Kearney v Accrue Property Pty Ltd (No 2)
[2024] FedCFamC2G 248
•11 April 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Kearney v Accrue Property Pty Ltd (No 2) [2024] FedCFamC2G 248
File number(s): MLG 3058 of 2018 Judgment of: JUDGE TAGLIERI Date of judgment: 11 April 2024 Catchwords: INDUSTRIAL LAW – underpayment of contractual entitlements including superannuation – failure to pay for public holidays and accrued leave – failure to provide access to relevant Award and NES – pecuniary penalties to be imposed pursuant to section 546 of the Act – compensation awarded and payable jointly and severally by the respondents – lump sum awarded in lieu of interest on compensation awarded – pecuniary penalties imposed against each respondent Legislation: Fair Work Act 2009 (Cth) ss 45, 539, 546, 547, 557A
Federal Circuit and Family Court of Australia Act 2021 (Cth) s 211
Federal Court Act 1976 (Cth) ss 51A, 52
Real Estate Industry Award 2009 (Cth)
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)
Federal Court Rules 2011 (Cth) r 1.06
Federal Court of Australia, General Practice Note – Interest on Judgments (GPN-INT), 18 September 2017
Cases cited: Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; (2022) 274 CLR 450
Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (No 2) [2015] FCA 407; (2015) 234 FCR 451
Fair Work Ombudsman v Grouped Property Pty Ltd (No 2) [2017] FCA 557
Fair Work Ombudsman v NSH North Proprietary Limited trading as New Shanghai Charlestown [2017] FCA 1301
Fair Work Ombudsman v Step Ahead Security Services Pty Ltd & Anor [2016] FCCA 1482
Kearney v Accrue Property Pty Ltd [2023] FedCFamC2G 1078
Kelly v Fitzpatrick [2007] FCA 1080
Plancor Pty Ltd v Liquor Hospitality and Miscellaneous Union [2008] FCAFC 170; (2008) 171 FCR 357
Ponzio v B & P Caelli Constructions Pty Ltd [2007] FCAFC 65; 158 FCR 543
Sayed v Construction, Forestry, Mining and Energy Union [2016] FCAFC 4; (2016) 239 FCR 336
Stuart-Mahoney v Construction, Forestry, Mining and Energy Union [2008] FCA 1426
Trade Practices Commission v CSR Ltd [1990] FCA 521
Veeraragoo v Goldbreak Holdings Pty Ltd (No 2) [2018] FCA 1448
Division: Division 2 General Federal Law Number of paragraphs: 91 Date of last submission/s: 3 April 2024 Date of hearing: 20-24 February 2023 & 8-9 May 2023 Place: Melbourne Counsel for the Applicant: Ms Jardine Solicitor for the Applicant: Gil Boffa & Associates Counsel for the Respondents: Mr Galbraith Solicitor for the Respondents: SLF Lawyers ORDERS
MLG 3058 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: JOSEPH KEARNEY
Applicant
AND: ACCRUE PROPERTY PTY LTD
First Respondent
JEFFREY JAMES GROCHOWSKI
Second Respondent
ORDER MADE BY:
JUDGE TAGLIERI
DATE OF ORDER:
11 APRIL 2024
THE COURT ORDERS THAT:
1.Pursuant to s 545(1) of the Fair Work Act 2009 (Cth) the First and Second Respondents jointly and severally:
(a)Pay to the Applicant a gross amount of $2,843 less tax in accordance with applicable law in respect of their contravention of s 44 of the Fair Work Act 2009 (Cth) by not paying the Applicant for his absence on a public holiday as prescribed by s 116 of the Fair Work Act 2009 (Cth);
(b)Pay to the Applicant a gross amount of $6,115 less tax in accordance with applicable law in respect of their contravention of s 44 of the Fair Work Act 2009 (Cth) by not paying the Applicant for untaken and accrued annual leave on termination of employment in accordance with s 90(2) of the Fair Work Act 2009 (Cth);
(c)Pay to the Applicant a gross amount of $102,129.06 less tax in accordance with applicable law in respect of its contravention of s 323 of the Fair Work Act 2009 (Cth) by failing to pay the Applicant his contractual entitlements to commission; and
(d)Make contributions to the Applicant’s nominated superannuation fund in the total sum of $7,938.94 in respect of the superannuation owing for the unpaid contractual entitlements to commission.
2.Pursuant to s 546(1) of the Fair Work Act 2009 (Cth) the First Respondent pay pecuniary penalties in the total sum of $34,000 in respect of the contraventions declared on 24 November 2023.
3.Pursuant to s 546(1) of the Fair Work Act 2009 (Cth) the Second Respondent pay pecuniary penalties in the total sum of $8,000 in respect of his involvement in the contraventions declared on 24 November 2023.
4.Pursuant to s 546(3)(c) of the Fair Work Act 2009 (Cth) the pecuniary penalties imposed be paid to the Applicant.
5.The First and Second Respondents jointly and severally pay to the Applicant an amount of $12,000 in lieu of pre-judgment interest on the compensation ordered to be paid.
6.There are no orders as to costs.
7.There be a stay of 30 days on 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).
REASONS FOR JUDGMENT
JUDGE TAGLIERI:
On 24 November 2023 I published a judgment in respect of these proceedings: Kearney v Accrue Property Pty Ltd [2023] FedCFamC2G 1078 (“the liability judgment”). Although the hearing had proceeded on liability and the quantum of any compensation or penalties payable, it became apparent that further submissions were required consequent to the liability Orders made at the time of delivery of judgment.[1]
[1] Liability judgment at [116]-[121].
Accordingly, I made Orders for the parties to file further written submissions, which they have now done. I have had regard to:
·The applicant's submissions and accompanying tables filed 11 December 2023; and
·The respondents' written submissions and accompanying tables filed 11 December 2023. The solicitor for the respondents sent a further email on 11 December 2023, clarifying footnotes 14 and 15 of the submissions. The correction simply identifies the correct legislative provision that provides for the application and operation of the serious contravention provisions of the Fair Work Act 2009 (Cth) (“the Act”).[2]
[2] Clause 18(1) of Part 4, Schedule 1 of the Act.
Regrettably, the parties appear to have adopted slightly different methodology in relation to how the compensation payable ought to be assessed. This has made it somewhat difficult to interpret the scope of disagreement about what compensatory orders should be made.
COMPENSATION PAYABLE
My assessment of the competing submissions reveals the following:
Compensation payable for unpaid public holidays[3]
[3] Liability judgment at [65].
The applicant claims $3,567.96 in compensation, calculated according to [2](A) of his written submissions of 11 December 2023. The respondents submit that the sum of $2,843 less tax is payable in accordance with [119] of the liability judgment.
Compensation payable for unpaid accrued annual leave[4]
[4] Liability judgment at [66]-[68] and [120].
All parties state that the sum payable is $6,115.[5] However, the respondents submit this sum is the gross amount payable and tax is to be deducted. The applicant does not expressly address the issue of tax but the sum he claims is drawn from his consolidated pleadings filed 19 January 2023.[6] It can be reasonably inferred that the sum is a gross figure.
Compensation payable for unpaid commissions due on contractual entitlements[7]
[5] Respondents’ written submissions filed 11 December 2023 at [3] and applicant’s written submissions filed 11 December 2023 at [2](B), although I note that the latter refers to an amount of $6,115.50 rather than $6,115.
[6] Liability judgment at [120].
[7] Liability judgment at [44]-[56] and [121].
Broadly speaking, the parties’ submissions demonstrate agreement that the quantification of compensation payable for different properties includes sums owing for either Accrue for Life (“AFL”) commissions and/or sales commissions and/or superannuation.
The parties have identified the sums claimed to be owing by reference to two tables:
(1)Table A, which lists agreed sales that were completed and in which the applicant was involved; and
(2)Table B, which lists sales that are disputed because either:
(a)It is alleged that the sale did not proceed; or
(b)The parties disagree about whether the applicant was involved in the sale; or
(c)The parties disagree about what the applicant was paid in relation to various property transactions.
The respondents have prepared their tables with calculations showing what superannuation they contend is due pursuant to the liability judgment.[8]
[8] Consequent to the reasons in the liability judgment at [87] and [121].
The applicant’s submissions about calculation of superannuation are confusing because superannuation appears to be allowed for twice. For example, in relation to Table B, his submissions state that the figures in column F include the superannuation underpayment on unpaid commission plus the unpaid commission identified in column E. However, in the final paragraph on page 3 of his written submissions a further calculation of superannuation on unpaid commission is allowed for. This appears to double count the superannuation to be allowed for on unpaid commissions.
Interest due?
Both parties have provided a calculation of the interest said to be payable if the Court makes an order for the respondents to pay interest. But their submissions reveal that that the applicant relies on the Federal Court pre-judgment rates,[9] while the respondents state that interest should be calculated using a rate of 10%, being the penalty rate of interest in Victoria.[10]
[9] Applicant’s written submissions filed 11 December 2023 at p 3, under the heading “Interest”.
[10] Respondents’ written submissions filed 11 December 2023 at [10].
PECUNIARY PENALTIES
The parties’ written submissions to various degrees address the applicable law and aspects of the findings made by the Court when it made the declaratory Orders in the liability judgment.
The respondents’ submissions are more nuanced and consistent with the nature of submissions ordinarily seen in respect of penalty for breaches of civil remedy provisions of the Act. They propose various penalty ranges against each respondent for each contravention found established.
The respondents’ submissions ultimately are that the total penalty to be imposed should be:
·Against the first respondent in the range of $28,050 to $48,450.[11]
·Against the second respondent in the range of $4,080 to $7,140.[12]
[11] Respondents’ written submissions filed 11 December 2023 at [66].
[12] Respondents’ written submissions filed 11 December 2023 at [67].
The applicant contends that the Court may award a maximum of 3900 penalty units against the first respondent and 3600 penalty units against the second respondent, where a penalty unit is valued at $313.[13] He submits that a very significant proportion of the maximum should be imposed and says 3000 penalty units, which I infer is meant jointly and severally. He does not make a specific submission about what percentage of the maximum penalty or what dollar sum should be imposed for each contravention by each respondent.
[13] Applicant’s written submissions filed 11 December 2023 at p 8.
Not surprisingly, given the hard-fought conduct of these proceedings, the applicant submits the penalties imposed by the Court should be paid to the applicant.[14] The respondents submit the penalties should be paid to the Commonwealth’s Consolidated Revenue Fund.[15]
[14] Applicant’s written submissions filed 11 December 2023 at p 8.
[15] Respondents’ written submissions filed 11 December 2023 at [69].
The parties made opposing submissions about whether the established contraventions of the Act were “serious contraventions” within the meaning of s 557A of the Act. This impacts on the maximum penalty available and for the reasons below, the applicant’s submissions must be rejected.
Section 557A only commenced on 15 September 2017. Clause 18 of Part 4, Schedule 1 of the Act makes it plain that the serious contravention provisions only apply if some of the conduct occurred after the commencement date.
All of the established contraventions occurred well before the commencement date and I am therefore satisfied that s 557A does not need to be considered in this case because the respondents’ conduct completely preceded 15 September 2017.
By virtue of s 539 of the Act, the maximum penalty for the first respondent as a corporation is 5 x 60 penalty units for each established contravention.[16] The value of a penalty unit changed during the period of the conduct and the higher rate of $170 will be applied.[17]
[16] Section 546 of the Act.
[17] Fair Work Ombudsman v Grouped Property Pty Ltd (No 2) [2017] FCA 557.
Accordingly, the maximum penalty available in the case of the first respondent is $51,000 for each established contravention of ss 44, 45 and 323 of the Act.
The second respondent as an individual is subject to a maximum of $10,200 for each of the established contraventions against him.[18]
[18] Being the sum of 60 penalty units x $170.
Legal Principles - Penalties
The Court’s power to order penalties is provided for in s 546 of the Act. The Court accepts that deterrence is the primary purpose of imposition of civil penalties for contraventions of the Act,[19] and furthermore that the Court’s task involves an exercise of broad discretion involving instinctive synthesis. Further, there is a well-established five-step approach to be taken by the Court, the nature of which is usefully summarised in Fair Work Ombudsman v NSH North Proprietary Limited trading as New Shanghai Charlestown [2017] FCA 1301 at [36].
[19] Trade Practices Commission v CSR Ltd [1990] FCA 521.
Additionally, courts have recognised the following factors as relevant to the imposition of penalties under the Act:[20]
[20] This list was adopted by the Federal Court in Kelly v Fitzpatrick [2007] FCA 1080 at [14] and Stuart-Mahoney v Construction, Forestry, Mining and Energy Union [2008] FCA 1426 at [40].
·The need for general deterrence;
·The need for specific deterrence;
·The nature and extent of the conduct that 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(s);
·Whether the contraventions were properly distinct or arose out of the one course of conduct;
·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;
·Whether the party committing the contraventions has taken corrective action;
·Whether the party committing the contraventions has 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.
While it is well established that the above considerations are relevant, they are not a “rigid catalogue of matters for attention”[21] and ought not restrict the Court’s discretion.[22]
[21] Australian Building and Construction Commissioner v Pattinson [2022] HCA 13 at [19].
[22] Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (No 2) [2015] FCA 407; (2015) 234 FCR 451 at [91].
The issue of whether the penalties ought to be paid to the applicant is in dispute and I have directed myself according to the authority of Sayed v Construction, Forestry, Mining and Energy Union [2016] FCAFC 4; (2016) 239 FCR 336[23] (“Sayed”) which provides a comprehensive overview of the legislative history and purpose of penalties and the principles of relevance and to be applied. Many subsequent authorities have followed the principles and reasoning of the Full Court in Sayed. No submission has been advanced by the respondents as to why I should not follow them.
EVALUATION AND DETERMINATION
Compensation payable
[23] At [67]-[121].
Unpaid annual leave
As there is no dispute in relation to the quantum of unpaid accrued leave, the Court will make an Order for compensation in the gross sum of $6,115.
Unpaid public holidays
In respect of compensation for unpaid public holidays, the sum claimed by the applicant exceeds the value referred to in the liability judgment at [119]. The calculation at [2](A) of the applicant’s written submissions is erroneous as it allows for nine days in each of three financial years of employment. [24] But as the applicant's consolidated pleading asserts and the respondent admits, the applicant ceased employment on 7 October 2014.[25] This means that he did not accrue all available public holidays for the financial year ending 30 June 2015. There will be an Order for compensation in the gross sum of $2,843.
[24] Filed 11 December 2023. See, also, liability judgment at [119].
[25] Applicant’s consolidated pleadings filed 19 January 2023 at [1](b)(iii).
The applicant’s consolidated pleadings disclose that he advanced his case about unpaid superannuation only in respect of outstanding commissions.[26] Accordingly, to the extent that the applicant now seeks an order for superannuation to be paid in respect of unpaid public holidays,[27] it is not allowed. It would be contrary to the interests of justice to make allowance for a sum only raised after the liability judgment was delivered, when the respondents did not have notice of it or the opportunity to be heard in relation to it.
[26] Applicant’s consolidated pleadings filed 19 January 2023 at [59C] to [59G].
[27] Applicant’s written submissions filed 11 December 2023 at p 3.
Table A
A comparison of the parties’ submissions and their respective Table A’s reveals a small difference between them as to the quantum of compensation they submit should be ordered in relation to the commissions and superannuation due.[28] As best I can deduce, the difference is explained by the fact that the respondents have calculated the superannuation component at 9, 9.25 or 9.5% depending on the date of sale, whereas the applicant has used a flat rate of 9% to calculate the superannuation component.
[28] The applicant’s total being $37,468 compared to the respondent’s total of $38,473.75.
As I consider the respondents calculations relating to Table A properties to be more accurate, I will allow $34,485.17 gross for unpaid commissions and $3,988.58 for superannuation owing, totalling $38,473.75.
Table B
Concerning the sales listed in Table B of the parties’ submissions, the difference is considerable. Each party identifies the same 30 properties but the applicant does not make any claim in respect of six of those properties, being: 5 Champion Parade, Lot 13 Champion Parade, Lot 67 Beddison Road, 1003B Vantage Boulevard, 825A Vision Road and 1 Boronial Way. Accordingly, there will be no compensation allowance for these properties, despite the apparent inclusion by the respondents of sums for AFL commissions relating to three of these properties.
A summary of the competing contentions about what is due to the applicant as compensation for the remaining 24 properties is demonstrated in the information drawn from the parties’ respective Table B, and summarised in the following table:
Property address Amount claimed by applicant Amount respondents claim is owed to applicant Total owed (being the total of A, B & C) A:
Additional super to be paidB:
Additional commission to be paidC:
Additional AFL to be paid1 601A Vantage Boulevard $495 $522.50 $45.33 $477.17 $0.00 2 601B Vantage Boulevard $540 $522.50 $45.33 $477.17 $0.00 3 5/158 Derby Street $495 $508.75 $43.07 $465.68 $0.00 4 3/92 Paisley Street $2,998 $3,258.75 $275.91 $2,982.84 $0.00 5 Lot 1/4 Shepherd Street $3,290 $508.75 $43.07 $465.68 $0.00 6 33/1-11 Hyde Park Avenue $3,290 $522.50 $45.33 $477.17 $0.00 7 9/8 Murrell Street $495 $522.50 $45.33 $477.17 $0.00 8 9/3 Gladstone Parade $495 $522.50 $45.33 $477.17 $0.00 9 10A Champion Parade $540 $522.50 $45.33 $477.17 $0.00 10 Lot 6 Champion Parade $5,500 $500.00 $0.00 $0.00 $500.00 11 Lot 2 Champion Parade $5,500 $500.00 $0.00 $0.00 $500.00 12 Lot 1/14 Lae Street $5,500 $522.50 $45.33 $477.17 $0.00 13 Lot 14/16-32 Duke Street $540 $522.50 $45.33 $477.17 $0.00 14 Lot 40/1-11 Hyde Park Avenue $11,000 $6,545.00 $567.83 $5,977.17 $0.00 15 70/1-15 Beddison Road $5,500 $522.50 $522.50 $0.00 $0.00 16 Lot 5/16-32 Duke Street $2,998 $3,272.50 $283.92 $2,988.58 $0.00 17 4/41 Winifred Street $2,998 $3,272.50 $283.92 $2,988.58 $0.00 18 53 Exhibition Street $14,000 $500.00 $0.00 $0.00 $500.00 19 703 Saint Road $5,500 $0.00 $0.00 $0.00 $0.00 20 707 Saint Road $5,500 $508.75 $508.75 $0.00 $0.00 21 2/26 Rooney Street $5,500 $6,022.50 $522.50 $5,500.00 $0.00 22 5/208 Arthur Street $5,500 $6,022.50 $522.50 $5,500.00 $0.00 23 3/101 Puminuan Road $5,500 $6,022.50 $522.50 $5,500.00 $0.00 24 6/92 Paisley Street $5,500 $6,022.50 $522.50 $5,500.00 $0.00 SUB TOTAL: $4,981.61 $41,685.89 $1,500.00 TOTAL: $99,174 $48,167.50
For clarity, the figures I am comparing for the purposes of determining the amount owed to the applicant are the columns titled “Amount claimed by applicant” (column F) in the applicant’s Table B and “Total owed (being the total of columns A, B & C)” from the Respondents’ Table B. As noted above in these reasons at [10], the figures in the column F referred to as “Amount claimed by applicant” include compensation owing in respect of outstanding sales commissions and/or outstanding superannuation payments but it is not apparent what sum represents the superannuation component and how it has been arrived at.
There are self-apparent small differences in the two relevant comparison columns for the properties at rows 1-3, 7-9 and 13, which I consider to be immaterial. I consider the respondents’ calculations to be more accurate because they are mathematically logical and cohesive and thus capable of comprehension. By contrast, the applicant’s submissions contained mathematical error, and included the superannuation shortfall whilst also separately claiming it, which was frankly confusing and double counting. Accordingly, I will allow the amounts contended by the respondents.
There is nearly complete agreement about the commission amounts owing relating to properties at rows 4, 16-17 and 21-24. However, the respondents’ calculations about superannuation owing are more accurate as they use the correct superannuation guarantee percentage and allow for it in addition to the commission. This is consistent with the liability judgment. Accordingly, the respondents’ sums will be allowed for these rows.
There will be an Order for compensation relating to the Table B properties referred to at [35] of these reasons in the sum of $3,643.75 and for the properties referred to at [36] of these reasons in sum of $33,893.75.
There are large discrepancies in respect of all other properties referred to in Table B (being those at lines 5, 6, 10-12, 14, 15 and 18-20) and the evidence before the Court only partly assists in explaining those discrepancies. The Court’s assessment of such is as follows:
(1)Lot 1/4 Shepherd Street: There is no direct evidence to explain the difference, but the applicant has previously stated on oath that he was not owed anything in relation to this property.[29] Further, the applicant has pleaded receiving commission in relation to this property.[30] Accordingly, I prefer the calculation and submission made by the respondents about the sum owing and will allow what they concede, being $508.75.
(2)33/1-11 Hyde Park Avenue: There is no direct evidence to explain the difference, but the applicant has previously stated on oath that he received $5,005 in relation to this property,[31] so I prefer the submission of the respondents and will allow what they concede is owing, namely $522.50.
(3)Lot 6 Champion Parade: Although the evidence of Ms Grochowski is that this sale was cancelled,[32] the CRM screenshot for the property conveys that Mark and Christine Chapman still proceeded with a purchase but “flipped” to a property on Baronial Way.[33] This accords with other evidence before the Court that the Chapmans purchased Lot 23 Baronial Way.[34] In cross-examination Ms Grochowski conceded that if a purchaser introduced by the applicant purchased an alternate property, he was entitled to commission.[35] The applicant gave evidence, which I accept, that he sold this property to the Chapmans.[36] Based on the foregoing evidence, I infer that although the applicant was involved in securing the contract for sale of this property to the Chapmans, they proceeded to complete the purchase of Lot 23 Baronial Way. I am satisfied that the applicant is entitled to the sum he has claimed in Table B,[37] namely $5,500.
(4)Lot 2 Champion Parade: I accept that Mr Savannah did not proceed with this purchase as claimed by the respondents and the applicant stated on oath that he agreed this sale did not proceed and he no longer pursued the claim.[38] No compensation will be allowed for this property.
(5)Lot 1/14 Lae Street: The respondents claim the applicant was paid both sales and AFL commissions for this sale and the only sum owing is superannuation.[39] The applicant has given scarce evidence about this property, but he admits having received $5,005 in relation to it.[40] This admission accords generally with the respondent’s submissions and so I accept the respondents’ submissions about what is owing and $522.50 is allowed.
(6)Lot 40/1-11 Hyde Park Avenue: This property sale relates to the “John Chapman sale” referred to at [77]-[82] of the liability judgment. In his Table B, the applicant seems to make a simple mathematical error by claiming double commission but not allowing for the admission that he was already paid $5,000.[41] The amount said to be due by the respondents is correct, that is $6,545.
(7)70/1-15 Beddison Road: The applicant’s claim relating to this property is based on his evidence that he did sell it to the Jaskes and had sold two properties to them.[42] The respondents state that the Jaskes reported dissatisfaction with the applicant and that Jeff Grochowski sold this property to them.[43] Ms Grochowski states that the applicant was not involved in the sale.[44] At [18] of her affidavit affirmed 25 January 2023, Ms Grochowski annexes the sales administration form for this property as part of annexure JG-106. The details of split commissions referred to by Ms Grochowski at [18] of that affidavit are the subject of my adverse finding in the liability judgment.[45] A careful review of the CRM entries for the property[46] demonstrate that the contract for sale of this property was signed on Saturday 28 June 2014, prior to Jeff Grochowski calling the Jaskes on 1 July 2014. The entries made by Jeff Grochowski to the CRM show that the Jaskes contracted to purchase the property from the applicant but had second thoughts, causing the call by Jeff Grochowski who reassured them about completing the sale. The applicant was still employed with the first respondent on 28 June 2014 and was adamant he sold two properties to the Jaskes. Because I do not accept the reliability of the information recorded in the sales administration forms and prefer the applicant’s evidence, which is consistent with the timing of the signing of the contract recorded in the CRM, I am satisfied that the applicant was involved in the sale of this property and is entitled to the sum he claims in his Table B. The sum of $5,500 is allowed.
(8)53 Exhibition Street: In his Table B the applicant appears to claim an entitlement based on this sale being “distressed stock” but the evidence before the Court is conflicting and confusing. The applicant appears to make a claim relating to this property and accepts that he was paid some commission,[47] but there is no probative evidence that this property was categorised as a distressed stock sale. Ms Grochowski states she was unable to locate documents in relation to the property but regardless there was a dispute with the vendor and they were not paid commission.[48] Cross-examination did not provide useful clarification and in re-examination, Ms Grochowski stated she was unaware of any separate agreements regarding distressed stock,[49] and she neither agreed nor denied that this property was distressed stock.[50] Although I generally prefer the evidence of the applicant about a number of facts, the applicant’s own evidence concerning this property is unsatisfactory. For these reasons, I am not persuaded that there is an entitlement in respect of this property except to the extent conceded by the respondents, namely that the applicant is owed the AFL commission, being $500.
(9)703 Saint Road: The evidence of Ms Grochowski was that the applicant was not involved in this property purchase by the Knocks, only the sale of an AFL membership.[51] However, I have preferred the applicant’s evidence[52] and specifically reject Ms Grochowski’s evidence about this property because, although the contents of the CRM and Sales Administration Forms were not considered entirely reliable, for this property they record when vendor commission was paid to the first respondent and the timing corresponds with when the applicant was still employed. The amount claimed by the applicant will be allowed, being $5,500.
(10)707 Saint Road: The applicant makes a claim in respect of the sale of this property, which I can only infer is a claim based on the factual premise that it was a substitute sale to the Likhovetskys.[53] In cross-examination the applicant maintained that he had sold a property to the Likhovetskys but conceded it could not have been 1/19 Rockbank Rd, as that property was sold to Pearson.[54] As there is no evidence before the Court supporting the sale of this property to the Likhovetskys, I am not persuaded to make any allowance for the purported sale, notwithstanding that the respondents appeared to include an allowance for superannuation in their Table B. This was addressed in the liability judgment[55] and the applicant has not directed the Court to any evidence about the sale of this property, noting that I expressly advised counsel during the hearing that any documents relied upon would need to be formally tendered.
[29] Affidavit of applicant sworn 21 June 2021 at [70](b) and annexure JK-3 at p 3.
[30] Applicant’s consolidated pleadings filed 19 January 2023 at [18](c).
[31] Affidavit of applicant sworn 21 June 2021 at [70](b) and annexure JK-3 at p 3.
[32] Affidavit of Joan Grochowski affirmed 25 February 2021 at p 49, [228].
[33] Affidavit of Joan Grochowski affirmed 25 February 2021 at annexure JG-93, p 1630.
[34] Affidavit of Joan Grochowski affirmed 6 May 2022 at annexure JG-95.
[35] Transcript of 24 February 2023, p 373, line 45 to p 374, line 8.
[36] Transcript of 22 February 2023 at p 157, lines 35-44.
[37] Liability judgment at [75]-[76].
[38] Affidavit of applicant sworn 21 June 2021 at [70](a)(ii) and annexure JK-3.
[39] Affidavit of Joan Grochowski affirmed 25 February 2021 at annexure JG-49.
[40] Affidavit of applicant sworn 21 June 2021 at [70](b) and annexure JK-3.
[41] Applicant’s consolidated pleadings filed 19 January 2023 at [57].
[42] Transcript of 22 February 2023 at pp 209-213; and affidavit of applicant sworn 21 June 2021 at [70](b) and annexure JK-3.
[43] Affidavit of Joan Grochowski affirmed 25 February 2021 at annexure JG-94.
[44] Affidavit of Joan Grochowski affirmed 6 May 2022 at [26].
[45] See [54]-[56] of the liability judgment.
[46] Affidavit of Joan Grochowski affirmed 25 February 2021 at annexure JG-94.
[47] Affidavit of applicant sworn 21 June 2021 at annexure JK-3, p 6 under “amount received” column.
[48] Affidavit of Joan Grochowski filed 27 January 2023 at [7]-[8]. See, also, Respondent’s Table B.
[49] Transcript of 9 May 2023 at p 159, lines 5-19.
[50] Transcript of 9 May 2023 at pp 93-94 and 159.
[51] Affidavit of Joan Grochowski affirmed 25 February 2021 at [230] and annexure JG-94.
[52] Liability judgment at [74] and [76].
[53] Transcript of 22 February 2023, pp 214-215.
[54] Transcript of 22 February 2023, p 215.
[55] Liability judgment at [76].
Conclusion – compensation payable
The total gross compensation to be paid to the applicant is $110,068 comprising:
Compensation payable per findings at: Paragraph 27 of these reasons $6,115.00 Paragraph 28 of these reasons $2,843.00 Paragraph 31 of these reasons $38,473.75 Paragraph 37 of these reasons $37,537.50 Paragraph 38 of these reasons $25,098.75 TOTAL: $110,068 Penalties payable
The contraventions that attract penalty pursuant to s 546 of the Act are those referred to in the Declarations made on 24 November 2023 in the liability judgment, namely:
A. The First Respondent contravened s 44 of the Act by not:
(i) Paying the Applicant for his absence on a public holiday as prescribed by s 116 of the Act;
(ii) Paying the Applicant for untaken and accrued annual leave on termination of employment in accordance with s 90(2) of the Act.
B. The First Respondent contravened s 45 of the Act by failing to ensure that the Applicant had access to the Award and the NES in accordance with cl 5 of the Award.
C. The First Respondent contravened s 323 of the Act by failing to pay the Applicant his contractual entitlements to commission.
D.The Second Respondent was involved in the contraventions referred to in Declarations A(i), A(ii), and C.
The entirety of the conduct occurred before the commencement date for s 557A and so the contraventions proven cannot be “serious contraventions” pursuant to the Act. Accordingly, the maximum penalties available are those identified at [21] and [22] of these reasons.
I have regard to relevant considerations in the circumstances of this case and find as follows on the evidence before the Court:
·The conduct occurred over a period of just over two years.
·The first respondent was in business as a real estate agency. It was not a large business and employer, but it was substantial noting the volume of property transactions, number of employees or contractors,[56] commercial arrangements with a finance broker, property developers and income from vendor commissions and AFL memberships. The operational structures were also quite complex, noting the unchallenged evidence of Ms Grochowski at [19]-[21] of her affidavit affirmed 25 February 2021.
·I accept that the applicant received considerable remuneration, but this is to be expected given the volume of sales he was involved in and the income generated by the business from commissions.
·The contravention of s 45 of the Act likely contributed to the failure to pay for public holidays and annual leave. Had the first respondent ensured that the applicant was aware of the National Employment Standards provided for by the Real Estate Industry Award 2009 (Cth) (“the Award”), the payments may have been paid or at least rectified. I accept that second respondent was not involved in this contravention as a result of the finding at [107] of the liability judgment, so no penalty will be imposed against him for this contravention.
·I disagree that the amounts found to be owing to the applicant are “not significant”. Any failure to pay employees according to their entitlements pursuant to their employment agreement is a grave matter because it is contrary to law and recognised as warranting disapproval and right to civil remedy. Furthermore, the compensation that is to be awarded is approximately one fifth of the applicant’s total income and superannuation during his employment with the first respondent, as set out at [41] of the respondents’ submissions filed 11 December 2023.[57] In my view, this is not an insignificant sum to an individual.
·I reject that it was reasonable to believe that the applicant did not have to be paid annual leave on termination. The employment contract expressly adopted the provisions of the Award in relation to leave and it was likely mismanagement or blindness to their obligations on the part of the respondents. The respondents were the authors of the employment contract or at least were adopted authors, as Ms Grochowski said numerous times in her evidence that she prepared the letters of offer and schedule attached after receiving information on instruction from the second respondent who interviewed the applicant and other employees. The respondents had a responsibility to ensure that the terms of employment were consistently expressed between the letter of offer and adoption of the Award.
[56] Affidavit of Joan Grochowski affirmed 25 February 2021 at [39].
[57] That total being $537,696.68.
Discussion of findings and relevant circumstances
The contraventions relate to conduct that is not isolated, as there were contraventions of ss 44, 45 and 323 of the Act, for a period in excess of two years. The contraventions were part of a continuing course of conduct relating to numerous property transactions to numerous purchasers.
The total found to be owed to the applicant by the respondents is over $100,000 and I am satisfied this represents a significant sum for an individual to have been short-paid for work performed under the employment contract.
Although the first respondent is not a very large, national or multi-national corporation, its structure and business is considerably more than that of a sole trader or husband and wife partnership running a local small business. The turnover of the first respondent can be inferred to be sizeable given the number of properties it sold, its business contracts with developers, and its arrangements with Mr Kennedy, the finance broker who gave evidence to the Court.
I consider the size and structure of the first respondent, whose conduct was orchestrated by the second respondent, is such that the contraventions cannot be dismissed as negligent or innocent omissions. I do not agree that the first respondent employed a “small” number of persons. The sales administration forms received in evidence show at least five in-home sales employees and many others said to be “involved” in the business in some way during the applicant’s employment.[58]
[58] Affidavit of Joan Grochowski affirmed 25 February 2021 at [39].
In being satisfied that the second respondent orchestrated the contraventions described in Declarations A(i), A(ii) and C, I have not ignored the evidence given by Joan Grochowski about the extent of her involvement in managing the first respondent’s business.[59] However, that evidence does not detract from the finding in the liability judgment concerning the second respondent’s involvement in the contraventions and his role in instigating, directing and orchestrating the running of the business and the enacting of his decisions by Ms Grochowski.
[59] Transcript of 9 May 2023, pp 130-131.
The second respondent was a senior person and the only director qualified to conduct the business of selling property. This imposed on him a heavy onus in my view to ensure the Act was not contravened and he could not simply delegate that responsibility to others. This is relevant, in my view, to the seriousness of his offending, which is distinct from penalising him for claiming privilege against exposure to penalty.
There is no weight to be given to the submission that the conduct of these proceedings by the second respondent demonstrated lack of remorse or contrition. He was entitled to claim penalty privilege and require the applicant to prove his case.
The nature of the contraventions can be, in my view, characterised as reckless and involving arrogance, but were not knowingly deliberate. I agree with the submission that the contraventions arose in part from ignorance about the interpretation given to the employment contract, but their erroneous beliefs were not reasonably held because:
(a)More attention ought to have been given to the entirety of the documentation used to formalise the employment relationship; and
(b)The making of simple enquiries or taking advice would have corrected their erroneous beliefs. Further, to the extent that the contraventions arose in part from ignorance, it was underlined by:
(i)Obvious disregard to ensuring the employment terms for the applicant were legally compliant with the Award in all respects; and
(ii)Blatant lack of attention in the establishment of terms of employment to avoid misinterpretation, confusion or ambiguity.
I accept that a large part of the applicant’s claim relating to being a commission-only employee has failed, but the sums due in compensation for contravention of the employment contract are not trivial or minimal.
No evidence has been adduced of prior contraventions by either respondent and so I agree they should be treated as first time contraveners, but the penalties imposed must serve the purpose of deterrence as discussed at [23] of these reasons.
The respondents, citing Ponzio v B & P Caelli Constructions Pty Ltd [2007] FCAFC 65; (2007) 158 FCR 543, submit that a penalty at the low end of the maximum will be meaningful and appropriate without being crushing.[60]
[60] Respondents’ submissions filed 11 December 2023 at [62].
The respondents submitted that there was no need for specific deterrence in this case because there is no evidence to suggest similar contraventions have occurred and harm from contraventions will unlikely occur.[61]
[61] Respondents’ submissions filed 11 December 2023 at [63] citing Gray J in Plancor Pty Ltd v Liquor Hospitality and Miscellaneous Union [2008] FCAFC 170; (2008) 171 FCR 357 as to concept of specific deterrence.
The applicant’s submissions did not directly address the topics of general and specific deterrence, but it can be inferred from their reference Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; (2022) 274 CLR 450 that they accept that for the purpose of deterrence, general and specific deterrence are important objectives when penalties are imposed.[62]
[62] Applicant’s submissions filed 11 December 2023, p 7.
The applicant’s submissions focused on:
·The seriousness of the contraventions;
·The conduct not being isolated and occurring over the entire period of the applicant’s employment;
·The respondents demonstrating lack of remorse by their conduct of these proceedings over five years and, in the second respondent’s case, electing not to give evidence; and
·The unreliability of Ms Grochowski’s evidence.
The applicant submitted that the Court should impose 3900 penalty units against the first respondent and 3600 penalty units against the second respondent. Further, that the Court should order that the penalties are to be paid to the applicant.[63]
[63] Applicant’s submissions filed 11 December 2023, p 8.
Conclusion – Penalties
There is a need for general and specific deterrence in the circumstances of this case. The applicant’s submissions are mistaken about the maximum penalties available for the reasons above at [17]-[22].
When imposing penalties under the Act, the Court’s primary objective is deterrence. The respondents concede general deterrence is necessary but say the penalties at the lower ranges against each respondent is just and appropriate in all the circumstances without being punitive, crushing or objectively excessive.
I have reached the conclusion that general deterrence is important in the circumstances of this case because I can infer from the terms of the Award that employers within the real estate industry may remunerate employees involved in selling real estate in alternate ways.[64] It is necessary to send a cautionary message to the industry that meticulous attention must be given to how employment terms are formally established and implemented to avoid disputes and legal proceedings.
[64] For example, commission only and otherwise by classification.
Accordingly, although I have rejected that the serious contravention provisions apply in this case, I consider that the need for general deterrence is somewhat higher than submitted by the respondents.
Furthermore, specific deterrence is necessary and relevant in the circumstances of this case also. Although there is no direct evidence of similar conduct or disputes with employees about entitlements, the standardised templates used by the first respondent are problematic and require attention, including ensuring that they are correct for the different methods of remuneration available under the Award and expressed to suit the precise arrangements and terms intended by them and their employees.
To achieve the collective purpose of general and specific deterrence in the circumstances of the entirety of my reasoning above, the Court will impose the following penalties against the first respondent in respect of the declarations made in the liability judgment:[65]
[65] Where the maximum in each case is $51,000, see [21] of these reasons.
Contraventions
Percentage of maximum penalty (%)
Amount of penalty ($)
Declaration A(i)
22
$11,220
Declaration A(ii)
22
$11,220
Declaration B
22
$11,220
Declaration C
28
$14,280
TOTAL
$47,940
Against the second respondent,[66] the Court will impose the following penalties:
[66] Where the maximum in each case is $10,200, see [22] of these reasons.
Contraventions
Percentage of maximum penalty (%)
Amount of penalty ($)
Declaration A(i)
25
2,550
Declaration A(ii)
25
2,550
Declaration C
30
3,060
TOTAL
$8,160
The greater percentage of maximum penalty assessed in the case of the second respondent recognises his directorship and operational role as found in the liability judgment,[67] and justifies apportionment of greater seriousness and relative responsibility to him. He was the orchestrator of the contraventions as referred to in the reasons at [46] above.
[67] At [98]-[113].
The conduct relating to contraventions that are the subject of Declarations A and B are interrelated and in part causally connected as discussed in these reasons at [42], dot point four. Further, the applicant did not succeed in relation to his major claim for underpayment under the Award. Taking these matters into account, if the full amount of the penalty for each contravention is imposed, I consider it offends the principles of proportionality and in turn totality. Accordingly, some discounting is necessary and the ultimate penalty imposed will not be mathematically derived, but rather derived by instinctive synthesis.
On the basis of the reasoning above at [66], the total pecuniary penalties to be paid by the first respondent will be $34,000 and in the case of the second respondent $8,000.
As noted at [16] of these reasons, the parties made competing submissions about whether the penalties should be paid to the applicant. Following the established principles in Sayed,[68] which are binding on this Court, the penalties will be payable to the applicant, as he has made the effort of prosecuting the contraventions.
[68] See [26] of these reasons.
Evaluation – Interest payable
Concerning the competing submissions about interest payable on the compensation to be paid to the applicant,[69] I have not been directed to any authority which supports either submission. It can be inferred however that the parties accept that pre-judgment interest pursuant to s 547 of the Act is payable on the compensation awarded. Notably, the respondents have not made any submission that there is good cause for interest not to be interest on the compensation awarded.
[69] See [11] of these reasons.
Section 211(3) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) applies to these proceedings and gives the Court absolute discretion in relation whether interest is payable and if so, how it is to be determined. If not satisfied that good cause has been shown for not making an order for interest, the Court must either order how interest is to be calculated or instead include a lump sum in lieu of such interest.
The Federal Circuit and Family Court of Australia (Division 2)(General Federal Law) Rules 2021 (Cth) are silent about the method of calculating interest on compensation payable. But r 1.06 authorises the use and application of the Federal Court Rules 2011 (Cth). The Federal Court has published a General Practice Note – Interest on judgments (GPN-INT) (“the GPN-INT”) to guide the determination of interest pursuant to ss 51A and 52 of the Federal Court Act 1976 (Cth). The terms of s 51A of the Federal Court Act 1976 (Cth) are essentially identical to the terms of s 211 of the Federal Circuit and Family Court of Australia Act 2021 (Cth). There is therefore a strong argument that the GPN-INT ought provide guidance to determining what pre-judgment interest should be awarded if it is to be awarded.
It is customary for this Court to adopt the guidance in the GPN-INT when determining pre-judgment interest issues. Due to the broad discretion of this Court under s 211, I may award interest according to the GPN-INT. The effect of doing so would be to award interest at 4% above the cash rate published by the Reserve Bank of Australia over a period of close to either ten or six years depending on whether it is to be paid from when the sums for which compensation is ordered was owing or when the proceedings commenced.
Given the complexity of making those calculations or making calculations using some other interest rate that the parties may persuade me should apply, the delay in issuing proceedings and the delay in bringing the proceedings to an end, I propose to exercise the Court’s wide discretion and simply award a lump sum of $12,000 in lieu of interest but will afford the parties an opportunity to make submissions about this.
At [70] of their written submissions filed 11 December 2023, the respondents submit that they seek a stay of 30 days on the Orders to be made by this judgment. The applicant does not object to such order and accordingly it will be made.
Further submissions – Terms of compensatory order and interest
At an appearance before the Court on 20 March 2024, the parties were invited to make further submissions about two discrete issues which they had not directly or sufficiently addressed, before the Court pronounced final orders. For this purpose, draft reasons for judgment were provided to the parties on a not-for-publication basis.
The two discrete issues were:
·Whether the Court should make an order that the first and second respondents be jointly and severally liable for the compensation awarded in favour of the applicant and for interest payable on that compensation; and
·How interest should be calculated and assessed, it being agreed that pre-judgment interest was payable on the compensation to be awarded.
The parties were not in a position to make oral submissions and so directions were made that they file and serve written submissions, which were received from the applicant on 27 March 2024 and the respondents on 3 April 2024. Those submissions have been considered together with the authorities cited.
Terms of compensatory order - Relevant principles
It is apparent from the parties’ written submissions that they are not materially apart in relation to the relevant legal principles that apply to determining this discrete issue. The cases cited by each of them about the Court's power pursuant to s 545 of the Act, and its interpretation of that section, convey the same or similar sentiments.
I have found the judgment of the Justice Colvin in Veeraragoo v Goldbreak Holdings Pty Ltd (No 2) [2018] FCA 1448 (“Veeraragoo”) instructive and further, his reasoning should be followed as decisions of the Federal Court are binding on this Court.
In summary, the relevant principles to be applied when the Court makes an order for compensation to be paid pursuant to s 545 of the Act are:
(1)The Court has an unfettered discretion conferred by ss 545(1) and (2) to order a person to pay compensation for a contravention of the Act.
(2)The Court has power to make any order it considers appropriate against a contravening employer and/or a person who is involved in a contravention.
(3)Before any person (including a person involved in a contravention) may be ordered to pay compensation, the Court must be of the view that such an order is appropriate in the particular circumstances.
(4)When considering whether to make a compensation order against a person involved in a contravention, the following are relevant considerations:
(a)The nature of the person’s involvement. For example, if the contraventions occurred at the direction or with full knowledge or support of the person;
(b)The likelihood of recovering compensation against the contravening employer due to their financial position;
(c)The causative nexus between the contravention and the conduct of the person involved in the contravention; and
(d)Whether the person is to be solely or jointly and severally liable with a contravening employer.
In addition to the above principles, it appears accepted that public policy reasons drawn from the purpose of the Fair Work legislation may also be relevant to determining the precise terms of the compensatory order to be made where there is more than one person involved in the contravention. For example, preventing a person from benefiting from their misconduct or contravention.[70]
[70] Per Judge Jarrett in Fair Work Ombudsman v Step Ahead Security Services Pty Ltd & Anor [2016] FCCA 1482 at [53]-[56].
Evaluation and conclusion – Compensatory order
Pursuant to the liability judgment delivered on 24 November 2023 and the reasons above, the second respondent was very much involved in the contraventions. In particular, he orchestrated, instigated and authorised all of those contraventions that were established,[71] except one.[72]
[71] See [98]-[110] of the liability judgment and [42], [46]-[48], [50] and [65] of these reasons.
[72] Being the contravention of s 45 of the Act relating to the failure to ensure the applicant had access to the Award and NES.
There is limited indirect evidence as to the capacity of the first respondent to satisfy a compensatory order made by the Court, but I do not accept that there is none whatsoever. As submitted by the applicant, there was no challenge to the generalised indirect evidence read from the applicant’s affidavit of 21 June 2020 at [90]. This evidence permits an inferential finding that the first respondent quite possibly has limited means of satisfying a compensation order and I so find.
I accept that there is no direct or precise evidence about the capacity of either respondent to satisfy an order for compensation as submitted on their behalf.[73]
[73] Respondent’s written submissions dated 3 April 2024 at [4].
As the Court has limited evidence capable of informing it of the respondents’ respective capacities to satisfy a compensatory order, I consider it relevant to the public policy of the Act that the Court make the compensatory order in terms that are likely to have the intended purpose of compensating the applicant for losses found to have been suffered by him due to the contraventions.
An order that attaches joint and several liability to the respondents will maximise the purpose of the compensation order, while ensuring that the applicant is not doubly compensated. In my view, joint and several liability orders are generally most appropriate where there are several contraveners, unless there is a valid reason for distinguishing the accessory’s involvement in the contravention as being negligible or minor from a causative perspective. This reasoning is entirely consistent with the rationale of Justice Colvin in Veeraragoo.
Based on the findings and conclusions of the Court, the second respondent was a “major player” in all the contraventions established except one. In respect of the one that he was not involved in, no specific direct loss was suffered. This contravention mostly obstructed or delayed ensuring the applicant was correctly paid by the first respondent as employer. All compensation sums that are to be awarded result from the contraventions in which the second respondent was involved as a major player.
For all the foregoing reasons, the appropriate order is that the first and second respondents are jointly and severally liable to pay the compensation awarded to the applicant in the gross sum of $110,068.
Interest payable
Having had regard to the parties’ respective submissions about interest, for the reasons expressed at [64]-[73] above I remain of the view that a lump sum of $12,000 should be allowed in lieu of interest.
The applicant submitted that much of the delay in the proceedings was not attributed to him,[74] but I do not accept this. There was delay of four years before he brought the proceedings. About five years elapsed from commencement of proceedings until the liability judgment was delivered in November 2023. During that time both parties made interlocutory applications and obtained extensions of time. However, the applicant amended his pleadings many times and there are a number of inconsistencies between the pleadings and his affidavit evidence which in my view are not explicable by complaints about incomplete discovery. The manner of conduct of the applicant’s case contributed to the not insignificant delays, noting that as the applicant it was for him to prosecute the claim.
[74] Applicant’s written submissions filed 27 March 2024 at [3].
For the same reasons expressed above, both respondents are jointly and severally liable to pay the lump sum awarded in lieu of interest, being $12,000.
I certify that the preceding ninety-one (91) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Taglieri. Associate:
Dated: 11 April 2024
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