Kaur v Bangari and Karyal Pty Ltd Trading as India Gate Warrnambool
[2020] FCCA 2961
•4 November 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| KAUR v BANGARI AND KARYAL PTY LTD TRADING AS INDIA GATE WARRNAMBOOL & ANOR | [2020] FCCA 2961 |
| Catchwords: INDUSTRIAL LAW – Judgment in default for underpayments, demands for money and record keeping contraventions – penalties – respondents claiming applicant worked voluntarily as a chef 20 hours per week for seven months – respondents paying the applicant nothing for her work – respondents exploiting the applicant as a person seeking a 457 visa. |
| Legislation: Fair Work Act 2009, ss. 45, 323, 325, 546(1), 546(2), 546(3)(a), 535, 539, 557 Fair Work Regulations 2009, reg. 3.32, 3.33 |
| Award: Restaurant Industry Award 2010, cl. 20.1, 30.2, 34.1 |
| Cases cited: Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560; (2008) 246 ALR 35; [2008] FCAFC 8 Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 90 ALJR 113; (2015) 255 IR 87; (2015) 326 ALR 476; [2015] HCA 46 Community and Public Sector Union v Telstra Corporation Limited (2001) 108 IR 228; [2001] FCA 1364 Construction, Forestry, Mining and Energy Union (CFMEU) v Cahill (2010) 269, ALR 1; (2010) 194 IR 461; [2010] FCAFC 39 Fair Work Ombudsman v Lohr (2018) 158 ALD 457; (2018) 356 ALR 424; [2018] FCA 5 Fair Work Ombudsman v Mhoney Pty Ltd [2017] FCCA 811 Fair Work Ombudsman v NSH North Pty Ltd t/as New Shanghai Charlestown (2017) 275 IR 148; [2017] FCA 1301 Fair Work Ombudsman v Phua & Foo Pty Ltd [2018] FCA 137 Fair Work Ombudsman v Samurais Paradise Pty Ltd [2017] FCCA 2013 Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357; (2008) 177 IR 243; [2008] FCAFC 170 Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543; (2007) 162 IR 444; [2007] FCAFC 65 Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412 Rocky Holdings Pty Ltd v Fair Work Ombudsman (2014) 221 FCR 153; (2014) 243 IR 244; [2014] FCAFC 62 |
| Applicant: | INDERJIT KAUR |
| First respondent: | BANGARI AND KARYAL PTY LTD TRADING AS INDIA GATE WARRNAMBOOL (ACN 164 672 155) |
| Second respondent: | SOHAN SINGH |
| File number: | MLG 2258 of 2019 |
| Judgment of: | Judge Riley |
| Hearing date: | 5 October 2020 |
| Date of last submission: | 5 October 2020 |
| Delivered at: | Melbourne |
| Delivered on: | 4 November 2020 |
REPRESENTATION
| Counsel for the applicant: | Jim McKenna |
| Solicitors for the applicant: | Gordon Legal |
| Advocate for the respondents: | Justin Griffin |
| Solicitors for the respondents: | Patrick & Associates |
ORDERS:
Pursuant to s.546(1) of the Fair Work Act 2009 (“the Act”), the first respondent pay penalties for its contraventions of the Act in the amount of $126,000.
Pursuant to s.546(1) of the Act, the second respondent pay penalties for his contraventions of the Act in the amount of $70,560.
Pursuant to s.546(3)(a) of the Act, the respondents pay the penalties to the applicant within 28 days.
DIRECTION
The registrar refer this matter to the Department of Home Affairs for investigation into whether there have been any breaches of the Migration Act 1958 and, for that purpose, the registrar give the Department a copy of these orders and the reasons therefor, and such other documents from the court file as the Department may request.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 2258 of 2019
| INDERJIT KAUR |
Applicant
And
| BANGARI AND KARYAL PTY LTD TRADING AS INDIA GATE WARRNAMBOOL (ACN 164 672 155) |
First respondent
And
| SOHAN SINGH |
Second respondent
REASONS FOR JUDGMENT
Introduction
This matter concerns the penalties, if any, to be imposed for certain contraventions of the Fair Work Act 2009 (“the Act”).
The applicant argued that there should be very significant penalties. The respondents argued there should be no, or minimal, penalties. Neither side suggested a penalty range.
Although the respondents were represented, they failed to file material in accordance with the rules and court orders. Consequently, judgment was entered by default against them on 22 September 2020 as follows:
THE COURT DECLARES THAT:
2.The first respondent contravened:
a.s.45 of the Fair Work Act (“the Act”) by failing to pay to the applicant the minimum hourly rate of pay for ordinary hours as required by clause 20.1 of the Restaurant Industry Award 2010 (“the Award”);
b.s.45 of the Act by failing to pay to the applicant the minimum hourly rate of pay for Saturday hours as required by clause 34.1 of the Award;
c.s.45 of the Act by failing to pay to the applicant the minimum hourly rate of pay for public holiday hours as required by clause 34.1 of the Award;
d.s.45 of the Act by failing to make superannuation contributions on behalf of the applicant as required by clause 30.2 of the Award;
e.s.323 of the Act by failing to pay the applicant between 23 August 2017 and 18 March 2018;
f.s.325 of the Act by making a demand of the applicant in December 2017 for a visa nomination cost payment;
g.s.325 of the Act by making a demand of the applicant for a sponsorship payment;
h.s.325 of the Act by making a demand of the applicant for wage reimbursement; and
i.s.535(1) of the Act by failing to make and keep for seven years records relating to the employment of the applicant, as required by regulations 3.32 and 3.33 of the Fair Work Regulations 2009.
3.The second respondent was involved, pursuant to s.550 of the Act, in the contraventions committed by the first respondent.
4.By reason of the first respondent’s contraventions of the Act, the applicant:
a.has suffered a loss of wages in the amount of $18,061.78;
b.has not had the benefit of superannuation contributions in the amount of $1,715.87; and
c.has suffered additional loss and damage in the amount of $1,145.25 arising from the demand in December 2017 for a visa nomination cost payment.
THE COURT ORDERS THAT:
5.Pursuant to s.545(2)(b) of the Act, the first and second respondents jointly and severally pay the applicant compensation in the amounts of:
a.$18,061.78 with respect to lost wages;
b.$1,715.87 with respect to superannuation; and
c.$1,145.25 with respect to the demand in December 2017 for a visa nomination cost payment.
6.The first and second respondents jointly and severally pay the applicant interest pursuant to s.547(2) of the Act in the amounts of:
a.$2,240.20 with respect to lost wages; and
b.$212.82 with respect to superannuation.
Background
The applicant set out the background facts of the matter in paragraph 3 of her outline of submissions filed on 22 September 2020 as follows:
Ms Kaur’s case is that she was employed as a cook by the first respondent between 23 August 2017 and 2 April 2018. Between 23 August 2017 and 18 March 2018, whilst her 457 visa was pending, she received no remuneration despite working 20 hours per week. Around the time her 457 visa was approved the second respondent (Mr Singh) made a number of demands that she make financial contributions in relation to the cost of her visa. Her 457 visa was approved in March 2018, shortly after which the first respondent commenced paying her a wage. Ms Kaur was terminated on 2 April 2018 after refusing to enter into an arrangement whereby she reimbursed the respondents the wages paid to her.
The hearing on 5 October 2020
The matter was listed for penalty hearing on 5 October 2020. The hearing proceeded by Microsoft Teams, due to the COVID-19 pandemic. The applicant and respondents were represented.
The applicant relied upon:
a)her affidavit filed on 20 July 2020;
b)her affidavit filed on 25 September 2020;
c)her written submissions filed on 25 September 2020;
d)her affidavit filed on 2 October 2020; and
e)her written submissions filed on 2 October 2020.
The respondents relied upon:
a)the second respondent’s affidavit filed on 1 October 2020; and
b)their written submissions filed on 1 October 2020.
Agreement as to evidence
The parties agreed that there would be no cross-examination and that:
both parties may make submissions consistent with the evidence and the written submission and that neither party is going to take a Browne v Dunn point at the failure to put matters in cross-examination, so long as the submissions are consistent with [orders and declarations that have] previously been made and what’s in the affidavit material.[1]
[1] Transcript p.4, ll.19-24.
Having been deprived of the opportunity to observe the applicant and the second respondent under cross-examination, the court was given little basis to prefer one side’s evidence over the other’s on the many and fundamental points of difference between them.
However, doing my best, I found the applicant’s evidence to be more reliable than the second respondent’s. I consider her evidence to be more plausible and internally consistent than the respondents’. I also place weight on the fundamental dishonesty involved in the respondents having the applicant work for them for 20 hours each week for seven months for no pay whatsoever. As discussed below, I reject the respondents’ explanation for this. All in all, where the evidence differs, I prefer the applicant’s version of events.
The respondents’ main arguments
The respondents argued that, because the court had entered judgment in default, and had not assessed the case on its merits, and because the court had ordered the first respondent to pay the applicant the amounts that had been underpaid, it would be excessive, disproportionate and unreasonable to require the respondents to pay a penalty as well.
That submission misunderstands the nature of an order to pay an employee amounts that have been underpaid. Such an order is not an imposition of a penalty, but a requirement to pay the applicant the amount of her lawful entitlements that she should have been paid previously. It simply brings matters back to where they should have been.
The submission also misunderstands the nature of a default judgment. Because the respondents chose not to comply with the rules of court and orders of the court in a timely manner, it was open to the court to be satisfied of the matters alleged against the respondents. That is, the respondents’ default enabled the court, without more, to be satisfied of the necessary matters.
The respondents also argued the applicant worked at the first respondents’ restaurant as a chef for 20 hours a week for seven months, from 23 August 2017 until 18 March 2018, on a voluntary basis, and thus, there was no underpayment at all. That argument is inconsistent with the declarations that were made. It is not open to the respondents to seek to circumvent the declarations in that manner. If they had wanted to appeal, they should have done so at the appropriate time.
Having said that, there is some factual basis for the respondents’ claim that the applicant worked in the first respondent’s restaurant as a volunteer, in a misguided attempt to assist her 457 visa application. The second respondent set out in his affidavit filed on 1 October 2020 an email from the applicant in which she said:
First of all, I did volunteer work with you from 23 August 2017 to till (sic) 14 of March 2018.
The applicant did not dispute that she had sent that email. I accept that she did, and that there was an agreement between the parties that the applicant would work voluntarily for the first respondent until she obtained her 457 visa.
The court enquired of the parties whether such an arrangement was legal. The respondents argued that it was similar to an unpaid internship, such as young lawyers do in law firms, and was not illegal. The applicant argued that the intern analogy was not apt, because the applicant was not learning how to cook when she worked for the first respondent. On the contrary, she was already a qualified chef.
It is illegal to enter into an agreement to pay a person an hourly rate that is below the hourly rate that is specified in the applicable award. Similarly, with limited exceptions, it is illegal to enter into an agreement to pay a person nothing for the work they do. That is, subject to limited exceptions, it is not legal to enter into an agreement for a person to work for another person on a voluntary basis. Exceptions include work for not-for-profit organisations, vocational placements, work experience and internships.
An internship is an opportunity for an inexperienced person to attend a workplace and observe and, in a minimal way, assist. An internship is primarily for the benefit of the intern. If an intern does work that is useful for the employer, and that the employer would ordinarily have paid an employee to do, then the arrangement has probably strayed into an employment relationship, and the employer would be obliged to pay the intern for the time spent doing work that was useful to the employer.
A vocational placement is a period of work done with an employer which is arranged by, or in conjunction with, an educational or training provider. Work experience is similar, but usually undertaken by secondary students.
The arrangement between the applicant and the first respondent did not fit within any of the exceptions to the general rule that people who do work for an employer must be paid at least at the applicable award rate. The applicant was a qualified chef before she began to work for the first respondent. The applicant did work that the first respondent needed to be done, namely, she cooked meals. If the applicant had not worked 20 hours a week in the first respondent’s kitchen, the first respondent would have had to have paid someone else to do so. The applicant did not work at the first respondent’s restaurant to gain experience. She was already qualified.
In these circumstances, it was not open to the first respondent to enter into an agreement with the applicant for her to work for nothing. Any agreement they had to that effect was illegal.
The respondents nevertheless argued that they should not be treated as having deliberately breached the Act by not paying the applicant because they genuinely thought the arrangement was a voluntary one for the applicant’s benefit. The respondents suggested that, somehow, working on a voluntary basis would help the applicant obtain a 457 visa.
There was no evidence in support of the proposition that the applicant working on a voluntary basis would help the applicant obtain a 457 visa. Nor did the respondents point to any aspect of migration law that supports that contention. I am unable to accept it on the material before me.
I do not accept that the voluntary work arrangement between the applicant and the respondents indicates that the respondents’ underpayment breaches were not deliberate. On the contrary, the respondents knew perfectly well that they were not paying the applicant. They took advantage of her vulnerability, and desperation to obtain a 457 visa, to obtain her labour at no cost to themselves.
The respondents also relied on the fact that the first respondent paid the applicant for the two weeks after she obtained her 457 visa and just before terminating her employment. They said this demonstrated that they had no intention of not paying the applicant what she was entitled to. They said that they terminated her employment because she was not doing a good job.
However, I take a different view of this evidence. The first respondent paid the applicant for two weeks after she obtained her 457 visa as a smoke screen. The first respondent was happy enough with the applicant’s work for seven months while she was not being paid. It is completely implausible that she would have suddenly stopped being capable of the work as soon as the first respondent ceased to have an excuse not to pay her.
Moreover, although the first respondent paid the applicant for two weeks work by cheque, the second respondent demanded that the applicant refund that payment in cash. In such circumstances, the respondents cannot claim any credit for the payment for two weeks work.
The respondents’ underpayment contraventions were deliberate, egregious, and grossly exploitative. The respondents preyed upon the applicant’s vulnerability, in that she was a foreign national who was desperately seeking a 457 visa, for the respondents’ own financial benefit.
The egregious nature of the respondents’ conduct is further demonstrated by the facts that, in breach of s.325 of the Act, they demanded that the applicant:
a)pay the first respondent for the cost of its nomination as a sponsor for a 457 visa;
b)pay the first respondent a sponsorship payment; and
c)repay the two weeks’ pay the first respondent gave her.
Approach to determining penalty
Bromwich J summarised the proper approach to determining penalty in cases such as this in Fair Work Ombudsman v NSH North Pty Ltd t/as New Shanghai Charlestown (2017) 275 IR 148; [2017] FCA 1301 at [36] as follows:
(1)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.
(2)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.
(3)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.
(4)Consider the appropriate penalty in respect of each final individual group of contraventions, taken in isolation.
(5)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].
A convenient checklist of the factors that the court might consider in determining penalty include the matters that were identified by Mowbray FM in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 at [26]-[59] and adopted by Tracey J in Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 at [14]. That list is as follows, (with paragraph letters inserted):
(a)The nature and extent of the conduct which led to the breaches.
(b)The circumstances in which that conduct took place.
(c)The nature and extent of any loss or damage sustained as a result of the breaches.
(d)Whether there had been similar previous conduct by the respondent.
(e)Whether the breaches were properly distinct or arose out of the 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 the enforcement authorities.
(l)The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements.
(m)The need for specific and general deterrence.
The court must, of course, be mindful of the caution expressed by Buchanan J in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560; (2008) 246 ALR 35; [2008] FCAFC 8 at [91] as follows:
Check lists of this kind can be useful providing they do not become transformed into a rigid catalogue of matters for attention. At the end of the day the task of the Court is to fix a penalty which pays appropriate regard to the circumstances in which the contraventions have occurred and the need to sustain public confidence in the statutory regime which imposes the obligations. There is no suggestion in the present case that the learned magistrate made any relevant error in her identification of the matters which she should consider in fixing penalties.
The court will consider the circumstances of the case under the various headings suggested by Mowbray FM, and then consider whether any other matters are relevant.
Step 1: identifying the breaches
As indicated above, the first respondent breached:
a)s.45 of the Fair Work Act 2009 (“the Act”) by failing to pay to the applicant the minimum hourly rate of pay for ordinary hours as required by clause 20.1 of the Restaurant Industry Award 2010 (“the Award”);
b)s.45 of the Act by failing to pay to the applicant the minimum hourly rate of pay for Saturday hours as required by clause 34.1 of the Award;
c)s.45 of the Act by failing to pay to the applicant the minimum hourly rate of pay for public holiday hours as required by clause 34.1 of the Award;
d)s.45 of the Act by failing to make superannuation contributions on behalf of the applicant as required by clause 30.2 of the Award;
e)s.323 of the Act by failing to pay the applicant between 23 August 2017 and 18 March 2018;
f)s.325 of the Act by making a demand of the applicant in December 2017 for a visa nomination cost payment;
g)s.325 of the Act by making a demand of the applicant for a sponsorship payment;
h)s.325 of the Act by making a demand of the applicant for wage reimbursement; and
i)s.535(1) of the Act by failing to make and keep for seven years records relating to the employment of the applicant, as required by regulations 3.32 and 3.33 of the Fair Work Regulations 2009 (“the Regulations”).
and the second respondent was involved in each of those breaches.
Step 2: single course of conduct
Section 557 of the Act provides that two or more contraventions of s.45 and s.535 of the Act are to be taken to constitute a single contravention if the contraventions:
a)were committed by the same person; and
b)arose out of a course of conduct by that person.
The applicant argued that:
a)the multiple contraventions of the obligation to pay a minimum hourly rate for ordinary hours worked were a single course of conduct;
b)the multiple contraventions of the obligation to pay a minimum hourly rate for Saturday hours worked were a single course of conduct;
c)the multiple contraventions of the obligation to pay a minimum hourly rate for public holiday hours worked were a single course of conduct;
d)the multiple contraventions of the obligation to make superannuation contributions were a single course of conduct; and
e)the multiple contraventions of the obligation to keep records as required by reg.3.32 and reg.3.33 of the Regulations were a single course of conduct.
Otherwise, the applicant argued that the contraventions were all separate, for course of conduct purposes.
The respondents argued that there was only one course of conduct, encompassing all of the breaches, as they concerned only one employee and all stemmed from the same set of circumstances.
I do not accept the respondents’ argument. There are numerous authorities against it, namely, Construction, Forestry, Mining and Energy Union (CFMEU) v Cahill (2010) 269, ALR 1; (2010) 194 IR 461; [2010] FCAFC 39, Rocky Holdings Pty Ltd v Fair Work Ombudsman (2014) 221 FCR 153; (2014) 243 IR 244; [2014] FCAFC 62, Fair Work Ombudsman v Phua & Foo Pty Ltd [2018] FCA 137, Fair Work Ombudsman v Lohr (2018) 158 ALD 457; (2018) 356 ALR 424; [2018] FCA 5, Fair Work Ombudsman v Samurais Paradise Pty Ltd [2017] FCCA 2013, and Fair Work Ombudsman v Mhoney Pty Ltd [2017] FCCA 811.
Applying those authorities, I accept the applicant’s position on the course of conduct provisions.
That means that, applying the course of conduct provisions, there were:
a)four breaches of s.45 of the Act;
b)one breach of s.323 of the Act;
c)three breaches of s.325 of the Act; and
d)one breach of s.535 of the Act.
Step 3: grouped breaches
The applicant conceded that the breach of s.323 of the Act overlapped with the breaches of s.45 of the Act, and that the respondents should not be penalised under s.323 of the Act. I accept that concession.
Consequently, the matters for which a penalty might be imposed are:
a)four breaches of s.45 of the Act;
b)three breaches of s.325 of the Act; and
c)one breach of s.535 of the Act.
Step 4: the appropriate penalty for the breaches
a. the nature and extent of the conduct which led to the breach
The breaches consisted of underpayments, unlawful demands to pay money to the employer and record keeping defaults. The breaches all concerned a single employee. They took place over a period of seven months.
The underpayment contraventions consisted of the first respondent paying the applicant nothing at all for working 20 hours per week for a period of seven months.
The demands for payment consisted of the first respondent:
a)requiring the applicant’s husband to buy $1,145.25 worth of alcohol for the restaurant to compensate the first respondent for paying migration agent fees;
b)demanding $50,000 for applying for permanent residency; and
c)demanding that the applicant repay in cash the two weeks’ pay she was given by cheque after her 457 visa was granted.
The record keeping defaults had the effect of concealing from any authority who tried to investigate the first respondent’s employment practices the employment of the applicant.
b. the circumstances in which that conduct took place
The breaches arose in the context of the applicant being in a vulnerable position as a foreign national who was desperately seeking a 457 visa.
c. the nature and extent of any loss or damage sustained
The amount that the applicant was underpaid, the amount of superannuation contributions that were not paid on her behalf and the amount that the applicant’s husband paid the respondents for alcohol totalled about $21,000. The applicant did not pay the other amounts demanded by the respondents.
d. whether there had been similar previous conduct
It was not suggested that the respondents had engaged in any similar previous conduct.
e. whether the breaches arose out of the one course of conduct
This point has already been addressed.
f. the size of the business enterprise involved
The first respondent’s business is a small business. However, as Tracey J said in Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 at [28]:
No less than large corporate employers, small businesses have an obligation to meet minimum employment standards and their employees, rightly, have an expectation that this will occur. When it does not it will, normally, be necessary to mark the failure by imposing an appropriate monetary sanction. Such a sanction “must be imposed at a meaningful level” (citation omitted)
Similarly, in Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412, the court said at [27]:
Employers must not be left under the impression that because of their size or financial difficulty that they are able to breach an award. Obligations by employers for adherence to industrial instruments arise regardless of their size. Such a factor should be of limited relevance to the Court’s consideration of penalty. …
Basically, being a small business is no excuse for contraventions of the type and magnitude that occurred in this case.
g. whether or not the breaches were deliberate
As discussed above, the breaches were deliberate.
h. whether senior management was involved in the breach
The second respondent, as the sole director of the first respondent, was involved in the breaches.
contrition, corrective action and co-operation with the authorities
There is no evidence of contrition or corrective action or co-operation with the authorities.
j. the need to ensure compliance with minimum standards
This case highlights the need for employers to comply with employees’ minimum entitlements.
k. the need for specific and general deterrence
In Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482; (2015) 326 ALR 476; (2015) 90 ALJR 113; (2015) 255 IR 87; [2015] HCA 46, French CJ, Kiefel, Bell, Nettle and Gordon JJ said at [55]:
No less importantly, whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty, as French J explained in Trade Practices Commission v CSR Ltd, is primarily if not wholly protective in promoting the public interest in compliance:
“Punishment for breaches of the criminal law traditionally involves three elements: deterrence, both general and individual, retribution and rehabilitation. Neither retribution nor rehabilitation, within the sense of the Old and New Testament moralities that imbue much of our criminal law, have any part to play in economic regulation of the kind contemplated by Pt IV [of the Trade Practices Act]. ... The principal, and I think probably the only, object of the penalties imposed by s 76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the Act.”
(footnotes omitted)
Similarly, in Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (CFMEU) (2018) 262 CLR 157; (2018) 351 ALR 190; (2018) 92 ALJR 219; (2018) 273 IR 211; [2018] HCA 3, Keane, Nettle and Gordon JJ said at [116]:
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.
(footnotes omitted)
In relation to specific deterrence, Gray J observed in Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357; (2008) 177 IR 243; [2008] FCAFC 170 at [37] that:
… Specific deterrence focuses on the party on whom the penalty is to be imposed and the likelihood of that party being involved in a similar breach in the future. Much will depend on the attitude expressed by that party as to things like remorse and steps taken to ensure that no future breach will occur. …
In relation to general deterrence, Lander J noted in Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543; (2007) 162 IR 444; [2007] FCAFC 65 at [93]:
… In regard to general deterrence, it is assumed that an appropriate penalty will act as a deterrent to others who might be likely to offend. The penalty therefore should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like minded persons or organisations. If the penalty does not demonstrate an appropriate assessment of the seriousness of the offending, the penalty will not operate to deter others from contravening the section. However, the penalty should not be such as to crush the person upon whom the penalty is imposed or used to make that person a scapegoat. In some cases, general deterrence will be the paramount factor in fixing the penalty…(citations omitted)
Similarly, in Community and Public Sector Union v Telstra Corporation Limited (2001) 108 IR 228 at 230-231; [2001] FCA 1364, Finkelstein J said:
… 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 ….
It seems that the respondents, subject to the COVID-19 pandemic, intend to continue their business in regional Victoria. As such, there is a considerable need for specific deterrence. Similarly, as the hospitality industry is notorious for underpayments of staff, there is considerable need in this case for general deterrence.
Other issues
This is not a case where it is appropriate to give a discount for admissions. Although the liability issue was resolved on the basis of deemed admissions, constituted by the respondents’ defaults in complying with orders of the court and the rules of court, deemed admissions do not warrant a discount. Rather than being indicative of co-operation and contrition, deemed admissions are indicative of a party ignoring court processes.
I do not consider that there are any other relevant issues in this case.
Step 4: the appropriate penalty
I reject the respondents’ submission that they should be required to pay either no penalty or a minimal penalty for their contraventions. Their actions were deliberate. They have, to this point, failed to repay any of the underpayments or the amount paid for alcohol. They have not shown any contrition. It appears that they intend to continue in their business, so specific deterrence is required. As they are in the hospitality industry, which is notorious for industrial contraventions, general deterrence is also required. Fundamentally, the respondents paid the applicant nothing for working 20 hours per week for seven months, and demanded further sums of money from her. They exploited the applicant’s vulnerability in a predatory way.
The respondents did not put forward any evidence as to their financial circumstances, apart from some vague assertions about the impact of the COVID-19 pandemic.
The contraventions were egregious, but affected only one employee. The respondents had a previously unblemished record.
The maximum penalty for each breach is specified in s.539 of the Act. That section distinguishes between serious contraventions and other contraventions. The applicant did not submit that the contraventions in this case were serious, for the purposes of s.539 of the Act. Consequently, I will use the lower figure for the number of penalty units to be regarded as the maximum.
Section 546(2) of the Act provides that individuals, such as second and third respondents, are to receive a penalty of no more than the number of penalty units set out in the table in s.539(2) of the Act, and a corporation, such as the first respondent, is to receive a penalty of no more than five times the number of penalty units set out in the table in s.539(2) of the Act.
The table in s.539(2) of the Act specifies that the maximum number of penalty units for each breach of s.45, s.325 and s.535 of the Act is 60 penalty units. Therefore, the maximum penalty the first and second respondents can receive for each contravention is 60 penalty units, and the maximum penalty the first respondent can receive for each contravention is 300 penalty units.
There was no dispute that a penalty unit at the relevant times was worth $210. Therefore, the maximum penalty the second respondent can receive for each contravention is $12,600, and the maximum penalty the first respondent can receive for each contravention is $63,000.
Technically, the first respondent was primarily responsible for all of the contraventions as the applicant’s employer, and the second respondent was only an accessory. However, the reality is that the second respondent was the controlling mind of the first respondent, and was largely responsible for all of the contraventions. As such, it is appropriate that the penalties for the second respondent be a higher percentage of the maximums than the penalties for the first respondent.
I consider that, for each contravention:
a)the first respondent should receive a penalty of 25% of the maximum, being $15,750 per contravention; and
b)the second respondent should receive a penalty of 70% of the maximum, being $8,820 per contravention.
That means that there will be total penalties:
a)for the first respondent of $126,000; and
b)for the second respondent of $70,560.
Step 5: the totality principle
In relation to the check that is required by the totality principle, I consider that the aggregate penalties indicated above are appropriate for the whole of the contravening conduct engaged in by the respondents.
Orders
The applicant proposed orders in her written submissions filed on 22 September 2020 that:
8.The first respondent pay penalties pursuant to section 546(1) of the FW Act for the contraventions of the FW Act in the amount of _______.
9.The second respondent pay penalties pursuant to section 546(1) of the FW Act for the contraventions of the FW Act in the amount ________.
10.All penalties imposed on the first respondent and the second respondent be paid to Ms Kaur pursuant to s 546(3)(a) of the FW Act within 28 days.
Except for saying that they should pay no or a minimal penalty, the respondents did not oppose those orders. Orders substantially in the terms proposed by the applicant will be made.
In addition, as there may have been contraventions of the Migration Act 1958, I direct the registrar to refer the matter to the Department of Home Affairs for investigation of that issue.
I certify that the preceding eighty-one (81) paragraphs are a true copy of the reasons for judgment of Judge Riley
Associate:
Date: 4 November 2020
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