Fair Work Ombudsman v Soma Kitchen Pty Ltd & Anor (No 2)
[2020] FCCA 2583
•16 September 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v SOMA KITCHEN PTY LTD & ANOR (No.2) | [2020] FCCA 2583 |
| Catchwords: INDUSTRIAL LAW – Penalty hearing – factors for consideration – no engagement by respondents – mid range penalty imposed. |
| Legislation: Crimes Act 1914 (Cth), s.4AA Fair Work Act 2009 (Cth), ss.539, 546, 557, 682, 716 Federal Circuit Court Rules 2001 (Cth), r.29.07 |
| Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113 Fair Work Ombudsman v Soma Kitchen Pty Ltd & Anor [2020] FCCA 2358 Jordan v Mornington Inn Pty Ltd [2007] FCA 1384 Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union [2008] FCAFC 170 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | SOMA KITCHEN PTY LTD ACN 632 395 558 |
| Second Respondent: | GIANCARLO DANIELE |
| File Number: | PEG 467 of 2019 |
| Judgment of: | Judge Kendall |
| Hearing date: | 14 September 2020 |
| Date of Last Submission: | 14 September 2020 |
| Delivered at: | Perth |
| Delivered on: | 16 September 2020 |
REPRESENTATION
| Counsel for the Applicant: | Ms M Sears |
| Solicitors for the Applicant: | Fair Work Ombudsman |
| First Respondent: | No appearance |
| Second Respondent: | No appearance |
ORDERS
PENAL NOTICE
TO: THE RESPONDENTS
IF YOU:
(A)REFUSE OR NEGLECT TO DO ANY ACT WITHIN THE TIME SPECIFIED IN THIS ORDER FOR THE DOING OF THE ACT
YOU WILL BE LIABLE TO IMPRISONMENT, SEQUESTRATION OF PROPERTY OR OTHER PUNISHMENT.
ANY OTHER PERSON WHO KNOWS OF THIS ORDER AND DOES ANYTHING WHICH HELPS OR PERMITS YOU TO BREACH THE TERMS OF THIS ORDER MAY BE SIMILARLY PUNISHED.
Orders 3-5 of the orders dated 25 August 2020 be vacated.
Pursuant to section 545(1) of the Fair Work Act 2009 (Cth) the first respondent, within 28 days of these orders, take the steps that were required to comply with the Notice by:
(a)calculating the outstanding entitlements it was required to pay to Mr Girbal;
(b)paying the outstanding entitlements referred to in subparagraph (a) above to the Commonwealth Consolidated Revenue Fund (on behalf of Mr Girbal);
(c)calculating and paying into Mr Girbal’s nominated superannuation fund the additional superannuation contributions it was required to pay on the outstanding entitlements referred to in subparagraph (a) above; and
(d)preparing and producing to the applicant, a schedule outlining its calculation of the outstanding entitlements it was required to pay Mr Girbal, referred to in subparagraph (a) above, and providing proof that the outstanding entitlements were rectified as set out in subparagraphs (b) and (c) above.
Pursuant to s.547(2) of Fair Work Act 2009 (Cth) the first respondent pay interest on the amounts referred to in order 2 above.
The applicant distribute to Mr Girbal the amounts paid pursuant to order 2 above within 180 days of the payment being made, or in the event that Mr Girbal cannot be located within this timeframe, these amounts to be retained by the Commonwealth of Australia pursuant to s.559 of the Fair Work Act 2009 (Cth).
Pursuant to s.546(1) of the Fair Work Act 2009 (Cth):
(a)the first respondent pay a pecuniary penalty of $18,270 in respect of its contravention of s.716(5) of the Fair Work Act 2009 (Cth) within 90 days of the date of these orders;
(b)the second respondent pay a pecuniary penalty of $3,654 in respect of his involvement in the contravention of the first respondent within 90 days of the date of these orders.
Pursuant to s.546(3)(a) of the Fair Work Act 2009 (Cth), the pecuniary penalties ordered to be paid by the respondents in order 5 above be paid to the Commonwealth of Australia.
The applicant have liberty to apply on seven days’ notice in the event that any of the preceding orders are not complied with.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PERTH |
PEG 467 of 2019
| FAIR WORK OMBUDSMAN |
Applicant
And
| SOMA KITCHEN PTY LTD |
First Respondent
| GIANCARLO DANIELE |
Second Respondent
REASONS FOR JUDGMENT
Introduction
On 29 November 2019, the applicant (the Fair Work Ombudsman) filed an application in this Court alleging that the first respondent (Soma Kitchen Pty Ltd) had contravened s.716(5) of the Fair Work Act 2009 (Cth) (the “Act”). The applicant also alleged that the second respondent (Giancarlo Daniele) was “involved in” these contraventions.
On 25 August 2020, this Court entered judgment against the respondents: Fair Work Ombudsman v Soma Kitchen Pty Ltd & Anor [2020] FCCA 2358 (“Soma No.1”). The Court declared as follows:
A. The first respondent contravened s.716(5) of the Fair Work Act 2009 (Cth) by failing to comply with the Compliance Notice dated 9 September 2019 (Notice).
B. The second respondent was involved, within the meaning of s.550(2) of the Fair Work Act 2009 (Cth), in the first respondent’s contravention of s.716(5) of the Fair Work Act 2009 (Cth) by failing to comply with the Notice.
These reasons for judgment address the penalty to be imposed on the respondents for the contraventions specified by the Court on 25 August 2020.
The materials before the Court in relation to the determination of the penalty to be imposed are:
a)the applicant’s Statement of Claim filed on 29 November 2019;
b)an affidavit of Maddison Sears filed on 21 July 2020;
c)an affidavit of Sue-Ann Kaye Feltus filed on 7 August 2020;
d)an outline of submissions filed by the applicant on 10 August 2020;
e)email correspondence from Chambers to the known email addresses of the respondents dated 26 August 2020 confirming the date and time of the hearing and 7 September 2020 confirming the date, time and location of the hearing (marked as Exhibit 1); and
f)email correspondence from the applicant to the known email addresses of the respondents dated 11 September 2020 confirming the date and time of the hearing and that the respondents had “read” the email (marked as Exhibit 2).
The respondents were given numerous opportunities to file documents in relation to this matter (relating to both liability and to penalty). Despite that, the only documents they filed were a notice of address for service filed on 12 February 2020 and a notice of withdrawal of solicitor filed on 24 March 2020.
The second respondent has communicated with Chambers via email on two occasions – to indicate that he would attend a directions hearing (which he did not attend) and then afterwards to advise that “he got held up”. That aside, no active part has been played by the respondents in these proceedings. In this regard, the Court refers to its reasons in Soma No.1 where the respondents’ defaults are discussed in detail.
The matter was listed for a penalty hearing on 14 September 2020. Exhibit 1 and Exhibit 2 provide evidence that the respondents were advised on three different occasions of the date and time of the hearing: 26 August 2020, 7 September 2020 and 11 September 2020. No appearance by or for the respondents was entered at the penalty hearing. The Court was satisfied that the respondents were on notice of the date and time of the hearing and that, had they wished to participate, they would have attended. Accordingly, the Court proceeded to hear the matter in the respondents’ absence and on the basis of the materials provided by the applicant.
Background
Before considering what would be an appropriate penalty in this matter, it is necessary to provide an overview of the factual background which led to the relevant contraventions.
On 26 July 2019, the applicant received a request for assistance from a former employee of the first respondent. The employee stated that he had been paid only $200 for approximately 146 hours of work.
On 12 August 2019, Fair Work Inspector Sue-Ann Kaye Feltus (the “Inspector”) spoke with the second respondent who confirmed that the employee was employed by the first respondent and that he had been paid $200.
On 9 September 2019, a compliance notice was issued to the first respondent pursuant to s.716(2) of the Act (the “Notice”). The Notice required the first respondent to do as follows by 7 October 2019:
Step 1 - Identify
(a) In respect of Mr. Girbal identify:
(i) their employment status (full-time, part-time or casual);
(ii) their classification under the Restaurant Award (see Schedule B – Classification Definitions in the Restaurant Award);
(iii) their hours of work from 21 · May 2019 to 5 June 2019; and
(iv) the amounts paid to Mr Girbal for each hour of work performed from 21 May 2019 to 5 June 2019.
Step 2 - Calculate
Casual employees
(a) calculate the amount Mr Girbal should have been paid for hours of work performed between 21 May 2019 to 5 June 2019 in respect of the applicable entitlements for his status and classification level under the Restaurant Award and the following entitlements:
(i) Payment of Wages (see 6(a) above);
(b) calculate the difference between the amount paid to Mr Girbal (as identified at Step 1 (a)(iv)) and the amount he was entitled to be paid in respect of each relevant entitlement (as calculated at Step 2 (a)).
Step 3 - Superannuation
(a) calculate any additional superannuation contributions required by clause 30.2 of the Restaurant Award in respect of any of the amounts required to be paid to Mr Girbal as a result of Step 2(b).
Step 4 - Rectify
(a) make a payment to Mr Girbal in the amount of the difference between what he was entitled to be paid and what he was paid as calculated above (at Step 2 (b)); and
(b) make a payment to Mr Girbal's nominated superannuation fund in the amount of any additional superannuation identified in Step 3.
Step 5 - Schedule of payments
(a) prepare a schedule outlining:
(i) the status and classification of Mr Girbal identified in Step 1;
(ii) the amounts calculated for Mr Girbal in accordance with Step 2 and Step 3 (i.e. in respect of each entitlement); and
(iii) the amount which Mr Girbal has been paid to remedy any underpayment identified by Steps 2 and the amount paid his nominated superannuation fund as identified in Step 3 in accordance with Step 4.
On 15 October 2019, the Inspector spoke to the second respondent. The second respondent indicated that the Notice was “sitting on his desk”. The Inspector sent correspondence to the second respondent asking that he provide a “reasonable excuse” about why the Notice had not been complied with.
These proceedings were commenced on 29 November 2019. The respondents had not taken any steps to comply with the Notice prior to instituting these proceedings and have not taken any steps to comply with the Notice since the commencement of these proceedings.
Principles relevant to Penalty
Section 716(5) is a “civil remedy provision”. Section 546(1) of the Act provides that the Court has jurisdiction to impose a pecuniary penalty where there has been a contravention of a civil remedy provision.
Sections 539(2) and 546(2) of the Act indicate the “maximum” penalty units that can be imposed on an individual and a corporate entity. Here, the maximum penalty units that can be imposed are as follows:
a)for the first respondent, 150 penalty units; and
b)for the second respondent, 30 penalty units.
The Court must determine the amount of the “penalty unit” at the time the contravention occurred. That is, the Court must determine what the relevant penalty unit was at the time the respondents failed to comply with the Notice (not when proceedings were commenced or when this matter was heard).
In doing so, the Court has regard to s.4AA of the Crimes Act 1914 (Cth) as that section provided at the relevant time. Here, s.4AA stated that a penalty unit was $210. Accordingly:
a)the maximum penalty that can be imposed on the first respondent is $31,500; and
b)the maximum penalty that can be imposed on the second respondent is $6,300.
The maximum penalty is used as a “yardstick” with the maximum amount being reserved for only the most severe circumstances: Mornington Inn v Jordan [2008] FCAFC 70 at [41]-[46] (“Mornington Inn”).
Here, there is only a single contravention. In those circumstances it is unnecessary to consider s.557 of the Act or the need to “group” contraventions.
Accordingly, the Court must make an objective assessment of the circumstances and determine an appropriate penalty to be imposed. To assist the Court in determining an appropriate penalty, the Court may have regard to a variety of factors and circumstances. While there are no fixed factors, and the Court ought not adopt a “checklist” approach, the following factors are accepted as relevant to the Court’s task in relation to proceedings of this sort:
a)the nature and extent of the conduct which led to the breaches;
b)the circumstances in which that conduct took place;
c)the nature and extent of any loss sustained as a result of those breaches;
d)whether the breaches were distinct or arose out of one course of conduct;
e)the size of the business and the enterprise involved;
f)whether or not the breaches were deliberate;
g)whether the party committing the breach had exhibited contrition, taken corrective action and cooperated with enforcement authorities;
h)the need to ensure compliance with minimum standards by provision of effective means of investigation; and
i)the need for specific and general deterrence.
(Kelly v Fitzpatrick [2007] FCA 1080)
Critically, the Court must bear in mind that civil penalties are not intended to serve a retributive function: Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46 at [59]. Instead, as articulated by the Full Federal Court in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113 (“ABCC”) at [98]:
Whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty is primarily, if not wholly, protective in promoting the public interest in compliance: Trade Practices Commission v CSR Ltd [1990] FCA 521; (1991) ATPR 41-076 at 52,152 [42]; Commonwealth v Director, FWBII at [55] (per French CJ, Kiefel, Bell, Nettle and Gordon JJ). The principal object of a pecuniary penalty is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene; both specific and general deterrence are important: Chemeq at [90]; Ponzio at [93]. A pecuniary penalty for a contravention of the law must be fixed with a view to ensuring that the penalty is not to be regarded by the offender or others as an acceptable cost of doing business: Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 at 659 [66]; Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; (2012) 287 ALR 249 at 265 [62]-[63]…
The Court should also consider the penalty “proposed” by the applicant.
Here, the applicant proposes that a penalty in the region of 50 to 60 per cent should be ordered against each of the respondents. This amounts to a penalty:
a)between $15,750 and $18,900 or the first respondent; and
b)between $3,150 and $3,780 for the second respondent.
Having regard to all of the above, the Court will determine an appropriate penalty.
The final task for the Court is to examine for “one final time” whether the penalty arrived at “appears to be wrong” and to ensure that the proposed penalty is not oppressive. This is described as the “totality principle” in Mornington Inn at [42] as follows:
…the application of the totality principle…is a final check to be applied to ensure that a final, total or aggregate, penalty is not unjust or out of proportion to the circumstances of the case.
Consideration
On the facts of this case, the Court considers the following factors to be relevant to this matter and will consider each in turn:
a)the nature, circumstances and extent of the contravention and the loss/consequences that arose from it;
b)the size and history of the first respondent as a business;
c)the degree of contrition shown, corrective action taken and cooperation demonstrated;
d)the need to ensure compliance with minimum standards; and
e)the need for specific and general deterrence.
The nature, circumstances and extent of the contravention and the loss/consequences that arose from it
Section 716 of the Act provides as follows:
(1) This section applies if an inspector reasonably believes that a person has contravened one or more of the following:
(a) a provision of the National Employment Standards;
(b) a term of a modern award;
…
Giving a notice
(2) The inspector may, except as provided by subsection (4), give the person a notice requiring the person to do either or both of the following within such reasonable time as is specified in the notice:
(a) take specified action to remedy the direct effects of the contravention referred to in subsection (1);
(b) produce reasonable evidence of the person's compliance with the notice.
…
Relationship with civil remedy provisions
(4A)An inspector must not apply for an order under Division 2 of Part 4-1 in relation to a contravention of a civil remedy provision by a person if:
(a) the inspector has given the person a notice in relation to the contravention; and
(b) either of the following subparagraphs applies:
(i) the notice has not been withdrawn, and the person has complied with the notice;
(ii) the person has made an application under section 717 in relation to the notice that has not been completely dealt with.
Note:A person other than an inspector who is otherwise entitled to apply for an order in relation to the contravention may do so.
(4B)A person who complies with a notice in relation to a contravention of a civil remedy provision is not taken:
(a)to have admitted to contravening the provision; or
(b)to have been found to have contravened the provision.
Person must not fail to comply with notice
(5) A person must not fail to comply with a notice given under this section.
Note:This subsection is a civil remedy provision (see Part 4-1).
(6) Subsection (5) does not apply if the person has a reasonable excuse.
Section 716 was enacted to provide an alternative to litigation. In effect, s.716 is an informal mechanism by which the applicant can undertake its functions pursuant to s.682 of the Act and seek compliance with minimum entitlements without having to commence court proceedings.
Section 716 is beneficial for all parties involved. It allows the applicant to carry out its statutory function and remedy potential contraventions of the Act. It provides the employer (or alleged contravener) the opportunity to rectify any contraventions without any admission or finding of liability.
Here, the Notice was issued on 9 September 2019. It sought compliance from the respondents by 7 October 2019. In a “follow-up call” on 15 October 2019, the second respondent indicated to the Inspector that the Notice was “sitting on my desk to action. I might do it today”. A “Non-Compliance Notice” was received by the second respondent that same day. He was given seven days to comply.
The respondents have taken no steps to comply or “action” the Notice even though the second respondent told the Inspector on 15 October 2019 that he “might” do so.
This led to the applicant commencing proceedings in this Court on 29 November 2019.
To date, the respondents have not complied with the Notice. That is, the contravention remains ongoing almost one year later.
The circumstances in which the contravention arose were entirely avoidable. The respondents were given ample opportunity to comply with the Notice. Proceedings in this Court were commenced nearly two months after the time in which the first respondent had to comply with the Notice. Compliance with the Notice was not difficult. It was, by all accounts, a straight forward request which did not require any significant resources.
The Court finds the respondents’ rather nonchalant approach to the Notice and their failure to participate in these proceedings to be demonstrative of a complete disregard for their legal obligations. The respondents avoided, and are still consciously avoiding, the workplace obligations they owe to their employees, the applicant and this Court.
The nature, extent and circumstances surrounding the contravention warrant a penalty in the high range.
The applicant submits that the Court can infer that the affected employee suffered a loss in the form of financial hardship as he advised the Inspector that he was “going through a really bad period” and, amongst other things, “almost had to sleep in the street”. This can be attributed to the failure to pay wages (which was the subject of the Notice).
The Court is not unsympathetic to the concerns that arise in relation to the affected employee. However, the loss experienced by the employee is not of significant weight in the context of proceedings such as these. The Court is not considering the underlying contraventions that caused the Notice to be issued. The penalty does not relate to the underlying contraventions. It relates to the failure to comply with the Notice.
Hence, the “loss” that is most relevant in this case is that which relates to the frustration and stultification of the statutory purpose behind s.716 of the Act. As noted above, the purpose of s.716 is to provide an alternative to litigation. That is, it is designed to prevent litigation. Litigation is timely and expensive. It is also not controversial that Court resources are limited and this Court actively promotes alternative resolution methods in order to reduce unnecessary expenditure. Here, that purpose has been systematically undermined.
The extent of the loss warrants a penalty in the mid to high range.
The size and history of the first respondent’s business
In Jordan v Mornington Inn Pty Ltd [2007] FCA 1384 at [99] it was 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.
There is no evidence before the Court as to the first respondent’s financial circumstances or the second respondent’s financial circumstances. There is no indication of whether the first respondent is a “small business”. Hence, there is no evidence of any financial hardship that could justify a reduction in the penalty amount.
In any event, the Court does not consider that the respondents’ financial circumstances excuse or exempt them from the need to address the consequences of their failure to comply with their statutory obligations.
Accordingly, no reduction is appropriate on the basis of the financial position of the respondents alone.
There is no evidence that the respondents have ever been found to have contravened the Act. The evidence before the Court indicates that another employee of the first respondent has made a complaint of a similar nature to that which underlies the Notice in this matter. The Court gives this no weight. It is, at present, no more than an allegation.
As the respondents are “first time contraveners”, the Court will provide a minor reduction in relation to penalty.
Overall, the Court considers the size and history of the first respondent’s business warrants a penalty in the mid-range.
The degree of contrition shown, corrective action taken and cooperation demonstrated
Put simply, the respondents have shown no contrition, taken no corrective action and have demonstrated a lack of cooperation throughout the entire period in which the applicant has been engaging with them.
To summarise:
a)the respondents (being the second respondent on behalf of the first respondent) have given no apology. Nor have they expressed any regret for not having complied with the Notice. Rather, the second respondent has simply indicted that he “just wanted to get this over with”;
b)while the respondents had indicated that they intended to admit to wrongdoing, they were given countless opportunities to do so and did not. Further, as stated above, the intention to admit wrongdoing appears to be for the sole purpose of “getting this over with”. There is nothing to indicate an intention to make changes or take corrective action to ensure that the same thing does not happen again;
c)the respondents’ communications with the applicant represent no more than a series of promising but unfruitful statements about the respondents’ wish to progress the matter. The applicant has constantly acted in good faith and sought to accommodate the respondents by consenting to extensions of time on the basis of those statements. The respondents have never carried through on those statements. This demonstrates a complete lack of cooperation; and
d)the respondents’ failure to participate in these proceedings demonstrates a lack of contrition: Director of Consumer Affairs Victoria v Gibson (No 3) [2017] FCA 1148 at [83]-[84]). Further, their communications with the Court (by way of an email that indicated that they would attend) shows a lack of cooperation and demonstrates a disregard for the need to facilitate the course of justice: Mornington Inn at [76].
On the basis of the above, a penalty in the high range ought to be imposed.
The need to ensure compliance with minimum standards
The respondents’ failure to comply with the Notice demonstrates a disregard for the obligations which arise under the Act. Here, the extent of the evidence with respect to respondents attempt to comply with the Notice is that the second respondent stated that the Notice was “sitting on his desk” and he “might” get to it later that day. This demonstrates a flagrant disregard for the standards that are owed to employees under the Act.
In this regard, the Court considers a penalty in the mid-high range is appropriate.
The need for specific and general deterrence.
Deterrence is a central objective when imposing a penalty. Any contravention will damage the utility and effectiveness of the relevant statutory objectives and must be discouraged.
In relation to general deterrence, in ABCC at [98] the Court stressed:
...In relation to general deterrence, it is important to send a message that contraventions of the sort under consideration are serious and not acceptable: Australian Securities and Investments Commission v Southcorp Ltd (No 2) (2003) 130 FCR 406 at 418 [32].
A contravention of s.716 not only undermines the fundamental purpose of that section (i.e., to avoid litigation and encourage efficiency in the resolution of any identified shortcomings by employers), it also inhibits Fair Work Inspectors and the applicant from carrying out their roles and functions in relation to enforcing the legislation. Contraventions of this sort cannot be encouraged.
The applicant made a submission that the particular industry in which the respondents operate is one that is “notorious” when it comes to the underpayment of staff and that, as such, general deterrence is a significant factor.
Again, the Court is not considering a contravention in relation to the underpayment of staff. It is considering a failure to comply with a Notice. While it may be that the restaurant industry is more often served with notices under s.716, there is nothing to indicate that non-compliance with notices under s.716 is now a “trend” within the restaurant industry.
Nonetheless, the Court does accept that a failure to comply with a Notice must carry meaningful consequences and must not be considered an “alternative” that allows employers to avoid obligations which are the subject of notices.
A penalty in the mid-high range will achieve the required level of general deterrence.
As for specific deterrence, it is often relevant to look at the remedial steps that have been taken to ensure that no contravention will occur in the future: Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union [2008] FCAFC 170 at [37].
Here, no such steps have been taken. In the absence of corrective action and evidence of remedial steps having been taken, the Court cannot be satisfied that, were the same course of events to occur, the respondents would not act in the same way.
Further, the first respondent continues to be a registered company and, inferably, continues to operate. The second respondent still appears to be a Director of the first respondent and there is no indication that he is not responsible for the day-to-day operations of the first respondent.
In light of the above, a penalty in the mid-high range is appropriate.
Assessment of Penalty and Totality
As noted, the applicant submits that a penalty in the range of 50-60 per cent is appropriate.
The Court’s consideration of the factors above accords with the applicant’s proposed penalty range. Most of the factors, when assessed, support a penalty in the mid-high range.
The only mitigating factor that arguably warrants a reduction in penalty is that the respondents are first-time contraveners. However, this does not warrant a significant reduction in penalty. The respondents’ otherwise brazen approach to this proceeding and the events giving rise to it largely overshadow the fact that this is a first-time contravention.
Accordingly, only a two percent reduction is appropriate.
Having taken into account the applicant’s proposed penalty, the reduction discussed immediately above and the Court’s consideration of the relevant factors, the Court concludes that a penalty at 58 per cent of the maximum penalty should be imposed. This amounts to:
a)$18,270 for the first respondent; and
b)$3,654 for the second respondent.
The Court does not consider the penalty amount to be oppressive. It is appropriately fitted to the particular circumstances of this case. In particular, the lack of engagement by the respondents had the effect that much of what would usually warrant consideration for a discount in penalty was not provided. That, however, was a matter for the respondents. They were given every opportunity to participate and did not do so. They must, therefore, bear the consequences of their choices.
The Court does, however, note that the respondents work in the restaurant industry. It is a widely known fact that the COVID-19 pandemic has had an unfavourable impact on this industry. While the extent of the impact in Western Australia is perhaps less severe than in other states, the Court is prepared to allow the respondents a period of 90 days (as opposed to 28 days) to pay the penalties that the Court has imposed.
Supplementary matters
The applicant submits that any penalty should be paid to the Commonwealth of Australia. Section 546(3) allows this to occur. The Court sees no reason why this should not be the case in circumstances where the applicant is a Commonwealth regulator.
Prior to the hearing, the applicant sent a proposed minute of amended orders. In that order, the applicant sought an endorsement of a penal notice on the order against the respondents pursuant to r.29.07 of the Federal Circuit Court Rules 2001 (Cth). The proposed minute asked the Court to “re-make” the orders of 25 August 2020 and whatever penalty orders the Court made and endorse the order with a penal notice. It appears that the applicant “overlooked” the need for an order of this sort on 25 August 2020.
At the hearing, the Court raised with the applicant whether the preferred approach was to amend the orders dated 25 August 2020 to include the endorsement of a penal notice (as per the decision in Director of Consumer Affairs Victoria v Gibson(No 4) [2018] FCA 1868) or whether the Court should vacate the orders of 25 August 2020 and endorse a new order. The applicant indicated that the latter approach would be preferable.
Having reviewed the orders made on 25 August 2020, it is only necessary to vacate orders 3-5 of the orders dated 25 August 2020. The Court will do so.
The form of the penal notice which will be endorsed on these orders is standard (noting the decision in Enforcement, Endorsement and Contempt Practice Note (GPN-ENF)). However, in circumstances where the orders the Court will make do not prohibit the respondents from doing any act, the Court considers that the endorsement need not include paragraph (B) as requested by the applicant. Accordingly, this change will be made.
Conclusion
The first respondent is ordered to pay a pecuniary penalty in the amount of $18,270 to the Commonwealth.
The second respondent is ordered to pay a pecuniary penalty in the amount of $3,654 to the Commonwealth.
Both penalty amounts are to be paid within 90 days of the Court’s orders. The penal notice endorsed on the orders clearly outlines the potential consequences of non-compliance.
I certify that the preceding seventy-eight (78) paragraphs are a true copy of the reasons for judgment of Judge Kendall
Associate:
Date: 16 September 2020
27
12
4