Fair Work Ombudsman v Pebs Group Pty Ltd

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FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

Fair Work Ombudsman v PEBS Group Pty Ltd [2021] FedCFamC2G 158

File number(s): MLG 2804 of 2020
Judgment of: JUDGE RILEY
Date of judgment: 18 October 2021
Catchwords: INDUSTRIAL LAW – declaration that the first respondent failed to comply with a compliance notice – declaration that the second respondent was involved in the first respondent’s contravention – amount of penalties to be imposed on each respondent.
Legislation: Fair Work Act 2009 ss 550, 545(1), 546(1), 716(2) and (5)
Cases cited:

Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (CFMEU) (2018) 262 CLR 157; (2018) 351 ALR 190; (2018) 92 ALJR 219; (2018) 273 IR 211; [2018] HCA 3

Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd (2006) 236 ALR 665; (2008) ASAL 55-176; (2007) ATPR 42-138; [2006] FCA 1427

Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560; (2008) 246 ALR 35; [2008] FCAFC 8

Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 90 ALJR 113; (2015) 255 IR 87; (2015) 326 ALR 476; [2015] HCA 46

Community and Public Sector Union v Telstra Corporation Limited (2001) 108 IR 228; [2001] FCA 1364

Fair Work Ombudsman v Bedington [2012] FMCA 1133

Fair Work Ombudsman v NSH North Pty Ltd t/as New Shanghai Charlestown (2017) 275 IR 148; [2017] FCA 1301

Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080

Mason v Harrington Corporation Pty Ltd [2007] FMCA 7

Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383; (2008) 247 ALR 714; (2008) 171 IR 455; [2008] FCAFC 70

Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357; (2008) 177 IR 243; [2008] FCAFC 170

Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543; (2007) 162 IR 444; [2007] FCAFC 65

Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412

Number of paragraphs: 74
Division Division 2 General Federal Law
Date of hearing: 25 August 2021
8 September 2021
Place: Melbourne
Advocate for the Applicant: Chelsea Hannaford
Solicitor for the Applicant: Fair Work Ombudsman
Advocate for the First Respondent: Shane McGrath
Solicitor for the First Respondent: None
Advocate for the Second Respondent: In person
Solicitor for the Second Respondent: None

ORDERS

MLG2804 of 2020

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN:

FAIR WORK OMBUDSMAN
Applicant
AND:

PEBS GROUP PTY LTD (ACN 610 966 071)
First Respondent

SHANE MCGRATH
Second Respondent

ORDER MADE BY:

JUDGE RILEY

DATE OF ORDER:

18 OCTOBER 2021

UPON THE ADMISSIONS MADE BY THE RESPONDENTS, THE COURT DECLARES THAT:

1.The first respondent contravened s.716(5) of the Fair Work Act 2009 (“the Act”) by failing to comply with the compliance notice issued on 13 February 2020 pursuant to s.716(2) of the Act.

2.Pursuant to s.550 of the Act, the second respondent was involved in the first respondent’s contravention identified in declaration…

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Details
Case
[2021] FedCFamC2G 158
Decision Date

CaseChat Overview and Summary

The Fair Work Ombudsman (FWO) brought proceedings against Pebs Group Pty Ltd and its director, Mr. McGrath, seeking declarations that Pebs Group failed to comply with a compliance notice and that Mr. McGrath was involved in the contravention. The court considered the agreed facts, including that Pebs Group is a national system employer subject to the Fair Work Act 2009 (Cth) and that it employed certain individuals during specified periods. The parties sought declarations that Pebs Group contravened the Act by failing to comply with the compliance notice and that Mr. McGrath was involved in the contravention. The court needed to determine whether it was appropriate to make the sought declarations based on admissions and whether the penalties imposed were appropriate and proportionate.

The court found that the declarations were appropriate in this case, as there was recent authority supporting making such declarations based on admissions. The court accepted the FWO's submissions that the purpose of the Fair Work Act is to provide a guaranteed safety net of fair, relevant, and enforceable minimum terms and conditions for all employees. The court found that the respondents' failure to comply with the compliance notice undermined the Act's enforcement framework and the safety net of entitlements it is designed to protect. The court also accepted the need for specific deterrence to prevent the respondents from engaging in similar conduct in the future and general deterrence to send a message to others that such contraventions would result in consequences.

The court concluded that the total penalties for the two respondents were an appropriate and proportionate response to their wrongdoing. The court made the sought declarations and ordered that Pebs Group pay a penalty of $21,000 and Mr. McGrath pay a penalty of $10,500. The court found that the penalties imposed were sufficient to achieve both specific and general deterrence and would discourage the respondents and others from engaging in similar conduct in the future.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Subsection 545(1) provides that:The Federal Court or the Federal Circuit and Family Court of Australia (Division 2) may make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision.AGREED FACTS The parties set out the agreed facts in a statement of agreed facts filed on 23 January 2021 as follows: The Applicant and the Fair Work Inspectors1.The FWO has standing and authority to bring these proceedings and seek orders under section 539 of the Fair Work Act 2009 (Cth) (FW Act).2.Fair Work Inspector (FWI) Kelli Portbury (FWI Portbury) and FWI Sarah Allen (FWI Allen) are and were at all relevant times Fair Work Inspectors appointed by the FWO under section 700 of the Fair Work Act 2009 (FW Act).The Respondents 3.At all relevant times, PEBS Group is and was:(a)company incorporated under the provisions of the Corporations Act 2001 (Cth) and registered since 25 February 2016;(b)a “constitutional corporation” within the meaning of section 12 of the FW Act;(c)a “national system employer” within the meaning of section 14(1)(a) of the FW Act;(d)covered by and required to comply with the FW Act in respect of the Employees referred to at paragraph 5 below; and4. PEBS Group was at all relevant times a company that(a) sold advertising space for businesses in an online directory; and(b)has a registered office at 5 Valentine Lane, Cranbourne North, Victoria (Registered Office).5. At all relevant times the Second Respondent is and was:(a) a natural person capable of being sued;(b) the sole director of the PEBS Group since 26 February 2016;(c) the operative and controlling mind of the First Respondent;(d)responsible for the overall operation, management and control of the First Respondent; and(e)responsible for ensuring the PEBS Group complied with its legal obligations under the FW Act.Investigation Summary6.In or around September 2019, FWI Portbury commenced an investigation into the First Respondent’s compliance with the FW Act (Investigation), under the supervision of FWI Allen.7.At all relevant times, Mr McGrath used the email address info@pebs.com.au (Email Address) to communicate with FWI Portbury and FWI Allen.8.As a result of the Investigation, FWI Allen formed a reasonable belief, within the meaning of section 716(1) of the FW Act, that during the Employment Periods:(a)PEBS Group employed the individuals in the table below (Employees) to work in the business in the respective periods set out in the table (Employment Periods): Paragraph 19 of the statement of agreed facts proposed that the following declarations be made by the court: By consent, the parties seek declarations that:(a)PEBS Group contravened section 716(5) of the FW Act by failing to comply with the Compliance Notice; and (b)the Second Respondent was involved, within the meaning of section 550(2)(c) of the FW Act, in PEBS Group’s contravention of section 716(5) of the FW Act. There has been authority in the past to the effect that it is not appropriate for a court to make declarations based on admissions. However, there is more recent authority that in certain cases it is appropriate for the court to make declarations in such circumstances.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

In my view, the total penalties for the two respondents are an appropriate and proportionate response to their wrongdoing. CONCLUSION There will be orders accordingly.

Ratio Decidendi

Legal Principle Established

In her written submissions filed on 26 March 2021, the Ombudsman said that:25.One of the principal purposes of the FW Act is to provide a guaranteed safety net of fair, relevant, and enforceable minimum terms and conditions for all employees.25 To be able to enforce these terms, FWIs must be able to exercise their compliance powers effectively. The purpose of the powers conferred on FWIs is to provide the Applicant with an effective means of investigating and enforcing compliance with minimum standards and industrial instruments.26.The Courts have observed that a compliance notice is intended “to avoid litigation” and that failure to comply with a compliance notice “undermines the entire purpose of the statutory provision”.2627.The Respondents’ failure to comply with the Compliance Notice undermines the FW Act’s enforcement framework and the safety net of entitlements it is designed to protect.27 FN 25:Section 3(b) FW Act. FN 26:Fair Work Ombudsman v Corporation Sun Pty Ltd & Anor [2020] FCCA 2849 (Corporation Sun) at [63]. FN 27:Fair Work Ombudsman v Trek North Tours & Anor (No 2) [2015] FCCA 1801 at [21] − [22]. The respondents did not make any submissions on this point. I accept the Ombudsman’s submissions in this regard.k. the need for specific and general deterrence In her written submissions filed on 26 March 2021, the Ombudsman said that:Specific deterrence28.It is submitted that there is a need for specific deterrence to ensure that the Respondents will not be prepared to embark upon the risk of engaging in the same contravening conduct in the future.28 29.PEBS Group continues to operate and Mr McGrath remains its sole director. While the Respondents have put on no evidence regarding the number of employees presently engaged, the Applicant submits that with the Respondents’ continued involvement in business there is a likelihood of them employing staff into the future. On this basis, it is important that the penalties imposed be sufficient to deter the Respondents from future conduct that undermines the powers of FWIs or the efficacy of statutory notices.30.It is necessary that any penalty imposed on the Respondents contain sufficient “sting or burden” that the Respondents will “seek to avoid the risk of subjection to future penalties”.2931.There is a need to send a message to the Respondents that the Court does not tolerate such contraventions and the impact they have on affected individuals and public resources.General deterrence32.To achieve general deterrence, penalties should be set at a level to deter others who may engage in similar conduct and must not [be] seen by others as just “an acceptable cost of doing business”.30 Recipients of statutory notices issued by regulators such as the Applicant must be under no misapprehension about their obligations to comply with those notices, and that failure to do so will result in consequences.31 FN 28:Fair Work Ombudsman v AJR Nominees Pty Ltd (No 2) [2014] FCA 128 (AJR Nominees) at [50]. FN 29:Australian Building and Construction Commissioner v J Hutchinson Pty Ltd T/A Hutchinson Builders [2019] FCA 667 at [15] (unreported, 7 May 2019, Logan J). FN 30:Fair Work Ombudsman v Rum Runner Trading Pty Ltd & Anor [2018] FCCA 1129 at [120] citing Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20 at [62]- [63]; Ponzio v B & P Caelli Constructions Pty Ltd [2007] FCAFC 65 at [93] (Lander J). FN 31: Fair Work Ombudsman v Deborah Ruth Souris [2016] FCCA 345 at [48].