Fair Work Ombudsman v P49 Collingwood Pty Ltd
[2024] FedCFamC2G 1262
•21 November 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v P49 Collingwood Pty Ltd [2024] FedCFamC2G 1262
File number(s): MLG 2216 of 2023 Judgment of: JUDGE O'SULLIVAN Date of judgment: 21 November 2024 Catchwords: INDUSTRIAL LAW – Application for civil penalty –admitted contraventions –failure to cleave to compliance notice and provide pay slips under Fair Work Act 2009 (Cth) – penalty hearing – appropriate penalty. Legislation: Fair Work Act 2009 (Cth) ss.536(1), 550(2), 716
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law Rules) 2021 (Cth) r.13.06
Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157
Australian Building and Construction Commissioner v Pattinson (2022) 399 ALR 599
Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482
Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown
FWO v South Jin Pty Ltd (No 2) [2016] FCA 832
Kelly v Fitzpatrick (2007) 166 IR 14
Rocky Holdings Pty Ltd v Fair Work Ombudsman [2014] FCAFC 62
Division: Division 2 General Federal Law Number of paragraphs: 60 Date of last submission/s: 21 November 2024 Date of hearing: 21 November 2024 Place: Melbourne Solicitor for the Applicant: Ms Vassallo Solicitor for the Respondents: No appearance
Table of Corrections 28 November 2024 In paragraph 5, line 4, delete “was also liable for that breach”. ORDERS
MLG 2216 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
ApplicantAND:
P49 COLLINGWOOD PTY LTD (ACN 614 378 906)
First RespondentROCCO ESPOSITO
Second Respondent
ORDER MADE BY:
JUDGE O'SULLIVAN
DATE OF ORDER:
21 NOVEMBER 2024
THE COURT ORDERS THAT:
1.The hearing this day proceed in the absence of the respondents pursuant to Rule 13.06 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law Rules) 2021 (Cth) (the Rules) and pursuant to rule 6.04(b) of the Rules the affidavit of Leigh James Pace filed 23 October 2024 and the outline of submissions also filed 23 October 2024, are deemed to have been served on the second respondent on 23 October 2024 when they were emailed to [email protected] or served on the first respondent.
2.Pursuant to section 546 of the Fair Work Act 2009 (Cth) (“FW Act”), within 28 days of this order, the First Respondent pay:
(a)a pecuniary penalty of $21,037.50 to the Consolidated Revenue Fund of the Commonwealth for the contravention of section 716(5) declared in the Orders made on 19 April 2024; and
(b)a pecuniary penalty of $33,966 to the Consolidated Revenue Fund of the Commonwealth for the contravention of section 536(1) declared in the Orders made on 19 April 2024.
3.Pursuant to section 546 of the FW Act, within 28 days of this order, the Second Respondent pay a pecuniary penalty of $6,793.20 to the Consolidated Revenue Fund of the Commonwealth for the contravention of section 536(1) declared in the Orders made on 19 April 2024.
4.The Applicant have liberty to apply on seven days’ notice in the event that the preceding orders are not complied with.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE O’SULLIVAN
INTRODUCTION
Before the Court are proceedings for the imposition of penalties for contraventions of the Fair Work Act 2009 (Cth) (“the FW Act”). On 12 December 2023, the Fair Work Ombudsman (“the applicant”) commenced these proceedings against P49 Collingwood Pty Ltd (“the first respondent”) and Rocco Esposito (“the second respondent”) (“the respondents”).
It was subsequently agreed the first respondent contravened various provisions of the FW Act and that the second respondent was involved in those and accessorily liable as a result. Following the making of declarations to that effect in April this year the matter was listed for a penalty hearing and these reasons concern what penalty should be imposed for that conduct.
BACKGROUND
The first respondent operated a restaurant and café in Cambridge Street, Collingwood, trading as “Project 49”.
The applicant commenced an investigation in 2022 in relation to concerns Ms Maugeri (“the employee”) who worked for the first respondent was underpaid. The investigation identified that the employee was underpaid by the first respondent for both her minimum hourly rate of pay, her annual leave entitlements and did not get pay slips.
A compliance notice was issued by the applicant to the first respondent pursuant to s.716 of the FW Act on 29 November 2022. It is now agreed the first respondent failed to comply with that notice. It is agreed the second respondent the sole director, and who was responsible for ensuring the first respondent’s compliance.
The proceedings were first before the Court on 13 February 2024. The respondents were ordered to file and serve a response and defence, with the applicant to provide a reply to same. No defence or response was filed by the first or second respondent.
The applicant then filed an application in a proceeding on 19 March 2024. The application sought orders for inter alia default judgment.
However, the need to deal with that was overtaken by email correspondence from the parties sent to the Court on 18 April 2024 which indicated the respondents made full admissions in relation to the above conduct. A statement of agreed facts (S.O.A.F) was filed with the Court and minute of consent orders was then provided to the Court the same day. As a result, the following orders were made on 19 April 2024:
THE COURT DECLARES THAT:
1.Upon the admissions that the first respondent is taken to have made pursuant to the statement of agreed facts filed in this proceeding on 18 April 2024 the first respondent contravened:
(a) s.716(5) of the Fair Work Act 2009 (Cth) (‘the FW Act’) by failing to comply with the compliance notice; and
(b) s.536(1) of the FW Act by failing to give pay slips to the employee within one working day of making payments to her in relation to the performance of work.
2.Upon the admissions that the second respondent is taken to have made pursuant to the statement of agreed facts filed in this proceeding on 18 April 2024, the second respondent was involved, within the meaning of s.550(2) of the FW Act, in the first respondent’s contravention of s.536(1) referred to above at 1(b), and is therefore, taken to have contravened s.536(1) of the FW Act.
THE COURT ORDERS BY CONSENT THAT:
3.Pursuant to s.545(1) of the FW Act, within 28 days of this order, the first respondent take action required by the compliance notice by:
(a) calculating and paying the superannuation contribution to the employee’s nominated superannuation fund as required by clause 22.2 of the Restaurant Industry Award in respect of the outstanding amount (‘the outstanding superannuation’); and
(b) preparing and producing to the applicant a schedule outlining the first respondent’s calculations of the outstanding superannuation as set in order 3(a) above; and
(c) providing evidence to the applicant that the outstanding superannuation has been paid to the employee’s nominated superannuation fund as set out in order 3(b) above. […]
The matter was then listed for a penalty hearing on 21 November 2024 with orders and directions for that purpose.
At the penalty hearing, the applicant was represented by Ms Vassallo, Solicitor and there was no appearance by or on behalf of either of the respondents.
The Court was satisfied that as the respondents had notice of the hearing, must be taken to have elected not to attend the hearing in person and not sought to attend virtually, and had entered consent orders and an agreed statement of facts, it was considered appropriate to proceed in the absence of the respondents pursuant to r.13.06 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law Rules) 2021 (Cth) (the Rules).
The applicant raised an issue regarding service on the second respondent of the affidavit of Leigh James Pace and its penalty submissions both filed 23 October 2024. The affidavit of Sophie Vassallo filed 18 November 2024 makes clear the first respondent was served in accordance with the Rules and the second respondent was sent those documents via email[1] which he had used to communicate with both the applicant and the Court.[2]
[1] This was the email address the second respondent used when confirming he agreed to the SOAF
[2] see paras 7 & 8 and annexure SV-16 of Ms Vassallo’s affidavit
Pursuant to rule 1.07 of the Rules the Court may, in the interests of justice, dispense with compliance with the Rules or under rule 6.04, in the exercise of its discretion, find that a document has been served. In considering and applying the Rules, it is important to note the obligations contained in section 190 and 191 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) which deal with the overarching purpose of civil practice and procedure provisions.
Having regard to the above matters, I accept that reasonable efforts have been taken in attempting to effect service upon the second respondent of those documents. I do not see how adjourning the matter and requiring the documents to be personally served on the second respondent achieves anything (given he hasn’t otherwise participated - despite having the opportunity to do so - in the penalty hearing). Thus, it is clear that adjourning the matter would only lead to increasing costs for all parties and delay in these proceedings.[3]
[3] Fair Work Ombudsman v P49 Collingwood Pty Ltd [2024] FedCFamC2G 1262
The guiding principle in the exercise of the discretion contained in the above-mentioned rules is the public interest in the attainment of the ends of justice. Given the overarching purpose and that the public has an interest in the effective, efficient and expeditious disposal of litigation in the courts it is appropriate to exercise the discretion in the rules to either deem the documents to have been served by email and/or dispense with personal service on the second respondent of those documents.
Accordingly, there was also an order made pursuant to rule 6.04(b) of the Rules that the affidavit of Leigh James Pace filed 23 October 2024 and the outline of submissions also filed 23 October 2024, are deemed to have been served on the second respondent on 23 October 2024 when they were emailed to [email protected] or served on the first respondent.
MATERIAL RELIED ON
At the penalty hearing the applicant relied on the following evidence:
(a)Statement of agreed facts, filed on 18 April 2024 (“S.O.A.F”);
(b)Outline of submissions, filed on 23 October 2024;
(c)Affidavit of Leigh James Pace, filed on 23 October 2024; and
(d)Affidavit of Sophie Vassallo filed 18 November 2024.
STATEMENT OF AGREED FACTS
The S.O.A.F which should be read in conjunction with these reasons is Annexure A.
PRINCIPLES RELEVANT TO THE DETERMINATION OF PENALTY
The approach of the Court in determining penalties for contraventions of the FW Act is well settled.
In Australian Building and Construction Commissioner v Pattinson (2022) 399 ALR 599; [2022] HCA 13 (“Pattinson”), the High Court said that:
[9]… Under the civil penalty regime provided by the Act, the purpose of a civil penalty is primarily, if not solely, the promotion of the public interest in compliance with the provisions of the Act by the deterrence of further contraventions of the Act. In that context, the penalties fixed by the primary judge were appropriate because they were no more than might be considered to be reasonably necessary to deter further contraventions of a like kind by Mr Pattinson, the CFMMEU or others. They represented a reasonable assessment of what was necessary to make the continuation of the CFMMEU’s non-compliance with the law, amply demonstrated by the history of its contraventions, too expensive to maintain.
[10]The Full Court’s critical error was that it was distracted by a concern, drawn from the criminal law, that a penalty must be proportionate to the seriousness of the conduct that constituted the contravention. The power conferred by s 546 of the Act is not subject to constraints drawn from the criminal law and there is no place for a “notion of proportionality”, in the sense in which the Full Court used that term, in a civil penalty regime. Further, and relatedly, their Honours were misled by the view that the Act required that the maximum penalty be reserved for only the most serious examples of the offending comprehended by s 349(1), and that this principle could prevent the court from imposing the maximum penalty even though a penalty in that amount might reasonably be considered to be necessary to deter future contraventions of a like kind. Nothing in the text, context or purpose of s 546 requires that the maximum penalty be reserved for the most serious examples of misconduct within s 349(1). What is required is that there be “some reasonable relationship between the theoretical maximum and the final penalty imposed”. That relationship is established where the maximum penalty does not exceed what is reasonably necessary to achieve the purpose of s 546: the deterrence of future contraventions of a like kind by the contravenor and by others. …
[15]Most importantly, it has long been recognised that, unlike criminal sentences, civil penalties are imposed primarily, if not solely, for the purpose of deterrence….
The Court has a broad discretion to assess the appropriate penalty. In Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown[4], Bromwich J endorsed the following approach:
(1)identify the separate contraventions involved – each contravention of each separate obligation in the FW Act is a separate contravention;
(2)consider whether any of the contraventions arising from the above constitute a single course of conduct within the meaning of s.557(1) of the FW Act;
(3)consider the extent to which two or more of the contraventions have common elements – the penalties imposed should be an appropriate response to the conduct of the respondent;
(4)consider the appropriate penalty for each contravention and, if relevant, each group of contraventions; and
(5)finally, assess whether the overall penalty is an appropriate and proportionate response to the conduct as a whole which led to the contraventions. This is the application of the ‘totality principle’.
[4] [2017] 275 IR 148 at [36].
Fundamental to the Court’s task, is an assessment of the gravity and seriousness of the offending which it is called upon to penalise, having regard to all relevant factual circumstances. The considerations deemed relevant to this task are well known and frequently cited.[5] They include:
[5] see Pattinson at [18]; Kelly v Fitzpatrick [2007] FCA 1080 at [14].
·the nature and extent of the conduct which led to the breach;
·the circumstances in which the conduct took place;
·the nature and extent of any loss or damage sustained as a result of the breach;
·whether there has been similar previous conduct by the respondent;
·whether the breach was properly distinct or arose out of one course of conduct;
·the size of the business enterprise involved;
·whether or not the breach was deliberate;
·the involvement of senior management in the breach;
·whether the party committing the breach has shown contrition;
·whether the party committing the breach has taken corrective action;
·whether the party committing the breach has cooperated with enforcement authorities;
·the need to ensure compliance with minimum standard by provision of an effective means for investigation and enforcement of employee entitlements; and
·the need for specific and general deterrence.
While this list is well-settled, it is not to be interpreted by the Court as a “rigid catalogue of matters for attention”.[6] In Pattinson, the High Court reiterated that this list of possible relevant considerations ought not to be treated as a checklist. There is no specific order in which these matters should be considered.
[6] Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8
The Court may take into consideration matters relevant to both the character of the contravening conduct and of the contravenor.[7] The Court's task is, and remains to be, the determination of what penalty is most appropriate given all the relevant circumstances of the case.[8]
[7] Pattinson at [19].
[8] Pattinson at [68].
CONSIDERATION
It is important to note that in relation to the relevant contraventions, the maximum penalty that could be imposed for a contravention of s.716 in relation to the first respondent was at the relevant time $41,250, and in relation to s.536(1), $66,600 for the first respondent and $13,200 for the second respondent.
It is now convenient to turn to an analysis of the relevant considerations.
The contraventions have been referred to earlier and the background is in S.O.A.F. Also as set out in the S.O.A.F, the first respondent failed to give the employee payslips within one working day of payment or at all.
Course of conduct
The applicant’s written submissions filed on 23 October 2024 address this consideration at paragraph [23].
As set out in the S.O.A.F, the first respondent failed to give the employee payslips within one working day of payment or at all. Given s.557 of the FW Act, the applicant accepts the respondents are entitled to the benefit of that section to ensure they were not punished twice for what is in substance the same wrongdoing. Accordingly, the 3 alleged contraventions of s.536 are to be treated as one.[9]
[9] See Rocky Holdings Pty Ltd v Fair Work Ombudsman [2014] FCAFC 62.
The nature, circumstances and deliberateness of the breaches
The applicant’s written submissions filed on 23 October 2024 address these considerations at paragraphs [32] to [37]. The S.O.A.F records the detail of the contraventions.
The first respondent’s contraventions occurred in circumstances where:
(a)they were offered assistance to understand the actions required;
(b)they were reminded of the requirement to comply on two occasions;
(c)they were provided with three opportunities to rectify non-compliance; and
(d)the applicant made efforts to assist the first respondent to rectify non-compliance, including by providing calculations.
The first respondent’s conduct demonstrates a deliberate disregard for its obligations under the FW Act. The first respondent failed to give the employee a pay slip within one working day of making salary payments, or at all. The contravention of s.536(1) should not be regarded as an administrative failure.[10]
[10] See FWO v South Jin Pty Ltd (No 2) [2016] FCA 832 at [55].
The nature and extent of any loss or damage sustained as a result of the breaches
The applicant’s written submissions filed on 23 October 2024 address these considerations at paragraphs [43] to [50].
As a result of the first respondent’s failure to comply, the employee did not receive the amounts they were entitled to until 15 months after payment was due.
The first respondent has not provided any evidence that it has paid the superannuation contributions required by the orders of the Court dated 19 April 2024. The failure to comply undermines the utility of compliance notices as an effective mechanism for the efficient and cost-effective rectification of identified contraventions of the FW Act.
The legislature has set penalties for non-compliance because a failure to comply will cause the applicant (and the Court) to spend time and public funds dealing with civil remedy proceedings.
Whether there has been similar previous conduct by the respondents
There was no submission made or evidence that there was similar previous conduct.
The size and financial circumstances of the business enterprise involved
The applicant’s written submissions filed on 23 October 2024 address these considerations at paragraphs [51] to [53]. The respondents have not provided any material to the Court concerning their respective financial circumstances.
In any event it is well established that the size and financial circumstances of an employer does not exculpate breaches of workplace laws, and that capacity to pay a penalty will be of less relevance than the objective of general deterrence.
As Tracey J said in Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 at [28]:
No less than large corporate employers, small businesses have an obligation to meet minimum employment standards and their employees, rightly, have an expectation that this will occur. When it does not it will, normally, be necessary to mark the failure by imposing an appropriate monetary sanction. Such a sanction “must be imposed at a meaningful level” (citation omitted)
Whether senior management was involved in the breaches
The second respondent was the sole director and controlling mind of the first respondent. He was also responsible for its compliance with the FW Act and the compliance notice. The second respondent has accepted his involvement in the contravening conduct.
Contrition, corrective action and co-operation
The applicant’s written submissions filed on 23 October 2024 address these considerations at paragraphs [54] to [56].
Both the respondents have made admissions and in turn, the applicant submits that this has reduced the cost and complexity of the matter before the Court. The applicant submits that a 15% discount on the penalty to the respondents for the corrective action taken and cooperation they have displayed throughout the proceedings.
The need to ensure compliance with minimum standards
The applicant’s written submissions filed on 23 October 2024 address these considerations at paragraphs [38] to [42].
Compliance with minimum standards is a principle object of the FW Act and the failure to meet those standards deprives employees of that safety net. The applicant submits that the first respondent’s failure to comply with the compliance notice is serious and undermines the legislation that serves to protect employees.
The applicant also submits that compliance notices are a tool that can prevent unnecessary court proceedings and therefore failing to comply with such notices should have serious consequences.
The first respondent had a responsibility of complying with the minimum standards in the FW Act which are there for the benefit of employees. A failure to provide payslips is something the applicant also submits undermines the minimum standards of the FW Act.
Accordingly, the applicant contends (and I accept) that the penalty imposed should be at a meaningful level so as to reinforce the need to meet (and promote compliance with) these important minimum standards.
The need for specific and general deterrence
In Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482, it was said at [55]:
No less importantly, 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. (footnotes omitted)
Similarly, in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (‘CFMEU’) (2018) 262 CLR 157 it was said at [116]:
As has been observed, the principal object of an order that a person pay a pecuniary penalty under s 546 is deterrence: specific deterrence of the contravener and, by his or her example, general deterrence of other would-be contraveners. According to orthodox sentencing conceptions as they apply to the imposition of civil pecuniary penalties, specific deterrence inheres in the sting or burden which the penalty imposes on the contravener. Other things being equal, it is assumed that the greater the sting or burden of the penalty, the more likely it will be that the contravener will seek to avoid the risk of subjection to further penalties and thus the more likely it will be that the contravener is deterred from further contraventions; likewise, the more potent will be the example that the penalty sets for other would-be contraveners and therefore the greater the penalty's general deterrent effect. Conversely, the less the sting or burden that a penalty imposes on a contravener, the less likely it will be that the contravener is deterred from further contraventions and the less the general deterrent effect of the penalty. Ultimately, if a penalty is devoid of sting or burden, it may not have much, if any, specific or general deterrent effect, and so it will be unlikely, or at least less likely, to achieve the specific and general deterrent effects that are the raison d'être of its imposition. (footnotes omitted)
Specific deterrence
The applicant’s written submissions filed 23 October 2024 addressed the concept of specific deterrence at paragraphs [27] to [28]. Specific deterrence is directed at the party who has contravened the provision. It is concerned with ensuring a contravening party is not prepared to engage in the contravening conduct in the future. Here there has only been partial compliance with the notice and previous orders.
The applicant’s submission that specific deterrence is important is correct as the first respondent is still a registered corporation, the second respondent remains the sole director and is the current director of three other companies.
General deterrence
General deterrence is concerned with ensuring, among other things, that the penalty is likely to act as a deterrent in preventing similar contraventions by like-minded persons. The applicant’s written submissions filed 23 October 2024 addressed the concept of general deterrence at paragraphs [29] to [31].
The applicant contends that a penalty within the range contained in its submissions[11] will promote the object of providing general deterrence. The important concept of compliance notices as an enforcement tool and pay slips as a means of ensuring employees are properly paid is something that should be taken into account when arriving at the penalty to be imposed.
[11] There was a difference in the penalty units (given the timing of the contraventions) between s.716 and s.536
In relation to general deterrence, it is necessary and appropriate to impose a penalty that signals non-compliance with statutory notices will not be tolerated. The efficacy of these notices could be undermined if recipients think that a failure to comply has no meaningful consequences.
Appropriate penalties
Given the above, the applicant submitted that the following penalty ranges were appropriate:
(a) on the first respondent:
(i) for the contravention of section 716(5), a penalty of between $21,037.50 and $24,543.75, being 60% to 70% of the maximum penalty with a discount of 15%; and
(ii) for the contravention of section 536(1), a penalty of between $33,966 and $39,627, being 60% to 70% of the maximum penalty with a discount of 15%.
(b) on the second respondent for the contravention of section 536(1), a penalty of between $6,793.20 and $7,925.40, being 60% to 70% of the maximum penalty with a discount of 15%.
Totality principle
On this issue the applicant submitted at paragraph [58] that:
While the penalty imposed must not be crushing or oppressive, it must nevertheless bear relativity to the seriousness of the conduct engaged in by the Respondents. The Applicant submits that the penalties proposed above represents a reasonable relationship on respect of the theoretical maximum
There is no evidence that suggests that penalties within the proposed range would be crushing or oppressive.
CONCLUSION
In all the circumstances a penalty on each of the respondents at 60% of the maximum with a 15% discount for each of the contraventions referred to above reflects an appropriate response to the offending conduct.
Accordingly, there will be orders as set out at the beginning of these reasons for decision.
I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment of Judge O'Sullivan. Associate:
Dated: 21 November 2024
ANNEXUREA
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