Fair Work Ombudsman v Upper East Side Bondi Pty Ltd
[2023] FedCFamC2G 960
•26 October 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Fair Work Ombudsman v Upper East Side Bondi Pty Ltd [2023] FedCFamC2G 960
File number(s): SYG 1938 of 2021 Judgment of: JUDGE MANOUSARIDIS Date of judgment: 26 October 2023 Catchwords: INDUSTRIAL LAW – application for default judgment in relation to alleged contraventions of s 716(5) of the Fair Work Act 2009 (Cth) (FW Act) and s 718A of the FW Act – default declarations made and pecuniary penalties assessed and ordered – whether second respondent involved in first respondent’s contraventions of s 716(5) of the FW Act – second respondent involved – declaration made and pecuniary penalties assessed and ordered – whether second respondent contravened s 718A of the FW Act – contraventions found – declarations made and pecuniary penalties assessed and ordered. Legislation: Bankruptcy Act 1966 (Cth) s 82(1)
Crimes Act 1914 (Cth) s 4AA
Fair Work Act 2009 (Cth) ss 12, 90(2), 117(2), 539(1), 539(2), 545(1), 546(1), 547(2), 550(2), 557, 557A, 559(3), 700, 701, 712, 716(2), 716(3), 716(5), 718A
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) rr 1.06(2), 6.04(b), 13.04(2), 13.05, 13.06(2)
Federal Court Rules 1979 (Cth) O 35A r 3(2)(c)
Federal Court Rules 2011 (Cth) rr 5.23(2)(c), 16.02
Restaurant Industry Award 2010 cls 13.1, 20.1, 33.2, 34.1, 34.2
Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (The BKH Contractors Case) (No 2) [2018] FCA 1563
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3
Australian Competition and Consumer Commission v Yazaki Corporation [2018] FCAFC 73
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8
Bevis v VA Holdings Pty Ltd trading as Granton Homes & Ors [2020] FCCA 2082
Contin v The Queen [2012] VSCA 247
Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCAFC 59
Fair Work Ombudsman v Chatime Australia Pty Ltd [2022] FedCFamC2G 934
Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301
Fair Work Ombudsman v Upper East Side Bondi [2021] FedCFamC2G 354
Fair Work Ombudsman v Viper Industries Pty Ltd [2015] FCCA 492
Fair Work Ombudsman v VS Investment Group Pty Ltd [2013] FCCA 208
FWO v Australian Wild Tuna Pty Ltd & Anor [2016] FCCA 2626
Jordan v Mornington Inn Pty Ltd [2007] FCA 1384; (2007) 166 IR 33
Kelly v Fitzpatrick [2007] FCA 1080
Kiddle v Nguyen [2021] FedCFamC2G 53
Macquarie Bank Limited v Seagle [2005] FCA 1239
Macquarie Bank Limited v Seagle [2008] FCA 1417
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
Minister for Immigration, Local Government & Ethnic Affairs v Dela Cruz (1992) 34 FCR 348
Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70
Phonographic Performance Ltd v Maitra (1998) 41 IPR 225
Rathner, in the matter of Mildura Grand Pty Ltd (in liq) v Bendigo Skyrider Pty Ltd [2011] FCA 626
R v Holder & Johnston [1983] 3 NSWLR 245
Royer v Western Australia [2009] WASCA 139
Speedo Holdings B.V. v Evans (No 2) [2011] FCA 1227
Trade Practices Commission v Bata Shoe Company of Australia Pty Ltd [1980] FCA 47; (1980) 44 FLR 149; (1980) ATPR 40-161
Division: Fair Work Number of paragraphs: 139 Date of hearing: 3 May 2022 Place: Sydney Counsel for the Applicant: Ms B Byrnes Solicitor for the Applicant: Office of the Fair Work Ombudsman The First Respondent: No appearance by, or on behalf of, the first respondent The Second Respondent: In person, by video ORDERS
SYG 1938 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FAIR WORK OMBUDSMAN
Applicant
AND: UPPER EAST SIDE BONDI PTY LTD (ACN 617 357 007)
First Respondent
JULIA ROSE GELONESE
Second Respondent
ORDER MADE BY:
JUDGE MANOUSARIDIS
DATE OF ORDER:
26 OCTOBER 2023
THE COURT DECLARES THAT:
1.The first respondent contravened:
(a)s 716(5) of the Fair Work Act 2009 (Cth) (FW Act) by failing to comply with a compliance notice dated 27 November 2020 (First Compliance Notice);
(b)s 716(5) of the FW Act by failing to comply with a second compliance notice dated 27 November 2020 (Second Compliance Notice); and
(c)s 718A(1) of the FW Act by providing false or misleading information or documents to a Fair Work Inspector (FWI), knowing or being reckless as to whether it was false or misleading, on each of 6 January 2021, 13 January 2021, 5 February 2021, 12 February 2021, 15 February 2021, 2 March 2021, 4 March 2021, 5 March 2021, 9 March 2021, 11 March 2021, 17 March 2021 and 11 May 2021.
2.The second respondent was involved within the meaning of s 550(2) of the FW Act in the first respondent’s contraventions of s 716(5) of the FW Act referred to in declarations 1(a) and 1(b) above and, for that reason, is taken to have contravened s 716(5) of the FW Act.
3.The second respondent contravened s 718A(1) of the FW Act by providing false or misleading information or documents to a FWI, knowing or being reckless as to whether it was false or misleading, on each of 6 January 2021, 13 January 2021, 5 February 2021, 12 February 2021, 15 February 2021, 2 March 2021, 4 March 2021, 5 March 2021, 9 March 2021, 11 March 2021, 17 March 2021 and 11 May 2021.
THE COURT ORDERS THAT:
4.Pursuant to s 545(1) of the FW Act, within 28 days of these orders, the first respondent take the steps required to comply with the First Compliance Notice and the Second Compliance Notice (collectively Compliance Notices) by:
(a)paying $3,496.82 (gross) to the applicant in respect of the employee Sehee Cho; and
(b) either:
(i)provide evidence to the applicant of payment to the Australian Taxation Office of PAYG amounts withheld from the payments made to each of the employees identified in the Compliance Notices (Employees) (save for Sehee Cho) on or about 23 and 24 August 2021; or
(ii)paying to each of the Employees (save for Sehee Cho) the difference between the amounts required to be paid by the Compliance Notices and the payments made on or about 23 and 24 August 2021.
5.Pursuant to s 547(2) of the FW Act, the first respondent pay interest on the amount owed to Sehee Cho pursuant to order 4(a) above, to the applicant within 28 days of these orders at the applicable pre-judgment interest rate.
6.Pursuant to s 547(2) of the FW Act, within 90 days of receiving the amounts in orders 4(a) and 5 above, or any part of those amounts, the applicant seek to locate and pay Sehee Cho pursuant to orders 4(a) and 5.
7.Pursuant to s 545(1) of the FW Act, if the applicant is unable to locate and pay Sehee Cho within the time specified in order 4, the applicant is to pay to a person the amount specified in order 4(a) for that employee if:
(a)the person makes a claim for the amount in accordance with the form prescribed by the Fair Work Regulations 2009 (Cth) for s 559(3) of the FW Act; and
(b)the applicant is satisfied that the person is entitled to the amount.
8.Pursuant to s 546(1) of the FW Act the first respondent pay:
(a)a pecuniary penalty of $21,312 for the contravention identified in declaration 1(a);
(b)a pecuniary penalty of $15,984 for the contravention identified in declaration 1(b); and
(c)a pecuniary penalty of $99,900 for the contravention identified in declaration 1(c).
9.Pursuant to s 546(1) of the FW Act the second respondent pay:
(a)a pecuniary penalty of $4,262.40 for her involvement in the first respondent’s contravention identified in declaration 1(a);
(b)a pecuniary penalty of $3,196.80 for her involvement in the first respondent’s contravention identified in declaration 1(b); and
(c)a pecuniary penalty of $19,980 for the contravention identified in declaration 3.
10.The applicant has liberty to apply on seven days’ notice in the event that any of the preceding orders are not complied with.
THE COURT NOTES THAT:
11.Declarations 1(a), 1(b) and 1(c), and orders 4, 5, 6, 7, and 8, are made pursuant to r 13.05(2)(c) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
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
INTRODUCTION
In this proceeding the applicant (FWO) claims that the first respondent (UESB) contravened s 716(5) of the Fair Work Act 2009 (Cth) (FW Act) by failing to comply with two compliance notices (Compliance Notices) given under s 716(2) of the FW Act, and that the second respondent, Ms Gelonese, was involved in UESB’s contraventions of s 716(5) within the meaning of s 550(2) of the FW Act. The FWO also claims that UESB and Ms Gelonese each contravened s 718A of the FW Act by providing false or misleading information or documents to a Fair Work Inspector.
PROCEDURAL HISTORY
The FWO commenced this proceeding on 20 October 2021 by filing an application and a statement of claim. UESB was served with the application and statement of claim by express post sent on 21 October 2021.[1]
[1] Affidavit of service of P M Mellos 15.11.2021
The matter came before me on a first court date on 17 November 2021. There was no appearance by or on behalf of UESB; but Ms Gelonese, UESB’s sole director, appeared. Ms Gelonese confirmed what she had stated in an email she had sent to the Court on 11 November 2021, namely, that she is an undischarged bankrupt. Ms Byrnes, who appeared for the FWO, proposed I make directions for the filing of a defence and, if necessary, a reply.
Ms Byrnes said the FWO had requested the Australian Securities and Investments Commission defer taking action to deregister UESB. Ms Byrnes also said that the FWO did not view Ms Gelonese’s bankruptcy being an issue in the proceeding. I understood Ms Byrnes to be referring to the fact that a claim for the payment of a pecuniary penalty for the contravention of a civil remedy provision of the FW Act is not a provable debt for the purposes of s 82(1) of the Bankruptcy Act 1966 (Cth),[2] and, for that reason, Ms Gelonese’s bankruptcy is no bar to the FWO seeking pecuniary penalties against Ms Gelonese.
[2] See Kiddle v Nguyen [2021] FedCFamC2G 53
Ms Byrnes applied for an order confirming that Ms Gelonese had been served with the application and statement of claim. I declined to make that order; but Ms Gelonese acknowledged she had received by email the application and statement of claim. I made orders requiring the respondents to file and serve a defence by 7 December 2021, and that the FWO file a reply, if any, by 21 December 2021. I then listed the matter for a directions hearing at 9:30 am on 1 February 2022.
Neither respondent filed a defence; and so, on 27 January 2022, the FWO filed an application in a proceeding for default judgment pursuant to r 13.05(2)(c) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (GFL Rules). That application was made returnable at 9:30 am on 1 February 2022. On that day I made an order pursuant to r 6.04(b) of the GFL Rules that the application and statement of claim had been served on Ms Gelonese on 11 November 2021 by email. I also ordered that by 11 February 2022 Ms Gelonese file and serve a defence in a form that complies with r 16.02 of the Federal Court Rules 2011 (Cth), and that the FWO file and serve a reply, if any, by 18 February 2022. I then listed the matter for further directions at 9:30 am on 25 February 2022.
On 14 February 2022 Ms Gelonese filed an affidavit in which, it appears, she intended to state her defence to the statement of claim. For reasons that will appear later, it is unnecessary to describe what Ms Gelonese stated in her affidavit, and in a further affidavit Ms Gelonese filed on 28 April 2022.
At the directions hearing on 25 February 2022 I ordered that by 4 April 2022 the FWO file and serve evidence and an outline of submissions on liability and penalties; and that the respondents do so by 26 April 2022. I also listed the matter at 10:15 am on 3 May 2022 “for the purpose of hearing an application for default judgment (in respect of the first respondent), liability (in respect of the second respondent), and if the applicant is successful against either or both respondents, penalty”.
At the hearing on 3 May 2022, after I informed Ms Gelonese about her right to claim the privilege against exposure to a penalty, Ms Gelonese said she did not wish to rely on the affidavit she filed on 14 February 2022, or on the affidavit she filed on 28 April 2022. Ms Byrnes, who again appeared for the FWO, informed me that although the FWO had intended to rely on what she submitted were admissions Ms Gelonese made in her affidavits, the FWO was in a position to prove her case against Ms Gelonese without relying on any material contained in Ms Gelonese’s affidavits. In those circumstances, Ms Byrnes identified and read the affidavits on which she relied;[3] and I then heard submissions from Ms Byrnes and Ms Gelonese, at the conclusion of which I reserved judgment.
[3] The FWO relies on the following: Affidavit of service of P M Mellos 15.11.2021; Affidavit of A L Neal 16.11.2021; Affidavit of A L Neal 25.01.2022; Affidavit L J Cowell 01.04.2022; Affidavit of R Omar 01.04.2022; and the Affidavit of A L Neal 04.04.2022
ARRANGEMENT OF REASONS
I will first consider the FWO’s application for default judgment. That will require me to set out the allegations made in the statement of claim, and to refer to some principles that govern the exercise of the power to order default judgment under r 13.05(2)(c) of the GFL Rules. Next, I will consider the FWO’s evidence in support of its claims against Ms Gelonese, and the claims the FWO makes against Ms Gelonese. Finally, if I find that the FWO is entitled to default judgment against UESB, and has proven that Ms Gelonese is a person involved in UESB’s contraventions of s 716(5) of the FW Act, or has herself contravened s 718A of the FW Act, I will consider what pecuniary penalties, if any, I should order UESB or Ms Gelonese to pay.
APPLICATION FOR DEFAULT JUDGMENT AGAINST UESB
Facts alleged in the statement of claim
UESB is and was at all relevant times a company that operated a restaurant located at Bondi Beach (Business).
Ms Gelonese is and was at all relevant times the sole director of UESB since 1 September 2019, and the general manager of the Business. Ms Gelonese is and was responsible for: the daily operations of the Business; oversight of the Business’s rostering of employees; oversight of UESB’s payroll; keeping, creating “and/or” causing the creation of records relating to the hours of work, rates of pay and amounts paid to UESB’s employees; and ensuring UESB complied with its legal obligations under the FW Act.
Compliance Notices
On or around 19 November 2019, Ms Cowell (FWI Cowell), a Fair Work Inspector appointed under s 700 of the FW Act, commenced an investigation (Investigation) into UESB’s compliance with the FW Act after receiving a request for assistance from SG on 31 October 2019.
As a result of the Investigation FWI Cowell formed a reasonable belief that:
(a)UESB employed SG, TH, VP, SC, GH, BK, JH, and YL (Employees) for varying periods between 27 September 2019 and 22 March 2020 (Assessment Period);
(b)the FW Act applied to UESB in relation to the Employees;
(c)during their respective employment periods:
(i)SG, SC, GH, BK, JH, and YL were each employed by UESB as full-time employees;
(ii)TH was employed by UESB as a part-time employee; and
(iii)VP was employed by UESB as a full-time employee for the period 27 September 2019 to 3 October 2019, and as a casual employee for the period 19 October 2019 to 6 November 2019 (Casual Assessment Period);
(d)the Restaurant Industry Award 2010 (Restaurant Award) covered and applied to UESB in relation to the Employees; and
(e)in relation to the Employees, UESB had contravened cl 13.1, cl 20.1, cl 33.2, cl 34.1, and cl 34.2 of the Restaurant Award, and s 90(2) and s 117(2)(b) of the FW Act.
On 27 November 2020, pursuant to s 716(2) of the FW Act, the Compliance Notices were given to UESB by personal service to the registered office of UESB.
On 3 December 2020, Mr Omar (FWI Omar), a Fair Work Inspector appointed under s 700 of the FW Act, gave the Compliance Notices to UESB by email.
One of the Compliance Notices set out the terms of the Restaurant Award and the National Employment Standards (NES) that FWI Cowell believed UESB contravened during the Assessment Period in relation to the Employees (First Compliance Notice).
The other Compliance Notice set out the terms of the Restaurant Award that FWI Cowell believed UESB contravened in relation to VP during the Casual Assessment Period (Second Compliance Notice).
The First Compliance Notice required UESB to remedy the direct effects of the contraventions referred to in the First Compliance Notice by paying the Employees a gross total of $23,413.11 by 6 January 2021, comprising of the following gross amounts to each of the Employees:
(a)$1,684.01 to SG;
(b)$2,355.62 to TH;
(c)$1,087.59 to VP;
(d)$3,496.82 to SC;
(e)$4,209.82 to GH;
(f)$4,387.47 to BK;
(g)$2,621.33 to JH; and
(h)$3,570.45 to YL.
The First Compliance Notice required UESB to produce to the FWO reasonable evidence demonstrating the gross and net payments made to each of the Employees, including the time and day the payment was processed, by 13 January 2021.
The Second Compliance Notice required UESB to: remedy the direct effects of the contraventions referred to in the Second Compliance Notice by paying VP a total gross amount of $999.74 by 6 January 2021; and produce to the FWO reasonable evidence demonstrating the gross and net payment made to VP, including the time and day the payment was processed, by 13 January 2021.
The Compliance Notices required UESB to pay the Employees a total of $24,412.85 (Total Underpayment Amount).
On 4 January 2021 UESB sought an extension of time to respond to the Compliance Notices. The FWO did not grant UESB the extension.
UESB did not pay the Total Underpayment Amount as set out in the Compliance Notices by 6 January 2021, nor did UESB produce reasonable evidence of the gross and net payments made to any of the Employees, including the time and day the payments were processed, by 13 January 2021.
UESB paid amounts to the Employees in purported rectification of its non-compliance with the Compliance Notices as follows:
(a)on or around 23 August 2021:
(i)$1,774.33 to VP;
(ii)$3,577.47 to BK;
(iii)$2,361.33 to JH;
(iv)$2,002.62 to TH;
(v)$2,413.45 to YL; and
(vi)$3,459.82 to GH; and
(b)on or around 24 August 2021, $1,431.01 to SG.
As at the date of the statement of claim, UESB has not made payment to SC of the amount required pursuant to the First Compliance Notice.
Section 718A of the FW Act
On 12 separate occasions between 6 January 2021 and 11 May 2021, in response to the Compliance Notices, Ms Gelonese provided information or documents (Information) to FWI Cowell “and/or” FWI Omar as follows:
(a)on 6 January 2021, Ms Gelonese sent an email to FWI Cowell and FWI Omar that stated, “I have now completed the compliance notice – I will send through confirmation of payment upon receiving receipt”;
(b)on 13 January 2021, Ms Gelonese sent an email to FWI Omar and FWI Cowell attaching pay slips of gross payments for each of the Employees other than GH, recording that:
(i)SG was paid $1,684.01 on 22 July 2020;
(ii)VP was paid $999.74 and $1,087.59 on 22 July 2020;
(iii)BK was paid $4,387.47 on 30 April 2020;
(iv)JH was paid $2,621.33 on 30 April 2020;
(v)SC was paid $3,496.82 on 30 April 2020;
(vi)TH was paid $2,355.62 on 30 April 2020; and
(vii)YL was paid $3,570.45 on 30 April 2020;
(c)on 5 February 2021, Ms Gelonese sent an email to FWI Omar and FWI Cowell that stated “Staff payments shall also clear ASAP and will circle back with the bank in relation to this. I have complied with the compliance notice by the end of January as discussed with Lauren”;
(d)on 12 February 2021, Ms Gelonese sent an email to FWI Omar that stated “I have resent today. Please see attached”. The email did not contain any attached files;
(e)on 15 February 2021, Ms Gelonese telephoned FWI Cowell and stated words to the effect that “all Employees have been paid and FWI Omar has received pay slips and evidence of payment”;
(f)on 2 March 2021, Ms Gelonese sent an email to FWI Cowell attaching pay slips of gross payments for each of the Employees recording that:
(i)SG was paid $1,684.01 on 13 January 2021;
(ii)VP was paid $999.74 and $1,087.59 on 13 January 2021;
(iii)BK was paid $4,387.47 on 13 January 2021;
(iv)JH was paid $2,621.33 on 13 January 2021;
(v)SC was paid $3,496.82 on 13 January 2021;
(vi)TH was paid $2,355.62 on 13 January 2021;
(vii)YL was paid $3,570.45 on 13 January 2021; and
(viii)GH was paid $4,209.82 on 13 January 2021;
(g)on 4 March 2021, Ms Gelonese sent an email to FWI Omar and FWI Cowell that stated “These are the dates of initial payment that was processed, I had sent receipts to you and the payslips”;
(h)on 5 March 2021, Ms Gelonese sent an email to FWI Omar and FWI Cowell that stated “I would ask that you speak to the Employees after Tuesday to allow these business days for funds to clear to them”;
(i)on 9 March 2021, Ms Gelonese telephoned FWI Cowell and stated words to the effect that “all employees have been paid” and “all payments will have transferred by Thursday”.
(j)on 11 March 2021, Ms Gelonese sent an email to FWI Cowell attaching pay slips of gross payments for each of the Employees recording that:
(i)SG was paid $1,684.01 on 13 January 2021;
(ii)VP was paid $999.74 and $1,087.59 on 13 January 2021;
(iii)BK was paid $4,387.47 on 13 January 2021;
(iv)JH was paid $2,621.33 on 13 January 2021;
(v)SC was paid $3,496.82 on 13 January 2021;
(vi)TK was paid $2,355.62 on 13 January 2021;
(vii)YL was paid $3,570.45 on 13 January 2021; and
(viii)GH was paid $4,209.82 on 13 January 2021;
(k)on 17 March 2021, Ms Gelonese sent an email to FWI Cowell that stated, “I’ve been informed that all staff should receive payment by this week landing sporadically”;
(l)on 11 May 2021, in a telephone call made by FWI Cowell, Ms Gelonese stated words to the effect that “Upper East Side Bondi had made payments to all of the Employees” in purported compliance with the Compliance Notices and that “evidence of payment has been sent to FWO”.
Ms Gelonese gave the Information to FWI Omar or FWI Cowell or to both in their respective capacities as a FWI, and in the exercise of their respective powers or functions under the FW Act relating to the Compliance Notices; and before Ms Gelonese gave the Information to FWI Omar or FWI Cowell or to both, they took reasonable steps to inform UESB that it may be liable for a civil remedy under the FW Act if it produced false or misleading records in response to the Compliance Notices.
By providing the Information, UESB represented that it had paid the amounts owing to the Employees pursuant to the Compliance Notices, and had complied with the Compliance Notices; and Ms Gelonese knew, or was reckless to whether the Information was false or misleading in a material particular, because she knew of the contents of the Information, and she also knew that UESB had not paid amounts to the Employees pursuant to the Compliance Notices, and UESB had not complied with the Compliance Notices.
Default judgment - provisions and principles
Subrule 13.05(2) of the GFL Rules applies to a respondent who “is in default”. Under r 13.04(2) of the GFL Rules a respondent is in default if the respondent has not satisfied the applicant’s claims, and the respondent has failed to do one or more of the things identified in r 13.04(2)(b) of the GFL Rules. The things identified in r 13.04(2)(b) that are relevant to the application before me are the failure to give an address for service before the time for doing so has expired, the failure to file a response or defence before the time for doing so has expired, the failure to comply with an order of the Court in the proceeding, and the failure to defend the proceeding with due diligence. Also relevant is r 13.06(2) of the GFL Rules which provides that the Court may make an order of the kind mentioned in r 13.05(1), (2) or (4) if a party to a proceeding is absent from a hearing.
When a respondent is in default, or when a respondent is absent from a hearing, the Court may make one of the orders set out in r 13.05(2) of the GFL Rules. Relevant to the application before me is r 13.05(2)(c) which provides that the Court may:
if the proceeding was started by an application supported by a statement of claim or the Court has ordered that the proceeding continue on pleadings—give judgment against the respondent for the relief that:
(i) the applicant appears entitled to on the statement of claim; and
(ii) the Court is satisfied it has power to grant…
Rules 13.04 and 13.05 of the GFL Rules were adapted from, and are substantially similar to, the rules contained in O 35A of the now repealed Federal Court Rules 1979 (Cth);[4] and r 13.05(2)(c) of the GFL Rules is almost identical to O 35A r 3(2)(c). There are a number of principles that have been formulated in relation to O 35A r 3(2) which apply to r 13.05(2) of the GFL Rules. These include the following:
(a)First r 13.05(2)(c) of the GFL Rules “does not require proof of the claim by evidence, but only requires that – on the face of the statement of claim – there is a claim for the relief sought”.[5]
(b)Second, before the Court may make an order under r 13.05(2)(c) of the GFL Rules it must be satisfied that the document, which the applicant has filed with the application, is in fact a “statement of claim”. A statement of claim is a pleading, which means it must comply with the rules of pleading.[6]
(c)Third, it follows from (b) that the statement of claim must plead at least one reasonable cause of action that supports the granting of the relief the applicant seeks in the application. More particularly, “each element of the relevant civil wrong” of which the applicant complains must be “properly and discretely pleaded in the statement of claim”.[7]
(d)Fourth, although r 13.05(2)(c) of the GFL Rules does not require proof of the claim by evidence, it is permissible for the applicant to adduce evidence that is relevant to the relief sought.[8]
(e)Finally, the Court retains a discretion not to make an order under r 13.05(2)(c) of the GFL Rules, even if the preconditions for making an order are satisfied.[9]
[4] The equivalent current rule is r 5.23(2)(c) of the Federal Court Rules 2011 (Cth)
[5] Rathner, in the matter of Mildura Grand Pty Ltd (in liq) v Bendigo Skyrider Pty Ltd [2011] FCA 626, at [9] (Gordon J)
[6] Under r 1.06(2) of the GFL Rules, the rules of the Federal Court Rules 2011 (Cth) (FC Rules) identified in Schedule 1 to the GFL Rules apply, with necessary changes, to general federal law proceedings. The FC Rules there identified include the rules of pleading.
[7] Macquarie Bank Limited v Seagle [2005] FCA 1239, at [24] (Conti J); Macquarie Bank Limited v Seagle [2008] FCA 1417, at [20] (Jagot J)
[8] Phonographic Performance Ltd v Maitra (1998) 41 IPR 225, at page 230
[9] See the authorities decided under O 35A Federal Court Rules 1979 (Cth) referred to by Flick J in Speedo Holdings B.V. v Evans (No 2) [2011] FCA 1227, at [20]
Is UESB in default?
UESB has not filed a notice of address for service. Nor has it filed a reply or defence. By not filing any defence UESB failed to comply with the orders of 17 November 2021. Further, UESB has failed to defend the proceeding with due diligence. I am therefore satisfied UESB is in default within the meaning of r 13.04(2) of the GFL Rules.
Does the statement of claim disclose contraventions of s 716(5) and s 718A of the FW Act?
The statement of claim alleges a cause of action based on contraventions of s 716(5), and s 718A of the FW Act.
Subsection 716(5)
Subsection 716(5) of the FW Act provides that a “person must not fail to comply with a notice given under this section”. The “notice” referred to in s 716(5) of the FW Act is the notice which s 716(2) of the FW Act authorises the “inspector” to issue. “Inspector” is defined in s 12 of the FW Act as a “Fair Work Inspector” which, in turn, is defined in s 12 of the FW Act to mean a person appointed as a Fair Work Inspector under s 700 of the FW Act, or the FWO in his or her capacity as a Fair Work Inspector under s 701 of the FW Act.
Subsection 716(2) of the FW Act provides for the giving of a notice in the circumstances identified in s 716(1) of the FW Act, namely, where an inspector reasonably believes that a person has contravened, among other things, a provision of the NES. The notice s 716(2) of the FW Act authorises an inspector to give is one which requires the person whom the inspector reasonably believes has contravened (among other things) a provision of the NES to take specified action “to remedy the direct effects of the contravention referred to in subsection (1)”.
I am satisfied that the facts alleged in the statement of claim establish UESB contravened s 716(5) of the FW Act on two occasions by failing to comply with the Compliance Notices; and that declarations to that effect should be made.
Section 718A
I next consider the FWO’s claim under s 718A of the FW Act. Subsection 718A(1) of the FW Act relevantly provides:
A person must not give information or produce a document to the Fair Work Ombudsman, an inspector, or a person referred to in subsection 712AA(2), (the official) exercising powers or performing functions under, or in connection with, a law of the Commonwealth if the person knows, or is reckless as to whether, the information or the document:
(a) is false or misleading; or
(b) for information—omits any matter or thing without which the information is misleading.
I am satisfied that the statement of claim pleads facts that establish that on each occasion Ms Gelonese sent each of the communications I identify in paragraph 27 of these reasons, UESB contravened s 718A of the FW Act, and that declarations to that effect should be made.
CLAIMS AGAINST MS GELONESE
I will first set out the evidence on which the FWO relies. Ms Gelonese has not challenged this evidence; and the evidence, in any event, largely consists of contemporaneous records of communications. I therefore accept the evidence on which the FWO relies.
Facts
On around 19 November 2019, the FWO commenced an investigation into UESB after receiving requests for assistance from employees of UESB, these being SG, TH, VP, SC, GH, BK, JH, and YL (these being the “Employees” I defined above).[10] The FWO conducted the investigation through FWI Cowell, who, in turn, conducted the investigation under the supervision of FWI Omar.[11] In the course of her investigation FWI Cowell communicated with Ms Gelonese by telephone, and by email to two different email addresses.[12] Since 1 September 2019 Ms Gelonese was the sole director of UESB, and the company secretary of UESB.[13]
[10] Affidavit L J Cowell 01.04.2022, [9]
[11] Affidavit L J Cowell 01.04.2022, [10]
[12] Affidavit L J Cowell 01.04.2022, [11]
[13] Affidavit of A L Neale 16.11.2021; annexure ALN-4
The Employees provided FWI Cowell with various classes of documents, these being software timesheets (from GH, TH, and YL), bank statements (from all Employees), vocational or training certifications (from GH, JH, BK, and YL), employment contracts (in relation to BK, JH, and GH), rosters (in relation to TH and BK), pay slips (from all Employees), and text messages (from all Employees).[14]
[14] Affidavit L J Cowell 01.04.2022, [12]
Between March and June 2020, the FWO issued three notices to produce documents (NTPs) pursuant to s 712 of the FW Act, one dated 24 March 2020, a second dated 16 April 2020, and a third dated 30 June 2020.[15] The NTPs were each addressed to “The Proper Officer Upper East Side Bondi Pty. Ltd.”, and called for a number of classes of documents, including documents that record the dates on which the Employees commenced and ended their employment with UESB, the classification level of each Employee, the rates of pay of each Employee, and payments made to each Employee.[16] Each of the NTPs contained the following statement:
You may be liable to a civil remedy under the Act for giving false or misleading information or producing false or misleading documents. It is also a serious offence under the Criminal Code (Cth).
[15] Affidavit L J Cowell 01.04.2022, [13]
[16] Affidavit L J Cowell 01.04.2022, [13], exhibit LJC-1, tab 3 (CB797-805)
On 27 April 2020 Ms Gelonese sent an email to FWI Cowell setting out what Ms Gelonese states was a “full break down”. The email contains information about some of the Employees, these being SG, TH, VP, SC, GH, and BK, and about one other employee. The information included the position in which each Employee worked, the work they performed, and their wages. Ms Gelonese attached with her email a letter of demand from VP, a letter of resignation from GH, a termination letter in relation to SG, and an email between Ms Gelonese and SG.[17] UESB did not produce any other documents, even after the FWO issued the second and third NTPs.[18]
[17] Affidavit L J Cowell 01.04.2022, [14], exhibit LJC-1, tab 4 (CB808-814)
[18] Affidavit L J Cowell 01.04.2022, [15]
On 27 November 2020 FWI Cowell issued the Compliance Notices.[19] The First Compliance Notice related to each of the Employees during their employment by UESB in the Assessment Period. (This included VP while she was employed full time from 27 September to 3 October 2019.) The First Compliance Notice alleged, among other things, as follows:
(a)UESB engaged the Employees for varying periods during the Assessment Period;
(b)the Employees’ employment was covered by the NES and the Restaurant Award;
(c)UESB employed the Employees in the employment classifications listed in Table A to the First Compliance Notice, and they each performed the duties that corresponded with their classification levels;
(d)during the Assessment Period UESB had paid or had agreed to pay the Employees the hourly amounts specified in Table B to the First Compliance Notice;
(e)during the Assessment Period the Employees were entitled to be paid, but UESB failed to pay to the respective Employees identified in Tables C, D, E, F, G, H, I, J, and K in the First Compliance Notice the rates specified in those tables, being amounts UESB was required to pay, but which it failed to pay under cl 20.1, cl 34.1, cl 34.2(a)(i), cl 33.2(a), cl 33.2(b), and cl 33.2(c) of the Restaurant Award and (in relation to the amounts in Tables J and K) s 90(2), s 117(2)(b), and s 117(3) of the FW Act;
(f)the amounts UESB was required to pay the Employees, but which it failed to pay the Employees, totalled $23,413.11.
[19] Affidavit L J Cowell 01.04.2022, [17]; exhibit LJC-1, tab 5 (CB815)
The First Compliance Notice demanded that, pursuant to s 716(2) of the FW Act:
(a)by 6 January 2021 UESB pay to each of the Employees the amounts the First Compliance Notice identified UESB failed to pay to each of the Employees; and
(b)by 13 January 2021, UESB produce reasonable evidence demonstrating the gross and net amount paid to each of the Employees including the time and date the payment was processed.
The Second Compliance Notice related only to one Employee, VP, while UESB had VP on what the Second Compliance Notice alleges was a casual basis. The Second Compliance Notice alleges that VP was entitled to be paid the amounts stated in Tables A, B, C, D, and E in the Second Compliance Notice under cl 20.1, cl 13.1, cl 34.1, and cl 34.2(a)(i) of the Restaurant Award. The amounts UESB was required to pay to VP totalled $999.74. The Second Compliance Notice demanded that, by 6 January 2021 UESB pay VP $999.74, and by 13 January 2021 UESB produce reasonable evidence demonstrating the gross and net amount paid to VP including the time and date the payment was processed.
Each of the Compliance Notices contained the following statements:
You may be liable to a civil penalty or other civil remedy under the FW Act if you give false or misleading information or produce false or misleading documents in response to this Compliance Notice. You may also be liable for a criminal offence under the Criminal Code (Cth) if you do so.
The Compliance Notices were served on the registered office of UESB on 27 November 2020.[20] On 3 December 2020, however, in a telephone conversation FWI Omar initiated, Ms Gelonese said she had not yet received the Compliance Notices; but she would look at them if FWI Omar sent them by email.[21] On the same day FWI Omar sent an email marked to the attention of “Julia Gelonese”, attaching the Compliance Notices.[22] In his email FWI Omar confirmed what was said in their telephone conversation that the Compliance Notices were served on UESB by a process server; and noted that “your action is required by 6 January 2021”.
[20] Affidavit of R Omar 01.04.2022, [10]; annexure RO-2
[21] Affidavit of R Omar 01.04.2022, [11]
[22] Affidavit of R Omar 01.04.2022, [11]; annexure RO-3
On 4 January 2021 Ms Gelonese sent an email to FWI Omar and FWI Cowell in which she enquired whether it would be possible “to push the due date till” 30 January 2021, noting that she was “awaiting data from our rostering platform to confirm the hours for [B and B] along with cashflow constraints due to COVID regulations etc.”[23] FWI Cowell responded by email sent on 4 January 2021 in which she stated that the “resolution dates on the Compliance Notices stands”, and that the “Compliance Notices are to be complied with by 6 January 2021 and the evidence is to be provided by 13 January 2021”.[24]
[23] Affidavit of R Omar 01.04.2022, [12]; annexure RO-4
[24] Affidavit of R Omar 01.04.2022, [12]; annexure RO-4
6 January 2021 email (SoC: 24(a))
On 6 January 2021 Ms Gelonese sent to FWI Omar and FWI Cowell an email which included the following:[25]
Trust this email finds you well and wishing you a Happy New Year.
As per the compliance notices − it does state that I am required to respond by the 13th of January 2021, I have however attached the below and had confirmation of arrangement with Lauren.
In the compliance notice it mentions my actions are only the below:
46.
a. pay the Employees in accordance with the gross amounts set out in Tables C to K and listed below (Total Underpayments)
b. Produce reasonable evidence demonstrating the gross & net amount paid to each employee.
In relation to point B − would you please confirm if the below table is sufficient? If not, I can arrange Final payslips with the attached gross above for both Full time & casual staff members.
[25] Affidavit of R Omar 01.04.2022, [13]; annexure RO-5
Immediately below this passage there is a table which names each of the Employees (including VP as a casual), and in relation to each of the Employees includes amounts under the headings “Gross” and “Net”. Ms Gelonese concluded her email as follows:
I have now completed the compliance notice − I will send through confirmation of payment upon receiving receipt.
If you would Kindly confirm this is all that is required from me so I don't get issued a failure to comply that would be very much so appreciated.
FWI Omar responded by email sent on 6 January 2021 stating that Ms Gelonese should pay the employees “today”, issue pay slips to the Employees “within one day of making payment”, and forward evidence of the payments by 13 January 2021 by forwarding the pay slips together with “EFT receipts”.[26]
[26] Affidavit of R Omar 01.04.2022, [13]; annexure RO-5
13 January 2021 email (SoC: 24(b))
On 13 January 2021 an email was sent from “[email protected]” to FWI Omar and FWI Cowell, which states: “Please see attached required information”.[27] I find that Ms Gelonese sent this email. The subject of the email is “Re: Attn Julia Gelonese”; and the email forms part of an email chain Ms Gelonese initiated on 4 January 2021 and to which FWI Cowell responded by email sent on 4 January 2021.[28] The email Ms Gelonese sent on 13 January 2021 attached purported pay slips that represented payments made on 22 July 2020 (in relation to SG and VP), and payments made on 30 April 2020 (in relation to BK, JH, SC, TH, and YL).
[27] Affidavit of R Omar 01.04.2022, [14]; annexure RO-6
[28] Affidavit of R Omar 01.04.2022, [12]; annexure RO-4
On 14 January 2021 FWI Omar sent an email to Ms Gelonese in which he stated that the payments date on the purported pay slips Ms Gelonese had sent “are incorrect”; and he requested Ms Gelonese “send through the EFT evidence asap”.[29] Ms Gelonese did not respond until 30 January 2021, when she sent an email to FWI Omar stating: “Please see attached documentation required”, and “[d]o confirm if anything else is required”.[30] By email sent on 1 February 2021 FWI Omar informed Ms Gelonese there were no attachments to the email she had sent on 30 January 2021.[31]
[29] Affidavit of R Omar 01.04.2022, [15]; annexure RO-7
[30] Affidavit of R Omar 01.04.2022, [16]; annexure RO-8
[31] Affidavit of R Omar 01.04.2022, [16]; annexure RO-8
On 3 February 2021 FWI Omar sent a further email to Ms Gelonese confirming the telephone conversation he had with Ms Gelonese on that day that FWI Omar was yet to receive the documents purportedly attached to Ms Gelonese’s email of 30 January 2021. FWI Omar also stated that he had spoken to a “couple of employees” who advised that “funds have yet to reach their bank accounts”; and he requested, as a matter of urgency, that Ms Gelonese forward evidence of payment “in relation to the … Compliance Notices”.[32]
[32] Affidavit of R Omar 01.04.2022, [16]; annexure RO-8
5 February 2021 email (SoC: 24(c))
After FWI Omar, on 5 February 2021, emailed Ms Gelonese that he had still not received the attachment, Ms Gelonese, on the same day, sent the following email:[33]
I am getting this file compressed into a zip file as it may be too large to be sent hence why it isn’t being received.
Staff payments shall also clear ASAP and will circle back with the bank in relation to this.
I have complied with the compliance notice by the end of January as discussed with Lauren.
Please contact me if you have any further queries.
[33] Affidavit of R Omar 01.04.2022, [16]; annexure RO-8
FWI Omar acknowledged receipt of Ms Gelonese’s email, and stated that, because he had not yet received the required evidence, and the “affected employees have advised that funds have not cleared into their bank accounts”, FWI Omar needed to issue the failure to comply notice that was attached to his email.[34] On 5 February 2021 FWI Omar sent to Ms Gelonese by registered post a notice stating that UESB had failed to comply with the Compliance Notices.[35]
[34] Affidavit of R Omar 01.04.2022, [17]; annexure RO-8
[35] Affidavit of R Omar 01.04.2022, [18]; annexure RO-8
12 February 2021 email (SoC: 24(d))
On 12 February 2021 Ms Gelonese sent an email stating she had spoken to her bank, “and there were some bounce backs due to account being overcommitted”, and she again said: “Please see attached”. FWI Omar sent an email stating there was nothing attached to Ms Gelonese’s email.[36]
[36] Affidavit of R Omar 01.04.2022, [20]; annexure RO-9
15 February 2021 telephone conversation (SoC: 24(e))
Ms Gelonese telephoned FWI Cowell on 15 February 2021, and said that she had emailed to FWI Omar “the payslips and evidence of payment”, and that “this was emailed with a zip file attachment”. FWI Cowell asked Ms Gelonese whether she could email them to her. Ms Gelonese said that “all employees have been paid and if any payments are overcommitted, they will do so tomorrow”. In response to FWI Cowell’s request that she explain what she meant by this, Ms Gelonese said:[37]
“Payments were made through the Xero platform and they will be reversed if overdrawn. Payslips have only been sent to the FWO…”
[37] Affidavit L J Cowell 01.04.2022, [25]
2 March 2021 email (SoC: 24(f))
On 2 March 2021 Ms Gelonese sent to FWI Cowell an email attaching purported pay slips representing that on 13 January 2021 the following amounts had been paid:[38]
(a)$1,684.01 to SG;
(b)$999.74 and $1,087.59 to VP;
(c)$4,387.47 to BK;
(d)$2,621.33 to JH;
(e)$3,496.82 to SC;
(f)$2,355.62 to TH;
(g)$3,570.45 to YL; and
(h)$4,209.82 to GH.
[38] Affidavit L J Cowell 01.04.2022, [26]; CB840-850
4 March 2021 email (SoC: 24(g))
On 4 March 2021 Ms Gelonese sent an email to FWI Omar to which she attached the same pay slips she had attached to her email to FWI Cowell.[39] FWI Omar sent an email to Ms Gelonese on 4 March 2021 in which he noted that the pay slips did not correspond with the facts, and he requested Ms Gelonese inform him when payments were processed. FWI Omar also requested that Ms Gelonese “attach evidence of the transfer of funds to the employees by way of EFT receipts”.[40] Ms Gelonese responded by email sent on 4 March 2021 in which she stated that “[t]hese are the dates of initial payment that was processed”, and that she had sent “receipts to you and the payslips”, and requested that FWI Omar “confirm”.[41] FWI Omar sent an email stating that “[w]e’ve never received any EFT receipts from you – just pay slips”, and that he had “just called two of the affected employees for a spot check and both maintain that no payments have been received yet”.[42]
[39] Affidavit of R Omar 01.04.2022, [22]; annexure RO-10, page 81
[40] Affidavit of R Omar 01.04.2022, [22]; annexure RO-10, page 79
[41] Affidavit of R Omar 01.04.2022, [22]; annexure RO-10, page 79
[42] Affidavit of R Omar 01.04.2022, [22]; annexure RO-10, page 78
5 March 2021 email (SoC: 24(h))
On 5 March 2021 Ms Gelonese sent an email to FWI Omar requesting that he “speak to the employees after Tuesday to allow these business days for funds to clear to them”.[43]
[43] Affidavit of R Omar 01.04.2022, [22]; annexure RO-10, page 78
9 March 2021 conversation (SoC: 24(i))
On 9 March 2021 FWI Cowell informed Ms Gelonese by telephone that she had received the pay slips Ms Gelonese had sent FWI Cowell on 2 March 2021, but the dates show the incorrect payment date of 13 January 2021. Ms Gelonese said she “will rectify”, that “all employees have been paid”, and that “all payments will be transferred by Thursday”.[44]
[44] Affidavit L J Cowell 01.04.2022, [28]
11 March 2021 email (SoC: 24(j))
On 11 March 2021 Ms Gelonese sent an email to FWI Cowell attaching pay slips purporting to show payment of the Employees on 13 January 2021.[45] FWI Cowell responded by email sent on 11 March 2021 in which she confirmed she had received the pay slips, but again noted that they each nominated 13 January 2021 as the payment date. FWI Cowell also said that “five former employees have stated that no payment has been received”.[46]
[45] Affidavit L J Cowell 01.04.2022, [29]; exhibit LJC-1, tab 10 (CB851)
[46] Affidavit L J Cowell 01.04.2022, [30]; exhibit LJC-1, tab 11 (CB863)
17 March 2021 email (SoC: 24(k))
On 17 March 2021 Ms Gelonese sent another email to FWI Cowell in which she stated that she had been informed that “all staff should receive payment by this week landing sporadically”. FWI Cowell sent emails to Ms Gelonese on 17 and 29 March 2021 for confirmation that the Employees had been paid.[47]
[47] Affidavit L J Cowell 01.04.2022, [31]; exhibit LJC-1, tab 11 (CB861-862)
On 14 January 2021 and 11 March 2021 FWI Cowell sent emails to each of the Employees requesting they each confirm that they had been paid; and they each confirmed that they had not received payment.[48] Further, on 1 April 2021 FWI Cowell issued two NTPs to two banks, seeking documents relating to UESB and Ms Gelonese for the period 27 November 2020 to 30 March 2021.[49]
[48] Affidavit L J Cowell 01.04.2022, [41]; exhibit LJC-1, tab 20 (CB1191-1237)
[49] Affidavit L J Cowell 01.04.2022, [40]; exhibit LJC-1, tabs 18 and 19 (CB918-1189)
The Employees responded they had not received payments on 14 January 2021 (in the case of JH, YL, GH, BK, VP, and TH); on 15 January 2021 (in the case of SG); on 1 March 2021 (in the case of VP); on 5 March 2021 (in the case of SG); on 11 March 2021 (in the case of JH, SG, and TH); on 29 March 2021 (in the case of TH); on 8 April 2021 (in the case of VP); on 13 April 2021 (in the case of JH); on 10 June 2021 (in the case of TH); on 22 June 2021 (in the case of JH).[50]
[50] Affidavit L J Cowell 01.04.2022, [41]; exhibit LJC-1, tab 20 (CB1191-1237)
11 May 2021 conversation (SoC: 24(l))
On 11 May 2021 FWI Cowell telephoned Ms Gelonese and had a conversation to the following effect:[51]
FWI Cowell: If you give false or misleading information or produce false or misleading documents to me you may be liable to a civil remedy.
Ms Gelonese: Yes, I understand. I am calling to find out what is happening with this matter?
FWI Cowell: Julia, none of the employees have confirmed that they have received any payments in relation to the Compliance Notices and FWO has not received any EFT evidence.
Ms Gelonese: They have been paid.
[51] Affidavit L J Cowell 01.04.2022, [33]; exhibit LJC-1, tab 14 (CB868-872)
On 12 July 2021 FWI Cowell sent an email to each of the Employees requesting they each provide to the FWO bank statements or extracts from their bank accounts recording that no payments had been made. Between 12 and 19 July 2021 the Employees responded they had not been paid.[52]
[52] Affidavit L J Cowell 01.04.2022, [42], [43]; exhibit LJC-1, tabs 21 and 22 (CB1238-1314; CB1315-1318)
On 17 August 2021 FWI Cowell sent an email to Ms Gelonese attaching a letter dated 10 August 2021 which had been sent by express post to Ms Gelonese at an address at Bondi Beach. The letter stated that its purpose was to provide UESB with the opportunity to respond to allegations that it had provided false or misleading information and documents to Fair Work Inspectors.[53] The letter identified the information the letter alleged contained false or misleading information. Ms Gelonese responded with the following email on 18 August 2021:[54]
Dear Lauren,
Thank you for your email.
I remember I gave you a call in May to discuss these matters to see where they were at and you were going to email me back. I’m bit confused here - are you stating that after all of this time, you did [not] receive all documentation?
Are you also stating that none of the staff had been paid?
Thank you,
Julia
[53] Affidavit L J Cowell 01.04.2022, [37]; exhibit LJC-1, tab 14 (CB868-872)
[54] Affidavit L J Cowell 01.04.2022, [35]; exhibit LJC-1, tab 14 (CB874)
FWI Cowell responded by email sent on 18 August 2021 noting, among other things, that the Employees listed in the Compliance Notices “have all stated that they have not received a payment from [UESB]”.[55]
[55] Affidavit L J Cowell 01.04.2022, [35]; exhibit LJC-1, tab 14 (CB873)
On 23 August 2021 Ms Gelonese sent an email responding to FWI Cowell’s email of 18 August 2021.[56] Ms Gelonese stated that she had “provided correct and accurate payslips for the staff prior to the compliance due date”; that “[p]ayment[s] were processed and have been processed”; that “staff have been paid and payslips confirm these figures as per the compliance notice”; and the “payslips on this date are true and correct, the amounts are the same, unsure how this would be a contradiction when they have the same information with the same figures all provided in the compliance notices”. Ms Gelonese attached purported screenshots of transfers made to the Employees, other than SG, GH, and YL, and pay slips recording payments on 13 January 2021 to each of the Employees. The purported screenshots were undated.
[56] Affidavit L J Cowell 01.04.2022, [36]; exhibit LJC-1, tab 15 (CB875-876)
On 16 September 2021 FWI Cowell sent an email to Ms Gelonese attaching a letter dated 16 September 2021, which refers to the email Ms Gelonese had sent on 23 August 2021.[57] The letter states, among other things, that the FWO has not received electronic funds transfer evidence for UESB confirming that payments had been made on any of the dates specified in pay slips Ms Gelonese had previously provided. Ms Gelonese responded by email sent on 17 September 2021 to which she attached purported evidence of payment to SG and YL, and a table that purportedly represents gross payments made to the Employees.[58].
[57] Affidavit L J Cowell 01.04.2022, [37]; exhibit LJC-1, tab 16 (CB891-896)
[58] Affidavit L J Cowell 01.04.2022, [37]; exhibit LJC-1, tab 16 (CB897-898)
On 22 September 2021 FWI Cowell sent an email to Ms Gelonese attaching a letter dated 22 September 2021.[59] The letter stated that each of SG, YL, GH, BK, JH, TH, and VP (both for full-time and part-time work) had confirmed they had received payment; and that SC informed the FWO that he had closed the bank account to which UESB had paid his wages. The letter recommended Ms Gelonese contact SC to obtain his current banking details. The letter also requested that Ms Gelonese provide evidence that UESB had withheld amounts for PAYG tax.
[59] Affidavit L J Cowell 01.04.2022, [38]; exhibit LJC-1, tab 17 (CB902-903)
On 11 October 2021 Ms Gelonese sent an email attaching files that included a document that purported to show seven transfers from a bank account on 23 August 2021 to SC, JH, VP, BK, YL, and TH (but not to GH and SG), and another document that purported to show gross payments to all Employees.[60] On 14 October 2021 Ms Neal, a lawyer working in the office of the FWO, sent an email to Ms Gelonese in which she said, among other things, that the documents Ms Gelonese provided did not constitute reasonable evidence of gross payments. Ms Neal also said that although the documents showed that an amount had been paid to SC, it was unlikely that the transfer would have been completed because SC had informed the FWO that he had closed that account. Ms Neal, therefore, requested, among other things, Ms Gelonese provide evidence that SC had been paid.[61]
[60] Affidavit of A L Neal 04.04.2022, [4]; annexure ALN-24
[61] Affidavit of A L Neal 04.04.2022, [5]; annexure ALN-25
Ms Gelonese responded by email sent on 18 October 2021, in which she said, among other things:[62]
As per the attached bank statements. If you’re claiming that [SC] has not been finalised − I would like to have his bank details urgently. He has not responded to my email in regards to if he has received payment or not, or provided his “new” bank details. I would like you to confirm what you'd like me to do in this circumstance? As he won’t even respond to Ms Cowell.
[62] Affidavit of A L Neal 04.04.2022, [5]; annexure ALN-26
The FWO submits that UESB has not provided evidence confirming remittance of gross amounts to the Australian Taxation Office (ATO); and none of the purported pay slips Ms Gelonese provided to FWI Cowell or FWI Omar accurately record any transfers to the ATO. I accept that submission, which means that UESB did not comply with the Compliance Notices to the extent they required UESB “produce reasonable evidence demonstrating the gross and net amount paid to each Employee, including the time and date the payment was processed”.
Was Ms Gelonese involved in any contravention of s 716(5) of the FW Act?
On the basis of the facts I have set out in the preceding section of these reasons, it is clear that UESB was given the Compliance Notices, and that UESB failed to comply with them. I am therefore satisfied that UESB failed to comply with the Compliance Notices and, for that reason, contravened s 716(5) of the FW Act.
The next question is whether Ms Gelonese was a person “involved” in UESB’s contraventions of s 716(5) of the FW Act. I have set out elsewhere the circumstances in which a person will be taken to be a “person involved” in another person’s contravention of a civil remedy provision within the meaning of s 550(2) of the FW Act; and it will not be necessary to repeat those principles here.[63] All I need to say is that for Ms Gelonese to be liable as a person involved in UESB’s contraventions of s 716(5) of the FW Act two things must be proved. The first is that Ms Gelonese engaged in conduct, or failed to engage in conduct, which is linked to the essential elements of UESB’s contraventions of s 716(5) of the FW Act. There are two such elements: UESB was given a notice that has been issued pursuant to s 716(2) of the FW Act and which contains the information required by s 716(3); and UESB failed to comply with the requirements of the notice. Second, Ms Gelonese has knowledge of these essential elements.
[63] See Fair Work Ombudsman v Chatime Australia Pty Ltd [2022] FedCFamC2G 934, at [70]-[84]
Ms Gelonese was the sole director of UESB; and Ms Gelonese was the only person who corresponded with and spoke to FWI Cowell and FWI Omar in relation to the Compliance Notices. FWI Omar informed Ms Gelonese on 3 December 2020 that the Compliance Notices had been served on the registered office of UESB on 27 November 2020; and on 3 December 2020 FWI Omar sent the Compliance Notices to Ms Gelonese by email. It is open to find, and I do find, therefore, that Ms Gelonese received both Compliance Notices; she was in a position to understand the contents of the Compliance Notices; and that she took the time to read and understand their contents, and in particular, what it was the Compliance Notices required UESB to do, and by when UESB was required to do these things. These findings are reinforced by the extensive correspondence Ms Gelonese sent to FWI Omar and FWI Cowell providing information Ms Gelonese claimed showed that UESB had complied with the Compliance Notices. I also find, on the basis of these matters, and Ms Gelonese’s being the sole director of UESB, that she was the person responsible on behalf of UESB for responding to the Compliance Notices.
In these circumstances, I find Ms Gelonese was the person through whom UESB failed to comply with the Compliance Notices; she was aware that UESB had been given the Compliance Notices which required UESB to comply with them by 6 January 2021; and that she knew UESB did not comply with the Compliance Notices by that day. I am therefore satisfied that Ms Gelonese was a person involved with UESB’s contraventions of s 716(5) of the FW Act within the meaning of s 550(2); and, for that reason, is to be taken herself to have contravened s 716(5) when UESB failed to comply with the Compliance Notices.
Did Ms Gelonese contravene s 718A of the FW Act?
Section 718A of the FW Act provides as follows:
(1) A person must not give information or produce a document to the Fair Work Ombudsman, an inspector, or a person referred to in subsection 712AA(2), (the official) exercising powers or performing functions under, or in connection with, a law of the Commonwealth if the person knows, or is reckless as to whether, the information or the document:
(a) is false or misleading; or
(b) for information—omits any matter or thing without which the information is misleading.
(2) Subsection (1) does not apply as a result of paragraph (1)(a) if the information or the document is not false or misleading in a material particular.
(3) Subsection (1) does not apply as a result of paragraph (1)(b) if the information did not omit any matter or thing without which the information is misleading in a material particular.
(4) Subsection (1) does not apply to a person who produces a document if the document is accompanied by a written statement signed by the person or, in the case of a body corporate, by a competent officer of the body corporate:
(a) stating that the document is, to the knowledge of the person, false or misleading in a material particular; and
(b) setting out, or referring to, the material particular in which the document is, to the knowledge of the person, false or misleading.
(5) Subsection (1) does not apply if, before the information was given or the document was produced by a person to the official, the official did not take reasonable steps to inform the person that the person may be liable to a civil remedy for contravening subsection (1).
(6) For the purposes of subsection (5), it is sufficient if the following form of words is used:
“You may be liable to a civil remedy for giving false or misleading information or producing false or misleading documents”.
The elements of a contravention of s 718A of the FW Act, therefore, are as follows:
(a)a person gave information or produced a document to, among others, an inspector exercising powers or performing functions under, or in connection with, a law of the Commonwealth;
(b)either:
(i)the information or document was false or misleading; or
(ii)the information omitted any matter or thing without which the information was misleading;
(c)the person who gave the information or document knew or was reckless as to whether:
(i)the information or document was false or misleading; or
(ii)the information omitted any matter or thing without which the information was misleading;
(d)the information or document the person gave must have been false or misleading in a material particular or, the information a person omitted to provide did not render the information the person did provide misleading; and
(e)before the person gave the information or document the person to whom the information or document was provided took reasonable steps to inform the person that the person may be liable to a civil remedy for contravening s 718A of the FW Act.
The expression “false in a material particular” was considered by the Full Federal Court in Minister for Immigration, Local Government & Ethnic Affairs v Dela Cruz:[64]
The expression “false in a material particular” appears in many statutes, both in this country and overseas. It has been discussed in R v Lord Kylsant [1932] 1 KB 442; Murphy v Griffiths [1967] 1 WLR 333; [1967] 1 All ER 424; R v Mallett [1978] 1 WLR 820; R v M [1980] 2 NSWLR 195; R v Brott [1988] VR 1. In the last mentioned case, Brooking J pointed out that the concept is well understood. As his Honour said (at 11): “an assertion that a document is false is to be taken as an assertion that it is false in a material particular.” The term “material” requires no more and no less than that; the false particular must be of moment or of significance, not merely trivial or inconsequential.
[64] Minister for Immigration, Local Government & Ethnic Affairs v Dela Cruz (1992) 34 FCR 348, at page 352
Did Ms Gelonese give documents and information to an inspector?
The FWO identifies in paragraph 24 of the statement of claim the documents and information the FWO alleges Ms Gelonese gave to FWI Omar or FWI Cowell, or to both. I have identified and set out above the documents and information Ms Gelonese provided; and I find that the documents and information I have identified are to the effect alleged in paragraph 24 of the statement of claim. I further find that on each occasion Ms Gelonese gave the information or documents, she conveyed a representation to the effect that UESB had paid the amounts it owed the Employees.
Were the documents and information false?
Each of the representations Ms Gelonese conveyed to FWI Omar and FWI Cowell on or before 11 May 2021 was false. As I have already noted, on 11 October 2021 Ms Gelonese sent an email attaching a document that purported to show seven transfers from a bank account on 23 August 2021 to six of the eight Employees.[65] The information contained in this document appears to be correct, because by no later than September 2021 the Employees (other than SC) confirmed to the FWO that they had been paid. This evidence alone is a basis for finding, and I do find, that at least six of the eight Employees had been paid on 23 August 2021, which means that at least those six Employees had not been paid before 23 August 2021. That, in turn, means that each of the representations Ms Gelonese made on or before 11 May 2021 that the Employees had been paid was false.
[65] Affidavit of A L Neal 04.04.2022, [4]; annexure ALN-24
Even if I were to ignore the (hearsay) evidence that by September 2021 all Employees (other than SC) had confirmed to the FWO that they had received payment, I would still find that each of the representations Ms Gelonese made to the FWO on or before 11 May 2021 that the Employees had been paid was false. In her email of 11 October 2021 Ms Gelonese represented that at least six of the eight Employees had been paid on 23 August 2021, and this representation was supported by a document that contains particulars of the account number from which the money was paid, and the transaction numbers for each transfer. Whether the document Ms Gelonese provided is authentic or accurate, the fact that it asserts payments were made on 23 August 2021 to at least six of the Employees is a basis for inferring, and I find, that representations Ms Gelonese made on or before 11 May 2021 that the Employees had been paid were false.
Did Ms Gelonese know the documents and information were false?
This question must be answered in the affirmative. Ms Gelonese has adduced no evidence to show the Employees had been paid at any of the times that, on or before 11 May 2021, Ms Gelonese represented they had been paid. That is a basis for inferring that UESB had no records that are capable of showing that UESB had paid the Employees by each of the times Ms Gelonese, on or before 11 May 2021, had represented UESB did pay the Employees.
Further, and as I have already found, Ms Gelonese was the person who provided information to FWI Omar and FWI Cowell in response to the Compliance Notices. From this it is open to find, and I do find, that Ms Gelonese had access to the books and records of UESB to the extent they related to the payment of wages to the Employees; and therefore had knowledge of what the records revealed about whether the Employees had been paid their wages, namely, that UESB had not paid the Employees at each of the times Ms Gelonese, on or before 11 May 2021, had represented UESB had paid them. The position, therefore, is that at the time she made each of these representations, Ms Gelonese either knew UESB had not paid the Employees, or she was indifferent to the truth of whether UESB did pay the Employees.
At the hearing Ms Gelonese submitted that the pay slips she provided to FWI Cowell and FWI Omar “would have been from the initial time that the payslips were generated and I wouldn’t be in this circumstance if they were paid in accordance with the date that they were supposed to be paid”.[66] In response to my informing Ms Gelonese I did not understand this submission, Ms Gelonese submitted that the pay slips were intended only to show the periods for which the Employees had worked, not the time they were paid. I do not accept that submission; the pay slips purport to show amounts that were paid, and the dates on which they were paid.
[66] T33.20
Were documents and information false in a material particular?
There is no question that the truth of whether the Employees had been paid was significant on each occasion on which Ms Gelonese provided information or documents that conveyed a representation to the effect that the Employees had been paid. The entire point of the Compliance Notices was to require UESB to pay the Employees the amounts to which they were entitled. Thus, Ms Gelonese’s statements that the Employees had been paid when in fact they had not been paid were false in a material particular.
Reasonable steps to inform of potential civil remedy if false or misleading information provided?
I have already noted that the Compliance Notices contained a note to the effect that “[y]ou may be liable to a civil penalty or other civil remedy under the FW Act if you give false or misleading information or produce false or misleading documents in response to this Compliance Notice”. It could be argued that, given the Compliance Notices were directed to UESB, the note was only directed to UESB, and not to Ms Gelonese. I would not accept this argument. “You”, as it appears in the Compliance Notices, would have been understood by any person, such as Ms Gelonese, who purported to respond to the Compliance Notices, that if, in purported compliance with the requirements of the Compliance Notices, they provided to an inspector information or documents that were false would be liable to a civil remedy.
Conclusion
I am satisfied that Ms Gelonese contravened s 718A of the FW Act on each of the occasions identified in paragraph 24 of the statement of claim she provided information or documents to FWI Cowell or FWI Omar.
PENALTY
Power and principles
Subsection 546(1) of the FW Act provides that this Court may, on application, order a person to pay a pecuniary penalty the Court considers is appropriate if the Court is satisfied the person has contravened a “civil remedy provision”.[67] That expression is defined in s 539(1) of the FW Act to include the provisions identified in column 1 of the table to s 539(2) of the FW Act. Subsection 716(5) and s 718A are in column 1 of the table to s 539(2) of the FW Act.
[67] I reviewed the relevant principles in Bevis v VA Holdings Pty Ltd trading as Granton Homes & Ors [2020] FCCA 2082, at [33]-[38]
Subsection 546(2) of the FW Act provides that the pecuniary penalty the Court may impose must not, where the person is an individual, be more than “the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2)” and, if the person is a body corporate, must not be more than five times “the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2)”.
The maximum penalty units for a contravention of s 716(5) of the FW Act as at 6 January 2021, being the day by which UESB was required to carry out all of the actions specified in the Compliance Notices, are 30 penalty units for an individual, and 150 penalty units for a body corporate. The maximum penalty units for a contravention of s 718A of the FW Act from 6 January 2021 (being the day by which UESB was required to carry out all of the actions specified in the Compliance Notices) to 11 May 2021 (being the last of the occasions alleged in paragraph 24 of the statement of claim in which Ms Gelonese provided information to the FWO) are 60 penalty units for an individual, and 300 penalty units for a body corporate. (This excludes “serious contraventions”, as defined in s 557A of the FW Act.) Section 12 of the FW Act provides that “penalty unit” has the meaning given by s 4AA of the Crimes Act 1914 (Cth). The penalty unit provided for by s 4AA of that Act from 6 January 2021 to 11 May 2021 was $222. Thus, $33,300 is the maximum penalty a company may be ordered to pay for its contravention of s 716(5) of the FW Act; and $6,660 is the maximum penalty for an individual. And $66,600 is the maximum penalty a company may be ordered to pay for its contravention of s 718A of the FW Act; and $13,320 is the maximum penalty for an individual.
Assessing penalties for multiple contraventions
The FWO submits the proceeding concerns two contraventions of s 716(5) of the FW Act in relation to each of the Compliances Notices issued to UESB, and 12 contraventions of s 718A of the FW Act in relation to each time Ms Gelonese represented to the FWO that the Employees had been paid, and supplied document evidence in purported proof of such payments.
The approach to assessing penalties for multiple contraventions of provisions of the FW Act was outlined by Bromwich J in Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown (New Shanghai) as follows:[68]
(1)Identify the separate contraventions, with each breach of each obligation being a separate contravention, and each breach of a term of the Award being a separate contravention.
(2)Consider whether each separate contravention should be dealt with independently or with some degree of aggregation for those contraventions arising out of a course of conduct, noting that s 557 of the FW Act provides that two or more contraventions of a given civil remedy provision are to be taken to be a single contravention if committed by the same person and arising out of a course of conduct by that person.
(3)Consider whether there should be further adjustment to ensure that, to the extent of any overlap between groups of separate aggregated contraventions, there is no double penalty imposed, and that the penalty is an appropriate response to what each respondent did.
(4)Consider the appropriate penalty in respect of each final individual group of contraventions, taken in isolation.
(5)Consider the overall penalties arrived at, including by reference to those which may be proposed by the FWO . . . and what is proposed by the respondents, and apply the totality principle, to ensure that the penalties for each respondent are appropriate and proportionate to the conduct viewed as a whole, making such adjustments as are necessary . . . .
[68] Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301, at [36]
It is unnecessary to apply the second of the five steps Bromwich J identifies in this passage to the respondents’ contraventions because s 716(5) and s 718A of the FW Act are not mentioned in s 557(2) of the FW Act and, for that reason, s 557(1) does not apply to multiple contraventions of s 716(5) and s 718A of the FW Act. The third step, however, is relevant; it requires the application of what is often referred to as the “one transaction principle”. Owen JA gave a useful statement of the principle in Royer v Western Australia:[69]
At its heart, the one transaction principle recognises that, where there is an interrelationship between the legal and factual elements of two or more offences with which an offender has been charged, care needs to be taken so that the offender is not punished twice (or more often) for what is essentially the same criminality. The interrelationship may be legal, in the sense that it arises from the elements of the crimes. It may also be factual, because of a temporal or geographical link or the presence of other circumstances compelling the conclusion that the crimes arise out of substantially the same act, omission or occurrences.
[69] Royer v Western Australia [2009] WASCA 139, at [22]
Lockhart J stated the principle in the context of the imposition of penalties for contraventions of provisions of the Trade Practices Act 1974 (Cth) in Trade Practices Commission v Bata Shoe Company of Australia Pty Ltd:[70]
Guidance is given in the field of sentencing for criminal offences by the well-known principle that where several offences are heard together and arise out of the same transaction it is a sound working rule that the sentences imposed for those offences should be made concurrent; it is inappropriate to sentence consecutively when the offences were all really involved in the same episode . . .
[70] Trade Practices Commission v Bata Shoe Company of Australia Pty Ltd [1980] FCA 47; (1980) 44 FLR 149; (1980) ATPR 40-161, at 42, 277
The Full Federal Court confirmed the relevance of the “one transaction principle” in the assessment of multiple contraventions of a single civil remedy provision in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union:[71]
There is no doubt that, in an appropriate case involving multiple contraventions, the Court should consider whether the multiple contraventions arose from a course or separate courses of conduct. If the contraventions arose out of a course of conduct, the penalties imposed in relation to the contraventions should generally reflect that fact, otherwise there is a risk that the respondent will be doubly punished in respect of the relevant acts or omissions that make up the multiple contraventions.
[71]Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113, at [148] (Dowsett, Greenwood, and Wigney JJ)
There are two matters to note about the application of the “one transaction principle”. First, the principle does not relieve the Court from assessing a penalty for each contravention, even if the contravention arose out of a course of conduct. The “one transaction principle” is applied only after a penalty has been (provisionally) assessed for each contravention. That is apparent from the fourth step Bromwich J identifies in New Shanghai, namely, the consideration of “the appropriate penalty in respect of each final individual group of contraventions, taken in isolation” (emphasis added).[72] Second, “even if the contraventions are properly characterised as arising from a single course of conduct, a judge is not obliged to apply the principle if the resulting penalty fails to reflect the seriousness of the contraventions”.[73]
[72] Fair Work Ombudsman v NSH North Pty Ltd trading as New Shanghai Charlestown [2017] FCA 1301, at [36]
[73] Australian Competition and Consumer Commission v Yazaki Corporation [2018] FCAFC 73, at [235] (Allsop CJ, Middleton and Robertson JJ)
The final step Bromwich J identifies in New Shanghai is the application of a related, but distinct,[74] principle known as the “totality principle”. Under that principle a sentencing judge is required “to impose a sentence or sentences which reflect the overall criminality of the offending for which the offender has been convicted”.[75] In R v Holder & Johnston Street CJ described the principle as follows:[76]
The principle of totality is a convenient phrase, descriptive of the significant practical consideration confronting a sentencing judge when sentencing for two or more offences. Not infrequently a straight-forward arithmetical addition of sentences appropriate for each individual offence considered separately will arrive at an ultimate aggregate that exceeds what is called for in the whole of the circumstances. In such a situation the sentencing judge will evaluate, in a broad sense, the overall criminality involved in all of the offences and, having done so, will determine what, if any, downward adjustment is necessary, whether by telescoping or otherwise, in the aggregate sentences in order to achieve an appropriate relativity between the totality of the criminality and the totality of the sentences.
[74] Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70, at [42], Stone and Buchanan JJ said: “For the purpose of the present discussion the general principle which appears to be relied upon by the appellant [i.e., the “one transaction principle”] may be accepted, although it is important to distinguish it from the application of the totality principle which 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.”
[75] Contin v The Queen [2012] VSCA 247, at [38]
[76] R v Holder& Johnston [1983] 3 NSWLR 245, at page 260
The “totality principle” has been held to apply to the assessment of pecuniary penalties.[77] The application of the “totality principle” to the assessment of pecuniary penalties was confirmed by the Full Federal Court in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union:[78]
The totality principle, like the course of conduct principle, has its origins in criminal sentencing. . . .
The totality principle is sometimes confused or conflated with the course of conduct principle. That is perhaps not surprising because application of the totality principle may again result in a court adjusting what would otherwise have been consecutive or cumulative sentences to sentences that are wholly or partially concurrent. The proper approach, however, is to first consider the course of conduct principle and determine whether the sentences should be consecutive, or wholly or partly concurrent. Once that is done, the Court should then review the aggregate sentence to ensure that it is just and appropriate. That may require a further adjustment of the sentences: either by ordering further concurrency or, if appropriate, lowering the individual sentences below what would otherwise be appropriate.
While, in the criminal sentencing context, the totality principle is generally applied in cases involving sentences of imprisonment, it has been held to apply to the fixing of fines . . . . In the case of fines, the Court must fix a fine for each offence and then review the aggregate to ensure that it is just and appropriate. If the result of the aggregation of multiple fines is that the penalty is excessive, that may lead to the moderation of the fine imposed in respect of each offence . . . .
Once again, the important point to emphasise is that, in the criminal sentencing context, application of the totality principle does not authorise or permit the sentencing court to impose a single sentence for multiple offences.
[77] Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCAFC 59, at [41]
[78] Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113, at [116]-[119] (Dowsett, Greenwood, and Wigney JJ) (citations omitted)
Assessing penalty for single contravention – object of assessment
When assessing the amount of the pecuniary penalty that the Court should order be paid, it is useful to distinguish between the purpose or purposes for which pecuniary penalties are to be imposed and, given that purpose or purposes, the matters that may be relevant to assessing the penalty. As for the purpose of imposing pecuniary penalties, the Full Federal Court in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union said:[79]
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. 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 contravener and by others who might be tempted to contravene; both specific and general deterrence are important. 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. In relation to general deterrence, it is important to send a message that contraventions of the sort under consideration are serious and not acceptable.
The question whether a pecuniary penalty involves an element of punishment remains somewhat controversial. To a certain extent, that debate appears to be more semantic or philosophical than real. It is sufficient to say that, accepting that the primary purpose of imposing a pecuniary penalty is to protect and deter, that purpose is achieved by imposing a punishment in the form of a pecuniary penalty.
[79] Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113, at [98], [99] (citations omitted)
That the principal purpose of making an order for the payment of a pecuniary penalty is deterrence was confirmed by the plurality in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (references omitted):[80]
[T]he principal object of an order that a person pay a pecuniary penalty under s 546 is deterrence: specific deterrence of the contravener and, by his or her example, general deterrence of other would-be contraveners.
[80] Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3, at [116] (Keane, Nettle and Gordon JJ) (citation omitted)
Assessing penalty for a single contravention – factors
The approach of most judges when assessing penalties for a single contravention of a provision of the FW Act is to take into account the non-exhaustive considerations Tracey J identified in Kelly v Fitzpatrick,[81] which his Honour adopted from the judgment of Mowbray FM in Mason v Harrington Corporation Pty Ltd.[82] Those considerations are:
[81] Kelly v Fitzpatrick [2007] FCA 1080, at [14]
[82] Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
(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 or damage sustained as a result of the breaches;
(d)whether there had been similar previous conduct by the respondent;
(e)whether the breaches were properly distinct or arose out of the one course of conduct;
(f)the size of the business enterprise involved;
(g)whether or not the breaches were deliberate;
(h)whether senior management was involved in the breaches;
(i)whether the party committing the breach had exhibited contrition;
(j)whether the party committing the breach had taken corrective action;
(k)whether the party committing the breach had cooperated with the enforcement authorities;
(l)the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
(m)the need for specific and general deterrence.
Although these factors have been identified and applied as relevant to the assessment of penalties, they do not constitute a “rigid catalogue of matters for attention”.[83]
[83] Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8, at [91] (Buchanan J)
Also relevant is the maximum penalty for the contravention provided for by the FW Act; and here I refer to the following passage from the judgment of Flick J in The BKH Contractors Case (No 2):[84]
In undertaking the task of assessing and quantifying the penalties to be imposed, the maximum penalty prescribed by the Commonwealth legislature for a specific contravention serves as a “yardstick” against which the assessment of penalties is generally to proceed . . . .
Assessment of penalties for contraventions of s 716(5) of the FW Act
[84] Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (The BKH Contractors Case) (No 2) [2018] FCA 1563, at [19]
Nature, extent, circumstances, and deliberateness of the contravening conduct
The contraventions consisted of UESB, through Ms Gelonese, not complying with the Compliance Notices by 6 January 2021. This remains the case, even though the evidence shows that UESB eventually paid all the Employees except SC by around August 2021. Further, as I have already found, UESB has not provided evidence confirming remittance of gross amounts to the ATO.
The following passage from the judgment of Judge Emmett in Fair Work Ombudsman v Viper Industries Pty Ltd applies to the nature of UESB’s and Ms Gelonese’s contraventions of s 716(5) of the FW Act.[85]
The Respondents’ intentional failure to comply with a mandatory notice issued by the workplace regulator is “conduct ... [which] undermines the utility and effectiveness of a fundamental object” [of] the FW Act. The failure to comply undermines and frustrates the powers conferred on Fair Work Inspectors, which are conferred for the purposes of providing an effective means of enforcing compliance with lawful minimum entitlements. There is a significant cost to the public by reason of the need to bring this matter before the court to enforce compliance.
[85] Fair Work Ombudsman v Viper Industries Pty Ltd [2015] FCCA 492, at [7]
These matters point to assessing penalties at the higher end of the scale.
At the hearing, Ms Gelonese submitted she was still requesting information about SC so that she can pay him. As I have already noted, it is the case that an attempt had been made to transfer funds into an account SC had maintained when he was an employee, but which had been closed by the time Ms Gelonese attempted in August 2021 to pay SC, together with the other Employees.
Nature and extent of loss occasioned by contravention
The amount of the wages UESB failed to pay within the time required by the Compliance Notices total $24,412.85; and the amounts for each Employee range from $1,684.01 to $4,387.47. These are significant amounts; and the time it took UESB to pay these amounts to the Employees is also significant. These matters point to assessing penalties at the higher end of the scale.
Deliberateness, similar previous conduct, and lack of contrition and corrective action
As I have already noted, UESB eventually paid the Employees. That, however, is not a factor that should be given great weight to mitigate a penalty that it would otherwise be appropriate to assess for UESB’s contravention. Between 6 January 2021 and 11 May 2021 Ms Gelonese repeatedly advised FWI Cowell and FWI Omar that payments would or had been made to the Employees the subject of the Compliance Notices. Further, the respondents have been the subject of previous proceedings in relation to a failure to comply with compliance notices issued on 15 October 2019.[86] There can be no doubt, therefore, that when Ms Gelonese received the Compliance Notices on 3 December 2020 she would already have known of their nature and significance.
[86] Fair Work Ombudsman v Upper East Side Bondi [2021] FedCFamC2G 354, at [25]
Specific deterrence
The FWO submits there is a strong need for specific deterrence, and that the penalty imposed on the respondents should be meaningful enough to ensure they are deterred from engaging in similar conduct in the future. The FWO submits that although Ms Gelonese is an undischarged bankrupt, and unable to hold a position as director of UESB, UESB is still registered and “there is at least some risk it may operate a business in the future”. The FWO also submits that the respondents’ incapacity to pay a penalty “will carry little weight”.[87]
[87] Applicant’s Submissions on Default Judgment, Liability and Penalty, [73] referring to Jordan v Mornington Inn Pty Ltd [2007] FCA 1384; (2007) 166 IR 33, at [99]; FWO v Australian Wild Tuna Pty Ltd & Anor [2016] FCCA 2626, at [84]
I am not satisfied there is any prospect that UESB will again trade, and although there is some prospect Ms Gelonese will in the future commence a business, the prospects of her doing so are sufficiently remote not to warrant my including specific deterrence as a factor when assessing the penalty it would be appropriate for Ms Gelonese to pay.
General deterrence
The FWO relies on data contained in an industry profile of the “Cafes and Restaurants & Takeaway Food Services” industry, and submits a meaningful penalty will encourage other employers, particularly those in the hospitality industry, to take timely action to comply with compliance notices issued by a Fair Work Inspector. The FWO further submits there is a need to send a message to detract others who may otherwise be prepared to expend public resources to engage in delay and misinformation to avoid payment of amounts owed under a compliance notice. I agree.
I adopt what Judge Jarrett said in Fair Work Ombudsman v VS Investment Group Pty Ltd:[88]
The failure to comply with a notice properly issued by the applicant in the course of its investigations and the discharge of its statutory functions is serious. Recipients of such notices should be left under no misapprehension about their obligations to comply with those notices.
[88] Fair Work Ombudsman v VS Investment Group Pty Ltd [2013] FCCA 208, at [51]
Other matters
Ms Gelonese submitted that she is devastated by her becoming bankrupt at such a young age, and that she has been painted as an untrustworthy individual; and she is remorseful “that this even occurred”.[89] Ms Gelonese further says that if somebody Googles her name then, “because of what the [FWO] has given to the media, it comes up with” unflattering information about Ms Gelonese.[90] Although I appreciate these matters are of concern to Ms Gelonese, they are not relevant to assessing penalties.
[89] T36.10
[90] T37.5
Assessment (before adjustment)
The FWO submits that:
(a)the penalty for the contravention of the First Compliance Notice should range from 80% to 90% of the maximum amount, which translates to a range from $26,640 to $29,970 for UESB, and from $5,328 to $5,994 for Ms Gelonese; and
(b)the penalty for the contravention of the Second Compliance Notice should range from 60% to 70% of the maximum penalty, which translates to a range from $19,980 to $23,310 for UESB, and from $3,996 to $4,662 for Ms Gelonese.
The FWO submits the penalty ranges for the contraventions of the First Compliance Notice should be higher than for the contravention of the Second Compliance Notice because the First Compliance Notice relates to a higher number of employees and a higher underpayment amount than the Second Compliance Notice. I agree.
I am satisfied it is appropriate to set the penalty for UESB’s and Ms Gelonese’s contraventions of the First Compliance Notice at 80% of the maximum penalty, namely $26,640 in the case of UESB, and $5,328 in the case of Ms Gelonese, and set the penalty for UESB’s and Ms Gelonese’s contraventions of the Second Compliance Notice at 60% of the maximum penalty, namely $19,980 in the case of UESB, and $3,996 in the case of Ms Gelonese.
Adjustments?
The final question is whether any adjustment should be made, first, because of the “one transaction principle” and, second, because of the “totality principle” (being the fifth step identified in the passage in New Shanghai set out above). As for the “one transaction principle”, I am satisfied there is a significant degree of overlap between the contraventions of the Compliance Notices. I consider it appropriate that the penalties be reduced by 20%.
I am not satisfied any further adjustment is required under the “totality principle”.
Assessment of penalties
I therefore will order that:
(a)UESB pay a pecuniary penalty of $21,312 for its contravention of the First Compliance Notice,[91] and $15,984 for its contravention of the Second Compliance Notice;[92] and
(b)Ms Gelonese pay a pecuniary penalty of $4,262.40 for her contravention of the First Compliance Notice,[93] and $3,196.80 for her contravention of the Second Compliance Notice.[94]
[91] $26,640 x 80% = $21,312
[92] $19,980 x 80% = $15,984
[93] $5,328 x 80% = $4,262.40
[94] $3,996 x 80% = $3,196.80
Assessment of penalties for contraventions of s 718A of the FW Act
I have found that UESB and Ms Gelonese contravened s 718A of the FW Act on each of the 12 occasions identified in paragraph 24 of the statement of claim in which UESB, through the agency of Ms Gelonese, provided information and documents to FWI Cowell or FWI Omar, or to both. Although I am required to assess a penalty separately for each of UESB’s and Ms Gelonese’s 12 contraventions of s 718A of the FW Act, it would be convenient if I discuss the 12 contraventions together.
Nature, extent, circumstances, and deliberateness of the contravening conduct
As the FWO has submitted, the 12 contraventions may be divided into two classes. One class consists of the 9 occasions on which Ms Gelonese represented to FWI Cowell or FWI Omar that the Employees had been paid; and the other class consists of the 3 occasions on which Ms Gelonese presented documents that purported to show that payment had been made. The contraventions are extensive, and by their nature deliberate. These matters weigh in favour of assessing a penalty at the higher end of the scale.
Deterrence
For the reasons I have given in relation to UESB’s and Ms Gelonese’s contraventions of s 716(5) of the FW Act, I do not propose to consider specific deterrence as a factor when assessing the penalty it would be appropriate for UESB and Ms Gelonese to pay.
General deterrence is another matter. The giving of truthful information in response to a compliance notice is an essential requirement of the effective operation of s 716; the penalties should be set at a level that signals to all persons who are involved in responding to a compliance notice issued pursuant to s 716(2) of the FW Act that there would be no advantage in giving false or misleading information intentionally or recklessly.
Assessment (before adjustments)
In principle, I should assess a separate penalty for each of the twelve contraventions. It would be convenient, however, to simply assess one penalty for each of the contraventions. I consider 50% of the maximum penalty would be appropriate for each contravention. That translates to $399,600 in relation to UESB’s contraventions of s 718A of the FW Act,[95] and $79,920 in relation to Ms Gelonese.[96]
[95] ($66,600 x 50%) x 12 = $396,000
[96] ($13,320 x 50%) x 12 = $79,920
Adjustments?
The FWO submits there is a degree of factual overlap in the individual contraventions of s 718A of the FW Act because the FWO submits they arise from Ms Gelonese maintaining, through repeated assurances and deflections, the pretence of compliance with the Compliance Notices. The FWO, therefore, submits it would be appropriate to group the 9 occasions on which Ms Gelonese represented to FWI Cowell or FWI Omar that the Employees had been paid as a single contravention, and the 3 occasions on which Ms Gelonese provided documents to FWI Cowell or FWI Omar purporting to provide evidence of payment as a single contravention.
I do not consider that the correct approach is to group the contraventions into two classes and treat each group as a single contravention, and, thus, in effect, apply s 557(1) of the FW Act when s 557(1) does not apply. The correct approach is to consider whether the one transaction principle applies to the 12 contraventions, and, if so, to make an adjustment that reflects the degree to which the elements of each contravention overlap.
There is a high degree of commonality among the contraventions. First, the information and documents were given in response to the one set of compliance notices. Second, 9 of the contraventions concern the making of the one representation, and 3 of the contraventions relate to the making of a different representation. It would be appropriate, therefore, to adjust the penalties I have determined by discounting the penalties by 75%.
I am not satisfied any further adjustment is required under the “totality principle”.
Assessment of penalties
I will therefore order that:
(a)UESB pay a pecuniary penalty of $99,900 for its contraventions of s 718A of the FW Act;[97] and
(b)Ms Gelonese pay a pecuniary penalty of $19,980 for her contraventions of s 718A of the FW Act.[98]
[97] $399,600 x 25% = $99,900
[98] $79,920 x 25% = $19,980
DISPOSITION
I propose to make declarations to reflect my findings; and I will order that UESB and Ms Gelonese pay pecuniary penalties for their contraventions of s 716(5) and s 718A of the FW Act in the amounts I have found are appropriate.
The FWO also applies for orders that the respondents pay SC, namely Sehee Cho, $3,496.82 (gross). I will also make orders to the effect the FWO seeks.
I certify that the preceding one hundred and thirty-nine (139) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Manousaridis. Associate:
Dated: 26 October 2023
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