Fair Work Ombudsman v Rachael Louise Medispa (No 2)
[2022] FedCFamC2G 284
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Rachael Louise Medispa (No 2) [2022] FedCFamC2G 284
File number(s): SYG 1898 of 2021 Judgment of: JUDGE MANOUSARIDIS Date of judgment: 22 April 2022 Catchwords: INDUSTRIAL LAW – assessment of pecuniary penalty for contravention of s 716(5) of the Fair Work Act 2009 (Cth). Legislation: Crimes Act 1914 (Cth) s 4AA
Fair Work Act 2009 (Cth) ss 12, 539(1), 539(2), 546(1), 547(2), 550(2), 557A, 716(5), 717
Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (The BKH Contractors Case) (No 2) [2018] FCA 1563
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8
Bevis v VA Holdings Pty Ltd trading as Granton Homes & Ors [2020] FCCA 2082
Fair Work Ombudsman v VS Investment Group Pty Ltd [2013] FCCA 208
Kelly v Fitzpatrick [2007] FCA 1080
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
Division: Fair Work Number of paragraphs: 23 Date of hearing: 12 April 2022 Place: Sydney Solicitor for the Applicant: Ms M Zhang of the Office of the Fair Work Ombudsman, by telephone The Respondents: No appearance by, or on behalf of, the respondents ORDERS
SYG 1898 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: RACHAEL LOUISE MEDISPA PTY LTD ACN 625 563 340
First Respondent
RACHAEL LOUISE BIRCH
Second Respondent
ORDER MADE BY:
JUDGE MANOUSARIDIS
DATE OF ORDER:
22 APRIL 2022
THE COURT ORDERS THAT:
1.Pursuant to s 546(1) of the Fair Work Act 2009 (Cth) (FW Act) the first respondent pay a pecuniary penalty of $24,975 for its contravention of s 716(5) of the FW Act as declared in the orders made on 17 December 2021.
2.The first respondent pay the pecuniary penalty referred to in order 1 to the Commonwealth by 20 May 2022.
3.Pursuant to s 546(1) of the FW Act the second respondent pay a pecuniary penalty of $4,995 for her involvement in the contravention of the first respondent of s 716(5) of the FW Act as declared in the orders made on 17 December 2021.
4.The second respondent pay the pecuniary penalty referred to in order 3 to the Commonwealth by 20 May 2022.
5.The parties have liberty to apply on 7 days’ notice in relation to any question that may arise concerning the implementation 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
INTRODUCTION
On 17 December 2021, on the basis of reasons for judgment I published that day (earlier reasons),[1] I made declarations that the first respondent, Rachael Louise Medispa Pty Ltd (RLM), contravened s 716(5) of the Fair Work Act 2009 (Cth) (FW Act) by failing to comply with the requirements of a compliance notice issued on 14 July 2021 (Compliance Notice), and that the second respondent, Ms Birch, was involved, within the meaning of s 550(2) of the FW Act, in RLM’s contravention. The Compliance Notice was issued by Mr Keene, the Fair Work Inspector to whom I refer in my earlier reasons, in relation to RLM’s employment of Ms Laredo.
[1] Fair Work Ombudsman v Rachael Louise Medispa Pty Ltd [2021] FedCFamC2G 362
The applicant (FWO) now applies under s 546 of the FW Act for orders that RLM and Ms Birch each pay a pecuniary penalty because RLM contravened s 716(5) of the FW Act, and Ms Birch was involved in RLM’s contravention of s 716(5).
PROCEDURAL HISTORY
In addition to making declarations, on 17 December 2021 I set the matter down for hearing on the question of penalty on 23 March 2022, and made directions for the filing of evidence and submissions.
On 23 December 2021 Ms Birch sent to my associate’s inbox the following email (errors in original):
My sincere apologies that I haven’t responded I have been very ill this year and recently had to go undergo a second operation for the year - both which I have evidence of year. I have been under intense pressure and stress this year as a result of covid and other matters and I haven’t known what to do with this matter.
I unfortunately don’t have the funds for a solicitor but would like to have the opportunity to see if I can obtain one or have the chance to defend myself as I have strong reasoning and evidence behind the reasons the money was withheld in the period stated. I went through this at the beginning of the year with Matthew Keene from FWO and I believe that she owes me funds.
I know the date of the final hearing passed but I heard or read no final decision- if this is not yet made can I please have an extension to this so I can have my response in the new year?
At my direction, and in reply to Ms Birch’s email of 23 December 2021, my associate sent an email to the parties in which it was stated that the matter had been listed for a directions hearing on 9 February 2022. The respondents did not appear at the directions hearing on 9 February 2022. In those circumstances, I vacated the hearing on the question of penalty on 23 March 2022, and relisted the hearing on the question of penalty on 12 April 2022.
On 12 April 2022 I heard the FWO’s submissions on the question of penalty. The respondents did not appear. Shortly after the completion of the hearing, Ms Birch sent the following email to my associate’s inbox:
This is dated for today and the time of me reading this has now passed. Please confirm if the hearing proceeded without me or if a new date for the final hearing was selected.
This email was brought to my attention, but I instructed my associate the email warranted no response from the Court. The respondents have been on notice of this proceeding, including the directions hearing on 9 February 2022 which I appointed in response to Ms Birch’s email of 23 December 2021, but they have failed to engage in any meaningful way with the allegations the FWO made against them in this proceeding. I am satisfied that, notwithstanding the emails Ms Birch had sent to the Court, neither RLM nor Ms Birch ever intended or now intend to meaningfully engage with the claims the FWO has made in this proceeding.
FACTS
I have set out in the earlier reasons the allegations made in the statement of claim which are taken to have been admitted by the respondents. These reasons should be taken to incorporate paragraph 10 of the earlier reasons. In addition, the FWO relies on an affidavit made by Mr Keene.[2]
PENALTY
[2] Affidavit of M Keene 02.03.2022
Power and principles
Subsection 546(1) of the FW Act provides that this Court may, on application, order a person to pay a pecuniary penalty the Court considers is appropriate if the Court is satisfied the person has contravened a “civil remedy provision”.[3] That expression is defined in s 539(1) of the FW Act to include the provisions identified in column 1 of the table to s 539(2) of the FW Act. Subsection 716(5) is in column 1 of the table to s 539(2) of the FW Act.
[3] I repeat in this and the following 4 paragraphs much of what I said in Bevis v VA Holdings Pty Ltd trading as Granton Homes & Ors [2020] FCCA 2082, at [33]-[38]
Subsection 546(2) of the FW Act provides that the pecuniary penalty the Court may impose must not, where the person is an individual, be more than “the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2)” and, if the person is a body corporate, must not be more than five times “the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2)”. The maximum penalty units for a contravention of s 716(5) of the FW Act as at 16 August 2021, being the day by which RLM was required to carry out the actions specified in the Compliance Notice, are 30 penalty units for an individual, and 150 penalty units for a body corporate. (This excludes “serious contraventions”, as defined in s 557A of the FW Act.) Section 12 of the FW Act provides that “penalty unit” has the meaning given by s 4AA of the Crimes Act 1914 (Cth). The penalty unit provided for by s 4AA of that Act as at 16 August 2021 was $222. Thus, $33,300 is the maximum penalty RLM may be ordered to pay for its contravention of s 716(5) of the FW Act, and $6,660 is the maximum penalty Ms Birch may be ordered to pay for RLM’s contravention of s 716(5) of the FW Act.
The approach of most judges when assessing penalties for a single contravention of a provision of the FW Act is to take into account the non-exhaustive considerations Tracey J identified in Kelly v Fitzpatrick,[4] which his Honour adopted from the judgment of Mowbray FM in Mason v Harrington Corporation Pty Ltd. [5] Those considerations are:
[4] Kelly v Fitzpatrick [2007] FCA 1080, at [14]
[5] Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
(a)the nature and extent of the conduct which led to the breaches;
(b)the circumstances in which that conduct took place;
(c)the nature and extent of any loss or damage sustained as a result of the breaches;
(d)whether there had been similar previous conduct by the respondent;
(e)whether the breaches were properly distinct or arose out of the one course of conduct;
(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 breach had exhibited contrition;
(j)whether the party committing the breach had taken corrective action;
(k)whether the party committing the breach had cooperated with the enforcement authorities;
(l)the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
(m)the need for specific and general deterrence.
Although these factors have been identified and applied as relevant to the assessment of penalties, they do not constitute a “rigid catalogue of matters for attention”.[6]
[6] Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8, at [91] (Buchanan J)
Also relevant is the maximum penalty for the contravention provided for by the FW Act; and here I refer to the following passage from the judgment of Flick J in The BKH Contractors Case (No 2):[7]
In undertaking the task of assessing and quantifying the penalties to be imposed, the maximum penalty prescribed by the Commonwealth legislature for a specific contravention serves as a “yardstick” against which the assessment of penalties is generally to proceed . . . .
[7] Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (The BKH Contractors Case) (No 2) [2018] FCA 1563, at [19]
Nature, extent, circumstances, and deliberateness of the contravening conduct
The contravention consists of RLM failing to comply with the requirements of the Compliance Notice, and Ms Birch’s involvement in that contravention. The actions RLM was required to take, and which Ms Birch, as the person responsible for the overall management of RLM, ought to have caused RLM to take, to remedy the direct effects of the contravention, are clearly set out in the Compliance Notice. Further, RLM’s failure to comply with the Compliance Notice, and Ms Birch’s failure to cause RLM to comply with the Compliance Notice, were deliberate. On 14 July 2021 Mr Birch told Mr Keene that RLM will not make the payments the Compliance Notice required RLM make to Ms Laredo because RLM does not have the money.[8]
[8] Affidavit of M Keene 02.03.2022, [10]
These are matters that point to the assessment of the penalty at the higher end of the scale.
Nature and extent of loss occasioned by contravention
By failing to comply with the Compliance Notice, RLM denied Ms Laredo’s entitlement to approximately $3,048.50. That is not an insignificant amount.
Deterrence
There is evidence that RLM continues to operate its business;[9] and Ms Birch remains the sole director and shareholder of RLM, and thus continues to have responsibility for employing employees or overseeing employee entitlements in the future.[10]
[9] Affidavit of M Keene 02.03.2022, [13]
[10] Affidavit of M Keene 02.03.2022, annexure MK-8
As for general deterrence I refer to what Judge Jarrett said in Fair Work Ombudsman v VS Investment Group Pty Ltd:[11]
The failure to comply with a notice properly issued by the applicant in the course of its investigations and the discharge of its statutory functions is serious. Recipients of such notices should be left under no misapprehension about their obligations to comply with those notices.
[11] Fair Work Ombudsman v VS Investment Group Pty Ltd [2013] FCCA 208, at [51]
The FWO relies on an industry profile report for the “Hairdressing and Beauty Services” industry from July 2015 to June 2021,[12] which shows a high dispute rate in the beauty services industry. The FWO submits there is a need to send a message to employers generally, and to the beauty services industry more specifically, that a failure to comply with a compliance notice will not be tolerated by the FWO, the community, or the courts. I agree.
[12] Affidavit of Mr M Keene, [17], annexure MK-10
The penalty should be set at a level that signals not only to employers in the beauty services industry, but to all employers that a wilful disregard of a compliance notice issued under s 716(2) of the FW Act will be met with a significant penalty.
Assessment
The FWO submits that, given the nature of the contravention, the factual basis which informed the Compliance Notice being issued, and the absence of contrition and corrective action by RLM, even after the FWO commenced this proceeding, it would be appropriate to impose penalties in the higher range of the scale. The FWO submits that 75% of the maximum amount would be an appropriate penalty. I agree. I therefore find that $24,975 is an appropriate penalty for RLM’s contravention of s 716(5) of the FW Act, and $4,995 is an appropriate penalty for Ms Birch’s involvement in RLM’s contravention of s 716(5) of the FW Act. I agree.
DISPOSITION
I propose to order that:
(a)RLM pay a pecuniary penalty of $24,975 for its contravention of s 716(5) of the FW Act, and that Ms Birch pay a pecuniary penalty of $4,995 for her involvement in RLM’s contravention;
(b)RLM and Ms Birch pay the pecuniary penalties to the Commonwealth within 28 days after the day I pronounce these orders; and
(c)the parties have liberty to apply on 7 days’ notice in relation to any question that may arise concerning the implementation of the orders I propose to make.
In her proposed orders the FWO proposes an order under s 547(2) of the FW Act that RLM pay interest to Ms Laredo. In the earlier reasons I held that an order that interest be paid without specifying the amount is not an order that is authorised by s 547(2) of the FW Act.
I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Manousaridis. Associate:
Dated: 22 April 2022
0
6
0