Harper v AF Maple Services Pty Ltd (No 2)
[2023] FedCFamC2G 1067
•3 October 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Harper v AF Maple Services Pty Ltd (No 2) [2023] FedCFamC2G 1067
File number(s): PEG 17 of 2022 Judgment of: JUDGE STREET Date of judgment: 3 October 2023 Catchwords: FAIR WORK – penalty hearing – course of conduct- not serious contraventions- contrition- no need for specific deterrence Legislation: Fair Work Act 2009 (Cth) ss 45; 61(2); 139(1); 323; 507A; 539(2); 542; 545; 546; 550; 557A; 566; 570; 570 Cases cited: Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; 165 FCR 560
Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482
Fair Work Ombudsman v Get Plucked Holdings Pty Ltd [2022] FedCFamC2G 807
Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
Division: Division 2 General Federal Law Number of paragraphs: 34 Date of hearing: 3 October 2023 Place: Sydney Solicitor for the Applicant Mr J Dasey of Dasey Legal Solicitor for the First Respondent Mr J Buxton of Buxton Solicitor for the Second Respondent Mr J Buxton of Buxton ORDERS
PEG 17 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: ANNIE HARPER
Applicant
AND: AF MAPLE MANAGEMENT SERVICES PTY LTD ACN 644 815 485
First Respondent
JAMESON CHARLES CLARKE BUXTON
Second Respondent
ORDER MADE BY:
JUDGE STREET
DATE OF ORDER:
3 OCTOBER 2023
THE COURT ORDERS THAT:
1.Leave is granted to the second respondent to appear on behalf of the first respondent.
2.The application for an adjournment by the respondent’s is refused.
3.Pursuant to s 5461 of the Fair Work Act 2009 (Cth), within 28 of the date of these orders:
(a)The first respondent pay a pecuniary penalty to the applicant for the two contraventions of s 45 and s 323 of the Fair Work Act 2009 (Cth) in the total amount of $53,280.
(b)The second respondent pay a pecuniary penalty to the applicant for his involvement in the first respondent’s declared contraventions of s 45 and s 323 of the Fair Work Act 2009 (Cth) in the total amount of $10,656.
4.Liberty is granted to the applicant to make further application for steps of enforcement if order 3a or order 3b is not complied with within 28 days of these orders.
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).
EX TEMPORE REASONS FOR JUDGMENT 3 OCTOBER 2023
JUDGE STREET
This is a penalty hearing within the Court’s jurisdiction under s 566 of the Fair Work Act 2009 (Cth) (“FW Act”), in respect of proceedings that were commenced on 10 February 2022 relating to contraventions of ss 45 and 323 of the FW Act. The statement of claim filed on 10 February 2022 identified the applicant as being engaged as a national system employee of the corporate entity and identified a letter of offer with attached terms of employment and an annual salary of $90,000 which were said to have been accepted on 28 April 2021 and the letter was signed by the second respondent. The salary was increased to $110,000 per annum with effect from 1 October 2021.
The applicant identified working full-time in the duties of the position provided from 17 May 2021 until 1 October 2021, with the exception of two weeks leave from 12 to 22 June 2021. The contract of employment provided that applicant’s salary was to be paid on the 15th of each month. Therefore, payments were due on 15 June 2021, 15 July 2021, 15 August 2021, 15 September 2021 and 15 October 2021. However, no such salary payments were made by the corporate entity. The pleading identified that the second respondent had made excuses each month that convinced the applicant she would eventually be paid.
On 1 October 2021 the applicant advised the second respondent that she would not perform any further work. The second respondent identified receiving a $1500 cash payment on 15 October 2021, received but no other payments and no payment of superannuation. The applicant identified that she was the subject of the Clerks Private Sector Award 2020 which has been marked exhibit E, and under clause 16 there was a minimum rate payable under the award. The salary was identified as a matter described in ss 61(2) and 139(1) of the FW Act, and the applicant’s the above award component of the safety contractual net was identified in clause 12 of the Clerks – Private Sector Award 2020. The applicant identified the work undertaken comprising 20 weeks and an unpaid salary amounting to $34,504.80 and outstanding superannuation of $3393.55.
The contraventions pleaded, referred to the minimum salary requirement in clause 16 which gave rise to a contravention of s 45 of the FW Act, and the failure to pay the amounts payable in full on the scheduled date in contravention of s 323 of the FW Act. The statement of claim alleged that the second respondent, who was the corporate mind of the first respondent, was involved in the contraventions by the first respondent. The pleading alleges that the contraventions were serious contraventions within the meaning of s 557A of the FW Act.
Following the commencement of the proceedings, they came before a Judge of the Court in Perth on three occasions before the filing of any response to the statement of claim on 8 August 2022. That response did not engage with the allegations in the pleading and in essence identified that the respondents consented to the making of orders in relation to the initial salary, superannuation, and advanced explanations concerning the background that did not otherwise identify any proper response to the statement of claim. Following the filing of that on 20 April 2023, an application was filed for summary judgment and an affidavit was provided in support by Mr John Noel Daisy.
That affidavit identified the outstanding unpaid salary, superannuation and the contraventions relied upon. The response in essence, identified admissions as a result of which the applicant moved for summary judgment. A further response was filed on 19 May 2023 in which the respondents agreed to the request for summary judgment, agreed they had contravened s 45, agreed the applicant was entitled to a safety net contractual entitlement under s 542 and agreed that the second respondent was involved in the contraventions within the meaning of s 550 of the FW Act.
The respondents sought to take issue with the multiple occasions of contravention in terms of their course of conduct and also sought to take issue with the characterisation of the contraventions being serious contraventions under s 507A of the FW Act. Following the filing of that response on 26 May 2023, this Court by consent, made the following declarations:
5.The first respondent has contravened s 45 of the Fair Work Act 2009 (Cth), by not paying the applicant the minimum salary required by the Clerks-Private Sector Award 2020.
6.The applicant’s salary under her contract of employment, to the extent that it exceeded the minimum payable under her award is a safety net contractual entitlement for the purpose of s 542 of the Fair Work Act 2009 (Cth).
7.The first respondent has contravened s 323 of the Fair Work Act 2009 (Cth) by not paying the applicant amounts due to her on each of the dates, being 15 June 2021, 15 July 2021, 15 August 2021, 15 September 2021, and 15 October 2021.
8.The second respondent was involved, within the meaning of s 550(2)(c) of the Fair Work Act 2009 (Cth), in the first respondent’s contraventions at declarations 1, 2 and 3 above.
The declarations were made by consent, and the Court made order 1 pursuant to s 545(2) of the FW Act. The Court made orders in respect of appearance for the corporate entity and for the payment of interest, and the Court recorded on that occasion, that the second respondent indicated payment would be effected on or before 12 June 2023.
On 21 July 2023, the penalty hearing that had been fixed on 21 July 2023 was vacated. On the adjournment application the second respondent on that occasion, gave evidence as to the absence of any formal rental agreement that he was currently living with his girlfriend, does not own any real property and that he has been acting as a consultant for commodity trading and works US hours involved with clients in China and Asian countries in respect of US suppliers. There was a reference to a particular entity and a particular person. The second respondent identified he did not otherwise have any investments and had not acquired any other normal job because he was hoping that the commodity trading would provide a better income.
The second respondent provided a screenshot in support of the alleged genuineness of the transactions that was marked exhibit A. The second respondent referred to the sending of $200 million without identifying the subject matter precisely and makes other references to two sets of $200 million documents, all of which are unsupported by any other evidence of a satisfactory kind to identify that screenshot was in any way genuine or represented any genuine transaction. The Court nonetheless adjourned the matter until today.
At the commencement of the hearing, Mr Daisy, after obtaining instructions, opposed the adjournment application made by Mr Buxton. Mr Buxton contended that because of the documents that were marked as exhibits, being an additional statement to the earlier statement that he had filed which was also marked as an exhibit and which a statement purported to identify imminent payment about to be made which did not occur. the additional statement alleges payment is about to be made which will facilitate the payment of the outstanding wages and it was suggested any costs.
In support of that additional statement that was marked exhibit D being an irrevocable master fee protection agreement which bears no relationship to the earlier text transactions, and which on its face appears to be incomplete, and has numerous issues in relation to the veracity of the same including in particular a reference to JP Morgan and Chase Bank and the officer being described as Brendan Baxter unsigned. The document itself suggested that until it was executed it would not be binding. On its face, it is not executed by JP Morgan and Chase Bank and the person Brendan Baxter which absence of execution is sufficient to identify that the document appears to be of no weight, does not evidence a genuine transaction and provides the Court with no confidence that there is an imminent payment to be made.
The date of the document of 22 September 2023 is also of concern. There are other concerns in relation to the description of the parties’ agents. It is unnecessary for the Court to descend further beyond identifying that the evidence adduced by the respondents, falls well short of identifying any proper basis upon which the Court could have confidence that there is an imminent payment to be made that would justify a further adjournment in these proceedings, particularly, given the history of the matter. Given that the adjournment was opposed and the history of the matter, and the above findings the Court was not satisfied that an adjournment was warranted in the interests of the administration of justice and refused the adjournment.
The Court granted leave to Mr Buxton to represent the first respondent. The Court identified that it had the benefit of submissions that had been filed by Mr Daisy. Those submissions sought to contend the matter was one engaging the Court’s powers in respect of a serious contravention under s 557A of the FW Act. The Court is not satisfied that the circumstances of this case, although the conduct as the Court will identify was deliberate, engaged the serious contravention provisions under s 557A.
The Court also raised with Mr Daisy the concern that on the face of the evidence, the failure of payment in five occasions, in respect of the minimum wage and the payment obligations should be treated as separate contraventions. The Court raised that the failures were one course of conduct for each of the respective contraventions under ss 45 and 323 of the FW Act, rather than being separate contraventions. The Court was satisfied and raised with Mr Daisy that it appeared that this was a case where the two contraventions were not ones engaging in any double jeopardy. The Court finds that the contraventions arise out of a course of conduct in respect of each contravention and should be treated as a singular contravention of each provision.
Mr Daisy identified that there had been an updated amount in respect of the penalty units for the respective units. The maximum penalty units for each contravention identified in the respective provision for an individual is 60 penalty units. Given the provisions of s 546 of the FW Act, in respect of any corporate entity there is a 300 multiplier that applies to the penalty units. Accordingly, for each of the two contraventions, there is a maximum penalty for the first respondent of $66,600.00, therefore, giving a potential total for the two contraventions of $133,200.00.
In relation to the second respondent and the knowing involvement in the contraventions, the 60 penalty units reflects $13,320.00 as the maximum penalty for each contravention reflecting a total potential maximum penalty of $26,640.00. Mr Daisy accepted that the increase to $ 313 for the penalty unit appeared to be prospective. The Court in any event would have taken the view that it is the penalty at the time the proceedings were commenced that should be the appropriate rate to be imposed and it is for those reasons that the Court has identified the maximum penalty amounts.
The Court raised with Mr Daisy that the consent appeared to be one that justified at least a 20 per cent discount with which Mr Daisy took no issue and the Court then raised with Mr Buxton what he wished to put in relation to submissions as to penalty. The Court raised with Mr Buxton that the object of the penalty provisions were primarily general and specific deterrence, being public protective in nature, and that the Court accepted his contention as to his dire circumstances that meant the need for specific deterrence in the present case was not as significant as it might otherwise have been.
There is no suggestion of any earlier contraventions by either respondent. The Court foreshadowed that the approach it may adopt given the important need for general deterrence and likely finding in respect of deliberateness, is that beyond the 20 per cent reduction there should be a further 50 per cent reduction given the absence of need for specific deterrence of the respondents in the present case. Mr Buxton maintained that he was expecting payment to be made and that his explanation for the earlier inconsistencies is that it was a different transaction and that he was still expecting to receive payment and intending to make payment to Ms Harper of the amounts ordered by the Court.
The Court has taken that evidence into account, but the position presently remains notwithstanding the earlier representations both to the applicant when she was an employee in respect of employment that occurred two years ago and the representations that have been made to this Court more recently, it is not satisfied that it can place weight on Mr Buxton’s assertions as to the imminent making of payment. The Court finds on the evidence before it that the transactions in respect of pending payment are not genuine. In any event, the Court is satisfied that the continuing failure to pay is a relevant aggravating factor in the context of outstanding employee entitlements which the Court has taken into account in the context of determining what order should be imposed.
Section 546 of the FW Act is as follows:
Pecuniary penalty order
(1) The Federal Court, the Federal Circuit Court or an eligible State or Territory court may, on application, order a person to pay a pecuniary penalty that the court considers is appropriate if the court is satisfied that the person has contravened a civil remedy provision.
Note 1: Pecuniary penalty orders cannot be made in relation to conduct that contravenes a term of a modern award, a national minimum wage order or an enterprise agreement only because of the retrospective effect of a determination (see subsections 167(3) and 298(2)).
Note 2: Pecuniary penalty orders cannot be made in relation to conduct that contravenes a term of an enterprise agreement only because of the retrospective effect of an amendment made under paragraph 227B(3)(b) (see subsection 227E(2)).
Determining amount of pecuniary penalty
(2) The pecuniary penalty must not be more than:
if the person is an individual—the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2);
if the person is a body corporate—5 times the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2).
Payment of penalty
(3) The court may order that the pecuniary penalty, or a part of the penalty, be paid to:
(a) the Commonwealth; or
(b) a particular organisation; or
(c) a particular person.
Recovery of penalty
(4) The pecuniary penalty may be recovered as a debt due to the person to whom the penalty is payable.
No limitation on orders
(5) To avoid doubt, a court may make a pecuniary penalty order in addition to one or more orders under section 545.
The appropriate approach that should be taken in determining the appropriate penalty as set out in Fair Work Ombudsman v Get Plucked Holdings Pty Ltd [2022] FedCFamC2G 807 [12] – [15], is as follows:
[12] Identify the separate contraventions, with each breach of each obligation being a separate contravention, and each breach of a term of the Award being a separate contravention.
Consider whether each separate contravention should be dealt with independently or with some degree of aggregation for those contraventions arising out of a course of conduct, noting that s 557 of the FW Act provides that two or more contraventions of a given civil remedy provision are to be taken to be a single contravention if committed by the same person and arising out of a course of conduct by that person.
Consider whether there should be further adjustment to ensure that, to the extent of any overlap between groups of separate aggregated contraventions, there is no double penalty imposed, and that the penalty is an appropriate response to what each respondent did.
Consider the appropriate penalty in respect of each final individual group of contraventions, taken in isolation.
Consider the overall penalties arrived at, including by reference to those which may be proposed by the FWO (as permitted by Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482 (CFMEU Civil Penalties Case) at [64]) and what is proposed by the respondents, and apply the totality principle, to ensure that the penalties for each respondent are appropriate and proportionate to the conduct viewed as a whole, making such adjustments as are necessary: see Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14 at [30]; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; 165 FCR 560 at [23]. [71] and [102].
[13] Under ss 539(2) and 546(2) of the Act, the maximum penalty relevantly in respect to the failure to comply with the first compliance notice is $6,300.00 for an individual and $31,500.00 for a corporation, and the second compliance notice, a $33,300.00 for a corporation.
[14] In respect of the principal object of deterrence depending upon a penalty having the necessary sting or burden to achieve specific and general deterrence as being the raison d'etre for its imposition.
[15] The non-exhaustive factors to determine the appropriate penalty in an industrial regulatory context as identified in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7, as endorsed by Tracey J in Kelly v Fitzpatrick [2007] FCA 1080 at [14], relevantly as follows:
•The nature and extent of the conduct which led to the contraventions;
•The circumstances in which that conduct took place;
•The nature and extent of any loss or damage sustained as a result of the contraventions;
•Whether there has been similar previous conduct by the respondent;
•The size of the business enterprise involved;
•Whether or not the contraventions were deliberate;
•Whether senior management was involved in the contraventions;
•Whether the party committing the contraventions has exhibited contrition; taken corrective action; and/or cooperated with the enforcement authorities; and
•The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements.
In relation to the steps required, in the present case, the Court has identified that there are two separate contraventions in respect of each of which there is a course of conduct by reason of which the contraventions of ss 323 and 45 should each be treated as a single contravention. The Court is also satisfied that there is no double jeopardy in respect of the conduct that constitutes the separate contraventions and that they are indeed separate specific contraventions by reason of which it is appropriate for the Court to impose an appropriate penalty in respect of the two contraventions.
The Court has identified that the appropriate penalty in the present case must take into account the consent by the respondents to the summary judgment in respect of the contraventions which the Court entered orders in relation to, and the Court is satisfied that that consent was genuine contrition, even though it could have occurred potentially at an earlier occasion, the respondents are respectively entitled to a 20 per cent discount given the consent orders. The Court has identified the maximum punishments or penalty for each offence and the Court turns now to the various factors.
The first in relation to the nature and circumstance of the contravening conduct, the Court finds that the failure to pay the minimum amount and the failure to pay the applicant each month was a deliberate failure in circumstances where the respondents had no funds to meet their employment obligations which included, albeit not taking into account for the purposes of penalty, an obligation to pay superannuation. The corporate entity has not yet been put into liquidation. It is not necessary for this Court to decide whether the applicant can successfully pursue an entitlement under the fed guarantee that the Commonwealth has potentially available in respect of employers that go into insolvency. This is not a factor that the Court takes into account itself in determining the penalty for the two contraventions.
The Court has indicated that it is not satisfied that the contraventions are of a kind falling within s 577(1)(a) of the FW Act, not because there is no knowing contravention but in relation to the assertion of a systemic pattern of conduct. The Court’s concern is that it was the want of funds and the impecunious nature of the respondents rather than a systemic pattern of conduct that gave rise to the contraventions and the Court accordingly is not satisfied that this is an appropriate matter in which to find that they were serious contraventions.
Turning to the issue of deliberateness, the Court does accept that each contravention was deliberate in that there was an employee, being the applicant, who had been engaged under a contract of employment and was not paid for a substantial period of time and that a substantial amount was and remains outstanding. In relation to the nature of the loss, the Court identified above that the amounts outstanding of wages and superannuation which together gave rise to consent orders for the amount of almost $41,000.00 which is still outstanding and has still not been paid to the applicant.
In terms of the size of the business, the Court accepts the first respondent’s business has effectively failed to commence beyond engaging the applicant and imposing on the applicant obligations of work without complying with the relevant provisions to which the Court has referred of the Fair Work Act. The fact that the employer was impecunious at the time of commencement of employment is a reason why the applicant should not have been engaged. However, it is clear the applicant was the recipient of similar representations of payment about to be made and which also have been made to this Court.
The loss for an employee of the amount in the present case for the individual is substantial and significant. To have unpaid salary for 20 weeks amounting to $34,504.80 and unpaid superannuation of $3,393.55 would represent a significant loss to an individual in respect of whom there was an obligation on the employer and the corporate mind of the employer to ensure payment was in fact made.
In relation to management and contrition, the Court has already identified a proposal to discount the proposed penalties by 20 per cent given the apparent contrition in respect of the contraventions. Mr Buxton said that his relationship has failed as a result of this matter and he has had to move in with his daughter, all of which are sad circumstances. However, in relation to the level of contrition, there has still been non-compliance with the order made by this Court that required payment. While the impecuniosity of the respondents explains the failure, the ongoing failure to have paid the amounts are aggravating factors in the context of the nature of the penalty that should be imposed.
Turning then to the issue of specific deterrence. The Court is satisfied that the respondents are unlikely to engage in employing individuals in the future and that the only person who had been employed by the first respondent was the unfortunate applicant. The Court is satisfied that the circumstances of this case are such that there is little need for specific deterrence in that the corporate entity is unlikely to engage in any trading activity and appears to be insolvent which may give rise to the issue to which the Court has referred to under the affected legislation, and the Court finds that neither respondent would be likely to engage in conduct of the kind giving rise to the contraventions in this case in the future. That want of specific deterrence is a reason for a further discount in relation to the penalty that might otherwise have been imposed.
Turning to the need for general deterrence reflecting the need for public protection and ensuring that employers pay employees, there is a very real and significant need for general deterrence. That need for general deterrence is one which in all the circumstances to which the Court has referred warrants, nonetheless, a significant sting in terms of penalty is likely to drive home in terms of general deterrence the seriousness of contraventions of the kind in the present case, where an employer has failed to pay the employee their wages and failed to pay the minimum amount under the relevant Award.
The Court is of the view that a further reduction of 50 per cent after the 20 per cent allowance is the appropriate reduction to be made in the present case. The 80 per cent in respect of the two contraventions for the corporate entity, being the first respondent, reflects an amount of $106,560.00. The Court is satisfied that a further reduction should be made in the order of 50 per cent of the amount of the potential penalty for the first respondent after allowance of the 20 per cent reduction, that amounts to an amount of $53,280.00.
The Court has taken a similar view in relation to the 80 per cent reduction of the maximum penalty that might have been imposed for the two offences in respect of the second respondent as an individual, which would amount to $21,312.00, and that a further 50 per cent reduction would give rise to $10,656.00. The Court has taken into account that as far as the Court is aware, the respondents have not engaged in any earlier contravention of the FWA and is satisfied that the proposed penalty in the set amounts are proportionate and reasonable, and taking into account the principle of totality for each respondent, the set amount is appropriate.
The Court heard submissions in relation to whether the amount should be paid to the Commonwealth or to the applicant. The Court is satisfied in the circumstances in the present case, the penalty amount should be paid to the applicant.
Accordingly, the Court makes the above orders.
The Court notes that Mr Dasey did ask for costs under s 570 of the FW Act, and the circumstances in terms of the representations of payment which not been forthcoming and has engaged the applicant in the incurring of further costs. However, the penury circumstances of the respondents in the present case when taken into account together with the contrition that was shown, and the admissions made, the Court declines to make any order under s 570 of the Act.
I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Street. Associate:
Dated: 8 December 2023
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