Fair Work Ombudsman v RS Diners Pty Ltd
[2022] FedCFamC2G 84
•10 February 2023
Federal Circuit and Family Court of Australia
(DIVISION 2)
Fair Work Ombudsman v RS Diners Pty Ltd [2022] 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 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:
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.
At the hearing on penalty, both this matter and the Route 45 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
The Court has before it the Statement of Agreed Facts dated September 2022, set out at Annexure A.
Applicant’s evidence
Each of the affidavits of Inspector Hayden and Ms Yazidjoglou were read into evidence. Neither was required for cross examination.
In her affidavit, Inspector Hayden deposes to the investigation conducted by the Applicant, the service of the NTP’s and the Notices on the First Respondent, and the attempts by the Applicant to follow-up with the Respondents to ascertain whether they had complied with the Notices. 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 Route 45 Pty Ltd. I accept the evidence of Inspector Hayden.
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.
The Second Respondent gave the following evidence:
(a)the First Respondent operated Bobo’s Diner until that business was sold in or around October 2019;
(b)the First Respondent does not operate any other businesses;
(c)the Second Respondent tried to close the First Respondent down, however it remains registered;
(d)the First Respondent does not have a bank account and does not own any other assets;
(e)the First Respondent has liabilities of around $200,000 owed to the Australian Tax Office;
(f)the Second Respondent owns a house with his wife. 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 Route 45 or the First Respondent;
(g)he accepts the Applicant’s calculations of the amounts owing to Mr Golebiowski ($2705.75) and Mr Feore ($10,029.30);
(h)that he made a stupid mistake and should have paid the employees when he had the money, but now he has lost everything;
(i)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.
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.
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 remaining 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, when one walks down any street in Melbourne.
the submissions of the parties
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 the importance of respondents complying with Notices and the NTP’s; 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 Compliance 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.
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 with the Feore CN and a penalty against the First Respondent for failing to comply with the Golebiowski CN. The penalty sought for each contravention was at 70% of the maximum;
(b)A penalty against the First Respondent for failing to comply with the Feore NTP and a penalty against the First Respondent for failing to comply with the Golebiowski NTP. The penalty sought for each contravention was at 50% of the maximum;
(c)a single penalty for contravening section 536(1) of the Act in relation to the provision of payslips. The penalty sought was at 75% of the maximum;
(d)a penalty against the Second Respondent for his involvement in failing to comply with the Feore CN and a penalty against the Second Respondent for his involvement in failing to comply with the Golebiowski CN. The penalty sought for each contravention was at 70% of the maximum;
(e)A penalty against the Second Respondent for his involvement in failing to comply with the Feore NTP and a penalty against the Second Respondent for his involvement in failing to comply with the Golebiowski NTP. The penalty sought for each contravention was at 50% of the maximum;
(f)a single penalty against the Second Respondent for his involvement in failing to comply with section 536 of the Act. The penalty sought was at 60% of the maximum.
The Applicant submitted that a further discount of 10% should be applied to the penalties set out above. Weighing that and other factors, the Applicant sought total penalties on the First Respondent of $120,000 and total penalties on the Second Respondent of $22,000.
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 $98,000 on the First Respondent and a total of $19,000 in penalties on the Second Respondent.
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
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.
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
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].
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.
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:
The Applicant accepted that the Respondents were entitled to the benefit of section 557 of the Act in relation to the contraventions of section 536(1). The Applicant, however, submitted that the two contraventions of section 712(3) should not be grouped together, and the two contraventions of section 716(5) should not be grouped together. That submission was advanced on the basis that neither section 716(5) nor 712(3) are relevant civil remedy provisions as contemplated by section 557(2). I accept that submission.
It was then submitted that in so far as the Court may apply the common law course of conduct principles, that the contraventions of section 712(3) and 716(5) involve distinct conduct, arose from the issuing of different notices in respect of different employees 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].
It is necessary to consider the NTP’s and the Notices separately. The NTP’s were issued on 6 February 2020. Records and documents were required to be produced under them by 5pm on 5 March 2020. Plainly the NTP’s relate to two different employees. The NTP’s seek records and information concerning two different time periods. The categories of documents or information required to be produced, however, are similar. The NTP’s are not, however, identical.
There is evidence in the form of a telephone record that on 4 March 2020, an inspector from the Applicant’s office telephoned the Respondents and spoke to the Second Respondent. The file note records that the inspector told the Second Respondent that staff are owed money. The Second Respondent stated that he knew that, was looking for ways to pay them, and had no funds to pay staff at the moment as he is trying to save the money by continuing to run the Forest Hill store. The Second Respondent told the Inspector it had been ‘hectic’. The inspector queried whether the company is going to go into administration. The inspector also asked why there had been such trouble paying wages. The file note records the Second Respondent stating ‘he said that there are a lot of reasons, but that currently coronavirus is affecting business and this week has been the worst in 14 months’. The file note also records the Second Respondent as acknowledging the NTP’s, with the inspector recording in the telephone note ‘that he [Second Respondent] would email me all of the documents because he has them’. It is of course a fact that the Second Respondent never emailed any documents or records to the Applicant.
In my view, when all the facts are considered, the failure to comply with the NTP’s should be grouped as a single contravention arising out of course of conduct. The NTPs were issued on the same date. Documents and records were due to be produced to the Applicant under each NTP on the same date being 5 March 2020. Both NTP’s related to employees of the First Respondent. The Inspector made one follow-up call in relation to both employees, Mr Feore and Mr Golebiowski. The Inspector received one answer from the Respondents during the telephone call which was that the documents and records would be emailed to the inspector. The Respondents never produced the documents under either NTP. It can be inferred from both the telephone record and the evidence given by the Second Respondent that the records were not produced in circumstances where the Respondents were (in part) having to manage the effects of COVID-19 on the business.
The factors I have mentioned above are of much greater significance than the factors the Applicant points to as to why each contravention of the NTP should be treated separately. The obligations imposed by any NTP in relation to any employee will always be distinct because each notice deals with a separate employee. Such a submission does not advance the Applicant’s case. Moreover, the Applicant’s submission ignores the central matter that the Court is required to consider i.e. 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. The offence here was the failure to comply with the NTP’s.
I then turn to the Notices. Both Notices were issued on 4 February 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. Both the Notices stipulated that the required actions were to be taken by 4 March 2021. Both Notices were not complied with. On 15 March 2021, the Applicant wrote to the Respondents informing them of the failure to comply with ‘three Compliance Notices dated 4 February 2021’.
In my view, when all the facts are considered, the failure to comply with the Notices should be grouped as a single contravention arising out of course of conduct. The Notices were issued on the same date. The steps set out in the Notices were required to be taken by the same date. Both Notices related to employees of the First Respondent. The Respondents never complied with the Notices and subsequently sent one letter to the Respondents in relation to the failure to comply with ‘three’ Compliance Notices.
Moreover and significantly, however, there is the evidence of the Second Respondent. 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 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 Notices arose from a single course of conduct referred to above.
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.
I have given consideration to whether the single contravention of the NTP’s and the single contravention of the Notices should themselves be grouped together to constitute a single contravention for failure to comply with section 712(3) and failure to comply with section 716(5) of the Act. On one view, there are somewhat persuasive reasons for grouping these contraventions together to constitute a single contravention. They include that the course of conduct was a failure to comply with what might be described as statutory notices to take particular action. Moreover, that the course of conduct arguably arose because of the onset of the COVID-19 pandemic and the failure of the Respondents to navigate the business impacts of it and to then deal with the consequences of it.
On balance, however, I am of the view that the single contravention of section 712(3) of the Act should not be grouped together with the single contravention of section 716(5) of the Act for the purposes of imposing a single penalty. The contraventions of section 712(3) and sections 716(5) occurred over a year apart. The better view of the evidence is that one decision was taken in March 2020 not to comply with the NTP’s while a second decision was taken in March 2021 not to comply with the Notices. While COVID-19 was a factor in relation to non-compliance in both instances, the better view of the Second Respondent’s evidence is that the effects of COVID-19 on him personally were much more significant in February/March 2021. In March 2020, for example, telephone record indicates the Respondents intended or wanted to comply with the NTP’s. Furthermore, I do not understand the Second Respondent’s evidence to be that he was contemplating suicide in March 2020. The better view is that his thoughts of suicide, sleeplessness and his going broke were factors that were present in March 2021.
Accordingly, there are six single contraventions before the Court. In order, they are as follows. First, the single contravention by the First Respondent for its failures to comply with section 712(3) of the Act. Second, the single contravention by the First Respondent for its failure to comply with 716(5) of the Act. Third, the single contravention by the First Respondent relating to its contravention of section 536(1) of the Act. Fourth, the single contravention by the Second Respondent for his involvement in the contravention by the First Respondent of section 712(3) of the Act. Fifth, the single contravention by the Second Respondent for his involvement in the contravention by the First Respondent of 716(5) of the Act. Finally, the single contravention by the Second Respondent for his involvement in the contravention by the First Respondent of section 536(1) of the Act.
factors relevant to the assessment of penalty
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. 712(3)
$63,000
First Respondent
s. 536(1)
$63,000
Second Respondent
s. 716(5)
$6,660
Second Respondent
s. 712(3)
$12,600
Second Respondent
s. 536(1)
$12,600
I now turn to consider the various factors relevant to assessing the appropriate penalty to be imposed. I discuss first below, the factors that were raised by the Applicant in its submissions.
Deterrence
As noted in Pattinson, civil penalties are imposed primarily to promote the public interest in compliance with the provisions of the Act.
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.
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.
There is arguably a need for specific deterrence in this case. That arises largely but not solely from the non-compliance with the Notices which subsists. There are, however, other considerations that suggest 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 last business it operated was sold in 2019. It is saddled with not insignificant liabilities to the Australian Taxation Office. The Second Respondent has negligible assets. He earns only his 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. The Second Respondent said he tried to close (which I understand to be deregister or wind up the First Respondent) and I accept that evidence. In summary, 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.
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.
It is important that employers comply with statutory notices whether they be issued under section 712 or section 716 of the Act. Imposing no penalty, or a penalty that is too low, risks sending a message that there is no consequence to complying with provisions such as section 712 and section 716 of the Act. Equally and perhaps more importantly, it is very important that employers provide payslips to employees. 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 sections 712 and 716 of the Act.
The submission that deterrence is needed because non-compliance with statutory notices or payslip requirements ‘in particular’ in the restaurant and café industry cannot be tolerated 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. 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] of 85 Degrees, it is supported by evidence. I do not know what evidence Jarret J had before him to warrant the statement, he made in Sun Sea, but there is no evidence before me. I also note that the contraventions in that case occurred in Broadbeach Queensland and the Applicant has not adduced any evidence to say that what is happening in Melbourne is the same as what is happening in Broadbeach, Queensland. 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 for the reasons given in Pattinson.
Nature, extent and circumstances of the conduct
The Applicant submits that not only were the NTP’s and 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) of the Act, the Applicant submits that a meaningful penalty must be imposed.
The Respondents clearly did not comply with the NTP’s or 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 NTP’s or the Notices. No explanation has ever been provided in relation to the failure to comply with section 536(1) of the Act. The silence from the Respondents is deafening. These matters weigh heavily against the Respondents.
Those are not the only circumstances, however, that attend the relevant contraventions particularly, the contravention of section 716(5) of the Act. The NTPs and 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 NTP’s and the Notices.
Nature and extent of loss
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. Given the lack of payslip information, it is difficult to ascertain precisely the loss suffered by these employees. The Respondents concede, however, that these employees remain out-of-pocket. The total amount of the underpayments was $3705.75 in respect of Mr Golebiowski and $11,529.30 in relation to Mr Feore. As matters presently stand, Mr Golebiowski is owed $2705.75 and Mr Feore is owed $10,029.30. These are significant amounts for employees working in a restaurant and to that extent, the losses can be described as significant, particularly for Mr Feore.
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.
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
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 NTP’s and 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
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 NTP’s and 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.
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 in relation to both the NTP’s and the Notices when widespread lockdowns took effect, and then continued in Victoria. I also noted 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.
Financial circumstances of the Respondents
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, however, that the focus is properly on the ‘size’ of the contravening company.
The First Respondent operated a small business (a local restaurant), but now operates no business. It has no assets. I infer it does not generate any income. It is saddled with liabilities to the ATO. It follows that the financial position of the First Respondent is parlous. It is difficult to think of a smaller business.
The Second Respondent does not operate any businesses 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 how much money the Second Respondent owes to those who have placed caveats on his property, but I infer they are significant amounts which would likely equal or exceed the amount of funds the Second Respondent is likely to be left with.
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.
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.
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 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.
I have set those passages out in the full because while they support the submission advanced by the Applicant, it is also apparent they make other points. 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.
Corrective action, co-operation and contrition
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.
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. For example, the Applicant proposed the total penalties on the Second Respondent be reduced from $22,000 to $19,000. 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, has not done so since 2019 and has little prospect given its debts of conducting any business enterprise in the future. 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.
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 and also Pattinson 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.
As I have noted, 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 of the case are considered and weighed.
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.
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 thatthe penalty must be no greater the necessary to achieve the object of general deterrence.
In all the circumstances of this case, I set the single penalty for the First Respondent for the single breaches of section 712(3) at 15% of the maximum being $9450. 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 contravention section 712(3) of the Act at 10% of the maximum being $1260. I set the single penalty for the Second Respondent for being involved in the contravention of section 716(5) of the Act at 10% of the maximum being $666.
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.
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.
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.
The total penalty to be imposed on the First Respondent is $27,045. The total amount of the penalty to be imposed on the Second Respondent is $3816. In my view, these penalties are excessive and not just or appropriate in all the circumstances of the case. I would therefore reduce the penalties on the First Respondent by a further 50%. Accordingly, the First Respondent should pay a penalty of $13,552.50. The Second Respondent’s penalty should be reduced by 60% to temper it for personal considerations and ensure it is not oppressive. The Second Respondent should pay a penalty of $1526.40. I will make orders to this effect and given the circumstances of the Respondents order that such amounts be paid within 180 days of the date of this order by the First Respondent, and within 260 days by the Second Respondent. Orders will be issued to this effect.
I certify that the preceding eighty-two (82) 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 - RS Diners Pty Ltd
(3)The First Respondent, RS Diners Pty Ltd (ACN 614 509 554) (RS Diners) 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 Frankston trading as Bobos Diners (the Business); and
(f)a company with a registered office of "G, 435 Nepean Highway Frankston Victoria 3199" (the Registered Office).
The Second Respondent - George Stathakopoulos
(4)The Second Respondent, George Stathakopoulos, is and was at all relevant times:
(a)a natural person capable of being sued;
(b)the sole director and secretary of RS Diners;
(c)responsible for the overall operation and control of the Business;
(d)responsible for the overall operation and control of RS Diners;
(e)responsible for ensuring that RS Diners complied with its legal obligations under the FW Act; and
(f)a person whose conduct (engaged in on behalf of RS Diners and within the scope of his actual or apparent authority) is taken to be that of RS Diners under section 793(1) of the FW Act.
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 FWO under s 700 of the FW Act on 30 October 2019.
The Investigation
(6)From in or around December 2019, the FWO commenced an investigation into RS Diners' compliance with Commonwealth workplace laws (the Investigation). FWI Alison Read (FWI Read) initially had carriage of the Investigation.
(7)From on or around June 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 (Award), a modern award under the FW Act, covered and applied to RS Diners in respect of its employment of Mr Michael Golebiowski and Mr Tom Feore (Employees);
(b)during the period between 29 August 2016 and 7 November 2019 (Feore Period):
(i)RS Diners employed Mr Feore;
(ii)Mr Feore was employed by RS Diners as a prep chef on a full-time basis; and
(iii)Mr Feore performed work as a Level 4 - Cook Grade 3 (tradesperson) under Schedule B to the Award;
(c)during the period between 7 October 2019 and 7 November 2019 (the Golebiowski Period):
(i)RS Diners employed Mr Golebiowski;
(ii)Mr Golebiowski was employed by RS Diners as a food and beverage attendant on a part-time basis; and
(iii)Mr Golebiowski performed work as a Level 2 - Food and beverage attendant Grade 2 under Schedule B to the Award;
(d)RS Diners had contravened the following term of the Award and provision of the National Employment Standards in respect of Mr Feore during the Feore Period (collectively referred to as the Feore Contraventions):
(i)clause 28.1(c) of the Award - failing to provide Mr Feore with an equivalent day off for working on a public holiday or a day added to his annual leave entitlement; and
(ii)section 90(2) of the FW Act - on the termination of Mr Feore's employment, failing to pay Mr Feore, in respect of his accrued but untaken annual leave, the amount that would have been payable had Mr Feore taken that leave;
(e)RS Diners had contravened the following terms of the Award and provision of the National Employment Standards in respect of Mr Golebiowski during the Golebiowski Period as follows: (collectively referred to as the Golebiowski Contraventions):
(i)clause 12.10 of the Award - failing to pay Mr Golebiowski 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)clause 34.2(a)(i) of the Award - failing to pay Mr Golebiowski 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;
(iii)clause 34.1 of the Award - failing to pay Mr Golebiowski at 125% of the minimum wage for the relevant classification for ordinary hours worked on a Saturday
(iv)clause 34.1 of the Award - failing to pay Mr Golebiowski at 150% of the minimum wage for the relevant classification for ordinary hours worked on a Sunday;and
(v)section 90(2) of the FW Act and clause 35.2(b) of the Award - on the termination of Mr Golebiowski's employment, failing to pay Mr Golebiowski's, in respect of his accrued but untaken annual leave, the amount that would have been payable had Mr Golebiowski taken that leave, including the additional leave loading of 17.5% prescribed by clause 35.2(b) of the Award.
Feore Compliance Notice
(8)On 4 February 2021, FWI Hayden gave a notice pursuant to s 716(2) of the FW Act (the Feore Compliance Notice) dated 4 February 2021 to RS Diners by personally serving the notice on Mr Stathakopoulos.
(9)Pursuant to s 716(2) of the FW Act, the Feore Compliance Notice required RS Diners to:
(a)remedy the direct effects of the Feore Contraventions by 4 March 2021, by taking the following action in respect of Mr Fore for each of the Feore Contraventions (the Feore Specified Action):
(i)calculate the amount by which RS Diners underpaid Mr Feore in respect of the Feore Contraventions, and pay those amounts to Mr Feore;
(ii)make a record of the calculations referred to in paragraph 9(a)(i); and
(b)produce to FWO the following reasonable evidence of its compliance with the actions specified in paragraph 9(a) by 11 March 2021:
(i)records of RS Diners' calculations; and
(ii)proof that full payment had been made to Mr Feore of the payment(s) required to be made by paragraph 9(a).
(10)The Feore Compliance Notice met the requirements of s 716(3) of the FW Act.
Failure to comply with the Feore Compliance Notice
(11)RS Diners did not:
(a)take the Feore Specified Action by 4 March 2021, or at all; and
(b)produce to the FWO sufficient evidence of compliance with the Feore Compliance Notice by 11 March 2021, or at all.
(12)By reason of the matters in paragraph 11 above, RS Diners admits it failed to comply with the Feore Compliance Notice and thereby contravened s 716(5) of the FW Act.
Golebiowski Compliance Notice
(13)On 4 February 2021, FWI Hayden gave a notice pursuant to s 716(2) of the FW Act (the Golebiowski Compliance Notice) dated 4 February 2021 to RS Diners by personally servning the notice on Mr Stathakopoulos.
(14)Pursuant to s 716(2) of the FW Act, the Golebiowski Compliance Notice required RS Diners to:
(a)remedy the direct effects of the Golebiowski Contraventions by 4 March 2021, by taking the following action in respect of Ms Golebiowski for each of the Golebiowski Contraventions (the Golebiowski Specified Action):
(i)calculate the amount by which RS Diners underpaid Mr Golebiowski in respect of each of the Golebiowski Contraventions, and pay those amounts to Mr Golebiowski;
(ii)in respect of the amounts paid to Mr Golebiowski in compliance with the Golebiowski Compliance Notice, calculate and pay any additional superannuation contributions required pursuant to clause 30.2 of the Award to his chosen Superannuation Fund; and
(iii)make a record of the calculations referred to in paragraph 14(a)(i) and (ii); and
(b)produce to FWO the following reasonable evidence of its compliance with the actions specified in paragraph 14(a) by 11 March 2021:
(i)records of RS Diners' calculations;
(ii)proof that full payment had been made to Mr Golebiowski of the payment(s) required to be made by paragraph 14(a).
(15)The Golebiowski Compliance Notice met the requirements of s 716(3) of the FW Act.
Failure to comply with the Golebiowski Compliance Notice
(16)RS Diners did not:
(a)take the Golebiowski Specified Action by 4 March 2021, or at all; and
(b)produce to the FWO sufficient evidence of its compliance with the Golebiowski Compliance Notice by 11 March 2021, or at all.
(17)By reason of the matters in paragraph 16 above, RS Diners admits it failed to comply with the Golebiowski Compliance Notice and thereby contravened s 716(5) of the FW Act.
C. CONTRAVENTIONS OF SECTION 536 OF THE FW ACT
(18)RS Diners employed:
(a)Mr Feore for the Feore Period;
(b)Mr Golebiowski for the Golebiowski Period
(c)Mr Liam Crowley from 26 August 2019 to 8 November 2019 (Crowley Period).
(19)Pursuant to section by s 536(1) of the FW Act, RS Diners was required to give pay slips to its employees within one working day of paying an amount in relation to the performance of work.
(20)During the Feore Period, RS Diners:
(a)generally paid Mr Feore on a weekly basis, other than occasions where pay was delayed;
(b)did not give Mr Feore a pay slip on a weekly basis within one working day of paying an amount to him in relation to the performance of work; and
(c)on 9 February 2018, 10 May 2018, 9 September 2019, 26 May 2019, 29 May 2019 and 9 September 2019 gave Mr Feore multiple pay slips on the same day.
(21)During the Golebiowski Period, RS Diners:
(a)did not pay Mr Golebiowski at regular intervals, and on occasion payment for work performed was delayed or not made;
(b)did not give Mr Golebiowski any pay slips at all.
(22)During the Crowley Period, RS Diners:
(a)on 9 September 2019, 17 October 2019, 21 October 2019, 31 October 2019 and 6 November 2019 made payments to Mr Crowley for the performance of work; and
(b)did not give Mr Crowley any pay slips at all.
(23)By reason of the matters set out in paragraphs 18 to 22, RS Diners admits it contravened s 536(1) of the FW Act.
D. CONTRAVENTIONS OF SECTION 712(3) OF THE FW ACT
(24)RS Diners was required by s 712(3) of the FW Act to comply with a notice to produce records or documents served upon it.
Feore Notice to Produce
(25)On 6 February 2020, pursuant to s 712(1) of the FW Act, FWI Sevda Keremelevski (FWI Keremelevski) served on RS Diners a written notice to produce records or documents relating to the employment of Mr Feore dated 6 February 2020 (Feore Notice to Produce), by posting it to RS Diners' Registered Office and emailing a copy to Mr Stathakopoulos at [email protected] on 6 February 2020.
(26)The Feore Notice to Produce required RS Diners to produce specified records and documents relating to the employment of Mr Feore (Feore Specified Documents).
(27)The Feore Notice to Produce required RS Diners to produce the Feore Specified Documents:
(a)by 5pm on 5 March 2020 (NTP Compliance Date); and
(b)in person at Level 6, 414 Latrobe Street Melbourne or by post to GPO Box 9887, Melbourne VIC 3001 or by email to [email protected].
(28)The Feore Notice to Produce was issued, and stated that it was issued:
(a)by FWI Keremelevski pursuant to section 712 of the FW Act;
(b)for the purpose of determining whether:
(i)the FW Act is being or had been complied with, particularly in relation to section 44, section 45, Division 2 of Part 2-9, section 328, section 535, section 536 and section 550 of the FW Act; and
(ii)a fair work instrument, namely the Award, is being or had been complied with.
(29)By reason of the matters in paragraphs 25 to 28, the Feore Notice to Produce complied with the requirements of s 706 and s 712(2) because:
(a)it was issued for a compliance purpose (within the meaning of s 706(1)(a)); and
(b)it was in writing; and
(c)was served on RS Diners; and
(d)required RS Diners to produce the Feore Specified Documents at a specified place within a specified period of at least 14 days.
Failure to comply with the Feore Notice to Produce
(30)RS Diners did not produce any records or documents as required by the Feore Notice to Produce by the NTP Compliance Date, or at all.
(31)By reason of the matters in paragraphs 25 to 30 above, RS Diners admits it failed to comply with the Feore Notice to Produce and thereby contravened section 712(3) of the FW Act.
Golebiowski Notice to Produce
(32)On 6 February 2020, pursuant to section 712(1) of the FW Act, FWI Keremelevski served on RS Diners a written notice to produce records or documents relating to the employment of Mr Golebiowski dated 6 February 2020 (Golebiowski Notice to Produce), by posting it to RS Diners' Registered Office and emailing a copy to Mr Stathakopoulos at [email protected] on 6 February 2020.
(33)The Golebiowski Notice to Produce required RS Diners to produce specified records and documents relating to the employment of Mr Golebiowski (Golebiowski Specified Documents).
(34)The Golebiowski Notice to Produce required RS Diners to produce the Golebiowski Specified Documents:
(a)by 5pm on the NTP Compliance Date; and
(b)in person at Level 6, 414 Latrobe Street Melbourne or by post to GPO Box 9887, Melbourne VIC 3001 or by email to [email protected].
(35)The Golebiowski Notice to Produce was, and stated that it was issued:
(a)by FWI Keremelevski pursuant to section 712 of the FW Act;
(b)for the purpose of determining whether:
(i)the FW Act is being or had been complied with, particularly in relation to section 44, section 45, Division 2 of Part 2-9, section 328, section 535, section 536 and section 550 of the FW Act; and
(ii)a fair work instrument, namely the Award, is being or had been complied with.
(36)By reason of the matters in paragraphs 32 to 35, the Golebiowski Notice to Produce complied with the requirements of s 706 and s 712(2) because:
(a)it was issued for a compliance purpose (within the meaning of s 706(1)(a)); and
(b)it was in writing; and
(c)was served on RS Diners; and
(d)required RS Diners to produce the Golebiowski Specified Documents at a specified place within a specified period of at least 14 days.
Failure to comply with the Golebiowski Notice to Produce
(37)RS Diners did not produce any records or documents as required by the Golebiowski Notice to Produce by the NTP Compliance Date, or at all.
(38)By reason of the matters admitted in paragraphs 32 to 37 above, RS Diners admits it failed to comply with the Golebiowski Notice to Produce and thereby contravened section 712(3) of the FW Act.
E. ACCESSORIAL LIABILITY OF SECOND RESPONDENT
Involvement in contraventions of s 716(5) of the FW Act
(39)During the Investigation, Mr Stathakopoulos:
(a)on 4 May 2020, had a telephone call with Fair Work Officer Monica Madeira on behalf of RS Diners
(b)corresponded with FWIs regarding the Investigation, including using the email address [email protected];
(c)on 8 May 2020, sent a text message to FWI Read regarding the Investigation; and
(d)on 25 June 2020, sent a reply email from the email address [email protected] in response to an email from FWI Hayden, sent on 24 January 2020.
(40)Mr Stathakopoulos was personally served with the Feore Compliance Notice and the Golebiowski Compliance Notice (the Compliance Notices).
(41)By reason of the matters in paragraphs 4, 8, 11, 13, 16, 39 and 40 above, Mr Stathakopoulos:
(a)was responsible for ensuring that RS Diners complied with the Compliance Notices;
(b)had knowledge that the Compliance Notices were given to RS Diners, including the requirement that RS Diners comply with the Compliance Notices within the timeframe specified;
(c)had knowledge that RS Diners failed to comply with the Compliance Notices; and
(d)was an intentional participant in RS Diners failure to comply with the Compliance Notices.
(42)By reason of the matters in paragraphs 40 and 41, Mr Stathakopoulos admits he:
(a)was involved, within the meaning of s 550(2)(c) of the FW Act, in the contraventions by RS Diners 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 section 536(1)
(43)At all material times Mr Stathakopoulos:
(a)was involved in payroll administration on behalf of RS Diners including paying wages and issuing pay slips to the Employees and Mr Crowley;
(b)was responsible for ensuring that RS Diners complied with s 536(1) of the FW Act to provide pay slips within 1 working day of paying an amount to the Employees and Mr Crowley in relation to the performance of work; and
(c)directed, authorised and /or arranged for pay slips to be issued by email to Mr Feore referred to in the particulars to paragraph 20, above.
(44)By reason of the matters in paragraphs 4, 20 to 22 and 43 above, Mr Stathakopoulos:
(a)had knowledge that RS Diners did not provide each of the Employees or Mr Crowley a pay slip within 1 working day of paying an amount to them in relation to their performance of work; and
(b)was an intentional participant in RS Diners' failure to provide each of the Employees and Mr Crowley with pay slips as referred to in subparagraph (a) above.
(45)By reason of the matters in paragraphs 43 and 44, Mr Stathakopoulos admits he:
(a)was involved, within the meaning of s 550(2)(c) of the FW Act, in the contraventions by RS Diners of s 536(1) of the FW Act; and
(b)by reason of s 550(1) of the FW Act is taken to have contravened s 536(1) of the FW Act.
Involvement in contraventions of section 712(3)
(46)Mr Stathakopoulos was a party to the following conversations in relation to the Feore Notice to Produce and the Golebiowski Notice to Produce (Notices to Produce):
(a)a telephone conversation with Fair Work Officer Madeira on 13 January 2020, in which Fair Work Officer Madeira indicated that the FWO intended to issue the Notices to Produce; and
(b)a telephone conversation with FWI Read on 4 March 2020 (the day before the NTP Compliance Date), in which FWI Read reiterated that compliance with the Notices to Produce was due shortly.
(47)By reason of the matters in paragraphs 4, 25, 30, 32, 37 and 46 above Mr Stathakopoulos:
(a)was responsible for ensuring that RS Diners complied with s712(3) of the FW Act by producing records and documents of the kind required in the Notices to Produce by the NTP Compliance Date;
(b)had knowledge that the Notices to Produce were given to RS Diners, including the requirement that RS Diners comply with the Notices to Produce within the timeframe specified, that is by the NTP Compliance Date; and
(c)had knowledge that RS Diners failed to comply with the Notices to Produce by the NTP Compliance Date or at all.
(48)By reason of the matters in paragraphs 4, 46 and 47 above, Mr Stathakopoulos admits he:
(a)was involved, within the meaning of s 550(2)(c) of the FW Act, in the contraventions by RS Diners of s 712(3) of the FW Act; and
(b)by reason of s 550(1) of the FW Act is taken to have contravened s 712(3) of the FW Act.
Date: 7 September 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 4 February 2021 in respect of Tom Feore ('Feore Compliance Notice').
2.The First Respondent contravened s 716(5) of the FW Act by failing to comply with the compliance notice dated 4 February 2021 in respect of Michael Golebiowski ('Golebiowski Compliance Notice').
3.The First Respondent contravened s 536(1) of the FW Act by failing to provide Mr Feore pay slips within 1 working day of paying him wages.
4.The First Respondent contravened s 536(1) of the FW Act by failing to provide Mr Golebiowski pay slips within 1 working day of paying him wages.
5.The First Respondent contravened s 536(1) of the FW Act by failing to provide Mr Crowley pay slips within 1 working day of paying him wages.
6.The First Respondent contravened s 712(3) of the FW Act by failing to comply with the notice to produce dated 6 February 2020 in respect of Mr Feore.
7.The First Respondent contravened s 712(3) of the FW Act by failing to comply with the notice to produce dated 6 February 2020 in respect of Mr Golebiowski.
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 536(1) 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 712(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 712(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 Feore Compliance Notice and the Golebiowski Compliance Notice (the 'Compliance Notices') by:
a.calculating and paying to each of Mr Feore and Mr Golebiowski ('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 Route 45 Pty Ltd (MLG395/2022) 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
4weeks 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:
A.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
12
1