Fair Work Ombudsman v Wi-Man - [2011] FMCA 322

FEDERAL MAGISTRATES COURT OF AUSTRALIA

FAIR WORK OMBUDSMAN v WI-MAN & ORS

[2011] FMCA 322

INDUSTRIAL LAW – Penalty hearing – under payment of basic rate of pay and annual leave entitlements – considerations on penalty.

Workplace Relations Act 1996 (Cth) ss.3, 3(f), 182, 182(1), 182(3), 183(2), 232, 232(2), 235(2), 235(3), 612, 615, 719, 719(2), 728(1)

Alfred v Walter Construction Group [2005] FCA 497
Australian Ophthalmic Supplies v McAlary-Smith [2008] FCAFC 8
Cotis (Office of Workplace Services) v Pow Juice Pty Ltd [2007] FMCA 140
Kelly v Fitzpatrick [2007] FCA 1080
Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7
Glenn Jordan v Mornington Inn Pty Ltd [2007] FCA 1384
Ponzio v B & P Caelli Constructions Pty Ltd (2007) 1158 FCR 543; [2007] FCAFC 65
Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412
Trade Practices Commission v TNT Australia Pty Ltd (Express Freight case) (1995) ATPR 40

Applicant:

FAIR WORK OMBUDSMAN

First Respondent:

WI-MAN

Second Respondent:

MACQUARIE TECHNOLOGY GROUP INTERNATIONAL PTY LTD

Third Respondent:

PAUL DESMOND WALLACE

File Number:

BRG 1283 of 2010

Judgment of:

Burnett FM

Hearing dates:

4 & 12 April 2011

Date of Last Submission:

12 April 2011

Delivered at:

Brisbane

Delivered on:

12 April 2011

REPRESENTATION

Solicitors for the Applicant:

Fair Work Ombudsman

Counsel for the Respondent:

Mr H. Trotter

Solicitors for the Respondent:

Barringer Leather Lawyers

ORDERS

THE COURT DECLARES:

That the Second Respondent has breached:
(a)section 182(3) of the Workplace Relations Act 1996 (Cth); and
(b)section 232(2) of the Workplace Relations Act 1996 (Cth).
That the Third Respondent has, pursuant to section 728 of the Workplace Relations Act 1996 (Cth) breached:
(a)section 182(3) of the Workplace Relations Act 1996 (Cth); and
(b)section 232(2) of the Workplace Relations Act 1996 (Cth).
That the total underpayments are $5,946.37, as particularised in Schedule 1 and Schedule 2 to the Amended Statement of Claim.

THE COURT ORDERS:

That the Second Respondent pay a pecuniary penalty, pursuant to section 719(1) of the Workplace Relations Act 1996 (Cth) in respect to the contraventions at paragraph 1 above as follows:
(a)$2,640 for a breach of section 182(3) of the Workplace Relations Act 1996 (Cth); and
(b)$2,640 for a breach of section 232(2) of the Workplace Relations Act 1996 (Cth).
That the Third Respondent pay a pecuniary penalty, pursuant to section 719(1) of the Workplace Relations Act 1996 (Cth), by way of section 728 of the Workplace Relations Act 1996 (Cth) in respect to his involvement in the contraventions at paragraph 2 above as follows:
(a)$550 for a breach of section 182(3) of the Workplace Relations Act 1996 (Cth); and
(b)$550 for a breach of section 232(2) of the Workplace Relations Act 1996 (Cth).
That the Second and Third Respondents pursuant to section 841 of the Workplace Relations Act 1996 (Cth) pay the penalty in paragraphs 4 and 5 above as follows:
(a)$862.14 to Mr Malcolm Godber by 4.00 pm, 19 April 2011; and
(b)$5,517.86 to the Commonwealth Consolidated Revenue Fund by 4.00 pm, 3 June 2011.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT BRISBANE

BRG 1283 of 2010

FAIR WORK OMBUDSMAN

Applicant

And

WI-MAN

First Respondent

And

MACQUARIE TECHNOLOGY GROUP INTERNATIONAL PTY LTD

Second Respondent

And

PAUL DESMOND WALLACE

Third Respondent

REASONS FOR JUDGMENT

(Revised from Transcript)

The applicant, Fair Work Ombudsman, seeks declarations and penalties against each of the first and second respondents in respect of their conduct related to the employment of Malcolm Godbar. Mr Godbar was employed by Macquarie Technology Group International Pty Ltd (MTGI) as an accountant. The declarations sought relate to the underpayment of the basic rate of pay and annual leave entitlements which entitlements were due following Mr Godbar giving notice and terminating his employment with the first respondent. The declarations are sought in respect of both the corporate respondent and the personal respondent and penalties are sought in respect of the contraventions, the subject of the declarations.
Broadly, the facts are these: the applicant is a Fair Work inspector who has standing to bring these proceedings pursuant to the provisions of the Workplace Relations Act (WR Act). He has standing to bring the proceedings in his name in relation to the conduct which occurred prior to the repeal of the WR Act. At all material times, the first respondent was a company incorporated according to law and capable of being sued. It was the corporate trustee for the MTGI Trust. It was a constitutional corporation and it conducted a business retailing, importing and distributing computer hardware, predominantly wireless modems for radio devices.
It was also the employer of Mr Godbar as trustee for the trust from 1 July 2008 to 10 April 2009. It should be noted that from 1 July 2008, the first respondent assumed liability for all annual leave entitlements which had been accrued by Mr Godbar under the Australian Fair Pay and Conditions Standard during his employment by another company – that being Wi-Man Proprietary Limited (Wi-Man) – between 18 September 2006 and 30 June 2008. Wi-Man had been the first employment of Mr Godbar and was also a corporation in respect of which the second respondent, Mr Paul Desmond Wallace, had a significant interest.
The second respondent was the sole director and shareholder of the first respondent from 18 December 2006 and he was directly involved in the day-to-day management of the first respondent and, in particular, as responsible for setting the wages of employees of the first respondent, including Mr Godbar.
Mr Godbar, himself, was a chartered accountant. Initially, he was employed by Wi-Man, as an accountant/bookkeeper on a full-time basis from 18 September 2006 to 30 June 2008. He was subsequently employed by the first respondent as an accountant/bookkeeper on a full-time basis from 1 July 2008 to 10 April 2009. His duties with both Wi-Man and the second respondent included payroll, including recording his own hours, calculating employees’ entitlements, calculating employees’ wages, paying employees’ wages and entitlements on-line via authorised access to the first respondent’s bank account, completing profit and loss, balance sheets and other relevant financial statements and completing business activity statements and general accounting. He was, in the course of his employment, subject to supervision by the second respondent.
There was no particular industrial instrument such as an award or agreement which applied to the business of the first respondent insofar as it related to the employment of Mr Godbar. He was subject to private agreement. He initially commenced his employment with the first respondent on 1 July 2008 his employment having been novated from Wi-Man. Between the weeks commencing 10 November 2008 and 30 March 2009, Mr Godbar completed weekly employee timesheets which were all signed by Ms Lee Negata. Ms Negata is the wife of the second respondent. She, too, was involved in the first respondent’s operations.
On 16 March 2009, Mr Godbar gave notice of his intention to terminate his employment with the first respondent with effect from Friday, 10 April 2009. As it occurred, Friday, 10 April 2009, was Easter Friday, a public holiday, and, accordingly, the last day of his effective attendance at his place of employment was to be 9 April 2009. On that day Mr Godbar prepared his own final payslip which included all his wages and entitlements and, in particular, his entitlement to his last week’s pay and his accrued leave.
For reasons that will be explored shortly, there was an agreement by Mr Godbar not to be paid that sum until 15 April 2009. In the event, the sum was not paid as agreed and on the evening of 22 April 2009, Mr Godbar wrote to the respondents seeking payment of that sum by
24 April 2009. The second respondent replied by email on 23 April 2009 saying that he needed to verify the amount to which Mr Godbar was entitled and invited Mr Godbar to attend his office to discuss the matter further. While initially there was an agreement between the parties for Mr Godbar to attend at the second respondent’s office, he subsequently cancelled that appointment. The sum remained outstanding and ultimately Mr Godbar sought assistance from the office of the applicant in respect of his unpaid wages and leave entitlements.
By operation of s.182 of the WR Act, Mr Godbar was entitled to a guaranteed basic periodic rate of pay that was at least equal to the standard federal minimum award. The federal minimum award during the relevant period was the sum of $14.31 per hour worked and that was the guaranteed basic periodic rate of pay. By operation of s.183(2) of the WR Act, Mr Godbar’s guaranteed hours whilst employed with the first respondent were 38 hours per week. Pursuant to s.612 of the WR Act, an employee was entitled to a day off on a public holiday.

A public holiday is defined in s.611 of the Act to include Good Friday. As I have earlier noted, 10 April in that particular year was a public holiday, being Good Friday.
It follows that between 1 April 2009 and 9 April 2009, based upon Mr Godbar’s timesheets, he worked 66.0833 hours. The first respondent failed to pay Mr Godbar for the period 1 April 2009 to 10 April 2009 inclusive and that failure to pay constituted a contravention of s.182(3) of the Act in respect of its failure to pay him the guaranteed basic periodic rate of pay for the hours worked between 1 April 2009 and 9 April 2009 inclusive and also for the public holiday. As a consequence of that contravention, Mr Godbar was underpaid a sum of $945.59.
By operation of s.232(2) of the Act, Mr Godbar was also entitled to accrue an amount of paid annual leave. The amount of leave accrued being one-thirteenth of the hours worked by him during the four week period. By operation of s.235(2) of the Act, any untaken accrued leave was required to be paid to Mr Godbar on termination. Mr Godbar’s employment with the first respondent commenced on 1 July 2008 and was terminated by his resignation with one month’s notice, with effect from 10 April 2009.
At the time of termination, the hourly rate of pay payable to Mr Godbar by the second respondent was $34.41 per hour. Allowing for the leave, including leave which rolled over from employment with Wi-Man on
1 July 2008, Mr Godbar’s total leave accrued amounted to 145.3295 hours. In contravention of s.235(3) of the Act, the first respondent failed to pay the untaken accrued annual leave to Mr Godbar following his termination on 10 April 2009. As a result of the first respondent’s contravention of sections 182(3) and 232(2) of the Act, it underpaid wages and entitlements to Mr Godbar in the amount of $5,946.37. Those amounts were ultimately paid by the first respondent to Mr Godbar a short time before the hearing being made on 24 March 2011.
So far as the second respondent’s involvement in these matters is concerned, s.728(1) of the Act provides that a party who is directly or indirectly knowingly concerned, in or party to a contravention assumes liability. In this case, the second respondent was involved in the day-to-day operations of the first respondent. He was aware of the termination of Mr Godbar’s employment and was also aware that Mr Godbar was not paid in accordance with either the statutory obligation to pay upon termination or the extended time agreed between Mr Godbar and Ms Negata. By reason of s.728(1), he was directly and knowingly concerned with the contraventions and a party to the contraventions by reason of the matters which have been addressed above.
In addition to the matters which I have outlined, the respondents also contend that Mr Godbar was employed as the financial controller for the first respondent and that, in that capacity, his duties included maintaining the payroll for the first respondent. While there is no question between the parties concerning the extent of those duties, the respondent contends that, in addition, Mr Godbar calculated wages and entitlements for all the respondent’s employees including himself, had access to the respondent’s bank accounts, and particularly had access to those bank accounts to pay wages and entitlements and, in this instance, agreed that, in respect of the last day’s work, he prepared a document called a “payslip” which included a pay period that matches the period claimed by the applicant for the underpayment. The payslip included a calculation of annual leave hours and salary, his net pay and a due date of payment being 9 April 2009.
However, the respondents contended a point of difference arose whereby the Fair Work Ombudsman alleges that an agreement was struck between the complainant and the respondents on his last day of work, being 9 April 2009, that he would not pay himself and the respondents would pay him on 15 April instead. The respondents in their most recent iteration of submissions, Exhibit 7, do not recall any such agreement being reached and assumed that the complainant would pay himself his entitlements on his last day, as was to be expected in the ordinary performance of his duty.
The applicant’s position was supported by an email from Mr Godbar addressed to the respondent by particular to Andrea Godbar whose email address is noted as [email protected], he stated among other things:
“My inquiry today to my bank revealed that my pay had not been deposited to my bank account as promised. My last day that I physically attended work was Thursday, 9 April 2009, as my last day as an employee was the following day, Easter Friday, 10 April 2009. My discussions with Lee Negata-Wallace was a request from Lee if it would be acceptable to me if I could be paid on the normal pay day, being Wednesday, 15 April 2009. Based on this request, I agreed. I'm now writing about a concern I have in relation to my employment entitlements. I was employed by you between 18 September 2006 and 10 April 2009 on a full-time basis as the accountant bookkeeper. Please refer my final pay calculations which I believe were approximately two weeks’ pay and three weeks’ holiday pay. Payment is to be made by 5 pm on Friday, 24 April 2009, as payment was due on my last day of employment, Friday, 10 April 2009, but, as agreed with Lee Negata-Wallace, payment would be made on Wednesday, 15 April 2009. Failure to comply will result in contact to the Workplace Ombudsman to formally investigate this matter. The question of further pay and the matter of hours worked in lieu would become a further matter of consideration.”
It would seem, accepting the time and the relative proximity of that email to these events, that the evidence supports the complainant’s position that, in fact, there was an agreement. That is particularly so in the absence of any express denial, despite the affidavit of Lee Negata wherein she says that she would not have said any of the things claimed by Mr Godbar in that email. There has been no challenge to that correspondence. It would seem from the respondent’s point of view that the respondent relied upon a payslip which was prepared and which is annexed to an affidavit which indicates it having been paid on 9 April. However, it is difficult to apprehend how the respondent could have continued to hold that view in light of the latter correspondence addressed to it by the complainant, Mr Godbar.
In summary then, the position is broadly as follows: the first respondent conducted a business retailing, importing and distributing computer hardware, predominantly wireless modems for radio devices and was a constitutional corporation. The second respondent was the sole director and shareholder of the first respondent and was a person directly involved in the day-to-day management of the first respondent and responsible for setting the wages of employees of the first respondent, including that of Mr Godbar. Mr Godbar was employed by the first respondent as an accountant/bookkeeper on a full-time basis from 1 July 2008 to 10 April 2009 and that included a rollover from his previous employment with Wi-Man which employment existed between 18 April 2006 and 30 June 2008.
In the course of Mr Godbar’s duties, he undertook duties in respect of payroll, preparation of financial statements, including BAS statements and general accounting and he was largely supervised by the second respondent and/or by Ms Negata. There was no industrial agreement that applied to either Wi-Man or the first respondent insofar as it related to the employment and, on termination, Mr Godbar proposed to pay himself but did not upon a request by Ms Negata that he wait for his pay to be transferred to his account on 15 April. It took some time and the involvement of the Workplace Ombudsman in order for Mr Godbar to ultimately to be paid as he was in March 2011.
So far as the court’s approach to determining penalty is concerned, the established approach for the court is well-settled. First, the court should identify the separate contraventions involved. Each breach of a separate obligation found under the Act is a separate contravention of a term of an applicable provision for the purposes of s.719. However, s.719(2) provides for treating multiple breaches involved in a course of conduct as a single breach. Secondly, to the extent that, two or more contraventions have common elements, this should be taken into account in considering what is an appropriate penalty in all the circumstances for each contravention.
The respondent should not be penalised more than once for the same conduct. The penalties imposed by the court should be an appropriate response to the respondents’ conduct, this task being distinct from and in addition to the final application of the totality principle of which there will be more later. Third, the court should then consider an appropriate penalty to impose in respect of each course of conduct, having regard to the circumstances of the case; and, fourth, and finally, having fixed an appropriate penalty for each group of contraventions or course of conduct, the court should take a final look at the aggregate penalty to determine whether it is an appropriate response to the conduct which led to the breach. The court should apply what is described as “an instinctive synthesis” in making its assessment. This is known as “the application of the totality principle”.
Section 719(2) of the Act requires the court to consider two or more breaches of an applicable provision that arise out of a course of conduct to be taken to constitute one single breach of an applicable provision. It has been held that, in relation to this clause, that, where the breaches of a particular type arise out of the same course of conduct, even if they involve different employees, they must be treated as a single breach (see Cotis (Office of Workplace Services) v Pow Juice Pty Ltd[1]). Where there are breaches of two distinct terms of an industrial instrument, they are not to be treated as a single breach, even if they arise from one course of conduct (see Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar[2]).
[1] [2007] FMCA 140
[2] [2007] FMCA 7
Here the applicant submits that the contravention should be assessed for penalty as two separate courses of conduct as they involved breaches of two separate provisions or two separate distinct provisions of the Act, they being, first, a failure to pay the basic periodic rate of pay pursuant to the AFPCS in contravention of s.182(1) of the Act and, second, failure to pay any accrued annual leave on termination pursuant to s.232(2) of the Act.
It follows in the applicant’s contention that the court should consider the maximum penalties in respect of those contraventions as, first, in relation to the first respondent – that is, the corporate entity – 300 penalty units for each of the two contraventions, totalling $66,000.00; and, in relation to the second respondent – that is, the individual – 60 penalty units for each of the two contraventions, totalling up to $13,200.00.

So far as is relevant, factors which are brought into play when considering the assessment of penalty, are now well settled. The approach set out in Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar (supra) which has been approved by the Federal Court in Kelly v Fitzpatrick[3] and the Full Court in Australian Ophthalmic Supplies v McAlary-Smith[4] which broadly identifies a number of factors that should be taken into account whether a particular conduct calls for a penalty and the quantum of such. Those factors present a convenient checklist but do not prescribe or restrict the matters which may be taken into account in the exercise of the court’s discretion. They were merely matters which the court may consider as appropriate.
[3] [2007] FMCA 1080
[4] [2008] FCAFC 8
Generally, however, it should be noted, as was observed by Burchett J in the Trade Practices Commission v TNT Australia Pty Ltd[5] (Express freight case) that:
“The process of penalty and position cannot be denied that the fixing of the quantum of penalty is not an exact science. It is not done by the application of a formula and within a certain range. Courts have always recognised that one precise figure cannot be incontestably said to be preferable to another.”
[5] (1995) ATPR 40
Before examining each of the various points, it is necessary to make the observation that the court should first look to the principal object set out in s.3 of the Act, in particular so far as is relevant to these sorts of contraventions. Section 3(f) of the Act sets out the relevant objects which ought to be considered. They include the need to provide an economically sustainable safety net of minimum wages and conditions for those whose employment is regulated by the Act and, (b), to ensure compliance with the minimum standard by providing effective means for the investigation and enforcement of employee entitlements.
Turning then to the particular considerations which are apposite in this case. Firstly, the nature and extent of the conduct and the circumstances in which the conduct took place. I have earlier outlined in the introduction the broad ambit of the nature and extent of the conduct and the circumstances. The conduct is confined only to the time when Mr Godbar left the employment of the first respondent – that is, it incorporates events that appear to have followed 9 April 2009. There is no suggestion that in any previous time during the course of his employment that there had been any contraventions by the respondents in respect of their employment of him or others; and, indeed, the relevant conduct appears to have followed in the two weeks which immediately followed his termination and with focus upon events on or about 22 April 2009 when the first email was forwarded by the employee to the respondents.
At that time, there was some question about the calculation of Mr Godbar’s final pay and a refusal by the respondent to make payment to Mr Godbar until he had come into the office for a meeting. Mr Godbar decided not to attend, although initially having agreed to attend. Ultimately, he decided not to attend the meeting and, as a consequence, did not receive his final pay. That matter will be addressed under another consideration shortly, but it does not go without observation that, notwithstanding that matter, the respondents did not make payment to Mr Godbar until approximately one week prior to the date for hearing of the application.
Next, the nature and extent of the loss or damage. The amount of the underpayments to Mr Godbar totalled $5,946.37. There is an addition to that sum, an amount of interest calculated at the sum of $862.14. Unquestionably, the loss constitutes a significant loss, although, in fairness, it should be noted that, of that, only $900.00 relates to loss of pay, with the balance relating to loss of accrued leave entitlements which would ordinarily not necessarily impact adversely upon the cash flow of Mr Godbar. Accordingly, it would not have occasioned a significant hardship, as, for instance, may have been occasioned if this sum in whole represented an underpayment of wages due on a periodic basis. Accordingly, a loss of opportunity in relation to what Mr Godbar may have suffered, that loss of opportunity relates principally to the loss of accrued leave entitlements which can be largely compensated by an interest payment.
In terms of similar previous conduct, there is no evidence to suggest that the respondent has engaged in conduct of this kind on a previous occasion, although, as has been noted by the court in Rajagopalan v BM Sydney Building Materials Pty Ltd,[6] a lack of any prior contravention of the Act, while relevant to the matter of penalty, may not, of itself, warrant a reduction in the penalty that ought to be imposed.
[6] [2007] FMCA 1412
Next, whether the breaches arose out of the one course of conduct.

I have earlier addressed that, although it does appear that events have a temporal association, they do, in fact, constitute separate breaches, one being in respect of pay and one being in respect of accrued leave entitlements, but the temporal concurrency is not overlooked.
So far as the size of the business is concerned, the respondent has placed evidence before the court concerning the size of its business. That evidence is to be found in the affidavit of Mr Ian James Kerr and, in particular, the observations contained in Exhibit 8 which is a letter addressed by the second respondent. It can be seen that the businesses here have to be viewed collectively. The second respondent is associated with three entities whose accounts ought to be viewed on a consolidated basis for the purpose of imposition of penalty.
As Mr Wallace noted in his letter, Exhibit 8, MTGI has been running at a loss for the last three years and the three companies combined return a marginal profit. The three companies that Mr Wallace refers to are the first respondent, MTGI; the company, Wi-Man Proprietary Limited, which has earlier been discussed; and, an entity, Polyphone Telecom Proprietary Limited, another entity in respect of which reference can be found in material. It is apparent from the financial statements which are attached to the affidavit of Mr Kerr that the entities, although not large, are significant and constitute significant trading entities.
However, regardless of size, that does not absolve the first respondent from its legal responsibilities to comply with the law in relation to the employment of its employees. As was noted by Justice Tracey in Kelly v Fitzpatrick (supra), no less than large corporate employers, small businesses have an obligation to meet minimum employment standards and their employees rightly have an expectation that this will occur. When it does not, it will normally be necessary to mark the failure by imposing an appropriate monetary sanction. Such a sanction must be imposed at a meaningful level.
To similar effect, in Rajagopalan v BM Sydney Building Materials (supra), it was said employers must not be left under the impression that because of their size or financial difficulty that they are able to breach an award obligations by employers, for adherence to industrial instruments arise regardless of their size. Such a factor should be of limited relevance to a court’s consideration of penalty.
Next, then, was the question of the deliberateness of breach. It is submitted by the applicant that the first and second respondents have either deliberately or at least have been reckless to their obligations as employers. It would seem that at least since 22 April when Mr Godbar emailed the respondents regarding the failure to pay him on termination that the respondents had notice of the non-payment. There is, from the material, an obvious explanation for the non-payment. So much is to be gleaned by reference to the matters contained in Mr Godbar’s affidavit filed on 6 April and the correspondence attached to it.
In his affidavit, Mr Godbar noted that, as has been agreed, he had, upon his initial employment, he had the authority and responsibility of preparing the payroll. The circumstances changed however and later, all payrolls required authorisation. Indeed, in the week prior to his leaving the first respondent, the payroll function was transferred to the second respondent. He noted that in the months prior to leaving the first respondent, Ms Negata assumed the role of reviewing timesheets and if they were in order, she would approve and sign them. It was also her practice on a number of occasions to sign a number of weekly timesheets for a particular employee at one time.
He noted that, in an email to Mr Wallace and to Ms Negata, instructions were issued in relation to the maximum which he was permitted to draw on any one occasion and also, that, in other emails between the parties there was an instruction in relation to payments plans where the total value of pays exceeded the bank transfer limit of $25,000.00. He noted that, towards the end of his employment with MTGI, that the company itself was under some financial pressure, a matter which has not been contested by the respondents in submissions on penalty.
In particular, he exhibits a copy of an email which was an internal email between Ms Negata and himself in which Ms Negata observed, among other things:
“Time is a bit tough at the moment and especially for PW as he is the one who is liable and is driving this business. We’re getting back on track and I do thank you both for supporting us. Just to advise you that PW is doing the payroll this month. All payments for pay will need to be okayed with him before paying until our cash flow is better. Lynelle will be taking over the payroll from next month onward.”
The observation at the outset of that email that “time was a bit tough”, I take to be a reference to the fact that the company was suffering some financial stress. That is not at all inconsistent with the submission made by the respondents on the matter of penalty.
It follows that, by reason of the facts that I have just identified, there was some motivation during the period before acting upon the respondents in respect of the payment of the complainant’s wages and salaries. Irrespective of whether or not there was a genuine basis for concern about the calculation of those sums, the non-payment would have advantaged the cash flow of the respondents.
In response to the complaint, it ought be noted that the respondents contended that, in part, the complainant had some responsibility, given that, as the first respondent’s accountant, he had the responsibility of paying himself and that, in part, difficulties arose because of that.
As earlier noted, by reason of the agreement which was reached between the employee and Ms Negata, I do not accept that the complainant should assume any culpability or contribution to the events giving rise to the contraventions.
Next is the involvement of senior management. It is beyond contest that, in this case, the second respondent was involved in these matters. In the last email which I have just recited, there is evidence of that matter. I noted the submission made on the respondents’ behalf that Mr Wallace was not aware of that matter. But it is apparent by reason of his senior role in this organisation and, in particular, the size of the organisation and finally, the email which was forwarded directly to him on 22 April 2009 that he would have been or ought to have been aware of these matters and, to that end, was involved as part of the senior management team.
In terms of contrition, corrective action and co-operation with enforcement authorities, there is evidence of contrition on the part of the respondents. Perhaps the most poignant evidence of contrition would be the payment, although in this case that is not necessarily to the respondents’ advantage. Payment was not made by the first respondent until 24 March 2011 – that is, a little more than a year and 11 months after the failure to pay was first raised and about a week before the matter was listed to commence hearing.
Mr Wallace, however, has written in his letter, Exhibit 8, expressing regret and remorse, that it took two years for Mr Godbar to be paid his underpayment and to apologise for the breaches that occurred in the first place. He has expressed some insight into the way in which things could have been done better and in particular, acknowledges that he could have been more proactive in attempting to calculate the underpayment himself, rather than simply disagreeing with the amount sought, I would assume initially first by the complainant and then, subsequently, by the Fair Work Ombudsman. He notes that he could have paid an amount that represented a payment of the minimum underpayment due, but did not and for that, I expect he proffers his apology.
He did, by way of excuse, contend that, in Mr Godbar’s absence, it was difficult to calculate the underpayment, but with respect, I do not accept that as necessarily the case. Mr Godbar’s hourly rate was well-settled, his hours at work were not in dispute, nor was his leave entitlement. It would seem to me based on those critical facts being undisputed, it would have been a simple arithmetic exercise to ascertain the amount due. There is nothing in the material to suggest that any of the primary facts necessary to have affected a calculation were in issue. In any event, I acknowledge his expression of contrition.
A real issue in this case, however, concerns the matter of co-operation with the enforcement authorities. In their submission, the applicant contends that, although the respondents have filed a statement of agreed facts, they have consistently demonstrated a lack of co-operation through the investigation process, including through the investigation, the first and second respondents consistently asserting that Mr Godbar was not an employee of the first respondent, while being evasive as to the employing entity of Mr Godbar. Despite direct questions of it by the applicant, for example, they note that on 2 June 2009 the second respondent emailed the applicant stating that:
“Mr Godbar was never employed by MTGI”.
They also made veiled threats in that regard to provide matters to police which one assumes was a reference to a complaint about misstatements. Further, on 2 June 2009, the applicant emailed the second respondent advising:
“No attempt was made by you to contact our office to discuss the employing entity identified in the notice.”
And again, I was not made aware that this was in dispute until now and, further, on 9 June, the second respondent again stated Mr Godbar was never lawfully employed by MTGI.
It is apparent from the statement of agreed facts and by the admissions made by Mr Wallace who is the controlling officer of the first respondent and associated with Wi-Man and Polyphone, that he well knew the true position in relation to these matters, but, despite that, appears not to have been forthcoming with that information to the applicant. Further, the applicant contends that the second respondent used highly inflammatory and, at times, personally insulting language to representatives of the applicant. For instance, it contends that, on

21 September 2009, Mr Wallace emailed the applicant’s officer, Inspector Emma Jacobs, stating:
“I am advised that deliberate nature of your prejudicial conduct could see what knows as indemnity costs awarded to us in the event that further costs are incurred by us or that the matter go to hearing.”
That email was concluded with a remark along the lines of:
“Emma, please deny that you were born in New Zealand.”
No doubt, the latter statement having a derogatory intention. It is further noted that, in support of the applicant’s complaint, that the second respondent did not accept the offer of a record of interview with the respondent stating:
“In relation to my request to convene a meeting and your recent similar invitation, my advice is that, due to prejudice, this is not advisable.”
In respect to the first two complaints made by the applicant, I consider there is good ground to draw an inference that there has been a lack of co-operation through the investigatory processes. However, in respect of the third ground, I do not draw such an inference. Ultimately, these proceedings, although they are civil penalty proceedings, they are clothed with the same character as any prosecution by an authority body and ultimately, the respondents are not obliged, in my view, to provide any assistance in the conduct of an investigation which would include co-operating in the course of a record of interview. Those matters may sound in penalty at a later time, but, quite plainly, one ought not draw any adverse inference at any time in respect of a party exercising its rights in not seeking to assist. I do not draw any adverse inferences in this instance by reason of that conduct.
Plainly, the respondents have subsequently admitted liability and, at least, that element of co-operation, including the signing of the statement of agreed facts has obviated the need for a full hearing. The question however, arises as to what sort of discount ought be allowed for its admission and conduct. In this case, I find the observations of the Full Court in Glenn Jordan v Mornington Inn Pty Ltd[7] particularly helpful where the court noted adopting Branson J in Alfred v Walter Construction Group:[8]
“The rationale for providing a discount for an early plea of guilty in a criminal case does not apply neatly to a case, such as the present, where a civil penalty is sought and the case proceeds on pleadings. Nevertheless, in our view, it should be accepted, for the same reasons as given in Cameron, that a discount should not be available simply because a respondent has spared the community the cost of a contested trial. Rather, the benefit of such a discount should be reserved for cases where it can be fairly said that an admission of liability: (a) has indicated an acceptance of wrongdoing and a suitable and credible expression of regret; and/or (b) has indicated a willingness to facilitate the course of justice.”
[7] [2007] FCA 1384
[8] [2005] FCA 497
Arguably, in this case, until more recent times, there does not appear to have been a great deal of goodwill indicating an acceptance of wrongdoing and a suitable and credible expression of regret or, alternatively, a willingness to facilitate the course of justice. It follows that, while some small concession might be made, it would not be large. In making that point, I am particularly mindful of the observations and submissions made by the respondents. In their submission, they contend that Ms Jacobs and her superior officer, Ms Prassado, wrote some concerning and confusing correspondence, and in particular difficulties arose between the parties concerning the identity of the appropriate employer.
It was submitted on behalf of the respondents that their behaviour in the investigation of the matter by reason of those matters had frustrated the respondents in their attempts to settle the matter and it was despite all these matters that the respondents have accepted liability and obviated the need for a full hearing.
As earlier noted, the respondent was uniquely positioned to assist the investigating authorities in relation to these matters and, to that end, its conduct, to my mind, has been largely responsible for the applicant having to incur the additional trouble it did incur in the investigatory processes. In my view, it ill behoves the respondent to complain of the applicant’s approach having regard to its response to what I would have regarded as reasonable matters. That is so particularly given that, in this instance, documents that would ultimately be discoverable by the respondents would have addressed all these issues without the need for the difficulties that ultimately flowed in this case.

The other matter which is advanced by the respondents is the respondents’ submission that their generous concession in allowing the applicants to produce hearsay evidence to facilitate the hearing has avoided the need to call oral evidence. Quite clearly the applicant has to a large extent put a considerable amount of hearsay material before the court. However, that matter of course one assumes in the conduct of these matters that the hearsay material is produced to minimise expense and trouble to all parties, including the applicant and the respondents, and is done at an early stage in order to enable parties to ascertain precisely what issues will need to be strictly established at trial.
At this particular point, I do not feel considerable weight ought to be allowed for the fact that the applicant had only hearsay material available at this time. One assumes that, if the matter had not achieved settlement, then evidence would have been called in order to enable admissible material to be placed before the court in the proceeding. In that regard, I particularly note that the oral evidence would have been in very short compass, having regard to the overwhelming body of material that would have been introduced of a documentary nature in the ordinary course.
Further complaints were made by the respondent in respect of such matters as relying on faulty notices to produce, misquoting and frustrating the respondents, failures by the applicant in attempts to mediate, failure to produce evidence, seeking to rely solely on hearsay evidence and occasions of undue delay. In my view those matters, to a large part, have their genesis with the respondents’ conduct and, accordingly, in my view, ought not properly be visited upon the applicant. Indeed, the view that I have taken so far as the respondents is concerned is generous in even allowing some small allowance for the fact that the matter has proceeded to be disposed of without the need for a hearing.
Next is ensuring compliance with minimum standards. The principal object of the Act emphasises the importance of an effective safety net of minimum terms and conditions of employment, together with effective enforcement of those minimum standards. The provisions concerning compliance with part 14 of the Act is one of the ways that the Act seeks to give effect to that principal object. The importance of the safety net is reflected not only in the magnitude of maximum penalties available which I have earlier noted, but also in the increase in those penalties which came about by amendment in August 2004. The fact remains that these contraventions of awards and agreements are treated seriously and must be regarded by employers with that degree of seriousness.
The next concerns specific and general deterrence. It is, in my view, well settled that deterrence is a relevant factor in the imposition of a penalty and, in cases such as this, there is a need for both specific and general deterrence. Specific deterrence arises because the first respondent continues to operate and the second respondent is the sole director and shareholder of the first respondent and also plainly, is involved in the two other corporate entities which form part of the consolidated group. Given those matters and in particular the time it took for Mr Wallace to recognise the significance of these matters, there is, to my mind, a high need for specific deterrence.
So far as general deterrence is concerned, the relevant approach was explained by Justice Lander in Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543; [2007] FCAFC 65 where his Honour said:
“In regard to general deterrence, it is assumed that an appropriate penalty will act as a deterrent to others who might be likely to offend. The penalty therefore should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like minded persons or organisations. If the penalty does not demonstrate an appropriate assessment of the seriousness of the offending, the penalty will not operate to deter others from contravening the section. However, the penalty should not be such as to crush the person upon whom the penalty is imposed or used to make that person a scapegoat. In some cases, general deterrence will be the paramount factor in fixing the penalty.”
In this instance, I think that it is appropriate that the court have regard to the message that ought be sent to employers and company directors and the community generally concerning underpayment of wages, particularly in the context of termination and that is that underpayment and non-payment on termination is simply not to be tolerated.
So far as the actual penalty is concerned, having regard to the factors that have been addressed, the range of penalties advanced for by the applicant are for the s.182 contravention, a low range of penalties – that is, 75 to 120 penalty units for the corporation; and, 15 to 24 penalty units for the individual and, for the s.232(2) contravention, a high range of penalty of 225 to 255 penalty points for the corporation and 45 to 51 penalty units for the respondent. Respectfully, I disagree. I think, in this instance, events in a temporal sense arise from common circumstances. Although there are clearly different contraventions involved, both relate to the circumstances of severance of employment between the employee and the employer. The events have arisen largely by reason of the first respondent’s attitude evidenced by the second respondent’s behaviour following termination.
To my mind, it is plain that the respondents’ conduct reflects stupidity and bloody-mindedness on its part, but, overall, in my view, having regard to the temporal association of these events and the overall circumstances, I am of the view that a low-range penalty in each instance would be appropriate. So far as penalties are concerned, for the s.182(3) contravention, in my view, an appropriate penalty would be 24 penalty units for the corporation and five penalty units for the individual – that is, $2,640.00 for the corporation and $550.00 for the individual – and, for the s.232 contravention, 24 penalty units for the corporation and five penalty units for the individual. In total, those penalties in aggregate total $6,380.00.
In considering whether those penalties are appropriate, one must have regard to the totality principle. In doing so, the court must consider whether the aggregate penalties against the respondents are just and appropriate in all the circumstances. In Kelly (supra), the court observed another factor which must be taken into account in fixing the pecuniary penalties for multiple breaches of statutory stipulations is the totality principle. This principle is designed to ensure that the aggregate of the penalties imposed is not such as to be oppressive or crushing. Different views have been expressed as to the manner in which the principle ought properly to be applied.
On one view, the starting point should be the determination of an appropriate total penalty. That figure would then be divided by the number of breaches to produce a penalty for each breach. The orthodox position however which I consider should be adopted at the starting point is the determination of appropriate penalties for each contravention of the statutory norm. The aggregate figure is then considered with a view to ensuring that it is an appropriate response to the conduct which led to the breaches. This approach was virtually described in the criminal conduct from which the totality principle is derived as the orthodox but not necessarily immutable practice adopted by sentencing courts.
Having regard then to the principles set out in Kelly, I am of the view that a penalty in aggregate totalling $6,380.00 represents an appropriate response to the contraventions the subject of this application. In respect of that penalty, I will direct that $862.14 be paid to the complainant. That sum equates with the interest which would have accrued in the ordinary course on the underpayments with the balance then, of course, to be payable to the Commonwealth.
I will make declarations in accordance with the application.
I will direct that the respondents pay the sum of $862.14 on or before 4 pm on 19 April 2011 and the balance to be paid by 3 June 2011.

I certify that the preceding sixty-nine (69) paragraphs are a true copy of the reasons for judgment of Burnett FM

Date: 6 May 2011