Jin v Premium Travel Solutions Pty Ltd (No 2)
[2023] FedCFamC2G 254
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Jin v Premium Travel Solutions Pty Ltd (No 2) [2023] FedCFamC2G 254
File number(s): SYG 891 of 2021 Judgment of: JUDGE D HUMPHREYS Date of judgment: 3 April 2023 Catchwords: INDUSTRIAL LAW – Fair Work Act – Passenger Vehicle Transportation Award 2010 – Imposition of Penalty. Legislation: Fair Work Act 2009 (Cth) ss 45, 500
Federal Circuit and Family Court of Australia Act 2021 (Cth) s 21
Federal Court of Australia Act 1976 (Cth) s 51A
Cases cited: Australian Building and Construction Commissioner v Pattinson [2022] HCA 13
Australian Ophthalmic Supplies Pty Ltd v McAlary‑Smith (2008) 165 FCR 560
Canturi v Sita Coaches Pty Ltd (2002) 116 FCR 276
Fair Work Ombudsman v Nobrace Centre Pty Ltd (in Liquidation) [2019] FCCA 2979
Fair Work Ombudsman v NSH North Pty Ltd t/as New Shanghai Charlestown [2017] FCA 1301
Jin v Premium Travel Solutions Pty Ltd [2023] FedCFamC2G 22
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383
Sayed v Construction. Forestry, Mining, and Energy Union [2016] FCAFC 4
Seven Network (Operations) Pty Ltd v Communications, Electrical, Electronic, Energy Information, Postal Plumbing and Allied Services Union of Australia (CEPU) (2001) 110 IR 372
Division: Division 2 General Federal Law Number of paragraphs: 25 Date of last submission/s: 24 June 2023 Date of hearing: In Chambers Place: Parramatta Counsel for the Applicant: Mr Furlan Solicitor for the Applicant: Zhang Shijing Lawyers Counsel for the Second Respondent: The Second Respondent appeared on their own behalf ORDERS
SYG 891 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: ZHENG HUI JIN
Applicant
AND: PREMIUM TRAVEL SOLUTIONS PTY LTD
First Respondent
CHANGXIN FEI
Second Respondent
YE ZHAO
Third Respondent
order made by:
JUDGE D HUMPHREYS
DATE OF ORDER:
3 April 2023
THE COURT ORDERS THAT:
1.Pursuant to s 546(1) of the Fair Work Act 2009 (Cth) (“the Act”), the second respondent pay a pecuniary penalty in the total sum of $34,000.00.
2.Pursuant to s 546(3)(c) of the Act, the Second Respondent to pay the Applicant the amount ordered in order 1 of these orders within 28 days of the date of this order.
3.Pursuant to s 547 of the Act and s 211 of the Federal Circuit and Family Court of Australia Act 2021 (Cth), the second respondent to pay interest to the Applicant in the amount of $20,038.67, to be paid within 28 days of the date of this order.
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 D HUMPHREYS
INTRODUCTION
This judgement deals with the appropriate penalties to be imposed following a determination of this Court (see; Jin v Premium Travel Solutions Pty Ltd [2023] FedCFamC2G 22) that the second respondent, Changxin Fei, was taken by operation of s 500 Fair Work Act 2009 (“the Act”) to have breached s 45 of the Act as follows:
a) Failed to pay the minimum ordinary time rate of pay to the Applicant in breach of clause 14.1 of the Passenger Vehicle Transportation Award 2010 (“the Award”) in respect of any of the Applicant’s work for the First Respondent at any time between January 2016 and June 2018 (“Work Period”);
b) Failed to apply casual loading to the Applicant’s pay in breach of clause 10.5(c) of the Award in respect of any of the Applicant’s work for the First Respondent during the Work Period;
c) failed to pay early and late work penalty rates in breach of clause 23.5 of the Award in respect of any of the Applicant’s work for the First Respondent during the Work Period;
d) failed to pay overtime rate to the Applicant for hours worked in excess of 10 hours and less than 13 hours in breach of clauses 21.3 and 23.1 of the Award in respect of any of the Applicant’s work for the First Respondent during the Work Period;
e) failed to pay overtime rate to the Applicant for hours worked in excess of 13 hours in breach of clause 23.2 of the Award in respect of any of the Applicant’s work for the First Respondent during the Work Period;
f) failed to pay penalty rates for Saturday work in breach of clause 23.2 of the Award in respect of any of the Applicant’s work for the First Respondent during the Work Period;
g) failed to pay penalty rates for Sunday work in breach of clause 23.2 of the Award in respect of any of the Applicant’s work for the First Respondent during the Work Period;
h) failed to pay penalty rates for Public Holiday work in breach of clause 23.4 of the Award in respect of any of the Applicant’s work for the First Respondent during the Work Period;
i) failed to make superannuation contributions on behalf of the Applicant in breach of cluse 20 of the Award in respect of any of the Applicant’s work for the First Respondent during the Work Period.
On 24 January 2023, orders were made for the filing and serving of any submissions and evidence relied upon by the applicant by 14 February 2023 and Mr Fei, the second respondent, by 7 March 2023. While the applicant complied with those orders, Mr Fei did not file any material. At a directions hearing on 10 March 2023, directions were again made for Mr Fei to file any submissions and evidence he wished to rely upon by 23 March 2023. Again, no material was filed by Mr Fei.
At a further directions hearing on 24 March 2023, by consent, the parties agreed that the issue of penalty be dealt with on the material already filed with the Court.
Accordingly, the Court has no material by way of mitigation on behalf of Mr Fei. The Court has taken account of some relevant material raised during the course of the liability hearing as to his circumstances and otherwise.
EVIDENCE BEFORE THE COURT
In addition to written submissions, the applicant relied up on two Affidavits. The first is that of the applicants dated 13 February 2023. In it, he deposes that during his 30 month employment with the respondent company, he only received payments for the company for 10 months. He claims not to receive any payments for wages from the company consecutively for a year from July 2016 to July 2017. During that period, he relied on tips and extra income from working night tours to cover his living costs. He claims that since July 2017, he moved house and his rented gone up from $260 to $450 per week. As a result of increased living costs, he had to work even harder and longer hours.
The applicant claims to work seven days per week with a busier workload when holiday season came, especially during the Lunar New Year. He claims that he barely had time to spend with his family or go on a trip with them. He claims that due to long hours of working and irregular sleep and diet, he has contracted diabetes around the end of 2016. He believes this was a result of increased stress from not being properly paid.
While the Court takes account of these claims, it places no weight on them other than to the extent that they merely confirm the matters the Court has already found in the liability judgement for this matter.
The second Affidavit is from Mai Minh Chau Do, a paralegal working for the applicant’s solicitors, sworn 13 February 2023. Attached to her Affidavit is a worksheet calculating pre-judgement interest of the compensation awarded to the applicant, calculated to be $20,038.67. Ms Do swears that the method of calculating the interest in her Affidavit is in accordance with s 51A(1)(a) of the Federal Court of Australia Act 1976 (Cth), and the General Practice Note: Interest on Judgements Practice note (GPN-INT) published 18 September 2017.
The Court has perused this worksheet and the relevant interest rates applied and agrees with the calculations undertaken by Ms Do.
THE LAW IN RELATION TO FAIR WORK PENALTIES
The Court has a broad discretion as to penalty. In Australian Building and Construction Commissioner v Pattinson [2022] HCA 13 at [71] it is stated that the Court should fix a penalty “… it considers fairly and reasonably to be appropriate to protect the public interest from future contraventions of the Act”. Further at [10], the High Court stated that the penalty must not exceed what is “… reasonably necessary to achieve the purpose of section 546: the deterrence of future contraventions of a like kind by the contravener and others”.
In Fair Work Ombudsman v NSH North Pty Ltd t/as New Shanghai Charlestown [2017] FCA 1301, Bromwich J summarised how the discretion is to be approached at [36], as follows:
a) 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.
b) 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 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.
c) 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.
d) Consider the appropriate penalty in respect of each final individual group of contraventions, taken in isolation.
e) 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].
The purpose of a civil penalty is primarily, if not wholly, promoting the public interest in compliance with the laws that have been contravened, and it does not engage principles of retribution or rehabilitation: (see; Fair Work Ombudsman v Nobrace Centre Pty Ltd (in Liquidation) [2019] FCCA 2979 (“Nobrace”) per Kelly J at [65]. As the principles of retribution or rehabilitation are not involved in the determination of a civil penalty, this intensifies the focus of a civil penalty determination on issues of specific and general deterrence: (see; Nobrace at [66]).
The Act does not set out any mandatory criteria, inclusive or exclusive, that the Court must consider when determining whether to impose a penalty or the amount of any penalty: (see; Canturi v Sita Coaches Pty Ltd (2002) 116 FCR 276 at [88]). The choice of penalty must be guided by the “individual circumstances of a case, not by a line-by-line comparison with another case”: (see; Australian Ophthalmic Supplies Pty Ltd v McAlary‑Smith (2008) 165 FCR 560 at [12]). The process is an intuitive one by the Court and not an application of a scientific process: (see; Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 at [60]‑[63]).
In Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 (“Mason v Harington”), Mowbray FM set out what is a now well accepted set of factors relevant in assessing a pecuniary penalty. They are as follows:
a) the nature and extent of the conduct which led to the breaches;
b) the circumstances in which the conduct took place;
c) the nature and extent of any loss sustained as a result of the breaches;
d) whether there has been similar previous conduct by the Respondents;
e) whether the breaches were properly distinct or arose out of one course of conduct;
f) the size of the business enterprise involved;
g) whether or not the breaches were deliberate;
h) whether senior management was involved in the breaches;
i) whether the party committing the breach had exhibited contrition;
j) whether the party committing the breach had taken corrective action;
k) whether the party committing the breach had cooperated with enforcement authorities;
l) the need to ensure compliance with minimum standards by provision of an effective means for the investigation and enforcement of employee entitlements; and
m) the need for specific and general deterrence.
In Seven Network (Operations) Pty Ltd v Communications, Electrical, Electronic, Energy Information, Postal Plumbing and Allied Services Union of Australia (CEPU) (2001) 110 IR 372 at 374, Merkel J set out some guiding considerations for the Court:
… matters to be taken into account in determining the appropriate penalty include the cost of the contravention, deterrence, the flagrancy and deliberateness of the breach, the offender’s past record of behaviour and any contrition displayed by the offender.
CONSIDERATION
As set out above, there are nine separate contraventions of s 45 of the Act comprising of failures to pay relevant Award rates, including ordinary time rate, casual loading, early and late penalty rates, over time to time work in excess of 10 hours in less than 13 hours, over time for work in excess of 13 hours, and a failure to pay penalty rates for Saturdays and Sundays and public holidays. The respondent company has also failed to pay superannuation in breach of clause 20 of the relevant Award.
On behalf of the applicant, it was submitted that each of the contravention should be treated as a separate contravention and attract a discrete penalty. The Court does not accept this submission, noting that the contraventions appear to arise out of a single course of conduct.
The Court is of review, however, that they should not be aggregated into one single contravention, but rather grouped into four separate contraventions for the purposes of penalty, as follows:
•Failure to pay minimum ordinary rates of pay and casual loading;
•Failure to pay penalty rates for early and late work, Saturday work, Sunday work on public holiday work;
•Failure to pay overtime rates when applicable; and
•Failure to make superannuation contributions.
The Court notes that the penalty for each contravention between 1 January 2017 of 30 June 2018 was 60 penalty units. As at 30 June 2017, the value of one penalty unit was $180.00, however this increased on 1 July 2017 to $210.00. The Court will apply the higher penalty unit value, but take into consideration when fixing the penalty for each contravention that for at least part of the period of the contravention the value of the penalty unit was lower. Thus, the maximum penalty for each of the four aggregated contraventions is $12,600.00.
In terms of the relevant factors set out in Mason v Harrington as set out above, the Court finds as follows:
a. In terms of the nature and extent of the conduct leading to the breaches, the conduct took place over a lengthy period, being from 1 January 2016 to 30 June 2018. It was submitted on behalf the applicant the contraventions must be viewed as a result of a deliberate scheme to mischaracterise the company’s drivers, including the applicant, as contractors to justify paying them at fixed daily rates for all of their work, without regard to the number of hours worked and the Award rates, including any applicable penalty rates.
The respondent was a director of the respondent company, and his actions were clearly essential to the contraventions that had been found.
b. In terms of the circumstances in which the conduct took place, it was submitted that the underpayment of the applicant occurred in circumstances where on 9 August 2017, during a hearing of an earlier dispute between the applicant and the respondent company, a Commissioner of the Fair Work Commission informed the respondent company that the applicant was an employee and not a contractor. In these circumstances, having regard especially to the respondent’s failure to give evidence of the proceedings, it should be inferred that he was aware of what had transpired at the Fair Work Commission and that he needed to be very careful about the issue.
On behalf of the applicant, it was submitted that the respondent company ignored the Fair Work’s remarks and continued to enumerate the applicant in precisely the same way it had at all times since his employment commenced. There is no evidence that the respondent company took any steps whatsoever to ascertain what its obligations were once they had been warned that the applicant was an employee. The continued underpayment significantly contributes to the overall seriousness of the contraventions of this matter. The Court agrees with this submission.
c. In relation to the nature and extent of the loss suffered, the Court notes the total underpayment is a significant amount, being $92,386.09. For a relatively modest entitlement under the Award, this represents a significant underpayment. On behalf of the applicant, it was submitted this was a serious breach and needed to be reflected accordingly in the penalties imposed
d. In terms of prior conduct, it was submitted there was no evidence of any prior breaches of the Act by the respondents. However, the respondent company and the second respondent failed to take account of the Fair Work Commission hearing and rectify their conduct in treating the applicant as a contractor rather than as an employee. It was submitted this was a significant matter that should carry weight in the Court’s assessment of contraventions.
e. The Court is satisfied that the breaches did arise out of a single course of conduct, however, that they should not be aggregated totally but rather to four distinct contraventions
f. In terms of the size of the enterprise, it is common ground that the respondent company was a relatively small enterprise with few employees.
g. In terms of whether the breaches were deliberate, it was submitted the Court could not conclude that they were other than deliberate. The Court agrees with this submission, noting the previous hearing in the Fair Work Commission.
h. In terms of the involvement of senior management, the second respondent was only one of two founding directors of the respondent company. The Court finds that he was intimately involved in the contraventions.
i. In terms of contrition, the Court finds that there has been no expression of contrition or remorse. Although the Court has ordered that a compensation be paid, the Court understands that no compensation has been paid to date. Further, the respondent denied any liability, and this continued to the end of the trial.
j. In terms of corrective action, there has been no attempt to rectify the underpayments. The Court finds this is a significant matter in the assessment of penalties.
k. In terms of specific and general deterrence, it was submitted on behalf of the applicant that it was not known what, if any, business activities the second respondent may be engaged in or be planning to be engaged in the future. This is because he chose not to give evidence. On behalf of the applicant, it was submitted that the respondent having failed to take any responsibility for his actions meant that there was a very clear need for specific deterrence in this matter. Further, there was an undeniable need for general deterrence of work arrangements that wrongly and deliberately seek to characterise employees as contractors for the purpose of this systemically under remunerating employees to the financial advantage of the business that employs them and the owners of that business. The Court considers this to be a significant factor which will be appropriately reflected in the overall penalties.
The applicant submitted that an appropriate range in respect of each contravention should be in the range of 70 to 80% of the maximum penalty that is $8,820.00-$10,080.00. Each contravention is similar and there was no need to differentiate between any particular contravention by imposing a greater penalty as compared to the others. It was further submitted that it would be appropriate to discount these recommended penalties by the amount of 10% to take account of the value of the change of a penalty unit during the contravention period. This resulted in a penalty range of $7,938.00-$9,072.00.
Taking in to account, all of the matters raised above, the Court is of the view that the appropriate penalty, taking into account the aggregation of penalties, together with a discount for the increase in penalties, is an amount of $8,500.00 per group of aggregated contraventions, or a total of $34,000.00 all up.
The Court has formed a view, based on the totality of the penalty, that it is not appropriate to reduce it further. This is based on the fact that the number of contraventions have already been aggregated, reducing the total penalty. The Court has also taken into account that the third respondent in the matter settled the claim against him for a payment of money for ‘legal fees’, and as a result has not had any pecuniary penalties imposed upon him. On this basis, the second respondent should not bear the full burden of any pecuniary penalties. This adjustment is reflected in the total penalty arrived at.
The Court orders that the second respondent, Mr Fei, is to pay the penalties to the applicant: (see; Sayed v Construction. Forestry, Mining, and Energy Union [2016] FCAFC 4).
In terms of interest, the Court is satisfied that it is appropriate to order interest on the judgment amount ordered on 24 January 2023 to the date of that judgement, despite the employment of the applicant commencing more than two years earlier on 1 January 2016. The Court is satisfied that the appropriate amount is that set out in the Affidavit of Ms Do, being the amount of $20,038.67.
I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment of Judge D Humphreys. Associate:
Dated: 3 April 2023
0