Fair Work Ombudsman v Trytell
[2013] FMCA 100
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v TRYTELL | [2013] FMCA 100 |
INDUSTRIAL LAW – Fair Work – Agreed Statement of Facts – admission of liability – accessorial liability – agreed penalty – consideration as to whether agreed penalty is within “permissible range”.
| Crimes Act 1914 (Cth) 4AA(1) Liquor and Allied Industries Catering Cafe Restaurant etc (Australian Capital Territory) Award 1998 (ACT) Cls 16.3, 16.4, 28.1, 28.2, 29.1.1, 29.1.2, 29.2.1, 37.7 |
| ACCC v Black On White Pty Limited (2001) 110 FCR 1 Australian Ophthalmic Supplies Limited v McAlary-Smith (2008) 165 FCR 560 Finance Sector Union v Commonwealth Bank of Australia (2006) 224 ALR 467 Kelly v Fitzpatrick (2007) 166 IR 14 Markarian v the Queen (2005) 228 CLR 357 Minister for Industry Tourism and Resources v Mobil Oil Australia Pty Limited (2004) ATPR ¶41-993 Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 Ponzio & B & P Caelli Constructions Pty Limited (2007) 158 FCR 543 Torpia v Empire Printing (2009) 188 IR 306 Wells v Locarno Management Pty Limited (2008) FCA 1034 |
| Applicant: | FAIR WORK OMBUDSMAN |
| Respondent: | DAMIEN MICAH TRYTELL |
| File Number: | CAG 47 of 2012 |
| Judgment of: | Neville FM |
| Hearing date: | 22 November 2012 |
| Delivered at: | Canberra |
Delivered on: | 8 March 2013 |
REPRESENTATION
| Counsel for the Applicant: | Ms J Dennis |
| Solicitors for the Applicant: | Office of Fair Work Ombudsman |
| Counsel for the Respondent: | Dr C Ward & Mr J Macken |
| Solicitors for the Respondent: | Arnold Bloch Leibler |
DECLARATIONS and ORDERS:
Manuka Food Pty Ltd (ACN 114 747 643) (Manuka) contravened the following civil penalty provisions:
(a)subsection 185(2) of the Workplace Relations Act 1996 (WR Act) and sub-item 5(1), Part 3, Schedule 9 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Transitional Act) by failing to pay the following eighteen (18) employees the relevant casual loading:
(i) Peter James Adamson;
(ii) Andrew James Fedorovitch;
(iii) Tim Heaney;
(iv) Cassandra Schlitz;
(v) Kristy Greenwell;
(vi) Rykie Hill-Wright;
(vii) Pei Koon Lee;
(viii) Chris McClung;
(ix) Sally Johnston;
(x) Daniel Thomas;
(xi) James Wilcock;
(xii) Maximillian Gurtler;
(xiii) Amelia Schlanger;
(xiv) Rhys Spiteri;
(xv) Sarah Jane Bryant;
(xvi) Harin Renasinghe;
(xvii) Hayley Nichols; and
(xviii) Caroline McGrath.
(b)subsection 232(2) of the WR Act and item 2 of Part 2 of Schedule 4 of the Transitional Act by failing to accrue annual leave for the following five (5) employees:
(i) Viewek Lai Dharme;
(ii) Xiao Yu Zhang;
(iii) Nazul Huda;
(iv) Pru Fuller; and
(v) Yuan (Silv) Liang.
(c)clauses 16.3 to 16.4 of the Liquor and Allied Industries Catering, Cafe, Restaurant, Etc. (Australian Capital Territory) Award 1998 [AP787016] (Common Rule Award) and item 2 of Part 2 of Schedule 3 to the Transitional Act by failing to pay the following eighteen (18) employees the relevant pro-rata annual leave:
(i) Peter James Adamson;
(ii) Andrew James Fedorovitch;
(iii) Tim Heaney;
(iv) Cassandra Schlitz;
(v) Kristy Greenwell;
(vi) Rykie Hill-Wright;
(vii) Pei Koon Lee;
(viii) Chris McClung;
(ix) Sally Johnston;
(x) Daniel Thomas;
(xi) James Wilcock;
(xii) Maximillian Gurtler;
(xiii) Amelia Schlanger;
(xiv) Rhys Spiteri;
(xv) Sarah Jane Bryant;
(xvi) Harin Renasinghe;
(xvii) Hayley Nichols; and
(xviii) Caroline McGrath.
(d)clauses 28.1 – 28.2 of the Common Rule Award and item 2 of Part 2 of Schedule 3 to the Transitional Act by failing to pay the following eight (8) employees the relevant overtime rates for overtime worked:
(i) Francois Morf;
(ii) Viewek Lal Dharme;
(iii) Xiao Yu Zhang;
(iv) Jared Codd;
(v) Dennis Butcher;
(vi) Nazul Huda;
(vii) Pru Fuller; and
(viii) Yuan (Silv) Liang.
(e)clauses 29.1.1 – 29.1.2 of the Common Rule Award and item 2 of Part 2 of Schedule 3 to the Transitional Act by failing to pay the following eight (8) employees the relevant penalty rates for weekend work performed:
(i) Francois Morf;
(ii) Viewek Lal Dharme;
(iii) Xiao Yu Zhang;
(iv) Jared Codd;
(v) Dennis Butcher;
(vi) Nazul Huda;
(vii) Pru Fuller; and
(viii) Yuan (Silv) Liang.
(f)clause 29.2.1 of the Common Rule Award and item 2 of Part 2 of Schedule 3 to the Transitional Act by failing to pay the following eight (8) employees the relevant penalty rates for work performed between 7pm and 7am Monday to Friday:
(i) Francois Morf;
(ii) Viewek Lal Dharme;
(iii) Xiao Yu Zhang;
(iv) Jared Codd;
(v) Dennis Butcher;
(vi) Nazul Huda;
(vii) Pru Fuller; and
(viii) Yuan (Silv) Liang.
(g)clause 37.7 of the Common Rule Award and item 2 of Part 2 of Schedule 3 to the Transitional Act by failing to pay the following six (6) employees the relevant penalty rates for work performed on Public Holidays:
(i) Viewek Lal Dharme;
(ii) Xiao Yu Zhang;
(iii) Dennis Butcher;
(iv) Nazul Huda;
(v) Pru Fuller; and
(vi) Yuan (Silv) Liang.
The Respondent was involved in each of the contraventions committed by Manuka set out in Order (1) above.
The Respondent pay penalties pursuant to subsection 719(1) of the WR Act and subsection 546(1) of the Fair Work Act 2009 (FW Act) to a total amount of $16,170, which is made up of the following amounts:
(a)$2,310 in respect of the contravention of subsection 185(2) of the WR Act and sub-item 5(1), Part 3, Schedule 9 of the Transitional Act by failing to pay the eighteen (18) employees listed at Declaration (1)(a) above the relevant casual loading;
(b)$2,310 in respect of the contravention of subsection 232(2) of the WR Act and item 2 of Part 2 of Schedule 4 of the Transitional Act by failing to accrue annual leave for the five (5) employees listed at Declaration (1)(b) above;
(c)$2,310 in respect of the contravention of clauses 16.3 to 16.4 of the Common Rule Award and item 2 of Part 2 of Schedule 3 to the Transitional Act by failing to pay the eighteen (18) employees listed at Declaration (1)(c) above;
(d)$2,310 in respect of the contravention of clauses 28.1 – 28.2 of the Common Rule Award and item 2 of Part 2 of Schedule 3 to the Transitional Act by failing to pay the eight (8) employees listed at Declaration (1)(d) above the relevant overtime rates for overtime worked;
(e)$2,310 in respect of the contravention of clauses 29.1.1 – 29.1.2 of the Common Rule Award and item 2 of Part 2 of Schedule 3 to the Transitional Act by failing to pay the eight (8) employees listed at Declaration (1)(e) above the relevant penalty rates for weekend work performed;
(f)$2,310 in respect of the contravention of clause 29.2.1 of the Common Rule Award and item 2 of Part 2 of Schedule 3 to the Transitional Act by failing to pay the six (6) employees listed at Declaration (1)(f) above the relevant penalty rates for work performed between 7pm and 7am Monday to Friday; and
(g)$2,310 in respect of the contravention of clause 37.7 of the Common Rule Award and item 2 of Part 2 of Schedule 3 to the Transitional Act by failing to pay the six (6) employees listed at Declaration (1)(g) above the relevant penalty rates for work performed on Public Holidays.
Pursuant to section 841 of the WR Act and subsection 546(3) of the FW Act that the Respondent pay the penalty amount set out in Order (3) above to the Fair Work Ombudsman. The Fair Work Ombudsman will:
(a)pay the penalty amount set out in Order (3) above to the employees according to the following table; or
(5) Employee Name
(6) Underpayment amount
(7) Percentage of total underpayment
(8) Amount of penalty (based on proportion of underpayment)
(9) Peter James Adamson (10) $895.31 (11) 1.76% (12) $283.89 (13) Andrew James Federovitch (14) $637.23 (15) 1.25% (16) $202.05 (17) Tim Heaney (18) $174.12 (19) 0.34% (20) $55.21 (21) Cassandra Schlitz (22) $397.82 (23) 0.78% (24) $126.14 (25) Kristy Greenwell (26) $579.90 (27) 1.14% (28) $183.88 (29) Rykie Hill-Wright (30) $2,037.37 (31) 4.00% (32) $646.02 (33) Pel Koon Lee (34) $1,582.23 (35) 3.10% (36) $501.70 (37) Chris McClung (38) $694.65 (39) 1.36% (40) $220.26 (41) Sally Johnston (42) $215.49 (43) 0.42% (44) $68.33 (45) Daniel Thomas (46) $1,266.42 (47) 2.48% (48) $401.56 (49) James Willcock (50) $209.19 (51) 0.41% (52) $66.33 (53) Maximillian Gurtler (54) $667.69 (55) 1.31% (56) $211.71 (57) Amelia Schlanger (58) $2,838.06 (59) 5.57% (60) $899.90 (61) Rhys Spiteri (62) $526.30 (63) 1.03% (64) $166.88 (65) Sarah Jane Bryant (66) $65.48 (67) 0.13% (68) $20.76 (69) Harin Renasinghe (70) $5,828.15 (71) 11.43% (72) $1,848.01 (73) Hayley Nichols (74) $915.77 (75) 1.80% (76) $290.38 (77) Caroline McGrath (78) $5,651.43 (79) 11.08% (80) $1,791.97 (81) Francois Morf (82) $2,780.38 (83) 5.45% (84) $881.61 (85) Viewek Lai Dharme (86) $2,540.56 (87) 4.98% (88) $805.57 (89) Xiao Yu Zhang (90) $1,971.39 (91) 3.87% (92) $625.09 (93) Jared Codd (94) $6,848.96 (95) 13.43% (96) $2,171.69 (97) Dennis Butcher (98) $2,004.25 (99) 3.93% (100) $635.51 (101) Nazul Huda (102) $3,497.04 (103) 6.86% (104) $1,108.85 (105) Pru Fuller (106) $3,318.10 (107) 6.51% (108) $1,052.11 (109) Yuan (Silv) Liang (110) $2,852.79 (111) 5.59% (112) $904.57 (b)if the Fair Work Ombudsman is unable to pay any amount set out in the table at Order (4) above to any employee, because the Fair Work Ombudsman does not know the employee’s whereabouts, pay this remaining amount to the Consolidated Revenue Fund of the Commonwealth.
The Respondent pay the amount in penalty to the Fair Work Ombudsman within forty-two (42) days of order for payment.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT CANBERRA |
CAG 47 of 2012
| FAIR WORK OMBUDSMAN |
Applicant
And
| DAMIEN MICAH TRYTELL |
Respondent
REASONS FOR JUDGMENT
The Court has before it an application for orders in relation to various admitted breaches of the Workplace Relations Act 1996 (“the WR Act”), the Fair Work Act 2009 (“the FW Act”), the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (“the Transitional Act”) and the Liquor and Allied Industries Catering Cafe Restaurant etc (Australian Capital Territory) Award 1998 (“the Award”).
The matter relates to the underpayment of wages and entitlements to 26 employees which amounts to $50,996.08. The employees were working, at the time in question, in a restaurant trading under the name of the “Mecca Bah”, which was operated by Manuka Food Pty Ltd (“Manuka”) in which the Respondent, Mr Trytell, was the “controlling mind”.
As noted, the Respondent has admitted liability, and the parties have agreed on the proposed penalty. The issue before the Court is whether the orders proposed in relation to penalty should be made. It is submitted by both parties that, while it is in the Court’s discretion to determine the penalty to be imposed, it has been held, both by Full Court authority such as in Minister for Industry Tourism and Resources v Mobil Oil Australia Pty Limited (2004) ATPR ¶41-993 and, more recently, by Jessup J in Wells v Locarno Management Pty Limited (2008) FCA 1034, that the Court should not disturb the parties’ agreement unless it falls outside the permissible range.
For the reasons that follow, in my view, the penalty agreed upon by the parties is within the permissible range. In accordance with principle, in my view, the agreed penalty is neither manifestly inadequate nor manifestly excessive.[1] Accordingly, declarations and orders should be made as sought and as agreed.
[1] See the comments of Jessup J in Ponzio & B & P Caelli Constructions Pty Limited (2007) 158 FCR 543 at [129].
The Applicant relies upon three affidavits (with certain exceptions noted): those of - Glen Andrew Forster, sworn 18 October 2012, Phillip Benjamin Marsh, sworn 19 October 2012, and Fiona Louise Aldridge, sworn 22 October 2012.
For the Respondent’s part (again with certain exceptions in the affidavit material that have been agreed and noted in documents put before the Court), he relies upon the sole affidavit which he swore on 3 October 2012.
Both parties have filed detailed written submissions. There is also a Statement of Agreed Facts, which was filed on 27 September 2012. The following matters, as is commonly done, both by way of factual background and otherwise, are taken in large measure from the detailed written submissions filed on behalf of the Applicant, many of which are reflected in and/or draw upon the affidavit material to which reference has been made, as well as the Statement of Agreed Facts (“the Statement”).
Background Information
The underpayments arose because Manuka paid the employees pursuant to what purported to be, and what was held out to be, an Australian Workplace Agreement (“AWA”). The agreement contained rates of pay that were insufficient to satisfy the employees’ entitlements under the Award. The agreement which was put in place by Manuka was not capable of overriding the entitlements under the Award.
As already mentioned, the Respondent has admitted liability in relation to each of the contraventions that are outlined in the submissions and the detail of which is noted in annexures to the Statement.
The Respondent, Mr Trytell, was at all material times the sole director and secretary of Manuka and was responsible for the day-to-day management, direction and control of Manuka’s operations and business. The restaurant operated by Manuka, Mecca Bah, was part of a group with two other restaurants located in Victoria and Queensland. Manuka employed approximately 87 employees at the restaurant in Canberra at various times, even though the Respondent contended in his affidavit material that the number was significantly less.
On or about 3 December 2009, Manuka became the subject of an audit and investigation by the Applicant. During that investigation the Applicant reviewed the terms and conditions of employment for Manuka’s employees for the period from 25 May 2009 to 27 December 2009. During that audit period Manuka employed the 26 employees listed in paragraph 8 of the Statement on either a full-time, part‑time or casual basis. Eleven of the employees were junior employees.
The employees were employed by Manuka as either kitchen staff, wait staff, supervisor or chef de partie. The employees were paid in accordance with identical, and invalid, documents named, “Mecca Bah Canberra workplace agreement for hourly paid staff” and “Australian Workplace Agreement”. The audit and investigation revealed various contraventions of Australian workplace laws because the employees were paid flat rates of pay in accordance with Manuka’s purported Australian Workplace Agreement but were not paid their entitlements under the WR Act and the Award.
It was submitted on behalf of the Applicant, and I accept it, that in the light of the facts that have been briefly outlined, and which are set out in more detail in the Statement, the Respondent’s conduct falls into the category of careless disregard for Manuka’s statutory obligations, as opposed to a more serious characterisation.
On or about 16 September 2011, Manuka went into liquidation. As a result the Applicant was unable to commence proceedings against Manuka to seek orders to recover the employees’ outstanding entitlements which remain unpaid.
Contraventions
By a statement of claim filed on 27 June 2012, the Applicant alleged that the Respondent contravened the following provisions (emphasis added):
a)subsection 185(2) of the WR Act and sub-item 5(1), Part 3, Schedule 9 of the Transitional Act by failing to pay the eighteen (18) casual employees, a guaranteed casual loading;
b)subsection 232(2) of the WR Act and item 2 of Part 2 of Schedule 4 of the Transitional Act by failing to accrue annual leave for six (6) of the full-time and part-time employees;
c)clause 16.3 of the Award and sub-item 2(1) of Schedule 16 to the Transitional Act by failing to pay eighteen (18) casual employees pro-rata annual leave;
d)clauses 28.1 and 28.2 of the Award and sub-item 2(1) of Schedule 16 to the Transitional Act by failing to pay overtime rates to eight (8) of the employees;
e)clauses 29.1, 29.1.1 and 29.1.2 of the Award and sub-item 2(1) of Schedule 16 to the Transitional Act by failing to pay the eight (8) full-time and part-time employees penalty rates for weekend work performed;
f)clauses 29.2, 29.2.1 and 29.2.2 of the Award and sub-item 2(1) of Schedule 16 to the Transitional Act by failing to pay the eight (8) full-time and part-time employees penalty rates for work performed between 7pm and 7am Monday to Friday; and
g)clause 37.7 of the Award and sub-item 2(1) of Schedule 16 to the Transitional Act by failing to pay eight (8) full-time and part-time employees penalty rates for work performed on Public Holidays.
On 26 September 2012, the Respondent signed the Statement and admitted his liability in relation to each of the contraventions to which I have just referred.
Relevant Legislation
In the period from 1996 until 26 March 2006, in addition to the requirements set out in the submissions, an AWA had to pass the “no disadvantage test” to operate validly. For an AWA to pass the no disadvantage test once it was lodged, its terms would be compared to the terms of the relevant Award that would have ordinarily applied to that employee. The AWA would be approved only if, on balance, it did not reduce the overall terms and conditions of employment of those employees that would have applied under the relevant Award and relevant State or Commonwealth legislation.[2]
[2] Amongst other places see s.17XA(2) WR Act.
In the period from 7 May 2007 until 28 March 2008, in addition to the requirements set out earlier in the submissions of the Applicant, an AWA had to pass the fairness test to operate validly. For this to occur, once it was lodged, its terms would be compared to the terms of the relevant Award that would have ordinarily applied to that employee. The AWA would be approved only if, on an overall basis, it provided conditions as beneficial as in the relevant Award. If an AWA passed the fairness test, a receipt would issue notifying the parties of it and then the AWA would either start to operate or continue to operate.
If an AWA did not pass the fairness test, the employer would be asked to vary the AWA, for example, by increasing the rate of pay. If this direction was not complied with, then the AWA would cease to operate.[3]
[3] See further ss.348(2) & 349 WR Act.
From 28 March 2008, AWAs could no longer be created. Manuka’s purported AWA was not legally capable of overriding the entitlements of the employees under the WR Act and under the Award because the procedures for making an AWA were not followed. These included that Manuka did not lodge the documents for approval, and in respect of the employees that commenced their employment at any time after 28 March 2008, which applied to at least four employees, AWAs could not be made in relation to them.
Provisions in Relation to Liability
It is undoubted that if the Court finds that liability is proven, the Court has power to impose pecuniary penalties in relation to contraventions of both the WR Act and the FW Act.[4] Accordingly, the Respondent is taken to be assessed as though he, personally, contravened the relevant sections of the WR Act and the FW Act.
[4] S.728 WR Act and s.550 FW Act both provide that a person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.
Section 719(4) of the WR Act, and s.539(2), (by virtue of s.546 (2)) of the FW Act, prescribe the maximum penalties that may be imposed by this Court for each contravention of the Acts to which I have referred. In the case of an individual, this amounts to 60 penalty units.[5] Section 4(1) of the WR Act and s.12 of the FW Act provide that “penalty unit” has the same meaning as in the Crimes Act 1914 (Cth).
[5] See s.546(2) FW Act.
Section 4AA(1) of the Crimes Act defines penalty unit to be “$110”. Therefore the maximum penalty that may be imposed by the Court for each breach of the WR Act and the FW Act is $6,600 for each contravention of an applicable provision or civil remedy provision by the Respondent as an individual.
Provisions & Considerations regarding Penalty
In relation to “penalty”, I note the following.
The first step for the Court is to identify the separate contraventions involved. Each breach of each separate obligation, found under both the WR Act and the FW Act, is a separate contravention.
Next, the Court needs to consider whether the breaches arising in the identification process constitute a single course of conduct.[6] Then, the Court must consider whether the breaches constitute a single course of conduct.
[6] See s.719(2) WR Act, and s.557(1) FW Act.
The Court must next consider whether any of the contraventions have any common elements, which fact should be taken into account in determining what is an appropriate penalty for each contravention in all the circumstances. Clearly, the Respondent should not be penalised more than once for the same conduct. Further, the penalties imposed by the Court should be an appropriate response to what the Respondent did.[7]
[7] In this regard, see the Full Court discussion in Australian Ophthalmic Supplies Limited & McAlary-Smith (2008) 165 FCR 560, especially at [46] (Graham J). Hereafter “McAlary-Smith”. See also the subsequent Full Court decision in Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383. In particular, see the discussion in relation to penalty in the joint judgment of Stone & Buchanan JJ, beginning at [41] ff.
This task is distinct from and in addition to the “totality principle” as that has been explained and applied in multiple cases, including in McAlary-Smith.[8] Next, the Court must consider the appropriate penalty for the single breaches and, if relevant, each group of contraventions, taking into account all of the circumstances. Finally, the Court must consider whether it is an appropriate response to the conduct which led to the breaches. The Court should apply an “instinctive synthesis” in making its assessment.[9]
[8] Generally, see Graham J in McAlary-Smith at [54] – [55] and [78]. In that case his Honour discussed at a little length, the High Court decision in Markarian v the Queen (2005) 228 CLR 357. That case was also the subject of comment by Gray J in McAlary-Smith at [27].
[9] Ibid.
I incorporate formally into and as part of these reasons the following schedule, being par. 59 of the Applicant’s submissions, where each of the sections, the description of the contravention, the number of employees affected, the maximum penalty and the reference for the maximum penalty in each instance is set out.
| Provision contravened | Description of contravention | Number | Maximum Penalty | Reference for maximum penalty |
| Subsection 185(2) of WR Act and sub-item 5(1), Part 3, Schedule 9 of the Transitional Act | Failure to pay guaranteed casual loading percentage | 18 | $6,600 per contravention | Subsection 719(4)(a) of the WR Act |
| Section 232(2) of the WR Act and sub-item 6(1)(a) of Schedule 16 of the Transitional Act | Failure to accrue annual leave | 6 | $6,600 per contravention | Subsection 719(4)(a) of the WR Act |
| Clause 16.3 of the Common Rule Award and sub-item 2(1) of Schedule 16 to the Transitional Act | Failure to pay casual employees pro-rata annual leave | 18 | $6,600 per contravention | Subsection 719(4)(a) of the WR Act |
| Clauses 28.1 and 28.2 of the Common Rule Award and sub-item 2(1) of Schedule 16 to the Transitional Act | Failure to pay overtime rates | 8 | $6,600 per contravention | Subsection 719(4)(a) of the WR Act |
| Clauses 29.1, 29.1.1 and 29.1.2 of the Common Rule Award and sub-item 2(1) of Schedule 16 to the Transitional Act | Failure to pay full and part-time employees penalty rates for weekend work performed | 8 | $6,600 per contravention | Subsection 719(4)(a) of the WR Act |
| Clauses 29.2, 29.2.1 and 29.2.2 of the Common Rule Award and sub-item 2(1) of Schedule 16 to the Transitional Act | Failure to pay full and part-time employees penalty rates for work performed between 7pm and 7am Monday to Friday | 8 | $6,600 per contravention | Subsection 719(4)(a) of the WR Act |
| Clauses 37.7 of the Common Rule Award and sub-item 2(1) of Schedule 16 to the Transitional Act | Failure to pay full and part-time employees penalty rates for work performed on Public Holidays | 6 | $6,600 per contravention | Subsection 719(4)(a) of the WR Act |
Course of Conduct & Penalty
The Applicant accepts that the Respondent has the benefit of the “course of conduct provisions” in s.719(2) of the WR Act and s.557(2) of the FW Act in relation to repeated breaches of a provision in respect of multiple employees. In the light of that, the Applicant submits, and I accept, that each breach pleaded in these proceedings is a distinct and separate obligation under the WR Act and also under the Transitional WR Act to which I have earlier referred.
The Applicant says that each civil remedy provision is separate for the purposes of s.719(2) of the WR Act and s.546(1) of the FW Act. Further, the Applicant submits, and I accept, that in the circumstances of this matter, the only course of conduct considerations that arise for the benefit of the Respondent, are those limiting the contraventions in respect of the repeated breaches of a provision in respect of multiple employees. I further accept the submission that, rather than submitting that the employer engaged in multiple breaches of each provision for each employee, the Court should and does find that the Respondent engaged in a total of seven contraventions.
In relation to the matters for the Court to consider in determining, (a), the appropriate penalty and/or, (b), whether the agreed penalty is appropriate, there are many decisions which properly guide the Court, not least being (again), McAlary-Smith, which accepted in turn the outline of matters considered by Tracey J in Kelly v Fitzpatrick.[10] At the same time, I remind myself of Buchanan J’s comment, at [21] in McAlary-Smith: “These are but factors, they are not a prescription or restriction on matters that the Court should properly take into account.”
[10] Kelly v Fitzpatrick (2007) 166 IR 14 at [14].
The Court accepts the further submission on behalf of the Applicant that the contraventions represent a failure to provide basic and important conditions and entitlements under the WR Act and under the FW Act. This legislation is designed to provide a safety net which ensures adequate minimum entitlements to employees, particularly those who are vulnerable or in low income roles. In this regard it is a significant matter for a company or an individual to seek to contract out of its or their obligations by entering into separate agreements with each of the employees.
In this case I accept that Manuka, of which the Respondent was the controlling mind, took active steps to put in place a mechanism to make its employees’ entitlements no longer subject to the entitlements under the Award. The details of that Award are further set out, among other places, in the detailed written submissions of the Applicant. Although the Respondent claimed in his submissions that he relied upon legal advice in the preparation of what he described as Manuka’s AWA, in my view, in the light of the Statement the Respondent cannot rely, or rely to the degree that he seeks, upon the legal advice that (he says) entitled him to contract out of the provisions under the Act and the Award.
Indeed, it is the case that the Respondent has admitted that he was responsible for designing Manuka’s purported AWA, obtaining legal advice for Manuka’s purported AWA, and not lodging the said AWA. The Respondent has also admitted that he knew that an AWA was an individual agreement and that it had to pass the fairness test to operate validly. I also note generally that Manuka advertised for causal positions and that, otherwise given his experience, he should have known and clearly checked what the precise entitlements were of each of the employees of Manuka.
Amongst other considerations in the determination of penalty, is the size and financial circumstances of the business. Although there was some factual contest, obviously the Court has before it the Statement, which in large measure makes many of the issues that were said to be in contest of no particular moment. Certainly, it is not denied that Manuka is currently under external administration and that liquidators were appointed on 16 September 2011.
The fact that Manuka has been placed into liquidation does not prevent proceedings from continuing against persons who may be accessorily liable, namely, the Respondent.[11] It is also clear that proceedings for the imposition of a penalty may continue against a person who is accessorily liable, despite the fact that the principal contravener has been placed into liquidation.[12]
[11] See, for example, ACCC v Black On White Pty Limited (2001) 110 FCR 1.
[12] See Torpia v Empire Printing (2009) 188 IR 306 at [65].
I accept the further submission on behalf of the Applicant that Courts have articulated, as a statement of principle, that any sanctions to be imposed, whether pursuant to a contested hearing or pursuant to an admission of liability, should be imposed at a meaningful level, even in circumstances where a company is under financial difficulty or otherwise.[13]
[13] Generally, see the discussion in cases such as McAlary-Smith and Kelly v Fitzpatrick and the cases referred to therein.
Again, I accept the submission on behalf of the Applicant that the Respondent’s conduct falls into the category of careless disregard for Manuka’s statutory obligations. There is no doubt, nor can there be, that the Respondent was the guiding mind of Manuka; he was the sole director and secretary of that company and therefore was involved in the contraventions of Manuka within the meaning of s.728(2)(c) of the WR Act and s.550(2)(c) of the FW Act.
Again, I note, but need not formally record, the matters set out in par. 104 of the Applicant’s submissions, which demonstrate the Respondent’s involvement in the contraventions of Manuka. It is also important to record that the Applicant agrees that the Respondent has cooperated with the Applicant during the audit and investigation conducted, including by responding to produce documents. The Applicant readily agrees that the Respondent admitted the contraventions at the earliest opportunity in these proceedings and, in doing so, has saved the Court and the parties inconvenience and cost associated with a liability hearing.
Unfortunately there is no evidence to suggest that the Respondent has taken any remedial steps to rectify the underpayments or to resolve the issues raised in the proceeding. The Respondent has apologised for the contraventions. Further matters to be taken into account by the Court in accordance with authority in determining an appropriate penalty relates to ensuring that there is compliance with minimum standards.
As the authorities make plain, it is essential that employers comply with their obligations to provide at least the minimum entitlements to their employees for their benefit, but also to ensure that similar businesses are not either, unfavourably or unfairly disadvantaged, or otherwise that an uneven playing field is constructed. It is also clear on the authorities to which I have already referred, that in imposing a penalty, there is a need for specific and general deterrence.[14]
[14] Among many places, see the discussion by Merkel J in Finance Sector Union v Commonwealth Bank of Australia (2006) 224 ALR 469 at [41].
Such matters were canvassed at some length by Lander J in Ponzio & B & P Caelli Constructions Pty Limited.[15] Clearly, in relation to general deterrence, it is important for a “clear message” to be sent to other employers that obligations to workers cannot be avoided or otherwise attenuated in any way.
[15] Ponzio & B & P Caelli Constructions Pty Limited (2007) 158 FCR 543 at [93] ff.
Finally, having regard to the totality principle, to which I have referred earlier,[16] it is submitted on both parties’ behalf that the agreed penalty, to which I will refer shortly, is appropriate in all of the circumstances and conforms to the principles to which I have referred.
[16] See, for example, the discussion in McAlary-Smith at [23] (Gray J), [71] (Graham J), and at [102] (Buchanan J).
In general terms, I should also note the statements of principle from the slightly earlier Full Court decision in Minister for Industry Tourism and Resources v Mobil Oil Australia Pty Limited.[17] It is as well to set them out in full. Thus, at [51] and [53] – [58], the Court (Branson, Sackville & Gyles JJ) said (emphasis added):[18]
[17] Minister for Industry Tourism and Resources v Mobil Oil Australia Pty Limited (2004) ATPR ¶41-993.
[18] The consistent reference to “NW Frozen Foods” in the following citation refers to the Full Court decision of NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285. In addition to the paragraphs set out in full here, see also the further comments by the Full Court in Mobil Oil at [69] – [70] & [77] – [78].
[51] The following propositions emerge from the reasoning in NW Frozen Foods:
(i) It is the responsibility of the Court to determine the appropriate penalty to be imposed under s 76 of the TP Act in respect of a contravention of the TP Act.
(ii) Determining the quantum of a penalty is not an exact science. Within a permissible range, the courts have acknowledged that a particular figure cannot necessarily be said to be more appropriate than another.(iii) There is a public interest in promoting settlement of litigation, particularly where it is likely to be lengthy. Accordingly, when the regulator and contravenor have reached agreement, they may present to the Court a statement of facts and opinions as to the effect of those facts, together with joint submissions as to the appropriate penalty to be imposed.
(iv) The view of the regulator, as a specialist body, is a relevant, but not determinative consideration on the question of penalty. In particular, the views of the regulator on matters within its expertise (such as the ACCC’s views as to the deterrent effect of a proposed penalty in a given market) will usually be given greater weight than its views on more "subjective" matters.
(v) In determining whether the proposed penalty is appropriate, the Court examines all the circumstances of the case. Where the parties have put forward an agreed statement of facts, the Court may act on that statement if it is appropriate to do so.
(vi) Where the parties have jointly proposed a penalty, it will not be useful to investigate whether the Court would have arrived at that precise figure in the absence of agreement. The question is whether that figure is, in the Court’s view, appropriate in the circumstances of the case. In answering that question, the Court will not reject the agreed figure simply because it would have been disposed to select some other figure. It will be appropriate if within the permissible range.
[53] First, the rationale for giving weight to a joint submission on penalty is said by the Court to be the savings in resources for the regulator and the Court, as well as the likelihood that a negotiated resolution will include measures designed to promote competition. As Jeremy Thorpe points out, a related advantage is that the savings in resources can be used by the regulator to increase the likelihood that other contraveners will be detected and brought before the courts. This has the effect of increasing deterrence which is one of the principal justifications, if not the only justification for imposing civil penalties under the TP Act or the Sites Act: J Thorpe, "Determining the Appropriate Role for Charge Bargaining in Part IV of the Trade Practices Act" (1996) 4 Comp & Cons LJ 69, at 72-74. Of course the arguments in favour of negotiated settlements have to take account of the fact that it is the Court that bears the ultimate responsibility for determining the appropriate penalty.
[54] Secondly, the sixth proposition drawn from the reasoning in NW Frozen Foods does not mean, in our opinion, that the Court must commence its reasoning with the proposed penalty and limit itself to considering whether that penalty is within the permissible range. A Court may wish to take that approach. However, it is open to a Court, consistently with the reasoning in NW Frozen Foods, first to address the appropriate range of penalties independently of the parties’ proposed figure and then, having made that judgment, determine whether the prepared penalty falls within the range.
[55] Thirdly, as has been noted, the appellant in NW Frozen Foods admitted contravening the TP Act and had reached agreement with the ACCC upon the facts to be put before the Court. There was no suggestion that the admissions or statement had been tailored or modified to reflect the difficulties faced by the ACCC in proving its case. The Full Court therefore acted on the basis of clear admissions and a detailed statement of agreed facts setting out how the contraventions had occurred. Accordingly, the decision is consistent with the views expressed by the New Zealand High Court in Milk Corporation. Those views are, with respect, correct in principle.
[56] Fourthly, as the Full Court in Australian Competition and Consumer Commission v Ithaca Ice Works Pty Ltd [2002] ATPR 41-851, has pointed out, the regulator should always explain to the Court the process of reasoning that justifies a discounted penalty. In that case, the ACCC and two contravenors produced an agreed statement of facts, supplemented by affidavit evidence, but they disagreed as to the appropriate penalty. The trial Judge had previously imposed agreed penalties on other offenders, which the Full Court apparently thought were somewhat low (at 44,543 [51]), and had taken these penalties into account in determining the appropriate penalties to be imposed on the two remaining contravenors. The Full Court made the following observations (at 44,549 [56]):
"[w]here the Commission proposes to the Court an agreed penalty which is calculated taking into account a substantial discount from what would otherwise be considered the appropriate penalty so as to reflect a degree of co-operation, it would be desirable that the Commission disclose the process by which the discounted penalty has been arrived at. In particular, it would be of assistance to the Court, particularly where there are other proceedings pending, to hear submissions on the range of appropriate penalties and the discount which it is proposed should be allowed to take into account the level of co-operation afforded by the offender. Had that been done in the present case, the learned primary judge would have been able to form a view as to the appropriate range of penalty absent co-operation and have then been in the position to calculate an appropriate discount to take into account the exceptional level of co-operation afforded by QIS [one of the offenders]. It is only in this way that a comparison could properly be made between the penalty payable where the offender had offered a high level of co-operation and the penalty payable where the level of co-operation was of a lesser magnitude."
[57] These observations are consistent with the approach in NW Frozen Foods. The Full Court in Ithaca Ice was plainly aware of the reasoning in NW Frozen Foods, since it considered the factors discussed in that case as relevant to the quantum of penalty. It follows that a court considering an "agreed" penalty is entitled to expect the regulator to explain the basis on which a discount from the otherwise appropriate penalty has been calculated having regard to the contravenor’s co-operation and, for that matter, other relevant factors….
[58] Fifthly, there is nothing in NW Frozen Foods that is inconsistent with any of the following propositions:
(i) The Court, if it considers that the evidence or information before it is inadequate to form a view as to whether the proposed penalty is appropriate, may request the parties to provide additional evidence or information or verify the information provided. If they do not provide the information or verification requested, the Court may well not be satisfied that the proposed penalty is within the range.
(ii) If the absence of a contradictor inhibits the Court in the performance of its duties under s 76 of the TP Act, s 13 of the Sites Act, or similar legislation, it may seek the assistance of an amicus curiae or of an individual or body prepared to act as an intervenor under FCR, O 6 r 17.(iii) If the Court is disposed not to impose the penalty proposed by the parties, it may be appropriate, depending on the circumstances, for each of them to be given the opportunity to withdraw consent to the proposed orders and for the matter to proceed as a contested hearing.
And, finally, for ease of reference and the detail provided, par. 64 of the Statement helpfully sets out (a) the provision contravened, (b) the description of the contravention, (c) the maximum penalty that is available under each of those sections and (d) the combined submission to the Court regarding penalty. It is reproduced below:
| Provision contravened | Description of contravention | Maximum penalty | Parties’ submission to the Court regarding penalty |
| Subsection 185(2) of WR Act and sub-item 5(1), Part 3, Schedule 9 of the Transitional Act | Failure to pay guaranteed casual loading percentage | $6,600 | $2,310 |
| Subsection 232(2) of WR Act and sub-item 6(1)(a), of Schedule 16 of the Transitional Act | Failure to accrue annual leave | $6,600 | $2,310 |
| Clause 16.3 of the Common Rule Award and sub-item 2(1) of Schedule 16 to the Transitional Act | Failure to pay casual employees pro-rata annual leave | $6,600 | $2,310 |
| Clauses 28.1 and 28.2 of the Common Rule Award and sub-item 2(1) of Schedule 16 to the Transitional Act | Failure to pay overtime rates | $6,600 | $2,310 |
| Clauses 29.1, 29.1.1 and 29.1.2 of the Common Rule Award and sub-item 2(1) of Schedule 16 to the Transitional Act | Failure to pay full and part-time employees penalty rates for weekend work performed | $6,600 | $2,310 |
| Clauses 29.2, 29.2.1 and 29.2.2 of the Common Rule Award and sub-item 2(1) of Schedule 16 to the Transitional Act | Failure to pay full and part-time employees penalty rates for work performed between 7pm and 7am Monday to Friday | $6,600 | $2,310 |
| Clauses 37.7 of the Common Rule Award and sub-item 2(1) of Schedule 16 to the Transitional Act | Failure to pay full and part-time employees penalty rates for work performed on Public Holidays | $6,600 | $2,310 |
| Total | $46,200 | $16,170 | |
Discussion & Conclusion
Summarily, the maximum penalty in relation to all of the contraventions is $46,200. The parties submit that the appropriate penalty in all of the circumstances is $16,170. They come to this combined submission, amongst other things, by reference to the Full Court decision in Minister for Industry or Tourism and Resources v Mobile Oil Australia, to which I have referred. The parties also rely upon the decision of Jessup J in Wells v Locarno Management Pty Limited.[19]
[19] Wells v Locarno Management Pty Limited [2008] FCA 1034, particularly at [23].
Finally, I note the following from the Respondents’ submissions in relation to penalty.
First, the Respondent refers to the Statement and that, with the parties having reached an agreement, submits that the Court should impose the agreed penalty, unless it is satisfied that what is proposed is outside the permissible range, in the sense that it is either manifestly excessive or manifestly inadequate. The Respondent adopts the submissions of the Applicant in this regard.
The Respondent agrees with the Applicant that the agreed penalties are within the permissible range and should be adopted by the Court. The Respondent also submits that, having regard to the statements of principle contained in the Applicant’s submissions to which I have referred, there is little to be gained by exploring in detail the facts and circumstances surrounding the contraventions. Nor is much to be gained, the Respondent submits, by attempting to align or explain any differences in the evidence for which each party contends or to make factual findings in relation to them. This must be so, in my view, in the light of the agreed Statement.
In all of the circumstances and, similarly relying upon the decisions to which I have referred - Mobil Oil and Locarno Management in particular - the Respondent submits that the penalty that has been agreed should be determined by the Court to be within the permissible range and therefore declarations and orders to relevant effect should be made.
Following a brief hearing between the parties and discussions with the Court, a form of orders had been prepared in relation to declarations regarding the contraventions. Further declarations in relation to the Respondent being involved in the contraventions and, finally, orders in relation to the payments to be made, are all set out in the draft minute of orders.
In all of the circumstances, the Court considers that the penalty agreed is appropriate. Declarations and orders should be made as agreed between the parties and submitted to the Court. The Court so orders.
I certify that the preceding fifty-three (53) paragraphs are a true copy of the reasons for judgment of Neville FM
Date: 8 March 2013
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