Fair Work Ombudsman v Touchpoint Media Pty Ltd

[2018] FCCA 2615

FEDERAL CIRCUIT COURT OF AUSTRALIA

FAIR WORK OMBUDSMAN v TOUCHPOINT MEDIA PTY LTD & ANOR [2018] FCCA 2615

Catchwords:
INDUSTRIAL LAW – Fair Work Act 2009 – Penalty hearing – failure to pay penalty rates.

Legislation:

Fair Work Act 2009 (Cth)

Cases cited:

Commonwealth ofAustralia v Director, Fair Working Building Industry Inspectorate [2015] HCA 41

Trade Practices Commission v CSR [1990] FCA 521

Applicant: FAIR WORK OMBUDSMAN

First Respondent: TOUCHPOINT MEDIA PTY LTD
(ACN 166 551 373)

Second Respondent: LAURENCE BERNARD WARD

File Number: BRG 570 of 2017

Judgment of: Judge Young

Hearing date: 4 September 2018

Date of Last Submission: 4 September 2018

Delivered at: Brisbane

Delivered on: 4 September 2018

REPRESENTATION

Counsel for the Applicant: Ms Seck

Solicitors for the First Respondent: Self-represented

Solicitors for the Second Respondent: Self-represented

ORDERS

THE COURT DECLARES THAT:

1. The First Respondent contravened the following civil remedy provisions:

   (a)section 45 of the Fair Work Act 2009 (Cth) (FW Act), by failing to pay Zoe McLaughlin, Maggie McKeown, Marian Faa, James Caughlin, Louise Cadell, Miranda Ninnes, Kate Reynolds, Michael Steepe, Aisling Brennan, Anton Rose, Luke Flint and Joel Thomas (Award Employees) the minimum rates of pay as prescribed by clause 14.1 of the Journalists Published Media Award 2010 (Modern Award);

   (b)section 293 of the FW Act, by failing to pay Melissa Yeo and Jessica Demichelis the national minimum wage as prescribed by clause 4.1 of the National Minimum Wage Orders made on 27 June 2014 and 29 June 2015;

   (c)section 44 of the FW Act, by failing to pay the Ms McLaughlin, Ms McKeown, Ms Faa, Mr Caughlin, Ms Cadell, Ms Ninnes, Ms Reynolds, Mr Steepe, Ms Brennan, Mr Rose, Mr Flint, Mr Thomas, Hannah Twiggs, Linda Rattray, Dean Heffernan, Michael Telford, Patricia Beven, Ms Yeo and Ms Demichelis their accrued annual leave entitlements on termination of their employment pursuant to section 90(2) of the FW Act;

   (d)section 45 of the FW Act, by failing to pay the Ms McLaughlin, Ms Mckeown, Ms Faa, Ms Twiggs, Mr Caughlin, Ms Cadell, Ms Ninnes, Ms Reynolds, Ms Rattray, Mr Steepe, Ms Brennan, Mr Rose, Mr Flint, Mr Heffernan, Mr Telford, Mr Thomas, Ms Beven, Kathryn Cygan, Justine Miller, Rebecca Cover and Kathryn Born their superannuation entitlements as prescribed by clause 14.1 of the Modern Award;

   (e)section 323(1)(a) of the FW Act, by failing to pay Ms McLaughlin, Ms McKeown, Ms Faa, Ms Twiggs Mr Caughlin, Ms Cadell, Ms Ninnes, Ms Reynolds, Ms Rattray, Mr Steepe, Ms Brennan, Mr Rose, Mr Flint, Mr Heffernan, Mr Telford, Mr Thomas, Ms Beven, Ms Yeo, Ms Cygan, Ms Miller, Ms Cover, Ms Born and Ms Demichelis (Employees) in full;

   (f)section 323(1)(c) of the FW Act, by failing to pay Ms Faa, Ms McKeown, Mr Flint, Mr Caughlin, Ms Cadell, Mr Thomas, Ms Rattray and Ms Yeo at least monthly;

   (g)section 535(1) of the FW Act, by falling to make and keep pay records for Ms Cygan, Ms Miller, Ms Cover, Ms Born or Ms Demichelis;

   (h)section 535(1) of the FW Act, by failing to make and keep leave records for the Ms McKeown, Ms Faa, Ms Twiggs Mr Caughlin, Ms Cadell, Ms Ninnes, Ms Rattray, Mr Steepe, Ms Brennan, Mr Rose, Mr Flint, Mr Heffernan, Mr Telford, Mr Thomas, Ms Beven, Ms Yeo, Ms Cygan, Ms Miller, Ms Cover, Ms Born and Ms Demichelis;

   (i)section 535(1) of the FW Act, by failing to make and keep termination records for Ms Laughlin, Ms Demichelis, Ms McKeown, Ms Cygan, Ms Faa, Mr Flint, Mr Rose, Mr Caughlin and Ms Yeo;

   (j)regulation 3.44(1) of the Fair Work Regulations 2009 (Cth) (FW Regulations), by making and keeping false or misleading records;

   (k)regulation 3.44(6) of the FW Regulations, by making use of entries in false or misleading records; and

   (l)section 536(1) of the FW Act, by failing to provide pay slips to Ms McLaughlin, Ms Demichelis, Ms McKeown, Ms Cygan, Ms Faa, Mr Flint and Mr Rose.

2. The First Respondent failed to pay Ms Twiggs, Ms Rattray, Mr Heffernan, Mr Telford, Ms Beven, Ms Cygan, Ms Miller, Ms Cover, Ms Born, Ms Demichelis and Ms Yeo for their hours worked pursuant to their safety net contractual entitlements pursuant to section 542(1) of the FW Act.

3. The Second Respondent was involved, pursuant to section 550 of the FW Act, in each of the contraventions committed by the First Respondent as set out in paragraph 1 above.

THE COURT ORDERS THAT:

1. Pursuant to sections 542 and 545(2) of the FW Act, the First Respondent and the Second Respondent, jointly and severally, pay $305,780.65 to the Applicant within 28 days of the Court's orders, to be distributed by the Applicant as follows:

   (a)$7,278.35 to Ms McLaughlin;

   (b)$13,096.36 to Ms McKeown;

   (c)$7,274.30 to Ms Faa;

   (d)$3,678.03 to Ms Twiggs;

   (e)$32,329.99 to Ms Rattray;

   (f)$9,751.33 to Mr Caughlin;

   (g)$36,948.71 to Ms Cadell;

   (h)$2,151.15 to Ms Ninnes;

   (i)$5,515.90 to Ms Reynolds;

   (j)$17,760.87 to Mr Steepe;

   (k)$12,036.43 to Ms Brennan;

   (l)$13,978.60 to Mr Rose;

   (m)$19,151.95 to Mr Flint;

   (n)$4,602.69 to Mr Heffernan;

   (o)$10,161.76 to Mr Telford;

   (p)$48,217.39 to Mr Thomas;

   (q)$7,597.42 to Ms Beven;

   (r)$43,166.66 to Ms Yeo;

   (s)$2,381.63 to Ms Cygan;

   (t)$1,188.08 to Ms Miller;

   (u)$1,872.45 to Ms Cover;

   (v)$2,329.07 to Ms Born; and

   (w)$3,311.53 to Ms Demichelis.

2. Pursuant to section 545(1) of the FW Act, the First Respondent make superannuation contributions on behalf of each of the Employees, to the respective Employee's nominated superannuation fund, in respect of the ordinary time earnings component of the hours worked by the Employees at the relevant superannuation guarantee charge rate prescribed at the date of this order.

3. The First Respondent pay penalties, pursuant to section 546(1) of the FW Act, for its contraventions as set out in paragraph 1 above, fixed in the sum of $220,320.00, except in relation to the contravention of section 323(1)(a) in respect of the Award Employees, Ms Yeo and Ms Demichelis. The penalty in respect of each contravention is set out in the table annexed and marked "A".

4. The Second Respondent pay penalties, pursuant to section 546(1) of the FW Act, for his involvement in the contraventions as set out in paragraph 3 above, fixed in the sum of $44,604.00 except in relation to the contravention of section 323(1)(a) in respect of the Award Employees, Ms Yeo and Ms Demichelis.

5. Pursuant to section 546(3)(a) of the FW Act, each of the Respondents must pay their respective pecuniary penalties to the Commonwealth within 28 days of the Court's orders.

6. Pursuant to section 547(2) of the FW Act, the First Respondent and the Second Respondent jointly and severally pay interest at the applicable prejudgment rate on the amounts payable under order 4 above.

7. Pursuant to section 545(1) of the FW Act, the First Respondent, at its expense, engages a third party with qualifications in accounting or workplace relations to undertake an audit of compliance with the FW Act and the Modem Award on the following terms:

   (a)the audit period will be the period commencing on 1 March and ending 31 August following the date of this order (Audit Period);

   (b)the audit is to be completed within 60 days of the end of the Audit Period (Audit Completion Date);

   (c)the audit will apply to all employees and persons otherwise engaged to perform work for the First Respondent;

   (d)the audit will assess the First Respondent's compliance with the following obligations according to each Employee's classification of work, category of employment and hours worked during the Audit Period:

   (i)wages and work related entitlements under the Modern Award;

   (ii)accrual and payment entitlements under the National Employment Standards in Part 2-2 of the FW Act; and

   (iii)record keeping and pay slip obligations in Division 3 of Part 3-6 of the FW Act and Part 3-6 of the FW Regulations; and

   (e)within 30 days of the Audit Completion Date, the First Respondent provide to the Applicant:

   (i)a copy of the audit report which will include a statement of the methodology used in the audit;

   (ii)a copy of the source materials and records used to conduct the audit; and

   (iii)written details of any contraventions identified in the audit, the steps the First Respondent will take to rectify any identified contravention(s) and by when the rectification will occur.

8. The Applicant have liberty to apply on seven days' notice in the event that any of the preceding orders are not complied with.

Annexure A

Contravention	Penalty
Company	Individual
1	Section 45 - Failure to Pay Minimum Rates under the Award - 60 units	$32,130	$6,426
2	Section 293 - Failure to pay NMWO - 60 units	$32,130	$6,426
3	Section 45 - Failure to pay Annual Leave on Termination - 60 units	$32,130	$6,426
4	Section 45 - Failure to Pay Superannuation - 60 units	$32,130	$6,426
5	Section 323(1)(a) -Failure to Pay in Full - 60 units	$32,130	$6,426
6	Section 323(1)(c) - Failure to Pay at Least Monthly - 60 units	$9,180	$1,836
7	Section 535(1) - Grouped Record Keeping Contraventions - 30 units	$16,065	$3,213
8	Regulation 3.44(1) - Making and Keeping False and Misleading Records - 20 units	$9,180	$1,836
9	Regulation 3.44(6) - Making use of False and Misleading Records - 20 units	$9,180	$1,836
10	Section 536(1) - Failure to provide payslips within one working day - 30 units	$16,065	$3,213
Total	$220,320	$44,064

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT BRISBANE

BRG 570 OF 2017

FAIR WORK OMBUDSMAN

Applicant

And

TOUCHPOINT MEDIA PTY LIMITED
(ACN 166 551 373)

First Respondent

And

LAURENCE BERNARD WARD

Second Respondent

REASONS FOR EX TEMPORE JUDGMENT

1. These reasons for judgment were delivered orally. They have been corrected from the transcript. Grammatical errors have been corrected and an attempt has been made to render the orally delivered reasons amenable to being read.

2. This is a prosecution under the Fair Work Act of the first respondent, Touchpoint Media Proprietary Limited, (“Touchpoint” or “the company”) and a second respondent, Mr Ward. Mr Ward is the director and company secretary of Touchpoint and a major shareholder, holding a, if I recall correctly, 49.5 per cent interest. In any event, he is a major shareholder.

3. Touchpoint is a small to medium media company.  It provides online news, or did provide, online news in rural Queensland.  While the company has not apparently been deregistered, Mr Ward told me from the bar table that it is not presently trading and has no current employees.

4. From about January 2015 to 17 June 2016 Touchpoint employed 23 employees whom it underpaid.  The employees were often young journalism graduates, or journalism or communications graduates, although that does not appear to be the case necessarily with each of the employees.  The underpayments were made up of the following categories:

   a)underpayments under the relevant award, which is the Journalist Published Media Award 2010;

   b)underpayments under the Safety Net Contractual Entitlement, which I understand are essentially simply underpayments of agreed rates between the employer and the employee;

   c)underpayments pursuant to the National Minimum Wage Order;

   d)failure to pay leave entitlements;  and

   e)failure to pay superannuation entitlements.

5. The underpayments in each of these categories total $305,780.65 according to the Statement of Agreed Facts.  It appears from the Statement of Agreed Facts and some of the affidavit material that Touchpoint was in some financial difficulty throughout the period.  Promises were made to employees that unpaid wages would be paid in the near future, with the arrival of an investor.  Some employees appeared to have accepted those assurances. It appears others did not, or ultimately did not, and resigned.

6. The underpaid employees were, as I have mentioned, often young or in their first journalism or communications job.  In some cases, such as with Ms McEwen, they had moved to another town to accept employment.  I accept that some of these employees were vulnerable and eager to obtain a job so as to enter the industry or the profession of journalism.  There is some evidence that Touchpoint especially sought out such employees.  I am satisfied that there was an element of exploitation involved with young employees that would have been less likely to occur with older or more experienced employees.

7. As such, I am satisfied that the experience of employment by Touchpoint, and the consequent serious underpayment of many employees, was a bitter and humiliating experience.  I am satisfied that the experience was one likely to sap the confidence of a young or an inexperienced employee and for that I am satisfied that the respondents share culpability.  Unfortunately, there is no real prospect that the employees will be paid their entitlements.  The company appears to me to have been insolvent, or close to insolvent, throughout the relevant period, in the sense that it was unable to pay its debts, including to its employees, as they fell due.  This is, in my view, a seriously aggravating factor.

8. In July 2016 the Fair Work Ombudsman began to investigate.  In that month an inspector, Ms Barney, requested documents from Touchpoint.  Through a solicitor, Touchpoint replied, providing various documents, including PAYG summaries for a number of the employees.  These documents purported to show that the employees had been properly paid.  The documents were, however, false and misleading.  They were, as I say, provided to the Fair Work Ombudsman in response to a request for documentation.

9. In cross-checking by Ms Barney, the Fair Work inspector, it was revealed that the information was false.  She asked for an explanation and was told, apparently by the solicitor acting for the respondent company, that the documents were not intended to be misleading, but were created in the expectation that the representation in the documents would be made good in future, presuming an investor arrived.  At least that is how I understand the purport of a diary note made by Ms Barney recording a conversation with the solicitor acting for the respondent company.  Of course, the assertion that the representation would be made good did not happen.

10. I am satisfied that this too is an aggravating factor and suggests a lack of contrition by the respondents.  Mr Ward, who appeared for himself today, appears to be the moving force in the company.  He provided some evidence that his health has been poor and was poor at the time.  Now it is said that he was suffering from depression.  However, there is no evidence that this explained his conduct.  He also provided some evidence, in the form of affidavits, from former employees, including two, as I understand it, who had been underpaid, who said that Mr Ward had been a good employer.  Taking into account the conduct that has been admitted, I do not accept that claim.

11. The principles relating to the imposition of civil penalties are set out in a couple of well-known cases, one of which is Commonwealth ofAustralia v Director, Fair Working Building Industry Inspectorate [2015] HCA 41 where it is made clear that civil penalties may be distinguished from criminal penalties which import notions of retribution and rehabilitation. On the other hand, a civil penalty is primarily directed to promoting the public interest in compliance or regulatory compliance. The imposition of a penalty has an important role in economic regulation, protection of minimum standards for employees and promoting fair competition.

12. There is also what is sometimes called a “checklist” referred to in cases such as Trade Practices Commission v CSR [1990] FCA 521. I do not propose to go through each of the criteria in that checklist but I have had regard to it and I am satisfied that the following matters are most relevant in deciding what penalty is appropriate in this case:

    a)There has been a significant underpayment to employees, in some cases tens of thousands of dollars.  There was an underpayment to one of about $32,000, another about $36,000, and another about $48,000, so very significant underpayments and other underpayments of lesser magnitude but still serious.  As I have already observed, it is unlikely that the employees will recover any of that money in my assessment.

    b)The contraventions have taken place over an extended period of time and involve a relatively large number of employees, 23 people.

    c)I am satisfied that the breach or the breaches were deliberate and I also take into account that there is no evidence of any previous breaches.

    d)There has been some degree of significant cooperation between the respondents and the Fair Work Ombudsman in the prosecution.  There has been a Statement of Agreed Facts filed in Court, though whether this is evidence of real contrition as opposed to a convenient saving of cost and expense by the respondent, I am not persuaded.

13. I have been given very little information in the way of information or evidence about the respondents’, particularly Mr Ward’s, financial position.  However, I am satisfied that the overriding factor is the need to ensure compliance with workplace laws, particularly those in issue here designed to protect employees. 

14. While the most serious aspect of the contraventions is the underpayment of employees who, as I say, are not likely to recover any of the underpayments, there are other factors involved:  a failure to keep complete records, including records of leave entitlements, termination entitlements, and a failure to provide payslips.  Obviously the failure to keep records undermines the capacity of employees to pursue their entitlements, and undermines the capacity of the authorities to enforce compliance.  In my view, these are serious breaches as well.

15. I propose to make declarations in terms of the Statement of Agreed Facts where at paragraphs 99-107 there are agreed declarations and agreed orders relating to payment of the underpayments.  I do not propose to make the declarations or the orders at paragraphs 108, 109 or 110 of the Agreed Statement of Facts given that I have been told that the company is not trading. I consider that there is little likelihood of it recommencing trading so I see no utility in those orders.

16. Turning to penalty, the applicant has provided a table of proposed penalties at Annexure A of its Submissions.  I generally accept that those proposals are appropriate. 

17. The proposal of the applicant is that there ought to be a 15 per cent discount on the maximum penalty to recognise the cooperation by the respondents.  As I say, I am not satisfied that that cooperation reflects contrition but I acknowledge that it has certainly saved the applicant considerable trouble and expense in pursuing this prosecution and I consider that a 15 per cent discount is an appropriate one.

18. In relation to the penalty range after that discount, essentially the applicant proposes that for the contraventions relating to underpayment there ought to be both in respect of the company and Mr Ward as an individual, a penalty, as I say, after discount of 70-80 per cent of the maximum.  I consider that range is appropriate, and the figure I propose to impose is at the bottom of that range, so that will be 70 per cent.  So that covers Counts 1 through to 5, if I can call them that.

19. Count 6, which is a breach of section 323(1)(c) of the Fair Work Act, which is a failure to pay at least monthly. I consider that the lower percentage there is correct.

1. Count 7, I accept that the 70 percent is an appropriate percentage.

2. I consider that 40 percent for each of counts 8 and 9, that is breach of regulation 3.44(1) and 3.44(6) of the Fair Work Regulations, is appropriate. There is a degree, I am satisfied, of overlap between those two counts particularly, as I’ve mentioned in the factual recitation, that in a sense the creation of the documents and the use of them by providing them to the inspector was almost a single transaction. I consider that there is a degree of overlap there which I think is adequately reflected in adopting the lower percentage.

3. Count 10 which concerns the failure to provide pay slips, I am satisfied also that the lower percentage is correct there, that is 70 percent. So on my estimation that is, in each case, a total fine imposed on the company of $220,320 and on Mr Ward a penalty of $44,064. There will be 28 days to pay.

I certify that the preceding twenty-two (22) paragraphs are a true copy of the reasons for judgment of Judge Young

Date: 14 September 2018