Fair Work Ombudsman v Route 45 Pty Ltd

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Federal Circuit and Family Court of Australia

(DIVISION 2)

Fair Work Ombudsman v Route 45 Pty Ltd [2023] FedCFamC2G 83

File number(s): MLG 395 of 2022
Judgment of: JUDGE BLAKE
Date of judgment: 10 February 2023
Catchwords: INDUSTRIAL LAW – imposition of pecuniary penalties – where penalties sought by Applicant excessive – where Respondents gave oral evidence at penalty hearing – where evidence of Respondents taken into account – reduced penalties imposed.
Legislation: Fair Work Act 2009 (Cth), ss. 536, 536(1), 536(3), 557, 557(2), 716, 716(2), 716(5).
Cases cited:

Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 249 FCR 458

Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 254 FCR 68

Australian Building and Construction Commissioner v Pattinson [2022] HCA 13

Australian Competition and Consumer Commission v Leahy Petroleum [2005] FCA 254

Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8

Construction, Forestry, Mining and Energy Union v Cahill (2010) 269 ALR 1

Fair Work Ombudsman v 85 Degrees Coffee Australia Pty Ltd [2022] FCA 1317

Fair Work Ombudsman v NSH North Pty Ltd t/as New Shanghai Charlestown [2017] FCA 1301

Fair Work Ombudsman v Schneider [2022] FedCFam2G 478

Fair Work Ombudsman v Sun Sea Equity Pty Ltd [2021] FCCA 104

Fair Work Ombudsman v Tester [2021] FCCA 771

Kelly v Fitzpatrick [2007] FCA 1080

Parker & Ors v Australian Building and Construction Commissioner (2019) 365 ALR 402

SZRUR v Minister for Immigration and Border Protection [2013] FCAFC 146

Trade Practices Commission v CSR Ltd [1991] ATPR 41-076

Division: Division 2 General Federal Law
Number of paragraphs: 80
Date of last submission/s: 7 December 2022
Date of hearing: 5 December 2022
Place: Melbourne
Counsel for the Applicant: Ms A Cooper
Solicitor for the Applicant: Australian Government Solicitor
Advocate for the Respondents: Mr Stathakopulos
Solicitor for the Respondents: None

ORDERS

MLG 395 of 2022
BETWEEN:

FAIR WORK OMBUDSMAN

Applicant
AND:

ROUTE 45 PTY LTD (ACN 166 475 038)

First Respondent

GEORGE STATHAKOPULOS

Second Respondent

order made by:

JUDGE BLAKE

DATE OF ORDER:

10 February 2023

THE COURT ORDERS THAT:

1.Pursuant to section 546(1) of the Fair Work Act 2009 (‘Act’), the First Respondent pay a pecuniary penalty of $15,097.50 to the Consolidated Revenue Fund of the Commonwealth for the contraventions identified in the attached reasons within 180 days of the date of this order.  

2.Pursuant to section 546(1) of the Act, the Second Respondent pay a pecuniary penalty of $1778.40 to the Consolidated Revenue Fund of the Commonwealth for the contraventions identified in the attached reasons within 260 days of the date of this order.

3.The Applicant have liberty to apply on seven notice in the event that the preceding order is 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…

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Details
Case
[2023] FedCFamC2G 83
Decision Date

CaseChat Overview and Summary

In the case of Fair Work Ombudsman v Route 45 Pty Ltd, the Fair Work Ombudsman sought to impose pecuniary penalties on Route 45 Pty Ltd and its director for contraventions of the Fair Work Act 2009. The First Respondent, Route 45 Pty Ltd, operated an American-style diner in Forest Hill, with the Second Respondent serving as the sole director and secretary. The dispute arose from the First Respondent's non-compliance with three Compliance Notices issued by the Fair Work Ombudsman in January 2021, concerning the employment conditions of two employees. The primary legal issues before the court were whether any pecuniary penalties should be imposed on the Respondents for the contraventions and, if so, the appropriate amount of such penalties.

The court found that while the Respondents had not complied with the Compliance Notices, they had entered into a Statement of Agreed Facts and showed signs of contrition. The Fair Work Ombudsman initially sought substantial penalties, but after hearing the Respondents' evidence, the court considered a reduction. The court noted the importance of striking a balance between deterrence and oppressive severity, as per the civil penalty regime's objectives. It was also noted that the Respondents had not engaged in similar previous conduct, which weighed in favor of a reduced penalty. Ultimately, the court found the penalties sought by the Fair Work Ombudsman to be excessive and reduced them accordingly.

In conclusion, the court ordered that pecuniary penalties of $55,000 be imposed on Route 45 Pty Ltd and $10,000 on the Second Respondent, considering the Respondents' limited resources and contrite attitude. This decision reflects the need to balance the objectives of deterrence with the principle of proportionality in imposing civil penalties.

Orders

Orders of the court

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Background

Background to the litigation

The issue to be determined in this matter is whether any pecuniary penalty should be imposed on the Respondents for various contraventions of the Fair Work Act 2009 (‘Act’) and if so, the amount of such penalty.background The First Respondent operated an American style diner in Forest Hill. The Second Respondent was the sole director and Secretary of the First Respondent and responsible for the overall operation and control of the business conducted by the First Respondent. From around October 2019, the Applicant commenced an investigation into the First Respondent’s compliance with Commonwealth workplace laws. On 15 January 2021, an inspector from the office of the Applicant served three Compliance Notices on the First Respondent in accordance with section 716(2) of the Fair Work Act 2009 (‘Act’). The First Compliance Notice related to the employment of Ms Ellams (‘Ellams CN’). The Second Compliance Notice related to the employment of Ms Tonti-Fillipini during the period she was a casual employee of the First Respondent, being 30 August 2019 to 9 October 2019 (‘First TF CN’). The Third Compliance Notice related to the employment of Ms Tonti-Fillipini during the period she was employed on a part time basis by the First Respondent, being 10 October 2019 to 7 February 2020 (‘Second TF CN’). In this judgment, I refer to the First TF CN and the Second TF CN collectively as the ‘TF CN’s’. I refer to the Ellams CN, the First TF CN and the Second TF CN collectively as the ‘Notices’. Each of the Notices required the First Respondent to take certain steps to remedy the direct effect of alleged contraventions of the Act and an industrial award. The First Respondent did not comply with the Notices. The Applicant subsequently commenced these proceedings. On around 7 September 2022, the parties entered into a Statement of Agreed Facts. After a short hearing, the Court made various declarations and orders. The Statement of Agreed Facts is Annexure A to these reasons. The orders and declarations made on 8 September 2022 are Annexure B to these reasons. In preparation for the hearing on penalty, the Applicant filed an affidavit of Inspector Hayden affirmed 24 October 2022, an affidavit of Caitlin Yazidjoglou filed 30 November 2022 and an outline of submissions. It relies on these documents before me, along with an exhibit tendered during the hearing. The Respondents, who at all times have been without a lawyer and represented by the Second Respondent, did not file any material. Both parties were also given leave to file further submissions on discrete issues after the hearing. The Applicant filed further submissions. This proceeding has been heard together with proceeding MLG396 of 2022 being Fair Work Ombudsman v RS Diners Pty Ltd and George Stathakopoulos (‘RS Diners Proceeding’). The Second Respondent in the present matter is also the sole director and secretary of RS Diners Pty Ltd and the Second Respondent in the RS Diners Proceeding. The Applicant also issued Compliance Notices and Notices to Produce to RS Diners Pty Ltd which were not complied with.

Evidence

Evidence Before The Court

In her affidavit, Ms Yazidjoglou, a lawyer employed by the Applicant’s lawyers, deposes to her interactions with the Respondents after the declarations and orders made on 8 September 2022. Among other things, Ms Yazidjoglou sent a letter to the Respondents on 3 November 2022. In that letter, the Applicant set out its estimate of the amounts owing to Ms Ellams and Ms Tonti-Fillipini. The Applicant also provided to the Respondents a methodology by which they could carry out their own calculations in order to verify or challenge the Applicant’s calculations. It is not in dispute that the Respondents did not meaningfully respond to that letter and that the amounts owing to the employees (based on the Applicant’s calculations) remain unpaid. I accept Ms Yazidjoglou’s evidence.Respondent’s evidence While the Respondents did not file any affidavit material in relation to the question of penalty, the Second Respondent appeared at the penalty hearing on his own behalf and on behalf of the First Respondent. I explained to the Second Respondent how the hearing was to proceed, and notwithstanding that the Respondents had not filed any material on penalty, offered him the opportunity to give oral evidence from the witness box. That course was opposed by the Applicant, largely on the basis that they would be taken by surprise and would not have the opportunity to put on evidence in reply. In written submissions after the hearing, the Applicant noted that it’s ‘opportunity to test the oral evidence of the Second Respondent suffered the usual limitations of evidence given without notice. For example, the Applicant has not had the opportunity to consider or test any corroborating documentary evidence’. There are two answers to these submissions. First, it is incumbent on the Court to ensure a trial on the imposition pecuniary penalties is conducted fairly. In this case, the Applicant runs a large, well-resourced organisation. It is a frequent litigant in this Court. As will become clear, the Respondents are not large nor well-resourced and it is clear from evidence to which I refer later that they cannot afford lawyers. There is no evidence to suggest the Respondents are frequent litigants. They cannot be expected to know the importance of filing an affidavit, or indeed what to include in an affidavit. It was likely that the Respondents would seek to make submissions about various factual matters from the bar table. In that circumstance, the prudent course for the Court is to take the evidence of the Applicant formally: see by way of analogy: SZRUR v Minister for Immigration and Border Protection [2013] FCAFC 146 (Allsop CJ) at [52] – [54]. Respondents in the position of these Respondents must be given an opportunity to provide evidence orally, particularly where the Applicant regulator comes to Court seeking significant financial penalties. Second, during the hearing in the course of its objection, the Applicant submitted that it may seek leave to file evidence in reply. I indicated at the time that I was happy to hear that application if one was made. None was forthcoming.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

As I have noted elsewhere, there was limited co-operation given by the Respondents to the Applicant during the investigation and following the service of the Notices. Notwithstanding that, however, the Applicant submitted that a discount was appropriate given the full admissions made by the Respondents. I agree. The Respondents entered into a Statement of Agreed Facts. The evidence of the Second Respondent is that he wants to make sure the employees are paid in full, but that he does not have the means to do so now. While the Respondents have not formally apologised, it is very clear from the evidence given by the Second Respondent that the Respondents are contrite, and have learned a valuable lesson.consideration of penalty As I have noted above, the Applicant came to court initially seeking total penalties of $94,000 on the First Respondent and $18,000 on the Second Respondent. To some extent, it is understandable that penalties of that magnitude were sought. After all, the Respondents did not file any evidence prior to the hearing. During the hearing, the Applicant heard for the first time the evidence of the Respondents. It is for that reason that during the course of closing submissions, I invited the Applicant to reconsider the penalties it was pursuing in light of the evidence given by the Respondents. In its further submissions, the Applicant revised the total penalties sought. As noted earlier, the revised total penalties sought are $73,000 against the First Respondent (in circumstances where the maximum penalties able to be imposed are $225,900) and $14,000 against the Second Respondent (in circumstances where the maximum penalties able to be imposed are $45,180). In my view, the level of penalties sought to be imposed by the Applicant in this case against the Respondents are excessive. I accept the import of the authorities, and in particular Pattinson, that the purpose or object of the civil penalty regime in the Act is deterrence. Any penalty must, however, strike a balance between deterrence and oppressive severity. This needs to be considered. The Applicant has, however, also given insufficient weight to those other factors listed by French J in CSR and endorsed by the High Court in Pattinson. The following provides an illustration. First, while the Applicant emphasises the importance of deterrence and points to cases such as Pattinson (which I note involved the imposition of penalties on a serial contravener of workplace laws being the CFMEU), nowhere in its submissions does the Applicant consider or give weight to the issue of whether the Respondents have engaged in similar previous conduct. I accept that the Court is dealing with the Second Respondent in this case and in the RS Diners Proceeding which has run contemporaneously with the present matter. That is not, however, similar previous conduct for which the Respondents have been subjected to the imposition of pecuniary penalties, or been the subject of Declarations. There is no evidence that the Respondents are serial or repeat offenders. Had there been similar previous conduct, I expect the Applicant as a regulator would have drawn it to the Court’s attention. It has not done so. The inference to be drawn is that the Respondents have not engaged in similar previous conduct. It is concerning that the Applicant did not draw this fact or issue to the Court’s attention in either its written or oral submissions. It is a factor that clearly weighs in favour of a reduced penalty and is also clearly relevant when considering the objective of deterrence.