Martin v Fresho Foods Pty Ltd (No.2)

[2009] FMCA 191

FEDERAL MAGISTRATES COURT OF AUSTRALIA

MARTIN v FRESHO FOODS PTY LTD (No.2) [2009] FMCA 191

INDUSTRIAL LAW – Penalty hearing – underpayment of employees and failure to pay overtime – failure to give notice to transferring employees – order requiring underpayments to be made to affected employees.

Workplace Relations Act 1996, ss.719, 722, Schedule 9

Martin v Fresho Foods Pty Ltd ACN 120 091 296 [2009] FMCA 15
Blandy v Coverdale NT Pty Ltd [2008] FCA 1533
Gibbs v City of Altona (1992) 37 FCR 216
CFMEU v Coal & Allied Operations (No 2) (1999) 94 IR 231
Kelly v Fitzpatrick [2007] FCA 1080
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; (2008) 165 FCR 560
Rojas v Esselte Australia Pty Ltd (No 2) [2008] FCA 1585
Workplace Ombudsman v Saya Cleaning Pty Ltd [2009] FMCA 38
Carr v CEPU & Anor [2007] FMCA 1526
Finance Sector Union v Commonwealth Bank of Australia (2005) 224 ALR 467
CPSU v Telstra Corporation Ltd (2001) 108 IR 228

Applicant: SHELBY MARTIN

Respondent:

FRESHO FOODS PTY LTD

ACN 120 091 296

File Number: BRG 747 of 2007

Judgment of: Wilson FM

Hearing date: 6 March 2009

Date of Last Submission: 6 March 2009

Delivered at: Brisbane

Delivered on: 13 March 2009

REPRESENTATION

Counsel for the Applicant: Mr Horneman-Wren

Solicitors for the Applicant: Corrs Chambers Westgarth

Counsel for the Respondent: Mr Shepley

Solicitors for the Respondent: QBM Lawyers

ORDERS

(1)That the declarations made on 27 January 2009 be varied as follows:

(a)Paragraph (1)(xii) be deleted;

(b)Paragraph (1)(b) be amended by replacing “Clause 4.3” with “Clauses 4.3, 7.6.1 and 7.6.3”;

(c)Paragraph (1)(b) be further amended by replacing “that clause” with “those clauses or any of them”.

(2)That the respondent pay to the applicant, on behalf of each of the persons identified in the Schedule to the Reasons for Judgment, the amount of $13,510.27, within 14 days of the date of these orders.

(3)The applicant shall, upon receipt from the respondent, forthwith pay to each of the said persons the amount appearing in the said Schedule applicable to that person.

(4)That the respondent pay to the consolidated revenue of the Commonwealth of Australia the sum of $80,200 for breaches of the following applicable provisions:

(a)The failure to pay the casual loading to transferring employees in accordance with clause 4.3.1 of the preserved APCS;

(b)The failure to pay overtime for work performed in excess of eight hours per shift in accordance with clause 4.3.1 of the NAPSA;

(c)The failure to pay overtime for work performed on a Saturday or Sunday in the circumstances identified in clause 4.3.3 of the NAPSA;

(d)The failure to pay overtime for work performed on a public holiday (the Gold Coast Show day) in accordance with clause 7.6.3 of the NAPSA;

(e)The failure to pay overtime for work performed on New Years Day in accordance with clause 7.6.1 of the NAPSA;

(f)The failure of the respondent to give to each of the transferring employees a written notice in accordance with clause 28(3) of Schedule 9.

(5)That the penalties referred to in order 4 hereof be paid within twenty eight (28) days from the date of these orders.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
BRISBANE

BRG 747 of 2007

SHELBY MARTIN

Applicant

And

FRESHO FOODS PTY LTD ACN 120 091 296

Respondent

REASONS FOR JUDGMENT

1.

On 27 January 2009 the Court made declarations that the respondent was bound by the rates of pay prescribed by the Jam, Preserve Fruit and Vegetable Processing Award – Southern Division, Eastern District as adjusted by the Australian Fair Pay Commission effective from

1 December 2006 and 1 October 2007 in respect of twelve named employees.  It was also declared that the respondent was bound to pay overtime by clause 4.3 of the Award, if employees otherwise satisfied the terms of that clause.

2.It was declared that the respondent had breached ‘applicable provisions’ by which it was bound, and had also contravened clause 28(2) of Schedule 9 to the Workplace Relations Act 1996 (“the Act”).

3.The matter returns before the Court to determine what penalty is appropriate to be imposed on the respondent. As pointed out in my earlier reasons for judgment ([2009] FMCA 15), the applicant seeks the imposition of penalties for breaches of applicable provisions binding on the respondent, and for an order requiring the amounts of the underpayment to be paid to the specified employees. The applicant also seeks the imposition of a penalty under clause 31(2) of Schedule 9 to the Act.

4.These Reasons need to be read in conjunction with my earlier Reasons, which set out the circumstances in which the respondent was found to have committed the various breaches of the legislation.

5.The parties agreed that, in light of my earlier Reasons, one of the named employees ought not to have been included in the list of employees in respect of which there have been established breaches of the legislation.  I will make orders to rectify that erroneous inclusion.

6.Further, the parties agreed that, in addition to breaches of clause 4.3 of the Award (relating to overtime) the applicant was entitled to declarations in respect of the non-payment to employees entitled to be paid in accordance with clauses 7.6.1 and 7.6.3 of the Award.  This related to the entitlement of certain employees to overtime for working on a public holiday, and for one employee in respect of working on New Years’ Day.  I will also make orders rectifying that erroneous omission.

7.Section 719(2) of the Act provides:

(2)     Subject to subsection (3), where:

(a)     2 or more breaches of an applicable provision are committed by the same person; and

(b)     the breaches arose out of a course of conduct by the person;

the breaches shall, for the purposes of this section, be taken to constitute a single breach of the term.

8.In my earlier Reasons, at paragraphs [112 – 114], I concluded that there was a course of conduct of the respondent in its contravention of the relevant provisions of the legislation.  Thus, although there has been a breach established in respect of eleven named employees, that breach occurred as part of a course of conduct and is to be treated as a single breach.  However, as counsel for the applicant submitted, where there are proved distinct breaches of different terms of the applicable provisions, they are not to be treated as a single breach.  Thus, in this case, there are six separate breaches identified, and in respect of all but one they involve multiple employees.  Because I have concluded that the respondent engaged in a course of conduct, the breach of each applicable provision is to be treated as a single breach, but a penalty must be considered in the case of each of the six distinct breaches: Blandy v Coverdale NT Pty Ltd [2008] FCA 1533 applying Gibbs v City of Altona (1992) 37 FCR 216.

9.The six identified, and proven, breaches are:

a)The failure to pay the casual loading in accordance with clause 4.3.1 of the preserved ACPS to the eleven named employees;

b)The  failure to pay overtime for work performed in excess of eight hours per shift in accordance with clause 4.3.1 of the NAPSA;

c)The failure to pay overtime for work performed on a Saturday or Sunday in the circumstances identified in clause 4.3.3 of the NAPSA;

d)The failure to pay overtime for work performed on a public holiday (the Gold Coast Show day) in accordance with clause 7.6.3 of the NAPSA;

e)The failure to pay overtime to one employee for work performed on New Years Day in accordance with clause 7.6.1 of the NAPSA;

f)The failure of the respondent to give to each of the transferring employees a written notice in accordance with clause 28(3) of Schedule 9.

10.These breaches were listed in what the applicant submitted was the order of relative seriousness.  The maximum penalty for each breach is the same: $33,000.

11.In accordance with my earlier Reasons, the solicitor for the applicant has recalculated the amount of underpayment in relation to each employee, and has provided a copy of such calculations to the respondent.  No challenge is made to the solicitor’s calculations.  Counsel for the applicant provided to the Court a schedule setting out the amounts of underpayment that is, for the sake of efficiency, attached to these Reasons.

12.The principles applicable to determining the appropriate penalty are not controversial.  In CFMEU v Coal & Allied Operations (No 2) (1999) 94 IR 231 at 232 Branson J said:

“The Act gives no explicit guidance as to the circumstances in which an order imposing a penalty . . . will be appropriate or as to the circumstances in which a penalty of or near the maximum, or alternatively of a lesser amount, may be called for. The Court is simply directed to consider what is appropriate in all the circumstances of the case.

The following matters, which are not intended to comprise an exhaustive list, seem to me to be considerations as to which the Court may appropriately have regard in determining whether particular conduct calls for the imposition of a penalty, and assuming that it does, the amount of the penalty:

(a) the circumstances in which the relevant conduct took place (including whether the conduct was undertaken in deliberate defiance or disregard of the Act);

(b) whether the respondent has previously been found to have engaged in contravention of . . . the Act;

(c) where more than one contravention of [the Act] is involved, whether the various contraventions are properly seen as distinct or whether they arise out of the one course of conduct;

(d) the consequences of the conduct found to be in contravention of . . . the Act;

(e) the need, in the circumstances, for the protection of industrial freedom of association; and

(f) the need, in the circumstances, for deterrence.

13.In Kelly v Fitzpatrick [2007] FCA 1080 Tracey J at [14] said:

“In Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 Mowbray FM identified “a non exhaustive range of considerations to which regard may be had in determining  whether particular conduct calls for the imposition of a penalty, and if it does the amount of the penalty”.  Those considerations were derived from a number of decisions of this Court.  I gratefully adopt, as potentially relevant and applicable, the various considerations identified by him.  They were:

·    The nature and extent of the conduct which led to the breaches

·    The circumstances in which that conduct took place

·    The nature and extent of any loss or damage sustained as a result of the breaches

·    Whether there had been similar previous conduct by the respondent

·    Whether the breaches were properly distinct or arose out of the one course of conduct

·    The size of the business enterprise involved

·    Whether or not the breaches were deliberate

·    Whether senior management was involved in the breaches

·    Whether the party committing the breach had exhibited contrition

·    Whether the party committing the breach had taken corrective action

·    Whether the party committing the breach had cooperated with the enforcement authorities

·    The need to ensure compliance with minimum standards by provision of an effective means of investigation and enforcement of employee entitlements and

·    The need for specific and general deterrence.”

14.Further, in Kelly at [30] Tracey J. said:

“Another factor that must be taken into account in the fixing of pecuniary penalties for multiple breaches of statutory stipulations is the totality principle.  This principle is designed to ensure that the aggregate of the penalties imposed is not such as to be oppressive or crushing.  Different views have been expressed as to the manner in which the principle ought properly be applied.  On one view the starting point should be the determination of an appropriate total penalty.  That figure would then be divided by the number of breaches to produce a penalty for each breach: see CPSU v Telstra Corporation Limited (2001) 108 IR 228 at 230 [7].  The orthodox position, however, which I consider should be adopted, is that the starting point is the determination of appropriate penalties for each contravention of the statutory norm.  The aggregate figure is then considered with a view to ensuring it is an appropriate response to the conduct which led to the breaches: see Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1997) 145 ALR 36 at 53.  See also Ponzio v B & P Caelli Constructions Pty Ltd [2007] FCAFC 65 at [145] per Jessop J.  This approach was recently described, in the criminal context from which the totality principle is derived, as “the orthodox, but not necessarily immutable, practice” adopted by sentencing courts, see Johnston v R (2004) 205 ALR 346 at 356 [26] per Gummow, Callinan and Heydon JJ.”

15.The decision of the Full Federal Court in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; (2008) 165 FCR 560 is instructive. At [12] Gray J deprecated the use of “comparator” cases. His Honour said:

“This was a fundamentally wrong approach. Penalties are not a matter of precedent. The choice of penalty must be dictated by the individual circumstances of a case, not by a line by line comparison with another case. . . “

16.At [13] his Honour said:

“Penalty decisions in other cases can be of value in demonstrating that there is a range of penalties generally considered appropriate to a particular type of case. The individual circumstances of the case at hand must then be examined, in order to determine at what point in the appropriate range the penalty should be set. This does not involve a comparison with the facts of other cases.”

17.Graham J at [53] – [56] referred to other relevant decisions of the Full Court and of the High Court, and at [60] adopted the checklist of Tracey J in Kelly v Fitzpatrick:

“53.  In Ponzio v B & P Caelli Constructions Pty Ltd [2007] FCAFC 65; (2007) 158 FCR 543 at [93]-[94] (Ponzio) Lander J summarised the purpose of imposing penalties for breaches of the Act as follows:

93 There are three purposes at least for imposing a penalty: punishment; deterrence; and rehabilitation. The punishment must be proportionate to the offence and in accordance with the prevailing standards of punishment: R v Hunter (1984) 36 SASR 101 at 103. Therefore the circumstances of the offence or contravention are especially important. The penalty must recognise the need for deterrence, both personal and general. In regard to personal deterrence, an assessment must be made of the risk of re-offending. In regard to general deterrence, it is assumed that an appropriate penalty will act as a deterrence to others who might be likely to offend: Yardley v Betts (1979) 22 SASR 108. The penalty therefore should be 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: R v Thompson (1975) 11 SASR 217. In some cases, although hardly in this type of contravention, rehabilitation is an important factor.

94 The individual or personal circumstances of the contravenor must be taken into account as also any relevant matter in mitigation.  For a contravention of these sections the minimum penalty which addresses punishment and deterrence, both personal and general, will be appropriate.  Where one act may involve a number of contraventions, as in this case, it would be generally inappropriate to impose separate penalties because almost inevitably that would offend against the totality principle as known to the criminal law. …

54.    The ultimate control on the judicial sentencing discretion is the requirement that the sentence be proportionate to the gravity of the offence committed.  In pursuit of other sentencing purposes, a judge may not impose a sentence that is greater than is warranted by the objective circumstances of the crime.  Both proportionality and consistency commonly operate as final checks on a sentence proposed by a judge (per McHugh J in Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357 at [83] (Markarian v The Queen); see also Veen v The Queen (No 2) (1998) 164 CLR 465 at 472).

55.    The acceptance of the role of instinctive synthesis in the judicial sentencing process is not opposed to the concern for predictability and consistency in sentencing that underpins the rule of law and public confidence in the administration of criminal justice.  The synthesising task is conducted after a full and transparent articulation of the relevant considerations including an indication of the relative weight to be given to those considerations in the circumstances of the particular case (per McHugh J in Markarian v The Queen 228 CLR 357 at [84]).

56.    In addressing consistency, it is important to note that Burchett and Kiefel JJ said in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 295, namely:

A hallmark of justice is equality before the law, and, other things being equal, corporations guilty of similar contraventions should incur similar penalties: Trade Practices Commission v Axive Pty Ltd [[1994] ATPR 42,782 (41,795).  There should not be such an inequality as would suggest that the treatment meted out has not been even-handed … However, other things are rarely equal where contraventions of the Trade Practices Act are concerned.  In the present case, differing circumstances, size, market power and responsibility for the contraventions, as well as other factors, complicate any attempt to compare the penalties imposed on the appellant with those imposed on the other corporations.

Another form of comparison is not appropriate.  The facts of the instant case should not be compared with a particular reported case in order to derive therefrom the amount of the penalty to be fixed.  Cases are authorities for matters of principle; but the penalty found to be appropriate, as a matter of fact, in the circumstances of one case cannot dictate the appropriate penalty in the different circumstances of another case.  The point was well made by Spender J in Trade Practices Commission v Annand and Thompson Pty Ltd [[1987] ATPR 48,390 (40,772)] (at 48,394) when he said:

Each case must, of course, be viewed on its own facts and facts may be infinite in their variety.

It follows, as his Honour also said, that “[t]he quantum of penalties imposed in other cases can seldom be of very much direct assistance.”

18.Buchanan J, after referring to the checklist in Kelly v Fitzpatrick said, at [91]:

“Checklists 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.”

19.In Rojas v Esselte Australia Pty Ltd (No 2) [2008] FCA 1585 Moore J said at [65]:

“Although “check lists” of the above kind are a useful starting point in determining whether a penalty ought to be imposed, and if so the level of such penalty, at the end of the day the task of the Court is to fix a penalty that pays appropriate regard to the contraventions that have occurred: Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; (2008) 165 FCR 560 at [91]. Moreover, as the Full Court noted in Plancor Pty Ltd v Liquor Hospitality and Miscellaneous Union [2008] FCAFC 170 at [60], while general guidance as to the appropriate penalty may be obtained through an analysis of comparable cases, it remains necessary for the Court to give careful consideration to the circumstances of the case before it (see also Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith . . . at [12] per Gray J.”

20.The circumstances in which the contravening conduct took place are quite straightforward.  When the respondent acquired the business of Fresho Foods from T-Jays Wholesalers Pty Ltd, its director, Mr Pirrottina, determined how workers would thereafter be paid.  He set an hourly rate for workers to be paid.  He did so with a view to making the business profitable.  Mr Pirrottina met with the workers and told them what they would be paid.  There was no room for debate or negotiation.  It was a take it or leave it situation.  The workers were required to work as ‘independent contractors’, notwithstanding their legal status as employees.  No regard was had to the terms of the Award.

21.The transferring employees were paid at the rate determined by the respondent for an extended period of time.  The breaches of the applicable provisions were not isolated instances.  There was a regular pattern of behaviour by the respondent that simply ignored the relevant statutory entitlements of the transferring employees.  There were multiple contraventions in relation to all but one of the proved breaches.  Once the breaches were brought to the attention of the respondent, no corrective action was taken.  The affected employees were not reimbursed the amounts of the underpayment.  Even at the penalty hearing the respondent made no concession that the amount of underpayment should be paid to the affected employees.

22.Rather, the attitude of the respondent, and of its director Mr Pirrottina, has been entirely unrepentant, and lacking any contrition. Mr Pirrottina was aggressive towards, and dismissive of, the applicant and other investigators from the Workplace Ombudsman. He ignored correspondence sent to him on four separate occasions prior to the institution of proceedings pointing out the breaches that have subsequently been found to have occurred. Rather, the respondent’s attitude, conveyed through its director Mr Pirrottina, was that if the matter was pursued it would sack the employees. To use the vernacular, Mr Pirrottina simply thumbed his nose to the investigating authority, and to the Court.

23.At the hearing concerning whether there had been breaches of the applicable provisions Mr Pirrottina was at pains to point out that he had not misled any of the transferring employees. However, he did not tell them of their statutory entitlements (as to which the breach of clause 28(2) of Schedule 9 is important), nor did he pay them the remuneration to which they were entitled. Whilst this is not a case of exploitation, as that term is ordinarily understood, Mr Pirrottina, and through him the respondent, treated its workers with contempt. The respondent did not concede that there had been any breaches of the legislation.

24.The respondent’s attitude continued through to the penalty hearing. Indeed the only substantive submission made by the respondent’s counsel was that a significant penalty should not be imposed because, if it was, the respondent would have to close down the business and the employees would lose their jobs. The Court cannot condone such industrial relations blackmail. Counsel for the respondent frankly accepted that little could be said in mitigation of the penalties sought by the applicant.

25.In Workplace Ombudsman v Saya Cleaning Pty Ltd [2009] FMCA 38 Simpson FM usefully considered whether the financial health of the respondent corporation was a relevant consideration in determining the quantum of penalty. At [26-30] his Honour referred to the following relevant authorities:

“26.  The first respondent is a small company and, I infer, has very few if any assets.  However as Justice Tracey said in Kelly v Fitzpatrick (supra):

“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.”

27.    In Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412 at paras.27 to 29 it was said:

“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 a Court’s consideration of penalty.”

28.    Notwithstanding financial hardship that an employer may be experiencing Lynch v Buckley Sawmills Pty Ltd (1984) 3 FCR 503, 508 Keely J said:

“In this connection it is important that the respondent – and other employers bound by the award or by other awards under the Act – understand the importance of complying with an award and it follows that any decision taken by them which is regarded as affecting their obligations to comply with particular provisions of the award or the award generally should only be taken after careful consideration. They must not be left under the impression that in times of financial difficulty they can breach an award made under the Act either with impunity or in the belief that no substantial penalty will be imposed in respect of a breach found by a court to have been committed.”

29.    In PKIU and Others v Vista Paper Products Pty Ltd and Another (1994) 127 ALR 673 Wilcox CJ, in penalising both a company in receivership and its bankrupt controlling director said:

“While this evidence suggests that both Vista and Mr McNamee may have difficulty in paying penalties, I do not think I should allow it to deflect me from imposing whatever penalties are otherwise appropriate.”

30.    Driver FM said in Cotis v MacPherson [2007] FMCA 2060 [12]; (2007) 169 IR 30:

“It is, in my view, important to make the point that employers should not and cannot regard insolvency, either personal or corporate, as a refuge from their responsibilities under the Workplace Relations Act.””

26.Each of the breaches by the respondent was deliberate.  There were, as I have said, multiple instances of each breach of an applicable provision, other than the breach of clause 7.6.1 of the NAPSA.

27.The obvious consequence of the respondent’s behaviour was that eleven employees were underpaid.  The amounts of those underpayments are set out in the schedule to these Reasons.

28.The workers were described by counsel for the applicant as ‘vulnerable’.  By this I took him to mean not that they were subject to a legal disability such as age or mental acuity, or from a different country and culture, but rather that they were employed as unskilled, menial workers who had little choice but to accept the terms of remuneration that they were offered.  I accept the categorisation of the transferring employees as vulnerable in the sense to which I have referred.

29.The respondent is a corporation controlled by Mr Pirrottina.  He was directly involved in the respondent committing the various breaches of the legislation.

30.There is no history of any previous breaches of the legislation by the respondent.

31.The only evidence put before the Court by the respondent was an affidavit by Mr Pirrottina which, besides repeating the threat to liquidate the respondent if a fine of a substantial nature is imposed, exhibits the financial statements of the business for the 2006/7 financial year.  No financial statements for the 2007/8 financial year were provided, nor was any evidence given by Mr Pirrottina as to the performance of the business since 30 June 2007.

32.The financial documents that were produced showed that the business had:

a)Gross profit from trading of $295,297.12;

b)A loss before income tax of $43,193.60;

c)Incurred legal fees of $8,692.10;

d)Incurred an “office expense” of $11,066.28;

e)Incurred motor vehicle expenses of $22,056.40;

f)Incurred expenses for repairs and maintenance of $25,630.51;

g)Incurred “wastage” of $11,413.59.

33.It was not explained whether the gross profit of the business since 30 June 2007 had increased, decreased or remained static.  The expense items to which I have referred were not explained, nor was it said whether they were likely to be recurrent or ‘one-off’ items.

34.In short, no evidence was put before the Court to demonstrate the current financial position of the respondent, of its ongoing profitability, nor, most importantly, of its inability to pay such penalty as imposed by this Court.  This underscores the unwillingness of the respondent to co-operate in any way.

35.There is then the matter of deterrence, both general and specific.

36.As Lucev FM said in Carr v CEPU & Anor [2007] FMCA 1526 at [29]:

“General and specific deterrence are significant considerations given that deterrence is a primary objective of imposing penalties. It is necessary for deterrence to be both specific and general. Specific deterrence relates to the need to deter a contravener from further contravention of the [Act] whilst general deterrence refers to the need to deter others from contravening the [Act] by showing the seriousness with which the Court considers the contraventions. The penalties must be meaningful and consistent with other considerations to be taken into account in determining an appropriate penalty. In light of legislative changes in recent years, a “light handed approach” is no longer applicable to the imposition of civil penalties for breaches of industrial law . . .”

37.The last sentence from the passage just extracted is derived from the judgments in Finance Sector Union v Commonwealth Bank of Australia (2005) 224 ALR 467, for example Merkel J at 487; and (2007) 157 FCR 329 at [192] per Branson J.

38.In CPSU v Telstra Corporation Ltd (2001) 108 IR 228 at 231 Finkelstein J said that a penalty must be imposed at a ‘meaningful’ level.

39.Counsel for the respondent did not make any submission that the penalties should be ameliorated to a lower, but still appropriate, figure because of a lack of capacity to pay; nor that time should be allowed for the respondent to pay. Rather the submission was made that it did not really matter what penalty was imposed because the respondent could not afford it.

40.The respondent’s contention was that a proper penalty should not be imposed on it because to do so would cause workers to lose their jobs. This attempt to hold the Court to ransom over the livelihoods of the respondent’s employees must be viewed against the background facts to which I have referred, and the complete disregard which the respondent, and its director, have displayed for the employees’ entitlements to date. Despite concerns as to what ‘scorched earth’ policy the respondent may adopt as a result of the penalties to be imposed, the Court must, in my view, impose otherwise appropriate penalties to, in part, mark its disapproval of the respondent’s conduct and to deter other would be workplace cowboys to think twice before embarking on such behaviour.

41.The first breach identified, namely the persistent failure to pay the casual employees of the respondent the amount of wages to which they were entitled under the Award is, I agree, the most serious breach.  It was flagrant.  It occurred in respect of ten identified employees over a period of fourteen months.  It warrants a penalty of three quarters of the maximum penalty, namely the amount of $24,750.

42.The second breach also relates to a serious impact on the employees’ statutory entitlements when overtime was worked.  It occurred in respect of eleven identified employees over the same period as for the first breach.  It also warrants a penalty of $24,750.

43.The third and fourth breaches also relate to the failure to pay overtime for weekend work, and work on public holidays.  They are also serious breaches of the applicable provisions, but are not of the same magnitude in either number of occurrences or dollar terms as the first two breaches.  A penalty for each breach of $6,600 is called for.

44.The breach of clause 7.6.1 of the NAPSA relates to one employee on one occasion.  A penalty of $1,000 is appropriate in the circumstances.

45.Counsel for the applicant submitted that the penalty that should be imposed for the breach of clause 28(2) of Schedule 9 to the Act should be minimal, having regard to the other penalties imposed. I disagree. The failure by the respondent to comply with the subclause allowed it to continue to underpay its employees without ever having given them the requisite information as to how much they were in fact entitled to be paid. It allowed the respondent to keep its employees in the dark. It highlights the respondent’s complete disregard of its legal obligations. It was a breach of an important information provision of the legislation. The breach occurred on eleven occasions. The legislation imposes a maximum penalty of $33,000. In my view, the conduct warrants a penalty of one half of the maximum, namely $16,500.

46.The penalties that I propose are:

a)For breach of clause 4.3.1 of the NAPSA in relation to the underpayment of wages - $24,750;

b)For breach of clause 4.3.1 of the NAPSA in relation to the non-payment of overtime - $24,750;

c)For breach of clause 4.3.3 of the NAPSA in relation to the non-payment of overtime for weekend work - $6,600;

d)For breach of clause 7.6.3 of the NAPSA in relation to the non-payment of overtime for work on a public holiday - $6,600;

e)For breach of clause 7.6.1 of the NAPSA in relation to the non-payment of overtime for work on New Years Day - $1,000;

f)For breach of clause 28(2) of Schedule 9 to the Act in relation to the failure of the respondent to give to each of the transferring employees a written notice in accordance with clause 28(3) - $16,500.

47.These penalties total $80,200.  As counsel for the applicant submitted, in reliance on the authorities set out at paragraph 12 of the written submissions, the application of the totality principle does not necessarily result in a reduction of the penalty.

48.I have approached the imposition of penalties in the orthodox manner referred to by Tracey J in Kelly.  In my view a penalty of $80,200 is an appropriate response to the conduct of the respondent in having disregard to the entitlements of its employees in a number of ways over a lengthy period, total disregard for the role that the applicant plays in the enforcement of workers’ entitlements, lack of any contrition, and as a deterrent to the respondent and other employers.

49.The applicant seeks an order pursuant to s.719(6) of the Act that the respondent make payment to each identified employee the amount of the underpayment. I agree that such an order should be made. No submission was made to the contrary, although such an order was not consented to. However, rather than order the respondent to locate and make payment to the individual employee, I propose to order that the total amount of underpayment be paid to the applicant, on behalf of the affected employees, who should then make the payment to the individual employees. If a particular employee cannot be located, the amount should be returned to the respondent rather than be paid to consolidated revenue.

50.The applicant also seeks an order that interest be paid on the amounts to be paid to the underpaid employees. Section 722 of the Act provides:

(1)     In exercising its powers under subsection 719(5) or (6) or in a proceeding under section 720 or 721, the eligible court must, upon application, unless good cause is shown to the contrary, either:

(a)     order that there be included in the sum for which an order is made or judgment given, interest at such rate as the Court or court of competent jurisdiction, as the case may be, thinks fit on the whole or any part of the money for the whole or any part of the period between the date when the cause of action arose and the date on which the order is made or judgment entered; or

(b)     without proceeding to calculate interest in accordance with paragraph (a), order that there be included in the sum for which an order is made or judgment given, a lump sum instead of any such interest.

(2)     Subsection (1) does not:

(a)     authorise the giving of interest upon interest or of a sum instead of such interest; or

(b)     apply in relation to any debt upon which interest is payable as of right whether by virtue of an agreement or otherwise; or

(c) authorise the giving of interest, or a sum instead of interest, otherwise than by consent, upon any sum for which judgment is given by consent.

51.No submissions were made on behalf of the respondent concerning the inclusion of interest.  No good cause has been shown to the contrary as to why interest should not be included in the amounts to be paid to the affected employees.

52.The payment to the employees should be made first.  If there is any risk that the full amount of the penalties and the payments to the employees will not be made, I think the former should give way to the latter.  It is of course a matter for the applicant as to how these orders are enforced.

I certify that the preceding fifty-two (52) paragraphs are a true copy of the reasons for judgment of Wilson FM

Associate:  Lynnette Chin

Date:  13 March 2009

IN THE FEDERAL COURT OF AUSTRALIA                  No. BRG 747/2007
QUEENSLAND DISTRICT REGISTRY

Shelby Martin  Applicant

Fresho Foods Pty Ltd ACN 120 091 296               Respondent

REVISED SCHEDULE OF UNDERPAYMENTS

Employee	Under payment wages and casual loading	Under payment Overtime	Total Under payment	Interest payment	Total
Julia Amos	$981.87	$287.95	$1,269.82	$120.08	$1,389.90
Alison Bold	$312.04	$276.81	$588.85	$92.59	$681.44
Mal Bradford	$206.71	$0.00	$206.71	$32.76	$239.47
Daniel Bennett	$0.00	$64.10	$64.10	$10.40	$74.50
Robert Grant	$5,252.57	$362.63	$5,615.20	$530.98	$6,146.18
Nigel O’Brien	$903.72	$37.18	$940.90	$88.97	$1,029.87
Mark Pearson	$142.52	$89.70	$232.22	$37.96	$270.18
Salvatore (Sam) Sangricoli	$404.11	$280.17	$684.28	$111.87	$796.15
Leanne Sangricoli	$877.14	$58.41	$935.55	$149.44	$1,084.99
Mel Smith	$352.46	$200.47	$552.93	$86.25	$639.15
Daniel Terry	$867.73	$165.91	$1,033.64	$124.80	$1,158.44
TOTALS	$10,300.87	$1,823.33	$12,124.20	$1,386.10	$13,510.27