Gautier v Melbourne CBD Pty Ltd
[2023] FedCFamC2G 11
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Gautier v Melbourne CBD Pty Ltd [2023] FedCFamC2G 11
File number(s): BRG 193 of 2021
BRG 204 of 2021Judgment of: JUDGE VASTA Date of judgment: 19 January 2023 Catchwords: Industrial Law – breach of s 44 of the Fair Work Act 2009 (Cth) –employer failed to pay leave entitlements - Assessment of pecuniary penalties Legislation: Fair Work Act 2009 (Cth):s 90(2), s 557) Cases cited: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3
Australian Building and Construction Commissioner v Pattinson [2022] HCA 13
Mason v Harrington Corporation Proprietary Limited t/as Pangaea Restaurant & Bar [2007] FMCA 7
Division: Division 2 General Federal Law Number of paragraphs: 31 Date of last submission/s: 9 December 2022 Date of hearing: In Chambers Place: Brisbane In BRG 193 of 2021 Counsel for the Applicant: Mr O’Brien Solicitor for the Applicant: Aj & Co Lawyers Counsel for the Respondents: Mr Zielinski Solicitor for the Respondents: Aclg Lawyers In BRG 204 of 2021 Counsel for the Applicant: Mr O’Brien Solicitor for the Applicant: Aj & Co Lawyers Counsel for the Respondents: Mr Zielinski Solicitor for the Respondents: Aclg Lawyers ORDERS
BRG193 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: TYLER GAUTIER
Applicant
AND: MELBOURNE CBD PTY LTD ACN 096 153 525
First Respondent
IL ROY PTY LTD ACN 617 404 298
Second Respondent
JOHN KILROY
Third Respondent
order made by:
JUDGE VASTA
DATE OF ORDER:
19 January 2023
amended 15 june 2023THE COURT ORDERS THAT:
1.Within 60 days of this order, the Second Respondent pay a pecuniary penalty of
$15,000$5,000 to the Applicant pursuant to s 546(1) of the FW Act.
NOTATION: Order 1 has been amended to show $5,000 in lieu of $15,000 pursuant to rule 17.05(2)(h) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
ORDERS
BRG 204 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: CEDRIC GAUTIER
Applicant
AND: IL ROY PTY LTD ACN 617 404 298
First Respondent
JOHN HAROLD KILROY
Second Respondent
order made by:
JUDGE VASTA
DATE OF ORDER:
19 January 2023
amended 15 june 2023THE COURT ORDERS THAT:
1.Within 60 days of this order, the First Respondent pay a pecuniary penalty of
$5,000$15,000 to the Applicant pursuant to s 546(1) of the FW Act.
NOTATION: Order 1 has been amended to show $15,000 in lieu of $5,000 pursuant to rule 17.05(2)(h) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE VASTA
INTRODUCTION
I am dealing with two matters regarding contraventions of the Fair Work Act 2009 (Cth) (“the FW Act”). Tyler Gautier (“Tyler”) was employed in the hospitality industry. She was employed as the senior waiter at a restaurant called Cha Cha Char from 13 January 2014 until 22 November 2020.
During that time, her employer changed from Melbourne CBD Pty Ltd to Il Roy Pty Ltd (the employer). This change occurred because of some corporate restructuring by the controlling mind of the two companies, Mr John Kilroy. It did not affect the employment of Tyler in any way. This change occurred on 18 August 2019.
Cedric Gautier (“Cedric”) was employed as the restaurant manager at Cha Cha Char from 2 September 2019 until 22 November 2020.
In separate actions before this Court (BRG 193/2021 and BRG 204/2021 respectively) Tyler and Cedric claimed that their employer had contravened the FW Act.
Factual matrix
In March 2020, government edicts forced the closure of the restaurant to ensure that COVID-19 did not spread. As history records, such actions were devastating to the hospitality industry. Notwithstanding that the Federal Government introduced the JobKeeper payments, for a number of businesses, this assistance was still insufficient for the business to survive.
Mr Kilroy had paid both Tyler and Cedric the amount that he had been given by the government pursuant to the JobKeeper scheme. Nevertheless, in November 2020, Mr Kilroy made the decision that he was going to have to close the three restaurants that he owned (which included Cha Cha Char).
In effect, the employment of both Tyler and Cedric ceased as at 22 November 2020. In December 2020, Mr Kilroy sent a letter to all employees informing them that he had surrendered the leases of the three restaurants back to the landlords. He informed the employees that he would no longer be operating any of the restaurants and that it was no longer possible to keep the staff on JobKeeper.
He said that he was reviewing the financial position of the companies and looking at all current staff entitlements and that he would be in touch with staff in the future regarding that aspect.
In looking at the staff entitlements, Mr Kilroy paid Tyler a sum that equated to 200 hours in notional long service leave. This was an amount to which Tyler did not have a statutory entitlement.
However, both Tyler and Cedric were not paid for their unused annual leave. Tyler had leave totalling 287.1753 hours. This amounted to $7,483.79. Cedric had leave totalling 179.47 hours. This amounted to $7,266.00.
According to s 90(2) of the FW Act, if, when the employment of an employee ends, the employee has a period of untaken paid annual leave, the employer must pay the employee the amount that would have been payable to the employee had the employee taken that period of leave.
Neither Tyler nor Cedric had been paid their entitlements. However, the employer was entitled to set off the amount paid to Tyler (for which she had no statutory entitlement) against this sum. This meant that the employer had not paid Tyler the sum of $2,271.78.
This failure to observe s 90(2) of the FW Act meant that the employer, Il Roy Pty Ltd, had contravened s 44 of the FW Act.
On 21 October 2022, by consent, I declared that the employer had contravened the FW Act by failing to pay Cedric the sum of $7,266 in annual leave entitlements. I ordered the employer to pay Cedric that sum. On that same day, 21 October 2022, by consent, I declared that the employer had contravened the FW Act by failing to pay Tyler the sum of $2,271.78 in annual leave entitlements. I ordered the employer to pay Tyler that sum.
Pecuniary penalty
These matters are still before me to determine what pecuniary penalty ought to be awarded by the Court against the employer. The parties have asked me to determine this question “on the papers”.
The law in relation to assessment of pecuniary penalties has really been laid down quite comprehensively. The High Court, in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3, said, at paragraph 116 of that judgment:
As has been observed, the principal object of an order that a person pay a pecuniary penalty under s 546 is deterrence: specific deterrence of the contravener and, by his or her example, general deterrence of other would-be contraveners. According to orthodox sentencing conceptions as they apply to the imposition of civil pecuniary penalties, specific deterrence inheres in the sting or burden which the penalty imposes on the contravener. Other things being equal, it is assumed that the greater the sting or burden of the penalty, the more likely it will be that the contravener will seek to avoid the risk of subjection to further penalties and thus the more likely it will be that the contravener is deterred from further contraventions; likewise, the more potent will be the example that the penalty sets for other would-be contraveners and therefore the greater the penalty's general deterrent effect. Conversely, the less the sting or burden that a penalty imposes on a contravener, the less likely it will be that the contravener is deterred from further contraventions and the less the general deterrent effect of the penalty. Ultimately, if a penalty is devoid of sting or burden, it may not have much, if any, specific or general deterrent effect, and so it will be unlikely, or at least less likely, to achieve the specific and general deterrent effects that are the raison d'être of its imposition.
The High Court reaffirmed that principle in the matter of Australian Building and Construction Commissioner v Pattinson [2022] HCA 13. The High Court said, at paragraph 46:
[46]It is important to recall that an “appropriate” penalty is one that strikes a reasonable balance between oppressive severity and the need for deterrence in respect of the particular case. …
[47]The penalty that is appropriate to protect the public interest by deterring future contraventions of the Act may also be moderated by taking into account other factors … where those responsible for a contravention of the Act express genuine remorse for the contravention, it might be considered appropriate to impose only a moderate penalty because no more would be necessary to incentivise the contravenors to remain mindful of their remorse and their public expressions of that remorse to the court. Similarly, where the occasion in which a contravention occurred is unlikely to arise in the future because of changes in the membership of an industrial organisation, a modest penalty may be appropriate having regard to the reduced risk of future contraventions.
[48]It is not necessary to multiply examples further. It is sufficient to say that a court empowered by section 546 to impose an “appropriate” penalty must act fairly and reasonably for the purpose of protecting the public interest by deterring future contraventions of the Act.
In Mason v Harrington Corporation Proprietary Limited t/as Pangaea Restaurant & Bar [2007] FMCA 7, which is known as the “Pangaea case”, the Court went through, in effect, a number of factors the Court should be mindful of when imposing pecuniary penalties. One must be careful, though, in looking at the Pangaea case (Supra), that one does not simply look at those matters as some form of checklist to see whether or not the facts of the case with the particular factors either aggravate or mitigate the penalty. As such, the list compiled in Pangaea (Supra) is extremely useful, but it should not be a formula used by the Court to slavishly come up with some sort of almost mathematical guide for the imposition of penalties.
Notwithstanding what has been said in Pattinson (Supra), the principles in Pangea (Supra) are still apposite when looking at the circumstances of the contravention as well as the circumstances of the contravener.
Discussion
The parties have agreed that the maximum penalty is $63,000 for a contravention of s 44 of the FW Act. There are two distinct contraventions; one regarding Cedric and one regarding Tyler. There was a submission from the employer that the penalty could be taken to constitute a single contravention. This is because s 557 of the FW Act permits that if contraventions of the same section are committed by the same person and they arose out of a course of conduct by that person, then they may constitute a single contravention.
It would seem to me that the prerequisites for s 557 have been met and that the Court could treat the matter as a single contravention. However, this is not one action brought by an Applicant who asked for pecuniary penalties for a number of contraventions; these are two separate actions that are being heard together for the sake of convenience.
To my mind, this prevents the Court from utilising the provisions of s 557 and it means that the Court must treat the contraventions as two separate contraventions and impose a pecuniary penalty in relation to each matter.
The Circumstances of Cedric and Tyler
I have little evidence as to the circumstances of Cedric or Tyler. I can infer that they were competent staff employed at a level that required a degree of responsibility. Notwithstanding that they had not been working since March 2020, they continued to be paid until November 2020.
The amounts that they were not paid are not insubstantial, though it would seem that the employer attempted (albeit mistakenly) to give Tyler her entitlements given that she had been an employee for over six years.
The Circumstances of the Employer
On the evidence before me, the employer lost a substantial amount of money because of the COVID-19 pandemic and had his sources of income from three restaurants dried up almost overnight. While JobKeeper ensured that he could pay the ordinary wages of his employees, they still continue to accrue leave entitlements during that time and the payment of those entitlements was not covered by the JobKeeper payments.
The employer has said that he will not be employing persons in in the future, nor would it seemed that he will be running any business.
Assessment of the Penalty
I am not of the view that there is any correlation or proportionality between the amount of underpayments and the penalty that ought to be imposed. The Court imposes a penalty for one reason, and one reason only; and that is to deter in both specific and a general sense.
It is important for the Court to send a message to all employers, regardless of their financial situation, that they must ensure that the entitlements of employees are given absolute priority.
As this is the purpose of the imposition of the penalties, there is a clear difference in the case involving Tyler as against the case involving Cedric. In Tyler’s case, the employer did pay entitlements to Tyler. It was for the wrong purpose and it was insufficient to meet the statutory obligations, but it was a payment nevertheless. This can be contrasted with Cedric’s case where there was no attempt to pay entitlements at all.
In my view, a pecuniary penalty of $15,000 in the case of Cedric and $5,000 in the case of Tyler, would be an appropriate penalty that strikes the balance between deterrence and oppression.
Order
In the respective matters of Cedric and Tyler, I order that the employer pay a pecuniary penalty in the sum of $15,000 and $5000. Those sums are to be paid within 60 days of the orders.
I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Vasta. Associate:
Dated: 19 January 2023
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