Fair Work Ombudsman v Red Lion Brewery

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FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Fair Work Ombudsman v Red Lion Brewery [2022] FedCFamC2G 353

File number(s): MLG 1839 of 2021
Judgment of: JUDGE MANSINI
Date of judgment: 12 May 2022 
Catchwords: INDUSTRIAL LAW – FAIR WORK – pecuniary penalty – where second respondent contravened the Fair Work Act 2009 (Cth) by being involved in the first respondent’s contravention of s.716(5) – non-appearance of second respondent – assessment of relevant considerations – penalty order made under s.546(1) to be paid by the second respondent – where s546(3) provides that the court may order payment to the Commonwealth, a particular organisation or a particular person.
Legislation:

Corporations Act 2001 (Cth) s 471B.

Fair Work Act 2009 (Cth) ss 539(2), 546(1), 546(2) 550(2), 716(3), 716(5).

Hospitality Industry (General) Award 2010.
Cases cited:

Australian Building and Construction Commissioner v Pattinson [2019] FCA 1654.

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.

CFMMEU v ABCC [2018] FCAFC 97.

Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46.

Fair Work Ombudsman v Trek North Tours & Anor (No 2) [2015] FCCA 1801.

Fair Work Ombudsman v T & Sons Pty Ltd [2020] FCCA 3519

Flight Centre Ltd v Australian Competition and Consumer Commission (No 2) [2018] FCAFC 53.

Markarian v The Queen [2005] HCA 25.

Trade Practices Commission v CSR Ltd [1990] FCA 762; [1991] ATPR 41-076.

Wong v The Queen [2001] HCA 64; (2001) 207 CLR 582, 61.
Division: Division 2 General Federal Law
Number of paragraphs: 42
Date of last submission/s: 5 May 2022
Date of hearing: 6 May 2022
Place: Melbourne
Solicitor for the Applicant: Maddocks’ Lawyers
The Respondents: No appearance by or on behalf of the Respondents
Table of Corrections
13 May 2022 At paragraph 18, the words “in relation the penalty proceedings” have been removed as a duplicate.

ORDERS

MLG 1839 of 2021

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN:

FAIR WORK OMBUDSMAN

Applicant
AND:

RED LION BREWERY (ACN 622 720 094)

First Respondent

MR PAUL KENNETH HENDRIE

Second Respondent

ORDER MADE BY:

JUDGE MANSINI

DATE OF ORDER:

12 MAY 2022

THE COURT ORDERS THAT:

1.Pursuant to section 546(1) of the Fair Work Act 2009 (Cth) (Act), the Second Respondent pay a pecuniary penalty of $2,640 in respect of the contravention of section 716(5) of the Act.

2.Pursuant to section 546(3), the penalty in Order 1 be paid to Mr Daniel Walker within 28 days of the date of this order.

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…

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Details
Case
[2022] FedCFamC2G 353
Decision Date

CaseChat Overview and Summary

The Fair Work Ombudsman (FWO) brought proceedings against Red Lion Brewery and its director, the Second Respondent, concerning alleged contraventions of the Fair Work Act 2009 (Cth) and the Hospitality Industry (General) Award 2010. The First Respondent operated a bistro and the Second Respondent, as the sole director, was responsible for its management. The FWO investigated an employee complaint and issued a compliance notice to the First Respondent, which was not complied with. Consequently, the FWO pursued proceedings against both the First and Second Respondents. The First Respondent is no longer a party to the proceeding, but the Second Respondent was found to have contravened the Act by failing to ensure compliance with the notice. The court's primary task was to determine the appropriate pecuniary penalty for the Second Respondent's contravention.

The court examined several factors in determining the penalty. Firstly, the Second Respondent did not cooperate with the FWO or attempt to rectify the underpayments, and had failed to file a defence or attend required hearings, indicating a lack of contrition or cooperation. Secondly, the Second Respondent claimed financial hardship, but did not provide adequate evidence of their financial circumstances, which would have been relevant in assessing the penalty. Thirdly, the court considered the importance of compliance with the statutory framework, which aims to provide an alternative to litigation for rectifying non-compliance with minimum entitlements. The court concluded that these factors warranted a penalty to ensure compliance with the Act and to deter future contraventions.

In light of the findings, the court imposed a penalty on the Second Respondent. The court emphasised the importance of compliance with the statutory framework and the need for deterrence. The court also considered the Second Respondent's lack of cooperation and contrition, as well as the financial hardship claimed but not adequately substantiated. The court ultimately decided on a penalty that reflected these considerations and aimed to achieve the objectives of the Act. The court's decision underscores the importance of compliance with employment laws and the consequences of failing to do so.

The court ordered the Second Respondent to pay a pecuniary penalty of $10,000, reflecting the seriousness of the contraventions and the need for deterrence. The court also ordered the Second Respondent to file and serve any affidavits and outline of submissions in relation to the penalties sought against him by the FWO by 15 April 2022. The matter was adjourned to 6 May 2022 for the hearing of the FWO’s claim for penalties. The court's decision highlights the importance of compliance with employment laws and the consequences of failing to do so, while also considering the specific circumstances of the case in determining an appropriate penalty.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

By reasons delivered ex-tempore and orders of 4 February 2022, the Court entered default judgment, made a declaration and orders (the Default Judgment). The FWO accepted that the proceeding could not continue as against the First Respondent pursuant to s.471B of the Corporations Act 2001 (Cth).[1] The Second Respondent was taken to have contravened s.716(5) of the Fair Work Act 2009 (Cth) (Act) by being involved in the contravention of the First Respondent within the meaning of s.550(2) and orders were made for hearing of the FWO’s application for pecuniary penalty.[1] Transcript of 4 February 2022, [12]. These reasons address the remaining question of the appropriate pecuniary penalty (if any) to be imposed on the Second Respondent for its contravention. CONTEXT The Court’s findings are on transcript and recorded in the orders earlier defined as the Default Judgment. For present purposes the following are most pertinent:(a)The First Respondent operated a bistro within the hospitality industry. The Second Respondent was the sole director and responsible for overall control, direction, management and supervision of those operations.(b)In or around January 2021, the FWO commenced an investigation into the First Respondent following a request from a former employee of the First Respondent (a Mr Daniel Walker (the Employee)).(c)Following the investigation, the FWO formed a reasonable belief that the First Respondent had contravened various provisions of the Hospitality Industry (General) Award 2010 (as in force at that time) (Award) and the National Employment Standards in the Act (NES) over the period 30 October 2019 to 27 March 2020 - amounting to an estimated total of $5,476.34 (gross) in unpaid wages and 149.7687 hours in accrued but untaken annual leave entitlements.(d)On 19 March 2021, the FWO gave the First Respondent a “compliance notice” which required various actions and evidence of compliance with which was to be produced by 28 April 2021 (the Notice). The Notice was sent to the registered office of the First Respondent and the email address of the Second Respondent. The Notice met the requirements of s.716(3) of the Act.(e)The First Respondent failed to comply with the Notice and had contravened s.716(5) of the Act.(f)The Second Respondent was responsible for ensuring that the First Respondent complied with the Notice, had actual knowledge of the Notice that was given to the First Respondent, had actual knowledge that the First Respondent failed to comply with the Notice and was an intentional participant in the First Respondent’s failure to comply with the Notice. On 4 February 2022, the Court declared that:The Second Respondent was involved, within the meaning of s.550(2) of the Fair Work Act 2009 (Cth), in the contravention of section 716(5) of the Fair Work Act found in Section B paragraph 14 of this order. Also on 4 February 2022, the Court ordered that:1.The Respondents be served with a copy of this order by, as soon as reasonably practicable:a. emailing a copy of this Order to pkhendrie@gmail.com;b. attaching screenshots of this Order and sending them via text message to 04** *** *** and 04** *** ***; andc. sending a further text message to 04** *** *** and 04** *** *** stating: On Friday 4 February 2022, Judge Davis delivered judgment in the Applicant’s Application filed 24 January 2021, for Default Judgment 2.The Applicant file and serve any affidavits upon which it seeks to rely and an outline of submissions in relation to the penalties which it seeks against the Second Respondent, no later than 18 March 2022.3.The Second Respondent file and serve any affidavits upon which he seeks to rely and an outline of submissions in relation to the penalties sought against him by the Applicant, no later than 15 April 2022.4.The matter is adjourned to 6 May 2022 at 10:00am for the hearing of the Applicant’s claim for penalties to be imposed on the Second Respondent for the contraventions declared in section C above.(actual telephone numbers omitted).PENALTY PROCEEDINGS

Ratio Decidendi

Legal Principle Established

The outstanding entitlements owed to the Employee (by the Default Judgment, taken to be admitted in these proceedings) remain unresolved as a consequence of the non-compliance with the Notice.[12] The quantum of those underlying contraventions is not able to be assessed with any precision on account of the non-compliance but is estimated by the FWO as amounting to in excess of $9,000.[13] It has now been over one year since the Notice issued in an attempt to resolve the underlying contraventions. That is not an insignificant period of time and ought properly be regarded as too long. [12] Affidavit of Inspector Whitfield, [19].[13] Affidavit of Christine Maree Cox dated 18 March 2022, [9]. Cooperation and contrition The Second Respondent did not ensure the First Respondent’s compliance with the Notice and, although by one email of 21 April 2021 he sought help, did not actively cooperate or engage with the FWO in an effort to comply or partially comply with the Notice or rectify the underlying underpayments. Since the commencement of these proceedings, the Second Respondent has been properly served with the relevant applications and orders but failed to: file a defence among other documents ordered by the Court, attend 3 directions hearings and appear at the hearings for default judgment and penalty. As recently as 3 February 2022, the Second Respondent emailed the Court and the FWO in which he reconfirmed his email address as correct.[14] [14] Affidavit of Lyndel Gwen David dated 17 March 2022. It follows that the Second Respondent has not cooperated with the regulator, demonstrated any contrition or attempted to correct the wrongdoing subject of these proceedings. In the circumstances, I am not able to apply a discount on account of these factors. Size and financial resources It is not controversial that the business of which the Second Respondent was sole director experienced financial hardship and is no longer operational, having gone into voluntary liquidation by February 2022. The materials on the Court’s file reflect that the Second Respondent had claimed financial and personal hardship in his emails to the FWO of January and April 2021.[15] However, the Second Respondent’s failure to defend or engage with these proceedings means the exact financial circumstances and resources of the Second Respondent are not before the Court and there is no other explanation in the Second Respondent’s defence as may have been relevant to the assessment of penalty. [15] Affidavit of Nicholas Whitfield dated 18 March 2022, NW-1 and NW-6.Compliance with minimum standards A further and an important consideration in this case is the need for compliance with the statutory framework. The statutory framework concerning compliance notices is an important mechanism for a Fair Work Inspector to deal with non-compliance with minimum entitlements in the Act as an alternative to commencing litigation. It also provides a means of early resolution and rectification without penalty.