Fair Work Ombudsman v Ranvel Pty Ltd
[2023] FedCFamC2G 683
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Ranvel Pty Ltd [2023] FedCFamC2G 683
File number: MLG 4578 of 2019 Judgment of: HER HONOUR JUDGE C.E. KIRTON KC Date of judgment: 3 August 2023 Catchwords: INDUSTRIAL LAW – Fair Work Ombudsman – pecuniary penalties – contraventions of ss 45, 535(1) and (2), and 536 of the Fair Work Act 2009 (Cth) – declarations made by consent in respect of Respondents – appropriate penalties – principles of penalties applied – relevant factors considered – penalties ordered Legislation: Fair Work Act 2009 (Cth) ss 45, 535(1), 535(2), 536, 539, 546, 550 and 557
Fair Work Regulations 2009 (Cth) rr 3.32 ad 3.33
Federal Circuit Court Rules2001 (Cth) r 4.05(2)(b)
Cleaning Services Award 2010 (Cth) cls 12.5, 16.1, 23.2, 27.2, 27.3 and cl D.1, sch D
Cases cited: Australian Building and Construction Commissioner v Pattinson [2022] HCA 13
Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8
Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; (2015) 258 CLR 482
Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39
Fair Work Ombudsman v A to Z Catering Solution Pty Ltd (No 3) [2018] FCCA 3574
Fair Work Ombudsman v First Group of Companies Pty Ltd [2018] FCCA 1228
Fair Work Ombudsman v NHS North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301
Rocky Holdings Pty Ltd v Fair Work Ombudsman [2014] FCAFC 62
Trade Practices Commission v CSR Ltd [1990] FCA 762
Wong v The Queen [2001] HCA 64; (2001) 207 CLR 584
Division: Division 2 General Federal Law Number of paragraphs: 104 Date of last submissions: 27 July 2021 Date of hearing: 27 July 2021 Place: Melbourne (by videoconference) Counsel for the Applicant: Ms Dowsett Solicitor for the Applicant: Australian Government Solicitor Solicitor for the First and Second Respondents: Mendis & Gibson Lawyers Counsel for the Third Respondent: Mr Minucci Solicitor for the Third Respondent: Colin Biggers & Paisley ORDERS
MLG 4578 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: RANVEL PTY LTD (ACN 612 029 526)
First Respondent
INDIKA UDARA LOKUBALASURIYA
Second Respondent
QUAYCLEAN AUSTRALIA PTY LTD (ACN 102 238 933)
Third Respondent
order made by:
HER HONOUR JUDGE C.E. KIRTON KC
DATE OF ORDER:
3 August 2023
THE COURT DECLARES BY CONSENT THAT:
1.Ranvel Pty Ltd (ACN 612 029 526) (First Respondent) contravened the following provisions of Fair Work Act 2009 (Cth) (FW Act);
(a)Section 45 of the FW Act, by failing to pay the minimum hourly rate pursuant to cl 16.1 of the Cleaning Services Award 2010 (Cleaning Award);
(b)Section 45 of the FW Act, by failing to pay the casual loading pursuant to cl 12.5(a) of the Cleaning Award;
(c)Section 45 of the FW Act, by failing to pay the Saturday penalty pursuant to cl 27.2(a) of the Cleaning Award;
(d)Section 45 of the FW Act, by failing to pay the Sunday penalty pursuant to cl 27.2(b) of the Cleaning Award;
(e)Section 45 of the FW Act, by failing to pay the public holiday penalty pursuant to cl 27.3 of the Cleaning Award;
(f)Section 45 of the FW Act, by failing to pay superannuation contributions pursuant to cl 23.2 of the Cleaning Award;
(g)Section 535(1) of the FW Act, by failing to make and keep records of the kind required by r 3.32 of the Fair Work Regulations 2009 (Cth) (FW Regulations);
(h)Section 535(2) of the FW Act, by failing to make and keep records with the information prescribed by rr 3.33(1), 3.33(2) and 3.33(3) of the FW Regulations; and
(i)Section 536 of the FW Act, by failing to give employees payslips.
2.Mr Indika Udara Lokubalasuriya (Second Respondent) was, pursuant to ss 550(1) and 550(2)(c) of the FW Act, involved in the First Respondent’s contraventions of the following:
(a)Section 45 of the FW Act, by failing to pay the minimum hourly rate pursuant to cl 16.1 of the Cleaning Award;
(b)Section 45 of the FW Act, by failing to pay the casual loading pursuant to cl 12.5(a) of the Cleaning Award;
(c)Section 45 of the FW Act, by failing to pay the Saturday penalty pursuant to cl 27.2(a) of the Cleaning Award;
(d)Section 45 of the FW Act, by failing to pay the Sunday penalty pursuant to cl 27.2(b) of the Cleaning Award; and
(e)Section 45 of the FW Act, by failing to pay the public holiday penalty pursuant to cl 27.3 of the Cleaning Award.
3.Quayclean Australia Pty Ltd (ACN 102 238 933) (Third Respondent) was, pursuant to ss 550(1) and 550(2)(c) of the FW Act, involved in the First Respondent’s contraventions of the following:
(a)Section 45 of the FW Act, by failing to pay the casual loading pursuant to cl 12.5(a) of the Cleaning Award;
(b)Section 45 of the FW Act, by failing to pay the Saturday penalty pursuant to cl 27.2(a) of the Cleaning Award;
(c)Section 45 of the FW Act, by failing to pay the Sunday penalty pursuant to cl 27.2(b) of the Cleaning Award; and
(d)Section 45 of the FW Act, by failing to pay the public holiday penalty pursuant to cl 27.3 of the Cleaning Award.
THE COURT ORDERS THAT:
4.The First Respondent pay a total penalty of $114,480 pursuant to s 546(1) of the FW Act for the contraventions set out at Order 1 above.
5.The Second Respondent pay a total penalty of $15,552 pursuant to s 546(1) of the FW Act for his involvement in the contraventions set out at Order 2 above.
6.The Third Respondent pay a total penalty of $71,820 pursuant to s 546(1) of the FW Act for its involvement in the contraventions set out at Order 3 above.
7.The First, Second and Third Respondents, pursuant to s 546(3) of the FW Act, pay their respective penalty amounts to the Commonwealth within 90 days of the date of these Orders.
8.The Applicant has liberty to apply on seven (7) days’ notice if any of the preceding Orders are not complied with.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
HER HONOUR JUDGE C.E. KIRTON KC:
INTRODUCTION
This matter concerns the underpayment of employees at Etihad Stadium now known as Marvel Stadium (Stadium), located in the Docklands area of Melbourne. The underpayment was made by employers engaged in a sub-contractual arrangement for the provision of cleaning services at the Stadium.
The proceeding commenced by way of an Originating Application filed on 23 December 2019 (Application) by the Fair Work Ombudsman (Applicant). In accordance with r 4.05(2)(b) of the Federal Circuit Court Rules 2001 (Cth) as applicable at the time, the Applicant also filed a Statement of Claim on 23 December 2019 (Statement of Claim).
In the Statement of Claim, the Applicant alleged that Ranvel Pty Ltd (ACN 612 029 526) (First Respondent) provided cleaning services at the Stadium pursuant to a contract with Quayclean Australia Pty Ltd (ACN 102 238 933) (Third Respondent).[1] The Statement of Claim also alleged that the First Respondent contravened ss 45, 535(1), 535(2) and 536 of the Fair Work Act 2009 (Cth) (FW Act) and the Cleaning Services Award 2010 (Cleaning Award).[2] It was further alleged that Mr Indika Udara Lokubalasuriya (Second Respondent) and the Third Respondent were involved a number of the First Respondent’s contraventions of the FW Act and Cleaning Award.[3]
[1] Statement of Claim, filed by the Applicant 23 December 2019 (Statement of Claim), [3].
[2] Statement of Claim, [20]-[39] and [41]-[60].
[3] Statement of Claim, [63] and [84].
The Applicant sought declarations from the Court against the First, Second and Third Respondents (together, the Respondents). The Applicant also sought orders that pecuniary penalties be imposed on the Respondents pursuant to s 546(1) of the FW Act.
BACKGROUND
This proceeding involves the employment by the First Respondent of 14 individuals (Employees) to perform cleaning duties at the Stadium during the period from 1 February 2017 to 30 June 2017 (Relevant Period). The Employees were employed by the First Respondent and provided cleaning duties pursuant to the First Respondent’s contract with the Third Respondent.
During the Relevant Period, Melbourne Stadiums Limited (ACN 098 476 594) held a contract with the legal partnership of The Trustee for Loui Petrevski Business Trust, the Trustee for Sash Petrevski Business Trust, and the Trustee for the Piwkowski Family Trust, trading as the Third Respondent, for cleaning services at the Stadium.[4] The Third Respondent subcontracted the First Respondent, among others, to provide these cleaning services.
[4] Statement of Agreed Facts, filed 17 May 2021 (Statement of Agreed Facts), [8].
The Second Respondent was, during the Relevant Period, the director, secretary and sole shareholder of the First Respondent.[5]
[5] Statement of Claim, [5]; Affidavit of Mr Indika Udara Lokubalasuriya (Second Respondent), filed 10 February 2020, [2].
During the Relevant Period the Employees were engaged in cleaning duties, including rubbish collection, sweeping and other general cleaning duties at the Stadium.[6]
[6] Statement of Claim, [12]; Statement of Agreed facts, [13].
During the Relevant Period, each of the Employees:
(a)Were employed as ‘Cleaning Services Employee Level One’ within the meaning of cl D.1 of Schedule D to the Cleaning Award;
(b)Were employed by the First Respondent as casual employees within the meaning of cl 12.5 of the Cleaning Award;
(c)Worked intermittent and irregular hours;
(d)Were employed to work uncertain hours; and
(e)Did not accrue or receive any paid leave entitlements.[7]
[7] Statement of Claim, [15]-[17]; Statement of Agreed Facts, [16]-[18].
During the Relevant Period, the Employees were paid as follows, as compared to their legal entitlements:
Description Amount received Entitlement Cleaning Award Total underpaid Minimum Hourly Rate $16 per hour $18.91 per hour cl 16.1 $6,449.36 Casual Loading Nil $4.73 per hour
25% of the ordinary hourly ratecl 12.5(a) $12,110.31 Saturday Penalty Between $324 and $488 $28.36 per hour
Time and one half of the ordinary hourly rate for all hours between midnight Friday and midnight Saturdaycl 27.2(a) $2,196.99 Sunday Penalty Between $220 and $472 $37.82 per hour
Double the ordinary hourly rate for all hours worked between midnight Saturday and midnight Sundaycl 27.2(b) $3,366.90 Public Holiday Penalty $192 paid to 1 employee only $47.27 per hour
Double time and a half of the ordinary hourly rate for all hours worked on public holidayscl 27.3 $375.24 Superannuation Contributions Nil An employer must make such superannuation contributions to a superannuation fund for the benefit of an employee cl 23.2 Unspecified
In addition to the above, during the Relevant Period, the First Respondent also failed keep records or information as follows:
(a)The names, commencements dates, employment classifications and employment status of the Employees;
(b)The rate of remuneration paid to each of the Employees;
(c)The gross and net amounts paid to each of the Employees;
(d)The amount of any loading or penalty rates that the Employees were entitled to;
(e)The hours worked by each of the Employees; and
(f)Payslips for the Employees.[8]
[8] Statement of Claim, [44]-[60].
ISSUES BEFORE THE COURT
By virtue of the admissions made by the Respondents, the Court has the power to make orders for the payment of penalties pursuant to s 546(1) of the FW Act.
The issues that the Court must therefore determine are:
(a)The penalty that is appropriate in the circumstances of this case with respect to each of the Respondents; and
(b)The timeframe within which the Respondents would be required to pay such a penalty to the Commonwealth of Australia.
CONTRAVENTIONS
The First Respondent admitted that it contravened the FW Act during the Relevant Period and consented to the making of declarations and orders in respect of the admitted contraventions.
The contraventions admitted by the First Respondent are as follows:
(a)Section 45 of the FW Act, by failing to pay the minimum hourly rates prescribed by cl 16.1 of the Cleaning Award;
(b)Section 45 of the FW Act, by failing to pay the casual loading as prescribed by cl 12.5(a) of the Cleaning Award;
(c)Section 45 of the FW Act, by failing to pay the Saturday penalty as prescribed by cl 27.2(a) of the Cleaning Award;
(d)Section 45 of the FW Act, by failing to pay the Sunday penalty as prescribed by cl 27.2(b) of the Cleaning Award;
(e)Section 45 of the FW Act, by failing to pay the public holiday penalty as prescribed by cl 27.3 of the Cleaning Award;
(f)Section 45 of the FW Act, by failing to pay superannuation contributions as prescribed by cl 23.2 of the Cleaning Award;
(g)Section 535(1) of the FW Act, by failing to make and keep records of the kind required by r 3.32 of the Fair Work Regulations 2009 (Cth) (FW Regulations);
(h)Section 535(2) of the FW Act, by failing to make and keep records with the information prescribed by rr 3.33(1), 3.33(2) and 3.33(3) of the FW Regulations; and
(i)Section 536 of the FW Act, by failing to give the Employees payslips.
(Collectively, the First Respondent’s Contraventions).
As a result of the First Respondent’s Contraventions, the Employees were underpaid a total amount of $24,498.80.[9]
[9] Applicant’s Submissions on Penalty, filed 21 June 2021 (Applicant’s Penalty Submissions), [9].
The Second Respondent has admitted to being involved, within the meaning of ss 550(1) and 550(2)(c) of the FW Act, in contraventions of the FW Act by the First Respondent. The contraventions admitted by the Second Respondent include those listed at [15](a) to (e) above (Second Respondent’s Contraventions).[10]
[10] Applicant’s Penalty Submissions, [10].
The Third Respondent has also admitted to being involved in some of the contraventions of the FW Act by the First Respondent. The contraventions admitted by the Third Respondent include those listed at [15](b) to (e) above (Third Respondent’s Contraventions).[11]
[11] Applicant’s Penalty Submissions, [11].
As a result of the Third Respondent’s Contraventions, the Employees were underpaid a total amount of $18,094.44.[12]
[12] Applicant’s Penalty Submissions, [12].
HEARING AND DOCUMENTS RELIED UPON
This matter was heard on 27 July 2021, together with an associated matter, and proceeded by way of Microsoft Teams, as a result of the health protocols adopted by the Federal Circuit Court of Australia (as the Court then was) at the time due to the ongoing COVID-19 pandemic (Penalty Hearing).
At the Penalty Hearing, the Applicant relied on the following documents:
(a)The Statement of Claim;
(b)Reply, filed 20 March 2020;
(c)Statement of Agreed Facts, filed 21 September 2020;
(d)Statement of Agreed Facts, filed 17 May 2021;
(e)Affidavit of Anna Kathleen Arnold affirmed and filed 24 May 2021, save for paragraphs 16 to 18 and the annexures referred to therein;
(f)Affidavit of Vera Jonceski, affirmed and filed 21 June 2021;
(g)Submissions on Penalty, filed 21 June 2021 (Applicant’s Penalty Submissions); and
(h)Submissions in Reply filed 16 July 2021.
At the Penalty Hearing, the First and Second Respondents relied on the following documents:
(a)Affidavit of the Second Respondent, affirmed 7 February 2020 and filed 10 February 2020;
(b)Submissions, filed 10 February 2020;
(c)Affidavit of the Second Respondent, affirmed and filed 11 June 2021; and
(d)Submissions for Penalty Hearing, filed 5 July 2021.
At the Penalty Hearing, the Third Respondent relied on the following documents:
(a)Statement of Agreed Facts, filed 21 September 2020;
(b)Statement of Agreed Facts, filed 17 May 2021;
(c)Affidavit of Mark Peter Piwkowski, affirmed and filed 7 June 2021 (Piwkowski Affidavit); and
(d)Outline of Penalty Submissions, filed 5 July 2021.
The Court also had before it: a Court Book filed by the Applicant numbering 766 paginated pages, which contains each of the documents mentions at [21] to [23] above; and a Joint List of Authorities, filed 23 July 2021. The Court has also considered the transcript of the Penalty Hearing, where Counsel for the Applicant, the Solicitor for the First and Second Respondents, and Counsel for the Third Respondent provided oral submissions.
RELEVANT LEGAL PRINCIPLES
During the Relevant Period, the First Respondent was required to comply with the FW Act, the FW Regulations and the Cleaning Award. By virtue of the Respondents’ contraventions, or involvement in contraventions of s 45 of the FW Act, the Court may impose penalties pursuant to s 546(1) of the FW Act.
As stated in Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; (2015) 258 CLR 482 at [55], and re-emphasised by the High Court in Australian Building and Construction Commissioner v Pattinson [2022] HCA 13 (Pattinson) at [9], the primary purpose of penalties for contraventions of the FW Act is the protection of the public interest in compliance with the FW Act by deterrence.
The approach of the Court in determining the quantum of penalties is well established. The Court has broad discretion to assess the appropriate penalty, ultimately adopting an approach of an ‘instinctive synthesis’ as discussed by the High Court in Wong v The Queen [2001] HCA 64; (2001) 207 CLR 584 at [75], cited with approval by the Full Court of the Federal Court in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 at [27]-[28], [55] and [78].
In Pattinson at [18] the High Court referred to several factors identified by French J in Trade Practices Commission v CSR Ltd [1990] FCA 762 at [42], which informed the assessment of a penalty of an appropriate deterrent value. These factors were as follows:
1.The nature and extent of the contravening conduct.
2.The amount of loss or damage caused.
3.The circumstances in which the conduct took place.
4.The size of the contravening company.
5.The degree of power it has, as evidenced by its market share and ease of entry into the market.
6.The deliberateness of the contravention and the period over which it extended.
7.Whether the contravention arose out of the conduct of senior management or at a lower level.
8.Whether the company has a corporate culture conducive to compliance with the [FW Act], as evidenced by educational programs and disciplinary or other corrective measures in response to an acknowledged contravention.
9.Whether the company has shown a disposition to co-operate with the authorities responsible for the enforcement of the Act in relation to the contravention.[13]
[13] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13 (Pattinson) at [18].
There is some similarity between these factors and those in Fair Work Ombudsman v NHS North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301 at [36], where Bromwich J summarised the approach to determining an appropriate penalty as follows:
36 […]
(1)Identify the separate contraventions, with each breach of each obligation being a separate contravention, and each breach of a term of the Award being a separate contravention.
(2)Consider whether each separate contravention should be dealt with independently or with some degree of aggregation for those contraventions arising out of a course of conduct, noting that s 557 of the FW Act provides that two or more contraventions of a given civil remedy provision are to be taken to be a single contravention if committed by the same person and arising out of a course of conduct by that person.
(3)Consider whether there should be further adjustment to ensure that, to the extent of any overlap between groups of separate aggregates contraventions, there is no double penalty imposed, and that the penalty is an appropriate response to what each respondent did.
(4)Consider the appropriate penalty in respect of each final individual group of contraventions, taken in isolation.
(5)Consider the overall penalties arrived at, including by reference to those which may be proposed by the FWO…and what is proposed by the respondents, and apply the totality principle, to ensure that the penalties for each respondent are appropriate and proportionate to the conduct viewed as a whole, making such adjustments as are necessary […]
The Court in Pattinson at [19] cautioned against the use of the list of possible relevant considerations as a ‘rigid catalogue of matters for attention’, citing Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 at [91]. The Court confirmed that the Court’s task remains to determine what an ‘appropriate’ penalty is in the circumstances of each case.[14]
[14] Pattinson, [19].
Maximum penalties
Section 539(2) of the FW Act sets out the maximum penalties that may be imposed for contraventions of the sort admitted to in this matter. Section 546(2) of the FW Act prescribes that a pecuniary penalty imposed by the Court must not be more than the maximum number of penalty units referred to in the table in s 539(2) of the FW Act.
In considering the maximum penalties, the Court undertakes a comparative exercise of determining where the relevant contraventions fall along the spectrum of contravening conduct: Fair Work Ombudsman v Zucco Farming Pty Ltd [2019] FCCA 1277 at [39], citing Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70 at [88]. As stated by the High Court in Markarian v The Queen (2005) 228 CLR 357 at [31], maximum penalties, ‘taken and balanced with all of the other relevant factors’, will provide a ‘yardstick’ against which to determine an appropriate penalty in each particular case. It is apparent, however that the yardstick approach to the maximum penalty is only one of a number of relevant factors for its consideration.
The maximum penalties (before any discount is applied) that the Court could impose in this matter are as follows:
(a)First Respondent – $405,000;
(b)Second Respondent – $54,000; and
(c)Third Respondent – $216,000.
The amounts in the preceding paragraph are further broken down in Tables 1, 2 and 3 of Annexure A to the Applicant’s Penalty Submissions for each contravention as follows:
Contravention Description of contravention Maximum penalty s 45 FW Act Failing to pay minimum hourly rates First Respondent: $54,000
Second Respondent: $10,800s 45 FW Act Failing to pay casual loading First Respondent:$54,000
Second Respondent: $10,800
Third Respondent: $54,000s 45 FW Act Failing to pay Saturday Penalty First Respondent: $54,000
Second Respondent: $10,800
Third Respondent: $54,000s 45 FW Act Failing to pay Sunday Penalty First Respondent: $54,000
Second Respondent: $10,800
Third Respondent: $54,000s 45 FW Act Failing to pay Public Holiday Penalty First Respondent: $54,000
Second Respondent: $10,800
Third Respondent: $54,000s 45 FW Act Failing to pay Superannuation Contributions First Respondent: $54,000
s 535(1) FW Act Failing to make and keep records of the kind required by the Regulations First Respondent: $27,000
s 535(2) FW Act Failing to make and keep records with the information prescribed by the Regulations First Respondent: $27,000
s 536 Failing to give the Employees payslips First Respondent: $27,000
The Third Respondent submitted that the maximum penalties which could be imposed on the Respondents are reserved only for the worst categories of contravention, and this is not such a case.[15] Such reasoning was rejected by the majority of the High Court in Pattinson, commenting that reserving the statutory maximum for imagined ‘worst cases’ is apt to divert the court from determining an appropriate penalty which it considers will adequately deter future contraventions.[16] Further, their Honours in Pattinson, citing Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25 at [156], noted that what is required is that there be ‘some reasonable relationship between the theoretical maximum and the final penalty imposed’.[17]
[15] Outline of Penalty Submissions, filed by the Third Respondent, 5 July 2021 (Third Respondent’s Penalty Submissions), [9].
[16] Pattinson, [10] and [71].
[17] Pattinson, [10].
Grouping of contraventions
Section 557(1) of the FW Act allows for the grouping of multiple contraventions into a single contravention where they arise from the same ‘course of conduct’, such that there is an overlap of the factual and legal elements of the contraventions: Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39 at [39]. However, where the contraventions concern differing obligations under the FW Act, the contraventions cannot be grouped: Rocky Holdings Pty Ltd v Fair Work Ombudsman [2014] FCAFC 62 at [17]-[19].
The Court notes that there is agreement between the Applicant and the Third Respondent as to the approach to grouping the Third Respondent’s Contraventions.[18] In accordance with this agreed approach, the Third Respondent’s Contraventions are to be treated as four (4) distinct contraventions.
[18] Transcript P7:L14.
The Applicant submitted that the First and Second Respondent’s contraventions should be grouped such that each contravention of an award provision is grouped separately, so that each award provision, irrespective of how many employees or how many times it was contravened during the Relevant Period, is just one (1) contravention.[19] This has the result that the First Respondent’s Contraventions are nine (9) in total and the Second Respondent’s Contraventions are five (5) in total.
[19] Transcript P7:L6-9.
It was submitted on behalf of the First and Second Respondents however, that the contraventions should be grouped such that all contraventions relating to underpayment constitute one (1) ‘course of conduct’ and the failure in record keeping and providing pay slips constitute another. On this approach, the First Respondent’s Contraventions would be two (2) in total and the Second Respondent’s Contraventions one (1) in total.
In support of their submission, the First and Second Respondent relied on s 556 of the FW Act and a decision of Judge Manousaridis in Fair Work Ombudsman v A to Z Catering Solution Pty Ltd (No 3) [2018] FCCA 3574 (A to Z Catering). At the Penalty Hearing, the Applicant referred to the First and Second Respondents’ submissions on grouping and noted that in A to Z Catering Judge Manousaridis ultimately adopted the proposal of the Applicant in this matter, such that every contravention of an award provision is a separate contravention.[20]
[20] Fair Work Ombudsman v A to Z Catering Solution Pty Ltd (No 3) [2018] FCCA at [43], [49]-[50]; Transcript P7:L31-37, P8:L1-12.
I am satisfied that the grouping of the contraventions as proposed by the Applicant is appropriate in the circumstances and consider the First and Second Respondents’ submissions in this respect to be an oversimplification of the conduct comprising the First and Second Respondent’s admitted contraventions.
RELEVANT FACTORS
As discussed above, there is no exhaustive list of factors to consider in determining an appropriate penalty. I will therefore consider the submissions of each party and the factors which they have addressed.
Nature, extent and circumstances of the contravening conduct
First and Second Respondents
The First Respondent was a company subcontracted by the Third Respondent to undertake cleaning work at the Stadium. The First Respondent employed 14 people, all of whom were paid by the First Respondent from amounts received by the Third Respondent.
The Second Respondent was during the Relevant Period the director, secretary and sole shareholder of the First Respondent.
The Third Respondent has agreed that during the Relevant Period, it paid $20 per hour for all non-event work performed by each employee, save for periodical work which was paid at $22 per hour. This was later increased to $23 per hour for all non-event work.[21]
[21] Statement of Agreed Facts, [41(f)].
As can be seen in the second column of the table produced at [10] above, the First Respondent paid the Employees a flat rate of $16 per hour for hours worked while undertaking non-event cleaning.
In the Applicant’s Penalty Submissions the Applicant submitted as follows:
39. […] the underpayments occurred because the amounts paid by […] Ranvel to their employees were insufficient to meet their minimum entitlements during the five-month assessment period.
40. The amounts underpaid by […] Ranvel during the Assessment Period were not insignificant and resulted in financial loss (in some instances, significant financial loss) being suffered by their respective employees, low-income earners reliant upon the minimum entitlements in the Cleaning Award.[22]
(Footnotes omitted)
[22] Applicant’s Penalty Submissions, [39]-[40].
The First Respondent submitted that during the Relevant Period, it was ‘heavily guided by the directors and senior management’ of the Third Respondent, who would advise it ‘how many workers would be required for each job, the time limit to complete each job, and the amount to be paid to employees’.[23] Further, the First Respondent claims to have approached the Third Respondent on multiple occasions in respect of insufficient funds, but nothing was ever actioned as a result.[24]
[23] Submissions for Penalty Hearing, filed by the First and Second Respondents, 5 July 2021 (First and Second Respondents Penalty Submissions), [18].
[24] First and Second Respondents Penalty Submissions, [19].
The First and Second Respondents do not dispute that the Employees suffered loss by virtue of the underpayments and other contraventions.[25]
[25] First and Second Respondents Penalty Submissions, [22].
The First Respondent’s Contraventions, which have been admitted, resulted in a total underpayment of $24,498.80 to the Employees over the Relevant Period. The Second Respondent has admitted to involvement in a number of the First Respondent’s Contraventions.
As a result of the First and Second Respondents’ contraventions, the Employees suffered a significant loss, particularly in the context of the casual nature of their employment with no set hours and the relatively small period for which the underpayment was assessed. Further, the contraventions in respect of failing to keep records and information and provide payslips to the Employees are significant in their representation of a failure to comply with basic business management standards.
Third Respondent
The Third Respondent is a commercial cleaning business that obtained a contract to provide cleaning services at the Stadium in December 2015.[26] The Third Respondent subcontracted the First Respondent to perform cleaning duties at the Stadium during the Relevant Period.
[26] Third Respondent’s Penalty Submissions, [10].
The Third Respondent agreed that it knew the First Respondent paid the Employees using the funds it provided.[27]
[27] Statement of Agreed Facts, [45(g)].
At the beginning of the Relevant Period, the Third Respondent employed 159 people, increasing to 169 people at the end of the Relevant Period.[28] The Third Respondent submitted, in response to the Applicant’s submissions, that it had ‘no formal arrangements’ with the Employees, but rather only ‘some familiarity’ with many of them by virtue of seeing them at the Stadium from time to time.[29]
[28] Third Respondent’s Penalty Submissions, [12].
[29] Third Respondent’s Penalty Submissions, [13].
The Third Respondent’s Contraventions, which have been admitted, resulted in a total underpayment of $18,049.44 to the Employees over the Relevant Period. As stated above, I consider the total loss incurred by the Employees to have been significant. The apparent lack of formal arrangement between the Third Respondent and the Employees must be countered by the fact of the Employees payment being derived directly from the Third Respondent, albeit through the First Respondent.
Deliberateness
First and Second Respondents
The First and Second Respondent submitted that their contravening conduct was not deliberate as they operated under the ‘strict direction’ of the Third Respondent and did not have the financial means to pay the Employees beyond the funds allocated to them by the Third Respondent.[30]
[30] First and Second Respondents Penalty Submissions, [28].
The First and Second Respondents further submitted that the amounts to be paid to the Employees were dictated wholly by the Third Respondent and that any attempts to rectify the insufficient funds were ‘repeatedly dismissed’.[31]
[31] First and Second Respondents Penalty Submissions, [26].
In his Affidavit evidence, the Second Respondent recalled an incident whereby he had allocated increased funds to the Employees for a particular job and subsequently received a warning from senior management of the Third Respondent.[32]
[32] Affidavit of the Second Respondent, affirmed 18 February 2021 filed 22 February 2021, [20].
The Second Respondent has also provided evidence as follows:
8. The Third Respondent decided and instructed me, in my capacity as a Director of the First Respondent, on all matters in relation to the number of required employees, the number of allocated hours, and the hourly rates in which the employees would be paid.[33]
16. […] I have never had any bad intentions. I was directed by Quayclean as to the conduct and operation of Ranvel, and so the allocation of funds to the employees was out of my control.[34]
[33] Affidavit of the Second Respondent, affirmed and filed 17 June 2020 (Second Respondent’s 17 June 2020 Affidavit), [8].
[34] Affidavit of the Second Respondent, affirmed and filed 11 June 2021 (Second Respondent’s 11 June 2021 Affidavit), [16].
The Applicant submitted that despite the First and Second Respondents lack of intention to contravene the FW Act, it follows from the admissions made by the First and Second Respondents in respect of the contraventions, that the Court can be satisfied that they knew what they were doing.[35]
[35] Applicant’s Penalty Submissions, [42].
Further, the Applicant contended that the Second Respondent, as the controlling mind of the First Respondent, made conscious choices as to the amounts to be paid to the Employees through his choice to accept the subcontract terms of the Third Respondent.[36] The First and Second Respondents’ contraventions necessarily resulted from those choices and as such were an ‘inevitable consequence’ of them.[37]
[36] Applicant’s Penalty Submissions, [43].
[37] Applicant’s Penalty Submissions, [43]; citing Fair Work Ombudsman v Priority Matters Pty Ltd (No 5) [2020] FCCA 901 at [131]-[132] and [205].
The Court agrees with the submissions of the Applicant and considers that the First and Second Respondents’ contraventions were deliberate in the circumstances.
Third Respondent
The Third Respondent submitted that it did not intend for the Employees to be receiving less than their entitlements under the Cleaning Award, and that there is no evidence that it had such an intention.[38] The Third Respondent urged the Court to be cautious about ‘making wholesale findings of deliberate wrongdoing’.[39]
[38] Third Respondent’s Penalty Submissions, [16].
[39] Third Respondent’s Penalty Submissions, [15].
The Applicant submitted that the Third Respondent’s contravening conduct was deliberate, primarily on the basis of its knowledge regarding the Employees pay and entitlements under the Cleaning Award.[40] Despite the purported lack of intention to contravene the FW Act, the Applicant pointed to the fact that the Third Respondent made a conscious choice in setting the rates to be paid to the First Respondent.[41]
[40] Applicant’s Penalty Submissions, [44].
[41] Applicant’s Penalty Submissions, [45].
The Court notes that the admissions made by the Third Respondent in this matter demonstrate that it held knowledge that the funds paid to the First Respondent were insufficient to comply with the Employees’ entitlements under the Cleaning Award. This is a significant persuasive factor that the Third Respondent’s contravening conduct was deliberate. Further, the Third Respondent’s status as a cleaning company necessarily indicates its awareness of or familiarity with the legal entitlements of its workers, and the application of the Cleaning Award to its employees.
I am therefore satisfied that the Third Respondent deliberately engaged in the contravening conduct.
Cooperation, Contrition and Corrective Action
First and Second Respondents
Upon investigation by the Fair Work Commissioner commencing in October 2017, the First and Second Respondents were notified of the contraventions of the FW Act by the First Respondent and requested to pay the Employees all outstanding amounts. The First and Second Respondents submit that admission to wrongdoing was made at the ‘earliest opportunity’ and that the owed amounts were paid to the Employees within the stipulated timeframe.[42]
[42] First and Second Respondents Penalty Submissions, [32] and [35]-[36].
The First and Second Respondents have maintained their admissions to the contraventions throughout the proceedings before the Court, and have consented to the making of declarations against them and orders for the payment of penalties. As such, there was no need for a liability hearing with respect to the contraventions, saving the Court time and resources.
The Second Respondent has also expressed remorse for his conduct and the impact that it had upon the Employees.[43]
[43] Second Respondent’s 11 June 2021 Affidavit, [15]-[16].
In light of the First and Second Respondent’s cooperation and contrition, in particular the immediate rectification of the underpayments to the Employees, I consider that a penalty discount of 20% for the First and Second Respondents is appropriate.
Third Respondent
The Court notes that the Applicant and Third Respondent have agreed that a penalty discount of 5% for the Third Respondent is appropriate in the circumstances.
I agree with this proposal for discount, in light of the following:
(a)The apparent interference with the Fair Work Commission’s investigation by senior management of the Third Respondent in September 2017 (which the Third Respondent disputes);
(b)The cooperation of the Third Respondent with the investigation subsequent to the event referred to at (a) above;[44]
(c)The apology and expression of remorse by Mark Peter Piwkowski, the Third Respondent’s CEO;[45]
(d)The steps taken by the Third Respondent to ensure no future contraventions of the FW Act occur;[46]
(e)The Third Respondent’s admission of involvement in the First Respondent’s contraventions; and
(f)The Third Respondent’s consent to declarations being made against it and orders for the imposition of penalties.
Size of the business and financial resources
[44] Third Respondent’s Penalty Submissions, [18].
[45] Affidavit of Mark Peter Piwkowski affirmed and filed 7 June 2021 (Piwkowski Affidavit), [36].
[46] Piwkowski Affidavit, [38]-[74].
First Respondent
The evidence of the First Respondent’s financial position is relatively limited. At the time of the Penalty Hearing, the First Respondent remained a registered company although was not trading and therefore receiving no income. An Activity Statement for the First Respondent from the Australian Taxation Office for the period January 2021 to March 2021 confirmed no activity from the business.
Further, the First Respondent submitted that it had lost all cleaning contracts after severing its association with the Third Respondent.
Second Respondent
The Second Respondent provided evidence of his financial position as follows:
(a)He remained a director, secretary and sole shareholder of the First Respondent;[47]
(b)He became a partner and director of Lumi Group Pty Ltd on 15 September 2017, a position from which he resigned on 17 May 2021;[48]
(c)He was receiving JobKeeper payments until the cessation of that program in March 2021 and is not eligible for Centrelink due to his citizenship status;[49]
(d)Since the cessation of the JobKeeper program, he has been using his savings for living expenses and to support his family, as well as borrowing money from friends;[50]
(e)He owns three (3) investment properties, all of which are subject to monthly mortgage repayments;[51]
(f)The rental payments from the investment properties referred to at (e) above are his ‘only source of income’;[52] and
(g)He sends $1,500 per month to Sri Lanka to support his elderly parents and sister.[53]
[47] Second Respondent’s 11 June 2021 Affidavit, [19]-[20].
[48] Second Respondent’s 11 June 2021 Affidavit, [18]-[20].
[49] Second Respondent’s 11 June 2021 Affidavit, [21].
[50] Second Respondent’s 11 June 2021 Affidavit, [23]-[24].
[51] Second Respondent’s 11 June 2021 Affidavit, [25].
[52] Second Respondent’s 11 June 2021 Affidavit, [26].
[53] Second Respondent’s 11 June 2021 Affidavit, [27]-[28].
The Applicant noted that as at 14 May 2021, the Second Respondent was a director of six (6) companies, in addition to the First Respondent and Lumi Group Pty Ltd.[54] As no evidence was provided by the Second Respondent about these directorships, or the income they generate, the Court considers that a full picture of the Second Respondent’s financial circumstances has not been provided to the Court.
[54] Applicant’s Penalty Submissions, [63].
The Applicant submitted, and the Court agrees, that the ‘incomplete’ evidence of financial hardship provided by the First and Second Respondents is insufficient to establish whether a particular penalty would be crushing or oppressive if imposed upon it.
Third Respondent
Mr Piwkowski, CEO of the Third Respondent, provided the following evidence of the Third Respondent’s financial position:
(a)In 2007, it employed approximately 40 employees and had an annual turnover of $6 million;[55]
(b)In the 2012 financial year, it had an annual turnover of $11 million and a profit margin of $670,000; [56]
(c)In the 2016 financial year, it had an annual turnover of $25.3 million and a net profit of $1.2 million;[57]
(d)As at February 2017, it employed 159 people, 126 of whom were cleaning staff;[58]
(e)By June 2017, it employed 169 people, 134 of whom were cleaning staff;[59]
(f)In the 2017 financial year, it had an annual turnover of approximately $30.8 million and a profit of $1.4 million;[60]
(g)In the 2018 financial year, it had an annual turnover of $39.6 million and a profit of $1.4 million;[61]
(h)In the 2020 financial year, it had an annual turnover of $49.8m and a profit of $3.5 million;[62] and
(i)As at June 2021, it employed 2098 people, 2049 of whom were cleaning staff.[63]
[55] Piwkowski Affidavit, [8].
[56] Piwkowski Affidavit, [9].
[57] Piwkowski Affidavit, [10], Annexure MP-1.
[58] Piwkowski Affidavit, [11].
[59] Piwkowski Affidavit, [12].
[60] Piwkowski Affidavit, [13], Annexure MP-2.
[61] Piwkowski Affidavit, [15], Annexure MP-3.
[62] Piwkowski Affidavit, [16], Annexure MP-4.
[63] Piwkowski Affidavit, [17].
It is plain from the evidence in the preceding paragraph that the Third Respondent has grown significantly as a company since its establishment. As such, I agree with the submission of the Applicant that there is no basis upon which to mitigate the penalty imposed on the Third Respondent on the basis of the Third Respondent’s size and financial position.[64]
Involvement of senior management in the breaches
[64] Applicant’s Penalty Submissions, [68].
First and Second Respondents
The Second Respondent was at all relevant times the sole director of the First Respondent and as such, was the person responsible for the direction, management and supervision of the First Respondent and its employees. This is not disputed by the First or Second Respondents.[65]
[65] First and Second Respondents Penalty Submissions, [30].
The admissions by the Second Respondent in respect of his involvement in the First Respondent’s contraventions demonstrate that the contraventions were derived from senior management of the First Respondent.
Third Respondent
Mr Petrevski was at all material times the director and secretary of the Third Respondent, and the Third Respondent’s admissions to involvement in contraventions are based, in part, upon the knowledge and conduct of Mr Petrevski.[66]
[66] Statement of Agreed Facts, [43] and [63].
Similarly as to the Second Respondent, Mr Petrevski’s involvement in the contraventions demonstrate that the contraventions were derived from the top of the Third Respondent.
Deterrence
General deterrence
In this case there is a need for general deterrence in the cleaning services industry (Cleaning Industry), particularly in respect of the contractual arrangements that gave rise to the Respondents’ contraventions. Although it is noted that the Third Respondent has moved away from this business model,[67] both his evidence,[68] and the findings of Judge Jones in Fair Work Ombudsman v First Group of Companies Pty Ltd [2018] FCCA 1228 at [155], demonstrate the prevalence of subcontracting arrangements in the Cleaning Industry generally.
[67] Piwkowski Affidavit, [71].
[68] Piwkowski Affidavit, [76].
The Court is therefore conscious of the need to ensure that other businesses in the Cleaning Industry are deterred from engaging in similar contravening conduct as the Respondents.
Specific deterrence
The Court notes that although the First Respondent is no longer trading, it remains registered as a company. As such, specific deterrence is appropriate to ensure that the First Respondent does not engage in contraventions of the FW Act in the future.
This is also true of the Second Respondent, who remains the director of the First Respondent and, as discussed above, the director of a number of other companies.
The Court therefore concludes that there is a need to impose penalties that will aim to specifically deter the Respondents from engaging in the same contravening conduct in the future.
DETERMINING THE QUANTUM OF THE PENALTY
The Applicant submitted in the Applicant’s Penalty Submissions, Annexure B: Ranvel Proceeding, Tables 1 to 3, that the appropriate penalty for each contravention should be as follows:
Contravention Description of contravention Proposed penalty s 45 FW Act Failing to pay minimum hourly rates First Respondent: $21,600
Second Respondent: $4,320s 45 FW Act Failing to pay casual loading First Respondent: $21,600
Second Respondent: $4,320
Third Respondent: $21,600s 45 FW Act Failing to pay Saturday Penalty First Respondent: $21,600
Second Respondent: $4,320
Third Respondent: $21,600s 45 FW Act Failing to pay Sunday Penalty First Respondent: $21,600
Second Respondent: $4,320
Third Respondent: $21,600s 45 FW Act Failing to pay Public Holiday Penalty First Respondent: $10,800
Second Respondent: $2,160
Third Respondent: $10,800s 45 FW Act Failing to pay Superannuation Contributions First Respondent: $21,600
s 535(1) FW Act Failing to make and keep records First Respondent: $8,100
s 535(2) FW Act Failing to make and keep records with certain information First Respondent: $5,400
s 536 FW Act Failing to give the Employees payslips First Respondent: $10,800 Total First Respondent: $143,100
Second Respondent: $19,440
Third Respondent: $75,600Total proposed penalty after discount First Respondent: $114,480 (20% discount)
Second Respondent: $15,552 (20% discount)
Third Respondent: $71,820 (5% discount)
The Court considers that the penalties proposed by the Applicant for the contraventions as set out in the table in the preceding paragraph are appropriate. Therefore, the penalty to be imposed against the First Respondent amounts to $114,480, the penalty against the Second Respondent amounts to $15,552, and the penalty against the Third Respondent amounts to $71,820.
Totality
After undertaking the assessment of a penalty for each contravention, the final step for the Court is to look at the aggregate penalty to determine whether it is appropriate and proportionate to the Respondents’ contravening conduct.
While the penalty imposed must not be crushing or oppressive, it must nevertheless bear relativity to the seriousness of the conduct engaged in, and not have the effect that the conduct is exonerated: Kelly v Fitzpatrick [2007] FCA 1080 at [30]; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 at [23], [71] and [102]; Fair Work Ombudsman v First Group of Companies Pty Ltd [2018] FCCA 1228 at [77].
Further, the High Court in Pattinson stated, at [46]:
46. […] an “appropriate” penalty is one that strikes a reasonable balance between oppressive severity and the need for deterrence in respect of the particular case.
The Applicant submitted that the proposed penalties were appropriate and that no further discount for totality was appropriate or necessary.[69]
[69] Applicant’s Penalty Submissions, [84].
The First and Second Respondents submitted that the penalties to be imposed upon them should not be ‘oppressive and/or crushing’.[70] This was repeated specifically in respect to the Second Respondent, where it was submitted that the penalty imposed upon him should not ‘significantly burden or crush his family unit’.[71]
[70] First and Second Respondents Penalty Submissions, [52].
[71] First and Second Respondents Penalty Submissions, [54].
The Third Respondent agreed to the penalties proposed by the Applicant.[72]
[72] Third Respondent’s Penalty Submissions, [30]; Transcript P22:L37-39.
The Court accepts the submissions made by the Applicant, as agreed to by the Third Respondent, and considers that in all the circumstances the proposed penalties are proportionate to the seriousness of the Respondents’ contravening conduct. No further discount should be imposed other than that as allowed for the Respondents’ cooperation discussed earlier in these Reasons for Judgment.
TIMEFRAME FOR PAYMENT
The Applicant sought that the penalties be paid by the Respondents within 90 days of the Court’s orders.[73] It does not appear that the Respondents have challenged this position, nor was it addressed at the Penalty Hearing.
[73] Applicant’s Penalty Submissions, p 24.
In these circumstances, I am satisfied that a period of 90 days from the date of the Court’s orders is appropriate for the Respondents to pay the penalties imposed, noting that there has been substantial time between the conclusion of the Penalty Hearing for the Respondents to make appropriate financial arrangements for their payment.
Accordingly, an order will be made that the Respondents pay the penalties to the Commonwealth of Australia within 90 days of the Court’s orders.
CONCLUSION
The Court finds that a penalty of $114,480 is to be paid by the First Respondent to the Commonwealth of Australia for the First Respondent’s Contraventions within 90 days of the date of the Court’s orders.
The Court finds that a penalty of $15,552 is to be paid by the Second Respondent to the Commonwealth of Australia for the Second Respondent’s Contraventions within 90 days of the date of the Court’s orders.
The Court finds that a penalty of $71,820 is to be paid by the Third Respondent to the Commonwealth of Australia for the Third Respondent’s Contraventions within 90 days of the date of the Court’s orders.
Declarations and Orders will be made accordingly.
I certify that the preceding one hundred and four (104) numbered paragraphs are a true copy of the Reasons for Judgment of Her Honour Judge C.E. Kirton KC. Associate:
Dated: 3 August 2023
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