Fair Work Ombudsman v Sinpek Pty Ltd (in Liquidation) and Ors (No.4)
[2020] FCCA 97
•20 January 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v SINPEK PTY LTD (IN LIQUIDATION) & ORS (NO.4) | [2020] FCCA 97 |
| Catchwords: INDUSTRIAL LAW – Penalty – consideration of the appropriate penalty for each contravention – consideration of general and specific deterrence – consideration of course of conduct – consideration of the totality principle – penalty imposed against the second respondent and the third respondent. |
| Legislation: Fair Work Act 2009 (Cth), ss.45, 539, 540, 546, 556, 557, 570, 572 |
| Cases cited: Australian Building and Construction Commissioner v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (The Australian Paper Case) (No 2) [2017] FCA 367 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | SINPEK PTY LTD (IN LIQUIDATION) |
| Second Respondent: | KAMALDEEP SINGH |
| Third Respondent: | UMA SINGH |
| File Number: | SYG 2187 of 2018 |
| Judgment of: | Judge Street |
| Hearing date: | 20 January 2020 |
| Date of Last Submission: | 20 January 2020 |
| Delivered at: | Sydney |
| Delivered on: | 20 January 2020 |
REPRESENTATION
| Counsel for the Applicant: | Mr M Easton |
| Solicitors for the Applicant: | Maddocks |
| Counsel for the Second and Third Respondents: | Mr I Latham |
| Solicitors for the Second and Third Respondents: | Direct Access |
ORDERS
Pursuant to s 546(1) of the Fair Work Act 2009 (Cth), the Second Respondent pay penalties in the total amount of $120,000.00 to the applicant within 28 days in respect of his involvement in the contraventions identified in the declarations made.
Pursuant to s 546(1) of the Fair Work Act 2009 (Cth), the Third Respondent pay penalties in the total amount of $90,000.00 to the applicant within 28 days in respect of her involvement in the contraventions identified in the declarations made.
Pursuant to s 546(3)(a) of the Fair Work Act 2009 (Cth), the penalties received by the applicant from the Second Respondent and Third Respondent be paid by the applicant to the Consolidated Revenue Fund of the Commonwealth within 60 days of receipt.
The application for payment by instalments is refused.
The application for costs against the applicant in respect of the notice to produce issue is refused.
The application for costs reserved on the cross claim is refused.
DATE OF ORDER: 20 January 2020
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 2187 of 2018
| FAIR WORK OMBUDSMAN |
Applicant
And
| SINPEK PTY LTD (IN LIQUIDATION) |
First Respondent
| KAMALDEEP SINGH |
Second Respondent
| UMA SINGH |
Third Respondent
REASONS FOR JUDGMENT
In this matter, the applicant has established knowing involvement by the second respondent in thirteen civil penalty contraventions and knowing involvement by the third respondent in ten civil penalty contraventions which have been the subject of declarations made by the Court today.
The Court has had the benefit of both written and oral submissions in relation to the issue of penalty.
The respective civil penalty provisions are identified in column 1, s 539 of the Fair Work Act 2009 (Cth). There is no dispute that the applicant is a person entitled to apply for a civil penalty.
Section 539(2) of the Act provides as follows:
For each civil remedy provision, the persons referred to in column 2 of the item may, subject to sections 540 and 544 and Subdivision B, apply to the courts referred to in column 3 of the item for orders in relation to a contravention or proposed contravention of the provision, including the maximum penalty referred to in column 4 of the item.
Section 540 of the Act further identifies the applicant as being the person entitled to apply for relief in respect of the civil penalty provisions that have been the subject of the declarations made by the Court in the present case.
In respect of civil penalties, s 556 of the Act is a provision to prevent double jeopardy as follows:
If a person is ordered to pay a pecuniary penalty under a civil remedy provision in relation to particular conduct, the person is not liable to be ordered to pay a pecuniary penalty under some other provision of a law of the Commonwealth in relation to that conduct.
Note: A court may make other orders, such as an order for compensation, in relation to particular conduct even if the court has made a pecuniary penalty order in relation to that conduct (see subsection 546(5)).
Section 557 of the Act deals with the circumstances in which contraventions of a civil penalty provision are taken to constitute a single contravention as follows:
(1) For the purposes of this Part, 2 or more contraventions of a civil remedy provision referred to in subsection (2) are, subject to subsection (3), taken to constitute a single contravention if:
(a) the contraventions are committed by the same person; and
(b) the contraventions arose out of a course of conduct by the person.
(2) The civil remedy provisions are the following:
(a) subsection 44(1) (which deals with contraventions of the National Employment Standards);
(b) section 45 (which deals with contraventions of modern awards);
(c) section 50 (which deals with contraventions of enterprise agreements);
(d) section 280 (which deals with contraventions of workplace determinations);
(e) section 293 (which deals with contraventions of national minimum wage orders);
(f) section 305 (which deals with contraventions of equal remuneration orders);
(g) subsection 323(1) (which deals with methods and frequency of payment);
(h) subsection 323(3) (which deals with methods of payment specified in modern awards or enterprise agreements);
(i) subsection 325(1) (which deals with unreasonable requirements on employees to spend or pay amounts);
(ia) subsection 325(1A) (which deals with unreasonable requirements on prospective employees to spend or pay amounts);
(j) subsection 417(1) (which deals with industrial action before the nominal expiry date of an enterprise agreement etc.);
(k) subsection 421(1) (which deals with contraventions of orders in relation to industrial action);
(l) section 434 (which deals with contraventions of Ministerial directions in relation to industrial action);
(m) subsection 530(4) (which deals with notifying Centrelink of certain proposed dismissals);
(n) subsections 535(1), (2) and (4) (which deal with employer obligations in relation to employee records);
(o) subsections 536(1), (2) and (3) (which deal with employer obligations in relation to pay slips);
(p) subsection 745(1) (which deals with contraventions of the extended parental leave provisions);
(q) section 760 (which deals with contraventions of the extended notice of termination provisions);
(r) subsection 785(4) (which deals with notifying Centrelink of certain proposed terminations);
(s) any other civil remedy provisions prescribed by the regulations.
(3) Subsection (1) does not apply to a contravention of a civil remedy provision that is committed by a person after a court has imposed a pecuniary penalty on the person for an earlier contravention of the provision
An important feature of the civil penalty provisions in the Act is that they are provisions protective of the public and in promoting the public interest in compliance with the Act, see Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate; Construction, Forestry, Mining and Energy Union v Director, Fair Work Building Industry Inspectorate [2015] HCA 46. Whilst the object is protective of the public, the Court takes into account the principles of general deterrence and specific deterrence, as otherwise applied traditionally in criminal law. Principles of retribution and rehabilitation have no application in the purpose behind the civil penalty provisions.
It is also accepted that there are a series of factors, which are not a rigid category, as matters requiring attention that should be taken into account, which are identified in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 at [88] to [91] as follows:
88 The learned Magistrate approached the task of assessing the penalties to be imposed by giving attention to ‘a non-exhaustive range of considerations to which regard may be had in determining whether particular conduct calls for the imposition of a penalty’. She used, for that purpose, a list of factors identified by Mowbray FM in Mason v Harrington Corporation Pty Ltd. The list of factors identified by Mowbray FM was drawn from similar lists in decisions of this Court in cases involving breaches of the requirements of the Trade Practices Act 1974 (Cth) and the WR Act (see Trade Practices Commission v CSR Limited [1991] HCA 7; [1991] ATPR 52,135 at 52,152 – 52,153; NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission [1996] FCA 1134; (1996) 71 FCR 285 at 291 - 292; Construction, Forestry, Mining & Energy Union v Coal & Allied Operations Pty Ltd (No 2) [1999] FCA 1714; (1999) 94 IR 231 at [7] – [8]; and Textile Clothing & Footwear Union of Australia v Lotus Cove Pty Ltd [2004] FCA 43 at [46] – [47].
89 In a recent judgment Tracey J adopted this same list of factors as ‘potentially relevant and applicable’ (see Kelly v Fitzpatrick [2007] FCA 1080). The list of factors is as follows:
‘• The nature and extent of the conduct which led to the breaches.
• The circumstances in which that conduct took place.
• The nature and extent of any loss or damage sustained as a result of the breaches.
• Whether there had been similar previous conduct by the respondent.
• Whether the breaches were properly distinct or arose out of the one course of conduct.
• The size of the business enterprise involved.
• Whether or not the breaches were deliberate.
• Whether senior management was involved in the breaches.
• Whether the party committing the breach had exhibited contrition.
• Whether the party committing the breach had taken corrective action.
• Whether the party committing the breach had cooperated with the enforcement authorities.
• The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements and
• The need for specific and general deterrence.’
90 Similar lists appear in other recent authorities (e.g. Construction, Forestry, Mining and Energy Union v Hamberger [2003] FCAFC 38; (2003) 127 FCR 309 at [51]; Hadgkiss v Sunland Construction (Qld) Pty Ltd [2006] FCA 1566 at [11].
91 Check lists of this kind can be useful providing they do not become transformed into a rigid catalogue of matters for attention. At the end of the day the task of the Court is to fix a penalty which pays appropriate regard to the circumstances in which the contraventions have occurred and the need to sustain public confidence in the statutory regime which imposes the obligations. There is no suggestion in the present case that the learned Magistrate made any relevant error in her identification of the matters which she should consider in fixing penalties.
The Court also has the benefit of the observations of the learned Bromwich J in Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301.
In that case, His Honour identified that the appropriate method to determine the question of the appropriate penalty is, first, to identify the separate contraventions as to each obligation being the subject of separate contravention and each breach of the award and the Act being a separate contravention of a civil penalty provision within s 539(2) of the Act.
A second step is to consider whether each separate contravention should be dealt with independently or with some degree of aggregation for those contraventions arousing out of a course of conduct, taking into account s 557 of the Act.
The third step is to consider whether there should be a further adjustment to ensure that, to the extent there is any overlap between groups of separate aggregated contraventions, there is no double jeopardy or double penalty imposed, consistent with the principles identified in s 556 Act.
The fourth step is to consider the appropriate penalty in respect of each individual and/or group of contraventions taken in isolation.
The final step is to consider the overall penalties arrived at, including those proposed by the parties, and take into account the totality principal to ensure that the penalties for each relevant respondent are appropriate and proportionate to the conduct viewed as a whole, making adjustments as necessary.
Consistent with the first step identified, the Court takes into account the declarations made in respect of the contravention of the thirteen civil penalty provisions by the second respondent, which identifies the statutory provisions contravened and, where applicable, the relevant award term. The Court also takes into account the declarations made in respect of the contravention of the ten civil penalty provisions by the third respondent, which again identify the statutory provisions contravened and, where applicable, the relevant award term.
The Court also takes into account the amount of the loss suffered by the two employees in respect of the relevant contraventions, which has been identified in the decision delivered by the Court in support of the declarations and in respect of which there has been a loss the subject of a compensation order in favour of Mr Dhariwal in the amount of $24,607.96 and a compensation order in favour of Ms Kumari in the amount of $28,114.52.
The Court also takes into account the maximum penalty in respect of each civil penalty contravention, as identified in the table helpfully provided by the applicant in relation to the second respondent, which set out as follows:
No Applicant’s Proposed Penalties – Kamaldeep Singh
(Second Respondent)Provision Contravention Maximum Penalty - - - Percentage Amount 1. Section 45 FW Act Failure to pay minimum hourly rate to Raman Kumari as required by clause 33.4
of the Award
$10,800 60% - 70% $6,480 - $7,560 2. Section 45 FW Act Failure to pay Shift Work Loading to
Raman Kumari as required by clause 42.2 of the Award
$10,800 25% - 35% $2,700 - $3,780 3. Section 45 FW Act Failure to pay Saturday rates for a full- time employee to Raman Kumari as
required by clause 43.3(a)(i) of the Award
$10,800 25% - 35% $2,700 - $3,780 4. Section 45 FW Act Failure to pay Sunday rates for a full-time employee to Sandeep Dhariwal and Raman Kumari as required by clause 43.3(a)(ii) of
the Award
$10,800 25% - 35% $2,700 - $3,780 5. Section 45 FW Act Failure to pay Public Holiday rates to Sandeep Dhariwal and Raman Kumari as required by clause 43.3(a)(iii) of the
Award
$10,800 25% - 35% $2,700 - $3,780 6. Section 45 FW Act Failure to pay overtime rates to Sandeep Dhariwal and Raman Kumari as required by clause 43.4(a)(i) of the Award for Monday to Saturday, by clause 43.4(a)(ii) of the Award for Sunday and clause
43.4(a)(iii) of the Award for public holidays
$10,800 70% - 80% $7,560 - $8,640 7. Section 44(1) FW Act Failure to pay accrued but untaken annual leave on termination to Raman Kumari and
Sandeep Dhariwal as required by section 90(2) of the FW Act
$10,800 40% - 50% $4,320 - $5,400 8. Section 44(1) FW Act Failure to make payment in lieu of notice to Raman Kumari and Sandeep Dhariwal
as required by section 117(1) of the FW Act
$10,800 25% - 35% $2,700 - $3,780 9. Section 44(1) FW Act Failure to pay personal/
carers leave to Sandeep Dhariwal as required by section99 of the FW Act
$10,800 10% - 20% $1,080 - $2,160 10. Section 325 FW Act Unreasonable requirement to spend an amount payable to employee (Fuel Costs) $10,800 5% - 10% $540 - $1,080 11. Section 325 FW Act Unreasonable requirement to spend an
amount payable to employee (Tax Repayment)
$10,800 50% - 60% $5,400 - $6,480 12. Section 535(1) FW
Act
Failure to make and keep required records $5,400 20% - 30% $1,080 - $1,620 13. Section 536(1) FW Act Failure to provide pay slips within one
working day of making payment for the performance of work
$5,400 60% - 70% $3,240 - $3,780
The maximum penalty in respect of the thirteen contraventions by the second respondent of civil penalty provisions would be $129,600.00. The maximum penalty to be imposed in respect of the third respondent in respect of the ten contraventions would be $102,600.00.
Before turning to the next step in respect of course of conduct, the Court proposes to deal with the circumstances in which the contraventions occurred.
Nature and Extent of the Conduct and Circumstances
The Court takes into account that Mr Dhariwal and Ms Kumari were vulnerable employees, not just by reason of their associated economic circumstances, but also by reason of their visa circumstances.
The Court finds that the first respondent, the second respondent and the third respondent exploited those vulnerabilities knowingly and to their own advantage and for their own benefit.
The exploitation of vulnerable employees is a very relevant factor in the context of the Act in terms of the gravity of the conduct which has occurred in respect of each particular contravention. That vulnerability occurred in circumstances where Mr Dhariwal and Ms Kumari moved interstate under the inducements of the second respondent and the third respondent and where Mr Dhariwal and Ms Kumari were placed in a position of threat of return to India or being deported if they failed to accommodate the exploitation by the first respondent, the second respondent and the third respondent. The first respondent, the second respondent and the third respondent also exploited Mrs Kumari, the wife of Mr Dhariwal, on the basis that he was being employed and, therefore, she should not be remunerated.
The conduct of the respondents in the circumstances of the present case is at the most serious end of the spectrum in respect of each of the contraventions. The contraventions by the first respondent in terms of the underpayment to Mr Dhariwal and Ms Kumari are made the more serious by reason of their vulnerability and the knowing exploitation of the same by the respondents. The Court accepts the applicant’s submission that these were properly characterised as aggravating factors in the context of penalty.
The circumstances of the contraventions also include, from the initial communications between Mr Dhariwal and the second respondent, the expectation that Mr Dhariwal would be required to repay tax benefits he might receive by reason of his taxation category. That was a further blatant and inappropriate exploitation by the second respondent in the context of the circumstances surrounding the contraventions. The Court has found that Mr Dhaiwal was, in fact, required to repay a tax benefit and, whilst the amount was only in the order of $3,600.00, that conduct is deserving of the strongest censure in relation to the surrounding circumstances.
The imposition of the policy of requiring payment by employees for drive-offs is also conduct of an aggravating kind requiring the strongest censure by the Court in terms of the gravity of the circumstances surrounding the contraventions.
The circumstances of the employment of Mr Dhariwal are also ones which impact on the gravity of the contraventions that have occurred in the present case. The first respondent, the second respondent and the third respondent were prepared to falsely represent that Mr Dhariwal was being employed as a retail manager and to assert, as they have in this case, the false proposition that he undertook responsibilities for payroll, payslips and rosters which the Court found was knowingly false evidence by the second respondent and the third respondent.
That conduct included the second respondent and the third respondent preparing a statutory declaration which they knew made false and untrue assertions in respect of the responsibilities of Mr Dhariwal in relation to budget and payroll. The Court has accepted Mr Dhariwal’s evidence that he was not given opportunity for input in relation to the statutory declaration. The Court has accepted that Mr Dhariwal’s signing of the same was in the context of the vulnerability which the first respondent, the second respondent and third respondent were exploiting in relation to both Mr Dhariwal and Ms Kumari.
The Court has also taken into account, in relation to the nature and extent of the conduct which led to the breaches, that this occurred through an employer being the first respondent which was effectively controlled and operated by the second respondent and the third respondent. Whilst the third respondent was not a director, it is apparent that the second respondent and the third respondent effectively interchangeably had responsibility for payroll, payslips and rosters, notwithstanding their evidence to the contrary.
The fact that that employer, being the first respondent, was put into voluntary liquidation three days after service of the submissions on penalty is a further matter of grave concern to the Court in the context of the relevant contraventions.
Evidence was also adduced in the course of the hearing from the accountant of the respondents that the first respondent had made very substantial unsecured loans, which were undocumented, to the accountant in excess of $100,000.00 without any identified corporate benefit for the first respondent shortly before placing the company into voluntary liquidation.
The placing of an employer into voluntary liquation after the commencement of these proceedings, and so shortly after the service of the submissions on penalty, is serious aggravating conduct warranting severe sanction from the Court, both as a matter of specific deterrence and as a matter of general deterrence, to which the Court will return.
Nature and Extent of Losses
The nature and extent of the losses the subject of the contraventions might be described as not significant in the context of being only $52,722.48but, for the particular individuals involved and given their vulnerability, it makes the knowing involvement in the circumstances of these contraventions at the serious end of the spectrum in terms of penalty.
The fact that the first respondent was willing to engage in the making of unsecured loans for no proper corporate benefit in respect of the first respondent to the accountant at a time when the first respondent, the second respondent and the third respondent were all aware of the substantial amounts for the individual employees which were outstanding reflects a deliberate decision not to meet the loss that had been suffered through the first respondent and to prefer their own financial interests in voluntarily placing the first respondent into liquidation.
In relation to the deliberateness of the conduct, the Court has identified that each of the contraventions by the second respondent and the third respondent, being knowingly involved in the contraventions of the first respondent, were deliberate.
No Similar Conduct
In terms of previous similar conduct, the Court accepts that there has been no previous finding of contravention of workplace laws by any of the respondents. In some circumstances that may be a mitigating factor, however, when it comes to the determination of penalty in the present case, it is a neutral factor. It is apparent from the evidence that the Court has accepted and finding of contraventions that the respondents had communication with the applicant in relation to their employees and their obligations under the Vehicle Manufacturing, Repair, Services and Retail Award 2010 (“the Modern Award”).
Size of Business
In relation to the size and financial circumstance of the business at the time of the relevant contraventions, there appeared to have been over ten to fifteen employees during the respective periods of employment the subject matter of these proceedings. The first respondent’s service station business, as was referred to in the judgment on contravention, was also sold prior to the commencement of the hearings. There is no satisfactory evidence as to the actual financial position of the company before it was placed into voluntary liquidation or proper evidence identifying the assets and liabilities of the second respondent and the third respondent or the benefits they received from the sale of the business of the first respondent.
For the reasons identified, however, the Court regards the conduct taken by the second respondent and the third respondent by placing the first respondent into liquidation, which was a voluntary liquidation, as having been obviously with the intention of preventing enforcement of compensation orders against the first respondent in respect of the two employees, as well as the avoidance of the significant penalties which may have been imposed in respect of the first respondent. The Court also takes into account the importance, in this regard, of the objective of general deterrence regardless of the alleged limited ability of the second respondent and the third respondent to pay.
Senior Management
In terms of involvement of senior management, it is apparent that the second respondent and the third respondent were the corporate minds of the first respondent in relation to payroll, payslips and rosters and each had a real and practical association with the conduct which gave rise to the contraventions. The Court rejected the evidence advanced by the second respondent and the third respondent that they had absolved themselves of responsibility in respect of payroll, rosters and payslips. The Court found that evidence was false evidence. That is a further aggravating factor in terms of the seriousness of the conduct the subject of the civil penalty provisions in the present case.
No Contrition
In terms of contrition, corrective action and cooperation, it is the case that, as a result of orders by the Court, there was filed a document which made an admission in respect of one contravention by the first respondent. That was a belated admission and is of no real value. There was no contrition at all by the second respondent and the third respondent in respect of the contraventions. There has been no corrective action taken either.
The second respondent and the third respondent, far from having cooperated with the investigation, provided information in respect of Ms Kumari that the Court found was knowingly false in respect of the terms of her employment and have advanced and maintained what the second respondent and the third respondent must have known was a false case of alleged responsibility by Mr Dhariwal for payroll, payslips and rosters. The Court regards those factors as aggravating factors giving rise to circumstances in which the Court must take into account the gravity of that conduct and the need for specific and general deterrence.
Minimum Standards
In relation to the need to ensure compliance with minimum standards, as apparent with the two employees in relation to their circumstances, Mr Dhariwal and Ms Kumari were the subject of significant underpayments over what was, relevantly, a long period of time for vulnerable employees. The Court takes into account the principal object of the Act being preservation of an effective safety net for employee entitlements and effective enforcement mechanisms. The Court accepts that it is fundamental to the effectiveness of workplace regulation in Australia that this safety net is extended to all foreign employees, regardless of their visa status or nationality.
In these circumstances, the failure to provide payslips for most of 2016in respect of these vulnerable employees is a further, clear aggravating factor in terms of the conduct in respect of the contraventions. The Court accepts the applicant’s submission that the stopping of payslips was deliberate in the context of seeking to exploit these employees.
Deterrence
As earlier identified and insofar as concerns deterrence, the primary purpose of civil penalties is to protect the public interest as to compliance with the Act. The civil penalties advance this purpose taking into account deterrence, both specific and general, in respect of the type of contraventions which have been found to occur. The penalty should not be fixed at an amount that is simply regarded as the cost of doing business.
In the present case, specific deterrence is of considerable importance. The conduct of the respondents in the course of this case and the pursuit of and maintenance of the false assertions in respect of Mr Dhariwal, in particular, and his alleged role of retail manager, responsibility for payslips, payroll and rosters, which the Court has found was all knowingly false by the second respondent and the third respondent, identifies a very real need for specific deterrence of these respondents. The very deliberate nature of the conduct and absence of meaningful remorse, acceptance of responsibility or evidence of compliance reinforces the strong need for specific deterrence of the second respondent and the third respondent.
In terms of general deterrence, the conduct in the present case is one, again, in respect of which the industry the subject of these contraventions is one engaging vulnerable employees and requires clear identification of the Court’s discouragement of similar conduct.
That general deterrence must also take into account the conduct which occurred in relation to the placing of the employer into liquidation as a means to avoid meeting obligations under the Act as to paying compensation and meeting penalties. The Court needs to make very clear the need for general deterrence of that type of conduct in the context of these contraventions, all as a matter of gravity which warrants the highest spectrum in the level of penalty.
Applying these provisions in respect of each separate contravention, the Court is of the view that it is the maximum penalty which should be imposed in respect of the thirteen contraventions by the second respondent and the maximum penalty in respect of the ten contraventions by the third respondent.
The Court has taken into account the modest percentage range that had been advanced by the applicant at the time that submissions on penalty were filed. Those submissions were filed at a point of time before the filing of the affidavit evidence by the second respondent and the third respondent, which the Court has found in material respects to have been false and knowingly false. Those percentages were also advanced at a time when the applicant was unaware, as was the Court, of the extent of the conduct of the second respondent and the third respondent, causing the first respondent to engage in the making of substantial loans to an accountant without any identifiable corporate benefit shortly prior to placing the first respondent into voluntarily liquidation.
Mr Latham of counsel on behalf of the second respondent and the third respondent submitted that the Court would be falling into error in finding that the penalty to be applied in respect of each contravention in this case fell within the most extreme or top end of the penalty range. Mr Latham, in that regard, referred to the absence of any earlier adverse findings against any of the respondents, the small size of the business, the small number of employees and the small amount in terms of actual loss suffered.
In the absence of the aggravating features of the kind that the Court has referred to, there is force in the submissions of Mr Latham. The Court, however, has found that, in the circumstances of the present case, there is a very real need to ensure that there is specific deterrence of the second respondent and the third respondent from engaging in conduct of the kind which has occurred in the present case in order to protect the public and to ensure compliance with the Act.
Further, for the reasons the Court has given, the Court finds that there is also a very real need, in the circumstances of the present case, to make clear the need for general deterrence of the conduct of a kind that has occurred by the second respondent and the third respondent, in particular, by placing into voluntary liquidation the employer as a means of trying to defeat and prevent the recovery of compensation and/or imposition of penalty. That is conduct at the worst end in terms of gravity and is deserving of the clearest censure and discouragement for the purpose of meeting the objects of the Act.
In these circumstances, the Court does not accept that a lesser percentage than the maximum penalty is the appropriate amount in terms of each contravention as identified in the first assessment required under the method identified by the learned Bromwich J.
On the second issue of course of conduct and/or aggravation, Mr Latham has submitted that the Court should find there was a course of conduct in relation to the items (3), (4), (5) and (6) in the schedule identified by the applicant and which has been incorporated into these reasons and/or a course of conduct in relation to items (1) to (6), as well as in relation to the second respondent, a course of conduct in respect of items (12) and (13).
Whilst it is correct that, in the course of considering this issue, the Court should take into account the principle entrenched within s 556 of the Act that there must not be a double jeopardy imposed in respect of the civil remedy provisions, the Court is satisfied that the imposition of the maximum penalty in relation to the second respondent and the third respondent in respect of each of the contraventions does not give rise to any double jeopardy within s 556 of the Act.
The Court has taken into account the principles in relation to s 557 of the Act which have been helpfully identified in Rocky Holdings Pty Limited v Fair Work Ombudsman [2014] FCAFC 62 at [10] to [23] and in Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39 at [35] to [45]. Mr Latham also helpfully drew the Court’s attention to the principles identified in Transport Workers' Union of Australia v Registered Organisations Commissioner [No 2] [2018] FCAFC 203 at [86]. In relation to s 556 of the Act, the Court has also taken into account in Australian Building and Construction Commissioner v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (The Australian Paper Case) (No 2) [2017] FCA 367at [40].
The contravention of s 45 of the Act in items (3), (4), (5) and (6) are not ones which should be treated as contraventions that arose out of a course of conduct by the person so as to collectively constitute one contravention. The contraventions involved different obligations under the Modern Award, each of which are the subject of separate conduct and separate activities in the employment of the relevant employees. The Court does not accept that those items should be treated as a course of conduct.
The respondents do, however, have the benefit of the contraventions the subject of items (3), (4), (5) and (6), which occurred over the substantial period of employment, as being treated as a course of conduct and one contravention in respect of each item.
Equally, the Court does not accept the submissions in respect of items (1) to (6) reflecting a course of conduct by reason of which there should be only one contravention as they clearly identify different requirements of the Modern Award in respect of different activities in the employment of the employees. Further, the second respondent and the third respondent have the benefit of items (1) to (6) in respect of each contravention separately being treated as a course of conduct.
Likewise, in relation to the second respondent in respect of items (12) and (13), those provisions reflect different conduct the subject of different contraventions and activities by the second respondent and the third respondent and, in particular, reflect different statutory provisions, the importance of which is apparent on their terms, to ensure the ability for employees, employers and/or regulators to identify what payments have been made to employees. The importance of compliance with those provisions which reflect separate and independent contraventions, again, needs little reinforcement.
Again, the second respondent has the benefit in respect of items (12) and (13) of each contravention over the period of time being treated as a course of conduct. It is not appropriate to otherwise treat the items as if the two contraventions of those two different provisions arose out of the course of conduct so as to be one contravention.
The third step, in substance, is to ensure no double jeopardy and that the penalty is an appropriate response to what the second respondent and the third respondent did. For the reasons the Court has identified, the maximum penalty in respect of each contravention is the appropriate response to what the second respondent and the third respondent did in the present case. The Court has identified the appropriate penalty in respect of each of the individual contraventions taken in isolation as being the maximum penalty in respect of each item identified in the table by the applicant.
The Court has taken into account that there was a brief period of overlap in relation to which there was a lesser penalty unit at the commencement of the employment of the respondents. This does not, however, in the circumstances of the present case, give rise to any basis why it should not be the full penalty units that should be enforced for the contraventions in the circumstances of the present case.
The last exercise required by the Court, in terms of the method identified by the learned Bromwich J, is to apply a totality consideration and to ensure that the penalties for each respondent are appropriate and proportionate to the conduct viewed as a whole, making such adjustments as are necessary.
The Court has taken into account the principles identified in Mill v The Queen (1988) 166 CLR 59 at 63 insofar as applicable to the protection of the public in fixing a civil penalty. Taking into account those considerations, the Court is of the view that this is a case in respect of which the conduct is deserving of the maximum penalties but that there should be a small adjustment in respect of the application of the totality principle to ensure a just and appropriate penalty.
The Court is satisfied, applying the totality principle in each of the matters to which the Court has referred, that it is just and appropriate to order that the second respondent pay penalties fixed in an amount of $120,000.00 and that it is just and appropriate, taking into account matters to which the Court has referred which equally apply in principle to the third respondent, that the third respondent pay penalties fixed in an amount of $90,000.00.
Mr Latham of counsel on behalf of the applicants foreshadowed an application for paying by instalments.
This is not a case where the Court is satisfied there is any proper basis to make any such order. The conduct of the second respondent and the third respondent in relation to the first respondent, to which the Court has referred, reinforces the reasons why the Court is not satisfied that this is a case where any such discretion should be exercised nor is there any proper basis to do so in terms of the financial position of the second respondent and the third respondents
The application for payment by instalments is refused.
Mr Latham also asked for an order for costs in relation to the issue, which was no longer pursued by the applicant, in respect of the alleged contravention concerning a notice to produce.
It is sufficient to refer to the provisions of s 570 of the Act. The Court is not satisfied that the prerequisite in s 572 of the Act has been made out so as to give rise to any basis to depart from the ordinary rule which is that there should be no costs for proceedings under the Act. The Court does not accept that the issue raised in respect of the notice to produce should be characterised as an unreasonable act or omission that caused the second respondent and the third respondent to incur costs. But for the provisions of s 570 of the Act, this is a case where the Court would have ordered the second respondent and the third respondent to pay the applicant’s costs.
The application for costs against the applicant in respect of the notice to produce issue is refused.
I certify that the preceding seventy-two (72) paragraphs are a true copy of the transcript of the published oral reasons for judgment of Judge Street delivered in open Court on 20 January 2020 and the parties were provided sealed copies of the Court’s orders.
Date: 14 February 2020