Fair Work Ombudsman v The Coffee Traders Group Pty Ltd
[2022] FedCFamC2G 350
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v The Coffee Traders Group Pty Ltd [2022] FedCFamC2G 350
File number: SYG 2022 of 2021 Judgment of: JUDGE CAMERON Date of judgment: 12 April 2022 Catchwords: INDUSTRIAL LAW – Compliance Notice – failure to comply – breaches of civil remedy provisions of the Fair Work Act 2009 (Cth) – imposition of pecuniary penalties – relevant considerations. Legislation: Fair Work Act 2009 (Cth) ss 90, 117, 539, 546, 550, 716
Crimes Act 1914 (Cth) s 4AA
Cases cited: Kelly v Fitzpatrick (2007) 166 IR 14 Division: Fair Work Division Number of paragraphs: 30 Date of hearing: 12 April 2022 Place: Sydney Solicitor for the Applicant: Maddocks Counsel for the Respondents: No Appearance by or on behalf of the Respondents ORDERS
SYG 2022 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: THE COFFEE TRADERS GROUP PTY LTD ACN 624 392 678
First Respondent
CHIEN HUANG CHEN
Second Respondent
ORDER MADE BY:
JUDGE CAMERON
DATE OF ORDER:
12 APRIL 2022
THE COURT DECLARES THAT:
1.The first respondent contravened s.716(5) of the Fair Work Act 2009 (Cth) by failing to comply with the compliance notice addressed to the first respondent issued on 19 March 2021.
2.The second respondent was involved, within the meaning of s.550(2) of the Fair Work Act 2009 (Cth), in the contravention by the first respondent of s.716(5) of the Fair Work Act 2009, and is taken to have contravened s.716(5) of the Fair Work Act 2009 by failing to comply with the compliance notice issued on 19 March 2021.
THE COURT ORDERS THAT:
1.The first respondent pay a penalty of $11,322 for its contravention of s.716(5) of the Fair Work Act 2009 (Cth).
2.The second respondent pay a penalty of $2,264.40 for his contravention of s.716(5) of the Fair Work Act 2009 (Cth).
3.The penalties be paid to the Commonwealth within 28 days.
4.The applicant have liberty to apply on seven days’ notice in the event that any of the preceding orders are not complied with.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE CAMERON
INTRODUCTION
This proceeding was brought by the Fair Work Ombudsman (“Ombudsman”) under the Fair Work Act 2009 (Cth) (“FW Act”) in respect of events arising out of underpayment of the first respondent’s employee, Georgia Mercieca. The first respondent (“Coffee Traders Group”) is the operator of a café trading as Coffee Trad3rs [sic] in Kellyville, a suburb of Sydney. The second respondent, Chien Huang Chen, is and at all relevant times was Coffee Trader Group’s sole director and shareholder and responsible for its management.
The Ombudsman alleged that Coffee Traders Group contravened s.716(5) of the FW Act by failing to comply with the requirements of a compliance notice, dated 19 March 2021 (“Compliance Notice”).
When this matter was called on for hearing half an hour ago, there was no appearance by or for the respondents. Part of the evidence relied on today by the Ombudsman is the affidavit of her solicitor, Ms Anderson, sworn 11 April 2022. In that affidavit, Ms Anderson deposes to her office having served upon the respondents’ then-solicitors a copy of the Ombudsman’s outline of submissions and affidavit of 7 March 2022. Ms Anderson further deposes that her office wrote to the respondents later in March, once their solicitors had filed a notice of ceasing to act, informing them of the timetable for their submissions in respect of penalty, as well as of today’s date. A reminder email was sent 11 days later.
It is not absolutely clear from the annexures to Ms Anderson’s affidavit as to which email address the emails to the second respondent, Mr Chen, were sent because the “to:” line of the address on the emails refers only to his name and does not set out the particulars of the email address. Nevertheless, I am willing to infer that the particulars of the email address were indeed the ones which were set out in the notice of ceasing to act, which the respondent’s former solicitors filed on 14 March 2022.
Further, the Court wrote by email to the parties on 7 April 2022 advising the arrangements for today’s hearing. A copy of that letter was also sent by Express Post to the respondents at the address identified in the notice of ceasing to act. In any event, today’s hearing was listed on 2 December 2021, when the respondents were still represented by their solicitors.
In all the circumstances, I am satisfied that the respondents have been made aware of today’s hearing date and the fact they have not appeared, whether electronically or when called outside the Court, should not prevent the matter from proceeding.
RELEVANT LEGISLATION
Section 716 of the FW Act relevantly provides:
716Compliance notices
Application of this section
(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.
(3)The notice must also:
(a) set out brief details of the contravention; and
(b) explain that a failure to comply with the notice may contravene a civil remedy provision; …
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;
…
(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.
(6)Subsection (5) does not apply if the person has a reasonable excuse.
Section 550 of the FW Act provides:
550Involvement in contravention treated in same way as actual contravention
(1)A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.
(2)A person is involved ina contravention of a civil remedy provision if, and only if, the person:
(a) has aided, abetted, counselled or procured the contravention; or
(b) has induced the contravention, whether by threats or promises or otherwise; or
(c) has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d) has conspired with others to effect the contravention.
Section 716(5) of the FW Act is a civil remedy provision: s.539(2) of the FW Act. Pursuant to ss.539(2) and 546(2) of the FW Act, the maximum pecuniary penalty that can be imposed for breach of s.716(5) is 30 penalty units for an individual and 150 penalty units for a body corporate. At all relevant times, a penalty unit was worth $222: s.4AA Crimes Act 1914 (Cth).
STATEMENT OF AGREED FACTS
Background
The parties filed a statement of agreed facts on 17 December 2021, in which they relevantly agreed on the following matters:
(a)the Ombudsman conducted an investigation into Coffee Traders Group in respect of the employment of Ms Mercieca;
(b)from 14 January 2021, Fair Work Inspector (“FWI”) Madeira had carriage of the investigation. She formed the belief that:
(i)Coffee Traders Group employed Ms Mercieca on a part-time basis from 22 July 2018 to 30 June 2019, when her part-time employment was terminated by Coffee Traders Group;
(ii)Coffee Traders Group then employed Ms Mercieca on a casual basis on 1 July 2019 to 7 September 2019;
(iii)the Restaurant Industry Award 2010 (“Award”) applied to Ms Mercieca and she was classified as a Food and Beverage Attendant Grade 2 as defined by sch.B to the Award; and
(iv)on termination of Ms Mercieca’s part-time employment, Coffee Traders Group did not pay her her accrued annual leave entitlement, including annual leave loading, and did not pay her wages in lieu of notice; and
(c)FWI Madeira formed the belief that Coffee Traders Group has contravened the following provisions of the FW Act and of the Award:
(i)section 90(2) of the FW Act by failing to pay Ms Mercieca all accrued but untaken annual leave entitlements on termination of her part-time employment;
(ii)clause 35.2 of the Award by failing to pay Ms Mercieca leave loading of 17.5% on those annual leave entitlements; and
(iii)section 117(2) of the FW Act by failing to pay Ms Mercieca’s wages in respect of a minimum period of notice on termination of her part-time employment.
Compliance Notice
The parties agree that on 19 March 2021, FWI Madeira gave Coffee Traders Group the Compliance Notice. That notice required Coffee Traders Group to:
(a)take the following action by 20 April 2021 to remedy the direct effects of the Contraventions:
(i)identify the number of annual leave hours the Employee would have accrued at the termination of the Employee's part-time employment;
(ii)identify the amount the First Respondent paid to the Employee in respect of annual leave on termination of the part-time employment;
(iii)calculate the amount the First Respondent should have paid to the Employee, inclusive of annual leave loading, in respect of annual leave on termination of the part-time employment;
(iv)make a payment to the Employee of the difference between the amounts in (ii) and (iii) immediately above;
(v)make a record of the information and amounts referred to in (ii) and (iii) and the amount of the payment referred to in (iv) immediately above;
(vi)identify the wages the Employee was entitled to be paid, equal to the period of notice the Employee was entitled to receive;
(vii)identify the amount the First Respondent paid the Employee in lieu of notice of termination of her part-time employment;
(viii)calculate the amount the First Respondent should have paid the Employee in lieu of notice of termination of her part-time employment;
(ix)make a payment of the difference between the amount referred to in (vii) and (viii) directly above;
(x)make a record of the information and amounts referred to in (vii) and (viii) and the amount referred to in (ix) immediately above;
(xi)calculate additional superannuation contributions required by clause 30.2 of the Award in respect of the amounts required to be paid to the Employee at (ix) above;
(xii)pay the additional superannuation contributions referred to in (xi) above to the Employee's superannuation fund; and
(b)produce reasonable evidence to the Applicant of its compliance with the Compliance Notice by 27 April 2021, by producing:
(i)a schedule that sets out in respect of the Employee the information referred to at 12(a)(v), 12(a)(x) and the additional superannuation contributions calculated at 12(a)(xi); and
(ii)proof that full payment has been made to the Employee.
Failure to comply with the Compliance Notice
The parties agreed that Coffee Traders Group failed on or before 20 April 2021, or before the commencement of this proceeding, to take the actions set out in the Compliance Notice and failed to produce evidence of compliance by 27 April 2021, or before the commencement of this proceeding. It was agreed that Coffee Traders Group contravened s.716(5) of the FW Act and did not have a reasonable excuse under s.716(6).
Accessorial liability of the second respondent
The parties agreed that Mr Chen was responsible for ensuring that Coffee Traders Group complied with the Compliance Notice. They also agreed that Mr Chen knew that the Compliance Notice had been given to Coffee Traders Group, was aware that Coffee Traders Group had failed to comply with it and was an intentional participant in that failure.
Contravention
The parties agreed that, as a consequence, Mr Chen:
(a)was involved within the meaning of s.550(2) of the FW Act, in the contravention by Coffee Traders Group of s.716(5) of the FW Act; and
(b)pursuant to s.550(1) of the FW Act, is taken to have contravened s.716(5) FW Act.
Rectification
The parties agreed that on 22 November 2021, Coffee Traders Group paid $1,014.64 to Ms Mercieca and on 14 December 2021 also paid $146.20 to her superannuation fund. The parties agree that there is no amount outstanding in respect of the Compliance Notice.
Declarations
The parties jointly sought declarations to the effect that:
(a)Coffee Traders Group contravened s.716(5) of the FW Act by failing to comply with the Compliance Notice issued on 19 March 2021; and
(b)Mr Chen was involved, within the meaning of s.550(2) of the FW Act in Coffee Traders Group’s contravention of s.716(5) and is taken to contravened it himself by failing to comply with the Compliance Notice.
In light of the admissions made in the statement of agreed facts, I am satisfied that it is appropriate to make the declarations sought.
APPLICANT’S EVIDENCE
The Ombudsman relied upon the affidavit of her solicitor Ms Anderson, sworn 7 March 2022, who relevantly deposed that on:
(a)29 September 2021 she instructed a solicitor in her employ to send an email to the respondents which attached a letter providing them with a further opportunity to rectify the non-compliance with the Compliance Notice, and notified them that if they failed to comply, the Ombudsman intended to commence proceedings; and
(b)1 March 2022 her assistant ordered a current company extract for Coffee Traders Group from the ASIC which showed that it remained registered and that Mr Chen is the sole director and shareholder of Coffee Traders Group.
CONSIDERATION
Section 716 of the FW Act provides that when contravention of a prescribed instrument is identified, a compliance notice may be employed to call upon the contravener to remedy the effects of the contravention. In broad terms, if that is done and demonstrated, such compliance prevents the Ombudsman from applying for penalties, compensation, interest or other relevant orders: s.716(4A). Also, such compliance does not operate as an admission or as a finding of contravention: s.716(4B). It is apparent that the scheme of compliance notices is an efficient way of addressing contraventions of the FW Act, presumably relatively minor ones, simply and cheaply for all involved.
In that connection, despite Coffee Traders Group having contravened its obligations to pay Ms Mercieca’s accrued annual leave entitlement, leave loading, wages in lieu of notice and related superannuation contributions, this proceeding is concerned with the two individual contraventions of s.716(5) of the FW Act that arise out of Coffee Traders Group’s failure to comply with the Compliance Notice and out of Mr Chen’s status as an accessory to that failure. The maximum penalty for their contraventions are $33,300 and $6,660 respectively. When determining the appropriate penalty to impose, regard should be had to all of the circumstances of the case, guided by the various discretionary considerations discussed in authorities such as Kelly v Fitzpatrick (2007) 166 IR 14, in order to arrive at a single result that it is an instinctive synthesis of those various factors.
That nature, extent and circumstances of the conduct which led to the breaches
The contraventions underlying the issue of the Compliance Notice, as agreed by the parties, were set out earlier in these reasons. Upon service of the Compliance Notice the respondents were afforded the opportunity to address those matters. A further opportunity to address those contraventions was afforded before this proceeding was commenced. Because the respondents did not address the underpayment of Ms Mercieca, the Ombudsman was put to the trouble and expense of bringing this proceeding and it was only after she did so that the amounts owing to, or in respect of, Ms Mercieca were paid.
The nature and extent of any loss or damage sustained as a result of the breaches
Ms Mercieca had been entitled to have those payments made promptly upon the termination of her permanent part-time position on 30 June 2019. Notwithstanding the service of the compliance notice in March 2021, which required corrective action to be taken by 20 April 2021, and being given a further opportunity to do so in September 2021, the underpayments were not addressed until November 2021 in respect of the amounts owed to Ms Mercieca, personally, and December 2021, in respect of Coffee Traders Group’s related superannuation obligation.
Further, in the context of a compliance notice, the public expense that has been incurred by reason that the respondents did not act on that notice as they should have, and that it has been necessary for the Ombudsman to bring this proceeding, must not be overlooked.
The size of the business enterprise involved
There is no evidence as to the size of Coffee Traders Group but I presume that it is not a larger operation. This is not a situation where the availability or lack of availability of resources is likely to have been of any significance for the contravention. Because the Compliance Notice made plain what steps were required, it is not a question of ignorance of the requirements of industrial laws and instruments.
Deliberateness of the breaches and compliance with minimum standards
The Ombudsman submitted, and I agree, that the respondents’ conduct in failing to comply with the Compliance Notice demonstrated a disregard for their obligations under the FW Act. I also agree with the Ombudsman’s submissions that the respondents’ failure to comply with the Compliance Notice undermines the FW Act’s enforcement framework and the safety net of entitlements it is designed to protect, and that the efficacy of statutory notices such as compliance notices will be hindered or made redundant if recipients perceive that a failure to comply carries no meaningful consequences.
Whether the party committing the breach had exhibited contrition
It is to be noted that the respondents, who are no longer represented, have not placed before the Court any evidence of contrition. True it is that the underpayments have been addressed but it is fair to infer that that occurred only because this proceeding was commenced and the Ombudsman thereby demonstrated to the respondents beyond a shadow of a doubt that she meant business. In any event, late observation of a statutory obligation is just that and, without more, not a manifestation of contrition.
Of greater significance is that, having made the payments, the respondents then co-operated in the filing of a statement of agreed facts, which has contributed to a quicker and less costly conclusion to this matter than would otherwise have been the case. I am prepared to accept the Ombudsman’s submission that a 15% discount on penalty should be allowed for that.
The need for specific and general deterrence
Absent any evidence to the contrary, I presume that Coffee Traders Group continues to trade while the evidence indicates that Mr Chen remains involved with that company. Some element for specific deterrence is therefore appropriate. The penalty in this case has to be set at a level which indicates the Court’s displeasure with the contravening conduct and which acts as a deterrent to its repetition by the respondents, or anyone else minded to repeat it.
PENALTIES
Given the value and usefulness of the scheme of compliance notices, observance of which avoids the need for litigation or the imposition of any penalties, the penalties in this case will be set at a level which demonstrates that there are serious consequences for failing to observe their requirements.
I accept the Ombudsman’s submission that penalties at 40% of the maximum, discounted by 15%, are appropriate in this case. There will be orders that Coffee Traders Group pays a penalty to the Commonwealth of $11,322 and that Mr Chen pays a penalty to the Commonwealth of $2,264.40. Those penalties are to be paid within 28 days. The Ombudsman will have liberty to apply in the event that those payments are not made as ordered.
I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Cameron. Associate:
Dated: 11 May 2022
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