was originally sought that an order be made for the payment of compensation and interest to Ms Lee (who is not a party) directly. A modified submission, which was not opposed, was that it be paid to FWO (an approach, which accords with authority).[229] The making of orders for the payment of the compensation to FWO entails a consequential direction for such compensation to be paid to Ms Lee.
[229] Cf Grouped Property Services (No 2) [2017] FCA 557.
243.However, it was implicit in the parties’ submissions that Ms Lee should not be entitled to recover more by way of compensation than she had actually lost.[230] It was explicit in the submissions that Dr Masters maintains he has the capacity to pay and that he will do so. Having regard to those matters, an order should be made that FWO not enforce the order for payment by Mrs Masters without leave of the court. Framing of orders in this manner is consistent with those submissions.
[230] Cf Redding v Lee (1983) 151 CLR 117, 133 (Mason and Dawson JJ).
244.FWO sought liberty to apply on seven days’ notice in the event that any of the preceding orders were not complied with. It was not explained why such an order was appropriate and I do not consider it to be so where final orders are being made to dispose of the proceeding. The position that FWO may choose to adopt in the event of failure to comply with the final orders are essentially matters for enforcement.
Conclusion
245.This application arose for determination in circumstances where each of the parties relied upon the whole of the evidence that was adduced for the purposes of the hearing on liability and upon submissions both oral and written. In particular, FWO lodged a large number of folders containing some 90 authorities upon which reliance was placed for the purposes of the hearing on penalty. The volume of business in this court and its limited resources cannot accommodate an approach to the conduct of proceedings in which such extensive materials are submitted for consideration. It is to be hoped that in future, the parties are able to identify the seminal decision upon each relevant issue so as to assist the court and to confine their submissions to reliance upon such decisions.
I certify that the preceding two hundred and forty-five (245) paragraphs are a true copy of the reasons for judgment of Judge A Kelly
Associate:
Date: 22 October 2019
Proposed Penalties – Mrs Christine Linda Masters
| Provision(s) contravened | Description of contravention | Maximum penalty | Penalty range sought | Total penalty sought | |
| 1. | Section 45 FW Act (clause 14.3 of the Health Award) | Failure to pay minimum rates of pay | $6,600 | 70% - 80% | $4,620 - $5,280 |
| 2. | Section 45 FW Act (clause 28.1 of the Health Award) | Failure to pay overtime rates | $6,600 | 70% - 80% | $4,620 - $5,280 |
| 3. | Section 45 FW Act (clause 26.1 of the Health Award) | Failure to pay weekend loading | $6,600 | 20% - 30% | $1,320 - $1,980 |
| 4. | Section 45 FW Act (clause 32.2 of the Health Award) | Failure to pay public holiday penalty rates | $6,600 | 5% | $330 |
| 5. | Section 44 FW Act (section 90(1) of the FW Act)) | Failure to pay during periods of annual leave | $6,600 | 40% - 50% | $2,640 – $3,300 |
| 6. | Section 44 FW Act (section 116 of the FW Act) | Failure to pay for public holidays not worked | $6,600 | 40% - 50% | $2,640 – $3,300 |
| 7. | Section 323(1) FW Act | Failure to pay in full by making unauthorised deductions | $6,600 | 50% - 60% | $3,300 - $3,960 |
| 8. | Section 535(1) FW Act | Failure to keep employee records as prescribed by the FW Regulations | $3,300 | 70% - 80% | $2,310 - $2,640 |
| 9. | Section 536(1) FW Act | Failure to provide pay slips | $3,300 | 70% - 80% | $2,310 - $2,640 |
| 10. | Regulation 3.44(1) FW Regulations | Knowingly keeping false and misleading employee records | $2,200 | 70% - 80% | $1,540 - $1,760 |
| TOTAL | $55,000 | 46.6% - 55.4% | $25,630 - $30,470 | ||
Proposed Penalties – Dr Ari Masters
| Provision(s) contravened | Description of contravention | Maximum penalty | Maximum penalty after grouping | Penalty range sought | Total penalty sought | |
| 1. | Section 45 FW Act (clause 14.3 of the Health Award) | Failure to pay minimum rates of pay | $10,200 | $10,200 | 80% - 90% | $8,160 – $9,180 |
| 2. | Section 45 FW Act (clause 28.1 of the Health Award) | Failure to pay overtime rates | $10,200 | $10,200 | 80% - 90% | $8,160 – $9,180 |
| 3. | Section 45 FW Act (clause 26.1 of the Health Award) | Failure to pay weekend loading | $10,200 | $10,200 | 30% - 40% | $3,060 – $4,080 |
| 4. | Section 45 FW Act (clause 32.2 of the Health Award) | Failure to pay public holiday penalty rates | $6,600 | $6,600 | 5% | $330.00 |
| 5. | Section 44 FW Act (section 90(1) of the FW Act)) | Failure to pay during periods of annual leave | $6,600 | $6,600 | 40% - 50% | $2,640 – $3,300 |
| 6. | Section 45 FW Act (clause 31.2 of the Health Award) | Failure to pay annual leave loading | $6,600 | |||
| 7. | Section 44 FW Act (section 116 of the FW Act) | Failure to pay for public holidays not worked | $6,600 | $6,600 | 40% - 50% | $2,640 – $3,300 |
| 8. | Section 44 FW Act (section 90(2) of the FW Act)) | Failure pay accrued annual leave on termination | $10,200 | $10,200 | 50% - 60% | $5,100 – $6,120 |
| 9. | Section 323(1) FW Act | Failure to pay in full by making unauthorised deductions | $10,200 | $10,200 | 60% - 70% | $6,120 – $7,140 |
| 10. | Section 535(1) FW Act | Failure to keep employee records as prescribed by the FW Regulations | $5,100 | $5,100 | 70% - 80% | $3,570 – $4,080 |
| 11. | Section 536(1) FW Act | Failure to provide pay slips | $5,100 | $5,100 | 70% - 80% | $3,570 – $4,080 |
| 12. | Section 712(3) FW Act | Failure to comply with a notice to produce records or documents | $10,200 | $10,200 | 40% - 50% | $4,080 – $5,100 |
| 13. | Regulation 3.44(1) FW Regulations | Knowingly keeping false and misleading employee records | $2,200 | $2,200 | 70% - 80% | $1,540 – $1,760 |
| TOTAL | $100,000 | $93,400 | 48.97% - 57.65% | $48,970 - $57,650 | ||
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