Fair Work Ombudsman v Rainbow Paradise Preschool
[2015] FCCA 1652
•19 June 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
FAIR WORK OMBUDSMAN v RAINBOW PARADISE PRESCHOOL & ANOR [2015] FCCA 1652
Catchwords:
INDUSTRIAL LAW – Application by Fair Work Ombudsman relating to conceded breaches of Fair Work Act 2009 and Workplace Relations Act 1996 in relation to underpayment of wages and other minimum entitlements – Respondent company a kindergarten and day care centre for disadvantaged children – Statement of Agreed Facts filed but contents disputed – imposition of penalties – relevant considerations.
Legislation:
Evidence Act 1995 (Cth), ss.4(3), 140, 191, 191(2)(a), 191(2)(b)
Fair Work Act 2009 (Cth), ss.12. 14, 44(1), 45,87(2), 90, 117, 323(1), 535, 536(1), 546(1), 551, 557(1), 682, 712(3), 729
Workplace Relations Act 1996 (Cth), ss.4, 6, 182(1), 234, 235, 547, 551, 719(1), 719 719(6), 729, 841
Australian Competition and Consumer Commission v Eternal Beauty Products Pty Ltd [2012] FCA 1124
Australian Competition and Competition Commission v Leahy Petroleum Pty Ltd & Ors (No. 3) (2005) 215 ALR 301
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560
Briginshaw v Briginshaw (1938) 60 CLR 336
Brobbel v S & C Mack Pty Ltd [2008] FMCA 1355
Browne v Dunn (1893) 6 R 67 (HL)
Commissioner of Patents v Sherman (2008) 172 FCR 394
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing & Allied Services Union of Australia v Australian Competition and Consumer Commission (2007) 162 FCR 466
Construction, Forestry, Mining and Energy Union v John Holland Pty Ltd (2010) 186 FCR 88
Cousins v Merringtons Pty Ltd (No. 2) [2008] VSC 340
Director of the Fair Work Building Industry Inspectorate v Luka Tippers & Excavation Pty Ltd & Anor [2014] FCCA 1459
Environment Protection Authority v Ramsey Food Processing Pty Ltd [2009] NSWLEC 152
Fair Work Ombudsman v Bosen Pty Ltd [2011] VMC 81
Fair Work Ombudsman v Contracting Plus Pty Ltd & Anor (2011) 205 IR 281
Fair Work Ombudsman v Cuts Only The Original Barber Pty Ltd [2014] FCCA 2381
Fair Work Ombudsman v Happy Cabby Pty Ltd & Anor [2013] FCCA 397
Fair Work Ombudsman v Hongyun Chinese Restaurant Pty Ltd (in liq.) & Ors [2013] FCCA 52
Fair Work Ombudsman v La Kosta Childcare Centre and Kindergarten Pty Ltd & Ors [2012] FMCA 551
Fair Work Ombudsman v Maclean Bay Pty Ltd (2012) 200 FCR 57
Fair Work Ombudsman v Mildura Battery Co Pty Ltd & Anor [2014] FCCA 192
Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd (No. 2) [2013] FCA 582
Fair Work Ombudsman v Ross Geri Pty Ltd & Ors [2014] FCCA 959
Fair Work Ombudsman v Tiger Telco Pty Ltd (in liq.) & Anor [2012] FCA 479
Fair Work Ombudsman v Tuscan Landscape Co Pty Ltd & Ors [2014] FCCA 1421
Gibbs v Mayor, Councillors and Citizens of the City of Altona (1992) 37 FCR 216
Hoare v R (1989) 167 CLR 348
Kelly v Fitzpatrick (2007) 166 IR 14
Lawlor v Personal Hire Pty Ltd (2009) 179 IR 91
Lynch v Buckley Sawmills Pty Ltd (1984) 3 FCR 503
Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant and Bar [2007] FMCA 7
McIver v Healey [2008] FCA 425
Mornington Inn Pty Ltd (ACN 116 830 703) v Jordan (2008) 168 FCR 383
Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd & Ors (1992) 110 ALR 449
NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285
Qantas Airways Ltd v Gama (2008) 167 FCR 537
R v Valentini (1980) 48 FLR 416
Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412
Rocky Holdings Pty Ltd v Fair Work Ombudsman (2014) 221 FCR 153
Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550
Stuart v Construction, Forestry, Mining and Energy Union & Anor (2010) 185 FCR 308
Stuart-Mahoney v Construction, Forestry, Mining and Energy Union (2008) 177 IR 61
Trade Practices Commission v CSR Ltd (1991) ATPR 41-076
Trade Practices Commission v Stihl Chain Saws (Aust) Pty Ltd (1978) ATPR 40-091
Veen v R (1979) 143 CLR 458
Veen v R (No.2) (1988) 164 CLR 465
Walden v Hensler (1987) 163 CLR 561
Workplace Ombudsman v Saya Cleaning Pty Ltd ( No. 2) (2009) 179 IR 358
Workplace Ombudsman v Securit-E Holdings Pty Ltd (in liq.) & Ors (2009) 187 IR 330
Applicant: FAIR WORK OMBUDSMAN
First Respondent: RAINBOW PARADISE PRESCHOOL CHILDHOOD DEVELOPMENT AND EDUCATION LONG DAY CARE CENTRE PTY LTD (ACN 114 319 907)
Second Respondent: GINA MOELAU
File Number: SYG 1418 of 2012
Judgment of: Judge Lloyd-Jones
Hearing dates: 11 March 2014, 22, 23 July 2014
Date of Last Submission: 7 October 2014
Delivered at: Sydney
Delivered on: 19 June 2015 REPRESENTATION
Counsel for the Applicant: Ms E Raper
Solicitors for the Applicant: Fair Work Ombudsman
Counsel for the Respondents: Ms D Dinnen
Solicitors for the Respondents: MBS Lawyers ORDERS
THE COURT DECLARES THAT:
(1)The First Respondent, Rainbow Paradise Preschool Childhood Development and Education Long Day Care Centre Pty Ltd (ACN 114 319 907, contravened:
(a)subsection 182(1) of the Workplace Relations Act 1996 (Cth) (the “WR Act”) (as it continued to apply pursuant to item 5 of Schedule 16 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (the “Transitional Act”)) by failing to pay Jessica Kathleen Austin (“Austin”) and Sarah Louise Kidd (“Kidd”) their basic periodic rate of pay under the Australian Pay and Classification Scale derived from the New South Wales Miscellaneous Workers’ – Kindergartens and Child Care Centres, &c. (State) Award (the “Child Care Pay Scale”) for each of their guaranteed hours, during the following periods:
(i)3 July 2009 to 18 December 2009, in respect of Austin; and
(ii)10 August 2009 to 21 August 2009, in respect of Kidd.
(b)section 45 of the Fair Work Act 2009 (Cth) (the “FW Act”) by failing to provide Austin with paid rest pauses as required by clause 22.2 of the Modern Award on 18-22 and 25-29 January 2010, and 1-5 and 9-11 February 2010.
(c)subsection 44(1) of the FW Act, by failing to provide Austin and Lilet Minasmasihi (“Minasmasihi”) with notice of termination or payment in lieu thereof, as required by section 117 of the FW Act, on the following dates:
(i)12 February 2010, in respect of Austin; and
(ii)2 December 2011, in respect of Minasmasihi.
(d)sections 234 and 235 of the WR Act (as they continued to apply by reason of sub-item 6(1) of Schedule 16 to the Transitional Act) by failing to accrue annual leave to Kidd, and pay accrued annual leave to Kidd on termination of her employment, in the period from 10 to 21 August 2009.
subsection 44(1) of the FW Act, by:
(i)failing to accrue annual leave to Minasmasihi, as required by section 87 of the FW Act, in the period from 11 November 2011 to 2 December 2011; and
(ii)failing to pay accrued annual leave upon termination to Austin and Minasmasihi, as required by subsection 90(2) of the FW Act, on the following dates:
(i)12 February 2010, in respect of Austin; and
(ii)2 December 2011, in respect of Minasmasihi.
(e)section 45 of the FW Act, by failing to pay Minasmasihi annual leave loading on leave paid out on termination of her employment, as required by clause 24.3 of the Modern Award, on 2 December 2011.
(f)subsection 323(1) of the FW Act by failing to pay Austin and Kidd all amounts payable to them in relation to the performance of work in full and at least monthly, on the following dates:
(i)3 to 9 July 2009, in respect of Austin; and
(ii)10 to 21 August 2009, in respect of Kidd.
(g)subsection 536(1) of the FW Act by failing to provide Minasmasihi with a payslip within one working day of paying an amount to her in relation to the performance of work, on or about 17 January 2012.
(h)subsection 712(3) of the FW Act by failing to comply, without a reasonable excuse, with a notice to produce records or documents issued under section 712 of the FW Act by Fair Work Inspector Jason Lam (“Inspector Lam”) on 16 November 2011.
(i)subsection 712(3) of the FW Act by failing to comply, without a reasonable excuse, with a notice to produce records or documents issued under section 712 of the FW Act by Inspector Lam on 6 February 2012.
(2)The Second Respondent, Gina Moelau, was involved in each of the contraventions committed by the First Respondent (within the meaning of subsection 728(1) of the WR Act and subsection 550(1) of the FW Act) as set out in declaration (1) above.
THE COURT ORDERS THAT:
(3)The First and Second Respondents jointly are to pay penalties, pursuant to subsection 719(1) of the WR Act and subsection 546(1) of the FW Act, in the total amount of $14,083 in respect of the Respondents’ contraventions in declarations 1 and 2 above.
(4)The First and Second Respondents are to pay the penalty amount set out in Order 3 to the Consolidated Revenue Fund of the Commonwealth pursuant to section 841 of the WR Act and subsection 546(3)(a) if the FW Act.
(5)The payment ordered in Order 3 is to be paid within 90 days of the date of these orders .
(6)Under sections 719(6) of the WR act and 545(2)(b) of the FW Act, the First Respondent is to pay a total of $3,146.96 to Kidd and Minasmasihi if, at the time of these orders come into effect the amount remains unpaid, being the amounts outstanding to them as a result of the First Respondent’s contraventions of the WR Act and FW Act within 28 days of the date of these orders coming into effect, made up of:
(a)$1,165.97 to Kidd; and
(b)$1,980.99 to Miniasmasihi.
(7)Under sections 722 of the WR Act and 547 of the FW Act, the First Respondent is to pay interest on the amounts ordered under Order 6 above.
(8)The Applicant has liberty to apply to the Duty Judge on seven days’ notice in the event that any of the preceding orders are not complied with.
FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEYSYG 1418 of 2012
FAIR WORK OMBUDSMAN Applicant
And
RAINBOW PARADISE PRESCHOOL CHILDHOOD DEVELOPMENT AND EDUCATION LONG DAY CARE CENTRE PTY LTD (ACN 114 319 907) First Respondent
GINA MOELAU Second Respondent
REASONS FOR JUDGMENT
Overview
1.The applicant, the Fair Work Ombudsman (the “FWO”), has brought civil remedy proceedings against the first respondent, Rainbow Paradise Preschool Childhood Development And Education Long Day Care Centre Pty Ltd (ACN 114 319 907) (“Rainbow Paradise”), and the second respondent, Gina Moelau (“Moelau”) for breaches of the former Workplace Relations Act 1996 (Cth) (“WR Act”) and the Fair Work Act 2009 (Cth) (“FW Act”).
2.I rely on the FWO’s outline of submissions and the Chronology contained in Annexure “A” which effectively set out the background material in respect to these proceedings.
3.Rainbow Paradise operates as an accredited childcare centre. It is a constitutional corporation within the meaning of s.4 of the WR Act and, from 1 July 2009, a constitutional corporation within the meaning of s.12 of the FW Act. It is an employer within the meaning of s.6 of the WR Act and, from 1 July 2009, a national system employer within the meaning of s.14 of the FW Act. Further, it is an entity operating as an accredited childcare centre, specialising in long day care for special needs children, at 36 Tullock Street, Blacktown in New South Wales (“Rainbow Paradise Premises”).
4.Moelau was and is;
a)The sole company director and shareholder of Rainbow Paradise;
b)Responsible for the overall direction, management and supervision of Rainbow Paradise’s operations in relation to industrial instruments and arrangements, setting pay rates, wages and conditions of employees; and
c)The person responsible for ensuring that Rainbow Paradise complied with its legal obligations under the WR Act, the Fair Work (Transitional Provisions and Consequent Amendments) Act 2009 (Cth) (the “Transitional Act”) and FW Act.
5.The FWO claims, and the respondents by and large accept, that they have breached the industrial legislation by failing to pay three of their former employees their minimum entitlements. By virtue of the admissions contained in the Statement of Agreed Facts (“SOAF”), filed 24 February 2014, the liability issues in dispute are confined to the following:
a)On the question of liability, there are three remaining contraventions which are disputed;
b)On the question of monetary amounts arising from the alleged contraventions, there is a dispute as to some of the factual matters underpinning the monetary amounts owed; and
c)On the question of penalty, the parties do not make a joint submission. Certain relevant factual matters are disputed including the state of the respondents’ knowledge of the contraventions at the time they were made.
Mediation
6.At a directions hearing before his Honour Smith FM on 7 September 2012, the following order was made:
10. The matter is referred to the District Registrar to arrange meditation or conciliation pursuant to ss.26 and 34 of the Federal Magistrates Act 1999 (Cth) and Parts 27 and 45, Division 45.4A of the Federal Magistrates Court Rules 2001 (Cth) to be conducted by a Registrar or by a FWA member nominated under Rule 45.13B (2). Primary dispute resolution must be completed before 28 February 2013.
7.The Court Registry advised the parties that mediation would occur on 11 October 2012 with Registrar Morgan conducting the mediation. That scheduled mediation occurred, but the matter was not resolved. Consequently the matter was returned for further directions establishing a timetable for hearing.
Scope and Conduct of these Proceedings
8.Rainbow Paradise is a small business and, at the time of the contraventions, employed a few people. As a result of the investigations into its operations and the subsequent proceedings, only family members of Moelau are now employed. The submissions filed on behalf of the respondents on 10 March 2014 indicate that Rainbow Paradise is a preschool which was established by Moelau and her husband, Mark Moelau, in 2006 in Blacktown, New South Wales. Rainbow Paradise provides a service to children from two to six years old and due to the demographics of the area, most of these children come from a disadvantaged socio-economic background. Specifically:
a)75% of the children come from an indigenous background;
b)90% of the children are referred to the centre by the Department of Family and Community Services;
c)60% of the children have behavioural issues including ADHD, autism, developmental mental delays and other psychological problems due to abuse and neglect; and
d)Some of these children also have problems with speech and other physical impairments.
9.Most of the children attending Rainbow Paradise come from one or more of the following groups:
a)Refugees mostly from Africa or Indigenous;
b)Single parent families;
c)From a family were the sole source of income is Centrelink payments;
d)Where the child in care has been removed from parents by the Department of Family and Community Services; and/or
e)From homes where the parents drop out of school before school certificate level.
10.Rainbow Paradise is regularly asked by the NSW Department of Family and Community Services to enrol the children into the preschool who have been put into the Department’s care. Most of the fees collected from children enrolled in Rainbow Paradise are obtained by way of government subsidies. However, families are expected to make co-contribution payments depending upon their individual financial circumstances. Notwithstanding, many of the families do not pay this co-contribution. It is a policy of Rainbow Paradise not to exclude children if their parents fail to make a co-contribution payment, unless there are exceptional reasons to do so.
11.As at the end of the financial year in 2012, Rainbow Paradise had a net profit of $28,187. Profits are funnelled back into Rainbow Paradise’s operating costs. Neither Moelau nor her husband draws a wage from Rainbow Paradise. Both spend a significant amount of time and their own money funding and maintaining the business. As a result of this litigation and other problems with obtaining and retaining reliable staff, Moelau ceased employing anyone outside her immediate family in 2013.
12.Elsewhere in this decision, details in respect of the initiation and progress of these proceedings are detailed. When the application was filed on 28 June 2012, the FWO sought civil remedies against Rainbow Paradise and Moelau for breaches of the WR Act and the FW Act. The original case management was approached on the basis that there would be proceedings to determine liability and the consequential penalty hearing. The liability hearing was set down for 12, 13, 14 and 19 November 2013. On 17 October 2013, the Court was advised by the parties that they had reached agreement to file the SOAF and requested that the liability hearing be vacated. Orders to this effect were made on 21 October 2013 which included the listing of the hearing to determine penalty on 11 March 2014 for a half day. It was not until 24 October 2013 that the SOAF was filed. That document listed the facts which were agreed to for the contraventions that were admitted, facts which were agreed for contraventions that were not admitted and the facts disputed in the proceedings.
13.At the commencement of the hearing, the Court was advised that the respondents sought to cross-examine four witnesses. Similarly, the FWO required four witnesses for cross-examination. No orders had been sought for the allocation of further hearing dates to accommodate calling and examination of eight witnesses. At the time of the opening addresses the parties were unable to advise the Court of the likely duration of the various cross-examinations.
14.Examination of the witnesses occupied three hearing days being 11 March 2014 and 22, 23 July 2014. The transcript of the evidence exceeds 340 pages.
15.The following documents were submitted by the parties to the Court;
a)FWO’s Outline of Submissions, filed on 28 February 2014, being 39 pages in length;
b)The respondents’ filed Submissions on Penalty on 10 March 2014, being 30 pages in length;
c)FWO’s Final Submissions on Liability and Penalty filed on 28 August 2014, being 43 pages in length; and
d)The respondents’ Final Closing Submissions filed 19 September 2014, being 15 pages in length.
e)FWO’s Submissions in Reply on Liability and Penalty, filed 7 October 2014, being 20 pages in length;
The Court also requested the parties file submissions in respect of s.682 of the FW Act.
f)The FWO filed Submissions on 22 October 2014 being 12 pages in length; and
g)The respondents’ filed Submissions on 15 July 2014, being 5 pages in length.
16.At the conclusion of the hearing on 23 July 2013, a timetable was set down for the filing of written submissions and the parties were asked to avoid filing voluminous submissions. I accept that this has been done, however, the bulk of the submissions address the issue of liability in respect of the disputed contraventions and subsidiary issues not directly focused on the issue of penalty.
17.I raise the above issues because of my concerns with the disparity between the size of Rainbow Paradise and the nature of their contraventions, compared with the resources that have been applied in pursuing these proceedings by the FWO. I will address this concern in various parts of the judgment which I believe are contrary to the objectives of the FW Act which are partly expressed in s.682, and the overall utilisation of resources that have been applied to this prosecution. I raise this concern because of the frequency of proceedings being brought against small operators with the ultimate result being the business closing and the express claim of pursuing these prosecutions to warn other operators of the consequences of failing to satisfy the requirements of the FW Act acting to destroy the operation.
Employees Involved in these Proceedings
18.The proceedings related to three former junior employees of Rainbow Paradise:
a)Jessica Kathleen Austin (“Austin”) was employed by Rainbow Paradise between 3 July 2009 and 12 February 2010. She was qualified with a Certificate III in Children’s Services and had completed a 12 month traineeship with SK & S Enterprises Pty Ltd, Trading as “Another World 4 Kids Kindergarten/ Preschool”. She was properly classified;
i)As a “childcare worker – step 5”, under the Australian Pay and Condition Scale derived from the Miscellaneous Workers Kindergarten and Childcare Centres, & C (State) Award (Childcare APCS) in the period from 3 July 2009 until 31 December 2009; and
ii)As a “Children’s Service Employee, Level 3.2- After 1 year” under the Children Services Award 2010 (Modern Award) in the period from 1 January 2010 until 12 February 2010 (SOAF at [4]-[5]);
b)Sarah Louise Kidd (“Kidd”) was employed by Rainbow Paradise between 10 and 21 August 2009. She was properly classified as “Childcare Worker – Step 1” under APCS derived from the Childcare Award during her employment (SOAF at [4], [6]); and
c)Lilet Minasmasihi (“Minasmasihi”) commenced employment with Rainbow Paradise on 11 November 2011. There is a dispute about when her employment ceased. She was properly classified as a “Support Worker – Level 1.1 – On Commencement” under the Modern Award during her employment (SOAF at [4], [7]).
Prior Complaints
19.In the FWO’s Final Submissions on Liability and Penalty, it was brought to the Court’s attention that within a year of Rainbow Paradise commencing operation, the Preschool became the subject of complaints from employees about the non-payment or underpayment of wages and conduct which mirrored the offending conduct which is the subject of these proceedings. As a result of these prior complaints, the respondents have had extensive dealings with the FWO, which, in the FWO’s submissions, demonstrates a heightened level of understanding on the respondents’ behalf of their obligations and to the consequences for them if they breached these obligations. Despite this knowledge, the FWO submits that the respondents behaved in a manner which was at least in wilful disregard for their obligations, but in fact where it is open to the Court to find that they deliberately avoided their industrial obligations.
20.In respect of this submission, the Court notes that Moelau gave evidence in re-examination that each of the alleged former complainants’ complaints were resolved at the investigation stage. No proceedings were commenced in relation to those complaints. No evidence was put on from the alleged complainants and, as submitted at hearing, the probative value was therefore significantly outweighed by the unnecessary prejudice to the respondents.
Admitted Contraventions
21.By way of an amended defence, filed on 11 November 2013 (“Amended Defence”) and the SOAF, the respondents have admitted liability for contraventions of the WR Act, the Transitional Act and the FW Act for failing to do the following;
a)Pay the appropriate base periodic rate of pay of minimum wages to Austin, Kidd and Minasmasihi;
b)Provide notice of termination, or pay in lieu thereof, to Austin;
c)Accrue and pay annual leave to Austin, Kidd and Minasmasihi;
d)Pay annual leave loading to Minasmasihi;
e)Provide Austin with rest pauses;
f)Comply with frequent pay obligations in relation to Austin and Kidd; and
g)Provide Minasmasihi with a payslip (SOAF [98]).
22.Moelau admits that she was involved in the above contraventions by Rainbow Paradise (SOAF at [99]).
23.As a result of the above admissions, the FWO is seeking penalties against Rainbow Paradise and Moelau. The FWO submits that these penalties are appropriate because of the following factors:
a)Respondents lack of cooperation with the FWO during the investigations;
b)The need for specific deterrence, given the failure of previous voluntary compliance;
c)The need for general deterrence and a need to send a message to the industry in which the respondents operate;
d)The vulnerability of the employees by reason of their age and experience;
e)The respondents contravened workplace relations law, despite receiving extensive information (through the previous investigations by the FWO and calls to the Workplace InfoLine and the Fair Work InfoLine) about their obligations to provide particular entitlements, information which was ignored;
f)In the case of the respondents’ failure to provide Minasmasihi with a payslip, the fact that Rainbow Paradise had previously singed a Compliance Agreement Form agreeing to comply with the payslip obligation – which was subsequently ignored.
24.The FWO is also seeking declarations that Rainbow Paradise contravened the relevant provisions of the FW Act and that Moelau was involved in those contraventions.
Disputed Contraventions
25.In addition to the admitted contraventions, the FWO alleges that ;
a)Rainbow Paradise failed to provide notice of termination, or pay in lieu thereof, to Minasmasihi (SOAF at [100]-[101], [125]-[128]);
b)Rainbow Paradise failed to comply with two Notices to Produce, issued under s.712 of the FW Act (SOAF at [102]-[106], [129]-[130]); and
c)Moelau was involved in the above contraventions (SOAF at [107]-[110], [133]-[134]).
Dispute in respect of Standard of Proof
26.The parties have made contradictory submissions as to the correct standard of proof to be applied in these proceedings. The issue first arises in the FWO’s Final Submissions on Liability and Penalty, filed 25 August 2014, under the heading Civil Proceedings, where it states that these are civil proceedings and a court hearing a proceeding involving a civil penalty or civil remedy must apply the rules of evidence and procedures for civil matter which are required by s.551 of the FW Act and s.729 of the WR Act. The standard of evidence for civil matters is set out in s.140 of the Evidence Act 1995 (Cth) (“Evidence Act”) and provides:
Civil proceedings: standard of proof
(1) In a civil proceeding, the court must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities.
(2) Without limiting the matters that the court may take into account in deciding whether it is so satisfied, it is to take into account:
(a) the nature of the cause of action or defence; and
(b) the nature of the subject-matter of the proceeding; and
(c) the gravity of the matters alleged.
27.In the respondents’ Final Closing Submissions (filed 19 September 2014), the contention advanced is that, contrary to the applicant’s submissions, it is not the case that the simple civil standard of proof, being “on the balance of probabilities” which applies to these proceedings for civil penalties. As noted in Construction, Forestry, Mining and Energy Union v John Holland Pty Ltd (2010) 186 FCR 88. The Court noted that the correct approach is to consider at [110] where it stated:
110. …[W]hether the alleged contraventions had been proved by reference to a civil standard of proof but paying due regard, as s 140(2) of the Evidence Act 1995 (Cth) required, to the nature of the cause of action or defence; the nature of the subject matter of the proceeding; and the gravity of the matters alleged. As his Honour’s associated reference to Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 attests, this subsection of the Evidence Act is a restatement of a well known passage (at 362) in the judgment of Dixon J (as his Honour then was) in that case, “The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters ‘reasonable satisfaction’ should not be produced by inexact proofs, indefinite testimony, or indirect inferences."
28.It is submitted on behalf of the respondents that the prosecutorial manner in which these proceedings were conducted, and the penalties sought by the FWO, indicated that the correct standard of proof to be applied is the standard set out in Briginshaw vBriginshaw (1938) 60 CLR 336.
29.In the FWO’s Submissions in Reply on Liability and Penalty, filed 7 October 2014, it is submitted that this submission is incorrect, for the following reasons:
a)The Briginshaw test does not create a third standard of proof (Qantas Airways Ltd v Gama (2008) 167 FCR 537 per French and Jacobson JJ at [110]), rather, it reflects a conventional perception that members of our society do not ordinarily engage in fraudulent/criminal conduct and the strength of evidence necessary to establish a fact or facts on the balance of probabilities may vary accordingly to the nature of what it sought to prove. In Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd & Ors (1992) 110 ALR 449 at 449-450 the High Court held:
The ordinary standard of proof required of a party who bears the onus in civil litigation in this country is proof on the balance of probabilities. That remains so even where the matter to be proved involves criminal conduct or fraud… On the other hand, the strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what it is sought to prove. Thus, authoritative statements have often been made to the effect that clear or cogent or strict proof is necessary “where so serious a matter as fraud is to be found”. Statements to that effect should not, however, be understood as directed to the standard of proof. Rather, they should be understood as merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct…
(footnotes omitted)
b)The respondents ignore the fact that the standard of proof in this matter is governed by the Evidence Act. Section 140(2) of the Evidence Act, cited in [10] of the FWO’s Final Submissions, dated 25 August 2014 was intended to reflect the common law position as to the strength of the evidence necessary to establish satisfaction on the balance of probabilities: Commissioner of Patents v Sherman (2008) 172 FCR 394 per Heerey, Kenny and Middleton JJ at [16]; and
c)Section 551 of the FW Act provides that “a Court must apply the rules of evidence and procedure for civil matters when hearing procedures relating to a contravention or proposed contravention, of a civil remedy provision”. Section 729 of the WR Act was in identical terms. To the extent that s.4(3) of the Evidence Act would invite the Court to disregard the rules of evidence, s.551 of the FW Act and s.729 of the WR Act would be directly inconsistent with that provision and therefore would prevail over s.4(3) of the Evidence Act.
30.In Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd (No. 2) [2013] FCA 582 , his Honour McKerracher J considered the issue of standard of proof and referred to the decision of Marshall J in Fair Work Ombudsman v Maclean Bay Pty Ltd (2012) 200 FCR 57 at [7]-[8]. McKerracher J stated:
STANDARD OF PROOF
7. In examining each aspect of this proceeding the Court proceeds on the basis that it is dealing with a civil proceeding in which civil penalties are sought for contraventions of provisions of the WR Act and of the NAPSA. In accordance with s 140 of the Evidence Act 1995 (Cth) the applicant is required to make out his case on the balance of probabilities. In deciding whether the Court is satisfied that any aspect of the applicant’s case is made out on the balance of probabilities the Court will take into account the nature of each cause of action and the defence to it. It will also take into account the nature of the subject matter of each aspect of the proceeding and the gravity of the matters alleged; see s 140(2) of the Evidence Act.
8. For reasons which follow, I am satisfied that all the allegations made by the applicant against the respondents are made out on the evidence before the Court. Apart from those alleging breaches of the NAPSA, the allegations are particularly serious ones. Nonetheless, the evidence in support of each such contravention is strong and in many aspects uncontradicted. This approach is consistent with that approved of by the Full Court in Qantas Airways v Gama [2008] FCAFC 69; (2008) 167 FCR 537; see at [110] where French and Jacobson JJ said:
The so-called Briginshaw test does not create any third standard of proof between the civil and the criminal. The standard of proof remains the same, that is proof on the balance of probabilities. The degree of satisfaction that is required in determining that that standard has been discharged may vary according to the seriousness of the allegations of misconduct that are made. In our opinion, however, there was no indication in his Honour’s reasons that the application of the Briginshaw test made any difference, adverse to Mr Gama, in his conclusions. We agree generally with what her Honour Branson J has to say about the Briginshaw test in her separate reasons for judgment. We would add that the observations of the New South Wales Court of Appeal in Amalgamated TV Services Pty Ltd v Marsden [2002] NSWCA 419 at[54]-[61], concerning the application of s 140(2)(c) of the Evidence Act are consistent with her Honour’s reasons.
See also at [139] where Branson J said:
As I have already indicated, I agree with the conclusion of French and Jacobson JJ that the federal magistrate’s reasons for judgment do not disclose any error in the application of the applicable standard of proof to Mr Gama’s allegations. However, in my view, for the reasons given above, references to, for example, “the Briginshaw standard” or “the onerous Briginshaw test” and, in that context, to racial discrimination being a serious matter not lightly to be inferred, have a tendency to lead a trier of facts into error. The correct approach to the standard of proof in a civil proceeding in a federal court is that for which s 140 of the Evidence Act provides. It is an approach which recognises, adopting the language of the High Court in Neat Holdings [1992] HCA 66; 67 ALJR 170; 110 ALR 449, that the strength of the evidence necessary to establish a fact in issue on the balance of probabilities will vary according to the nature of what is sought to be proved — and, I would add, the circumstances in which it is sought to be proved.
31.These are civil proceedings. The civil standard of proof applies. Section 140 of the Evidence Act addresses considerations to be taken into account: Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing & Allied Services Union of Australia v Australian Competition and Consumer Commission (2007) 162 FCR 466 per Weinberg, Bennett and Rares JJ in respect of the standard of proof, where at [29]-[31] the Court stated:
STANDARD OF PROOF
29. It follows that proceedings for recovery of pecuniary penalties under the Act are civil proceedings. Accordingly, s 140 of the Evidence Act 1995 (Cth) requires the Court in such proceedings to apply the civil standard of proof on the balance of probabilities. In arriving at a conclusion of satisfaction that a case has been proved on the balance of probabilities, s 140(2) of the Evidence Act provides:
‘(2) Without limiting the matters that the court may take into account in deciding whether it is so satisfied, it is to take into account:
(a) the nature of the cause of action or defence; and
(b) the nature of the subject-matter of the proceeding; and
(c) the gravity of the matters alleged.’
30. The mandatory considerations which s 140(2) specifies reflect a legislative intention that a court must be mindful of the forensic context in forming an opinion as to its satisfaction about matters in evidence. Ordinarily, the more serious the consequences of what is contested in the litigation, the more a court will have regard to the strength and weakness of evidence before it in coming to a conclusion.
31. Even though he spoke of the common law position, Dixon J’s classic discussion in Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 at 361-363 of how the civil standard of proof operates appositely expresses the considerations which s 140(2) of the Evidence Act now requires a court to take into account. Dixon J emphasised that when the law requires proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. He pointed out that a mere mechanical comparison of probabilities independent of any belief in its reality, cannot justify the finding of a fact. But he recognised that:
‘No doubt an opinion that a state of facts exists may be held according to indefinite gradations of certainty; and this has led to attempts to define exactly the certainty required by the law for various purposes. Fortunately, however, at common law no third standard of persuasion was definitely developed. Except upon criminal issues to be proved by the prosecution, it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters "reasonable satisfaction" should not be produced by inexact proofs, indefinite testimony, or indirect inferences. Everyone must feel that, when, for instance, the issue is on which of two dates an admitted occurrence took place, a satisfactory conclusion may be reached on materials of a kind that would not satisfy any sound and prudent judgment if the question was whether some act had been done involving grave moral delinquency.’ (Briginshaw 60 CLR at 361-362)
Documents Relied Upon by FWO
32.In chief, the FWO relies on the evidence of 11 separate witnesses;
a)Fair Work Inspector Jason Lam (“Inspector Lam”):
i)Affidavit of Jason Hoang Nam Lam affirmed 8 November 2012 and Exhibit “JL1” to that affidavit (the “First Lam Affidavit”);
ii)Affidavit of Jason Hoang Nam Lam affirmed 19 April 2013 and Exhibits “JL2” and “JL3” to that affidavit (the “Second Lam Affidavit”);
b)Fair Work Inspector Narelle Northwood (“Inspector Northwood”):
i)Affidavit of Narelle Northwood affirmed 9 November 2012 (the “Northwood Affidavit”);
c)Fair Work Inspector Sundararajan Rajagopalan (“Inspector Rajagopalan”):
i)Affidavit of Sundararajan Rajagopalan affirmed 9 November 2012 (the “Rajagopalan Affidavit”);
d)Fair Work Inspector Skye-Anne Steedman (“Inspector Steedman”):
i)Affidavit of Skye-Anne Steedman affirmed 13 November 2012 (the “Steedman Affidavit”);
e)James Robertson:
i)Affidavit of James Gregory Robertson sworn 19 April 2013 (the “Robertson Affidavit”);
f)Jessica Austin:
i)Affidavit of Jessica Kathleen Austin affirmed 14 November 2012 (the “First Austin Affidavit”);
ii)Affidavit of Jessica Kathleen Austin affirmed 19 April 2013 (the “Second Austin Affidavit”);
g)Maree Austin:
i)Affidavit of Maree Austin affirmed 15 November 2012 (the “First Maree Austin Affidavit”);
ii)Affidavit of Maree Austin affirmed 22 April 2013 (the “Second Maree Austin Affidavit”);
h)Sarah Kidd:
i)Affidavit of Sarah Louise Kidd affirmed 13 November 2012 (the “First Kidd Affidavit”);
ii)Affidavit of Sarah Louise Kidd affirmed 19 April 2013 (the “Second Kidd Affidavit”);
i)Lilit Minasmasihi:
i)Affidavit of Lilit Minasmasihi affirmed 9 November 2012 (the “First Minasmasihi Affidavit”);
ii)Affidavit of Lilit Minasmasihi affirmed 18 April 2013 (the “Second Minasmasihi Affidavit”);
iii)Affidavit of Lilit Minasmasihi affirmed 25 February 2014 (the “Third Minasmasihi Affidavit”):
j)Lilian Minasmasihi:
i)Affidavit of Lilian Minasmasihi affirmed 9 November 2012 (the “First Lilian Minasmasihi Affidavit”);
ii)Affidavit of Lilian Minasmasihi affirmed 19 April 2013 (the “Second Lilian Minasmasihi Affidavit”);
k)Valia Parya:
i)Affidavit of Valia Parya affirmed 9 November 2012 (the “First Parya Affidavit”);
ii)Affidavit of Valia Parya affirmed 18 April 2013 (the “Second Parya Affidavit”); and
l)Cathy Sharpe:
i)Affidavit of Cathy Sharpe in reply, affirmed 18 July 2014 (the “Sharpe Affidavit”).
Exhibits
33.The Exhibits tendered to the Court by the FWO, are as follows:
a)Exhibit “A1” – Copy of the FWO’s reply to an affidavit of Margaret Pavey;
b)Exhibit “A2” – Notice to Produce, 7 March 2014;
c)Exhibit “A3” – Email sent from David Pesino to Sally Dennington and from Sally Dennington to Jason Lam on 20 March 2012;
d)Exhibit “A4” – Email from Moelau (Gina Stratis) to Jason Lam dated 29 November 2011 and his reply, dated 29 November 2011;
e)Exhibit “A5” – Wildon Attendance Records in December 2011;
f)Exhibit “A6” – Policy Documents provided to employees;
g)Exhibit “A7” – Employment Contract;
h)MFI – “A8” – Extract from the Visitor’s Register Book 2011;
i)“MFI-1” – Objections of the respondents; and
j)Exhibit “A9” – Form F32 – Application for a Bargaining Order.
Documents Relied Upon by Respondents
34.The respondents relied upon the following documents:
a)Fawaz Ismail:
i)Affidavit of Fawaz Ismail, sworn 26 March 2013 (the “Ismail Affidavit”);
b)Lynette Gardiner-Cole:
i)Affidavit of Lynette Gardiner-Cole, sworn 26 March 2013 (the “Gardiner-Cole Affidavit”);
c)Mark Moelau:
i)Affidavit of Mark Moelau sworn 28 February 2013 the “Mark Moelau Affidavit”);
d)Gina Moelau:
i)Affidavit of Gina Moelau, sworn 28 February 2013 (the “First Moelau Affidavit”);
ii)Affidavit of Gina Moelau, sworn 11 March 2014 (the Second Moelau Affidavit”); and
e)Margaret Anne Pavey:
i)Affidavit of Margaret Anne Pavey, sworn 10 March 2014 (the “Pavey Affidavit” ([11] and [12] struck out)).
Witnesses called to give evidence
35.The respondents required four of the FWO’s eleven witnesses for cross-examination, being the former employee Minasmasihi, her sister Lilian Minasmasihi, her mother Valia Parya and Inspector Lam. Those four witnesses were required because their evidence related to matters remaining in dispute, being the employment and termination of Minasmasihi, the production of documents to Inspector Lam and, for the purposes of penalty submissions, the conduct and circumstances on the investigation and prosecution by the FWO.
36.The FWO called the following witnesses to give evidence;
a)Minasmasihi:
i)Evidence in Chief – Transcript of Proceedings 11 March 2014, pp.15-17;
ii)Cross-examination – Transcript of Proceedings, 11 March 2014, pp.17-33;
iii)The respondents argue that Minasmasihi had the incentive to obtain further pay from the respondents if the FWO’s case in relation to her employment (i.e. that she was a full-time employee whose employment was terminated) is accepted. This incentive is not minor in circumstances where the amount calculated outstanding on the FWO’s case in an additional $1,980, where on the respondents case she was only entitled to $791 gross for her employment for less than two weeks duration, and which was paid in January 2012 (SOAF, Annexure “C1” and “C2”). In cross-examination it became clear that Minasmasihi, her sister and her mother blamed the respondents for Minasmasihi’s failure to obtain the position or traineeship as a childcare worker. This was despite Minasmasihi’s evidence that she had no qualifications when she interviewed for employment at Rainbow Paradise and had no relevant or appropriate experience in childcare, had not obtained any further training or qualifications in the industry since her employment with Rainbow Paradise and had in fact been travelling overseas on a “gap year” in the interim;
iv)The respondents submit that Minasmasihi’s evidence was vague, emotional, contradictory and confused. She seemed at times to not understand the questions being asked of her, or the contents of her written statement. Her evidence demonstrates that she was still very upset that she had been unable to obtain work as a childcare worker, and she was very upset at being told by the respondents that she was “slow”, having been told that she was slow “her entire life” (Transcript, 11 March 2014, p.29);
v)The respondents contend that in the First Minasmasihi Affidavit and throughout the proceedings, it has been the position of Minasmasihi that Moelau told her that she would be working full-time and doing a traineeship at Rainbow Paradise. However, under cross-examination when asked if Moelau told her that she would be on a full-time traineeship after she finished training, Minasmasihi responded “I actually can’t remember, because this has been two, three years ago and I have a fuzzy memory now” (Transcript 11 March 2014, p.19.9). Under cross-examination, when asked if it was possible that Moelau told Minasmasihi that she would be starting off with some training part-time and then if all went well then she would be put to full-time training in order to get her certificate, Minasmasihi responded “yes, I don’t remember, as I said” (Transcript, 11 March 2014, p.19.16);
vi)In relation to her second week of employment at Rainbow Paradise, it was put to Minasmasihi if it was possible that she was rostered on for two or three days the following week, but was asked by Moelau whether or not she could come in for some extra days Minasmasihi responded with “I don’t remember. All I remember is that she called me in for the second week and just told me ‘come on Wednesday and Thursday’” (Transcript, p.20.15);
vii)The FWO claims that the information that Minasmasihi could not recall actual relates to the exact words she was told by Moelau. Relevantly, Minasmasihi stated in cross-examination:
Ms Dinnen: [Moelau] told you, didn’t she, that you would be full-time traineeship after you finish training?
Minasmasihi: I – I actually can’t remember, because this has been two, three years ago and I have a fuzzy memory now.
Ms Dinnen: Well, it’s a long time ago?
Minasmasihi: Yes
Ms Dinnen: So it possible, isn’t it that she said, “look, we will start you off with some training part-time and you know, if everything goes well, we will put you on full time training so you can get your certificate?
Minasmasihi: Yes, I don’t remember as I said.
viii)The FWO responds that in circumstances where Minasmasihi’s cross-examination took place approximately two and a half years after the interview took place and one and a half years after she swore the First Minasmasihi Affidavit, it is entirely reasonable that she did not remember exactly what words were said. The alternative position put to Minasmasihi (that her position was part-time initially and would only become full-time if she was successful in obtaining a traineeship) does not appear anywhere in the respondents’ written evidence. The First Moelau Affidavit does not mention any possible change to full-time employment at all and the Second Moelau Affidavit states only that “it was my intention to employ Ms Minasmasihi on a full-time basis if and when the need arose” (First Moelau Affidavit). Although Moelau tried to make this argument in cross-examination (Transcript, 23 July 2014, p.276), it occurred after Minasmasihi had given her evidence and in circumstances where Moelau was present in Court during that time.
ix)The issue in dispute is whether Minasmasihi’s employment was on a full-time or part-time basis. Minasmasihi’s evidence was very clear that she was not told at the interview that her employment would be part-time. Relevantly, in cross-examination Minasmasihi stated:
Ms Dinnen: And you were told at the meeting that you would be part-time, weren’t you?
Minasmasihi: Yes, I was told that I was going to be full-time.
Dinnen: So you were told that you were going to be full-time or you were told that you were going to be part-time?
Minasmasihi: No she told me that I was going to be full-time traineeship.
(Transcript, p.19.1-6)
x)The FWO submits and it was suggested that Minasmasihi’s evidence in relation to the days she worked was unclear, However, Minasmasihi’s evidence was quite clear when Ms Dinnen later sought to clarify when Minasmasihi was rostered to work and what she was told:
Ms Dinnen: You said before that you were rostered for two to three days but then [Moelau] would tell you?
Minasmasihi: No, the first week I was rostered on for a week, and then she – on the Friday, told me to go home and wait for her to call me and then tell me when to come in.
Ms Dinnen: So you weren’t rostered on for two to three days at the beginning?
Minasmasihi: No.
Ms Dinnen: And then given extra days?
Minasmasihi: No, for the first week, I was rostered on for a week, from Monday to Friday.
Ms Dinnen: And where was that roster?
Minasmasihi: I never saw the roster. I only – the time I would go into work there was a sign in booklet where you signed in your name and the date and your signature.
Ms Dinnen: So you say that you were rostered on for seven days, but you never saw the roster?
Minasmasihi: No.
Ms Dinnen: So?
Minasmasihi: I was just told when to come in and when to go.
Ms Dinnen: Okay. So Gina told you when to come in and when not to come in?
Minasmasihi: Yes.
(Transcript, 11 March 2014, p.24.10-29)
xi)The respondents submit that when Minasmasihi was asked under cross-examination if she had any idea why when Moelau paid her wages it bounced back a number of times. Minasmasihi responded with “yes. I don’t know with that situation like I think banks just – I don’t know because I have my card for a long time, and the numbers usually get rubbed off or, you, know, haven’t printed the numbers just…”.When Minasmasihi was asked “Did you give [Moelau] the numbers from your card, or was it from some other numbers?” (Transcript, 11 March 2014, p.21.16), Minasmasihi responded with “yes it was, - I don’t know if you know it. They usually give you – from the banks, they give you the right card with numbers on it.”She then agreed when it was put to her that the bank account details could have been read out incorrectly (Transcript, 11 March 2014, p.21.23);
xii)The FWO accepts it is suggested that Minasmasihi’s evidence is supportive of the respondents’ position because she was unable to explain clearly why payments made to her bounced back. However, Minasmasihi was not a bank employee or someone with specialist knowledge such that she would be expected to know why the transactions bounced. In any case, the FWO questions how relevant Minasmasihi’s evidence on this issue can be to the disputed contraventions. The respondents’ own evidence shows that their first attempt to make payments was on 8 December 2011 (First Lam Affidavit, Annexure “JL-1”, Tab 48, p.195-196), in circumstances where payments were made to employees on a fortnightly basis. If Minasmasihi’s employment had truly ended on 24 November 2011 (as the respondents contend), she should have been paid on 25 November 2011 (but was not);
b)Valia Parya;
i)Evidence in Chief – Transcript of Proceedings, 11 March 2014, p.35;
ii)Cross-examination – Transcript of Proceedings, 11 March 2014, pp.35-49;
iii)Re-examination - Transcript of Proceedings, 11 March 2014, p.49;
iv)In the respondents’ submissions it contends that Ms Parya was the epitome of a non-independent witness. Her evidence demonstrated her desire to advocate for Minasmasihi and thereby to support the FWO’s case and its claims for her. Ms Parya, the mother of Minasmasihi, was a defensive witness who sought to boost her daughter’s position by whatever means possible. When it was put to Ms Parya that Minasmasihi “said in Court that she had been told all of her life that she was slow” (Transcript, 11 March 2014, p.36.18), Ms Parya replied “No.” This was a direct contradiction to her daughter’s evidence and supports the submission that Ms Parya was not an honest witness;
v)The FWO submits that the criticism that Ms Parya was a “defensive witness who sought to boost her daughter’s position by whatever means possible” is without foundation. The only example the respondents cite to infer that she “was not an honest witness” is to state that Ms Parya denied that her daughter had been told all her life that she was slow. However, the answer given by Ms Parya was in response to the question “Lilet said when we had her in Court earlier that she had been told that she was slow all of her life. Do you know anything about this?” (Transcript, 11 March 2014, p.36.12-13). That Ms Parya did not know anything about Minasmasihi’s statement was a believable explanation and certainly does not infer that she was dishonest witness. No other statements were given in support of the respondents’ allegations and they should be rejected;
c)Lilian Minasmasihi;
i)Evidence in Chief – Transcript of Proceedings, 11 March 2014, pp.49-50;
ii)Cross-examination – Transcript of Proceedings, 11 March 2014, pp.50-61;
iii)The respondents’ submission in respect to this witness is in similar terms to that referring to Ms Parya in that Lilian Minasmasihi was also the epitome of a non-independent witness, that she demonstrated a desire to advocate for her sister and, therefore, supported the FWO’s case. Lilian Minasmasihi gave clear evidence of collusion between them:
Ms Dinnen: So what I’m saying is – I’m not suggesting that anything untoward happened, but what I’m saying is you knew that that occurred on 21 November 2011?
Lilian Minasmasihi: Yes. Because we tried to – because they told us try and remember as much as we can, so we tried to go back and see that – we knew what date that Lilet stated – at least an estimate – and then we tried to go back and backdate the – the times, the weeks, roughly.
Ms Dinnen: But you just said before that you couldn’t remember exactly what time she had started working at Rainbow Paradise?
Lilian Minasmasihi: I can’t give you an exact date right now.
Ms Dinnen: Yes?
Lilian Minasmasihi: Especially under the circumstances but yes. That’s right.
Ms Dinnen: But you can give me an exact date of 21 November?
Lilian Minasmasihi: In what sense?
Ms Dinnen: So at paragraph 3 you say “21 November 2011”. You can give me an exact date for that?
Lilian Minasmasihi: Yes. Because, as I said, we back dated. We looked at the calendars when we were writing the statement to see what dates.
Ms Dinnen: So when you say that, “we looked at calendars and we backdated and we were”, you know whose “we”?
Lilian Minasmasihi: Me and my family and I.
Ms Dinnen: So you and your family and I discussed it together?
Lilian Minasmasihi: No. I mean, when – not my particular report because as we were told we were not allowed, so – but, of course, we are family and we were all in the same situation and we all knew what had happened.
Ms Dinnen: So you discussed your recollections off what had happened-, together, and then you wrote your own statement?
Lilian Minasmasihi: No. What I mean is I wrote my own statement but during many things was happening and all the things that happened with Lilet with work of course – she was upset and, you know, things that happened so, of course, we all discussed – we are family. We – we support each other.
Ms Dinnen: But in writing the affidavit, you’ve said that, “we looked at all the calendars and we backdated and we figured out what was happening when”?
Lilian Minasmasihi: Not when we were writing it, when the – when we first called the Fair – Fair Work Trading, they would ask us, like, what happened, what date it was, and things like that, and that’s when – yes, we- we looked.
Ms Dinnen: You all discussed it?
Lilian Minasmasihi: Yes.
iv)The FWO submits in respect of the respondents’ claim that the passage quoted immediately above supports the allegation that Minasmasihi, Lilian Minasmasihi and Ms Parya colluded in giving their evidence, this does not illustrate that point. Lilian Minasmasihi specifically rejected that she had colluded with her family members when she wrote her affidavit. Rather, she said only that she and her family had worked out the dates of Minasmasihi’s employment at the time the complaint was made to the FWO (an action which was entirely reasonable, given that Minasmasihi was making a serious complaint about her former employer to the FWO). The continuation of the extract from Lilian Minasmasihi’s cross-examination confirms that this was what was being discussed:
Ms Dinnen: And when you first called the Fair Work Ombudsman that was in January 2012 or December of 2011. Do you recall when?
Lilian Minasmasihi: No.
Ms Dinnen: But it was a while ago?
Lilian Minasmasihi: Yes.
Ms Dinnen: Ok. So at that time, back whenever it was that you made a complaint to the Fair Work Ombudsman, could you or could you not remember the exact date you, yourself, without assistance. Ok – I withdraw that question. When the complaint was made by your family or by your mother who made the complaint to the Fair Work Ombudsman, could you – you – or could you not remember the exact date that it all these things happened?
Lilian Minasmasihi: I don’t understand sorry.
Ms Dinnen: Do you have your own recollection, your own memory, of the date of when these things happened, or is it something that?
Lilian Minasmasihi: Yes.
Ms Dinnen: So you do?
Lilian Minasmasihi: Like roughly I would, yes, have an idea.
Ms Dinnen: Roughly. So you know that it was November?
Lilian Minasmasihi: Yes. Because we looked back on dates.
Ms Dinnen: Because you – but without looking back, you couldn’t remember what date it was?
Lilian Minasmasihi: Not – I couldn’t give the exact date of when it happened, no.
Ms Dinnen: Ok, so you looked back after the fact to figure out what date it was that it happened?
Lilian Minasmasihi: Yes. Because they wanted us to give the exact dates.
(Transcript, 11 March 2014, p.53.15-44)
v)The FWO submits that Minasmasihi’s complaint was made to the FWO in January 2012. The First Minasmasihi Affidavit, the First Lilian Minasmasihi and the First Parya Affidavit were made on 9 November 2012 (11 months later) and the Second Minasmasihi Affidavit, the Second Lilian Minasmasihi and the Second Parya Affidavit on 19 April 2013 (15 months later) (with the Third Minasmasihi Affidavit sworn on 25 February 2014, 25 months later). The FWO contends that there is no evidence that these witnesses colluded and any suggestions as such should be rejected;
d)Inspector Lam;
i)Evidence in Chief – Transcript of Proceedings, 11 March 2014, pp.61-63;
ii)Cross –examination - Transcript of Proceedings, 11 March 2014, pp.63-92;
iii)Re-examination - Transcript of Proceedings, 11 March 2014, pp.93-95.
iv)The respondents submit that Inspector Lam’s evidence demonstrates that his attitude towards the respondents during the course of the investigation was intransigent and belligerent, and he did not fulfil his duties as a Fair Work Inspector who was obliged to not only enforce and investigate, but assist in compliance, promote harmonious, productive and cooperative workplace relations, offer people a single point of contact for them to get accurate and timely information about Australia’s workplace relations system, and educate people working in Australia about fair work practices, rights and obligations.
v)The respondents claim that Inspector Lam, when pressed on his obligations, was evasive and sought to absolve himself of responsibility for the FWO’s actions. He “couldn’t recall” providing education to the respondents (Transcript, 11 March 2014, p.64.43, 65.3) as “the proceedings have been a long time ago”. He “couldn’t recall” being told by Ms Gardiner-Cole that she didn’t want him to call her again, that she was being paid correctly and she did not want him to pursue anything against her employers (Transcript, 11 March 2014, p.74.28);
vi)The respondents contend that in cross-examination, Inspector Lam was forced to admit that he had not provided the respondents with any “education” despite saying that he had (Transcript, 11 March 2014, p.64; 65), and that his only meeting and discussion with them had been in the context of threatening prosecution. Inspector Lam admitted that he did not actually speak to the respondents about their compliance, instead only looked for persons who would make complaints against them (Transcript, 11 March 2014, p.77.39). Inspector Lam also admitted in evidence that he had referred to Moelau throughout his investigations as “AWD”, meaning “the alleged wrong doer”, which indicates the preconceived approach the FWO had to the conduct of its investigations. This approach manifests itself in and an aggressive and unhealthy manner in which the FWO dealt with the respondents;
vii)The respondents submit that Inspector Lam admitted in cross-examination that:
(a)He had directed Moelau to contact the FWO InfoLine to ascertain the correct pay rates;
(b)He did not know what information was provided over InfoLine to the respondents or whether it was correct;
(c)He knew that the respondents relied on the InfoLine to identify the correct pay rates and wages for employees;
(d)Despite agreeing that it was the employers job to classify the employees, he never asked Moelau for the classifications of her employees;
(e)He could not recall when he had calculated the underpayments owing to the respondents;
(f)That the contravention letter, issued to the respondents in June 2012, was the first time the FWO had identified their contended “correct” classification of the respondents employees;
(g)That the contravention notice did not contain a total amount alleged to be underpaid;
(h)That the contravention letter identified different amounts owing to those alleged in his affidavit; and
(i)That he did not include any of the correspondence with the respondents, the amount said to be owed to each individual employee, the basis of which it was calculated or the calculations done by him;
viii)The respondents contend that Inspector Lam was aggressive and overzealous in his handling of the respondents’ investigation. He sought out aggrieved employees to make complaints, rather than speaking directly to the respondents to ascertain and assist with their compliance. Inspector Lam’s role was not one where he was attempting to assist the respondents to correct the breaches, but was merely to penalise the respondents. The respondents submit that Inspector Lam was not interested in ensuring that the respondents understood and rectified their errors (regarding calculation of wages), but was only interested in strengthening its case in the prosecution of the respondents; and
ix)The FWO refutes these claims made against Inspector Lam. In respect to Inspector Lam being able to recall providing education to the respondents, the FWO argues that in an investigation that he had dealt with for 18 months, no adverse finding should be made against his failure to recall exact dates in providing education. The complaint is that Inspector Lam could not recall the exact words which Ms Gardiner-Cole was alleged to have said to Inspector Lam when she called him on 29 November 2011, which was approximately two and a half years prior to the date of his cross-examination. In these circumstances no adverse finding should be made against Inspector Lam in relation to these issues.
37.The respondents relied on the evidence of Fawaz Ismail, Lynette Gardiner-Cole, Mark Moelau and Moelau. All four witnesses were subjected to extensive cross-examination by the FWO. The following witnesses were called by the respondents;
a)Fawaz Ismail:
i)Evidence in Chief – Transcript of Proceedings, 22 July 2014, p.120;
ii)Cross-examination – Transcript of Proceedings, 22 July 2014, pp.121-160;
iii)Re-examination – Transcript of Proceedings, 22 July 2014, pp.160-162;
iv)The respondents contend that Mr Ismail had “limited involvement in the factual matters giving rise to the disputed contraventions”, and gave evidence in the Ismail Affidavit at [21]-[22] in relation to the respondents’ compliance with the Notice to Produce issued by the FWO, but did not ask him any questions in cross-examination in relation to that evidence. According to the rule in Browne v Dunn (1893) 6 R 67 (HL) Mr Ismail’s evidence in relation to compliance with the Notice to Produce must therefore be accepted. That evidence included that “…at all times every endeavour was made to comply with all Notices to Produce served on Rainbow Paradise Preschool…”;
v)The Ismail Affidavit included evidence of the non-disputed contraventions, for the purposes of supporting the respondents’ submission on relevant penalty considerations. The respondents contend that Mr Ismail’s cross-examination was entirely focused on [9]-[12] and [23]-[31] of the Ismail Affidavit regarding the respondents’ procedure of sending pay rates and his involvement in the FWO’s investigation in relation to Austin’s underpayment. His evidence under cross-examination was consistent with that affidavit evidence. Mr Ismail’s evidence was that he the respondents were “simply seeking an explanation for the amount the Fair Work Ombudsman alleged to be underpaid” (Ismail Affidavit at [29]). In evidence in chief, Ms Dinnen asked him “why is it now 18.23?” This question was asked in the context of being advised in January 2010 of a rate of $18.23 per hour where Inspector Northwood had advised the lower rate of $17.95 in the September 2010 contravention notices. The respondents have disputed the calculation made by the FWO, not the actual rate of pay;
vi)The respondents submit that Mr Ismail’s evidence in cross-examination supports the respondents’ submissions that there was no wilful or intentional underpayment of employees, and there was no refusal to cooperate with the investigation. Rather, the respondents received contrary and conflicting advice from the FWO in relation to the correct rates of pay and were not provided with an explanation for the change of advice or the calculations underpinning alleged underpayments. His evidence also supported the respondents’ submission that once the calculations were provided to the respondents, the amounts were paid. The remainder of Mr Ismail’s evidence regarding the interview and recruitment of staff including the two-week trial period contended by the respondents as supporting their position in relation to Minasmasihi’s employment, was uncontested. Similarly, his evidence in relation to the provisions of induction, rest breaks and meal breaks was uncontested. His statement regarding Minasmasihi was also uncontested and further supports the respondents’ position in relation to Minasmasihi’s credibility as a witness;
vii)The FWO acknowledges that while Mr Ismail gave evidence that “every endeavour was made to comply with all notices to produce”, Ms Dinnen informed the Court that the respondents did not intend to rely on this statement to argue that they ultimately did comply with the November and February Notices to Produce, but only that attempts were made (Transcript, 11 March 2014, p.110.38-41). The FWO submits that Mr Ismail’s evidence, in any case, focused on compliance at the time of the investigation into Austin in 2010 and does not dispute the respondents’ compliance with the Notice to Produce issued in June 2010. The better evidence on compliance with the November and February Notices to Produce came from Moelau and the FWO relies on that evidence to show that no genuine attempt was made to comply; and
viii)The FWO argues that the respondents cannot rely on Mr Ismail’s evidence (summarised at [34(a)] above) that he was confused about the rate of pay to justify underpaying Austin. Mr Ismail conceded that he had received advice from the InfoLine in January 2010 that Austin should be paid $18.23 per hour (Transcript, 11 March 2014, p.155.30-34) and that he passed on that information to Moelau, in circumstances where he had no authority to make the decision about the rate of pay (Transcript, 11 March 2014, p.146.14-25). The respondents have admitted in the SOAF that Austin was paid an average of $11.27 between July and December 2009 and an average of $13.41 between January and February 2010 (SOAF at [29]-[30]) and that they only made rectification payment to Austin in July 2012 (SOAF, [74]). The evidence shows that there was no confusion as the respondents had made no attempt before these proceedings were commenced to pay Austin any more than they had initially paid her, let alone the correct rate of $18.23;
b)Lynette Gardiner-Cole;
i)Evidence in Chief – Transcript of Proceedings, 22 July 2014, p.163;
ii)Cross–examination - Transcript of Proceedings, 22 July 2014, pp.165-177;
iii)Re-examination - Transcript of Proceedings, 22 July 2014, p.177;
iv)The respondents contend that the FWO made no adverse comments regarding Ms Gardiner-Cole’s evidence, therefore it should be accepted. Her evidence supported the respondents’ position in relation to the nature of Minasmasihi’s employment and the cessation of her employment. Ms Gardiner-Cole’s evidence was that Minasmasihi had taken over her part-time position at Rainbow Paradise (Transcript, 11 March 2014, 164.21-29), but the FWO takes issue with this evidence not being included in the Gardiner-Cole Affidavit. Nevertheless, she gave that evidence in chief at the hearing and was not cross-examined on that statement. Therefore, it should be accepted, especially in circumstances where Minasmasihi’s evidence as to whether she employed on a full-time or part time basis is contradictory under cross-examination;
v)The FWO relies upon Ms Gardiner-Cole acknowledging in evidence that “she did not have an independent recollection of Lilet saying ‘I’m leaving’ in her presence” (Transcript, 11 March 2014, p.174.28-32; p.173.38-41). To the contrary, Ms Gardiner-Cole clarified in re-examination shortly thereafter at that hearing that she did not understand what the term “independent recollection” meant, but that she did have her own memory of Minasmasihi saying “I want to leave”. Relevantly, she stated in cross-examination:
Ms Dinnen: you were asked a question by Ms Raper and it referred to your independent recollection?
Ms Gardiner-Cole: Yes
Ms Dinnen: Do you know what an independent recollection is?
Ms Gardiner-Cole: No.
Ms Dinnen: Can I ask, then, do you recall, from you own memory Lilet saying “I’m leaving”?
Ms Gardiner-Cole: She was crying and then she said, “I want to leave”. And then she was speaking to Mark and – that’s about it at the moment. And then it sort of…
Ms Dinnen: so do you recall that conversation from your own memory, or was it from the discussion you had with Mark a couple of weeks later?
Ms Gardiner-Cole: No. I remember her crying and saying she wants to leave ,“I want to leave”, and then one of the kids sort of started crying and that, so I sort of – I can remember walking away. That’s from my own memory.
(Transcript, p.175.31-44)
vi)The respondents submit that while Ms Gardiner-Cole did state that she was “not a big person on remembering days and dates”, as contended by the FWO, Ms Gardiner-Cole was quite firm in her memory that Minasmasihi left on Thursday (Transcript, 11 March 2014, p.176.1-11, confirmed at p.177). According to the undisputed evidence Minasmasihi commenced employment on Friday 11 November and her last day at Rainbow Paradise was 24 November. The only Thursdays in that time period were 17 November and 24 November. The undisputed evidence from the FWO is that Minasmasihi called in sick on 17 November because she was attending a pre-arranged medical appointment, so the Court should accept the respondents’ submission, supported by evidence, that the conversation happened on Thursday 24 November after which Minasmasihi walked out of the centre “between our morning tea and lunch break”, so it would have been between 10am and 12pm (Transcript, 11 March 2014, p.164.36-37). This is supported by the Wildon time records for the date 24 November 2011, which shows the notation that Minasmasihi walked out at 10.45am (Exhibit “A5”);
vii)The FWO submits that the citation given below in re-examination was a question asked in response to the last question asked of Ms Gardiner-Cole by FWO’s Counsel. Ms Gardiner-Cole had in fact been asked earlier in her cross-examination whether she had been told (other than by Mark Moelau) whether Minasmasihi had said she was leaving, and she gave a very similar, but slightly different evidence at that time to the passage cited above:
Ms Raper: Well, its Mark that has told you after the event that Lilet said she’s leaving. You don’t have an independent recollection of that yourself, do you?
Ms Gardiner-Cole: No, she… all I can remember is she had that conversation with Mark and she was very upset and she said that she wanted to come and supervise the children.
(Transcript, p.172.28-32)
viii)The FWO submits that it is also notable in any case that neither in Ms Gardiner-Cole’s written or oral evidence did she give evidence of seeing Minasmasihi leave herself. Her only account of Minasmasihi leaving came from what Mark Moelau allegedly told her (Transcript, 11 March 2014, p.164.39-43);
c)Mark Moelau;
i)Evidence in Chief – Transcript of Proceedings, 22 July 2014, p.183;
ii)Cross–examination – Transcript of Proceedings, 22 July 2014, pp.184-192;
iii)Re-examination – Transcript of Proceedings, 22 July 2014, p.192; and
d)Gina Moelau:
i)Evidence in Chief – Transcript of Proceedings, 23 July 2014, pp.210-212.
ii)Cross–examination – Transcript of Proceedings, 23 July 2014, pp.212-318;
iii)Re-examination – Transcript of Proceedings, 23 July 2014, pp.318-329.
iv)The respondents submit that Moelau’s evidence was consistent with the Response filed on 11 November 2013 and previous submissions. Her evidence was that she relied heavily on the Fair Work InfoLine to provide her with the necessary industrial information to conduct Rainbow Paradise as an employer, but that advice and therefore her conduct fell short. Her evidence was supported by the evidence of Inspector Lam;
v)The FWO submits that Moelau’s evidence in relation to the agreed contravention contradicted the SOAF and needs to be viewed again with reference to the respondents’ submissions that Moelau did not believe at the time that the actions were conducted that she was engaged in those contraventions. Her evidence supports the submission that she did not have any intention to deliberately contravene any act in the manner in the alleged and now agreed and therefore goes towards the respondents’ submissions on penalty. In relation to the disputed contraventions, Moelau’s evidence at hearing also demonstrated that, with respect to the Notice to Produce, she was confused as to what documents were required when and had considered that all the necessary documents requested had been provided. Her evidence of her priorities and circumstances at the time the investigation was being conducted supports the respondents’ submission that there was a reasonable excuse for failing to comply with the Notice to Produce. That several explanations are given by her in relation to those reasonable excuses does not denigrate on the veracity of her defence because there was not one sole or single reason for non-compliance, but rather a combination of reasons and circumstances;
vi)Moelau’s evidence in relation to Minasmasihi’s employment was truthful. She was not present at Rainbow Paradise at the time that Minasmasihi left, but was informed that she had done so. She did not and had no intention of terminating Minasmasihi’s employment and denies entirely the FWO’s version of events in relation to the alleged terminating phone call (Transcript, pp.314-315). Moelau’s evidence in relation to those disputed contraventions is unwavering and should be preferred. As a result of the inconsistent, deluded, advocating evidence provided by Minasmasihi and Ms Parya, Moelau’s version of events should be preferred; and
vii)The FWO submits that Inspector Lam’s evidence does not support Moelau’s argument that she was not provided with the necessary industrial information to run Rainbow Paradise Preschool or that such information fell short. The FWO’s evidence shows that the respondents received significant information from both Inspector Lam and others, but ignored it (and this was made clear in Moelau’s cross-examination). The FWO refers to its s.682 submissions at [81]-[96] below.
Scope of the Statement of Agreed Facts (“SOAF”)
38.On 24 February 2014 the FWO filed a SOAF which includes the following:
a)Part A – (pp.1-13) sets out the facts which were agreed to for the contraventions that were admitted;
b)Part B – (p.14) – sets out the facts which were agreed for contraventions that were not admitted; and
c)Part C (pp.15-18) – sets out which facts were disputed in the proceedings.
39.The contention advanced on behalf of the respondents was that the SOAF does not contain only those facts upon which the parties agree. It includes, in addition, an identification of the matters in dispute between the parties and was intended to assist the Court, rather than to provide a binding document upon which the Court should rely in precedence over the actual pleadings and evidence. The argument advanced on behalf of the FWO is that despite entering into the SOAF, the respondents have continued to rely on evidence that contradicted the SOAF and Moelau gave evidence, in cross-examination, in which she denied that she had engaged in contraventions previously admitted. The FWO submits that such evidence should not be accepted in accordance with s.191(2)(b) of the Evidence Act.
40.The FWO identifies these inconsistencies between the SOAF and the respondents evidence go to Austin’s classification, Kidd’s classification, the termination of Austin’s employment, and to provisions of the pay slip to Minasmasihi. The FWO submitted that the respondents’ conflict in evidence should not be accepted (in accordance with s.191(2)(b) of the Evidence Act) and that the respondents’ conduct in this regard is a clear demonstration of the fact that they have not accepted responsibility for their actions, are not contrite and higher penalties (such as those in the range sort by the FWO) should be imposed to specifically deter them.
[41] Secretary, Department of Health and Ageing v Pagasa Australia Pty Ltd [2008] FCA 1545 at [56]; Olsen v Sterling Crown Pty Ltd [2008] FMCA 1392 at [51].
32.As set out above, the FW Act empowers Inspectors to issue notices to produce as an effective means of investigating and enforcing compliance with minimum standards and industrial instruments. Rainbow Paradise and Moelau’s conduct in failing to comply with the notices issued by the FWO hindered the FWO’s ability to conduct a proper investigation of all of Rainbow Paradise’s employees. It is possible that the underpayments and contraventions identified by the FWO extended beyond those identified in the compliance notice,[42] but the FWO was unable to determine this due to the failure to respond to the notices to produce. The Respondents’ conduct undermines the statutory objectives and the principal objects of the FW Act.
[42] See for example, the situation investigated by Inspector Lam regarding Lynette Gardner-Cole: Lam Affidavit 8.11.12, Ex “JL-1”, Tab 30.
33.In this context, the Court should consider the effect of the notice to produce contraventions as being of similar importance to any monetary loss or damage.[43]
[43] Olsen v Sterling Crown Pty Ltd [2008] FMCA 1392 at [52]; Fair Work Ombudsman v Industrial Roadpavers (WA) Pty Ltd [2010] FMCA 204 at [28]; Nerd Group (No. 3) at [12].
Similar previous conduct
34.The FWO accepts that there are no previous findings by a Court against either Rainbow Paradise or Moelau for contraventions of workplace laws.
35.However, the Respondents have a prior complaint history. In relation to the pay slip contravention, in March 2010 Moelau signed, on behalf of Rainbow Paradise, a “Compliance Agreement Form” with the FWO in which she agreed to issue pay slips to employees, and keep time and wage records for all employees, in accordance with the requirements of the FW Act and Fair Work Regulations 2009 from the next pay period after 26 March 2010 (Compliance Agreement Form).[44] The Compliance Agreement Form specifically warned about “issuing pay slips within 1 day of payment”.[45] When considering a penalty for the failure to provide Minasmasihi with a pay slip in November 2011 (which is the same conduct that the Respondents had agreed not to engage in), it is relevant that the Respondents were aware of their obligations because they entered into the Compliance Agreement Form.
[44] SOAF, [96].
[45] Lam Affidavit 8.11.12, Ex JL-1, Tab 9.
Size and financial circumstances of the business
36.Information provided by Moelau indicates that Rainbow Paradise is a small business with a small number of employees.[46]
[46] Gina Moelau Affidavit 28.2.13, [7]-[8].
37.However, the Respondents are not able to excuse away their offending conduct by the size and/or financial circumstances of their operations: Workplace Ombudsman v Saya Cleaning Pty Ltd [2009] FMCA at [27] to [28] and the authorities referred to in those paragraphs:
27. In Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412 at paras. 27 to 29 it was said:
“Employers must not be left under the impression that because of their size or financial difficulty that they are able to breach an award. Obligations by employers for adherence to industrial instruments arise regardless of their size. Such a factor should be of limited relevance to a Court’s consideration of penalty.”
28. Notwithstanding financial hardship that an employer may be experiencing in Lynch v Buckley Sawmills Pty Ltd [1984] FCA 306; (1984) 3 FCR 503, 508 Keely J said:
“In this connection it is important that the respondent – and other employers bound by the award or by other awards under the Act – understand the importance of complying with an award and it follows that any decision taken by them which is regarded as affecting their obligation to comply with particular provisions of the award or the award generally should only be taken after careful consideration. They must not be left under the impression that in times of financial difficulty they can breach an award made under the Act either with impunity or in the belief that no substantial penalty will be imposed in respect of a breach found by a court to have been committed.”
38.In Moelau’s evidence as to penalty, she has emphasised a number of factors in relation to her own financial circumstances as well as those of Rainbow Paradise:
(a)the status of the preschool, providing a service to disadvantaged families in a low socio-economic area;[47]
[47] Gina Moelau Affidavit 28.2.13, [5]-[8]; Unsworn Moelau Affidavit, [16]-[17].
(b)there are limited funds left from which either Rainbow Paradise or Moelau could pay any monetary penalty;[48]
[48] Unsworn Moelau Affidavit, [4]-[15], [69].
(c)the expenditure of legal costs;[49] and
[49] Unsworn Moelau Affidavit, [61]-[63].
(d)a threat of corporate administration if a significant fine is imposed.[50]
[50] Unsworn Moelau Affidavit, [70].
39.With respect to the first proposition, the FWO disputes that it is open for the Respondents to argue that they are able to exploit employees (from low socio-economic backgrounds) because they are providing services to disadvantaged families in that area.
40.With respect to the second proposition, the FWO says that the Respondents had (and continue to have) sufficient funds to pay their employees. Contrary to Moelau’s assertion that Rainbow Paradise “does not operate on a large profit”,[51] and has “limited funds” to pay a monetary penalty,[52] the financial information contained in Moelau’s affidavit suggests otherwise when considering the underpayments in this matter. Annexure “GM1” to Moelau’s Affidavit of 28 February 2013 shows that Rainbow Paradise made the following profits over the financial years in which the contraventions took place:
[51] Gina Moelau Affidavit 28.2.13, [6].
[52] Unsworn Moelau Affidavit, [69].
(a)year ending 30 June 2010 = $57,228;
(b)year ending 30 June 2011 = $51,571; and
(c)year ending 30 June 2012 = $28,187.
41.In the year ending 30 June 2012 the profit was in addition to $20,000 in directors’ fees (presumably taken by Moelau herself as Rainbow Paradise’s sole director). Moelau expects the profits for the year ending 30 June 2013 to be similar to the above figures.[53]
[53] Unsworn Moelau Affidavit, [3].
42.Moelau held a second job as Hospital Technical Officer.[54] Moelau’s husband Mark indicates that he and Moelau were able to afford a small bus to transport children.[55]
[54] Gina Moelau Affidavit 28.2.13, [4].
[55] Mark Moelau Affidavit 28.2.13, [7].
Legal costs
43.To the extent that the Respondents rely on the expenditure of legal fees to reduce penalty, this submission should be rejected.
44.The Respondents are responsible for their own decisions: they chose to defend all contraventions for over 15 months in circumstances where they now admit that the majority of contraventions took place. In ACE Insurance Limited v Trifunovski (No. 2) [2012] FCA 793, Perram J held:
“There are risks in permitting the incurring of legal costs to count as an ameliorating factor in assessing a civil penalty. To do so may provide an economic incentive to a respondent to draw out a proceeding confident that money spent on its defence may result in a reduction in penalty. This, in turn, would conflict with the policy of encouraging early admission of wrongdoing by taking account of it in the process of penalty assessment as a positive matter: cf Minister for Sustainability, Environment, Water, Population and Communities v De Bono [2012] FCA 643 at [60], [73]; Secretary, Department of Health and Ageing v Export Corporation (Australia) Pty Ltd [2012] FCA 42 at [91].”
45.The incurring of some level of legal costs is an inevitable consequence of a respondent choosing (as most will) to obtain legal advice or representation in connection with proceedings brought under the WR Act and FW Act.
46.It is reasonable and open to the Court to infer that, in setting the maximum penalties applying to contraventions of civil remedy provisions of the WR Act and FW Act, the parliament would have contemplated that a person facing such a penalty would also be likely to have incurred some level of legal costs, in particular given that the parliament gave consideration to how costs would be dealt with in section 824 of the WR Act and section 570 of the FW Act.
47.To allow a discount on penalty on account of the mere fact of having incurred some costs would, in effect, reduce the applicable maximum penalties that have been judged by parliament to be appropriate. The FWO relies on Fair Work Ombudsman v Mildura Battery Company Pty Ltd [2014] FCCA 192 at [64], where Judge Turner held (at [64]):
“The mere fact that the respondents incurred costs relating to the proceedings ought have no relevance to penalty, as they have resulted from the respondent choosing to obtain legal advice. The legislation sets out the maximum penalties to be imposed without mention of deduction for costs. Costs are not a consideration relevant to penalty as set out in Mason [v Harrington Corporation Pty Ltd [2007] FMCA 7]”.[56]
[56] See also Fair Work Ombudsman v Revolution Martial Arts Pty Ltd [2013] FMCA 125 at [47]; Fair Work Ombudsman v Australian Sales and Promotions Pty Ltd [2013] FCCA 1502 at [21].
48.The FWO notes that:
(a)section 824 of the WR Act provided that a party to a proceedings in a manner arising under the WR Act must not be ordered to pay costs incurred by any other party to the proceeding unless the first-mentioned party instituted the proceedings vexatiously or without reasonable cause; and
(b)section 570 of the FW Act provides that a party to proceedings in a court exercising jurisdiction under the FW Act may only recover its legal costs in limited circumstances, including where such costs have been incurred by reason of the other party’s unreasonable act or omission.[57]
[57] The threshold set by subsection 570(2) of the FW Act is high, in that the Court’s discretion to award costs should only be exercised in a clear case: Saxena v PPF Asset Management Ltd [2011] FCA 395, at [5]-[6]; Construction, Forestry, Mining and Energy Union and Others v Clark (2008) 170 FCR 574 at [29].
49.Having regard to the above sections of the WR Act and FW Act, the FWO submits that:
(a)there is a clear legislative intention that the jurisdiction be “no costs” unless the very high thresholds in section 824 of the WR Act or subsection 570(2) of the FW Act have been satisfied; and
(b)legal costs that arise as an ordinary incidence of litigation conducted in a reasonable manner are to be borne by the Respondents, such costs also being the inevitable result of a respondent having civil remedy proceedings brought against them for having contravened Commonwealth workplace laws.
50.To obtain a discount on penalty by reason of costs incurred would, in the FWO’s submission, be to circumvent the intention of the legislation that:
(a)the jurisdiction be primarily a “no-costs” jurisdiction; and
(b)a party may only recover its costs where the high thresholds set by section 824 of the WR Act or subsection 570(2) of the FW Act have been satisfied.
51.Further, the consideration of costs by the Court would operate to the benefit of those respondents with the means to obtain legal representation, and is not a factor with general application in respect of penalty.
Threat of insolvency/administration
52.The Court should also give no weight to the Respondents’ threat of corporate insolvency or administration if a penalty is awarded.[58] As Driver FM (as his Honour then was) opined in Cotis v MacPherson [2007] FMCA 2060 at [12]:
[58] See Unsworn Moelau Affidavit, [70].
“It is, in my view, important to make the point that employers should not and cannot regard insolvency, either personal or corporate, as a refuge from their responsibilities under the Workplace Relations Act.”
53.Similarly, Magistrate Hawkins stated in Fair Work Ombudsman v Bosen Pty Ltd [2011] VMC 21 at [51]:
“[51] There is a need to send a message to the community at large, and small employers particularly, that the correct entitlements for employees must be paid and that steps must be taken by employers (of all sizes) to ascertain and comply with minimum entitlements (as opposed to ignoring those obligations). Compliance should not be seen as the bastion of the large employer, with human resources staff and advisory consultants (accountants, consultants, lawyers) behind them.”
54.Given that one of the principal objects of the FW Act is to provide a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions for all employees, employers who seek to profit by failing to comply with that guaranteed safety net can undercut other employers in their industry who are paying their employees in accordance with the correct terms and conditions. This practice may force other employers who pay their employees the correct wages and conditions (including small business employers) to become unprofitable as they are not able to compete with the undercutting and may result in job losses. These considerations underline the need to deter other employers from contravening these provisions.
55.The FWO submits that the law should mark its disapproval of the conduct in question, and set an appropriate penalty which serves as a warning to others.[59]
[59] Kelly at [28]
Deliberateness of the contraventions
56.The extent to which the Respondents acted deliberately is a contested matter in this proceeding.
57.The FWO submits that it will be open for the Court to find that Rainbow Paradise and Moelau acted, at a minimum, with wilful blindness to their obligations to provide the three employees with their entitlements. However, it may be, after the Court has received and considered all the evidence, that the Court in fact finds that the Respondents acted with complete disregard to their obligations in relation to some or all of the contraventions.
58.The FWO has set out earlier in these submissions the state of the Respondents’ knowledge of their obligations, at the time of the offending conduct, by reason of their involvement in previous FWO investigations and their calls to the Workplace Infoline/Fair Work Infoline.
59.Despite the extensive amount of information and warnings provided to Rainbow Paradise and Moelau, such that it could be in no doubt as to its workplace relations obligations and the effects of non-compliance, the Respondents failed to comply with the very entitlements it had received information about. This suggests the Respondents were at least wilfully blind or acted with complete disregard to their obligations. This factor should weigh in favour of a higher penalty.
Contrition, corrective action, co-operation with authorities
Contrition
60.The FWO will dispute at hearing that the Respondents are genuinely contrite. In the alternative, if the Court does accept that the Respondents’ expression of remorse is genuine, the FWO will submit that the Court should find that it was offered too late in the proceedings to constitute a mitigating factor.[60]
[60] See Fair Work Ombudsman v AJR Nominees Pty Ltd (No. 2) [2014] FCA 128 at [36]-[37] (apology offered in late 2013 for conduct which occurred in 2010 and 2011).
Corrective action
61.The Respondents have made limited attempts to rectify the underpayments. To date the only repayments made were:
(a)a back-payment to Kidd of $359.80 on 12 July 2012; and
(b)a back-payment to Austin of $3,329.82 on 20 July 2012.[61]
[61] SOAF, [74]-[75].
62.No further back-payments have been made and there are outstanding amounts still owed to Austin, Kidd and Minasmasihi.[62] The rectifications made constitute a small fraction of what is in fact owed to the employees: See [135] and [136] of the SOAF.
[62] SOAF, [135]-[136] (the amounts are not agreed by the Respondents).
63.The FWO submits that the Court will find that the Respondents have not taken appropriate steps to ensure that there is future compliance with their workplace relations obligations.
Co-operation with authorities
64.The FWO acknowledges that in late 2013, the Respondents admitted all of the contraventions except the notice of termination contravention in relation to Minasmasihi and the notice to produce contraventions, and in doing so, saved cost to the public purse by avoiding the need for a four-day contested hearing originally set down for November 2013.[63]
[63] SOAF, [18]-[22].
65.However, the Respondents’ admissions came very late in the proceedings, some 15 months after their commencement, and only after the FWO had filed 18 affidavits in support of its case as well as its outline of submissions. Moreover, even after making admissions the Respondents have failed to demonstrate any regret or remorse, or a willingness to facilitate the course of justice. The FWO relies upon the decision of the Full Court of the Federal Court in Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70 (per Stone & Buchanan JJ):
“[74] It is important to note that it is not a sufficient basis for a discount that the plea has saved the cost of a contested hearing – that would discriminate against a person who exercised a right to contest the allegations. A discount may be justified, however, if the plea is properly to be seen as willingness to facilitate the course of justice. Remorse and an acceptance of responsibility also merit consideration where they are shown.
[76] ... it should be accepted, for the same reasons as given in Cameron [v R (2002) 209 CLR 339], that a discount should not be available simply because a respondent has spared the community the cost of a contested trial. Rather, the benefit of such a discount should be reserved for cases where it can be fairly said that an admission of liability: (a) has indicated an acceptance of wrongdoing and a suitable and credible expression of regret; and/or (b) has indicated a willingness to facilitate the course of justice.”
66.In Fair Work Ombudsman v Jetstar Airways Ltd [2014] FCA 33, Buchanan J declined to discount the maximum penalty for admissions which were made at the last minute, after a significant amount of time had elapsed after the commencement of proceedings:
“[37]. In fact, I have no evidence of the attitude of any of the Respondents beyond a bare admission that contraventions occurred and penalties should be fixed. There is therefore no basis upon which to conclude that the Respondents regret their conduct or intend that it not be repeated. No further statement was made about the matter either during submissions, written or oral. Such matters may not be taken into account to increase any penalty otherwise appropriate. The significance of a lack of evidence showing contrition or remorse is that no occasion arises to consider, on that account, any discount from a penalty otherwise appropriate.
[38]. Similarly, there is no basis for a discount because the Respondents made admissions two days before trial, 18 months or so after the proceedings were commenced. Those admissions are not evident in any of the three defences which were filed, including the further amended defence filed less than two weeks before the admissions were made. In the present case, I see no occasion, therefore, upon which to discount from any penalty on the basis of an early admission of liability.
[39]. I conclude, therefore, that no occasion arises in the present case to consider any discount from penalties otherwise justified.”
67.The FWO submits that there should be no discount afforded on penalty if the Court finds that the contraventions took place.
68.In addition to the above, the FWO requests that, when setting a penalty, a significant factor that the Court should take into account is the behaviour and attitude of the Respondents during the investigation that led to these proceedings. In the period from December 2010 to June 2012, when Inspector Lam had carriage of the investigation, the Respondents were highly un-cooperative with the FWO and showed little respect for it as a regulator tasked with investigating whether Rainbow Paradise’s employees had been provided with their correct entitlements.
69.The Respondents did not comply with notices issued by the FWO (namely the November NTP and February NTP) or contravention letters issued by the FWO.[64]
[64] See SOAF, [102]-[106], [129]-[130].
70.Further, they did not participate in recorded interviews with the FWO which were offered to them.[65]
[65] See Northwood Affidavit, Annexure “NN7”; Lam Affidavit 8.11.12, Ex JL-1, Tabs 21 and 27. No response was received by the Respondents to any of these letters.
71.Most importantly, the emails sent by Moelau to Inspector Lam are indicative of the Respondents’ failure to co-operate throughout the investigative period. Examples of the emails include:
(a)“you need to perform your duties correctly from 1.5 years ago … You are not following the procedures to rectify a situation ASAP and it is your job to defuse a dispute rather than creating a dispute” (in response to the issuing of the November NTP);[66] and
[66] Lam Affidavit 8.11.12, Ex JL-1, Tab 36.
(b)“you need to refer to me before making assumptions regarding our service thank you. You did not call me to request why this person was not paid. You need to perform your duties correctly before pointing your finger” (in response to a notification of investigation regarding Minasmasihi)[67].
[67] Lam Affidavit 8.11.12, Ex JL-1, Tab 40. See also, by way of example, Ex JL-1, Tab 24 (“I feel you are trying to find something against me … your actions are unprofessional and are threatening”); Tab 30 (at p. 119) (“… you continued to be persistent by trying to manipulate her to provide false information” … “you were unprofessional with your work ethics and please do not abuse your authority” … “it is requested by Lynette that I call the police if you continue to harass her via telephone calls”); Tab 42 (“You will have to wait …”)
General Deterrence
72.General deterrence is an important factor in these proceedings. There is a need to send a message to the community, and particularly employers, that employers must provide their employees with the correct entitlements and take steps to respond to correspondence and notices issued by Government regulators such as the FWO. The role of general deterrence in determining the appropriate penalty is illustrated by the comments of Lander J in Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543, [93]:
“In regard to general deterrence, it is assumed that an appropriate penalty will act as a deterrent to others who might be likely to offend: Yardley v Betts (1979) 22 SASR 108. The penalty therefore 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. If the penalty does not demonstrate an appropriate assessment of the seriousness of the offending, the penalty will not operate to deter others from contravening the section. However, the penalty should not be such as to crush the person upon whom the penalty is imposed or used to make that person a scapegoat. In some cases, general deterrence will be the paramount factor in fixing the penalty: R v Thompson (1975) 11 SASR 217.”
73.General deterrence is particularly important in the child care industry in which Rainbow Paradise operates. The FWO refers to the comments made by Whelan FM (as her Honour then was) in Fair Work Ombudsman v La Kosta Childcare Centre & Kindergarten Pty Ltd [2012] FMCA 551 at [96]-[98]:
“96. The Applicant submits that it is important to send a message to the community at large and to employers in the childcare industry in particular because of the nature of employment in that industry.
97. I am satisfied that the nature of employment in this industry is sufficiently well known for me to take judicial notice of the type of employment and profile of the employees in the industry. Like the employees in this case they are generally employed on a part-time or casual basis and can appropriately be regarded as low-paid. The industry is not one where enterprise bargaining is widespread and many employees are reliant on minimum wages and conditions. Many employees are young females.
98. I accept that it is appropriate to remind other employers in this industry of the importance of ensuring that minimum wages and conditions are met.”
Specific deterrence
74.The FWO submits that the need for specific deterrence is high because of the following factors:
(a)the large number of contraventions of the WR Act and FW Act;
(b)the Employees were young and vulnerable;
(c)the Employees have still not been paid all of their entitlements, even though the contraventions occurred up to 4.5 years ago and the proceedings have been on foot for over 18 months;
(d)the Respondents have not co-operated with the FWO;
(e)the contraventions were serious and wilful;
(f)the FWO does not accept that Rainbow Paradise and Moelau have taken appropriate steps to prevent further contraventions;
(g)the Respondents had already received warnings about their need to comply with workplace obligations, and had signed a compliance agreement form in relation to pay slips, and were on notice of the pay rates to be provided to the employees, but still failed to comply with their workplace relations obligations; and
(h)Rainbow Paradise continues to operate and Moelau continues to be the sole director of Rainbow Paradise.
75.Rainbow Paradise and Moelau should be left in no doubt that failing to comply with workplace relations laws will not be tolerated by the Courts, that employees of Rainbow Paradise should be provided with their minimum entitlements and pay slips, and notices issued by regulators such as the FWO should be complied with.
Totality
76.Having fixed an appropriate penalty for each course of conduct, the Court should take a final look at the aggregate penalty, to determine whether it is an appropriate response to the conduct which led to the contraventions, and is not oppressive or crushing: see Kelly at [30]; Merringtons at [23] per Gray J, [71] per Graham J, and [102] per Buchanan J.
Accessorial Liability – senior management
77.The same considerations apply in determining penalty in respect of the conduct of Rainbow Paradise and Moelau. Moelau was clearly involved in Rainbow Paradise’s contraventions, being:
(a)the sole company director and shareholder and controlling mind of Rainbow Paradise[68];
[68] SOAF, [3], [91(a)].
(b)principally responsible for the overall direction, management and supervision of Rainbow Paradise’s operations in relation to industrial instruments and arrangements, setting pay rates, wages and conditions of employees, and therefore was the person responsible for ensuring that Rainbow Paradise complied with its legal obligations under the WR Act and FW Act;[69]
[69] Amended Statement of Claim, [3]; Amended Defence, [1]; SOAF [3].
(c)the person who made decisions on behalf of Rainbow Paradise regarding recruitment and termination of employees of Rainbow Paradise, the terms and conditions upon which persons would be employed by Rainbow Paradise, the work to be performed, and the time, method and manner of payments to the employees;[70]
[70] Amended Statement of Claim, [107(b)(i)-(iv)]; Amended Defence, [66]; SOAF [91].
(d)the person that the FWO primarily dealt with during the investigations into the employees and the other employees of Rainbow Paradise;[71]
[71] Amended Statement of Claim, [107(b)(v)]; Amended Defence, [66].
(e)a person who was aware of the ability to call the Workplace Infoline / Fair Work Infoline to obtain information and advice about pay and conditions for employees, and who obtained information and knowledge on that basis;[72]
[72] SOAF, [92]. See also SOAF, [93]-[95].
(f)the person who signed the Compliance Agreement Form on 18 March 2010 regarding pay slips;[73]
[73] SOAF, [96]. Lam Affidavit 8.11.12, Ex JL-1, Tab 9.
(g)a person who knew the requirements for complying with NTPs, having previously complied with one issued by Inspector Narelle Northwood issued on 29 June 2010;[74] and
[74] SOAF, [107].
(h)the person on whom the November NTP and February NTP were served, and the only person who responded to correspondence about those NTPs.[75]
[75] SOAF, [108]-[110].
78.The FWO submits that the connection between Rainbow Paradise and Moelau (she being its sole director, company secretary and shareholder) should not reduce the amount of the penalty. To make this submissions, the FWO relies upon the decision of Buchanan J in Fair Work Ombudsman v Ramsey Food Processing Pty Ltd (No 2) [2012] FCA 408 at [8]:
“A submission was made by the respondents that some consideration should be given to reducing the amount of the penalty imposed on one or other of the respondents to account for the intimate connection between the actions of the first respondent and the conduct of the second respondent. As I understood the submission, it was that there was a risk of punishing twice for the same conduct – i.e. punishing both the first and second respondents for the conduct of the second respondent. The submission appeared to rely on the judgment of Mansfield J in Australian Prudential Regulation Authority v Holloway (2000) 45 ATR 278; [2000] FCA 1245, although I do not understand how it could do so ... In the legislative scheme which his Honour was applying no distinction was made between the maximum penalty that could be applied to corporations and the maximum penalty that could be applied to individuals. That is not the case here. The present legislative scheme fixes quite different (and much lower) penalties for individuals than for corporations. The culpability of each respondent must be assessed individually and in the context set by the maximum penalty prescribed in each case. I reject the suggestion, if this was what was intended, that either or both respondents might have the benefit of any reduction in penalty because they were jointly, as well as individually, culpable”.
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