Milardovic v Vemco Services Pty Ltd (Administrators Appointed) (No 2)

In the matter of Milardovic v Vemco Services Pty Ltd (Administrators Appointed) (No 2), the plaintiff, Milardovic, brought proceedings against Vemco Services, a company that had been placed in administration, concerning unpaid redundancy pay and penalties for contravention of the National Employment Standards under the Fair Work Act 2009 (Cth). The case before the court involved several complex legal issues, including the applicability of insolvency laws to the imposition of penalties, the enforceability of penalties against an insolvent company, and the appropriateness of imposing penalties in light of the company's financial capacity. Specifically, the court had to decide whether the terms of section 553B of the Corporations Act 2001 (Cth) precluded the penalty imposed by the Fair Work Act from being provable in the winding up of the company. The court also needed to determine if the company's capacity to satisfy any penalty order should be a factor in imposing such penalties.

The court reasoned that the terms of section 553B were not currently applicable to any penalty imposed by the court on Vemco, as the company had not yet been liquidated. The court noted that the primary purpose of imposing penalties was to serve general deterrence and that the fact that a company might be placed in liquidation should not dissuade the court from imposing penalties if they were otherwise appropriate. The court referred to several cases where it was held that the potential financial ruin of a company should not deter the imposition of penalties. The court concluded that the capacity of the company to satisfy a penalty order was not a permissible consideration in imposing the penalty, aligning with the view that the primary purpose of penalties was deterrence.

The court ordered that Vemco Services pay Milardovic the sum of $30,024.60 for unpaid redundancy pay, along with pre-judgment interest. Additionally, Vemco was required to pay a penalty of $10,000 for failing to pay redundancy pay, which was to be paid by a specific date. The court granted a 30-day stay on the payment of the redundancy pay to allow Vemco to make arrangements.