Fair Work Ombudsman v Windaroo Medical Surgery Pty Ltd and Ors (No.2)
[2016] FCCA 2505
•28 September 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v WINDAROO MEDICAL SURGERY PTY LTD & ORS (No.2) | [2016] FCCA 2505 |
| Catchwords: INDUSTRIAL LAW – Application for imposition of pecuniary penalties – where employer ceased payments – where employer offered to recommence payments if employee withdrew complaint. |
| Legislation: Acts Interpretation Act 1901, s.15AB Crimes Act 1914, s.4AA Fair Work Act 2009, ss.340, 343(1), 417(1), 539(2), 545(1), 545(2)(b), 546(2), 550(1), 557(1), Federal Court of Australia Act 1976, ss.51A, 76(2), 76(3) |
| Cases cited: Aitken v Construction, Mining, Energy, Timberyards, Sawmills and Woodworkers Union of Australia (WA Branch) (1995) 63 IR 1 Fair Work Ombudsman v Windaroo Pty Ltd & Ors [2015] FCCA 554 Haines v Bendall (1991) 172 CLR 60 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | WINDAROO MEDICAL SURGERY PTY LTD |
| Second Respondent: | SHEILA PATHMANATHAN |
| Third Respondent: | TAN THI THANH TRAN |
| File Number: | BRG 525 of 2011 |
| Judgment of: | Judge Jarrett |
| Hearing date: | 11 May 2015 |
| Date of Last Submission: | 11 May 2015 |
| Delivered at: | Brisbane |
| Delivered on: | 28 September 2016 |
REPRESENTATION
| Counsel for the Applicant: | Mr Pratt |
| Solicitors for the Applicant: | Corrs Chambers Westgarth |
| Counsel for the Respondents: | Mr Merrell (directly instructed) |
DECLARATIONS
The Court declares that:
(a)The first respondent once contravened each of:
(i)s.343 of the Fair Work Act 2009 (Cth) on 24 February, 2010 by making threats to Dr Venkata Kaza to take action against him with the intention to coerce Dr Kaza not to exercise his workplace right constituted by Dr Kaza’s complaint to the Fair Work Ombudsman; and
(ii)s.340 of the Fair Work Act 2009 (Cth) on 24 March, 2010 to 6 May, 2010 by ceasing payments to which Dr Kaza was otherwise entitled pursuant to the contract of services between the first respondent and Dr Kaza;
(b)The second respondent once contravened each of:
(i)s.343 of the Fair Work Act 2009 (Cth) on 24 February, 2010; and
(ii)s.340 of the Fair Work Act 209 (Cth) on 24 March, 2010
in the same manner as the first respondent did as described above in declarations 1(a)(i) and 1(a)(ii) by being “involved in” the first respondent’s abovementioned contraventions within the meaning of s.550(2) of the Fair Work Act 2009 (Cth).
(c)The third respondent once contravened s.343 of the Fair Work Act 2009 (Cth) on 24 February, 2010 in the same manner the first respondent did as described above in 1(a)(i) by being “involved” in the first respondent’s abovementioned contravention within the meaning of s.550(2) of the Act.
ORDERS
The court orders that:
(a)Pursuant to s.546(1) of the Fair Work Act 2009 (Cth):
(i)The first respondent pay a pecuniary penalty in the sum of $39,600 for contravening ss.343 and 340 of the Act; and
(ii)The second respondent pay a pecuniary penalty in the sum of $7,920 for contravening ss.343 and 340 of the Act; and
(iii)The third respondent pay a pecuniary penalty in the sum of $3,960 for contravening s.343 of the Act; and
(b)Pursuant to s.546(1) of the Fair Work Act 2009 (Cth), those penalties be paid to the Consolidated Revenue Fund of the Commonwealth within 28 days.
(c)Pursuant to s.545(2)(b) of the Fair Work Act 2009 (Cth), the first and second respondents, within 28 days of the date of these orders, pay to the applicant $21,054.55 (inclusive of interest up to the date of this order) as compensation for the loss suffered by Venkata Kaza arising from the contraventions the subject of declarations 1(a)(ii) and 1(b)(ii) hereof; and
(d)Pursuant to s.545(2)(b) of the Fair Work Act 2009 (Cth), the first, second and third respondents, within 28 days of the date of these orders, pay to the applicant $3,669.69 (inclusive of interest up to the date of this order) as compensation for the loss suffered by Venkata Kaza arising from the contraventions the subject of declarations 1(a)(i), 1(b)(i) and 1(c) hereof.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRG 525 of 2011
| FAIR WORK OMBUDSMAN |
Applicant
And
| WINDAROO MEDICAL SURGERY PTY LTD |
First Respondent
And
| SHEILA PATHMANATHAN |
Second Respondent
And
| TAN THI THANH TRAN |
Third Respondent
REASONS FOR JUDGMENT
On 17 March, 2015 I delivered reasons and made findings against each of the respondents to these proceedings in respect of their liability for certain contraventions of the Fair Work Act 2009 (Cth). I subsequently directed the parties to make further submissions in relation to penalty, compensation and the form of any orders or declarations sought. That has now occurred and is the subject of these reasons.
The applicant seeks an order for compensation in the sum of $400,233.06 (inclusive of interest) and the imposition of pecuniary penalties on the respondents for the contraventions which they have been found to have committed. The respondents argue that whilst an order for compensation is appropriate, it should be limited to $11,590.15 plus interest. They argue for penalties that are at the lower end of the penalties that might be imposed.
Further, the parties are in dispute about the Court’s power to order the second and third respondents to pay compensation as the applicant seeks. They argue that the Court has no power to make an order for compensation against an accessory. They are also in dispute about the orders for interest on any compensation ordered that are appropriate.
Background
Dr Venkata Kaza is a medical practitioner, qualified in India, who took up an engagement with the first respondent, Windaroo Medical Surgery Pty Ltd, in order to pursue a medical practice in Australia. That engagement was fraught with difficulties and ultimately resulted in Dr Kaza returning to India and the Fair Work Ombudsman instituting these proceedings.
In Fair Work Ombudsman v Windaroo Pty Ltd & Ors [2015] FCCA 554, I found that the first respondent had contravened s.343 of the Act and that the second and third respondents were involved in that contravention within the meaning of s.550 of the Act. I was satisfied that certain words spoken by the third respondent to Dr Kaza, said on behalf of the first respondent, amounted to threats or coercion for the purposes of s.343 of the Act. I also found that the first respondent had engaged in adverse action contrary to s.340 of the Act by ceasing to make certain payments to Dr Kaza that were due to him. The second respondent, I also concluded, was involved in those contraventions within the meaning of s.550 of the Act.
The applicant seeks declarations of each contravention so found. The form of those declarations is not in dispute. Counsel for the parties were able to agree on the terms of a minute in respect of those declarations. I will make declarations in accordance with that minute.
The parties are largely in agreement in relation to the approach the Court should adopt in relation to penalty. Neither party sought to make submissions as to penalty range due to the decision of the Full Federal Court in Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (2015) 229 FCR 331. The appeal of that decision had not been determined by the High Court at the time submissions were made in this application. Since the appeal was determined (Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate; Construction, Forestry, Mining and Energy Union v Director, Fair Work Building Industry Inspectorate (2015) 326 ALR 476) the parties have not sought to make any further submissions.
Putting that aside, it is clear that the primary dispute between the parties is in relation to the compensation sought by the applicant in connection with the findings of contravention. Accordingly, I will address compensation first.
Compensation
The parties are at odds in respect of what, if any, compensation the respondents ought to pay to Dr Kaza as a result of their contraventions. So much is apparent from the written submissions filed by each of the parties: the applicant calculates compensation due in the amount of $400,233.06 (inclusive of interest); on the respondent’s calculation, that amount should be $11,590.15 (exclusive of interest). The issue that informs that disparity is causation. In short, the respondents argue that the contraventions found by the Court did not cause Dr Kaza to suffer the loss claimed on his behalf by the applicant. The applicant argues to the contrary and claims compensation for Dr Kaza’s lost contractual earnings, hurt and humiliation, the cost of a return airfare to India, and interest on those amounts.
Section 545(1) of the Act is the starting point for awards of compensation in these types of cases. That subsection provides that a court may make any order that it considers appropriate. Subsection 545(2)(b) makes it clear that such an order might include an order awarding compensation for loss that a person has suffered because of a contravention, if it is satisfied a person has contravened a civil remedy provision. Sections 340 and 343 of the Act are self-described civil remedy provisions.
The parties each referred me to Fair Work Ombudsman v Skilled Offshore (Australia) Pty Ltd [2015] FCA 275 and suggested that it contains an exposition of the principle applicable to awards of compensation in cases of this nature. In that case, Gilmour J said:
70. The WR Act and the FW Act do not prescribe the measure of damages recoverable by a person for contravention of civil remedy provisions. Section 545(1) of the FW Act confers a discretion upon this Court to make an order that it considers “appropriate”.
71. Fixing compensation under the FW Act and the WR Act is a statutory task “and the Court must not substitute that task with approaches derived from the general law”: Dafallah v Fair Work Commission [2014] FCA 328 at [149] citing Murphy v Overton Investments Pty Limited (2004) 216 CLR 388 at [44]; Qantas Airways Ltd v Gama (2008) 167 FCR 537 at [94].
72. The level of compensation awarded should be no greater than what is “reasonable” in the circumstances: see, for example, Aitken v Construction, Mining, Energy, Timberyards, Sawmills and Woodworkers Union of Australia – Western Australian Branch (1995) 63 IR 1 at 9.
His Honour went on, at [73], to refer to the language of s.545(2)(b) and said that the awarding of compensation is confined by a statutory precondition — the words “compensation for loss … suffered because of the contravention” mean what they say: loss or damage must have been suffered because of the contravention. His Honour referred to Australian Licensed Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd [2011] FCA 333 for the proposition that there must be “an appropriate causal connection between contravention and the loss claimed”.
For the sake of completeness, it is worth noting that the Skilled Offshore case has been the subject of an appeal since the close of submissions in the present proceeding: see Maritime Union of Australia v Fair Work Ombudsman [2015] FCAFC 120. That appeal altered the outcome of the trial judge’s decision. Importantly, however, Gilmour J’s observation on the “statutory precondition” in s.545(2)(b) was not disturbed. The issues on appeal instead concerned his Honour’s factual findings and the legal issues that did arise were unrelated to the present proceedings. Those matters related to proof and assessment of compensation in loss of opportunity cases. This is not one of those types of cases.
The respondents emphasised the phrase “appropriate causal connection” throughout their submissions, whereas counsel for the applicant simply referred to the “very broad power” the Court has to make compensation orders that it considers appropriate pursuant to s.545. If there is a distinction between the approaches taken by the parties and their respective interpretations of the relevant case law, it is of little moment. The plain ordinary meaning of s.545(2)(b) is clear. The text of the subsection provides that the Court may award “compensation for loss that a person has suffered because of the contravention”. The requirement for a causal connection between the compensation ordered and the contravention found is obvious. Moreover, when s.545(2)(b) is read in conjunction with s.545(1) it is clear that, apart from the necessity for a causal connection between the compensation and the contravention, the Court must also be satisfied that the proposed order is appropriate.
In the application of s.545(2)(b) to the facts, the respondents submit that their contraventions did not cause Dr Kaza to suffer the economic loss and the non-economic loss suggested by the applicant, nor the cost of Dr Kaza’s airfare to return to India. The respondents’ argument can be summarised as follows:
a)Dr Kaza had decided to terminate the contract between himself and the first respondent before any contravention had occurred —the first contravention occurring, as I previously found, on 24 February, 2010; and
b)the primary reason for Dr Kaza terminating the contract and returning to India was not any contravention of the Fair Work Act by the first respondent but rather his lack of skills and experience in regards to Australian medical practice.
The applicant’s case is that the contraventions did in fact cause Dr Kaza to suffer loss. In oral submissions, counsel for the applicant submitted that the s.343 contravention (the coercion) was the “cause” behind Dr Kaza’s termination of his engagement with the first respondent and that the s.340 contravention (the failure to pay him) was the “reason”. I confess I am not sure what to make of the distinction between “cause” and “reason” made by counsel—perhaps counsel sought to distinguish between objective circumstance and subjective intention, I am not sure. In any event, the purport of counsel’s submission, I think, is that the requisite causation is present. This submission is based upon a number of observations of the evidence.
The applicant refers to the affidavit of Dr Kaza filed on 29 February, 2011 where Dr Kaza deposes:
I understood that if my registration was not current, I could not leave Queensland… I wanted to leave [the first respondent] but I was afraid to do so because [the second respondent] had previously told me that she would sue me for breach of contract if I left prior to my contract ending.
The applicant’s point in relying on this evidence is that it demonstrates Dr Kaza had not made up his mind to terminate his engagement with the first respondent before the 24 February, 2010 contravention. On the applicant’s case, Dr Kaza did not act decisively until 27 April, 2010 when he actually resigned. The applicant also points to the fact that instead of resigning prior to the respondents’ contraventions, Dr Kaza complained to the employment agency that secured him the relevant work with the first respondent and several other bodies seeking assistance. The argument invites the inference that he would not have bothered trying to remedy a situation from which he intended to extricate himself.
The respondents’ case in respect of the causation issue is that Dr Kaza had decided to terminate his relationship with the respondents and return to India prior to the 24 February, 2010 contravention.
In my earlier judgment, I said at [132]:
I accept that Dr Kaza has indicated he wished to resign, for whatever reason, in his earlier conversation in November, and he was still of that mind in February. All he wanted to do was to be paid what he was owed and return home.
I was referred to Dr Kaza’s affidavit filed on 29 November, 2011 wherein he deposes that he said to the second respondent words to the effect:
I have not been paid for a very long time. I do not understand why I’m not being paid. It is very difficult for me and my family to survive without my payments. I’m having a mentally very tough time and I want to resign.
The respondents point elsewhere in that affidavit where Dr Kaza deposes to having made similar statements in October, November, and December, 2009.
The respondents also draw the Court’s attention to other parts of Dr Kaza’s affidavit where he deposes to having said various things concerning his lack of experience with medical practice in Australia. For example, annexure “VK36” to the affidavit filed on 29 November, 2011 contains an email sent by Dr Kaza to an organisation called Australian Doctors Overseas on 2 December, 2009 in the following terms:
I could not tolerate the mental and financial strain, and that I’m finding it difficult to manage the patients, because of the lack of sufficient skills and knowledge. So I would like to resign and go back to India.
Dr Kaza was cross-examined about this email and the respondents note that he conceded that a “significant reason” he wanted to leave Australia was that he did not have the skills as a general practitioner working in this country. He did however, give evidence that there were a number of reasons for his wanting to resign some of which related to his medical skills and his ability to save money, but the main reason he wished to resign centred on the fact that he was not receiving payments for his work. The evidence at the liability hearing before me was that Dr Kaza was not paid for lengthy periods throughout 2009.
The respondents also refer to evidence of the medical registration Dr Kaza was required to maintain and the conditions attached to it. In particular, they submit that the Medical Board of Queensland had required Dr Kaza to undertake and pass a Pre-employment Structure Clinical Interview with the Australian College of Rural and Remote Medicine if his special purpose registration in respect of the first respondent was to be maintained until 26 February, 2010. He needed to provide the results of the interview to the Medical Board by 27 January, 2010.
A Pre-employment Structure Clinical Interview was scheduled for 11 December, 2009 and the evidence shows that Dr Kaza attended but did not complete that interview.
There is evidence that Dr Kaza was investigating options to work in another medical practice in Queensland. Exhibit 4 in the liability hearing is an email from Ms Charlie Duncan of Health Workforce, a medical recruitment agency. The terms of the email confirm that Dr Kaza was attempting to find other work in Queensland.
There is also evidence that Dr Kaza had been appointed to a position at the Myall Medical Practice in Dalby, Queensland. Exhibit 11 in the liability hearing is an email dated 12 February, 2010 whereby Health Workforce advised Dr Kaza of his appointment to that position. However, the email also pointed out that in order to take up his position he had to have his special purpose registration with the medical board that permitted him to work in Queensland amended to refer to the new practice and he needed to undertake a Pre-employment Structured Clinical Interview with the Australian College of Rural and Remote Medicine.
Dr Kaza set about putting in train the steps necessary to take up his appointment at the Myall Medical Practice. On 14 February, 2010 he applied to the Medical Board of Queensland for special purpose registration to be employed by a general medical practice at Dalby. He also sent an email to Ms Sharon Burridge of Health Workforce on that day in which he said (with my emphasis):
Dear Sharon,
Thank you for the help with the recruitment process. I will be posting the Ml SP application form and the SCI application form of PESCI. I had attended an interview with on 11Dec2009 with PESCI, as a requirement for renewal of my registration for 2 mts from Feb to April. Most of the other documents for Ml SP are not required as I am not a new applicant. How long will the process take. Please let me know when I can resign from my present job, as I have not been paid from Sep 2009 and I see only 2 or 3 patients everyday since one month as my employer has been manipulating.
I know that I will not be getting one day leave for my PESCO interview, as according to her I should apply leave 2 mts in advance. I may have to pretend to be ill and produce a medical certificate on that day.
With regards
Dr. kaza
On 15 February, 2010 Sharon Burridge replied to Dr Kaza. She said (with original emphasis):
Hi Venkata
I have contacted ACRRM to find out when they can fit you in for PESCI.
Please do not resign at the moment, wait till we have clarification from ACRRM.
As soon as I know anything, I will contact you.
Cheers
Sharon
The Pre-employment Structured Clinical Interview that Dr Kaza needed to complete took place on 26 March, 2011. Dr Kaza failed the interview. His skills in all of the areas assessed in the interview were found to be unsatisfactory. The Australian College of Rural and Remote Medicine panel that assessed Dr Kaza recommended that he was not suitable for the position for which registration was sought.
In the meantime, Dr Kaza’s special purpose registration required for working with the first respondent had been extended by the Medical Board. Dr Kaza was advised by Health Workforce to keep it current so that he did not have to start the application procedure afresh. It was extended to a date in April, 2010 and then to 6 May, 2010. Despite Dr Kaza appreciating the need to keep his registration current, he alleges that his special purpose registration for the first respondent’s practice was extended by the second respondent acting without his knowledge.
On 18 April, 2010 Dr Kaza emailed Ms Burridge of Health Workforce and said:
Hi Sharon,
Hope you are enjoying you overseas trip. sorry to inform you that my interview with the PESCI was unsatisfactory and not fit to work at Dalby. I spoke to Ross Maxwell and informed him of the results and my inability to work, and thanked him for the job offer. he wished me all the best for my new life at India. I will be going back to India by 1st week of May. There is no point in applying for medical registration with this PESCI report.
Sorry for all the trouble you have taken for me….
The respondents submit that this unsatisfactory result is what ultimately caused Dr Kaza to end his engagement with the first respondent.
I am not satisfied that the unsatisfactory interview result was the reason for which Dr Kaza left the first respondent. He left because he was dissatisfied with the way he had been treated in 2009. His appalling treatment continued in 2010. Some of that treatment constitutes the contraventions that the first respondent has been found to have committed.
But the evidence does not establish that the contraventions found against the first respondent caused any loss to Dr Kaza. That is so for two reasons, namely:
a)He had decided to terminate his engagement with the first respondent before the contraventions took place. He did not resign earlier than he did because he was told by Health Workforce not to resign until he had put in place the requirements to take up employment at Myall Medical Practice; and
b)As Dr Kaza himself accepted (although did not seem to tell the applicant’s investigators), “There is no point in applying for medical registration with this PESCI report”. It appears that Dr Kaza’s special purpose registration already in place would not have been further renewed.
It is necessary at this juncture to discuss the date of Dr Kaza’s resignation because the parties have each referred to different dates in their submissions. In my reasons in respect of liability, I found that:
On 18 April, 2010 Dr Kaza submitted his resignation effective from 27 April, 2010. However, as his medical registration had been renewed he continued to practice and submitted a further resignation on 5 May, 2010. Dr Kaza’s last day at the practice was 6 May, 2010.
It is clear that Dr Kaza resigned or purported to resign twice. The first was upon him receiving the results of his interview that he undertook for the purposes of working in Dalby. The second was with effect from 6 May, 2010 the day his special purpose registration expired.
The respondents also rely on Dr Kaza’s statements in the material before the Court that in addition to wanting to leave due to lack of payments, he was also suffering from headaches, insomnia, depression, and anxiety as a result of the pressures of his work.
Lost earnings
In my opinion, the respondents’ submissions in respect of causation have merit. In my view, there is no causal link between the coercion contravention and the alleged loss of income claimed on behalf of Dr Kaza by the applicant. Nor is there a causal connection between the non-payment contravention and Dr Kaza’s decision to terminate his contract with the first respondent. However, there is a connection between that contravention and the loss of income that Dr Kaza suffered between 10 March, 2010 and 6 May, 2010.
The evidence demonstrates that Dr Kaza was wishing to resign as early as November and December, 2009. Whilst he did not resign then, by early the following year he had put in place steps to find employment and leave the engagement he had with the first respondent. He was offered a position, which he accepted, before the first of the found contraventions on 24 February, 2010. He wanted to terminate his engagement with the first respondent but did not do so because of the advice he received from Health Workforce. He only terminated his engagement when it became apparent that he could not take up the offered employment in Dalby and it appeared likely that his interview result would not permit further registration with the Medical Board of Queensland.
Moreover, whilst it may indeed be true, as the applicant submits, that Dr Kaza suffered loss in that he did not receive the income he expected under his contact with the first respondent because that contract was terminated, it was the termination that caused that loss, not the contraventions the first respondent has been found to have committed. For his lost income post 6 May, 2010 to be causally connected with the first respondent’s contraventions, those contraventions, or at least one of them, must have caused Dr Kaza to terminate the contract. It would not be appropriate to make an award of compensation for those alleged losses otherwise. The evidence does not permit of such a finding.
The measure of loss contended for by the applicant is inappropriate. That loss was not suffered by Dr Kaza because of the proved contraventions. Neither was the airfare that Dr Kaza incurred when he returned to India.
That is not to say that Dr Kaza did not suffer some loss. The second of the contraventions involved the first respondent not paying what was due to Dr Kaza. Even on the first respondent’s submissions, what was properly owed to Dr Kaza when the first respondent ceased paying him has not been paid. That is at least $11,590.15.
The essence of the second contravention of adverse action taken by the first respondent against Dr Kaza was ceasing payments to him to which he was otherwise entitled.
At [141] of my earlier reasons, I noted that it was agreed that Dr Kaza has not received any remuneration for patients that he treated from 31 January, 2010 until the day he ceased working at the first respondent’s premises on 6 May, 2010. That is still agreed. The only point of dispute is quantum.
The applicant claims that the amount owing in respect of the ceased payments is $26,881.72. The applicant submits that Dr Kaza earned an average of $1,923.08 per week pursuant to the contract with the first respondent. There was no direct evidence about that, but the sum appears to be an average calculated according to a representation made by the second respondent to the Department of Immigration for the purposes of Dr Kaza’s temporary residence permit. That is evidenced from Annexure A to the applicant’s written submissions.
The respondents, however, correctly submit that the amount claimed by the applicant is not based upon the actual fees earned by Dr Kaza from seeing patients but from the estimate to which I have just referred. His entitlement is to payment for patients with whom he consulted. The only evidence given about that was evidence of the second respondent.
Finally, counsel for the respondents submits that there is no evidence (or any finding by the Court) that there was any contractual agreement between Dr Kaza and the first respondent that he would receive $100,000 per annum. That is correct. The written contract between the Dr Kaza and the first respondent does not provide for the payment of such an amount (see Annexure “VK3” to Dr Kaza’s affidavit filed on 29 November, 2011).
The second respondent gave uncontested evidence that for the period 27 February, 2010 until 6 May, 2010 an amount of $17,418.90 was withheld from Dr Kaza. From that sum the first respondent was entitled to deduct its 40% service fee plus GST on that service fee (a total of $7,664.32). The second respondent also gave evidence that an amount of $1,835.57 was payable to Dr Kaza for the period 1 February, 2010 until 26 February, 2010. Thus, the nett amount of payments owing to Dr Kaza is $11,590.15 plus interest.
Counsel referred me to Exhibit “SP67” to the second respondent’s affidavit in respect of both amounts. However, while that evidence might have been uncontested, the Court does not necessarily have to accept it. I am troubled by the fact that the second respondent’s evidence is not particularised; it merely states totals and deducted service fees and GST amounts. However, the second respondent’s evidence about those matters was not challenged.
In Dafallah v Fair Work Commission [2014] FCA 328, Mortimer J observed, at [149], that:
Fixing compensation under s 545 is a statutory task, and the Court must not substitute that task with approaches derived from the general law: Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388 at [44]; Qantas Airways Ltd v Gama (2008) 167 FCR 537 at [94] per French and Jacobson JJ.
Her Honour also noted, at [157], that:
… the width of the power conferred by s 545(1) also allows for compensation which may not fully compensate a person for the loss suffered: see Gama at [94] per French and Jacobson JJ…
Her Honour then adopted the remarks of Lee J in Aitken v Construction, Mining, Energy, Timberyards, Sawmills and Woodworkers Union of Australia (WA Branch) (1995) 63 IR 1, which dealt with the factors relevant to an award of compensation under s.170EE of the now repealed Industrial Relations Act 1988 (Cth). Lee J remarked , at p.9, that the Court will:
have regard to what is reasonable in the circumstances and will look at what would have been likely to occur had the Act not been contravened … The Court will consider the detriment occasioned to the employee by the employer’s contravention of the Act, and the extent to which it is reasonable to compensate the employee for such consequences.
It is also important to bear in mind that I am not dealing with a contractual claim for what was actually owed pursuant to the contract between Dr Kaza and the first respondent. I am assessing compensation under a statutory mandate, as the authorities to which I have just referred point out.
In my opinion, it is reasonable to compensate Dr Kaza for an amount in the vicinity to that conceded by the respondents. The applicant did not explain why I should prefer using estimated averages over the second respondent’s evidence, lack of particularisation aside. In my view, an appropriate amount for compensation in this respect is $12,000 plus interest.
Non-economic loss
The applicant submits that a global figure of $15,000 is appropriate to compensate Dr Kaza for the distress, suffering, hurt and humiliation he experienced as a result of the contraventions. The applicant acknowledges that this is a higher than usual amount for this type of case. The applicant sought to contrast the present case with several other cases. In particular, I note the applicant’s reference to Transport Workers’ Union of Australia v Atkins [2014] FCCA 155 in which a sum of $10,000 was awarded and in which the Court noted that that amount was lower than it might have been but for an apology and demonstrated contrition. The applicant seeks a higher sum on the basis that there is no apology or demonstrated contrition in the present case.
Dr Kaza gave written evidence about the stress and feelings of humiliation that he says that he experienced. For example, he describes his treatment by the first respondent as being “like a prison” at paragraph 252 of the affidavit filed on 29 November, 2010. He also deposes that he felt “very stressed and tense” and that he and his family were “under a lot of pressure” at paragraph 253 of that affidavit. Much of his evidence related more generally to his treatment by the first respondent. His evidence was not confined to the particular contraventions that were the subject of the proceedings or those ultimately found proved by me.
Nonetheless, it is likely that each of the two contraventions found proved against the first respondent caused Dr Kaza distress. He was in a financially difficult situation, of which I am satisfied the respondents were aware.
Counsel for the respondents makes a similar point in his submissions. First, he argues that because Dr Kaza was experiencing distress prior to the first found contravention on 24 February, 2010 there is no causal connection between the contravention and Dr Kaza’s feeling of distress and humiliation. However, the respondents concede that “there was some distress experienced by Dr Kaza associated with the contravention of section 340 (the cessation of payments from 11 March 2010)”. Second, the respondents argue that the applicant has not presented any medical evidence to suggest that Dr Kaza suffered any type of recognised medical condition or psychiatric or psychological injury having a causal connection to either the 24 February, 2010 or 24 March 2010 contravention. But as the authorities show, medical evidence is not necessary.
The final point the respondents make is that the authorities to which the applicant has referred the Court to in relation to quantum for non-economic loss are disparate from the present case. The respondents submit that those cases did not involve a person terminating a contract for services like the present case. Indeed, cases like the Transport Workers’ Union case involved employer-employee relationships. There are two things to say about this. First, I do not understand the relevance of the termination of the contract as a distinguishing factor—the respondents concede that the cessation of payments to Dr Kaza in contravention of the Act caused him distress. Second, there is no reason why someone in a contractual relationship recognised by the Fair Work Act should be awarded a lesser amount than an employee in similar circumstances. I note that in any event, the authorities referred to by the applicant do not bind me—awards of compensation are always a matter of discretion.
I have already discussed the causation requirement contained in s.545(2)(b) of the Fair Work Act. The applicant cannot seek an award of compensation for hurt, distress, humiliation or the like for events that occurred prior to the relevant contravention. However, I am satisfied that the commission of both contraventions was likely to cause Dr Kaza some distress. The respondents concede that he would have suffered distress as a result of the second contravention. I am satisfied that the first would have caused him distress as well and I so find.
In McIlwain v Ramsey Food Packaging Pty Ltd (No 4) (2006)158 IR 181 Greenwood J, dealing with a claim under the Workplace Relations Act 1996, set out the following concerning the circumstances in which an award for non-economic loss will be appropriate:
87. In reaching the conclusion that it is appropriate in the circumstances of the case to order compensation, I recognise that compensation must be confined within reasonable limits and that restraint is required (Burazin v Blacktown City Guardian Pty Ltd (1996) 142 ALR 144 at 156). In addition, not every termination of employment will attract compensation. In Burazin, their Honours Wilcox CJ, Von Doussa and Marshall JJ concluded that in the circumstances of that case, there were “unusual exacerbating circumstances that make it appropriate to include in the compensation an allowance for distress unnecessarily caused to Mrs Burazin”. In Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v ACI Operations Pty Ltd (2006) 150 IR 179 at [11], Marshall J concluded that something more than the usual element of distress which accompanies most terminations must be demonstrated although the notion of “unusual and exacerbating circumstances” is not necessarily the test. In Aitken v Construction, Mining, Energy, Timberyards, Sawmills and Woodworkers Union of Australia (WA Branch) (1995) 63 IR 1 at 9, Lee J made a number of observations concerning those factors which might inform whether it is “appropriate in all the circumstances of the case to make an order requiring the employer to pay to the employee compensation of such amount as the court thinks appropriate” in respect of a contravention of the relevant Division of the Industrial Relations Act 1998 (Cth) (the IR Act) for the purposes of s 170EE of the IR Act. That particular legislation also set a cap upon the amount of the compensation that might be ordered. As a matter of general principle, Lee J considered that the court would have regard to “what is reasonable in the circumstances” and would consider “the detriment occasioned to the employee by the employer’s contravention of the Act” and the extent to which “it is reasonable to compensate the employee for such consequences”. In some cases, it may be appropriate to include in the measure of compensation a sum “sufficient to compensate an employee for mental distress or injured feelings caused by a harsh, unjust or unreasonable termination of employment”. Although the statutory context is, of course, a different one, notions of what might be “reasonable” are relevantly analogous to notions of what is “appropriate”. A consideration of a compensable component of mental distress in the context of conduct characterised as an unjust or unreasonable termination of employment suggests such a consideration would be more so relevant in the circumstances of the prohibited purposes identified by the Workplace Relations Act (s 298L(1)) and the objects the Act seeks to achieve by force of the prohibition.
88. In determining that each employee ought to be paid compensation of $3,000 in the circumstances of the breach by the Greater Dandenong City Council of s 298K of the Act, Madgwick J made reference to Fryar v System Services Pty Ltd (1996) 137 ALR 321 at 330-331 per Von Doussa J. The Respondents say that Fryar’s case is not an illustration of the exercise of such a jurisdiction. It seems to me that the reference by Madgwick J to Fryar’s case was simply intended to recognise that at least in the context of a severance payment which is a form of compensation for the loss of “non-transferable credits and entitlements built up through length of service such as sick leave, long service leave and for inconvenience and hardship imposed by the termination of employment through no fault of the employee” (Von Doussa J at 331, line 15), the inconvenience and hardship element “includes the disruption to the employee’s routine” and other matters. In point of principle, compensation in respect of the contravention of the Act might also take account of disruption and dislocation.
I am satisfied on the evidence that there are some exacerbating circumstances that make it appropriate to include in the compensation an allowance for distress unnecessarily caused to Dr Kaza (adopting the phraseology used in Burazin v Blacktown City Guardian Pty Ltd (1996) 142 ALR 144). Those circumstances are the significant financial difficulty that Dr Kaza was in at the time of both contraventions which were committed in an attempt to have him withdraw his complaint to the Fair Work Ombudsman. The first and second respondents knew of Dr Kaza’s financial distress. They knew, I am satisfied, that both the threat of withholding and actually withholding further payments from Dr Kaza would add to his financial distress.
I consider that an amount of $2,500 plus interest is appropriate in respect of each contravention. I deal with the question of interest below.
Airfare
As I have set out above, I do not consider it appropriate that Dr Kaza be awarded compensation for the airfare to return to India after his contract with the first respondent was terminated.
Orders for compensation against the second and third respondents
The applicant’s written submissions seek orders that the first respondent pay compensation for the loss suffered by Dr Kaza arising from the contraventions. In the alternative, the applicant seeks orders for compensation against the second and third respondents, joint and severally, in the same amount. That those orders are sought in the alternative to an order against the first respondent is curious.
Another curious aspect is that the orders sought are sought against all respondents. However, whilst the second respondent is liable for both of the first respondent’s contraventions, the third respondent is only liable for the first – the coercion contravention. That has an impact upon the incidence of the orders for compensation against the second and third respondents, if any should be made at all.
Counsel for the respondents submits that the Court has no power to make orders for compensation against the second and third respondents. The argument commences with the proposition that there is nothing expressed in either ss.545 or 550 of the Fair Work Act that confers power on the Court to make an order awarding compensation against a person who is taken to have contravened the Act because they come within the terms of s.550(1) of the Act.
However, the respondents’ argument must be rejected. By its terms, s.545(1) provides a broad power to “make any order the court considers appropriate” where the court is satisfied that a person has contravened a civil remedy provision. The only jurisdictional requirement is the need for the Court to be satisfied that a person has contravened, or proposes to contravene, a civil remedy provision. In a case where the Court has found that a person is involved in a contravention as provided for by s.550(1) of the Act and is therefore to be taken to have committed the contravention, the necessary satisfaction required by s.545(1) will always be achieved. That is because s.550(1) requires a court to treat a person involved in the contravention as having contravened the relevant civil remedy provision. Subsection 545(2)(b) makes it clear that the power in s.545(1) includes the power to make an order awarding compensation for loss that a person has suffered “because of the contravention”. It follows that where it is established that the accessory was “involved in” the contravention of a civil remedy provision the only jurisdictional requirement for making an order to pay compensation will always be met.
The respondents submit that s.550(1) or alternatively s.545(1) is ambiguous and therefore, in accordance with s.15AB of the Acts Interpretation Act 1901, resort might be had to the explanatory memorandum dealing with s.550(1) of the Act, which provides:
2177. [W]hile a penalty may be imposed on a person involved in a contravention, the clause does not result in a person involved in a contravention being personally liable to remedy the effects of the contravention. For example, where a company has failed to pay, or has underpaid, an employee wages under a fair work instrument, the director is not personally liable to pay that amount to the employee.
However the terms of neither s.545(1) or s.550(1) are ambiguous. They are words of wide import in remedial provisions. They ought to be interpreted according to their very wide terms.
In Scotto v Scala Bros Pty Ltd & Anor [2014] FCCA 2374, Judge Cameron held that the Court could order a person involved in a contravention to pay compensation. His Honour contrasted the lack of power under the previous Workplace Relations Act with the provisions of the Fair Work Act. However, his Honour was not asked to consider paragraph 2177 of the Explanatory Memorandum to the Fair Work Bill 2008. Another case dealing with this issue is my decision in Sponza v Coal Face Resources Pty Ltd [2015] FCCA 1140 where I followed the approach in Scotto v Scala Bros Pty Ltd. In Sponza I considered paragraph 2177 of the Explanatory Memorandum and accepted a submission that it was not consistent with a plain reading of s.545(1). However, I held that the text of s.545(1) of the Act was clear and unambiguous. Despite counsel’s submissions on behalf of the respondents, extrinsic materials cannot be relied upon to displace the clear meaning of the text of the legislation: CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at [47].
Finally, there is another matter that tells against the respondents’ argument. The second and third respondents do not submit that they are not liable to have pecuniary penalties imposed upon them for the contraventions they are taken to have committed by reason of their involvement in them. The Court has power to impose pecuniary penalties upon a person who has contravened a civil remedy provision of the Act. The power is conferred by s.546(1) of the Act. Relevantly, the text of that section is not different from the text of s.545(1) of the Act. Whilst there are some differences, they are of no significance to present considerations. Both sections provide power to make an order, for compensation in the case of s.545(1) of the Act or for a pecuniary penalty in the case of s.546(1) of the Act, against a person who has contravened a civil remedy provision. It would be anomalous if s.546(1) was wide enough to permit a pecuniary penalty order to be made against an accessory so found pursuant to s.550(1) of the Act, yet the terms of s.545(1) are insufficient to permit an order for compensation against such a person in respect of the same contravention.
In my view, the Court has power to make compensation orders against the second and third respondents. The applicant sought that the orders expressly provide for joint and severally liability for the amounts ordered. The reason for that was not developed in argument. In my view, the orders need not provide for joint and several liability on the part of the respondents. Each is responsible for the amount ordered against them although they will have a right of contribution against each other in the usual way.
The orders for compensation should reflect that the first, second and third respondents are liable for the compensation due to Dr Kaza for the first contravention. They should reflect that it is only the first and second respondents that are liable for the second contravention.
Interest
The parties disagree about how pre-judgment interest should be calculated. The applicant submits that calculation of interest should be in accordance with the Federal Court Practice Note CM 16 pursuant to s.51A of the Federal Court of Australia Act 1976. That practice note provides:
1. Section 51A(1)(a) of the Federal Court of Australia Act 1976 (Cth) provides for the making of orders for the inclusion of interest in judgments.
2. Practitioners and litigants should expect that where, pursuant to section 51A(1)(a), interest in respect of a pre-judgment period is to be included in a judgment, the Court will have regard to the following rates, being rates agreed upon by the Discount and Interest Rate Harmonisation Committee established following a referral by the Council of Chief Justices of Australia and New Zealand:
(a) in respect of the period from 1 January to 30 June in any year – the rate that is 4% above the cash rate last published by the Reserve Bank of Australia before that period commenced, and
(b) in respect of the period from 1 July to 31 December in any year – the rate that is 4% above the cash rate last published by the Reserve Bank of Australia before that period commenced.
The applicant sets out the calculation of interest in accordance with the Practice Note in the annexures to their written submissions. Annexure B sets out the calculation of interest on the loss of contractual earnings commencing at 7 May, 2010 and continuing until 11 May, 2015 – the date the Court heard submissions on penalty and compensation. Annexure C sets out the calculation of interest on the airfare to India for the period 18 May, 2010 (the flight having been booked, it seems, on 17 May, 2010) until 11 May, 2015. Annexure D calculates the interest of the hurt and humiliation claim for the period 7 May, 2010 until 11 May, 2015. However, as I have already concluded that Dr Kaza should not be compensated for economic loss subsequent to the termination of contract nor for the cost of the airfare, I do not need to have regard to the applicant’s calculations of interest in respect of those things. The applicant is only entitled to compensation in respect of pre-termination of contract lost earnings and non-economic loss. In respect of those losses, however, I note that the applicant has not calculated the interest from the date of any contravention. That is important because what gives rise to a claim to compensation under s.545 of the Fair Work Act is loss caused by some contravention. Pre-judgment interest is generally calculated from the date a cause of action arises until the date judgment is entered (see, e.g., Haines v Bendall (1991) 172 CLR 60).
The respondents submit that interest in the amount of 6% could be charged in respect of interest up to judgment. I note that in May, 2015 when the parties made their submissions, the Reserve Bank of Australia set the cash rate at 2%. If that is read in conjunction with the Practice Note it explains how the respondents arrived at a rate of 6%. I will address the appropriate rate of interest below. However, there are two preliminary issues that require consideration.
First, the respondents’ written submissions are predicated on the assumption that interest will commence to run from 24 March, 2010 even though the non-payment contravention occurred on 10 March, 2010. I accept that interest should commence to run from 24 March, 2010. That is the day on which Dr Kaza was entitled to his next payment following the contravention. Whilst his economic loss accumulated from that date, it accumulated quickly thereafter. It did not accumulate over a long period of time. I am satisfied that interest should commence to run from 24 March, 2010.
Second, the respondents argue that interest should cease accruing 9 to 12 months after the final submissions in the hearing on liability. The respondents’ submissions suggest that to permit interest to accrue up to the date of judgment on the liability hearing (17 March, 2015) would visit an injustice on the first respondent.
I reject that submission. As the respondents point out, the purpose of interest is to compensate a person for the loss suffered by being kept out of his or her money. However, it was clear when the second respondent filed her evidence in chief for the trial, during her oral evidence at the liability trial, and it continues to be uncontentious, that the first respondent has held Dr Kaza out of money to which he is indisputably entitled. That the first respondent has not made reparations despite my findings is telling against the argument that interest should cease to run at any time before the making of the present orders.
Interest should be calculated up to the date of the orders delivered consequent upon these reasons. It has always been open to the first respondent to avoid the accrual of interest by paying to Dr Kaza what he is owed. That is so irrespective of the delay between the final submissions in the liability hearing and the delivery of judgment on those issues.
Section 76 of the Federal Circuit Court of Australia Act 1999 (Cth) is the starting point for claims of interest up to judgment in this Court. Subsection 76(2) provides that a party to proceedings in this Court for the recovery of money in respect of this action may apply for an order under s.76(3). Subsection 76(3) provides:
(3) If:
(a) an application is made under subsection (2); and
(b) the Federal Circuit Court of Australia or the Judge is not satisfied that good cause has been shown for not making an order under this subsection;
the Federal Circuit Court of Australia or the Judge must either:
(c) order that there be included in the sum for which judgment is given interest at such rate as the Federal Circuit Court of Australia or the Judge thinks fit on the whole or any part of the money for the whole or any part of the period between:
(i) the date when the cause of action arose; and
(ii) the date as of which judgment is entered; or
(d) without proceeding to calculate interest in accordance with paragraph (c), order that there be included in the sum for which judgment is given a lump sum in lieu of any such interest.
The making of an order for interest is mandatory unless the Court is satisfied that good cause has been shown for not making an order. The respondents do not contend that they have shown good cause for not making some order for interest.
In Wattle v Kirkland & Anor [2002] FMCA 135 Driver FM, as his Honour then was, addressed s.76(3)(c) at [72] and said the following regarding the interest rate to be applied:
No rate of interest is prescribed and the fixing of an appropriate rate is within the discretion of the Court. The practice of the Federal Court is to apply the same rate of interest that would be applied in the relevant State or Territory Court, rather than the rate that is prescribed in the Court rules for post judgment interest: Namol Pty Ltd & Anor v A U Baulderstone Pty Ltd & Ors (1993) 119 ALR 187. In my opinion, the Court should follow the same general practice as the Federal Court.
As already noted, the Federal Court’s practice has changed and that Court now adopts an interest rate by reference to the current Reserve Bank rate. I am satisfied that this Court should continue to follow the same general practice as the Federal Court. And in any event, the parties seem to be in agreement that the Court should do so in the present case.
Following that practice, and despite the respondents’ written submission to the contrary, it is clear that a flat rate of 6% is not what is required. The Practice Note refers to biannual periods “in any year” and applies “the cash rate last published by the Reserve Bank of Australia before that period commenced” (my emphasis). This suggests that the current Reserve Bank interest rate of 2% cannot be applied retrospectively. The Court must apply the Reserve Bank interest rates prescribed for the periods over which interest is to be calculated. This interpretation is consistent with the schedule published on the Federal Court website which sets out pre-judgment interest rates from 1 January 2000 until the present (see At the timing of writing, the schedule states:
Effective Dates
RBA cash rate target as at 1 Jan or 1 Jul (Per cent)
Pre-judgment interest – Cash rate plus 4% (Per cent)
1 Jan 2010 to 30 Jun 2010
3.75
7.75
1 July 2010 to 31 Dec 2010
4.5
8.5
1 Jan 2011 to 30 Jun 2011
4.75
8.75
1 July 2011 to 31 Dec 2011
4.75
8.75
1 Jan 2012 to 30 Jun 2012
4.25
8.25
1 July 2012 to 31 Dec 2012
3.5
7.5
1 Jan 2013 to 30 Jun 2013
3.0
7.0
1 Jul 2013 to 31 Dec 2013
2.75
6.75
1 Jan 2014 to 30 Jun 2014
2.50
6.5
1 Jul 2014 to 31 Dec 2014
2.50
6.5
1 Jan 2015 to 30 Jun 2015
2.5
6.5
1 Jul 2015 to 31 Dec 2015
2.0
6.0
1 Jan 2016 to 30 Jun 2016
2.0
6.0
1 Jul 2016 to 31 Dec 2016
1.75
5.75
Further, the respondents suggest that the Court should follow the usual approach of applying a halved interest rate to the non-economic loss component of an award damages that is commonly adopted in cases involving personal injury. In Hallet v Schoevers (1992) 106 FLR 233, the Supreme Court of the ACT referred to the usual course adopted by courts of reducing the interest rate by one-half in respect of damages for non-economic loss to reflect the accumulating nature of the injury. The Court cited Wheeler v Page (1982) 31 SASR 1, endorsed by the High Court in MBP (SA) Pty Ltd v Gogic (1991) 171 CLR 657 at 665 and adopted by the New South Wales Court of Appeal in Stenning v Johnson (unreported, Court of Appeal, NSW, Kirby P, Clarke, Handley JJ, No 40007/90, 18 April 1991) and Metropolitan Meat Industry Board v Williams (1991) 24 NSWLR 54. The Court in Hallett said, at p.234, that the appropriate approach was to apply a rate to half of the damages component for non-economic loss or alternatively to apply a halved interest rate to the full period of the loss on that component.
However, the application of interest rates to non-economic loss is a matter of discretion and practice in each jurisdiction. There are no hard and fast rules. In Rosecrance v Rosecrance (1999) 73 ALJR 1096, the High Court refused to find that the Northern Territory Court of Appeal had erred in applying the relevant interest rate to the whole of the damages amount rather than one-half, which the appellant had argued was the usual approach.
In my view the approach argued for by the respondents in this case is inappropriate. This is not a case where Dr Kaza has suffered an injury and his non-economic loss has accumulated over time. In my view the effect of the contraventions – the distress it caused to Dr Kaza was immediate. He was entitled to compensation for that at the time it occurred and has been held out of his compensation ever since. It is appropriate to apply the same interest rate as that applied to the other aspect of the compensation order. For ease of calculation I have commenced the interest calculation from the same point as the interest calculation for the economic loss aspect of the compensation order – 24 March, 2010.
Accordingly, interest upon the economic loss component of the compensatory order is $5,384.86 calculated as follows:
Period Days Rate Amount 24/03/10 - 30/06/10 98 7.75% $239.48 01/07/10 - 31/12/10 183 8.50% $490.48 01/01/11 - 30/06/11 180 8.75% $496.63 01/07/11 - 31/12/11 183 8.75% $504.90 01/01/12 - 30/06/12 181 8.25% $470.85 01/07/12 - 31/12/12 183 7.50% $432.78 01/01/13 - 30/06/13 180 7.00% $397.30 01/07/13 - 31/12/13 183 6.75% $389.50 01/01/14 - 30/06/14 180 6.50% $368.92 01/07/14 - 31/12/14 183 6.50% $375.07 01/01/15 - 30/06/15 180 6.50% $368.92 01/07/15 - 31/12/15 183 6.00% $346.22 01/01/16 - 30/06/16 181 6.00% $342.44 01/07/16 - 28/09/16 89 5.75% $161.36 Total Interest $5,384.86
The interest upon the non-economic loss component of the compensatory order is $2,339.38 calculated as follows:
Period Days Rate Amount 24/03/10 - 30/06/10 98 7.75% $104.04 01/07/10 - 31/12/10 183 8.50% $213.08 01/01/11 - 30/06/11 180 8.75% $215.75 01/07/11 - 31/12/11 183 8.75% $219.35 01/01/12 - 30/06/12 181 8.25% $204.55 01/07/12 - 31/12/12 183 7.50% $188.01 01/01/13 - 30/06/13 180 7.00% $172.60 01/07/13 - 31/12/13 183 6.75% $169.21 01/01/14 - 30/06/14 180 6.50% $160.27 01/07/14 - 31/12/14 183 6.50% $162.95 01/01/15 - 30/06/15 180 6.50% $160.27 01/07/15 - 31/12/15 183 6.00% $150.41 01/01/16 - 30/06/16 181 6.00% $148.77 01/07/16 - 28/09/16 89 5.75% $70.10 Total Interest $2,339.38
Penalty
It remains to be determined what pecuniary penalty each of the respondents should pay for their contraventions or respective involvement in those contraventions.
The applicant seeks two pecuniary penalties as against the first respondent, one for the contravention by the first respondent of s.340 and another for the contravention by the first respondent of s.343 of the Fair Work Act. In respect of the second respondent, the applicant seeks two pecuniary penalties for each of the two abovementioned contraventions in which the second respondent was involved. Finally, the applicant seeks one pecuniary penalty as against the third respondent for her involvement in the first respondent’s abovementioned contravention of s.343 of the Fair Work Act.
Statutory framework
There are at least three purposes for imposing penalties for breaches of industrial laws, namely punishment, deterrence (both specific and general), and rehabilitation.
Any penalty imposed must be proportionate to the gravity of the contravening conduct. The task which a sentencing judge is faced with is one of ‘instinctive synthesis’. That process requires that a court take into account all relevant factors and to arrive at a result which takes due account of them all. The parties are largely in agreement as to which factors are relevant in the present case, although they disagree in their characterisation of them.
The parties are also agreed on the maximum pecuniary penalties that the Court may impose. Pursuant to s.539(2) of the Fair Work Act, the maximum penalty that can be imposed by a court for each contravention of ss.340(1) and 343(1) is 60 penalty units respectively. Subsection 546(2) of the Fair Work Act provides that a pecuniary penalty must not be more than 60 penalty units if the person is an individual and 300 penalty units if the person is a body corporate. At the time of the contraventions, s.4AA of the Crimes Act 1914 defined “penalty unit” to be $110. Therefore, the maximum penalty that may be imposed by the Court for each contravention is $33,000 in respect of the first respondent for each contravention and $6,600 in respect of the second and third respondents for their involvement in each contravention. That brings the maximum penalties in this proceeding to:
a)$66,000 for the first respondent;
b)$13,200 for the second respondent; and
c)$6,600 for the third respondent.
In determining an appropriate penalty to impose, the first step is to identify the separate contraventions involved. The Court should then consider whether multiple contraventions of the same provision of the Fair Work Act must be taken to be a single contravention by reason of s.557(1) of the Act. Where there are multiple contraventions that cannot be taken as a single contravention pursuant to s.417(1) of the Act, it is still necessary to consider whether those multiple contraventions constitute a course of conduct. The contravener should not be penalised more than once for the same conduct. The penalties imposed by the Court in respect of multiple contraventions should be an appropriate response to the conduct of the contravener.
The parties are agreed on the identity of the contraventions and I make declarations in respect of those as set out at the commencement of these reasons. The parties also agree that the contraventions are distinct and do not amount to a “course of conduct” within the meaning of s.557(1) of the Fair Work Act. As the applicant puts it, the contraventions occurred at different times and involved different people who did different things.
Finally, the Court should consider the appropriate penalty for the contraventions taking into account all of the relevant circumstances. The Court should apply an ‘instinctive synthesis’ in assessing whether it is an appropriate response to the conduct which led to the contraventions.
Nature and extent of the conduct
The coercion contravention (s.343 of the Act) relates to a conversation between the third respondent and Dr Kaza on one occasion. There are not numerous contraventions or a prolonged course of conduct as the applicant suggests in submissions. The applicant’s submission does not recognise that I am dealing with one instance of contravention, not a course of conduct over a prolonged period of time. It was open to the applicant to plead all of the other incidents of contravention and seek findings in relation to each of them. As it is, relief was only sought in respect of the conversation between the third respondent and Dr Kaza which took place on 24 February, 2010. That is the only conduct I am dealing with in respect of the s.343 contravention.
Having said that, the contravention is serious. The applicant emphasises that the intention of the legislature is that no person should be subject to coercion for exercising a workplace right. To coerce a person into withdrawing a complaint made to the Fair Work Ombudsman in exchange for something to which they were in any event entitled is a gross contravention of s.343 of the Act. It is not difficult to infer that the contravention was designed with the explicit intent of avoiding scrutiny by the regulatory authority.
Counsel for the respondents submits that despite the Court’s finding of contraventions of s.343 of the Act, there was no actual coercion in the sense that Dr Kaza did not withdraw his complaint to the applicant. The respondents also suggest that there is no evidence that Dr Kaza felt coerced to withdraw his complaint. In fact, the respondents note that Dr Kaza says he asked the third respondent for some time to make a decision as to whether to withdraw his complaint. The respondents gave him that time. Counsel urges the Court to infer, seemingly, that Dr Kaza was not under a lot of pressure to withdraw his complaint. I reject those submissions. The effect of Dr Kaza’s evidence was that he felt coerced by the third respondent’s demand. In any event actual coercion is not required to make out a contravention of s.343(1) of the Act. A threat to take action against another is enough. That is what occurred in this case. The threat was carried out.
As to the breach of s.340 of the Act by ceasing to pay Dr Kaza, counsel for the respondents submits that even though the first respondent had ceased paying Dr Kaza, that was the only service it ceased providing to him. It is pertinent to recall my finding in the earlier reasons that the first respondent was an independent contractor with whom Dr Kaza had entered into a contract for services. Those services included those necessary to enable him to earn an income as a general medical practitioner such as the provision of plant, equipment, and accounting (see Fair Work Ombudsman v Windaroo Pty Ltd & Ors [2015] FCCA 554 at [98]). Counsel suggests that the first respondent has not been provided its fee for the provision of those services to Dr Kaza. However, there are two difficulties with this argument. First, all of the other services that the first respondent was to provide to Dr Kaza were meaningless if he was not to be paid for the work that he did by utilising the other services. The actions of the first respondent rendered the other services of no value to Dr Kaza. Second, it is of no relevance that the first respondent did not receive its fees from Dr Kaza for providing the services that it did to him. That is because the first respondent has retained the fund out of which the service fee due to the first respondent would be paid. It has not been out of pocket at all. It has enjoyed the benefit of that money as well as the funds to which Dr Kaza was entitled. To the extent that the evidence might suggest that the first respondent kept Dr Kaza’s funds separate and presuming that separation has been maintained until now, the argument of the first respondent is still hollow. If the first respondent’s service fee was to be deducted from the earnings paid to Dr Kaza and if the first respondent wanted the service fee paid to it, all it had to do was pay him. The first respondent never did.
The circumstances in which the conduct took place
Outlining the circumstances in which the conduct took place, counsel for the applicant emphasised Dr Kaza’s expenditure and efforts in terms of moving to Australia with his family as well as his belonging to a vulnerable class of workers as a foreign employee. Indeed, foreign workers have been recognized as a vulnerable class (see, e.g., Jones v Hanssen Pty Ltd [2008] FMCA 291). However, Dr Kaza was not an employee.
The applicant also points out the following circumstances:
a)Dr Kaza’s orientation program, initially schedule for two weeks, was extended to over two months and ended immediately following the first respondent’s practice undergoing an audit accreditation process;
b)There were a number of other incidences which, although not breaches of the Fair Work Act, resulted in Dr Kaza not receiving his fortnightly payments (see Fair Work Ombudsman v Windaroo Pty Ltd & Ors [2015] FCCA 554 at [51]), including the 2009-2010 Christmas period;
c)When Dr Kaza complained to the second respondent about the lack of payments he was told that his contract precluded him from “resigning” and that he risked legal proceedings being brought against him by the respondents if he resigned; and
d)Dr Kaza’s visa was sponsored by the respondents and his family’s income and Australian domicile depended on it.
In my view, however, none of these matters are relevant to my consideration of a penalty for the contraventions that were proved. Those matters, as the applicant’s submissions acknowledged, did not amount to a contravention or contraventions of the Fair Work Act.
The relevant circumstances relating to the coercion contravention was the fact that Dr Kaza had taken a complaint to the Fair Work Ombudsman as he was entitled to do. In response, the respondents, by the third respondent, threatened to take adverse action against Dr Kaza unless he withdrew his complaint. The respondents must have known that Dr Kaza was in a difficult financial position and that the threat to withhold further payments from him provided real leverage over him. Otherwise there would have been no point in making the threat.
The threat was carried out. Dr Kaza’s payments ceased when it became apparent that he would not withdraw his complaint. It was carried out by the first and second respondents who must have known that Dr Kaza was under significant financial pressure. It was done either in the hope that Dr Kaza would relent and withdraw his complaint, or as punishment for not succumbing to the earlier coercion.
Nature and extent of the loss
I have dealt with this issue above. The loss suffered by Dr Kaza because of the contraventions with which I am dealing is limited. Having said that, there has been no reparation of the loss by the first or second respondents.
Similar previous conduct
There is no evidence that the respondents have been involved in proceedings concerning contraventions of the Fair Work Act. The applicant concedes that the respondents should be given “first offender status” within the meaning used by McKerracher J in Fair Work Ombudsman v Kentwood Industries Pty Ltd (No. 3) [2011] FCA 579.
Size of first respondent
Both parties agree that the first respondent is not a large business. Counsel for the applicant submits, however, that being a small business does not absolve the first respondent of any responsibility to comply with the law and that any consideration of the first respondent’s size should be minor in this case. I am of that view.
Deliberateness
The contraventions were clearly a deliberate attempt to deprive Dr Kaza of his right to bring a complaint to the Fair Work Ombudsman and his right to payments under the contract for services he had with the first respondent.
Counsel for the respondents urges the Court, however, to consider the context in which the contraventions occur and points to the “less than optimum circumstances” in which Dr Kaza and the respondents found themselves. I do not know what that means. If it is an argument that the respondent’s conduct should be seen as less heinous than it is because Dr Kaza was unhappy or dissatisfied with them, or that he was not performing as the respondents had hoped, I reject the argument.
Contrition, corrective action, and co-operation
The applicant submits that hitherto the respondents have not demonstrated any contrition nor taken corrective action. The cessation of payments, in particular, has not been rectified.
The applicant also argues that its investigations were marred with difficulties from the respondents, including the second respondent making allegations of bias and improper conduct against the applicant’s inspectors. Counsel for the respondent submits – and the applicant concedes – that the second respondent participated in an interview and provided certain documents. However, the applicant notes that the third respondent refused to attend any such interview.
It is clear that the respondents’ conduct in respect of the investigation and their lack of contrition does them no favour. There are no expressions of regret or remorse.
Penalties
Taking those matters into account, in my view an appropriate penalty for each of the contraventions that I have found proved against the first respondent is 60% of the maximum in each case, or $39,600. In my view that penalty is an appropriate response to the first respondent’s two contraventions. There is no evidence that persuades me that such a penalty is likely to be crushing on the first respondent. In my view no reduction in the total of the two penalties is appropriate. In my view, no question of the first respondent being punished twice for the same conduct arises.
In respect of the second respondent, the penalty should also be 60% of the maximum for each contravention. That is a total penalty of $7,920. Again, there is no suggestion that such a penalty would be crushing. There is no warrant to reduce the aggregate of the two penalties in this case. There can be no realistic suggestion, in my view, of the second respondent being punished twice for the same conduct if two separate penalties are imposed.
In respect of the third respondent, the penalty should also be 60% of the maximum or $3,960.00
Conclusion
In summary, there should be orders imposing the pecuniary penalties I have fixed above on each of the respondents.
There should also be orders that the first and second respondents pay to the applicant the sum of $21,054.55 calculated as follows:
a)Economic loss $12,000.00
b)Interest thereon $5,384.86
c)Non-economic loss $2,500.00
d)Interest thereon $1,169.69
There should also be orders that the first second and third respondents pay to the applicant the sum of $3,669.69 calculated as follows:
a)Non-economic loss $2,500.00
b)Interest thereon $1,169.69
Accordingly I make the declaration and the orders set out at the commencement of these reasons.
I certify that the preceding one hundred and twenty-five (125) paragraphs are a true copy of the reasons for judgment of Judge Jarrett delivered on 28 September, 2016.
Date: 28 September 2016
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