Fair Work Ombudsman v Precise Fencing and Landscaping Pty Ltd (No 2)
[2024] FedCFamC2G 242
•30 January 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Precise Fencing and Landscaping Pty Ltd (No 2) [2024] FedCFamC2G 242
File number(s): SYG 905 of 2023 Judgment of: JUDGE CAMERON Date of judgment: 30 January 2024 Catchwords: INDUSTRIAL LAW – declarations of contravention of the Fair Work Act 2009 (Cth) made previously – penalty for contravention – relevant considerations. Legislation: Fair Work Act 2009 (Cth), ss.90, 539, 546, 557, 716
Crimes Act 1914 (Cth), s.4AA
Cases cited: Fair Work Ombudsman v Precise Fencing and Landscaping Pty Ltd [2023] FedCFamC2G 1235
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157
Dafallah v Fair Work Commission (2014) 225 FCR 559
Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (2018) 264 FCR 155
Gibbs v Mayor, Councillors and Citizens of City of Altona (1992) 37 FCR 216
Kelly v Fitzpatrick (2007) 166 IR 14
McIver v Healey [2008] FCA 425
Rocky Holdings Pty Ltd v Fair Work Ombudsman (2014) 221 FCR 153
Fair Work Ombudsman v Lohr (2018) ALR 424
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560
Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450
Division: Fair Work Number of paragraphs: 28 Date of hearing: 30 January 2024 Place: Sydney Solicitor for the Applicant: Mr T. Ahmed (Fair Work Ombudsman) Solicitor for the First and Second Respondents: No appearance by or on behalf of the respondents ORDERS
SYG 905 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: PRECISE FENCING AND LANDSCAPING PTY LTD (ACN 649 068 244)
First Respondent
KURT JOHN DEAN
Second Respondent
ORDER MADE BY:
JUDGE CAMERON
DATE OF ORDER:
30 JANUARY 2024
THE COURT ORDERS THAT:
1.Within 28 days the first respondent pay a pecuniary penalty of $15,000 to the Commonwealth for its contravention of s.716(5) of the Fair Work Act 2009 (Cth) (FW Act) declared at Order 1 of the orders made on 27 October 2023.
2.Within 28 days the second respondent pay a pecuniary penalty of $3,000 to the Commonwealth for his contravention of s.716(5) of the FW Act declared at Order 2 of the orders made on 27 October 2023.
3.A copy of these orders be served on the respondents.
4.The parties have liberty to apply within 48 days.
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 Cameron
INTRODUCTION
In reasons for judgment delivered in this matter on 27 October 2023, default judgment was entered for the applicant, the Fair Work Ombudsman (Ombudsman) and declarations made that the first respondent, Precise Fencing and Landscaping Pty Ltd, (PFL) and the second respondent, Kurt Dean, who was at all relevant times PFL’s sole director and secretary, had contravened s.716(5) of the Fair Work Act 2009 (Cth) (FW Act) by failing to obey a compliance notice dated 2 May 2022 (Compliance Notice) which the Ombudsman served on PFL in respect of unpaid accrued annual leave entitlements owing to its employee, Mitchell Hicks: Fair Work Ombudsman v Precise Fencing and Landscaping Pty Ltd [2023] FedCFamC2G 1235 (First Judgment). The Court also made orders in respect of compensation and interest which was to be paid to Mr Hicks within 28 days.
The matter was also set down for further hearing on the question of penalty and these reasons concern that issue.
SERVICE
The Ombudsman filed an affidavit of service affirmed on 29 January 2024 by her solicitor, Tauseef Ahmed, evidencing service on PFL and substituted service on Mr Dean of the:
·orders made on 27 October 2023;
·affidavit of Fair Work Inspector Andrew Semmler affirmed on 29 November 2023;
·affidavit of Tauseef Ahmed affirmed on 1 December 2023; and
·applicant’s submissions on penalty dated 1 December 2023.
Other efforts to bring the listing to the respondents’ attention were also deposed to by Mr Ahmed in that affidavit and in his earlier affidavit affirmed on 1 December 2023.
In all the circumstances, I am satisfied that the respondents have been served and otherwise made aware of today’s hearing date and the fact they have not appeared, whether electronically or when called outside the Court, should not prevent the matter from proceeding.
FIRST JUDGMENT
The declarations made by the Court on 27 October 2023 were:
1.The first respondent contravened s.716(5) of the Fair Work Act 2009 (Cth) (FW Act) by failing to comply with the compliance notice issued to the first respondent dated 2 May 2022.
2.The second respondent was involved, within the meaning of s.550(2) of the FW Act, in the contraventions by the first respondent of s.716(5) of the FW Act and is taken, by s.550(1) of the FW Act, to have contravened s.716(5) of the FW Act.
LEGISLATION
Section 716(5) is a civil remedy provision: s.539 of the FW Act, item 33. In combination, ss.539(2) and 546(2) of the FW Act provide that the maximum pecuniary penalty for the contravention of those civil remedy provisions is 30 penalty units for an individual and 150 penalty units for a body corporate.
According to the Ombudsman’s statement of claim, the Compliance Notice required PFL to take certain steps by 15 June 2022 and to demonstrate to the Ombudsman by 22 June 2022 that those steps had been taken. Those were separate obligations and the statement of claim alleged that PFL failed to comply with either of them. By failing to file a response or a defence, PFL is taken to have admitted the contraventions. As noted already, Mr Dean was found in the First Judgment to have been an accessory to those conventions.
At the time of contraventions on 15 and 22 June 2022, a penalty unit was worth $210: s.4AA Crimes Act 1914 (Cth). Accordingly, the maximum penalty that can be imposed on Mr Dean for his contravention is $6,300 and the maximum penalty that can be imposed on PFL for its contravention is $31,500.
EVIDENCE
Tauseef Ahmed
The Ombudsman read the affidavits of her solicitor, Mr Ahmed, affirmed:
(a)7 August 2023;
(b)14 September 2023;
(c)26 October 2023;
(d)1 December 2023; and
(e)29 January 2024.
Andrew Semmler
The Ombudsman also read the affidavit of Andrew Semmler, a Fair Work Inspector (FWI), affirmed on 29 November 2023.
Investigation
FWI Semmler deposed that from 19 April 2022 to 2 May 2022 he conducted an investigation from which he concluded that:
(a)on 14 July 2021 PFL had employed Mr Hicks on a full time basis as a landscape gardener;
(b)Mr Hicks’s employment was subject to the Gardening and Landscaping Services Award 2020, under which Mr Hicks was properly classified as a Level 5 employee;
(c)during his employment, Mr Hicks had accrued 34.7 hours of untaken annual leave;
(d)on 4 March 2022 Mr Hicks resigned from his employment and PFL did not pay him his accrued annual leave entitlement; and
(e)PFL had contravened s.90(2) of the FW Act by failing to pay Mr Hicks upon the termination of his employment the value of his accrued but untaken annual leave entitlements.
Compliance Notice
Mr Semmler deposed that on 2 May 2022 he issued PFL with the Compliance Notice by registered post and sent a copy to Mr Dean by email. That notice set out the contravention of s.90(2) which the Ombudsman believed PFL had committed and required it to:
…
(i) In respect of Mitchell Hicks' (Employee) employment
1.Calculate the number of hours of annual leave that were accrued to the Employee when his employment ended
2.Calculate the amount the Employee should have been paid for the accrued, but unused, annual leave when his employment ended
3.Make a payment to the Employee of the for the amount referred to in (2) immediately above
4.Make a record of the information and amounts referred to in (1) and (2) and the amount of the payment referred to in (3) immediately above …
and also by 22 June 2022:
to produce the following reasonable evidence of your compliance with the actions specified in paragraph 7 above:
(a)in relation to Mitchell Hicks, and in respect of the contravention that concerns him, the Annual Leave Underpayment Rectification Information
(b)proof that full payment has been made to Mitchell Hicks such as a bank transfer showing the transfer of funds to him, or a copy of his payroll records showing the payment.
Annexed to Mr Semler's affidavit was an industry report profile of the Ombudsman's office's interactions with the landscapes construction services industry from July 2019 to June 2023. That document disclosed that in that period, the landscape construction services industry had been involved in 409 disputes and 48 compliance notices had been issued by the FWO, involving more than $303,043 worth of FWO recoveries for employees.
Failure to Comply with the Compliance Notice
Mr Semmler’s evidence was that, to the best of his knowledge and belief, PFL had not at that time taken action to comply with the Compliance Notice and had not provided to the Ombudsman any evidence that it had done so.
The Ombudsman also led evidence of an email exchange between Mr Semmler and Mr Ahmed, in which Mr Semmler advised on 24 January 2024 that he had contacted Mr Hicks, who had advised that no contact or payment had been received from his employer, notwithstanding the orders made in October 2023.
CONSIDERATION
The purpose of civil penalties of the sort available under the FW Act is deterrence, not compensation: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2018) 262 CLR 157 at 195 [116]; Dafallah v Fair Work Commission (2014) 225 FCR 559 at 593 [140]. In Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (2018) 264 FCR 155 at 167 [19], the Full Court of the Federal Court said:
It is unnecessary to engage in any extended discussion of principle. Of particular significance is the recognition that deterrence (general and specific) is the principal and indeed only object of the imposition of a penalty — to put a price on contravention that is sufficiently high to deter repetition by the contravener and others who might be tempted to contravene the Act: French J in Trade Practices Commission v CSR Ltd [1990] FCA 762; [1991] ATPR 41-076 at 52,152, cited by the plurality in Commonwealth v Director of the Fair Work Building Industry Inspectorate (Civil Penalties Case) [2015] HCA 46; (2015) 258 CLR 482 at [55]. ...
In this case, the question of penalty is to be determined as follows:
(a)the Court is to identify the separate contraventions involved. Each contravention of a separate obligation in the Award and the FW Act is a separate contravention: Gibbs v Mayor, Councillors and Citizens of City of Altona (1992) 37 FCR 216 at 223; Kelly v Fitzpatrick (2007) 166 IR 14 at 17 [11]; McIver v Healey [2008] FCA 425 at [16]; Rocky Holdings Pty Ltd v Fair Work Ombudsman (2014) 221 FCR 153 at 159 [13]; Fair Work Ombudsman v Lohr (2018) ALR 424 at 436 [29];
(b)the Court should consider whether contraventions resulting from any particular course of conduct ought to be treated as a single contravention under s.557(1) of the FW Act; (“course of conduct”);
(c)the Court should determine an appropriate penalty to impose in respect of each contravention that is to be penalised (whether a single contravention or a course of conduct) having regard to all of the circumstances of the case; and
(d)having fixed an appropriate penalty for each contravention the Court should consider the aggregate penalty to determine whether it is an appropriate response to the contravening conduct; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560, (the “totality principle”).
When determining the appropriate penalty to impose, regard should be had to all of the circumstances of the case, guided by the various discretionary considerations discussed in authorities such as Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450 at 460-461 [18]-[19], in order to arrive at a single result that is an instinctive synthesis of those various factors.
In this case, the question of deterrence assumes particular significance, not only by reason of the fact that that is the purpose of penalties, but also by reason of the particular conduct of the respondents.
Turning first to questions of specific deterrence, I accept that a meaningful penalty is necessary to deter the first respondent from future contraventions, although I note that it appears that strike-off action is in progress at the instigation of the Australian Securities and Investments Commission. Nevertheless, the company remains registered and may yet still be trading or return to trading. It is important to discourage PFL from engaging in the same conduct in the future. I should also note that both respondents have demonstrated disregard for PFL’s obligations under the FW Act, not only in relation to the Compliance Notice, but also in relation to the National Employment Standards and its protection of unpaid accrued annual leave entitlements by, firstly, failing to respond to the Compliance Notice at all and, secondly, by failing to pay Mr Hicks what he was owed.
Noting that the Ombudsman has had dealings with the relevant industry on a number of occasions recently, it is necessary that the penalties contain some element for general deterrence. As the Ombudsman said in her submissions:
… The efficacy of compliance notices will be hindered if recipients perceive that a failure to comply carries no meaningful consequences.
I accept her submission that there is a need to send a message to businesses like PFL and employers generally that a failure to comply with a compliance notice will not be tolerated.
Further in that connection, the system of compliance notices provides an efficient and speedy means by which the Ombudsman can achieve compliance with industrial instruments by employers who have, for whatever reason, contravened them. Compliance notices are a useful and modern way to deal effectively, speedily and inexpensively with employers' contraventions and it is in the public interest that they be issued where appropriate and complied with as required. Failure to do so undermines the compliance notice regime and is certainly to be discouraged.
I note that there is no evidence that either of the respondents has contravened the FW Act at any time other than the underpayment of Mr Hicks and the failure to comply with the Compliance Notice under consideration.
It should be noted that in addition to FWI Semmler’s attempts to engage with the respondents at various times during the course of this proceeding, Mr Ahmed, on behalf of the Ombudsman, has made contact or attempted to make contact with the respondents on more than one occasion. The evidence indicates that nothing worthwhile came from those attempts and neither respondent has adduced evidence of having done anything which suggests even the smallest attempt to comply with the Compliance Notice or rectify the underpayment of Mr Hicks.
The failure to comply with the Compliance Notice has two practical consequences. The first is that Mr Hicks remains underpaid the amount that he is due, namely $1,674.62. While that does not seem an overly large sum, I infer from the fact of his classification under the relevant award that Mr Hicks is not highly paid, and so even the fact that the amount owing may not be objectively a large one, it may nevertheless be relatively a large one. Its significance to him should not be underestimated.
The second aspect is that the Ombudsman has been obliged to bring this proceeding at some expense to her, as well as to the public purse more generally in the form of the Court. These matters are significant, even though they do not form a major part of my reasons for arriving at the penalties which are to be imposed.
CONCLUSION
The Ombudsman has sought penalties of between 70 and 80 per cent of the maximum penalties available. I feel that those percentages are higher than appropriate in the circumstances of this case and that a lesser percentage is appropriate. PFL is to pay a penalty of $15,000 and Mr Dean is to pay a penalty of $3,000.
The penalties are to be paid to the Commonwealth within 28 days.
I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Cameron. Associate:
Dated: 14 March 2024
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