Fair Work Ombudsman v RS Diners Pty Ltd

Case [2023] FedCFamC2G 84

Federal Circuit and Family Court of Australia

(DIVISION 2)

Fair Work Ombudsman v RS Diners Pty Ltd [2023] FedCFamC2G 84

File number(s): MLG 396 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), 557, 557(2), 712, 712(1), 712(3), 716, 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: 82
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 396 of 2022
BETWEEN:

FAIR WORK OMBUDSMAN

Applicant
AND:

RS DINERS PTY LTD (ACN 614 509 554)

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 $13,552.50 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 $1526.40 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 days’ 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…

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AGLC
Fair Work Ombudsman v RS Diners Pty Ltd [2023] FedCFamC2G 84
Case
[2023] FedCFamC2G 84
Decision Date

CaseChat Overview and Summary

The Fair Work Ombudsman (Applicant) filed proceedings against RS Diners Pty Ltd (First Respondent) and its director and secretary, Mr. Georgios Stathakopoulos (Second Respondent), seeking various contraventions of the Fair Work Act 2009. The case primarily revolved around whether pecuniary penalties should be imposed on the Respondents for failing to comply with notices to produce records and compliance notices, and if so, the amount of such penalties. The First Respondent operated a restaurant and did not comply with the notices served by the Applicant, leading to the initiation of proceedings. The Applicant sought significant penalties against the Respondents, which were later revised after the Respondents provided evidence during the hearing.

The legal issues included determining the appropriate level of penalty that balances deterrence with oppressive severity, considering the Respondents' lack of cooperation, their admissions, financial capacity, and contrition. The Court had to assess the factors outlined in relevant authorities, such as CSR and Pattinson, to arrive at a just and appropriate penalty. The Respondents, unrepresented by legal counsel, argued for a reduced penalty due to their financial constraints and contrition, while the Applicant maintained that significant penalties were necessary for deterrence.

The Court found that while the Applicant's initial penalty demands were high, they were reduced after considering the Respondents' evidence. The Court emphasised that any penalty must strike a balance between deterrence and oppressive severity. The Respondents' lack of cooperation was noted, but their full admissions, efforts to pay some amounts, and evident contrition were considered mitigating factors. The Court also highlighted that the Applicant had not provided evidence of similar previous conduct by the Respondents, which would have supported higher penalties. Ultimately, the Court determined that the revised penalties sought by the Applicant were still excessive and imposed lower penalties, taking into account all relevant factors.

The Court ordered that the First Respondent pay a penalty of $50,000 and the Second Respondent pay a penalty of $10,000. This decision reflects the need to impose penalties that are sufficient for deterrence while also considering the Respondents' capacity to pay and their demonstrated contrition.

Orders

Orders of the court

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Background

Background to the litigation

The issue to be determined in this case 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 a restaurant known as Bobo’s Diner in Frankston. The Second Respondent was the sole director and Secretary of the First Respondent and responsible for the overall operation and control of the business. From around December 2019, the Applicant commenced an investigation into the First Respondent’s compliance with Commonwealth workplace laws. On 6 February 2020, an inspector from the office of the Applicant served on the First Respondent two written notices to produce records or documents under section 712(1) of the Act. The first notice related to the employment of an employee, Mr Feore (‘Feore NTP’). The second notice related to the employment of an employee, Mr Golebiowski (‘Golebiowski NTP’) (collectively, the ‘NTP’s’). Both NTP’s required the First Respondent to produce documents by 5pm on 5 March 2020. The First Respondent did not comply with the NTP’s. Around one year later on 4 February 2021, an inspector from the office of the Applicant served two Compliance Notices on the First Respondent. The First Compliance Notice related to the employment of Mr Feore (‘Feore CN’). The Second Compliance Notice related to the employment of Mr Golebiowski (‘Golebiowski CN’) (collectively, the ‘Notices’). The First Respondent did not comply with the Notices. As a result of, among other things, the First Respondent’s failure to comply with the NTP’s and the Notices, the Applicant commenced these proceedings on 22 February 2022. On around 8 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 MLG395 of 2022 (Fair Work Ombudsman v Route 45 and George Stathakopoulos) (‘Route 45 Proceeding’). The Second Respondent in the present matter is also the sole director and secretary of Route 45 Pty Ltd and the Second Respondent in the Route 45 Proceeding. The Applicant also issued Compliance Notices to Route 45 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. Of significance in the affidavit of Ms Yazidjoglou is a letter sent by Ms Yazidjoglou to the Respondents on 3 November 2022. In that letter, the Applicant set out its estimate of the amounts owing to Mr Feore and Mr Golebiowski. 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 of 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 that exceed $100,000. 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 NTP’s and 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. There is evidence before the Court that the Respondents have already paid some amounts outstanding to the Applicant. 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 $120,000 on the First Respondent and $22,000 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 $98,000 against the First Respondent (in circumstances where the maximum penalties able to be imposed are $255,600) and $19,000 against the Second Respondent (in circumstances where the maximum penalties able to be imposed are $50,400). 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 overlooked or 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 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 Route 45 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.