Fair Work Ombudsman v Preach By the Beach Pty Ltd
[2022] FedCFamC2G 1012
Federal Circuit and Family Court of Australia
(DIVISION 2)
Fair Work Ombudsman v Preach By The Beach Pty Ltd [2022] FedCFamC2G 1012
File number(s): SYG 936 of 2022 Judgment of: JUDGE HUMPHREYS Date of judgment: 28 November 2022 Catchwords: INDUSTRIAL LAW – Fair Work – Penalty Hearing – Pecuniary Penalties ordered. Legislation: Fair Work Act 2009 (Cth) s 715, 716 Cases cited: Australian Building and Construction Commissioner v Pattinson (2022) HCA 13
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560
Canturi v Sita Coaches Pty Ltd (2002) 116 FCR 276
Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate and Anor (2015) 258 CLR 482
Fair Work Ombudsman v No Brace Centre Pty Ltd (in liquidation) (2019) FCCA 2979
Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown (2017) FCA 1301
Mason v Harrington Corporation Pty Ltd (2007) FMCA 7
Mornington Inn Pty Ltd v Jordan (2008) 1868 FCR 383
Seven Networks (Operations) Pty Ltd v Communications, Electrical, Electronic, Energy Information, Postal, Plumbing and Allied Services Union (2001) 110 IR 3725
Division: Division 2 General Federal Law Number of paragraphs: 32 Date of last submission/s: 28 November 2022 Date of hearing: 28 November 2022 Place: Sydney Solicitor for the Applicant: Ms Clemens (Fair Work Ombudsman) Solicitor for the Respondents: No appearance ORDERS
SYG 936 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: PREACH BY THE BEACH PTY LTD (ACN 626 579 824)
First Respondent
RARBIE TAHA
Second Respondent
order made by:
JUDGE HUMPHREYS
DATE OF ORDER:
28 NOVEMBER 2022
THE COURT ORDERS THAT:
1.Pursuant to section 546(1) of the Fair Work Act (Cth) (FW Act), the First Respondent is to pay a pecuniary penalty of $28,500.00 for its contravention of section 716(5) of the FW Act, as declared on 14 October 2022.
2.Pursuant to section 546(1) of the FW Act, the Second Respondent is to pay a pecuniary penalty of $6000.00 for his involvement, within the meaning of section 550 of the FW Act, in the contravention the First Respondent of section 716(5) of the FW Act, as declared on 14 October 2022.
3.Pursuant to section 546(3)(a) of the FW Act, the pecuniary penalties, ordered to be paid by the Respondents at orders 1 and 2 above, are to be paid to the Commonwealth of Australia within 28 days of these orders.
4.The Applicant has liberty to apply on seven days’ notice in the event that any of 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
(As revised from the transcript)JUDGE HUMPHREYS
Introduction
This judgment concerns the imposition of appropriate pecuniary penalties following default judgment made on 14 October 2022 against the first and second respondents with declarations as follows:
a) A declaration the first respondent contravened s 716(5) of the Fair Work Act 2009 (Cth) (“the Act”) by failing to comply with a compliance notice;
b) A declaration the second respondent was involved within the meaning of section 550 of Act in the first respondent’s contravention of s 715(5) of the Act.
Following the making of those declarations the matter was stood over for consideration of any penalty that should be paid by each of the respondents. When the matter was called on 28 November 2022, there was no appearance on behalf of the respondents. Accordingly, this matter has proceeded without the benefit of any submissions from the respondents.
The Court has been provided with an Exhibit 1, a bundle of documents that clearly indicate that the orders made by the Court setting the matter down for hearing today in relation to the determination of penalty have been served on each of the respondents. The Court is further advised that there has been some email correspondence from the applicant to the respondents by way of service and that there has been a telephone conversation with the second respondent by the solicitor appearing before me today. The Court is satisfied that the respondents are aware of the fact that the matter is before the Court today and have chosen deliberately not to appear.
The law in relation to workplace penalties
The Court has a broad discretion as to penalty. In Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown (2017) FCA 1301, Bromwich J of the Federal Court summarised how the discretion is to be approached. Broadly, the Court is required to identify separate contraventions, consider whether there should be an aggregation, consider whether there should be further adjustment to ensure that there – any overlap between the aggregated contraventions there’s no double penalty, consider the appropriate penalty in relation to a final group and then look at it from the point of view of totality.
In this matter there is no need to go through those steps simply because there is only a single breach in relation to each of the respondents.
The purpose of the civil penalty is primarily, if not wholly, promoting the public interest and compliance with the laws that have been contravened and it does not engage the principles of retribution or rehabilitation: (see; Fair Work Ombudsman v No Brace Centre Pty Ltd (in liquidation) (2019) FCCA 2979 (“No Brace”) per Judge Kelly at [65].
As the principles of retribution or rehabilitation are not involved in the determination of civil penalty this intensifies the focus of a civil penalty determination on issues of specific and general deterrence: (see; No Brace at [66]).
The Act does not set out any mandatory criteria inclusive or exclusive, the Court must consider when determining whether to impose a penalty or the amount of any penalty: (see; Canturi v Sita Coaches Pty Ltd (2002) 116 FCR 276).
The choice of penalty must be guided by the individual circumstances of a case not by a line by line comparison with another case: (see; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at paragraph [12]).
The process is an intuitive one by the Court and is not an application of a scientific process: (see; Mornington Inn Pty Ltd v Jordan (2008) 1868 FCR 383).
In Mason v Harrington Corporation Pty Ltd (2007) FMCA 7 (“Mason v Harrington”) Mowbray FM, as he was then, set out what is now well accepted a set of factors relevant in assessing a pecuniary penalty. They are non-exclusionary and the Court may take into account other matters as it thinks fit.
The matters identified in that matter are:
a) the nature and extent of the conduct which led to the breaches,
b) the circumstances in which the conduct took place,
c) the nature and extent of any loss sustained as a result of the breaches,
d) whether there has been any similar previous conduct by the respondents,
e) whether the breaches were properly distinct or arose out one course of action,
f) the size of the business enterprise involved,
g) whether or not the breaches were deliberate,
h) whether senior management was involved in the breaches,
i) whether the party committing the breaches exhibited contrition,
j) whether the party committing the breaches taking corrective action,
k) whether the party committing the breaches cooperated with enforcement authorities,
l) the need to ensure compliance with minimum standards by the provision of effective means for the investigation and enforcement of employee entitlements, and
m) the need for specific and general terms.
Merkel J in Seven Networks (Operations) Pty Ltd v Communications, Electrical, Electronic, Energy Information, Postal, Plumbing and Allied Services Union (2001) 110 IR 372, set out some guided considerations for the Court at [374], they being:
Matters to take into account in determining the appropriate penalty including the cost of the contravention, deterrence, the flagrancy and deliberateness of the breach, the offender’s past record of behaviour and any contrition displayed by the offender.
Consideration
As already mentioned, this involves a single contravention. The Court need not follow the steps set out by Bromwich. However, the considerations should be given to the non-exclusory considerations detailed in Mason v Harrington.
The background to the matter is that following a complaint by an employee of the first respondent the Fair Work Ombudsman commenced an investigation. As a result of that investigation a reasonable belief was formed that between 5 October and 7 November 2020 the first respondent did not pay the complainant in the matter the applicable minimum wage under the award, the applicable casual loading under the award and applicable penalty rates under the award for working Saturdays and Sundays.
On or about 11 January 2022 the first respondent was issued with a compliance notice pursuant to s 716(2) of the Act requiring the first respondent to remedy within 28 days the underpayments identified above together with calculating and paying any additional superannuation contributions required to be paid as a result of the additional payments and produce evidence to the applicant of compliance with the requirements set out in the compliance notice.
The first respondent failed to comply with that compliance notice and in doing so contravened s 716(5) of the Act. The second respondent is the sole Secretary and Director of the first respondent and was responsible for ensuring the first respondent complied with the compliance notice that had been given to the first respondent. He had actual knowledge that the first respondent had failed to comply with the compliance notice and accordingly was an intentional participant in the first respondent’s failure to comply with the compliance notice and is guilty of being an accessory in the non-compliance.
It was submitted by the applicant to the Court that the appropriate penalty range in respect of each of the first and second respondents should be in the range of 80 to 90 per cent of the maximum of $33,000.00 for the first respondent and $6600.00 for the second respondent which would be the following amounts: for the first respondent $26,640.00 to $29,970.00; for the second respondent $5238.00 to $5994.00.
On behalf of the Fair Work Ombudsman it was submitted that the issuing of a compliance notice was introduced to provide a mechanism for the efficient and effective dealing with non-compliance with minimum entitlements under the Act as an alternate to commencing litigation for each underlying contravention of an entitlement.
It was further submitted that the principle and possibly only legitimate purpose of a pecuniary penalty is the protective purpose of the promotion of the public interest and compliance or in other words deterrence: (see; Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate and Anor (2015) 258 CLR 482 at [55]).
To achieve this end the Court should fix a penalty that considers fairly and reasonably to be appropriate to protect the public interest from future contraventions: (see; Australian Building and Construction Commissioner v Pattinson (2022) HCA 13 at [40]).
As at the date of the hearing it was submitted that the company remains registered and continues to operate a business where the complainant worked. There have been no steps to comply with the compliance orders. It was submitted that this conduct demonstrates a deliberate disregard for the obligations to the Court and under the Act.
The company’s continued status as a registered operating business means that there is a risk of engaging in the same contravening conduct in the future such that a meaningful penalty needs to be imposed to deter the company from future contraventions.
In relation to the second respondent he remains a sole Director of the company together with another company. The contraventions demonstrated a deliberate disregard for his obligations as a Director of an Australian propriety company and as an individual, such that, the Court must impose a meaningful penalty to impose him from future contraventions under the Act.
In terms of general deterrence it was noted that the café and restaurant industry has the highest number of Fair Work Ombudsman disputes of all industries, has the greatest proportion of Fair Work Ombudsman disputes located in New South Wales and was involved in more than 15 per cent of compliance notices issued by the Fair Work Ombudsman and involved more than $1.4 million worth of recoveries to employees.
It is fair to say that it is somewhat notorious in the Court that compliance within the café and restaurant industry is at a very low level. Other matters before the Court, indicate an almost culture of seeking to exploit vulnerable young workers or workers who are here on visas on the basis they will not complain and that they can be taken advantage of by not paying them the award entitlements that they are entitled to.
The effect of such behaviour is pernicious. Not only is the employer taking advantage of employees but further than that there is an unfair advantage garnered by the offending café as compared to those businesses which are around it which pay the proper award rates. There is a significant profit incentive to not pay proper rates.
The Court takes the view that those businesses that do not comply with award payments need to be sent a very clear signal that this Court will not tolerate wage theft and that the financial penalties that will be imposed will be such that the cost of non-compliance clearly outweighs the cost of compliance.
In the Court’s view a failure to comply with a compliance notice coupled with a failure to engage with the court in litigation must attract a pecuniary penalty at the very high end of the available range. It involves a deliberate disregard of the role of the Fair Work Ombudsman and the authority of the Court. There is no evidence as to the financial circumstances of the respondents and that any penalty would involve significant hardship.
The nature of the loss to the complainant is calculated at $2686.00 arising out of a single month’s employment. This is a significant amount of money and points to a willingness on behalf of the respondents to exploit workers in an industry that has a significant track record in relation to under payments to workers.
The lack of compliance or corrective action and the lack of any engagement with proceedings of the Court points to a deliberate act without any remorse or corrective action. The Court is also satisfied that the breaches were deliberate. Senior Management were involved in the breaches. There has been a complete lack of any cooperation with enforcement authorities.
The appropriate penalties are; $28,500.00 for the first respondent and $6000.00 for the second respondent.
I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Humphreys. Associate:
Dated: 5 December 2022
0
9
0