Fair Work Ombudsman v Siner Enterprises Pty Ltd (No.2)
[2018] FCCA 589
•15 March 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v SINER ENTERPRISES PTY LTD & ANOR (No.2) | [2018] FCCA 589 |
| Catchwords: INDUSTRIAL LAW – Penalties – contraventions of Fair Work Act 2009 (Cth) and Restaurant Industry Award 2010 – compensation for loss because of a contravention. |
| Legislation: Fair Work Act 2009 (Cth), ss.3, 4, 44, 45, 46, 87, 90, 96, 117, 336, 340, 352, 535, 539, 545, 546, 550, 557, 712 Fair Work Regulations, regs.3.32, 3.33, 3.34, 3.36, 3.40 |
| Cases cited: Aitken v Construction, Mining, Energy, Timberyards,Sawmills & Woodworkers Union of Australia - Western Australian Branch (1995) 63 IR 1; (1995) 38 AILR 3-187(75) Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550 Singtel Optus Pty Ltd v Australian Competition & Consumer Commission [2012] FCAFC 20; (2012) 287 ALR 249; (2012) ATPR 42-387 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | SINER ENTERPRISES PTY LTD |
| Second Respondent: | SIMON PETER MACKENZIE |
| File Number: | PEG 123 of 2013 |
| Judgment of: | Judge Antoni Lucev |
| Hearing date: | 17 January 2018 |
| Date of Last Submission: | 17 January 2018 |
| Delivered at: | Perth |
| Delivered on: | 15 March 2018 |
REPRESENTATION
| Counsel for the Applicant: | Mr AJ Power |
| Solicitors for the Applicant: | Fair Work Ombudsman |
| For the First Respondent: | No appearance |
| For the Second Respondent: | In person |
ORDERS
That the First Respondent pay penalties to the Consolidated Revenue Fund of the Commonwealth in the sum of $174,075 pursuant to s.546 of the Fair Work Act 2009 (Cth) by 15 April 2018.
That the Second Respondent pay penalties to the Consolidated Revenue Fund of the Commonwealth in the sum of $34,815 pursuant to s.546 of the Fair Work Act 2009 (Cth) by 15 April 2018.
That the First and Second Respondents be jointly and severally liable for the payment of compensation to Mr Singh in the sum of $17,885.38 pursuant to s.545 of the Fair Work Act 2009 (Cth) by 15 April 2018.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PERTH |
PEG 123 of 2013
| FAIR WORK OMBUDSMAN |
Applicant
And
| SINER ENTERPRISES PTY LTD |
First Respondent
| SIMON PETER MACKENZIE |
Second Respondent
REASONS FOR JUDGMENT
Introduction
By judgment of this Court in Fair Work Ombudsmanv Siner Enterprises & Anor [2017] FCCA 2583 (“Liability Judgment”) delivered on 26 October 2017, the first respondent Siner Enterprises Pty Ltd (“Siner Enterprises”) and the second respondent Simon Peter Mackenzie (“Mr Mackenzie”) (collectively “the Respondents”), were found to have engaged in a number of contraventions of the Fair Work Act 2009 (Cth) (“FW Act”) and the Restaurant Industry Award 2010 (“Restaurant Award”).
A preliminary issue arose in the first hearing concerning Siner Enterprises having no legal representation and Mr Mackenzie, a co-director of Siner Enterprises, seeking leave to appear, as a non-lawyer, on behalf of Siner Enterprises. The Court refused leave for Mr Mackenzie to appear as a non-lawyer for Siner Enterprises at the hearing: Liability Judgment at [3]-[44] per Judge Lucev. In the present proceedings before the Court, Siner Enterprises is again unrepresented. Mr Mackenzie appeared in person at the penalty hearing and chose not to cross examine on any of the evidence the FW Ombudsman sought to rely upon: Penalty Hearing Transcript, page 8. The Court also notes there were no written submissions or supplementary affidavits filed with the Court from Siner Enterprises or Mr Mackenzie.
The applicant, the Fair Work Ombudsman (“FW Ombudsman”), sought orders for the imposition of pecuniary penalties against the Respondents for the contraventions, or involvement in the contraventions, and for the payment of compensation for economic and non-economic loss to Mr Gurprit Singh (“Mr Singh”), whose employment with Siner Enterprises gave rise to the contraventions found by the Court (and which are set out at [12] below). By virtue of s.550 of the FW Act Mr Mackenzie was held to be liable for having been involved in the contraventions by Siner Enterprises and thus was taken to have contravened those provisions personally: see Liability Judgment at [137]-[142] per Judge Lucev.
It is unnecessary for the Court to repeat the background of the matter at length. Put briefly:
a)the FW Ombudsman commenced action against the Respondents for contraventions of the FW Act and Restaurant Award in respect of a restaurant operated by Siner Enterprises;
b)all allegations of contraventions were denied by the Respondents;
c)the contraventions related to one employee, Mr Singh, a 24 year old Indian man on a bridging visa who wanted to gain employment with an employer to sponsor him for a skilled worker visa, and who was engaged as a cook by Siner Enterprises during the period from 18 May 2012 to 18 September 2012; and
d)on 26 October 2017 the Court made declarations and orders as set out at [12] below.
Evidence
The FW Ombudsman sought to rely upon most of the material already before the Court, and two additional affidavits filed following the delivery of the Liability Judgment. Specifically, the documents relied upon were (see Applicant’s Submissions on Penalty at [4]):
a)Application filed 7 June 2013;
b)Statement of Claim filed 7 June 2013;
c)Affidavit of Ann Lucey filed 27 March 2014 (“First Lucey Affidavit”);
d)Affidavit of Gurprit Singh filed 27 March 2014 (“First Singh Affidavit”);
e)Supplementary Affidavit of Gurprit Singh filed 28 March 2014 (“Second Singh Affidavit”);
f)Further Supplementary Affidavit of Gurprit Singh filed 11 August 2014 (“Third Singh Affidavit”);
g)Supplementary Affidavit of Ann Lucey filed 16 November 2017 (“Second Lucey Affidavit”); and
h)Second Further Supplementary Affidavit of Gurprit Singh filed 17 November 2017 (“Fourth Singh Affidavit”).
Liability and Penalty
Section 539(2) of the FW Act prescribes the individual penalty units for contraventions of civil remedy provisions of the FW Act. These maximum penalties form the benchmark, or “yardstick”, against which the Court can assess where the Respondents contraventions sit when taken and balanced with all other factors: Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70; (2008) 168 FCR 383; (2008) 171 IR 455; (2008) 247 ALR 714; (2008) 60 AILR 100-883 at [41]-[46] per Stone and Buchanan JJ (“Mornington Inn Appeal”).
Section 4(1) of the FW Act provides that “penalty unit” has the same meaning as in s.4AA of the Crimes Act 1914 (Cth) (“Crimes Act”). From 28 December 2012, the Crimes Legislation Amendment (Serious Drugs, Identity Crime and Other Measures) Act 2012 (Cth) increased the amount of a penalty unit in the Crimes Act from $110 to $170. This increase was not retrospective, and in the current circumstances the Court has concluded during the employment of Mr Singh in 2012 the correct penalty unit was $110.
The power of the Court to impose pecuniary penalties in respect of contraventions of the FW Act arises from s.546(1) of the FW Act. In all but one of the contraventions in this case, the maximum penalty that may be imposed under s.546(2) of the FW Act for a contravention of a civil remedy provision is:
a)300 penalty units for a body corporate, being Siner Enterprises, amounting to $33,000; and
b)60 penalty units for an individual, that is Mr Mackenzie, thus a maximum penalty of $6,600.
In the case of the contravention of s.535(1) of the FW Act, the maximum penalty that may be imposed under s.546(2) of the FW Act is:
a)150 penalty units for Siner Enterprises, being $16,500 for the contravention; and
b)30 penalty units for Mr Mackenzie, being $3,300 for the contravention.
The power of the Court to award compensation for economic and non-economic loss arises from s.545(2) of the FW Act.
The Court’s approach to penalty
Imposition of a civil penalty is one of the most difficult tasks a judicial officer will perform: Construction, Forestry, Mining & Engineering Union v Williams [2009] FCAFC 171; (2009) 262 ALR 417; (2009) 191 IR 445 at [28] per Moore, Middleton and Gordon JJ; Australian Building & Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) [2010] FCA 977; (2010) 199 IR 373 (“ABCC”) at [4] per Barker J (from which an appeal was dismissed: McDonald v Australian Building & Construction Commissioner [2011] FCAFC 29; (2011) 202 IR 467). A set of principles as steps in the process of determining a quantum of penalty has been developed as follows:
a)first, the Court identifies the separate contraventions involved. Each contravention of, in turn each separate obligation imposed by, the FW Act is a separate contravention of a civil remedy provision for the purposes of s.539(2) of the FW Act: Gibbs v The Mayor, Councillors & Citizens of the City of Altona (1992) 37 FCR 216; (1992) 42 IR 255; (1992) 34 AILR 369, FCR at 223 per Gray J (“Gibbs”); McIver v Healey [2008] FCA 425; (2008) 60 AILR 100-850 at [16] per Marshall J; Rocky Holdings Pty Ltd & Anor v Fair Work Ombudsman [2014] FCAFC 62; (2014) 221 FCR 153; (2014) 243 IR 244 (“Rocky Holdings”);
b)second, the Court should consider whether the extent to which the contraventions so identified in the first step constitute a "course of conduct", and thus ought to be treated as a single contravention within the meaning and operation of s.557 of the FW Act: FW Act, s.557(1);
c)third, to the extent that two or more contraventions have common elements, the Court may take this into account in considering the appropriateness in all the circumstances of the quantum of penalty for the contraventions. That reflects the basic principle that a contravener should not be penalised more than once for what, in a practical sense, amounts to the same contravening conduct, such that the penalties imposed by the Court should be an appropriate but fair response to the contravention of statutory obligations: Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; (2008) 165 FCR 560; (2008) 246 ALR 35; (2008) 60 AILR 100-809 at [46] per Graham J (“Australian Ophthalmic Supplies”);
d)fourth, the Court, having identified the relevant factors arising from the first three steps, must fix appropriate penalties for each contravention having regard to all of the circumstances of the case, and the basic nature and purpose of imposing a penalty set out in Ponzio v B & P Caelli Constructions Pty Ltd and Ors [2007] FCAFC 65; (2007) 158 FCR 543; (2009) 162 IR 444; (2009) 59 AILR 100-669 at [93] per Lander J (“Caelli Constructions”):
i)as punishment, proportionate to the offence and according to prevailing standards;
ii)as personal or specific deterrence, having assessed the risk of reoffending; and
iii)for rehabilitation; and
e)fifth, having fixed appropriate penalties for the contraventions, the Court should take a final look at the aggregate penalty, to determine whether it is an appropriate response to the contravening conduct: Kelly v Fitzpatrick[2007] FCA 1080; (2007) 166 IR 14 at [30] per Tracey J (“Kelly”); Australian Ophthalmic Supplies at [23] per Gray J, [71] per Graham J and [102] per Buchanan J. The Court should apply an "instinctive synthesis" (often referred to in the applicable case law as the "totality principle'') in making this assessment: Australian Ophthalmic Supplies at [27] per Gray J and [55] and [78] per Graham J.
The contraventions
The Court made the following declarations and orders upon delivering the Liability Judgment:
The Court declares that the First Respondent contravened:
a) clause 20.1 of the Restaurant Industry Award 2010 by failing to pay Mr Gurprit Singh the minimum rate of pay for the period 18 May 2012 to 18 September 2012;
b) clause 27.2 of the Restaurant Industry Award 2010 by failing to pay Mr Gurprit Singh wages, penalties and allowances weekly, fortnightly or monthly for the period 18 May 2012 to 18 September 2012;
c) clause 34.1 and 34.2 of the Restaurant Industry Award 2010 by failing to pay Mr Gurprit Singh penalty rates for the period 18 May 2012 to 18 September 2012;
d) clause 33 of the Restaurant Industry Award 2010 by failing to pay Mr Gurprit Singh overtime penalty rates for the period 18 May 2012 to 18 September 2012;
e) section 90(2) of the Fair Work Act 2009 (Cth) and clause 35 of the Restaurant Industry Award 2010 by failing to pay Mr Gurprit Singh annual leave and annual leave loading on termination of employment;
f) section 117 of the Fair Work Act 2009 (Cth) and clause 16.1 of the Restaurant Industry Award 2010 by failing to pay Mr Gurprit Singh one week’s notice on termination;
g) clause 32.1 of the Restaurant Industry Award 2010 by failing to pay Mr Gurprit Singh meal breaks for the period 18 May 2012 to 18 September 2012;
h) section 340(1) of the Fair Work Act 2009 (Cth) by terminating Mr Gurprit Singh’s employment, thereby taking adverse action against him, for exercising his workplace right to utilise a period of personal leave on 18 September 2012;
i) section 352(1) of the Fair Work Act 2009 (Cth) by terminating Mr Gurprit Singh’s employment, thereby taking adverse action against him, for being temporarily absent due to illness or injury on 18 September 2012;
j) section 712(3) of the Fair Work Act 2009 (Cth) by failing to comply with a Notice to Produce dated 18 December 2012; and
k) section 535(1) of the Fair Work Act 2009 (Cth) by failing to keep proper employment records in relation to the employment of Mr Gurprit Singh for the period 18 May 2012 to 18 September 2012.
The Court orders that:
a) pursuant to s.546(1) of the Fair Work Act 2009 (Cth) the First Respondent and the Second Respondent be jointly and severally liable to pay to the Consolidated Revenue Fund of the Commonwealth pecuniary penalties in respect of the contraventions by them of the Fair Work Act 2009 (Cth) and Fair Work Regulations 2009 (Cth) in any amount to be assessed by the Court at a penalty hearing
…
e) pursuant to s.545(2) of the Fair Work Act 2009 (Cth), that the First Respondent and the Second Respondent be jointly and severally liable to pay Mr Gurprit Singh damages for economic and non-economic loss in any amount to be assessed by the Court at the penalty hearing.
Course of conduct contraventions
Two or more contraventions may be taken to constitute a single contravention under s.557 of the FW Act. In Rocky Holdings the appellants had each committed a number of contraventions of ss.44(1) and 45 of the FW Act arising from the same course of conduct. The contraventions of s.44(1) of the FW Act included contraventions of three different terms of the National Employment Standards (“NES”), and the contraventions of s.45 of the FW Act included contraventions of six different terms of a modern award. At first instance a Judge of this Court imposed a separate penalty for each discrete term of the NES and each term of the modern award contravened by the appellants. The appellants contended on the appeal that s.557 of the FW Act deemed each contravention of s.44(1) of the FW Act to constitute a single contravention by that appellant, and the contraventions of s.45 of the FW Act to constitute another single contravention. It was held that a civil remedy provision referred to in s.557 of the FW Act does not mean ss.44(1) and 45 of the FW Act, but rather the relevant provision of the NES or term of the modern award, and that the primary Judge did not therefore err in sentencing the appellants on the basis that the contraventions were separate: Rocky Holdings at [8], [23] and [27] per North, Flick and Jagot JJ.
In this case the Court is of the view that the Respondents are entitled to the benefit of the course of conduct provisions in relation to repeated breaches of each provision that they have contravened. Thus, for example, the repeated failure to pay minimum wage provisions to Mr Singh, whilst technically multiple contraventions, can be treated as a single contravention.
It is plain enough that the failure to pay the minimum wage pursuant to cl.20.1 of the Restaurant Award and the failure to pay wages, penalties and allowances weekly, fortnightly or monthly pursuant to cl.27.2 of the Restaurant Award are separate contraventions, and it was not argued otherwise.
The FW Ombudsman argued that the underpayments in respect of penalty rates for Saturdays, Sundays, public holidays and for work performed between 10.00pm and midnight on weekdays were for different contraventions arising in different circumstances, and that they differed in amount and did not overlap. The FW Ombudsman cited various cases in support of the treatment of the penalty rates as distinct contraventions. It is, however, necessary to go only to one recent case to deal with the issue: that case is Fair Work Ombudsman v Lohr [2018] FCA 5 (“Lohr”). In Lohr in this Court four types of overtime entitlements had been held to give rise to a single contravention rather than four contraventions: Lohr at [25] per Bromwich J. On appeal to the Federal Court the FW Ombudsman contended that that was an error, and said rather that once individual penalties for each contravention have been arrived at, the final overall penalty could then be adjusted by application of the totality principle, citing Australian Building & Construction Commissioner v Construction, Forestry, Mining & Energy Union [2017] FCAFC 113; (2017) 271 IR 321 at [116]-[121] per Dowsett, Greenwood and Wigney JJ: Lohr at [26] per Bromwich J.
In Lohr the Federal Court set out the relevant law as follows at [29]-[34] per Bromwich J as follows:
29 The Full Court in Rocky Holdings accepted a submission made by the FWO that one of the key objects of the FW Act was to ensure, through an effective penalty regime, compliance with minimum terms and conditions through the NES and modern awards. The purpose of s 557 was not simply to reduce the number of contraventions of a civil penalty provision to one where they arise from a course of conduct. If this was the purpose then it could very easily have been stated. Such an interpretation would undermine the purpose and deterrent effect of the enforcement regime under the FW Act, because the maximum amount of penalties available for multiple breaches of a diverse range of terms or provisions in industrial instruments and industrial legislation would be substantially reduced. Such a construction was not supported by the text of the FW Act. Rather, as their Honours pointed out at [13]:
The reference in s 557(1) to “a civil remedy provision referred to in subsection (2)” discloses that it is the provision which is relevant. Section 557(2) identifies each of ss 44(1) and 45 as a civil remedy provision. It is the substance of those provisions which create the proscriptions. … Section 45 proscribes contravention of a term of a modern award. … Section 557(2) should be recognised to be a form of definitions provision. It defines civil remedy provisions for the purposes of s 557(1). The function of s 557(2) is to indicate that when a provision is identified, it is the substance of the provision found elsewhere in the Act (in this case, in ss 44(1) and 45) which is the civil penalty provision. As the FWO put it in written submissions:
However, section 557 also operates on contraventions which relevantly occur when a term of an award or a provision of an NES is contravened. This now occurs indirectly through the operation of sections 44 and 45. In the case of s. 45 (for example), the contravention occurs when a term of a modern award is contravened. Thus the effect of subsection 557(1) in relation to contraventions of s. 45 is that:
… 2 or more contraventions of (a term of an award) are, subject to subsection 3, taken to constitute a single contravention …
The appellants [wrongly] construe s. 556 as if it said that 2 or more contraventions of an award or 2 or more contraventions of an NES are taken to constitute a single contravention.
30 The Full Court in Rocky Holdings at [14] embraced the following example from the Explanatory Memorandum for the Fair Work Bill 2008 (Cth), aided by the operation of s 15AB(1)(b) of the Acts Interpretation Act 1901 (Cth), as reflecting the true operation of s 557(1) of the FW Act:
For example, if a company contravenes a single term of a modern award in respect of ten employees, these ten contraventions are taken to be a single contravention. This means that the maximum penalty that the Court can impose for the contravention is 300 penalty units.
Similarly, if a company contravenes five separate terms of a modern award in respect of ten employees, these 50 contraventions are taken to be five contraventions. This means that the maximum penalty that the Court can impose is five times a maximum penalty of 300 penalty units.
31 The Full Court in Rocky Holdings also applied the reasoning in prior cases about the operation of historic provisions, to the same or similar effect as s 557(1) of the FW Act, as follows:
17 ... In Gibbs v The Mayor, Councillors and Citizens of the City of Altona (1992) 37 FCR 216 at 223 Gray J focussed attention on whether an offender has in substance committed a series of breaches which should not be punished separately as opposed to breaches of several different obligations and said:
The object of s 178(2) appears to be that a party bound by an award and pursuing a course of conduct involving repeated acts or omissions, which would ordinarily be regarded as giving rise to a series of separate breaches, should not be punished separately for each of those breaches. If such a party has pursued a course of conduct which gives rise to breaches of several different obligations, there is no reason why it should be treated as immune in respect of its breach of one obligation, merely because it has acted in breach of another. This reasoning leads to the conclusion that each separate obligation found in an award is to be regarded as a “term”, for the purposes of s 178 of the Act. The ascertainment of what is a term should depend not on matters of form, such as how the award maker has chosen to designate by numbers or letters the various provisions of an award, but on matters of substance, namely the different obligations which can be spelt out. For these reasons, I incline to the view that each separate obligation imposed by an award is to be regarded as a “term”, for the purposes of s 178 of the Act.
18 Buchanan J said something not dissimilar in Fair Work Ombudsman v Ramsey Food Processing Pty Ltd (No 2) [2012] FCA 408 as follows:
[2] … However, s 719(2) of the WR Act provides that where two or more breaches of an “applicable provision” under the WR Act, which includes a term of an award, arise out of the same course of conduct, they are to be treated as a single breach. On one view, the failure to make any of the required payments arose from a single course of conduct. They all arose from a determination by the respondents that no payment would be made upon the termination of employment of any of the employees, or the employees as a group. However, this approach gives insufficient attention to the separate legal character of the three forms of obligation earlier identified. I am satisfied that each of those forms of obligation requires separate recognition. I am not, however, satisfied that each individual example of defiance of an obligation is permitted separate recognition. In my view the individual examples, constituted by the failure to make payments to particular individual employees, arise out of a course of conduct in each of the three instances. Any penalty must be assessed taking that into account.
[3] This approach to the legislative scheme appears to me to be consistent with the approach taken in Gibbs v The Mayor, Councillors and Citizens of the City of Altona (1992) 37 FCR 216 and QR Limited v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (2010) 204 IR 142; [2010] FCAFC 150 on which both parties relied (see also Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v QR Limited (No 2) [2010] FCA 652 at [16]-[28]).
The object and purpose of provisions such as s 557 and its predecessor provisions is to ensure that an “offender is not punished twice for what is essentially the same criminality”. When considering the principles to be applied when imposing a penalty for contraventions of the Building and Construction Industry Improvement Act 2005 (Cth) Middleton and Gordon JJ in Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39, (2010) 269 ALR 1 stated the issue to be resolved in that appeal as follows:
[35] The appellants submitted that the sentencing discretion miscarried because her Honour failed to consider a relevant matter (whether the three contraventions ought properly be seen as arising out of the one course of conduct) or because her Honour misdirected herself in the application of the “one course of conduct” or the “one transaction” principle…
In resolving that argument, their Honours concluded:
[39] As the passages in Construction, Forestry, Mining and Energy Union v Williams (2009) 191 IR 445 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. …
32 Reliance was further placed by the FWO on a subsequent Federal Circuit Court decision in which the judge declined to follow the primary judge in this case, instead following Rocky Holdings: Fair Work Ombudsman v Mhoney Pty Ltd & Anor [2017] FCCA 811 at [17]-[28].
33 The written submissions for the FWO on these grounds summarised the error asserted to have been made by the primary judge as follows (emphasis in original; footnotes omitted):
24. First, properly understood, the “one transaction” or “course of conduct” principle does not permit a sentencing judge to impose a single sentence for multiple contraventions on the basis that they formed part of a course of conduct, except where that is a course agreed or accepted by the parties. Absent a statutory provision that provides otherwise, a sentencing judge is required to impose a separate penalty for each contravention, having considered whether the penalties need to be adjusted to avoid the aggregate penalty being excessive. The Primary Judge did not do that.
25. Second, s.557 of the Act is the express statutory manifestation of the one transaction or course of conduct principle. By enacting s.557 Parliament has determined how multiple contraventions arising from a course of conduct are to be treated. Having applied s.557 of the Act it was not open for the Primary Judge to further consolidate the 12 contraventions into one contravention by applying that principle, in effect, again.
34 Those submissions for the FWO should be accepted. Despite important factual differences between this case and Rocky Holdings, the Full Court’s decision in that case compels this outcome. Even if s 557 allows for the continued application of the course of conduct principle, which may be doubted, the application of s 557 to the facts of this case meant that there was no remaining work for the course of conduct principle to do. The fact of flat rates of pay cannot operate to deny the multiplicity of contraventions that this approach was found by his Honour to have produced. His Honour therefore erred in further consolidating the number of contraventions from 12 to one, noting, as already observed, that the FWO was content to proceed upon the basis of nine contraventions. These grounds of appeal must therefore succeed. Order 5(a) made by his Honour must accordingly be set aside.
It follows from Lohr that each of the penalty rates contraventions gives rise to a separate contravention.
In the above circumstances the Court therefore considers it appropriate to treat the failure to pay penalty rates, whether on a Saturday, Sunday, public holiday or for work performed between 10.00pm and midnight on weekdays as separate contraventions for the purposes of assessing penalty, subject to the application of the totality principle.
There was no dispute that the contraventions of annual leave and annual leave loading, notice of termination and adverse action provisions could be grouped in accordance with the declarations made by the Court in the Liability Judgment.
In all of the above circumstances the Court considers that the contraventions in relation to which penalties are to be imposed are twelve in number, as follows:
a)contravention of s.45 of the FW Act by failure to pay the minimum wage pursuant to cl.20.1 of the Restaurant Award;
b)contravention of s.45 of the FW Act by failure to pay wages, penalties and allowances weekly, fortnightly or monthly as prescribed by cl.27.2 of the Restaurant Award;
c)contravention of s.45 of the FW Act by the failure to pay Saturday penalty rates pursuant to cl.34.1 of the Restaurant Award;
d)contravention of s.45 of the FW Act by the failure to pay Sunday penalty rates pursuant to cl.34.1 of the Restaurant Award;
e)contravention of s.45 of the FW Act by the failure to pay public holiday penalty rates pursuant to cl.34.1 of the Restaurant Award;
f)contravention of s.45 of the FW Act by the failure to pay penalty rates for work performed between 10.00pm and midnight on weekdays pursuant to cl.34.2 of the Restaurant Award;
g)contravention of s.45 of the FW Act for failure to pay overtime pursuant to cl.33 of the Restaurant Award;
h)contravention of ss.44 and 45 of the FW Act by reason of failure to pay annual leave and annual leave loading pursuant to s.90 of the FW Act and cl.35 of the Restaurant Award;
i)contravention of ss.44 and 45 of the FW Act by reason of the failure to pay notice of termination under s.117 of the FW Act and cl.16.1 of the Restaurant Award;
j)contravention of ss.340(1) and 352(1) of the FW Act by reason of adverse action terminating Mr Singh’s employment whilst on personal leave and due to an illness or injury;
k)contravention of s.712(3) of the FW Act by failing to comply with a Notice to Produce; and
l)contravention of s.535(1) of the FW Act by reason of a failure to keep proper employment records.
Factors for consideration
Having broadly addressed the first three steps in the penalty determination process, the Court now moves to the fourth step and the considerations and factors that may be taken into account in the assessment of penalty. A checklist of factors which first appeared in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 at [26]-[55] per Mowbray FM (“Harrington Corporation”), and was adopted in Kelly at [14] per Tracey J, is as follows:
a)the nature and extent of the conduct which led to the contraventions;
b)the circumstances of the conduct (including deliberate defiance or disregard of Commonwealth workplace relations legislation);
c)the consequences of the contravening conduct;
d)the objects of Commonwealth workplace relations legislation;
e)whether the contraventions are distinct or arise from a single course of conduct;
f)deterrence, both general and specific;
g)relevant record of civil penalty contraventions;
h)the size and financial resources of the contravener;
i)co-operation with regulatory authorities (if any);
j)the contravener's contrition (if any);
k)the size of, and any recent increases to, the prescribed penalty; and
l)the totality principle.
Merely applying the checklist is an approach which might endanger the process of instinctive synthesis, transforming it into no more than a catalogue of matters to be attended to: ABCC at [8]-[10] per Barker J, and thus it is for the Court in exercising the discretion to impose a penalty, to take into account and weigh any other factors considered relevant to the individual circumstances of the case: Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550 at [11] per Gyles J; Australian Ophthalmic Supplies at [91] per Buchanan J. In this case it is unnecessary to consider any factors outside those on the Harrington Corporation checklist.
Nature, extent and circumstances of the contravening conduct (including loss)
The Court notes the following conduct concerning the nature, extent and circumstances surrounding the contraventions:
a)Mr Singh was underpaid almost all of his wages for the relevant period, and during that time, Siner Enterprises had the full benefit of those funds to which Mr Singh was entitled;
b)Mr Mackenzie told Mr Singh that he (Mr Mackenzie) was not earning money and that he would pay Mr Singh when he could afford to, though a letter written by Mr Mackenzie on the restaurant letterhead dated 15 May 2012 for the financial year ended 30 June 2011, stated Siner Enterprises had an annual projected turnover of $733,000 and a projected profit of $120,600. Assuming these records conveyed an accurate assessment of its position at the time, Siner Enterprises could have afforded to pay Mr Singh but it chose not to do so;
c)in the Employment Contract, Siner Enterprises had promised to pay Mr Singh $47,500 plus superannuation, and did not fulfil this contractual promise nor did it pay Mr Singh his minimum entitlements at law;
d)Mr Singh's employment was terminated because he exercised his workplace right to utilise a period of personal leave for which he obtained a medical certificate to confirm. Mr Singh was a full-time employee of Siner Enterprises and was therefore entitled to 10 personal days for every year of service pursuant to s.96(1) of the FW Act. As at 18 September 2012, Mr Singh had accrued sufficient personal leave to take a paid personal leave day;
e)as a consequence of Siner Enterprises taking adverse action and terminating Mr Singh’s employment, he was not able to obtain his sponsored work visa, and did not receive his entitlement to accrued but unpaid annual leave;
f)under the Second Notice To Produce (“NTP”) Mr Mackenzie provided Fair Work Inspector Ann Lucey with some timesheets by email. Mr Mackenzie admitted at hearing that the timesheets “aren’t 100% accurate”, while the Court found that the timesheets were “so grossly inaccurate as to be wholly unreliable”. Accordingly, Mr Mackenzie provided documents that he knew to be inaccurate in response to the NTP: Liability Judgment at [72] and [74] per Judge Lucev; and
g)Siner Enterprises failed to make and keep the following records as required by the Fair Work Regulations 2009 (Cth) (“FW Regulations”):
i)FW Regulations, reg.3.32 - Siner Enterprises' name; Mr Singh's name; whether Mr Singh's employment was full-time or part-time; whether Mr Singh's employment was permanent, temporary or casual; the date on which Mr Singh's employment began; and the Australian Business Number of the Respondent;
ii)FW Regulations, reg.3.33 - the rate of remuneration and gross and net amounts paid to Mr Singh, together with penalty rates;
iii)FW Regulations, reg.3.34 - the number of overtime hours worked by Mr Singh during each day, or when Mr Singh started and ceased working overtime hours;
iv)FW Regulations, reg.3.36 - leave accrued and taken during the course of employment; and
v)FW Regulations, reg.3.40 - entitlements upon termination of employment.
This Court has observed on a number of occasions the failure to produce documents is possibly more serious than the failure to pay entitlements, because the failure to produce documents prevents both the FW Ombudsman and the employee from carrying out investigations to determine whether or not an employee has been paid entitlements, minimum or otherwise, and in respect of the regulatory function has observed as follows:
21. Manifestly, failure to make and maintain records in relation to employee entitlements, undermines the utility and effectiveness of workplace inspectors, and their ability to determine whether or not there has been compliance with minimum standards and industrial instruments, and the provision of effective means for investigation and enforcement of employee entitlements.
Fair Work Ombudsman v Orwill Pty Ltd & Ors [2011] FMCA 730; (2011) 63 AILR 101-461 at [21] per Lucev FM, cited in Fair Work Ombudsman v Commercial & Residential Cleaning Group Pty Ltd & Ors [2017] FCCA 2838 (“Commercial and Residential Cleaning Group”) at [41] per Judge Lucev.
Likewise, the non-provision of payslips can impact significantly on an employee’s capacity to verify and prove their income and entitlements: Fair Work Ombudsman v Taj Palace Tandoori Indian Restaurant Pty Ltd [2012] FMCA 258 at [67] per Riethmuller FM; Commercial & Residential Cleaning Group at [42] per Judge Lucev.
The Court also notes that the termination of Mr Singh’s employment occurred in circumstances where he was exercising a workplace right, that he had no opportunity to further discuss the matter with the Respondents (and in particular Mr Mackenzie), and that Mr Mackenzie dismissed Mr Singh by way of a series of atrabilious outbursts in text messages sent to him: see Liability Judgment at [114]-[117] per Judge Lucev.
While considering the nature, extent and circumstances of the contravening conduct, and loss and damage, to each of the parties involved in these proceedings, it should also be noted that in any case such as this there is damage to the utility and effectiveness of the relevant statutory objective: Secretary, Department of Health and Ageing v Pagasa Australia Pty Ltd [2008] FCA 1545 (“Pagasa Australia”) at [56] per Flick J: see also [56] below.
The nature of the contraventions is such that as they relate to payment of minimum entitlements, and the requirement to produce documents and keep records, they demonstrate a failure to provide basic entitlements, and to comply with basic requirements, established under the FW Act. The conduct extended, however, to only one employee, and whilst a period of four months of non-payment or underpayment to a single employee is significant for that employee, in the overall context it is a period that whilst not short, is also not overly long. The circumstances of the termination of employment of Mr Singh are of course aggravated by the manner in which that was carried out by Mr Mackenzie (including the fact that it was effected by way of text messages), and the manner in which Mr Mackenzie conducted himself in so doing.
History, size and financial capacity
The Respondents have not previously been found to have contravened the FW Act. As such they are both first time contraveners of the FW Act. Ordinarily, and subject to consideration of the other factors, the Respondents’ status as first time contraveners would ordinarily entitle them to some discount on penalty.
Whilst employers, large, medium or small, cannot overcome financial difficulties by underpaying employees or avoiding statutory entitlements: Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412 (“Rajagopalan”) at [27] per Driver FM; Kelly at [30] per Tracey J, properly evidenced, and for proper reasons, incapacity to pay may afford some relief by way of mitigation of penalty: see Olsen vSterling Crown Pty Ltd [2008] FMCA 1392; (2008) 177 IR 337 (“Olsen”) at [58]-[76] per Lucev FM and the cases there cited, including:
a)Australian Competition & Consumer Commission v ABB Transmission & Distribution Ltd (No 2) [2002] FCA 559; (2002) 190 ALR 169 at [42] per Finkelstein J (“necessary to have regard to the capacity of the parties to bear the penalty”);
b)Australian Securities Commission v Forem-Freeway Enterprises Pty Ltd (1999) 30 ACSR 339 at 351-352 per Madgwick J (liberty to apply in relation to the imposition of a penalty on the basis that an individual might come into funds in the future and might be able to pay a penalty at a future time); and
c)Printing & Kindred Industries Union & Ors v Vista Paper Products Pty Ltd & Anor (1994) 57 IR 414; (1994) 127 ALR 673; (1994) 1 IRCR 413; (1994) 37 AILR 3-053; ALR at 686 per Wilcox J (usual for a court to take into account an offender’s capacity to pay in determining monetary penalty).
See also Workplace Ombudsman v KSN Engineering Pty Ltd [2009] FMCA 538; (2009) 185 IR 316 at [10]-[13] per Lucev FM.
In Kelly at [28] per Tracey J, the Federal Court did not disavow size as a factor to be considered in relation to penalty. What the Federal Court there said was:
a)regardless of size, corporate employers are obliged to meet minimum employment standards;
b)when corporate employers do not meet minimum employment standards it will be normal to impose an “appropriate” monetary sanction; and
c)the sanction must be at a meaningful level.
In Textile Clothing & Footwear Union of Australia v Lotus Cove Pty Ltd [2004] FCA 43 at [47] per Merkel J, the Federal Court, as a factor in mitigation of penalty, had regard to the fact that the employer respondent was a small enterprise upon whom the imposition of a large fine was likely to be oppressive.
In Olsen at [76] per Lucev FM following an extensive review of the authorities on payment of civil penalties it was said that:
It therefore appears that the size and financial resources of a contravener are factors to be considered, and the impact of those factors upon the setting of penalty is in each case a matter for consideration of the particular circumstances of the size and financial resources of the contravener, plus the other factors which are relevant.
It is clear that the restaurant at which Mr Singh worked for Siner Enterprises and in relation to which the contraventions occurred is no longer open. Mr Mackenzie said that that his “120-seater restaurant, half a million dollar restaurant” had burnt to the ground. There was some suggestion in Mr Mackenzie’s oral submissions that he does presently work, or maintains a business, however, there is no evidence of that before the Court. On the evidence before the Court at the time of the contraventions Siner Enterprises employed 5 full-time and 3 part-time employees: First Lucey Affidavit, Annexure AL-25, pages 317-320. There was also some evidence before the Court at hearing as to Siner Enterprises’ financial position, namely that for the financial year ended 30 June 2011 it had a projected profit of $120,600: see [24(b)] above.
The fact that the financial circumstances of a respondent may be a relevant consideration in determining an appropriate penalty and whether the size of that penalty is meaningful is not however finally determinative: other factors, and in particular general deterrence, must be had regard to.
In Jordan v Mornington Inn Pty Ltd [2007] FCA 1384; (2007) 166 IR 33; (2007) 60 AILR 100-744 (“Mornington Inn”) the Federal Court was required to determine the appropriate penalties to be imposed on an employer for admitted contraventions of the Workplace Relations Act 1996 (Cth), and at [99] per Heerey J stated:
As to the respondent's own financial position, however, in considering the size of a penalty, capacity to pay is of less relevance than the objective of general deterrence: Leahy (No 2) at [9]. In any event, to the extent that financial hardship might mitigate what would otherwise be an appropriate penalty, such an argument would need to be based on evidence. Apart from the income figures mentioned above, which were advanced from the Bar table, no such evidence was forthcoming.
Mornington Inn went on appeal. In Mornington Inn Appeal at [69] per Stone and Buchanan JJ the statement of principle in Mornington Inn at [99] per Heerey J was described as being "unimpeachable".
Mornington Inn Appeal can properly inform the approach the Court should adopt in the present matter. This is particularly so given the significance of the principle of general deterrence in relation to contraventions of workplace laws.
The Court accepts that Siner Enterprises may be characterised as a small business. In this case there is, however, nothing in the size of Siner Enterprises’ business which mitigates the failure to pay entitlements, keep or maintain records or produce records to the applicant in accordance with the provisions of the FW Act.
The Respondents have not filed any further or direct evidence of financial hardship or as to their respective current financial positions. Even if a sufficient evidentiary basis existed for the Court to find that the Respondents are experiencing financial difficulty, the weight the Court ought to give such evidence must be balanced against considerations of the objective seriousness and deliberateness of the contravening conduct. As was observed in Rajagopalan [27] per Driver FM:
27. Employers must not be left under the impression that because of their size or financial difficulty that they are able to breach an award. Obligations by employers for adherence to industrial instruments arise regardless of their size. Such a factor should be of limited relevance to the Court's consideration of penalty…
The Court should not be deterred from imposing the appropriate penalty only because there may be a difficulty paying it: Australian Competition & Consumer Commission v ACN 135 183 372 (in liquidation) (formerly known as Energy Watch Pty Ltd) [2012] FCA 749; [2012] ATPR 42-405 at [19] per Marshall J; Cotis v Pow Juice Pty Limited [2007] FMCA 140 at [68] per Lloyd-Jones FM.
In the absence of any evidence of the financial capacity of the Respondents, any penalty the Court may impose ought not be constrained by any suggestion of financial incapacity on the part of the Respondents.
Deliberateness and involvement of senior management
The Court made a number of statements in the Liability Judgment which support the view that the Respondents acted deliberately: Liability Judgment at [141]-[142] per Judge Lucev, as follows:
141. The specific acts and omissions that constitute Mr Mackenzie’s knowing concern in Siner Enterprises’ contraventions are:
a) Mr Mackenzie was the director and secretary of Siner Enterprises and the sole manager of its operations: Mackenzie Affidavit at [8] and [13];
b) Mr Mackenzie employed, managed and directed Mr Singh both as to his duties and his hours worked: Singh Affidavit at [11] to [20];
c) Mr Mackenzie knew that Mr Singh performed cooking and kitchen duties: Singh Affidavit at [63]-[66];
d) Mr Mackenzie knew of Mr Singh’s qualifications: Singh Affidavit at [32];
e) Mr Mackenzie knew that Siner Enterprises was legally obliged to pay Mr Singh the minimum rate of pay and to provide him with applicable entitlements under appropriate industrial awards. Mr Mackenzie made the decision not to pay Mr Singh at all;
f) Mr Mackenzie knew that, by virtue of making the decision not to pay Mr Singh at all, Siner Enterprises did not provide Mr Singh with any form of paid leave;
g) Mr Mackenzie either knew that Siner Enterprises was legally obliged to keep employee records for Mr Singh, or made no inquiries about its obligations. Mr Mackenzie admitted, in emails to FWI Lucey on 14 January 2013 and 5 February 2013 that he did not keep employee records for Mr Singh on the basis that Mr Singh was a “trainee” and was not being paid by Siner Enterprises: FWI Lucey Affidavit at [18]-[19] and [27]-[28]. Knowledge of unlawfulness is not necessary in order to find knowing concern.
h) Mr Mackenzie advised FWI Lucey, by way of an email to FWI Lucey on 14 January 2013, that he would provide a copy of the tax file number declaration that was the subject of the NTP but has failed to do so thereby failing to comply with the NTP: FWI Lucey Affidavit at [18], [20], [27]-[30] and [38]; and
i) Mr Mackenzie was the decision-maker in relation to the termination of Mr Singh’s employment that was precipitated by Mr Singh exercising his workplace right to utilise a period of personal leave and for being temporarily absent from his employment due to illness: Singh Affidavit at [91].
142. Mr Mackenzie is liable as an accessory for all of Siner Enterprises’ contraventions because he was the human agent through which Siner Enterprises acted.
In the context of Mr Mackenzie being the director, secretary and sole manager of Siner Enterprises’ operations he was the senior manager in the business which was running the restaurant. As such, the involvement of senior management in the contraventions is proven. It is also plain from the conclusions reached in the Liability Judgment that Mr Mackenzie knew of the legal obligations to pay Mr Singh the minimum rate of pay and the various entitlements under the Restaurant Award and made a deliberate decision not to pay those entitlements. In that regard the deliberateness of the contraventions is plainly proven. Plainly the decision to dismiss Mr Singh was also one made deliberately.
A level of penalty appropriate to the deliberateness of the contraventions and the involvement of senior management should be imposed.
Contrition, corrective action and co-operation
The FW Ombudsman submitted that:
a)there has been no apology from the Respondents to Mr Singh for the decision not to pay Mr Singh his legal entitlements as an employee or for unlawfully terminating his employment;
b)penalties should be set at a meaningful level leaving the Respondents in no doubt as to the consequences of non-compliance with their obligations under the FW Act given the Defence in these proceedings maintained no wrongdoing;
c)the Respondents denied the allegations made in two contravention letters sent by the FW Ombusman, and have made one payment of $2,701.12 since 2013;
d)Mr Singh was left without the benefit of the outstanding amount that was owed to him for a period of 5 years, and as at the time of the penalty hearing the amount remains outstanding;
e)the Respondents have demonstrated no meaningful co-operation or participation, but rather elected to provide the FW Ombudsman and the Court with plainly misleading and incorrect documents and information in the pursuit of their defence; and
f)the Respondents chose to dispute all of the contraventions, causing the FW Ombudsman to be put to proof in respect of all pleaded contraventions which resulted in a three-day liability hearing at the expense of the public purse.
Mr Mackenzie has failed to pay Mr Singh the amount ordered by the Court in the Liability Judgment. Mr Mackenzie maintained throughout the penalty hearing that he had done nothing wrong, and on more than one occasion referred to Mr Singh as having deceived the Court or been involved in deceptive conduct in relation to these proceedings: Penalty Hearing Transcript at pages 9, 11, 12 and 13. Mr Mackenzie went so far as to suggest that Mr Singh might have somehow had an involvement in events, or events which led to, the burning down of the restaurant, an assertion which was simply not the subject of any evidence whatsoever, and which caused the Court to point out to Mr Mackenzie that a penalty hearing was “not an opportunity and it simply makes more egregious the conduct considerations that the court has to take into account if you make and are making unsubstantiated assertions”: Penalty Hearing Transcript at page 10. Mr Mackenzie also made various unsubstantiated and irrelevant assertions about the conduct of Mr Singh and his lawyer in relation to visa sponsorship generally: Penalty Hearing Transcript at pages 8-11. Mr Mackenzie also suggested that the cause of the instigation of the proceedings was Mr Singh’s incompetence. Such was the level of accusation and hostility evinced by Mr Mackenzie that the Court was moved to observe as follows at Penalty Hearing Transcript at page 12:
HIS HONOUR: Mr Singh isn’t even the applicant in these proceedings. The applicant is a Commonwealth regulator. Your submissions should not – I put this on the record – should not consist of casting aspersions and accusations upon a person who is not the applicant, who this court has listened to and made findings in relation to and found that his evidence in essence is accurate and that yours is not. Now, I’ve said to you stop addressing him, address the court and address the court in a proper manner. You don’t shout at the court, you don’t call the people on the other side “guys”. I didn’t pull you up at the start but address people in a respectful manner.
This is a Commonwealth court exercising the judicial power of the Commonwealth. The fact that you want to let it flow, the fact that you want to go to the media, the fact that you haven’t led any of the evidence that you wanted to lead, didn’t seek an adjournment for those purposes, as I recall it, is all by-the-by now. The court has made a decision. It says what it says on the basis of the evidence that has been led. You’ve had an opportunity to lead evidence in these penalty proceedings and not done so and now you have to address the court and make submissions in relation to the evidence and submissions as they stand before the court. If you want to go to the media afterwards, well, that’s fine – you’re entitled to do that – but no doubt the media will read the judgments of the court and form their own view about what has occurred.
It is also relevant to note that Mr Mackenzie continually threatened to, and said he had already, brought the proceedings to the attention of “the media”: Penalty Hearing Transcript at pages 8, 10, 11 and 12.
Mr Mackenzie’s final submission was that:
You can give me whatever penalties you want to give me but at the end of the day I know that I was guilty of nothing and this guy is guilty of deception.
Penalty Hearing Transcript at page 13.
Preparedness to cooperate has been considered evidence of contrition and thus a matter to be considered in mitigation of a penalty: Caelli Constructions at [99] per Lander J and [165] per Jessup J; Fair Work Ombudsman v Drivecam Pty Ltd & Ors [2011] FMCA 600; (2011) 208 IR 79 at [77] per Emmett FM. Where respondents cooperate and make admissions early in the course of an investigation or soon after the commencement of proceedings, it is appropriate to allow a discount of penalty: Mornington Inn Appeal at [75]-[76] per Stone and Buchanan JJ.
In circumstances where no apology or expression of contrition has been offered, the Court can infer that but for the intervention of the FW Ombudsman, Mr Singh would remain unpaid and the Respondents would likely have ignored both the consequences of their actions and any loss or damage sustained by Mr Singh in consequence of those actions: Fair Work Ombudsman v Wongtas Pty Ltd (No 2) [2012] FCA 30; (2012) 63 AILR 101-522 at [52] per Cowdroy J. Mr Mackenzie sought to evade and mislead the FW Ombudsman during the investigation, something conceded by Mr Mackenzie in regard to the inaccuracy of timesheets provided to the FW Ombudsman: Liability Judgment at [72]-[74] per Judge Lucev, with the Court concluding that the timesheets “are so grossly inaccurate as to be wholly unreliable”: Liability Judgment at [74] per Judge Lucev.
At the penalty hearing Mr Mackenzie was uncooperative and furthermore expressed no apology or remorse for his actions as was made clear when he told the Court “there will be no apology at all”: Penalty Hearing Transcript, page 8. Mr Mackenzie’s hostility displayed toward the FW Ombudsman’s legal representatives and Mr Singh was clearly apparent to the Court at the penalty hearing.
It is clear that Mr Mackenzie (and through him Siner Enterprises) has not accepted any responsibility for wrongdoing. In circumstances where the Court has already determined that the Respondents were liable and responsible for the contraventions alleged, it was not for Mr Mackenzie to seek to re-agitate that liability at the penalty hearing. The Court is not prepared to provide any discount on penalty to the Respondents on the basis of contrition, corrective action and cooperation, because there has been none, and more particularly so given the conduct of Mr Mackenzie at the penalty hearing.
Compliance with minimum standards
In respect of compliance with minimum standards this matter was submitted by the FW Ombudsman to involve the complete failure on the part of Siner Enterprises to pay Mr Singh his basic, fundamental entitlements during the employment period (other than a $200 cash payment), which amounts to a significant failure to adhere to the minimum standards of the FW Act.
As already alluded to (see [28] above) the damage in a case such as this is often to the utility and effectiveness of the relevant statutory objective: Pagasa Australia at [56] per Flick J. A principal and fundamental object of the FW Act is the preservation of an effective safety net for employee entitlements and effective enforcement mechanisms: FW Act, s.3. The substantial penalties set by Parliament and awarded by the Courts for failing to comply with minimum award obligations reinforce the importance placed on compliance with minimum standards and an effective enforcement framework: FW Act, s.539(2).
The maintenance of the safety net is particularly pertinent in an industry such as the restaurant and hospitality industry, where it is now almost notorious that there are significant pockets of non-compliance in relation to the payment of wages and entitlements, either at all or correctly: Plancor Pty Ltd v Liquor, Hospitality & Miscellaneous Union [2008] FCAFC 170; (2008) 171 FCR 357; (2008) 177 IR 243 (“Plancor”) at [37] per Gray J; Fair Work Ombudsman v Kojima & Anor [2013] FCCA 976 at [1] (“Kojima”) per Judge O’Sullivan; Fair Work Ombudsman v Koojedda Carpentry Pty Ltd ACN 111 218 476 ATF The Gumley Trust & Ors (No 2) [2017] FCCA 2577 at [72] per Judge Lucev (“Koojedda Carpentry”).
In the context of the objects of the FW Act requiring compliance with minimum standards, including minimum rates of pay and entitlements, the contraventions in this case involve an undermining of the statutory objects and purpose of the FW Act, and in a manner which is so egregious as to require a substantial and meaningful penalty which demonstrates the serious consequences for failing to comply with the FW Act, and to act as an incentive for other employers to ensure that they comply with minimum standards.
Deterrence
In respect of deterrence the FW Ombudsman submitted:
a)there is no evidence that the Respondents have shown any remorse, taken steps to rectify the underpayment, or undertaken any action to ensure future compliance with Australian workplace laws, and they still remain a registered company able to engage employees; and
b)the Court should mark its disapproval of the Respondents’ conduct by setting a penalty that serves as a warning to other employers in the industry, particularly those employers who employ visa holders such as Mr Singh, that they must comply with minimum employment obligations.
It is well established that the need for specific and general deterrence are matters that are relevant to the imposition of a civil penalty: Harrington Corporation at [51]-[55] per Mowbray FM; Caelli Constructions at [93] per Lander J, and that:
a)general deterrence is an important and relevant consideration in order to mark disapproval of the conduct in question, and to act as a warning to others not to engage in similar conduct: Klousia v TKM Investments Pty Ltd & Anor [2009] FMCA 208 at [55] per O’Sullivan FM; and
b)specific deterrence seeks to focus on the party subject to the penalty and the potential that party may be involved in a similar breach in the future based upon their attitude to matters such as remorse and the steps taken to ensure that no future breach will occur: Plancor at [37] per Gray J.
General deterrence
In Fair Work Ombudsman v Maclean Bay Pty Ltd(No 2) [2012] FCA 557; (2012) 64 AILR 101-635 at [29] per Marshall J the Federal Court observed that:
It is important to ensure that the protections provided by the Act to employees are real and effective and properly enforced. The need for general deterrence cannot be understated. Rights are a mere shell unless they are respected.
The role of general deterrence in determining the appropriate penalty is illustrated by the comments in Caelli Constructions at [93] per Lander J:
In regard to general deterrence, it is assumed that an appropriate penalty will act as a deterrent to others who might be likely to offend: Yardley v Betts (1979) 22 SASR 108. The penalty therefore should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like minded persons or organisations. If the penalty does not demonstrate an appropriate assessment of the seriousness of the offending, the penalty will not operate to deter others from contravening the section. However, the penalty should not be such as to crush the person upon whom the penalty is imposed or used to make that person a scapegoat. In some cases, general deterrence will be the paramount factor in fixing the penalty: R v Thompson (1975) 11 SASR 217.
General deterrence is an important factor in fixing penalty in these proceedings, and employers should be in no doubt that they have a positive obligation to ensure compliance with the obligations they owe to their employees under the law, and that they must provide their employees with the correct entitlements, keep proper records and not terminate employees unlawfully, and that significant penalties running to tens of thousands or hundreds of thousands of dollars may be imposed upon corporate respondents and individual directors of, and managers in, corporations, who fail to comply with such obligations. Those employers who fail to comply with minimum obligations gain an unfair competitive advantage over those employers who do comply with their workplace obligations. The Court notes the history of non-compliance in relation to the payment of wages and entitlements, either at all or correctly, in the restaurant and hospitality industry: Plancor at [37] per Gray J; Kojima at [1] per Judge O’Sullivan (in Kojima the comment was made specifically in relation to vulnerable employees who were foreign nationals working in Australia on visas in the restaurant and hospitality industry); Koojedda Carpentry at [72] per Judge Lucev.
It follows from the above that a meaningful and robust measure of general deterrence is appropriate in this case so that other employers, particularly in the restaurant and hospitality industry, are not impressed with the idea that they can avoid payment of employees’ minimum entitlements, such as occurred in this case.
Specific deterrence
As the FW Ombudsman pointed out in the course of the penalty hearing Siner Enterprises is still a registered company capable of employing employees, and likewise there is no indication that Mr Mackenzie might not be involved in companies in the future which might engage employees. Mr Mackenzie’s attitude as evinced at the penalty hearing is cause for serious concern in relation to any possible future employment by him or by any company with which he is associated (such as, and including, Siner Enterprises). The ongoing denials of liability, and the unsubstantiated assertions concerning the conduct of Mr Singh, together with the sheer belligerence exhibited by Mr Mackenzie before the Court, renders this a case in which specific deterrence is a greater factor in fixing a penalty which specifically deters conduct similar to that which has occurred in this case, in the future. The Court should therefore impose penalties on Siner Enterprises and Mr Mackenzie that endeavour to ensure that they are deterred, quite specifically, from any future non-compliance with their obligations under the FW Act and the Restaurant Award, or any other relevant industrial instruments.
Assessment of penalty
The FW Ombudsman submitted that penalties should be awarded in a variety of ranges, but totalling as follows:
a)$171,600 - $207,900 for Siner Enterprises; and
b)$34,320 - $41,580 for Mr Mackenzie.
The FW Ombudsman also submitted that this is not an appropriate case for a discount to be applied given the Respondents made no admissions during the course of the proceedings, in circumstances where it may have been appropriate for them to do so, have shown no remorse and have not rectified the underpayment to Mr Singh as ordered by this Court.
In determining penalty the Court has had regard to the penalty recommendations contained in the FW Ombudsman’s submissions to the Court.
The Court notes that where it is necessary to impose a civil penalty it ought to be fixed at a level which ensures that the penalty cannot be regarded simply as part of an acceptable or usual cost of doing business: Singtel Optus Pty Ltd v Australian Competition & Consumer Commission [2012] FCAFC 20; (2012) 287 ALR 249; (2012) ATPR 42-387 at [62]-[63] per Keane CJ, Finn and Gilmour JJ.
On the basis of the contraventions as set out above: see [12] above, the maximum penalties that the Court can impose under s.539(2) of the FW Act are as follows:
a)$462,000 for the Siner Enterprises, reduced to $379,500 by course of conduct or grouping considerations; and
b)$92,400 for the Mr Mackenzie reduced to $75,900 by course of conduct or grouping considerations.
Having regard to all of the relevant circumstances as set out above, the Court notes that there are some factors which involve egregious conduct, and in particular the failure to pay basic entitlements and produce documents and keep proper employment records. The conduct in relation to the termination of employment of Mr Singh is, in the Court’s view, more egregious because of the manner in which it was carried out.
The Court further notes, however, that only one employee was involved in this case, and that the period of underpayment of Mr Singh although not short, is also not a long period, and that the Respondents are first time contraveners. Moreover, the amount involved by way of underpayment, whilst no doubt significant for Mr Singh, is not in its totality a significant sum of money.
The Court having carefully considered all of the circumstances is of the view that the contraventions all fall within a mid-range of penalty of 40% to 70%, and having regard to the fact that they ought not fall at the absolute minimum of that range by reason of the conduct concerned, but also bearing in mind that the conduct could be considerably worse in other cases, the Court is of the view that:
a)each of the contraventions of ss.44 or 45 of the FW Act ought to attract a penalty of 45% of the maximum penalty;
b)the adverse action unlawful termination contraventions ought to attract a penalty of 50% of the maximum penalty;
c)the failure to produce contravention ought to attract a penalty of 45% of the maximum penalty; and
d)the failure to keep proper records contravention ought to attract a penalty of 55% of the maximum penalty.
Contrary to the Courts orders of 26 October 2017 the Respondents will not be made jointly and severally liable for payment of the penalties. To do so would, in every case, result in a joint penalty to Mr Mackenzie which exceeds the maximum penalty prescribed by the FW Act: FW Act, ss.539(2) and 546(2)(a).
The Court has not distinguished between Siner Enterprises and Mr Mackenzie for the purposes of assessing penalty percentage given that, on the evidence, all of the acts of Siner Enterprises were the acts of Mr Mackenzie, or acts generated by him.
In all the circumstances, and allowing for course of conduct or grouping considerations, the penalties assessed to be imposed before totality considerations are as follows:
a)on Siner Enterprises - $174,075; and
b)on Mr Mackenzie - $34,815.
Application of the totality principle
The totality principle requires the Court, once it has made a judicial evaluation of what it considers to be an appropriate aggregate penalty, to examine one final time, the aggregate penalty in order to determine whether it appears wrong: Mornington Inn Appeal at [42]-[43] and [91] per Stone and Buchanan JJ; Australian Ophthalmic Supplies at [27]-[28] per Gray J and [78] per Graham J.
The Court has considered the application of the totality principle in this case, and having regard to all of the circumstances and the quantum of the penalties assessed in relation to Siner Enterprises and Mr Mackenzie, the Court is not persuaded that this is an appropriate case for the application of any significant reduction because of the totality principle, recognising that the failure to pay minimum entitlements arose from a single but ongoing decision not to pay. The Court notes that the penalties have been assessed, in large part, within a penalty range which is not at the higher end of penalties which might be imposed, and that there is no evidence upon which the Court might draw a reason to conclude that the aggregate penalty appears wrong, or that it might be crushing or oppressive, and there is certainly nothing to indicate that it is anything other than proportionate to the seriousness of the conduct engaged in by the Respondents.
Compensation
The Court made an order allowing the FW Ombudsman to make submissions on compensation the Respondents should be held liable to pay by way of damages for economic and non-economic loss of Mr Singh.
The Court may make any order for compensation it deems appropriate pursuant to s.545(2) of the FW Act, including compensation for economic and non-economic loss “because of the contravention”. The language of s.545(2) of the FW Act implies there “must be an appropriate causal connection between the contravention and the loss claimed": Australian Licenced Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd [2011] FCA 333; (2011) 193 FCR 526; (2011) 205 IR 392; (2011) 63 AILR 101-330 at [423] per Barker J.
The level of compensation at the discretion of the Court must be no greater than what is reasonable in all the circumstances: Aitken v Construction, Mining, Energy, Timberyards,Sawmills & Woodworkers Union of Australia - Western Australian Branch (1995) 63 IR 1; (1995) 38 AILR 3-187(75) at [9] per Lee J; Fair Work Ombudsman v Skilled Offshore (Australia) Pty Ltd [2015] FCA 275 at [72] per Gilmour J.
The FW Ombudsman sought compensation on behalf of Mr Singh for:
a)pure economic loss arising from the date of termination with Siner Enterprises to commencement of alternate employment, claimed in the amount of $11,390.38;
b)economic loss resulting from the forfeiture of Mr Singh’s visa application and the unnecessarily incurred professional fees arising as a result of this in the amount of $6,495; and
c)further economic loss in having to gain sponsorship from another employer in order to gain a subclass 457 work visa, and outlaying the amount of $10,000 to do so.
The evidence establishes that:
a)Mr Singh also worked as a factory worker with a company called Ferro during the time that he worked at Siner Enterprises and that he would undertake his duties with Ferro earlier in the day, before commencing with Siner Enterprises in the late afternoon or early evening: First Singh Affidavit at [9] and [53]-[54];
b)the termination of his employment at Siner Enterprises deprived Mr Singh of a potential source of income in addition to his income derived from working at Ferro: Fourth Singh Affidavit at [19];
c)following the termination of his employment by Siner Enterprises Mr Singh endeavoured to find alternative employment to mitigate his loss over a period of approximately 14 weeks from 18 September 2012 to April 2013: Fourth Singh Affidavit at [14]-[18], and in that regard Mr Singh’s evidence is that he applied for about 30 jobs working as a chef in a restaurant, went to approximately six to seven interviews, and ultimately Mr Singh appears to have recommenced working in April 2013, first as a chef at an Indian restaurant and then at a bar and bistro, and in the latter job not on a sponsored visa but on a bridging visa: Fourth Singh Affidavit at [18];
d)Mr Singh had applied for a sub-class 475 business (long stay) visa on the basis of a sponsorship to work in the Indian restaurant in April 2013, but that application was rejected in May 2013 for reasons particular to the business systems of the employer concerned, and the cost of applying for that visa, including migration agent’s fees, was approximately $7,000: Fourth Singh Affidavit at [16]-[17];
e)in July 2013 Mr Singh applied for a partner visa which was to be sponsored by his girlfriend but that visa was rejected on the basis that Mr Singh and his partner were not in a legitimate relationship: Fourth Singh Affidavit at [19]; and
f)in December 2013 Mr Singh started working at a restaurant in Fremantle, and he applied for a sub-class 457 business (long stay) visa in September 2014 which was approved in April 2015: Fourth Singh Affidavit at [20]-[22]. Mr Singh says that the cost of that visa, including migration agent’s fees, was about $10,000, but he has no receipts: Fourth Singh Affidavit at [21].
The FW Ombudsman says that Mr Singh would have been entitled, based on a 38 hour week and an hourly rate of $18.58 per hour to $706.10 per week or $9,885.40 for the 14 week period from 18 September 2012 to 8 April 2013 had he continued to work at Siner Enterprises. It was also submitted that pursuant to s.87 of the FW Act Mr Singh would have accrued approximately 81 hours of annual leave, which based on the hourly rate, is a further amount of $1,504.98. An amount of $11,390.38 (gross) is therefore claimed for lost wages and accrued annual leave. Those submissions are accepted as accurate by the Court.
The loss of $11,390.38 is directly attributable to the unlawful termination of Mr Singh’s employment by Siner Enterprises. Had that employment not been terminated then there is no reason to believe that Mr Singh would not have continued to work at Siner Enterprises until 8 April 2013 when he obtained other employment. In the circumstances, the Court finds that the Respondents are jointly and severally liable to pay to Mr Singh compensation in the amount of $11,390.38 for lost wages and accrued annual leave.
The FW Ombudsman also claims an amount comprising $2,095 forfeited on a visa application in relation to Mr Singh’s employment with Siner Enterprises: Fourth Singh Affidavit at [10]-[13] and Annexure GS 11, and $4,400 unnecessarily incurred in professional fees in relation to that visa application: Fourth Singh Affidavit at [11] and Annexure GS 12.
By reason of the unlawful termination of employment the monies paid in relation to the visa application and professional fees were wasted by Mr Singh as he was unable to obtain a visa in circumstances where he was no longer employed, and therefore no longer sponsored. In the circumstances there should be a further order that the Respondents be jointly and severally liable for the sum of $6,495 for economic loss suffered by Mr Singh in this respect.
A claim is also made in relation to the $10,000 spent by Mr Singh in obtaining his current sub-class 457 business (long stay) visa from his current employer, and it is asserted that but for the unlawful termination of Mr Singh’s employment by Siner Enterprises that Mr Singh would not have had to expend those funds to secure a visa in Australia.
In the Court’s view the causal connection between the unlawful termination of Mr Singh’s employment and the expenditure of the $10,000 for the current sub-class 457 business (long stay) visa is not readily apparent. On the evidence, Mr Singh had applied in April 2013 for a sub-class 457 business (long stay) visa in relation to other possible employment, but was unsuccessful when the sponsorship application was rejected by the Department of Immigration and Citizenship (as it then was). Mr Singh then worked on a bridging visa, and then applied for a partner visa, which application was also rejected. He commenced his current employment in December 2013, but it was not until September 2014 that he made the application for a sub-class 457 business (long stay) visa, in relation to which he was successful in April 2015. The Court observes that even setting aside Mr Singh’s earlier attempt to obtain a sponsored employment visa as a result of the employment at an Indian restaurant, his other employment at a bar and bistro, and his unsuccessful attempt to obtain a partner visa, that he did not commence working at his current employer until some 15 months after the unlawful termination of his employment at Siner Enterprises, and did not apply for the sub-class 457 business (long stay) visa until two years after the unlawful termination of his employment by Siner Enterprises. In those circumstances, the Court is not prepared to find that the expenditure post-September 2014 for a sub-class 457 business (long stay) visa was causally connected to the unlawful termination by Siner Enterprises. It might equally be said to have been caused by the earlier unsuccessful sponsorship application with the Indian restaurant, or the unsuccessful application for a partner visa. In any event, it cannot be said that an application for a sub-class 457 business (long stay) visa more than two years after the unlawful termination was because of the contravention or that there is an appropriate causal connection between the unlawful termination contravention and the loss claimed. In those circumstances the claim for an additional $10,000 of economic loss is rejected.
Conclusion and Orders
The Court has concluded that:
a)penalties in the sum of $174,075 are to be paid to the Consolidated Revenue Fund of the Commonwealth by Siner Enterprises for the contraventions set out at [12] above;
b)penalties in the sum of $34,815 are to be paid to the Consolidated Revenue Fund of the Commonwealth by Mr Mackenzie in respect of the contraventions set out at [12] above; and
c)the Respondents are to be jointly and severally liable for the payment to Mr Singh of compensation in the sum of $17,885.38.
I certify that the preceding eighty-nine (89) paragraphs are a true copy of the reasons for judgment of Judge Antoni Lucev
Date: 15 March 2018
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