Fair Work Ombudsman v Ponsonby (No 2)
[2022] FedCFamC2G 970
Federal Circuit and Family Court of Australia
(DIVISION 2)
Fair Work Ombudsman v Ponsonby (No 2) [2022] FedCFamC2G 970
File number(s): LNG 52 of 2021 Judgment of: JUDGE TAGLIERI Date of judgment: 21 November 2022 Catchwords: INDUSTRIAL LAW – Fair Work – penalty hearing – where default judgment previous entered regarding non-compliance with a Compliance Notice – quantum of pecuniary penalty, if any, to be paid – order for the Respondent to pay $2,200 in pecuniary penalty Legislation: Crimes Act 1914 (Cth) s 4AA
Fair Work Act 2009 (Cth) ss 539(2), 545(1), 546(1), 557(1), 716
Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3
Australian Building and Construction Commissioner v Pattinson [2022] HCA 13
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3
Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate & Anor (2015) 258 CLR 482
Fair Work Ombudsman v NSH North Pty Ltd [2017] FCA 1301
Fair Work Ombudsman v Ponsonby [2022] FedCFamC2G 636
Jordan v Mornington Inn Proprietary Limited [2007] FCA 1384
Trade Practices Commission v CSR Ltd [1990] FCA 521
Division: Division 2 General Federal Law Number of paragraphs: 42 Date of hearing: 11 November 2022 Place: Hobart Solicitor for the Applicant Mr Bayliss, Australian Government Solicitor For the Respondent In person ORDERS
LNG 52 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: VINCENT PETER PONSONBY
Respondent
order made by:
JUDGE TAGLIERI
DATE OF ORDER:
21 november 2022
THE COURT ORDERS THAT:
1.Pursuant to s 546(1) of the Fair Work Act 2009 (Cth), the Respondent pay a pecuniary penalty to the Consolidated Revenue Fund of the Commonwealth in the sum of $2,200 within 30 days of the date of these Orders.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE TAGLIERI
These are proceedings pursuant to the Fair Work Act 2009 (Cth) (“the Act”), brought by the Fair Work Ombudsman. On 10 August 2022, I delivered default judgment against the Respondent and gave reasons in writing.[1] I also made procedural orders for the further hearing of the proceedings concerning the specific relief that should be granted.
[1] Fair Work Ombudsman v Ponsonby [2022] FedCFamC2G 636.
The Respondent had failed to appear at any of the court events held for the purpose of the proceedings, although he had been served and reasonably was aware of them. However, he then appeared at the hearing on 17 October 2022 and, as a result of his submissions to the Court, I made orders unopposed in the following terms for part of the relief sought:
1.Order 3 of Judge Taglieri’s orders made on 10 August 2022 be varied to require that under section 545(1) of the Fair Work Act 2008 (Cth), the Respondent take the steps that were required by the Compliance Notice, within 28 days of the date of this order, by:
a)Paying $1,347.89 to the Employee;
b)Paying $141.53 superannuation owing on the amount in Order 1(a) above to the Employee’s nominated superannuation account;
c)Providing proof that the outstanding amounts were paid to the Employee, as set out in Orders 1(a) and 1(b) above.
2.Order 4 of Judge Taglieri’s orders made on 10 August 2022 be varied to require that under section 547(2) of the Fair Work Act 2008 (Cth), the Respondent pay interest in the amount of $79.03 to the Employee on the amounts owed to the Employee (in Order 2(a) above), within 28 days of this order.
[original emphasis]
Following the hearing on 17 October 2022, the only remaining relief sought concerned the pecuniary penalty to be imposed pursuant to s 546(1) of the Act and I listed a hearing for that purpose on 11 November 2022 at 12 noon. I also made orders for the Respondent to file any material upon which he relied for the hearing.
The Respondent has filed and served documents evidencing compliance with the orders made on 17 October 2022. That is, he has filed receipts evidencing the payments required to be made to his employee.
On 31 October 2022, the Respondent also filed and served a profit and loss income statement and a medical certificate/letter from Dr Hemm, attesting that the Respondent had suffered from past toxic metals exposure which to some extent has affected his ability to reply promptly. Dr Hemm also recommends avoidance of excessive stress.
The conduct of the pecuniary penalty hearing was disjointed as the Respondent initially did not appear. I had determined that the hearing would proceed as in the absence of the Respondent but taking into account the material upon which he apparently relied and I heard the Applicant’s case on penalty. I then indicated that I would deliver an ex-tempore judgment at 12:50pm on that day.
Upon reconvening for the delivery of judgment and after I had commenced giving oral reasons but before I had pronounced any orders, the Respondent appeared by MS Teams. The Applicant’s Counsel indicated that there was no opposition to hearing from the Respondent, so I abandoned the ex-tempore judgment and the hearing then proceeded as a defended hearing.
Applicant's case and submissions
The Applicant had asked the Court to read the affidavit of Jenna Smith, Fair Work Inspector, filed 30 August 2022. It also relied on [20], [32], and [39] to [42] of its written submission filed on 30 August 2022. Having considered the materials served by the Respondent,[2] Counsel for the Applicant submitted that a revised penalty range was recommended to the Court for the pecuniary penalty for non-compliance with the Compliance Notice.
[2] Referred to at [5] of these reasons.
The Applicant now sought an order for a pecuniary penalty in the recommended range of $3,663 to $4,329. Counsel for the Applicant explained that the revised range of penalty allowed a discount to the Respondent for having complied with payment of sums pursuant to the Court’s 17 October 2022 orders.
The Applicant maintained that a penalty in this range was required to meet the statutory objectives of deterrence. Noting the foreshadowed submission by the Respondent about his limited financial circumstances, the Applicant maintained the submissions at [43] and [44] of the written outline filed 30 August 2022. Namely, that “it is well-established in legal principle that the size and financial circumstances of an employer do not exculpate breaches of workplace laws and the capacity to pay a penalty will be of less relevance than the objective of general deterrence.”[3]
[3] Jordan v Mornington Inn Proprietary Limited [2007] FCA 1384 at [99].
I specifically enquired what, if any, submissions the Applicant had in relation to Dr Hemm’s medical opinion and letter. The Applicant submitted that it was of little utility as it did not identify the date on which the Respondent was exposed to toxic metals and the specific period during which his capacity to respond and be organised was impaired. Further, that it did not explain why the Respondent had not appointed someone to respond for him.
Respondent’s case and submissions
The Applicant did not oppose the materials referred to at [5] being received in evidence and considered by the Court. The Respondent was advised of the Applicant’s revised position about the pecuniary penalty range referred to at [9].
The Respondent made some oral submissions and then without objection also gave additional evidence about the medical and mental health conditions referred to in Dr Hemm’s letter/opinion.
The effect of the Respondent’s submissions were that the revised pecuniary penalty sought was excessive and unfair.
In summary, the Respondent’s evidence was as follows:
(a)He stated that he was a small business, his financial circumstances are modest, and he needs to support his wife and children;
(b)He said the exposure to toxic metals was long-term and cumulative exposure to fumes from fuels, including from the escape of them into a cabin of a vehicle he owned due to a defect in the catalytic converter;
(c)The impact of the exposure over a considerable period was a brain fog which makes it difficult to process things and organise, such that he had really struggled to work;
(d)He had to “just survive” during a period from about August 2020 until more recently when he had started to feel better due to accessing alternate therapies and avoiding medication and traditional medicine, which had not been helping;
(e)He said was simply unable to address the Compliance Notice or the paperwork relating to these proceedings, and his mental health suffered;
(f)He was of the view that he had been very good to his employee by giving him a job and paying him above the Award, only to then have him make a report to the Applicant; and
(g)There was nothing fair about requiring him to pay a significant pecuniary penalty as sought as those funds could be better used for his family.
The Respondent frequently submitted that it was unfair for him to pay a sizeable pecuniary penalty because he had been unable to deal with the Compliance Notice because of the impact of his health. He submitted the Court should impose a judgment “from the heart”.
I indicated to the Respondent that I was required to apply the law and directed him to the Applicant’s written submissions about the need to impose a penalty that would serve the purpose of deterrence.
The Respondent partly acknowledged this and then submitted that the sum of $1,500 should be imposed as the penalty.
Submissions in reply – applicant
Counsel for the Applicant emphasised the submissions referred to at [10] and stated that the Respondent had engaged in ongoing non-compliance and failed to participate in the proceedings until very late. This caused considerable effort and costs to be incurred and it was important for the Court to send a clear message to the industry in which the Respondent operated that it was not acceptable to ignore Compliance Notices.
Further, it was submitted that the opinion of Dr Hemm and the evidence of the Applicant to the Court did not adequately explain the extent to which he failed to respond to the Applicant’s office. I was referred to Annexure JS-21 of the affidavit of Ms Smith and directed to the statistics collected regarding contraventions in the carpentry industry relating to various types of breaches of employment rights.
I observed that the statistics did not isolate or identify contravention based on failure to comply with Compliance Notices under s 545(1) of the Act. Instead the data addressed contraventions of other civil remedies.
It was submitted that the civil remedy taken to be breached in this case pursuant to the orders made on 17 October 2022 related to wages and the data showed that 14 per cent, a significant amount, of contraventions were of this kind in the industry in which the Respondent operated.[4]
[4] Affidavit of J Smith affirmed 30 August 2022 at Annexure JS-21.
LEGAL PRINCIPLES APPLICABLE
In Fair Work Ombudsman v NSH North Pty Ltd [2017] FCA 1301 at [36], Bromwich J summarised the approach to determining an appropriate penalty as follows:
(h)identify the separate contraventions involved – each contravention of each separate obligation in the Act is a separate contravention;
(i)consider whether any of the contraventions arising from the above constitute a single course of conduct within the meaning of s 557(1) of the Act;
(j)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;
(k)consider the appropriate penalty for each contravention and, if relevant, each group of contraventions; and
(l)finally, assess whether the overall penalty is an appropriate and proportionate response to the conduct as a whole which led to the contraventions. This is the application of the “totality principle”.
More recently the High Court has further explained, in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3 at [116], that the “principal object” of deterrence depends on a penalty having the necessary “sting or burden” to secure ‘the specific and general deterrent effects that are the raison d’être of its imposition.
Determination
I accept that the Respondent’s past toxic metals exposure and mental health conditions have at times partially impacted the Respondent’s ability to respond to communications by the Applicant’s office[5] and to the Compliance Notices issued in May 2021.[6]
[5] Affidavit of J Smith affirmed 30 August 2022 at [5] to [8], [15] to [16], and [21] to [23].
[6] Affidavit of J Smith affirmed 30 August 2022 at Annexures JS-9 and JS-10.
However, I find that his failure to respond and non-compliance with the requirements of the Compliance Notice and non-participation in these proceedings are not fully or satisfactorily explained.
Being satisfied that the Respondent was served with the court process and made aware of the court’s orders,[7] I find that the Respondent has been an avoidant and reluctant participant in the proceedings. There is no evidence he took any action to address the subject of these proceedings until after the default judgment was entered. His evidence to the Court and the opinion of Dr Hemm does not satisfactorily explain the extent of his non-engagement and failure to comply with the Compliance Notices. I accept the submission of the Applicant that the Respondent could have engaged an agent, such as a lawyer or other trusted person, or made time to participate by MS Teams at a far earlier time.
[7] Affidavit of Julian Williams filed 2 November 2021; Affidavit of Holly Williams filed 1 July 2022; Affidavit of Holly Williams filed 30 August 2022; Affidavit of Holly Williams filed 29 September 2022; Affidavit of Holly Williams filed 14 October 2022.
By his own admission, the Respondent continued to work, albeit with difficulty, in the period after August 2020 and having heard his evidence it is apparent that he prioritised other activities and his family over and above the need to address the wages claim, requests from the Fair Work Ombudsman and the Compliance Notices.
It is also apparent from his evidence at [15(f)] above, and I find, the Respondent still considered the claim about underpayment of wages by his employee was unjustified and this likely contributed to his failure to address the Compliance Notice and respond to Ms Smith’s communications.
I find that the failures to respond were part of a single course of conduct relating to one employee only. There is no evidence before the court of the Respondent being involved in similar contraventions of the Act.
Conclusion
I am satisfied that the purpose and efficacy of that the statutory framework established under the Act, which provides civil remedies for breaches of employee entitlements, will be rendered meaningless in the absence of proportionately serious consequences for contraventions and non-compliance with Notices issues under s 716 of the Act.
The Court is required by law to impose penalties which will operate to deter employers from non-compliance with Notices and deter contraventions.[8]
[8] Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate & Anor (2015) 258 CLR 482;
The Act prescribes a maximum to be imposed in the case of an individual who does not comply with the requirements of a Compliance Notice and specifies that to be 30 penalty units, namely $6,600.[9]
[9] Section 539(2) of the Act; s 4AA of the Crimes Act 1914 (Cth) as indexed at 1 July 2020.
I accept the Applicant’s submissions that the Respondent has had multiple opportunities to comply with the Compliance Notice and to avoid these proceedings. I do not accept that the Respondent’s reasons for not responding are wholly satisfactory or provide an excuse which warrants avoiding imposition of a pecuniary penalty.
I largely agree with [39] to [42] of the Applicant’s written submissions dated 28 September 2022, which are supported by authority and well-established legal principle.
Applying the relevant principles to the findings I have made in these reasons, I consider a pecuniary penalty must be imposed which is proportionate to the maximum that may be imposed, but which also takes into account rectification now made and the partial explanation for the Respondent’s failures. However, the penalty must still have the necessary “sting” to deter this employer and other employers in his industry from the same conduct.
The object of the Act in providing for guaranteed safety nets and minimum terms and conditions of employment can only be effectively achieved if Compliance Notices are taken seriously by employers and acted upon according to their requirements.
Accordingly, in this case there must be a meaningful consequence rather than a minimal or token one in order to deter employers in the carpentry industry and to encourage compliance. I consider there is a need to demonstrate by the penalty imposed that busy employers, who may be stressed for any number of reasons, need to give priority to responding to the Applicant to ensure that the object of the Act is not rendered nugatory.
I also take into account that the Respondent’s conduct in ignoring or avoiding dealing with the Compliance Notices occurred repeatedly and over a significant period. However, the subject of the Notice involved only one employee and a relatively modest sum of money owed. It is a long way from example of the worst of such cases which would attract the maximum.
Taking into account all the above matters including that all sums due to the employee have been paid, I consider a pecuniary penalty in the sum of $2,200 should be imposed. This sum in all the circumstances of the matter will still serve the necessary purpose of deterrence, both specific and more generally. It will in my view have the necessary “sting”.
I have not taken into account the implied claim of lack of means to pay a sizeable pecuniary penalty. That is a less relevant consideration at law and, in any event, the submissions of the Respondent were not that he could not pay a penalty, but rather that the money could serve a better purpose by being directed to his family. Given the importance of deterrence, I do not accept the Respondent’s opinion as to this to have merit.
The Court orders that, pursuant to s 546(1) of the Act, the Respondent pay a pecuniary penalty to the Consolidated Revenue Fund of the Commonwealth in the sum of $2,200 within 30 days, or such other time agreed by the Applicant in writing.
I certify that the preceding forty-two (42) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Taglieri. Associate:
Dated: 21 November 2022
[2015] HCA 46 at [55], citing Trade Practices Commission v CSR Ltd [1990] FCA 521 at [40]; Australian Building and Construction Commissioner v Pattinson [2022] HCA 13 at [15] to [17]; Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3 at [116].
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