Fair Work Ombudsman v Phillips
[2024] FedCFamC2G 1458
•23 April 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Phillips [2024] FedCFamC2G 1458
File number(s): SYG 1113 of 2023 Judgment of: JUDGE GIVEN Date of judgment: 23 April 2024 Catchwords: INDUSTRIAL LAW – Imposition of penalty for contravention of s 716(5) of the Fair Work Act 2009 – failure to comply with compliance notice – lack of cooperation – no contrition – no corrective action Legislation: Crimes Act 1914 (Cth) s 4AA
Fair Work Act 2009 (Cth) ss 539, 546, 716
Federal Circuit and Family Court of Australia (Division 2)(General Federal Law) Rules 2021 (Cth) r 13.06
Federal Court Rules 2011 (Cth)
Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3
Australian Building and Construction Commissioner v J Hutchinson Pty Ltd T/A Hutchinson Builders [2019] FCA 667
Australian Building and Construction Commissioner v Pattinson [2022] HCA 13
Australian Competition and Consumer Commission (ACCC) v Leahy Petroleum(No 2) (2005) 215 ALR 281
Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560
Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482
Fair Work Ombudsman v AJR Nominees Pty Ltd (No 2) [2014] FCA 128
Fair Work Ombudsman v Blu Hornsby Pty Ltd [2016] FCCA 1150
Fair Work Ombudsman vCorporation Sun Pty Ltd [2020] FCCA 2849
Fair Work Ombudsman v Hess [2021] FCCA 1883
Fair Work Ombudsman v Jaycee Trading Pty Ltd & Anor (No. 2) [2013] FCCA 2128
Fair Work Ombudsman v Matcraft Pty Ltd [2021] FCCA 272
Fair Work Ombudsman v Nobrace Centre Pty Ltd & Anor (No. 2) [2019] FCCA 2144
Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301
Fair Work Ombudsman v Scott Redmond Trading as Cleaning Excellence [2019] FCCA 3697
Fair Work Ombudsman v Soma Kitchen v Pty Ltd (No.2) [2020] FCCA 2583
Fair Work Ombudsman v Syndicate Group Pty Ltd [2015] FCCA 2847
Fair Work Ombudsman v Tester [2021] FCCA 771
Fair Work Ombudsman v Yogurberry World Square [2016] FCA 1290
Jordan v Mornington Inn Pty Ltd [2007] FCA 1384
Kelly v Fitzpatrick (2007) 166 IR 14
Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383
Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543
Trade Practices Commission v CSR Ltd [1990] FCA 521
Division: General Federal Law Number of paragraphs: 51 Date of hearing: 23 April 2024 Place: Sydney Solicitor for the Applicant: Mr Gough, Fair Work Ombudsman Solicitor for the Respondent: No appearance ORDERS
SYG 1113 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: MICHAEL PHILLIPS (ABN 19 465 981 722)
Respondent
ORDER MADE BY:
JUDGE GIVEN
DATE OF ORDER:
23 APRIL 2024
THE COURT ORDERS THAT:
1.Pursuant to s 546(1) of the Fair Work Act 2009 (Cth) (Act), the respondent must pay a pecuniary penalty of $4,662 for the respondent’s contravention of s 716(5) of the Act declared in Order 2 made on 18 January 2024.
2.Pursuant to s 546(3)(a) of the Act, the pecuniary penalty referred to in order 1 above, is to be paid by the respondent to the Consolidated Revenue Fund of the Commonwealth of Australia, within 28 days of the date of these orders.
3.The applicant has liberty to apply on 7 days’ notice in the event that any of the preceding orders is not complied with.
4.Pursuant to r 17.02 of the Federal Circuit and Family Court of Australia (Division 2)(General Federal Law) Rules 2021 (Cth) (Rules), orders 1 and 2 above not be entered until the date of the publication of written reasons for judgment (revised from transcript) which for the avoidance of doubt, and for the purposes of r 36.03 of the Federal Court Rules 2011 (Cth), will also be taken to be the date upon which the judgment was pronounced.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
EX TEMPORE REASONS FOR JUDGMENT
(revised from transcript)JUDGE GIVEN:
On 18 January 2024, I made orders, inter alia, entering judgment default for the applicant in relation to defaults of the respondent. On the basis of those orders and admissions which are therefore taken to have been made by the respondent. The Court declared that the respondent had contravened s 716(5) of the Fair Work Act 2009 (Cth) (Act), by failing to comply with a compliance notice issued on 10 August 2022 (compliance notice).
On 18 January 2024, at the conclusion of the default judgment hearing, I made an order adjourning the matter for further hearing to 10:15am today in respect of the question of civil pecuniary penalties in relation to the contravention. As at 10:19am today, there was no appearance by, or for, the respondent. I had the matter called outside the courtroom which also yielded no appearance.
I have had regard to the Affidavit of Matthew James Gough affirmed 19 April 2024 (Gough Affidavit) which was read this morning and sets out steps taken to serve the respondent following the default judgment hearing on 18 January 2024. The time is now 10:24am, and there is still no appearance by or for the respondent. I am satisfied that the respondent has been notified of today’s hearing in several ways and has, for whatever reason, chosen not to attend. It is probably unsurprising, against the background of defaults in these proceedings that the respondent has also not filed any further evidence or written submissions as ordered, or at all.
Legislation
I have proceeded to hear the matter on the question of penalty pursuant to r 13.06(1)(e) of the Federal Circuit and Family Court of Australia (Division 2)(General Federal Law) Rules 2021 (Cth) (Rules). The applicant submits that the Court should impose a civil pecuniary penalty in this matter in the sum of $4,662.00, which is 70 per cent of the maximum penalty allowable in relation to the contravention.
Pursuant to ss 539(2) and 546(2)(a) of the Act, the maximum penalty that the Court may impose for a contravention of s 716(5) of the Act, being that which was declared by the 18 January 2024 orders, is $6,660 for an individual, by reference to the calculation of a penalty unit which applied as at the time of the contravention, pursuant to s 4AA of the Crimes Act 1914 (Cth).
Principles governing the determination of penalty
Section 546(1) of the Act enables the Court to impose a penalty in respect of a contravention of s 716(5) of the Act, which is civil remedy provision.
This Court has a broad discretion to assess the appropriate penalty to be imposed, with the penalty ultimately to be determined by way of an ‘instinctive syntheses’: Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 (Merringtons) at [27] to [28], [55] and [78].
In Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301 at [36] Bromwich J endorsed the following approach to assessing penalties:
(a)identify the separate contraventions involved, with each contravention of each separate obligation in the FW Act being a separate contravention;
(b)consider whether any of the contraventions arising from the above constitute a single course of conduct within the meaning of s 557(1) of the FW Act;
(c)consider whether there should be further adjustment to ensure that to the extent that two or more of the contraventions have common elements, there is no double penalty imposed and that the penalty imposed is an appropriate response to the conduct of the respondent;
(d)consider the appropriate penalty for each contravention and, if relevant, each group of contraventions, taken in isolation; and
(e)assess whether the overall penalty is an appropriate response to the conduct which led to the contraventions (known as the “totality principle”).
This matter concerns a single contravention of a civil remedy provision by the respondent, being the failure to comply with the compliance notice, and accordingly, the matters in [8(a)] to [8(c)] above need not be considered. The Court ought to consider the appropriate penalty to be imposed and whether this penalty is an appropriate response to the conduct which led to the contravention.
Pursuant to ss 539(2) and 546(2)(a) of the Act, the maximum penalty that the Court may impose for a contravention of s 716(5) of the Act that occurred in September 2022 is $6,660 for an individual.[1]
[1] The maximum penalty amount was calculated based on the penalty unit amount of $222 which applied at the time of the contravention. Section 12 of the FW Act provides that a ‘penalty unit’ has the meaning given by s 4AA of the Crimes Act 1914 (Cth).
The maximum penalty is a relevant consideration but “does not constrain the exercise of the discretion under section 546… beyond requiring ‘some reasonable relationship between the theoretical maximum and the final penalty imposed’”: Australian Building and Construction Commissioner v Pattinson [2022] HCA 13 (Pattinson) at [53] to [55], citing Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25 at [155] to [156]. The “reasonable relationship” should be considered by reference to the need for deterrence: Pattinson at [55].
The purpose of civil penalties is to promote the public interest in compliance, and attempt to impose a price on the contravention that is sufficiently high to deter repetition by the contravener, and by others who might be tempted to contravene the same legislation: Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 (Cth v FWBII) at [55] and [110], citing Trade Practices Commission v CSR Ltd [1990] FCA 521 (CSR) at [40].
To this end, the Court should fix a penalty that “it considers fairly and reasonably to be appropriate to protect the public interest from future contraventions of the [Act]”: Pattinson at [71]. The appropriate deterrent value of a penalty may be assessed by reference to the non-exhaustive list of relevant considerations that were identified by French J in CSR (supra). This list is well-settled but not a “rigid catalogue of matters for attention”: Merringtons at [91]. It includes matters relevant to both the character of the contravening conduct and of the contravener: see Pattinson at [19].
In the present case, the relevant matters going to the question of the imposition of penalty which appear relevant appear to be:
(a)deterrence, both general and specific;
(b)the nature, circumstances and deliberateness of the contravening conduct;
(c)the nature and extent of loss;
(d)the size and financial circumstances of the contravener.
Compliance with Minimum Standards
One of the principal purposes of the Act is to provide a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions for all employees: see s 3(b) of the Act. In order to enforce these minimum standard, Fair Work Inspectors must be able to exercise their compliance powers effectively. The purpose of the powers conferred on Fair Work Inspectors is to provide the applicant with an effective means of investigating and enforcing compliance with minimum standards and industrial instruments.
The respondent’s failure to comply with the compliance notice undermines the enforcement framework established by the Act, and the safety net of entitlements it is designed to protect: Fair Work Ombudsman v Tester [2021] FCCA 771 at [27]. As such, the penalty against the respondent should be set at a level which reflects the seriousness of a failure to comply with a statutory notice.
The respondent, as noted earlier, has filed no evidence in respect of the question of general deterrence or specific deterrence, nor has he made any submissions in respect of those issues.
Deterrence
The High Court of Australia has confirmed that deterrence, both specific and general, is either the sole or at least the primary objective of civil penalties: Cth v FWBII at [55] per French CJ, Kiefel, Bell, Nettle and Gordon JJ; see also at [79] per Keane J, agreeing with the plurality, and that the ‘principal object’ of deterrence depends on a penalty having the necessary ‘sting or burden’ to secure the specific and general deterrent effects that are the raison d’etre of its imposition: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157 at [116].
The penalty imposed by the Court should accurately and appropriately reflect the need for both general and specific deterrence for the reasons set out below.
General Deterrence
General deterrence must serve a purpose such that the penalty is not seen by others as just “the cost of doing business”: Fair Work Ombudsman v Yogurberry World Square [2016] FCA 1290 at [27]. In order to be useful as a general deterrent, a penalty “should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like minded persons or organisations”: Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543 at [93] per Lander J.
The applicant submits that the efficacy of statutory notices, such as compliance notices, will be hindered if recipients perceive that a failure to comply carries no meaningful consequences. Given the importance of the power to issue a compliance notice as a tool of Fair Work Inspectors, and that compliance with such notices avoids the need for litigation or the imposition of any penalties: Fair Work Ombudsman v Syndicate Group Pty Ltd [2015] FCCA 2847 at [27]; cited in Fair Work Ombudsman v Blu Hornsby Pty Ltd [2016] FCCA 1150 (Blu Hornsby) at [29], penalties for non-compliance should be set at a level which demonstrates there are serious consequences for failing to comply with a compliance notice. I agree that in doing so the Court will deter other recipients from failing to comply with compliance notices.
Specific Deterrence
Specific deterrence is directed at ensuring that a contravener is not prepared to embark upon the risk of engaging in the same contravening conduct in the future: Fair Work Ombudsman v AJR Nominees Pty Ltd (No 2) [2014] FCA 128 at [50].
The applicant says there is particular need to deter the respondent from engaging in future contravening conduct, given that:
(a)the respondent appears to continue trading and employing staff, and remains the registered business name holder of Michael Phillips Acoustics: First Gough Affidavit at [13] Cox Affidavit, [29] to [30];
(b)the respondent has failed to comply with the compliance notice despite being provided with numerous opportunities to take the required action before these proceedings were filed: Cox Affidavit, [7], [22], [24], [28]; Annexures “CC-4”, “CC-11”, “CC-12”, “CC-15”; and
(c)the respondent has failed to engage meaningfully in these proceedings and there is no evidence of contrition or corrective action: Cox Affidavit at [31] to [32], First Gough Affidavit at [26].
The applicant submits that the penalties imposed on the respondent should contain a sufficient “sting or burden” such that they will “seek to avoid the risk of subjection to future penalties”: Australian Building and Construction Commissioner v J Hutchinson Pty Ltd T/A Hutchinson Builders [2019] FCA 667 at [14], quoting Keane, Nettle and Gordon JJ of the High Court in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3 at [116].
I am satisfied that there is a sufficient need to deter the respondent himself, specifically, and also to pose a sufficient general deterrence to non-compliance with compliance notices issued by the applicant. In respect of corrective action, cooperation and contrition, the applicant submits that the respondent has not exhibited any such contrition, nor has he taken any corrective action nor cooperated with the applicant.
It is also submitted that the respondent has not cooperated in these proceedings. However, to the extent that the respondent is in default of the Court’s orders and has failed to comply with any of them. This includes in respect of filing of documents or otherwise participating in today’s penalty hearing, those are matters which are met by the default judgment having been entered on 18 January 2024. Further the imposition of penalty and any quantum is not to reflect the default by the respondent in these proceedings other than to note that, by virtue of not complying with the Court’s orders, the respondent has not taken up any opportunity to raise in his own interest any factors which he might otherwise say go towards the mitigation of:
(a)whether penalty should imposed at all; and
(b)if so, in what amount.
It is accurate, however, to observe that there is no contrition expressed by the respondent, nor has he taken any corrective action based on the material that is before the Court today.
Corrective Action, Cooperation and Contrition
The applicant says the respondent has not exhibited any contrition, taken any corrective action or cooperated in these proceedings. I agree.
The applicant was required to make an application for default judgement due to the respondent’s failure to participate in these proceedings, despite the applicant’s repeated attempts to engage with the respondent regarding the orders of this Court made on 15 August 2023, 2 November 2023 and 19 December 2023: First Gough Affidavit at [9] to [12], [14], [16], [19], [24]; Annexures “MJG-5” to “MJG-8”, “MJG-10”, “MJG-11”, “MJG-14”, “MJG-19”; Third Gough Affidavit [8] to [10]; Annexures “MJG-2” to “MJG-4”. The respondent’s lack of engagement in these proceedings demonstrates disregard for their legal obligations, not just to employees of the respondent, but to the Court: Fair Work Ombudsman v Soma Kitchen v Pty Ltd (No.2) [2020] FCCA 2583 at [35].
As at 29 January 2024, the respondent has not made payment of the amount due under the compliance notice as required by the orders of Judge Given dated 18 January 2024: Cox Affidavit at [31] to [32].
The respondent’s failure to participate in these proceeding and failure to comply with his obligations to the Court is a strong indication that he does not take this matter seriously and is not contrite: Fair Work Ombudsman v Scott Redmond Trading as Cleaning Excellence [2019] FCCA 3697 at [27]; Fair Work Ombudsman v Matcraft Pty Ltd [2021] FCCA 272 at [70] to [72]. See also Fair Work Ombudsman vCorporation Sun Pty Ltd [2020] FCCA 2849 at [56].
Accordingly, the applicant submits that no discount is appropriate in all the circumstances: Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 (Mornington) at [76].
As noted, the respondent, having made no submissions in this regard, and his ongoing lack of corrective action, cooperation and contrition, is reflected in the non-participation in these proceedings. However, it is generally, otherwise, patent.
I agree that there are no mitigating factors before the Court as to the imposition of penalty, nor any discount to be applied in the event that a penalty was to be imposed. In my view, no such discount would be warranted, based on this factor.
Nature, Circumstances and Deliberateness of the Contravening Conduct
The power of a Fair Work Inspector to issue a compliance notice was introduced into the Act to provide a mechanism to address non-compliance with certain employment obligations arising under the Act, as an alternative to commencing litigation for each underlying contravention: see Fair Work Bill 2008 and the Explanatory Memorandum thereto at [2673].
The Courts have recognised that compliance notices provide a mechanism for the efficient and cost-effective rectification of identified contraventions of the Act, including underpayments to employees: Fair Work Ombudsman v Nobrace Centre Pty Ltd & Anor (No. 2) [2019] FCCA 2144 (Nobrace) at [18]; Blu Hornsby at [29].
If the respondent had complied with the compliance notice:
(a)the applicant would have been prevented from bringing civil remedy proceedings against it in respect of the underlying contraventions pursuant to s 716(4A) of the Act; and
(b)it would not be taken to have contravened or to have admitted having contravened the civil remedy provisions in respect of the underlying contraventions, pursuant to s 716(4B) of the Act.
The respondent was given the compliance notice on 10 August 2022, sent by post to its registered business address and by email to the respondent’s email address: Statement of Claim at [7]. During the timeframe for compliance with the issued compliance notice, the applicant made 14 attempts to engage with the respondent, including offers to assist him to comply: see Cox Affidavit at [8] to [21]. However, the respondent failed to comply with the compliance notice within the requisite timeframe for compliance: Statement of Claim at [10] to [12].
The evidence shows that prior to the commencement of these proceedings, the respondent was provided with opportunities to rectify his non-compliance with the compliance notice. On 20 September 2022, 30 September 2022 and 22 November 2022, the applicant sent letters to the respondent, which provided him with an opportunity to rectify non-compliance, and notified him that if he failed to rectify non-compliance the applicant may commence proceedings to seek a civil penalty and orders for compliance: see Cox Affidavit at [22], [24] and [28].
In the circumstances set out above, the applicant submits that the respondent’s failure to comply with the compliance notice is serious, and the contravening conduct demonstrates disregard for his obligations under the Act and the authority of the applicant as a regulator of Commonwealth workplace laws.
In respect of the nature and extent of loss, the applicant submits that the respondent’s failure to comply with his obligations under the legislation denied Ms Eleni Chrysafis (employee), the benefit of her entitlements under the Professional Employees Award 2020 (Award) and under the Act.
I accept the applicant’s submissions in this regard.
Nature and Extent of Loss
The respondent’s failure to comply with its legislative obligations has denied the employee the benefit of her entitlements under the Award and the Act. The employee’s entitlements remain outstanding despite ceasing her employment with the respondent almost two years ago: see Statement of Claim at [5]. Further, approximately 17 months have elapsed since the compliance notice required the respondent to pay these entitlements to the employee: see Statement of Claim at [8].
The delay in the employee receiving her entitlements is a relevant loss flowing from the contravention: see Fair Work Ombudsman v Hess [2021] FCCA 1883 at [35].
As a result of the respondent’s failure to comply with the compliance notice, the applicant was required to bring proceedings, causing the applicant (and the Court) to spend time and public funds dealing with civil remedy proceedings which would otherwise not have been required had compliance occurred: see Fair Work Ombudsman v Jaycee Trading Pty Ltd & Anor (No. 2) [2013] FCCA 2128 at [9] per Judge Emmett.
This is a factor which weighs in favour of the imposition of a penalty, which reflects the burden, in particular, on the public and public funds in dealing with civil remedy proceedings and the time taken in the Court. In respect of size and financial circumstances, as with the other factors already addressed above, the respondent has again failed to adduce any evidence in relation to his financial capacity and, otherwise, in respect of any financial matters which might go towards either the imposition of a penalty as a whole or the quantum of that penalty.
The applicant said in written submissions that she would consider any evidence filed in respect of size and financial circumstances, if such material was to be forthcoming prior to today’s hearing. Yet, as at the date of today’s hearing, no such material has been advanced by or for the respondent.
In any event, it is well established that the size and financial circumstances of an employer do not exculpate contraventions of workplace laws: see Kelly v Fitzpatrick (2007) 166 IR 14 at [28] and that capacity to pay a penalty will be less relevant than the objective of general deterrence: see Australian Competition and Consumer Commission (ACCC) v Leahy Petroleum(No 2) (2005) 215 ALR 281 at [9] and Jordan v Mornington Inn Pty Ltd [2007] FCA 1384 at [99].
In respect of the size and financial circumstances of the respondent, that, in the absence of any information in this regard being advanced by the respondent, there is no material which weighs in favour of a reduction of any penalty that the Court would impose, being otherwise appropriate. In respect of penalty as a whole, the applicant says that, based on the penalty factors as outlined, that a penalty in the sum of $4,662.00 is appropriate in this matter. That amount represents 70 per cent of the maximum $6,660.00 penalty which is to be awarded in respect of a single contravention.
In all of the circumstances of this case, and having regard to the above factors, I am satisfied that a penalty is warranted in this matter. I am also satisfied that the amount of the penalty sought by the applicant, namely, $4,662.00, is the appropriate penalty, having regard to the nature of the contravention, the fact that it is a single contravention and the other factors which I have already set out in my assessment above.
Accordingly, I will make orders in that regard.
I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Given. Associate:
Dated: 15 August 2025
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