Fair Work Ombudsman v Route 45 Pty Ltd

[2022] FedCFamC2G 83

Federal Circuit and Family Court of Australia

(DIVISION 2)

Fair Work Ombudsman v Route 45 Pty Ltd [2022] 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 (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

JUDGE BLAKE:

1. 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

2. 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.

3. From around October 2019, the Applicant commenced an investigation into the First Respondent’s compliance with Commonwealth workplace laws.

4. 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.

5. The First Respondent did not comply with the Notices.  The Applicant subsequently commenced these proceedings.

6. 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.

7. 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.

8. 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.

9. At the hearing on penalty, both this matter and the RS Diners Proceeding were called on together. The Applicant presented its evidence in both cases.  The Second Respondent took to the witness box and gave evidence in respect of both matters.  Closing submissions were then received.

   the evidence before the court

10. The Court has before it the Statement of Agreed Facts dated 7 September 2022, set out at Annexure A.

    Applicant’s evidence

11. Each of the affidavits of Inspector Hayden and Ms Yazidjoglou were read into evidence.  Neither was required for cross examination. 

12. In her affidavit, Inspector Hayden deposes to the investigation conducted by the Applicant, the service of the Notices on the First Respondent, and the attempts by the Applicant to follow-up with the Respondents.  Inspector Hayden deposes that at no time did the Respondents provide any reasonable excuse for failing to comply with the Notices, provide any indication of whether they were intending to comply with the Notices, or provide any evidence that the First Respondent was not in a financial position to undertake the steps required by the Notices.  Inspector Hayden has also attached to her affidavit Equifax searches.  These searches show, among other things, that the First Respondent remains registered, and that the Second Respondent is a director and secretary of the First Respondent as well as a director and secretary of Route 45 Pran Central Pty Ltd, and a director and secretary of RS Diners Pty Ltd.  I accept the evidence of Inspector Hayden. 

13. 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

14. 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’.

15. 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.

16. The Second Respondent gave the following evidence:

    (a)the First Respondent operated the restaurant at Forest Hill until it was closed during the COVID-19 restrictions. The business has not re-opened;

    (b)the First Respondent does not operate any other businesses;

    (c)the First Respondent does not have a bank account and does not own any other assets;

    (d)the First Respondent (or the Second Respondent on behalf of the First Respondent) has liabilities to persons or entities that were suppliers to the business of around $200,000;

    (e)the Second Respondent owns a house with his wife.  His marriage has broken down. Accordingly his share in the house is 50%.  This is his only asset, after his car was repossessed.  The house was recently placed on the market with an estimated selling range of $580,000-$620,000.  There is a mortgage attached to the home of $400,000.  There are caveats that have been placed on the home by creditors whom the Second Respondent says are suppliers from whom he brought equipment for the businesses operated by RS Diners Pty Ltd or the First Respondent;

    (f)he accepts the Applicant’s calculations of the amounts owing to Ms Ellams ($4362.21) and Ms Tonti-Fillipini ($8814.91);

    (g)that he made a stupid mistake and should have paid the employees when he had the money, but now he has lost everything;

    (h)that he accepts that not paying his employees properly was the wrong thing to do, and that he has learnt that he has to pay  on time and not be arrogant or selfish

17. The Second Respondent was cross examined briefly. His evidence of what occurred and what has happened is compelling and is set out below:

    You weren’t trying to assist the Ombudsman with this investigation, were you?   No, not – no, I wanted to, but I couldn’t.

    When you say you couldn’t assist with the investigation by providing documents and records sought by notices to produce, what do you mean by that?   I was contemplating whether to kill myself or try and do it.  I couldn’t work.  I couldn’t sleep.  I haven’t slept in two and a half years.  I just didn’t have the energy any more.  I was broke.  So I didn’t do it.  And to be honest with you, if I had – you know, if I had this, I would have done it.  So, yes, I didn’t do it.  I apologise.  So I knew what I owed to the people.  I’ve told you many times, “Stop chasing me, stop harassing me, I’m going to pay them, leave me alone.”  But when I have 20 people threaten me every day, and then I have you sending me 50, 60 pages of documents, what am I going to read?  They go on and on and on and on.  I was just throwing them away.  I was baffled.  I’m shaking right now.  So I was being – I was contemplating for the past few years to kill myself.  I don’t believe in depression, because I’m the person who looks at the glass half full, never half empty.  I’m not that type of person.  I’m a fighter.  I’m a kid who has worked in the family, who knows about ethics.  So when I don’t send out – when I didn’t reply to you, I was just fed up.  I was done.  So that’s my answer.

    It’s correct, isn’t it, Mr Stathokopolus, that you hoped this matter would go away if you didn’t engage with it?   No, I just didn’t – at a point, like I said, I was – I wasn’t in – I wasn’t in this world.  I was at a point where I – not that I didn’t care.  I couldn’t see a solution.  Like, I’m not – I’m not – I’m not those big hotshots like George Calombaris, who stole $6 million from the employees, and all of a sudden they paid it in one day.  I came back to Australia 12 years ago with 8000 euros in my pocket.  I worked hard.  I worked like a dog.  I bought a cheap house in Frankston North worth $260,000.  I worked hard.  I worked for Bobo’s as an employee.  I bought them off slowly, slowly, slowly, until I got the whole store to myself.  Then I sold it.  I made a good name for myself.  I had a great name in Frankston.  I was up here in everybody’s eyes, up here.  I sold it.  I opened two more businesses, got hit by COVID, and when George lost everything and George was down here on the floor, friends disappeared, employees hated you, every – the whole world went crumbling.  So that is my life.  So Fair Work should look a little deeper into things sometimes when someone says, “Yes, we’re in trouble here.”  I owe how much, $23,000 to those employees, four employees.  What about the hundreds that I had before that?  No complaints to them.  I’ve paid them all.  It’s just some miscalculations, some misjudgement from my end, some mistakes from my end.  Yes, I am stupid.  I should have paid it right there and then when I could have.  But I was arrogant, too, when I was up here.  So, yes, that’s my reply.  I wasn’t – I wasn’t waiting for it to go away, because nothing goes away here in Australia.  Here in Australia, you breathe the air and you’ve got to pay for it.  You’ve got to pay for everything. 

18. I accept the evidence of the Second Respondent and intend to give it weight. The evidence of the Second Respondent was credibly given.  It was sincere.  It was not subject to any serious or sustained challenge during cross examination.  I accept his evidence of what occurred as a truthful account.  He acknowledged his mistakes.  He has endeavoured to repay the amounts he owes to employees, and told the Court frankly that he intends to meet his obligations.  That his businesses failed during the extended lockdowns in Melbourne, and that the Respondents have been left with debts and creditors chasing them, is readily able to be believed.

    the submissions of the parties

19. The Applicant filed a comprehensive outline of submissions on penalty, and spoke to those submissions orally during the hearing. In those submissions, the Applicant emphasised among other things the importance of respondents complying with the Notices; emphasised the importance of complying with the provisions of the Act regarding giving payslips to employees; underlined the importance of both specific and general deterrence; submitted that the Notices remain not complied with; that the contraventions were deliberate; that it has been forced to expend funds to secure compliance and that there has been no remorse or regret.

20. In its initial submissions filed with the Court, the Applicant sought the imposition of:

    (a)a penalty against the First Respondent for failing to comply the Ellams CN.  The single penalty sought for this contravention was at 70% of the maximum;

    (b)a single penalty against the First Respondent for failing to comply with the First TF CN and the Second TF CN.  The single penalty sought for this contravention was at 70% of the maximum;

    (c)a single penalty for contravening section 536(1) of the Act in relation to the failure to provide payslips to Ms Ellams and Ms Tonti-Fillipini. The penalty sought was at 50% of the maximum;

    (d)a single penalty for contravening section 536(3) of the Act with respect to the provision of false and misleading payslips to Ms Ellams and Ms Tonti-Fillipini. The penalty sought was at 60% of the maximum;

    (e)a penalty against the Second Respondent for his involvement in failing to comply with the Ellams CN. The penalty sought for this contravention was 70% of the maximum;

    (f)a single penalty against the Second Respondent for his involvement in failing to comply with the First TF CN and the Second TF CN. The single penalty sought for this contravention was 70% of the maximum;

    (g)a single penalty against the Second Respondent for his involvement in the failure to issue payslips to Ms Ellams and Ms Tonti-Fillipini. The penalty sought was at 50% of the maximum;

    (h)a single penalty against the Second Respondent for his involvement in providing false and misleading payslips to each of Ms Ellams and Ms Tonti-Fillipini. The penalty sought was at 60% of the maximum.

21. The Applicant submitted that discounts should be applied to the penalties set out above.  Weighing that and other factors, the Applicant sought total penalties on the First Respondent of $94,000 and total penalties on the Second Respondent of $18,000.

22. During the course of closing submissions, I questioned whether the Applicant continued to press the level of penalties set out above, given the evidence it had heard from the Second Respondent.  I permitted the Applicant to amend its position, if it chose to do so, by notifying my Chambers after the conclusion of the hearing.  The Applicant subsequently made further submissions on penalty.  In summary, the Applicant’s amended position was to recommend total penalties of $73,000 on the First Respondent and a total of $14,000 in penalties on the Second Respondent.

1. The Second Respondent submitted, in essence, that he did not have the money to pay fines the Applicant was seeking to impose.  He told the Court he did not have enough money to buy lunch at the lunch adjournment, did not have enough money to take his car out of the car park he had parked in to attend Court, and that he was unable to afford to connect services to his new rental accommodation. His position is best illuminated from this part of his closing submissions:

   In the past six months I was working three jobs.  I was working at nights at ..... in Springvale.  I was working at Mantecado in Black Rock.  And I was working between 90 and 110 hours.  I got burnt out.  I was working more than – that was just to make the payments of my mortgage, which I have to sell now;  of my phone bill;  of my gas.  I lost my car.  And you’re going on, 30,000, 60,000, 30,000, just to make an example of me.  Where am I going to find that money, even if I wanted to pay you? 

   relevant Principles

2. In Fair Work Ombudsman v NSH North Pty Ltd t/as New Shanghai Charlestown [2017] FCA 1301 (‘NSH North’), Bromwich J set out at paragraph [36] the approach to be taken when determining penalty. In Kelly v Fitzpatrick [2007] FCA 1080 (‘Kelly’) at [14], the Federal Court set out a list of non-exhaustive factors relevant to the imposition of penalties under the Act. I intend to approach this matter consistently with the authorities referred to above.

3. More recently, in Australian Building and Construction Commissioner v Pattinson [2022] HCA 13 (‘Pattinson’), the High Court at [18] referred to these principles and stated at [9] that ‘under the civil penalty regime provided by the Act, the purpose of a civil penalty is primarily, if not solely, the promotion of the public interest in compliance with the provisions of the Act by the deterrence of further contraventions of the Act. The High Court also stated at [42] that penalties ‘are not retributive, but rather are protective of the public interest in that they aim to secure compliance by deterring repeat contraventions’.

   grouping of contraventions

4. The first question that arises in this matter is the appropriate application of what is commonly referred to as the ‘course of conduct principle’. That principle finds voice in section 557 of the Act and also in the common law: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 249 FCR 458 at [88].

5. In Construction, Forestry, Mining and Energy Union v Cahill (2010) 269 ALR 1 at [39], the Full Court (Middleton and Gordon JJ) stated:

   [39]As the passages in Williams [2009] FCAFC 171; 262 ALR 417 explain, a "course of conduct" or the "one transaction principle" is not a concept peculiar to the industrial context. It is a concept which arises in the criminal context generally and one which may be relevant to the proper exercise of the sentencing discretion. The principle recognises that where there is an interrelationship between the legal and factual elements of two or more offences for which an offender has been charged, care must be taken to ensure that the offender is not punished twice for what is essentially the same criminality. That requires careful identification of what is "the same criminality" and that is necessarily a factually specific enquiry. Bare identity of motive for commission of separate offences will seldom suffice to establish the same criminality in separate and distinct offending acts or omissions.

6. In Parker & Ors v Australian Building and Construction Commissioner (2019) 365 ALR 402, Besanko and Bromwich JJ stated at [272]-[273] as follows:

   [272] As the Commissioner points out, the passage quoted at [268] above from Cahill requires consideration not just of an interrelationship between the legal and factual elements of two or more contraventions, but also the factually specific inquiry as to whether the different contraventions constitute the “same criminality”, translating that criminal law concept to the civil penalty context.

   [273]Concepts such as course of conduct (and, for that matter, totality) that are drawn from the criminal law and applied to the imposition of civil penalties are not rigid rules of law, but, rather, general principles to guide the exercise of the penalty imposing discretion:

7. The Applicant submitted that the Respondents were entitled to the benefit of section 557 of the Act in relation to the multiple contraventions of section 536(1) and section 536(3). The Applicant also submitted that the failure to comply with the First TF CN and the Second TF CN should be grouped together for the purposes of penalty. I accept those submissions.

8. The Applicant, however, submitted the failure to comply with the Ellams CN and should not be grouped together with the failure to comply with the TF CN’s for the purposes of penalty. The Applicant submitted section 716(5) is not a relevant civil remedy provision as contemplated by section 557(2). I accept that submission. The Applicant also submitted that the common law course of conduct principle should not be applied because the failure to comply with the Ellams CN and the failure to comply with the TF CN’s involve distinct conduct, arose from the issuing of different notices in respect of different employees which imposed distinct obligations, and required the Respondents to take action specific to each employee, which they did not do. In support of that submission, the Applicant referred me to the decisions of Fair Work Ombudsman v Tester [2021] FCCA 771 (‘Tester’) at [14]-[15]; and Fair Work Ombudsman v Schneider [2022] FedCFam2G 478 (‘Schneider’) at [34].

9. All three Notices were issued on 15 January 2021.  They set out, inter alia, a range of actions that the Respondents were required to take in relation to each employee.  The actions to be taken under each notice are not identical but pertain to the circumstances of each individual employee.  The Notices stipulated that the required actions were to be taken by 26 February 2021.  The Respondents did not comply with the Notices.  The time period or time span in which the Notices were not complied with is the same for each notice.  

10. In my view, when all the facts are considered, the failure to comply with the Ellams CN should be grouped together with the failures to comply with the TF CN’s and be treated as a single contravention arising out of a course of conduct for the purposes of penalty.  The Notices were served on the same date.  The Notices required steps to be taken by the same date.  Those steps were not taken.  The focus then becomes what decision or actions were taken or not taken by the Respondents in the time frame leading up to 26 February 2021.  It is those decisions or actions, taken or not taken, which inform whether there was a course of conduct leading to the failure to comply with all the Notices.

11. There is evidence before the Court and matters the Court can take notice of as to what occurred in the time period between the issuing of the Notices, and the Respondents failure to comply with them by 26 February 2021.  In February 2021, Melbourne had recently surfaced from its first extended lockdown, a lockdown longer in duration than anything imposed in any other part of Australia.  Within 6 months, the city would be in the grip of a second extended lockdown.  The Respondents’ evidence (set out earlier) is clear.  The Second Respondent lost everything, he was broke and he was contemplating suicide.  It is abundantly clear when all the evidence is assessed that a proper examination of the interrelationship between the legal and factual elements of two or more offences with a view to determining whether the contraventions constitute the same criminality discloses that the decision not to comply with the Ellams CN and the TF CN’s arose from a single course of conduct.  The Second Respondent was in no position to deal with the Notices – he was contemplating ending his life.

12. In reaching the conclusions above, I have considered the cases of Tester and Schneider, to which the Applicant referred.  The evidence in this matter distinguishes it from Tester and Schneider.  In Tester, there was no evidence before the Court that failure to comply with the notices arose from one transaction.  There is evidence in this case.  In Schneider the Respondents did not participate in the proceeding, other than in the initial stages where consent was given to initial procedural orders.

13. Accordingly, there are six single contraventions before the Court for the purpose of imposing a penalty. In order, they are as follows. First, the single contravention by the First Respondent for its failure to comply with 716(5) of the Act. Second, the single contravention by the First Respondent relating to its contravention of section 536(1) of the Act. Third, the single contravention by the First Respondent relating to its contravention of section 536(3) of the Act. Fourth, the single contravention by the Second Respondent for his involvement in the contravention by the First Respondent of 716(5) of the Act. Fifth, the single contravention by the Second Respondent for his involvement in the contravention by the First Respondent of section 536(1) of the Act. Finally, the single contravention by the Second Respondent for his involvement in the contravention by the First Respondent of section 536(3) of the Act.

    factors relevant to the assessment of penalty

14. The maximum penalties that the Court could impose for the various contraventions are as follows:

Respondent	Contravention	Maximum
First Respondent	s. 716(5)	$33,300
First Respondent	s. 536(1)	$63,000
First Respondent	s. 536(3)	$63,000
Second Respondent	s. 716(5)	$6,660
Second Respondent	s. 536(1)	$12,600
Second Respondent	s. 536(3)	$12,600

1. I now turn to consider the various factors relevant to assessing the appropriate penalty to be imposed.   

   Deterrence

2. As noted in Pattinson, civil penalties are imposed primarily to promote the public interest in compliance with the provisions of the Act.

3. Specific deterrence is directed at the party who has contravened the provision.  It is concerned with ensuring a contravening party is not prepared to engage in the contravening conduct in the future.

4. The Applicant submits that specific deterrence is warranted in this case because, among other things, the First Respondent remains a registered company with the potential to operate businesses in the restaurant industry in the future, and the Second Respondent continues to be the sole director of other companies.

5. There is arguably a need for specific deterrence in this matter.  That arises largely (but not solely) from the fact that the Notices were not complied with and because the non-compliance subsists.  There are however, other considerations that suggests there is little to no need for specific deterrence in this case.  The First Respondent is not trading.  It is not operating any businesses.  The Second Respondent has negligible assets and is being pursued by unpaid suppliers.  The Second Respondent now earns income as a salesperson.  He is not in a position to enter upon a new business venture himself, or to enter such a venture through contributing to or acquiring funds for the First Respondent.  In summary, given the financial position they find themselves in, there is little to no prospect, in my view, of the Respondents engaging in any business related venture in the future, much less employing anyone.

6. As to general deterrence, the Applicant submitted that the failure to comply with statutory notices is a serious issue and that the Court should impose a penalty that sends a message to employers, particularly in the café and restaurant industry that non-compliance with statutory notices will not be tolerated.  The Applicant also submitted that it is important to send a message to employers about complying with the law and regulations in respect of payslips because without proper payslips, employees can be significantly disempowered.  I propose to deal with these submissions separately.

7. It is important that employers comply with statutory notices issued under section 716 of the Act, or if they disagree with the notice, to take the proper steps to have it reviewed. Imposing no penalty, or a penalty that is too low, risks sending a message that there is no consequence to complying with section 716 of the Act. Equally and perhaps more importantly, it is very important that employers provide payslips to employees, and that payslips are accurate and not misleading. The importance of giving employees accurate and timely information by way of payslip is recognised by the Parliament which has mandated a higher penalty for contraventions of section 536 of the Act when compared to section 716 of the Act.

8. There is then the submission to the effect that there is a need to deter non-compliance in the restaurant and café industry ‘in particular’.  That submission requires careful consideration.  The Applicant referred me to the decisions of Fair Work Ombudsman v 85 Degrees Coffee Australia Pty Ltd [2022] FCA 1317 (‘85 Degrees’) at [34] and Fair Work Ombudsman v Sun Sea Equity Pty Ltd [2021] FCCA 104 (‘Sun Sea’) in support of its submission.

9. I accept that it is open for this Court to consider the particular need for general deterrence in certain industries including retail and food manufacturing.  Such a submission can only be accepted, as noted by Bromwich J at [34] in 85 Degrees, if it is supported by evidence.

10. There is no evidence before me in this case by way of data, statistics, or otherwise that participants in the restaurant and café industry regularly fail to comply with statutory notices, or fail to comply with statutory notices at a higher rate compared to participants in other industries.  I note the comments made by Jarrett J in Sun Sea.  I do not know what evidence Jarret J had before him to warrant that statement (which pertained to a business in Queensland, and not Melbourne), but there is no evidence before me.  When these matters are considered, I give no weight to the need to deter employers ‘in particular’ in the restaurant and café industry.  I do accept, however, as previously stated that there is a need for general deterrence among employers.

    Nature, extent and circumstances of the conduct

11. The Applicant submits that not only were the Notices not complied with at the time, but that the Respondents continue not to comply with the terms of the notices. Given this fact, and the seriousness associated with failing to provide payslips in accordance with section 536(1), or providing misleading payslips in contravention of section 536(3) of the Act, the Applicant submits that a meaningful penalty must be imposed.

12. The Respondents clearly did not comply with the Notices and remain in a state of non-compliance. Not only that, the Respondents at no stage sought to meaningfully engage with the Applicant in relation to the Notices. No explanation has ever been provided in relation to the failure to comply with section 536(1) or 536(3) of the Act. The silence from the Respondents is deafening. These matters weigh heavily against the Respondents.

13. Those are not the only circumstances, however, that attend the relevant contraventions particularly, the contravention of section 716(5) of the Act. The Notices were received at the onset of and during the COVID-19 pandemic. The clear evidence of the Second Respondent is that he could not sleep, contemplated suicide and went broke during this time. In those circumstances, it is not surprising that the Respondents found themselves unable to comply with the Notices.

    Nature and extent of loss

14. The Applicant identifies two losses.  First, there are two employees directly affected by the Respondents’ failure to comply with the Notices and the failure to provide payslips, or provide accurate payslips. Given the position in relation to payslips, it is difficult to ascertain precisely the loss suffered by these employees.  The Respondents concede, however, that these employees remain out-of-pocket.  The amounts that the employees are out of pocket is significant for employees working in a restaurant.

15. Second, the Applicant says it has been forced to expend public funds in pursuing these proceedings.  It says, with some force, that such costs could have been avoided if the Respondents had simply complied with the Notices, which provides a mechanism for efficient and cost-effective rectification of identified potential contraventions. 

16. I accept the Applicant’s submissions on these issues.  A failure to pay vulnerable employees their proper entitlements is a serious issue.  As I have said in cases before, employers simply must understand that employees are entitled to all of their entitlements, without qualification.  A regulator such as the Applicant is entitled to expect recipients of statutory notices to comply with those notices, or to exercise the rights available to seek review of such notices.  It is never an option to simply ignore such notices.  Regrettably, in this case, that is a lesson that has been learned by the Second Respondent too late in the piece.

    Involvement of Senior Management

17. The Second Respondent was and is the sole Director and Secretary of the First Respondent.  He was the person responsible for the overall management and control of the business.  He had knowledge of the Notices, but nevertheless did nothing about them.  I accept he was involved in the contraventions by the First Respondent and attach weight to his involvement in the contraventions.

    Deliberateness of the contravening conduct

18. The Applicant submits that the conduct of the Respondents was deliberate.  I accept that the conduct was deliberate in the sense that the Respondents knew about the Notices but failed to take steps to address them.  The Second Respondent said in evidence that he was stupid and arrogant and that he should have dealt with the issues at the time.

19. While I accept that the conduct of the Respondents was deliberate in the sense described above, I also note the position the Second Respondent found himself in after March 2020 when widespread lockdowns took effect and the continued in Victoria, clearly impacting his business.  I note in particular his mental state in March 2021 and his suicidal thoughts.  These matters have a bearing on the characterisation of the conduct as ‘deliberate’ that needs to be taken into account. 

20. It is necessary to note that in so far as the contraventions of section 536(3) is concerned, the Respondents have made admissions in the Statement of Agreed Facts that Route 45 knew the payslips provided were false and misleading. The conduct in providing such payslips was clearly deliberate.

    Financial circumstances of the Respondents

21. In written submissions, the Applicant referred to this factor as noted in the heading above.  A review of the authorities such as Trade Practices Commission v CSR Ltd [1991] ATPR 41-076 at 52,152-52,153 (endorsed by the High Court in Pattinson) and Kelly at [14] indicates that the focus is properly on the ‘size’ of the contravening company.

22. The First Respondent operated a small business, but now operates no business.  It has no assets. I infer it does not generate any income.  Suppliers to the business are owed a substantial sum of money. It follows that the financial position of the First Respondent is parlous.  It is difficult to think of a smaller business.

23. The Second Respondent does not operate any business any longer.  He conducts no business enterprise.  His net worth following the sale of his share of his house and the breakdown of his marriage is likely to be in the range of $100,000.  I infer, however, that he will incur costs in relation to the sale of the house.  I also accept his evidence that there are caveats placed on the house by persons to whom the Second Respondent owes money.  There is no information before me to enable me to determine precisely how much money the Second Respondent owes to those who have placed caveats on his property, but I infer from his evidence they are significant amounts which would exceed the amount of funds the Second Respondent is likely to be left with.   

1. I am also satisfied that the only income earned by the Second Respondent is the income he is able to generate as a salesman of $1153 per week (net).  I am satisfied that he currently struggles to pay bills, and I accept his submission that he could not afford lunch on the day he was in court.

2. Related to this factor is the separate factor raised by the Applicant in its further submissions on penalty relating to the capacity of the Respondents to pay any fine.  The Applicant submitted that capacity to pay a penalty is of less relevance to the objective of general deterrence, and in furtherance of that submission, relied on NSH North at [106] and Australian Competition and Consumer Commission v Leahy Petroleum [2005] FCA 254 (‘Leahy’) at [9] and Pattinson at [15]. It was also submitted that financial circumstances do not exculpate contraventions of workplace laws- see Kelly at [28] and that a respondent’s capacity to pay should not distract the court from its fundamental obligation to consider the object of general deterrence.

3. I accept that financial circumstances do not exculpate contraventions of workplace laws and I accept the thrust of the Applicants submissions above, but note the following:  Those submissions are grounded in paragraphs [8] and [9] of Leahy.  It is worth, however, setting out those passages from Leahy in full:

   8In a number of cases the Court has suggested that the size of the contravening company is relevant to the penalty that is appropriate. In NW Frozen Foods (at 293) Burchett and Keifel JJ observed:

   "In TNT (at 40,168), it was pointed out that some other factors which have been regarded as important actually flow from what French J called in CSR Ltd (at 52-152) ‘[t]he primacy of the deterrent purpose in the imposition of penalty’. One of those factors is the size of the corporation involved, since ‘[w]hat would deter a small company might have little effect on a very large one’. ...

   ...

   ... As Smithers J emphasised in Stihl Chain Saws (at 17,896), insistence upon the deterrent quality of a penalty should be balanced by insistence that it ‘not be so high as to be oppressive’. Plainly, if deterrence is the object, the penalty should not be greater than is necessary to achieve this object; severity beyond that would be oppression."

   See also Schneider at 615 [17] and 621 [48]-[49].

   9The size of the contravening companies and their respective capacities to pay a penalty were relied upon as factors in mitigation in the present case. Plainly, such factors can be relevant to the penalty that is necessary to deter the company from contravening the Act in the future. Size may also be relevant to general deterrence because other potential contraveners are likely to take notice of penalties imposed on companies of a similar size. However, a contravening company’s capacity to pay a penalty is of less relevance to the objective of general deterrence because that objective is not concerned with whether the penalties imposed have been paid. Rather, it involves a penalty being fixed that will deter others from engaging in similar contravening conduct in the future. Thus, general deterrence will depend more on the expected quantum of the penalty for the offending conduct, rather than on a past offender’s capacity to pay a previous penalty. I therefore respectfully agree with the observation of Smithers J, referred to by Burchett and Kiefel JJ in NW Frozen Foods, to the effect that, a penalty that is no greater than is necessary to achieve the object of general deterrence, will not be oppressive. I have approached the issue of corporate penalties on that basis. The penalties in relation to the individuals may need to be tempered by personal considerations.

4. I have set those passages out in the full because while they support the submission advanced by the Applicant, it is also apparent that other matters require consideration.  First, the size of a contravening company is relevant when considering what is necessary to deter that company from contravening conduct in the future.  Second, size may be relevant to general deterrence because other potential contraveners are likely to take notice of penalties imposed on companies of a similar size.  Third, any penalty should not be greater than is necessary to achieve the object of deterrence, severity beyond that would be oppressive.  Fourth, that penalties in relation to individuals may need to be tempered by personal considerations. I take all of these matters into account.

   Corrective action, co-operation and contrition

5. 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

6. 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.

7. 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).

8. 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.

9. 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.  

10. Second, it is apparent that insufficient weight has been given to the size of the business enterprise involved.  The Applicant had the opportunity to reconsider the penalties it sought to be imposed at the conclusion of the oral hearing.  Its response was to propose what I would regard as modest reductions in the penalties that were being sought.  Clearly, the Applicant places little weight on the fact that the Second Respondent is not conducting any enterprise, and is not in a position to conduct any business enterprise.  Clearly little weight has been placed on the fact that the First Respondent was a small business, conducts no business enterprise, and has little prospect given its debts of conducting any business enterprise in the future.  It is, in sum, not even a small business, but a non-existent business.  There is no business.  Despite this evidence about the size of the business, the Applicant comes to court seeking penalties of tens of thousands of dollars against the Respondents.

11. Third, while the Applicant focuses its submissions on deterrence and the need to deter others from engaging in similar conduct in the future, it has failed to consider what the authorities have to say about that issue in a holistic way.  It is plain from authorities such as Leahy that a penalty should be no greater than is necessary to achieve the object of general deterrence, and must not be oppressive.  Is also plain from Leahy that penalties in relation to individuals may need to be tempered by personal considerations.

12. The Applicant is an experienced and frequent litigator in this Court with significant resources.  It often comes before this Court seeking declarations and penalties against persons and small businesses who do not have the resources to engage legal representation.  In such circumstances, it is incumbent on the Applicant to properly and rigorously consider the penalties that it seeks to impose.  I appreciate that can sometimes be difficult given the non-engagement that often comes from dealing with unrepresented or unsophisticated respondents. But that is what must be done and what the Applicant, as regulator required to abide by the model litigation rules, must do.  It is also what the Court expects.  It does not reflect well on the Applicant in this case to have come before the Court having heard the evidence of the Second Respondent and seek penalties that are on any view excessive when all the circumstances the case are considered and weighed.

13. Returning to the task before me, there are compelling reasons why penalties should not be imposed at the level urged upon me by the Applicant and should instead be imposed at the lower end of the scale.  These include the lack of any need for specific deterrence; the nature and circumstances of the conduct, the remorse, contrition and cooperation shown by the Respondents and the size of the Respondent’s business enterprise.

14. The task before the Court, then, is to fix a penalty that takes into account and attaches sufficient weight to factors such as the involvement of senior management in the business, the fact that employees remain out-of-pocket and general deterrence.  While there is a need for general deterrence, the Court must take care to ensure that the penalty must be no greater the necessary to achieve the object of general deterrence.

15. In all the circumstances of this case, I set the single penalty for the First Respondent for the single breach of section 716(5) at 15% of the maximum, being $4995. I set the single penalty for the Second Respondent for being involved in the single contravention above at 10% of the maximum for the contravention, being $666.

16. I set the single penalty for contravention by the First Respondent of section 536(1) of the Act at 20% of the maximum, being $12,600. I set the single penalty for the Second Respondent for being involved in the single contravention above at 15% of the maximum being $1890.

17. I set the single penalty for contravention by the First Respondent of section 536(3) of the Act at 20% of the maximum, being $12,600. I set the single penalty for the Second Respondent for being involved in the single contravention above at 15% of the maximum being $1890.

18. It is then necessary to consider the application of the totality principle and whether the penalties would be crushing or oppressive.  In Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (2017) 254 FCR 68 at [117], a Full Court of the Federal Court of Australia described the principle in the following way when discussing the difference between the course of conduct principle and the totality principle:

    117.The totality principle is sometimes confused or conflated with the course of conduct principle. That is perhaps not surprising because application of the totality principle may again result in a court adjusting what would otherwise have been consecutive or cumulative sentences to sentences that are wholly or partially concurrent. The proper approach, however, is to first consider the course of conduct principle and determine whether the sentences should be consecutive, or wholly or partly concurrent. Once that is done, the Court should then review the aggregate sentence to ensure that it is just and appropriate. That may require a further adjustment of the sentences: either by ordering further concurrency or, if appropriate, lowering the individual sentences below what would otherwise be appropriate.

19. In Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8, an earlier Full Court expressed the principle in the following way at [102]:

    102.The totality principle is a guide to sentencing practice. It must be adapted to the circumstances. It is designed to avoid injustice in the overall result. It is not a principle which suggests that a penalty should necessarily be reduced from an aggregate total fixed for multiple offences. Rather, it involves a final check to ensure that a total or aggregate penalty is not, in all the circumstances, excessive. It may not be.

20. The total penalty to be imposed on the First Respondent is $30,195.  The total amount of the penalty to be imposed on the Second Respondent is $4446.  In my view, these penalties are excessive and not just or appropriate in all the circumstances of the case. I would therefore reduce each of the penalties above on the First Respondent by a further 50%.  Accordingly, the First Respondent should pay a penalty of $15,097.50.  I would reduce the penalty on the Second Respondent by 60%.  The Second Respondent should pay a penalty of $1778.40. 

21. I will make orders to this effect and given the circumstances of the Respondents order that such amounts be paid by the First Respondent within 180 days of the date of this order, and the penalties to be paid by the Second Respondent be paid within 260 days of the date of this order.  Orders will be issued to this effect.

I certify that the preceding eighty (80) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Blake.

Associate: C McKibbin

Dated:       10 February 2023

Annexure A

Statement of Agreed Facts filed 7 September 2022

(1)This statement of agreed facts (Statement) is an agreed document between the Applicant, the Fair Work Ombudsman (FWO) and the Respondents, made in these proceedings for the purposes of s 191 of the Evidence Act 1995 (Cth).

A.     PARTIES

The Applicant

(2)The FWO is and was at all relevant times:

(a)established under s 681 of the Fair Work Act 2009 (FW Act) and appointed by the Governor-General by written instrument pursuant to s 687(1) of the FW Act;

(b)a Fair Work Inspector (FWI) pursuant to s 701 of the FW Act; and

(c)a person with standing to bring these proceedings and to apply for orders for contraventions of civil remedy provisions in accordance with s 539(2) of the FW Act.

The First Respondent - Route 45 Pty Ltd

(3)The First Respondent, Route 45 Pty Ltd (ACN 166 475 038) (Route 45) is and was at all relevant times:

(a)a company incorporated under the provisions of the Corporations Act 2001 (Cth);

(b)a 'constitutional corporation' within the meaning of s 12 of the FW Act;

(c)a 'national system employer' within the meaning of s 14 of the FW Act;

(d)a 'person' within the meaning of s 716 of the FW Act;

(e)a company that relevantly operated an American style diner restaurant in Forest Hill trading as Route 45 Forest Hill (the Business); and

(f)a company with a registered office of 3 Marlock Street Frankston Victoria 3199 (the Registered Office).

The Second Respondent - George Stathakopulos

(4)The Second Respondent, George Stathakopulos, (Mr Stathakopulos) is and was at all relevant times:

(a)a natural person capable of being sued;

(b)the sole director and secretary of Route 45;

(c)responsible for the overall operation, control and management of the Business;

(d)responsible for the overall operation, control and management of Route 45;

(e)responsible for ensuring that Route 45 complied with its legal obligations under the FW Act

(f)a person whose conduct is taken to be that of Route 45 under section 793(1) of the FW Act, to the extent that the conduct was engaged in on behalf of Route 45 and was within the scope of his actual or apparent authority; and

(g)a person whose state of mind is taken to be that of Route 45 under section 793(2) of the FW Act, in relation to conduct to which 4(f), above, applies.

B. CONTRAVENTIONS OF SECTION 716(5) OF THE FW ACT

The Inspector

(5)FWI Ashleigh Hayden (FWI Hayden) is and was at all relevant times a FWI who was appointed by the FWO under s 700 of the FW Act on 30 October 2019.

The Investigation

(6)From in or around October 2019, the FWO commenced an investigation into Route 45's compliance with Commonwealth workplace laws (the Investigation). FWI Alison Read (FWI Read) initially had carriage of the Investigation.

(7)From on or around 25 May 2020, FWI Hayden had carriage of the Investigation and, as a result of the materials before her, formed a reasonable belief that:

(a)the Restaurant Industry Award 2010 (the Award), a modern award under the FW Act, covered and applied to Route 45 in respect of its employment of each of:

(i)Ms Ellams; and

(ii)Ms Tonti-Filippini;

(the Employees)

(b)during the period between 3 December 2018 and 10 August 2019 (the Ellams Period):

(i)Route 45 employed Ms Ellams;

(ii)Ms Ellams was employed by Route 45 as a food and beverage attendant on a full-time basis; and

(iii)Ms Ellams performed work as a Food and Beverage Attendant Grade 3 under Schedule B to the Award;

(c)during the period between 30 August 2019 and 9 October 2019 (the Tonti-Filippini Casual Period):

(i)Route 45 employed Ms Tonti-Filippini;

(ii)Ms Tonti-Filippini was employed by Route 45 as a food and beverage attendant on a casual basis; and

(iii)Ms Tonti-Filippini performed work as a Food and Beverage Attendant Grade 2 under Schedule B to the Award;

(d)during the period between 10 October 2019 and 7 February 2020 (the Tonti-Filippini Part-Time Period):

(i)Route 45 employed Ms Tonti-Filippini;

(ii)Ms Tonti-Filippini was employed by Route 45 as a food and beverage attendant on a part-time basis; and

(i)Ms Tonti-Filippini performed work as a Food and Beverage Attendant Grade 2 under Schedule B to the Award;

(e)Route 45 had contravened the following terms of the Award and provision of the National Employment Standards (NES) in respect of Ms Ellams' employment during the Ellams Period: (collectively referred to as the Ellams Contraventions):

(i)clause 20.1 of the Award - failing to pay Ms Ellams the applicable minimum wage in respect of the ordinary hours worked;

(ii)clauses 33.1(a) and 33.2(a) of the Award - failing to pay Ms Ellams at a rate of 150% of the ordinary base rate of pay for the first two hours of overtime worked on Monday to Friday;

(iii)clauses 33.1(a) and 33.2(a) of the Award - failing to pay Ms Ellams at a rate of 200% of the ordinary base rate of pay for all overtime worked after the first two hours of overtime worked on Monday to Friday;

(iv)clauses 33.1(a) and 33.2(b) of the Award - failing to pay Ms Ellams at a rate of 175% of the ordinary base rate of pay for the first two hours of overtime worked between midnight Friday and midnight Saturday;

(v)clauses 33.1(a) and 33.2(b) of the Award - failing to pay Ms Ellams at a rate of 200% of the ordinary base rate of pay for all overtime worked after the first two hours of overtime worked between midnight Friday and midnight Saturday;

(vi)clauses 33.1(a) and 33.2(c) of the Award - failing to pay Ms Ellams at a rate of 200% of the ordinary base rate of pay for all overtime worked between midnight Saturday and midnight Sunday;

(vii)clause 34.2(a)(i) of the Award - failing to pay Ms Ellams an additional payment of 10% of the standard hourly rate per hour for each ordinary hour or part thereof worked between 10pm and midnight Monday to Friday;

(viii)clause 34.1 of the Award - failing to pay Ms Ellams at 125% of the minimum wage for the relevant classification for ordinary hours worked on a Saturday;

(ix)clause 34.1 of the Award - failing to pay Ms Ellams at 150% of the minimum wage for the relevant classification for ordinary hours worked on a Public Holiday;

(x)clause 34.1 of the Award - failing to pay Ms Ellams at 225% of the minimum wage for the relevant classification for ordinary hours worked on a Sunday;

(xi)section 90(2) of the FW Act - failing to pay Ms Ellams an amount for annual leave loading (calculated in accordance with clause 35.2(b) of the Award) on any accrued but yet untaken annual leave payable on termination that would have been payable had Ms Ellams taken that annual leave;

(f)Route 45 had contravened various terms of the Award in respect of Ms Tonti- Filippini's employment during the Tonti-Filippini Casual Period as follows: (collectively referred to as the Tonti-Filippini Casual Contraventions):

(i)clauses 13.1, 20 and 34.1 of the Award - failing to pay Ms Tonti-Filippini the applicable minimum wage in clause 20 and a loading of 25% in respect of the ordinary hours worked;

(ii)clause 34.1 of the Award - failing to pay Ms Tonti-Filippini at 150% of the minimum wage for the relevant classification (inclusive of the casual 25% loading) for ordinary hours worked on a Saturday;

(g)Route 45 had contravened the following terms of the Award and provision of the NES in respect of Ms Tonti-Filippini during the Tonti-Filippini Part-Time Period as follows: (collectively referred to as the Tonti-Filippini Part-Time Contraventions):

(i)clauses 12.10 of the Award - failing to pay Ms Tonti-Filippini at the rate of 1/38th of the weekly rate prescribed for the class of work performed in respect of the ordinary hours worked;

(ii)clauses 12.8, 33.1(b) and 33.2(b) of the Award - failing to pay Ms Tonti- Filippini at a rate of 175% of the ordinary base rate of pay for the first two hours of overtime worked between midnight Friday and midnight Saturday;

(iii)clauses 12.8, 33.1(b) and 33.2(b) of the Award - failing to pay Ms Tonti- Filippini at a rate of 200% of the ordinary base rate of pay for all overtime worked after the first two hours of overtime worked between midnight Friday and midnight Saturday;

(iv)clauses 12.8, 33.1(b) and 33.2(c) of the Award - failing to pay Ms Tonti- Filippini at a rate of 200% of the ordinary base rate of pay for all overtime worked between midnight Saturday and midnight Sunday;

(v)clause 34.2(a)(i) of the Award - failing to pay Ms Tonti-Filippini an additional payment of 10% of the standard hourly rate per hour for each ordinary hour or part thereof worked between 10pm and midnight Monday to Friday;

(vi)clause 34.1 of the Award - failing to pay Ms Tonti-Filippini at 125% of the minimum wage for the relevant classification for ordinary hours worked on a Saturday;

(vii)clause 34.1 of the Award - failing to pay Ms Tonti-Filippini at 150% of the minimum wage for the relevant classification for ordinary hours worked on a Sunday;

(viii)clause 34.1of the Award - failing to pay Ms Tonti-Filippini at 225% of the minimum wage for the relevant classification for ordinary hours worked on a Public Holiday;

(ix)section 90(2) of the FW Act and cl 35.2(b) of the Award - failing to pay Ms Tonti-Filippini an amount for annual leave loading (calculated in accordance with clause 35.2(b) of the Award) on any accrued but yet untaken annual leave payable on termination that would have been payable had Ms Tonti- Filippini taken that annual leave.

Ellams Compliance Notice

(8)On 15 January 2021, FWI Hayden gave a notice pursuant to s 716(2) of the FW Act (the Ellams Compliance Notice) dated 15 January 2021 to Route 45 by posting it to Route 45's Registered Office and emailing a copy to [email protected].

(9)Pursuant to s 716(2) of the FW Act, the Ellams Compliance Notice required Route 45 to:

(a)remedy the direct effects of the Ellams Contraventions by 26 February 2021, by taking the following action in respect of Ms Ellams for each of the Ellams Contraventions (the Ellams Specified Action):

(i)calculate the amount by which Route 45 underpaid Ms Ellams in respect of each of the Ellams Contraventions, and pay these amounts to Ms Ellams;

(ii)in respect of the amounts paid to Ms Ellams in compliance with the Ellams Compliance Notice, calculated and pay any additional superannuation contributions required pursuant to clause 30.2 of the Award to her chosen Superannuation Fund; and

(iii)make a record of the calculations referred to in 9(a)(i) and (ii) above; and

(b)produce to the FWO the following evidence of its compliance with the actions specified in paragraph 9(a) by 5 March 2021:

(i)records of Route 45's calculations; and

(ii)proof that full payment had been made to Ms Ellams of the payment(s) required to be made by paragraph 9(a).

(10)The Ellams Compliance Notice met the requirements of s 716(3) of the FW Act.

Failure to comply with the Ellams Compliance Notice

(11)Route 45 did not:

(a)take the Ellams Specified Action by 26 February 2021, or at all; and

(b)produce to the FWO sufficient evidence of compliance with the Ellams Compliance Notice by 5 March 2021, or at all.

(12)By reason of the matters in paragraph 11 above, Route 45 admits that it failed to comply with the Ellams Compliance Notice and thereby contravened s 716(5) of the FW Act.

Tonti-Filippini Casual Compliance Notice

(13)On 15 January 2021, FWI Hayden gave a notice pursuant to s 716(2) of the FW Act (the Tonti-Filippini Casual Compliance Notice) dated 15 January 2021 to Route 45 by posting it to Route 45's Registered Office and emailing a copy to [email protected]..

(14)Pursuant to s 716(2) of the FW Act, the Tonti-Filippini Casual Compliance Notice required Route 45 to:

(a)remedy the direct effects of the Tonti-Filippini Casual Contraventions by 26 February 2021, by taking the following action in respect of Ms Tonti-Filippini in for each of the Tonti-Filippini Casual Contraventions (the Tonti-Filippini Casual Specified Action):

(i)calculate the amount by which Route 45 underpaid Ms Tonti-Filippini in respect of each of the Tonti-Filippini Casual Contraventions, and pay these amounts to Ms Tonti-Filippini;

(ii)in respect of the amounts paid to Ms Tonti-Filippini, calculate and pay any additional superannuation contributions required pursuant to clause 30.2 of the Award to her chosen Superannuation Fund; and

(iii)make a record of the calculations referred to in paragraph 14(a)(i) and (ii); and

(b)produce to the FWO the following reasonable evidence of its compliance with the actions specified in paragraph 14(a) by 5 March 2021:

(i)records of Route 45's calculations; and

(ii)proof that full payment had been made to Ms Tonti-Filippini of the payment(s) required to be made by paragraph 14(a).

(15)The Tonti-Filippini Casual Compliance Notice met the requirements of s 716(3) of the FW Act.

Failure to comply with the Tonti-Filippini Casual Compliance Notice

(16)Route 45 did not:

(a)take the Tonti-Filippini Casual Specified Action by 26 February 2021, or at all; and

(b)produce to the FWO sufficient evidence of compliance with the Tonti-Filippini Casual Compliance Notice by 5 March 2021, or at all.

(17)By reason of the matters in paragraph 16 above, Route 45 admits it failed to comply with the Tonti-Filippini Casual Compliance Notice and thereby contravened s 716(5) of the FW Act.

Tonti-Filippini Part-Time Compliance Notice

(18)On 15 January 2021, FWI Hayden gave a notice pursuant to s 716(2) of the FW Act (the Tonti-Filippini Part-Time Compliance Notice) dated 15 January 2021 to Route 45 by posting it to Route 45's Registered Office and emailing a copy to [email protected]..

(19)Pursuant to s 716(2) of the FW Act, the Tonti-Filippini Part-Time Compliance Notice required Route 45 to:

(a)remedy the direct effects of the Tonti-Filippini Part-Time Contraventions by 26 February 2021, by taking the following action in respect of Ms Tonti-Filippini for each of the Tonti-Filippini Part-Time Contraventions (the Tonti-Filippini Part-Time Specified Action):

(i)calculate the amount by which Route 45 underpaid Ms Tonti-Filippini in respect of each of the Tonti-Filippini Part-Time Contraventions, and pay those amounts to Ms Tonti-Filippini;

(ii)in respect of the amounts paid to Ms Tonti-Filippini in compliance with the Tonti- Filippini Part-Time Compliance Notice, calculate and pay any additional superannuation contributions required pursuant to clause 30.2 of the Award to her chosen Superannuation Fund; and

(iii)make a record of the calculations referred to in paragraph 19(a)(i) and (ii); and

(b)produce to the FWO the following reasonable evidence of its compliance with the actions specified in paragraph 19(a) by 5 March 2021:

(i)records of Route 45's calculations; and

(ii)proof that full payment had been made to Ms Tonti-Filippini of the payment(s) required to be made by paragraph 19(a).

(20)The Tonti-Filippini Part-Time Compliance Notice met the requirements of s 716(3) of the FW Act.

Failure to comply with the Tonti-Filippini Part-Time Compliance Notice

(21)Route 45 did not:

(a)take the Tonti-Filippini Part-Time Specified Action by 26 February 2021, or at all; and

(b)produce to the FWO sufficient evidence of compliance with the Tonti-Filippini Part- Time Compliance Notice by 5 March 2021, or at all.

(22)By reason of the matters in paragraph 21, Route 45 admits it failed to comply with the Tonti- Filippini Part-Time Compliance Notice and thereby contravened s 716(5) of the FW Act.

C. CONTRAVENTIONS OF SECTION 536 OF THE FW ACT

Employment

(23)Route 45 employed:

(a)Ms Ellams for the Ellams Period

(b)Ms Tonti-Filipini from 30 August 2019 to 7 February 2020 (Tonti-Filippini Employment Period).

Failure to issue pay slips

(24)Pursuant to section by s 536(1) of the FW Act, Route 45 was required to issue pay slips to the Employees within one working day of paying an amount in relation to their performance of work.

(25)During the Tonti-Filippini Employment Period, Route 45 failed to give pay slips to Ms Tonti- Fillippini within one day of paying an amount in relation to her performance of work, by virtue of the following:

(a)during the period 24 August 2019 to 23 October 2019, Ms Tonti-Filippini was paid by Route 45 by electronic bank transfer at irregular intervals;

(b)Ms Tonti-Filippini received 9 payslips on 15 November 2019 (covering the weekly pay periods 26 August 2019 to 27 October 2019) and 2 pay slips on 3 December 2019 (covering the period 10 November 2019 to 24 November 2019) via email generated through Xero, a payroll software; and

(c)from 4 December 2019 until her employment ended Ms Tonti-Filippini did not receive any additional pay slips from Route 45.

(26)During the period 7 April 2019 to 16 August 2019, Route 45 failed to give pay slips to Ms Ellams within one day of paying an amount in consideration for her performance of work, by virtue of the following:

(a)during the period 7 April 2019 to 16 August 2019, Route 45 paid Ms Ellams on a weekly basis by electronic bank transfer;

(b)on 28 August 2019, Ms Ellams received 13 emails from "[email protected]" stating that pay slips were available for the weekly pay periods from 7 April to 30 June 2019; and

(c)Ms Ellams did not otherwise receive pay slips from Route 45 between 7 April and 16 August 2019 within one day of payment or at all.

(27)By reason of the matters set out in paragraphs 24-26, Route 45 admits it contravened s 536(1) of the FW Act by failing to issue the Employees pay slips within one working day of payment.

False or misleading pay slips

(28)Pursuant to section 536(3) of the FW Act, Route 45 was prohibited from issuing pay slips to the Employees for the purposes of section 536 of the FW Act which it knew to be false or misleading.

(29)Route 45 gave pay slips to:

(a)Ms Ellams on 28 August 2019; and

(b)Ms Tonti-Filippini on 15 November and 3 December 2019.

(Pay Slips)

(30)At all material times the Pay Slips given to the Employees were false or misleading in a material particular because:

(a)they were not consistent with the hours and days Ms Ellams actually worked as they did not record work having been performed on a weekend and or any public holidays.

(b)they were not consistent with the days and hours Ms Tonti-Filippini actually worked as they did not record work having been performed on a weekend and or on any public holidays.

(31)Route 45 knew the Pay Slips were false or misleading because Mr Stathakopulos at all relevant times:

(a)was aware of the contents of the Pay Slips;

(b)was responsible for setting rosters;

(c)was aware the Employees performed work on weekends and public holidays;

(d)was responsible for processing payroll;

(e)was responsible for issuing or arranging for the issuance of the Pay Slips to the Employees; and

(f)was responsible for responding to complaints or queries from the Employees with regard to their pay.

(32)By reason of the matters set out in paragraphs 30-31, Route 45 admits it contravened s 536(3) of the FW Act in respect of the Pay Slips issued to the Employees.

D.     ACCESSORIAL LIABILITY OF MR STATHAKOPULOS

Involvement in contraventions of s 716(5) of the FW Act

(33)During the Investigation, Mr Stathakopulos:

(a)corresponded with FWIs regarding the Investigation, including using the email address "[email protected]";

(b)on 27 November 2019, 12 December 2019, 25 February 2020 and 4 March 2020 had telephone conversations with FWI Read in respect of the Investigation;

(c)in telephone conversations with FWI Read on 25 February 2020 and 4 March 2020 confirmed his best contact email address was "[email protected]";

(d)on 6 May 2020 had a telephone conversation with FWI Read with respect to the Investigation , and a further telephone conversation with FWI Hayden on 2 July 2020; and

(e)on 25 June 2020 sent a reply email from the email address "[email protected]" in response to an email from a FWI Hayden in respect of a related investigation into another company of which Mr Stathakopulos was director.

(34)By reason of the matters in paragraphs 4, 8, 13, 18, 33 and 33 above, Mr Stathakopulos had knowledge that the Ellams Compliance Notice, Tonti-Filippini Casual Compliance Notice and the Tonti-Filippini Part-Time Compliance Notice (the Compliance Notices) were given to Route 45.

(35)By reason of the matters admitted in paragraphs 4, 11, 16, 21 and 34 above, Mr Stathakopulos:

(a)had knowledge that the Compliance Notices were given to Route 45, including the requirement that Route 45 comply with the Compliance Notices within the timeframe specified;

(b)had knowledge that Route 45 failed to comply with the Compliance Notices; and

(c)was an intentional participant in Route 45's failure to comply with the Compliance Notices.

(36)By reason of the matters set out in paragraph 35 above, Mr Stathakopulos admits he:

(a)was involved, within the meaning of s 550(2)(c) of the FW Act, in the contraventions by Route 45 of s 716(5) of the FW Act; and

(b)by reason of s 550(1) of the FW Act is taken to have contravened s 716(5) of the FW Act.

Involvement in contraventions of sections 536(1) and 536(3) of the FW Act

(37)At all material times Mr Stathakopulos:

(a)was involved in setting salary, processing payroll and for resolving issues raised by employees around their pay in relation to Route 45's operations;

(b)was involved with the payment of wages and payroll administration including issuing payslips;

(c)directed, authorised and/or arranged for the Pay Slips to be issued by email to the Employees referred to in paragraph 26 above and the particulars contained therein;

(d)was involved in the creation of rosters including in checking and sending rosters to employees; and

(e)had actual knowledge that the Employees performed work on weekends and public holidays.

(38)By reason of the matters in paragraph 4, 25, 26, 29, 30, 31, and 37 Mr Stathakopulos:

(a)had actual knowledge that Route 45 did not issue the Employees with pay slips within one working day of payment;

(b)had actual knowledge that Route 45 provided the Pay Slips to the Employees which were false or misleading to his knowledge;

(c)was an intentional participant in Route 45's acts or omissions:

(i)by failing to issue pay slips to the Employees within one day of payment in relation to their performance of work as pleaded at paragraph 27 above; and

(ii)by issuing the pay slips to the Employees which were false and misleading to its knowledge as pleaded at paragraph 32 above.

(39)By reason of the matters in paragraphs 33 to 38 above, Mr Stathakopulos admits he:

(a)Was involved, within the meaning of s 550(2)(c) of the FW Act, in the contravention of section 536(1) by Route 45;

(b)Was involved, within the meaning of s 550(2)(c) of the FW Act, in the contravention of section 536(3) by Route 45;

(c)Pursuant to s 550(1) of the FW Act, is taken to have contravened:

(i)Section 536(1); and

(ii)Section 536(3).

Date: 7 December 2022

Annexure B

Orders and Declarations made 8 September 2022

THE COURT DECLARES THAT:

1.The First Respondent contravened s 716(5) of the Fair Work Act 2009 (Cth) ('FW Act') by failing to comply with the compliance notice dated 15 January 2021 in respect of Amber Ellams ('Ellams Compliance Notice').

2.The First Respondent contravened s 716(5) of the FW Act by failing to comply with the compliance notice dated 15 January 2021 in respect of Anna Tonti- Filippini's casual employment period ('Tonti-Filippini Casual Compliance Notice').

3.The First Respondent contravened s 716(5) of the FW Act by failing to comply with the compliance notice dated 15 January 2021 in respect of Anna Tonti- Filippini's part-time employment period ('Tonti-Filippini Part-Time Compliance Notice')

4.The First Respondent contravened s 536(1) of the FW Act by failing to provide Ms Tonti-Filippini payslips within 1 working day of paying her wages.

5.The First Respondent contravened s 536(1) of the FW Act by failing to provide Ms Ellams payslips within 1 working day of paying her wages.

6.The First Respondent contravened s 536(3) of the FW Act by knowingly providing Ms Ellams with false and misleading payslips.

7.The First Respondent contravened s 536(3) of the FW Act by knowingly providing Ms Tonti-Filippini with false and misleading payslips.

8.The Second Respondent was involved, within the meaning of section 550(2) of the FW Act, in the contravention by the First Respondent of section 716(5) of the FW Act declared at Order 1 above.

9.The Second Respondent was involved, within the meaning of section 550(2) of the FW Act, in the contravention by the First Respondent of section 716(5) of the FW Act declared at Order 2 above;

10.The Second Respondent was involved, within the meaning of section 550(2) of the FW Act, in the contravention by the First Respondent of section 716(5) of the FW Act declared at Order 3 above.

11.The Second Respondent was involved, within the meaning of section 550(2) of the FW Act, in the contravention by the First Respondent of section 536(1) of the FW Act declared at Order 4 above.

12.The Second Respondent was involved, within the meaning of section 550(2) of the FW Act, in the contravention by the First Respondent of section 536(1) of the FW Act declared at Order 5 above.

13.The Second Respondent was involved, within the meaning of section 550(2) of the FW Act, in the contravention by the First Respondent of section 536(3) of the FW Act declared at Order 6 above.

14.The Second Respondent was involved, within the meaning of section 550(2) of the FW Act, in the contravention by the First Respondent of section 536(3) of the FW Act declared at Order 7 above.

THE COURT ORDERS THAT:

15.Pursuant to section 545(1) of the FW Act, within 28 days of this Order, the First Respondent take the steps that were required to comply with the Ellams Compliance Notice, the Tonti-Filippini Part-Time Compliance Notice and the Tonti-Filippini Casual Compliance Notice (the 'Compliance Notices') by:

(a)calculating and paying to each of Ms Ellams and Ms Tonti-Filippini ('the Employees') the outstanding entitlements it was required to pay the Employees ('Outstanding Entitlements') in respect of each of the contraventions identified in the Compliance Notices ('Contraventions');

(b)calculating and paying superannuation contributions into the Employee's superannuation fund for any additional superannuation contributions it is required to pay under clause 22.2 of the Restaurant Industry Award 2020 in respect of the payment required under Order 15(a) above ('Outstanding Superannuation');

(c)preparing and producing to the Applicant a schedule outlining the First Respondent's calculation of the Outstanding Entitlements and the Outstanding Superannuation, and providing evidence to the Applicant that the Outstanding Entitlements and Outstanding Superannuation were rectified as set out in Orders 15(a) and 15(b) above.

16.Pursuant to section 547(2) of the FW Act, the First Respondent pay interest calculated in accordance with the applicable pre-judgement interest rates prescribed by the Federal Court of Australia in respect of the payment required under Order 15(a) above, to the Employees within 28 days of this Order.

17.In the event that either of the Employees cannot be located or for any reason payment cannot be made to either of the Employees, then any payment required by Order 15(a) is to be made to, and retained by, the Commonwealth in accordance with s 559 of the FW Act.

18.The proceeding be listed for penalty hearing jointly with the matter of Fair Work Ombudsman v RS Diners Pty Ltd (MLG396/2022) on 5 December 2022 at 10.00am before Judge Blake at the Federal Circuit and Family Court of Australia in Melbourne.

19.The Applicant file and serve:

(a)any affidavits and other documents on which it intends to rely and

(b)submissions in relation to penalty

6 weeks prior to penalty hearing.

20.The First and Second Respondents file and serve:

(a)any affidavits and other documents on which they intend to rely and

(b)submissions in relation to penalty

4 weeks prior to penalty hearing.

21.The Applicant file any submissions and material in reply 2 weeks prior to penalty hearing.

22.Liberty to apply.

AND THE COURT NOTES:

The Court expects the Fair Work Ombudsman to provide assistance to the First and Second Respondent in calculating the payments ordered above.

By the Court

DATE ENTERED: 8 September 2022