Kambouridis v L.R. Reed City Pty Ltd
[2020] FCCA 1484
•5 June 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| KAMBOURIDIS v L.R. REED CITY PTY LTD & ANOR | [2020] FCCA 1484 |
| Catchwords: INDUSTRIAL LAW – Contravention of Fair Work Act 2009 – unfair dismissal – penalties hearing – failure to pay compensation ordered – costs order sought – penalties imposed. |
| Legislation: Fair Work Act 2009 (Cth), ss.390, 392, 405, 539, 546, 550 and 570. Federal Circuit Court Rules (Cth), Sch.1. |
| Cases cited: Kambouridis v LR Reed City [2017] FWC 5336 Kelly v Fitzpatrick [2007] FCA 1080 Meadley v Sort Worx Pty Ltd [2013] FCA 1012 Mayberry v Kijani Investments Pty Ltd as trustee for The Dawe Investments Trust Subway Wallsend trading as Subway [2011] FCA 1238 |
| Applicant: | MICHAEL KAMBOURIDIS |
| First Respondent: | L.R. REED CITY PTY LTD (ACN 621 212 655) |
| Second Respondent: | ANDREW MUSEMECI |
| File Number: | MLG 2573 of 2018 |
| Judgment of: | Judge Riethmuller |
| Hearing date: | 28 February 2020 |
| Date of Last Submission: | 28 February 2020 |
| Delivered at: | Melbourne |
| Delivered on: | 5 June 2020 |
REPRESENTATION
| Solicitors for the Applicant: | Maddison and Associates |
| The Respondents did not appear. |
ORDERS
THE COURT DECLARES THAT:
The first respondent contravened s.405 of the Fair Work Act 2009 (‘the Act’) in failing to comply with the order of the Fair Work Commission dated 11 October 2017.
The second respondent was involved, within the meaning of subsection 550(2) of the Act, in the contraventions committed by the first respondent as set out in paragraph 1 above.
THE COURT ORDERS THAT:
The first respondent pay to the applicant a penalty of $20,000 pursuant to s.546(1) of the Act for its contraventions set out in paragraph 1 above.
The second respondent pay to the applicant a penalty of $5,000 pursuant to s.546 of the Act for his involvement in the contraventions set out in paragraph 1.
The respondents pay the applicant’s costs of these proceedings fixed in the sum of $7,104.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 2573 of 2018
| MICHAEL KAMBOURIDIS |
Applicant
And
| L.R. REED CITY PTY LTD (ACN 621 212 655) |
First Respondent
| ANDREW MUSEMECI |
Second Respondent
REASONS FOR JUDGMENT
The applicant commenced proceedings in this jurisdiction on 28 August 2018 seeking enforcement of an order of the Fair Work Commission (‘the FWC’) dated 11 October 2017: see the decision Kambouridis v LR Reed City [2017] FWC 5336 and Order PR 596732. The FWC found that the applicant had been unfairly dismissed from his employment with the first respondent and made an order for a remedy by way of compensation of $38,812.50. The power to make such orders is pursuant to ss.390 and 392 of the Fair Work Act 2009 (Cth) (‘the Act’).
The applicant was employed as an accountant by the first respondent, a facilities management company between 10 August 2015 and 22 May 2017: see paragraph [4] of the applicant’s Affidavit filed 24 February 2020. The second respondent is the Sole Director of the first respondent and was responsible for the day to day running of the business.
In the Statement of Claim filed on 28 August 2018 (as amended on 14 January 2020) the applicant seeks:
a)Payment of the compensation ordered by the FWC of $38,812.50;
b)Penalties pursuant to the Act against the first respondent;
c)Penalties pursuant to the Act against the second respondent;
d)Interest; and
e)Costs.
The matter was adjourned on a number of occasions to allow for personal service of the Application and Statement of Claim on the second respondent. On 8 May 2019 an Affidavit of Service was filed confirming the second respondent was personally served on 28 March 2019.
On 15 July 2019, orders were made (in the absence of the respondents, who failed to appear) for judgment to be entered against the first respondent in the sum of $38,812.50, which was to be paid within 30 days. The matter was adjourned for hearing on the issues of penalty and costs.
The first and second respondents have not filed any material in these proceedings, nor attended any hearings. The issue remaining before the Court is the imposition of penalties against the respondents and whether to make a costs order.
There is no evidence that the first respondent was unable to make the payment ordered by the FWC. The first respondent has therefore breached s.405 of the Act by contravening the orders of the FWC to make payment.
The applicant submits that pursuant to s.550 of the Act, the second respondent is involved in the contravention.
The second respondent is the Director of the first respondent and guiding mind and will of the first respondent. The second respondent takes an active role in the operations of the first respondent, finalising the payroll process of payment to staff, payment of superannuation, controlling payments of creditors, overseeing managers and making decisions to promote, terminate and hire employees.
The order of the FWC was brought to the attention of the second respondent both when the applicant’s representative attended to deliver a copy to him and when the Application and Statement of Claim in these proceedings were served upon him.
On the evidence, I am persuaded that the second respondent was knowingly concerned in the contravention by the first respondent. As a result the second respondent is taken to have also contravened the provision: see s.550(1) of the Act.
Section 539 of the Act provides for penalties in the amount of 60 units for breaches of s.405 of the Act. Section 546 of the Act provides that the maximum penalty for a corporation is 5 times that of an individual, making the maximum for the first respondent 300 penalty units. A penalty unit was $210 at the time of the breach. Accordingly, the maximum penalty in these proceedings for the first respondent is $63,000 and the second respondent $12,600.
The applicant submits a penalty in the mid to high range is appropriate and the Court should, in considering the circumstances, impose a penalty in excess of 50 per cent of the maximum.
Consideration of relevant factors
At the hearing, the applicant made oral submissions on the relevant factors identified by Tracey J in Kelly v Fitzpatrick [2007] FCA 1080. I now turn to consider those factors which are relevant in this proceeding, noting the list is a guide and not exhaustive.
The nature and extent of the conduct and the circumstances in which that conduct took place
The applicant submits that the conduct of the respondents is a serious breach of the legislative provisions. The applicant was unfairly dismissed by the first respondent. The FWC found that the applicant was only notified of his underperformance at the meeting in which he was dismissed: see paragraph [23] of the FWC decision. The applicant was given no opportunity to address any issues related to his employment and was not given an opportunity to improve his performance. The FWC also notes that the first respondent admitted the applicant had improved prior to his dismissal.
The respondents participated in the conciliation before the FWC, however they failed to comply with directions to file defence material. The respondents did not respond to several attempts by the FWC to have the respondents participate in the proceedings. The respondents have not participated or filed anything in the proceedings before this Court.
The nature and extent of any loss or damage sustained
The applicant submits that he lost his employment with the respondents and despite compensation being ordered, no payment has been forthcoming. The applicant therefore is without the amount that has been awarded to him. In addition, the applicant has had to engage legal representation to pursue enforcement of the claim and been subject to legal fees.
Whether there has been similar previous conduct
The applicant submits that the first respondent is in breach of the orders of the FWC and the orders of 15 July 2019 of this Court for the payment of compensation to him. The applicant submits that the breach of the FWC should be considered previous conduct. I do not accept that the ongoing failure to make the payment ordered by the FWC should be considered as more than one breach under the Act. This court’s order for payment can be enforced like any other money order.
On the evidence before the Court this is the only occasion that the respondents (or either of them) have engaged in conduct of this type.
Whether the breaches arose out of the one course of conduct
While the breaches arise out of a single course of conduct, being the failure to comply with the order of the FWC, I note the circumstances of this case are that the breach continues due to the ongoing failure of the first respondent to make payment.
The size of the business enterprise involved
The FWC was not satisfied the first respondent was a small business and proceeded on the basis the first respondent was not a small business in accordance with the Act: see paragraph [18] of the FWC decision. The FWC noted the first respondent acts as an Owners’ Corporation for at least 63 buildings: see paragraph [25] of FWC decision.
The applicant’s representative made submissions from the bar table in relation to the first respondent’s size and profits, however, no evidence was tendered or filed.
The FWC notes (at paragraph [26]):
There is a level of complexity in the nature of the business providing owners’ corporation services to building owners that would suggest that the respondent is not completely ignorant of the need to comply with the law in relation to a range of areas. The fact that the respondent has acted in such a cavalier manner in this matter has probably less to do with its size than with the particular attitude of Mr Musumeci as the director of the respondent.
On the material before the court I am persuaded that the first respondent’s business is of a size and nature that the respondents must have been aware of the obligation to comply with the lawful orders of the FWC.
Whether or not the breaches were deliberate
The applicant submits the conduct of the respondents is clearly deliberate. An order was made in October 2017 for the respondent to pay compensation. No payment has ever been made. I am satisfied that the conduct was deliberate.
Whether senior management was involved in the breach
The second respondent is the sole director of the company and responsible for the day-to-day operations and conduct of the first respondent. I have found the second respondent was involved in the breaches in accordance with s.550 of the Act.
Contrition, corrective action and co-operation with the authorities
The respondents have not participated in the proceedings and have not expressed contrition. Most significantly, they have not remedied the breach.
The need to ensure compliance with minimum standards
The role of the FWC in cases involving unfair dismissal is to ensure that minimum standards are maintained with respect to the security of a person’s employment. If such minimum standards are to be maintained, it is essential that there is compliance with the FWC orders.
The need for specific and general deterrence
The conduct of the respondents shows a lack of regard for the legislative provisions. The FWC plays an important role in protecting the rights of employees and if employers were of the view that a decision of the FWC could be ignored, it would result in a lack of confidence within the system and non-compliance within the work place.
In Meadley v Sort Worx Pty Ltd [2013] FCA 1012 (‘Meadley’s Case’) Tracey J considered deterrence in situations where the FWC has made orders that are not complied with, saying:
45. I am inclined to accept [the] submission that there is little likelihood of it reoffending. There remains, however, a significant issue relating to general deterrence. The Commission is charged with the responsibility of ensuring that employees are accorded the protection from proscribed adverse action to which they are entitled under the Act. When the Commission finds that an employee has been unfairly dismissed and makes remedial orders those orders must be complied with unless a stay is granted pending appeal. An employer is not entitled unilaterally to determine to ignore an order made by the Commission. This was not a case in which the employer was unable to meet its obligations; it simply chose not to do so. This was a serious contravention and the need for general deterrence weighs as a heavy consideration in fixing penalty. Penalties must be imposed at a meaningful level if they are to serve as a general deterrent to others who may be disposed to engage in similar misconduct: see, for example, Australian Competition and Consumer Commission v IPM Operation and Maintenance Loy Yang Pty Ltd (No 2) [2007] FCA 11 at [66]; Finance Sector Union of Australia v Commonwealth Bank of Australia [2005] FCA 1847; (2005) 224 ALR 467 at [41]. As Finkelstein J said in Community and Public Sector Union v Telstra Corporation Limited (2001) 108 IR 228 at 230-1; “even if there be no need for specific deterrence, there will be occasions when general deterrence must take priority, and in that case a penalty should be imposed to mark the law’s disapproval of the conduct in question, and to act as a warning to others not to engage in similar conduct ...”. This is such a case.
I am persuaded that this case calls for the imposition of a penalty that has regard to the need for specific deterrence of the respondents and also reflects the need for general deterrence. Unlike Meadley’s Case there is nothing before me to indicate that the respondents in this case are unlikely to repeat this type of conduct.
Conclusion
In considering the circumstances as a whole, I impose penalties of $20,000 on the first respondent and $5,000 on the second respondent. As the applicant has had to bring the proceedings it is appropriate that the penalty be payable to him personally.
Costs
The applicant seeks costs under subsection.570(2)(b) and (c) of the Act on an indemnity basis. Those sections relevantly provide:
570 Costs only if proceedings instituted vexatiously etc.
…
(2) The party may be ordered to pay the costs only if:
(a) the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or
(b) the court is satisfied that the party's unreasonable act or omission caused the other party to incur the costs; or
(c) the court is satisfied of both of the following:
(i) the party unreasonably refused to participate in a matter before the FWC;
(ii) the matter arose from the same facts as the proceedings.
The applicant submits that the respondents’ conduct was unreasonable in not complying with the FWC order, causing the applicant to incur further costs. In Mayberry v Kijani Investments Pty Ltd as trustee for The Dawe Investments Trust Subway Wallsend trading as Subway [2011] FCA 1238, Katzman J noted that:
28. … Despite the general rule against awarding costs in Fair Work proceedings, a party may be ordered to pay the other party’s costs if the Court is satisfied that the party’s unreasonable act or omission caused the other party to incur the costs: s 570(2) of the Act. [the applicant] has incurred costs in bringing and prosecuting this action as a result of [the respondent’s] conduct in disobeying or not complying with an order of Fair Work Australia. That should not have been necessary. On any view that act or omission is unreasonable.
Significantly, this is not a case where an arguable dispute between the parties remains. This is a case where the FWC has determined the dispute and the respondents have simply failed to comply with the FWC order, for no apparent our outlined reason. Their conduct has effectively forced the applicant to bring proceedings, despite there being no real dispute: such conduct is unreasonable as it wastes the applicant’s costs.
In the circumstances of this case I am persuaded that the applicant should have his costs pursuant to s.570 of the Act.
At the conclusion of the hearing, orders were made for the applicant to file submissions as to costs. No submissions have been forthcoming. I therefore order costs based on the lump sum scale in Sch.1 of the Federal Circuit Court Rules 2001 (Cth).
I note that this is effectively a case where summary judgment has been obtained first on the claim and then for penalty provisions, as the respondent has filed no material and never appeared. Thus, the initial work for filing the material and the two appearances should be sufficient to cover the costs. I therefore asses the costs as follows:
a)Item 2(a) – for commending proceedings including obtaining the judgment for payment of the FWC order: $3,744
b)Item 2(b) – appearance fee for half day for judgment on FWC order (including advocacy loading) under Items 12 and 13(b): $1,680
c)Items 12 and 13(b) – appearance fee for half day for penalty hearing (including advocacy loading) under Items 12 and 13(b): $1,680
There is no evidence on the amount of any disbursements (such as a filing fee or service agent’s fees), however, those amounts are likely to be small and able to be absorbed within the lump sum amounts set out above.
I therefore order that the respondents pay the applicant’s costs fixed at $7,104.
I certify that the preceding forty (40) paragraphs are a true copy of the reasons for judgment of Judge Riethmuller
Associate:
Date: 5 June 2020
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