MOORE v Slondia Nominees Pty Ltd (No.2)
[2012] FMCA 989
•31 October 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| MOORE v SLONDIA NOMINEES PTY LTD (No.2) | [2012] FMCA 989 |
| INDUSTRIAL LAW – Penalty imposed in respect of contravention arising from dismissal of employee on account of exercise of workplace right – calculation of compensation for loss suffered – sentencing principles – whether pecuniary penalty should be imposed – to whom penalty should be paid. |
| Fair Work Act 2009 (Cth), ss. 360, 361, 539, 545, 546, 547, 550, 570 & Division 2 Part 4.1 Crimes Act 1914 (Cth), s.4AA |
| Barclay & The Board of Bendigo Regional Institute of Technical Education [2011] FCAFC 14 Barclay & The Board of Bendigo Regional Institute of Technical Education [2012] HCA 32 Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 Kelly v Fitzpatrick [2007] FCA 1080 Ponzio v B and P Caelli Constructions Pty Ltd & Anors [2007] FCAFC 65 Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550 |
| Applicant: | SANDY MOORE |
| Respondent: | SLONDIA NOMINEES PTY LTD |
| File Number: | ADG 44 of 2011 |
| Judgment of: | Lindsay FM |
| Hearing date: | 28 May 2012 |
| Date of Last Submission: | 8 June 2012 |
| Delivered at: | Adelaide |
| Delivered on: | 31 October 2012 |
REPRESENTATION
| Counsel for the Applicant: | Mr Colgrave |
| Solicitors for the Applicant: | Bourne Lawyers |
| Counsel for the Respondent: | Mr Manuel |
| Solicitors for the Respondent: | Fox Tucker Lawyers |
ORDERS
That in respect of the contravention referred to in the orders of the Court of 4 April 2012:
(a)Pursuant to s.545(2)(b) of the Fair Work Act 2009 that there be an order awarding compensation for the loss that the applicant has suffered because of the contravention in the amount of TWENTY THOUSAND DOLLARS ($20,000.00);
(b)Pursuant to s.546 of the Fair Work Act 2009 there be a pecuniary penalty imposed on the respondent in the amount of FIFTEEN THOUSAND DOLLARS ($15,000.00); and
(c)Pursuant to s.546(3) of the Fair Work Act 2009 the pecuniary penalty referred to in (b) hereof be paid:
(i)As to the sum of SEVEN THOUSAND FIVE HUNDRED DOLLARS ($7,500.00) to the Commonwealth; and
(ii)As to the sum of SEVEN THOUSAND FIVE HUNDRED DOLLARS ($7,500.00) to the applicant.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
ADG 44 of 2011
| SANDY MOORE |
Applicant
And
| SLONDIA NOMINEES PTY LTD |
Respondent
REASONS FOR JUDGMENT
On 4 April 2012 I gave Reasons for being satisfied that the respondent contravened the civil remedy provisions referred to in s.539 of the Fair Work Act 2009 (“the Act”) in the manner specified in the application filed on 24 February 2011.
I found that the respondent employer had taken adverse action against the applicant employee because she sought to exercise a workplace right. The workplace right she was exercising was the bringing of an application in the relevant State Court for monies she said were owing to her under her contract of employment.
The ostensible reason the employer gave for the termination of her employment was a general downturn in its business. I found that the real reason for the termination was that the employee was exercising her workplace right aforesaid.
In dealing with the statutory provisions and in particular the provision relating to the reversal of the onus of proof to be found in s.361 of the Act I considered a number of authorities, including the decision of the majority in the Full Court of the Federal Court of Australia in Barclay & The Board of Bendigo Regional Institute of Technical Education [2011] FCAFC 14. That decision was overruled by the High Court of Australia (see Barclay & The Board of Bendigo Regional Institute of Technical Education [2012] HCA 32). However, my reliance on the decision of the Full Court did not include reliance upon those parts of it in which the High Court identified error. Those errors were related to the facts of that case involving as they did a termination from employment of an officer of a union (the errors being the erroneous distinction between “conscious” and “unconscious” reasons; the insistence that the contravention could only be determined objectively; and the so called “logical consequence” of the applicant’s status as an officer of a union). I should also note that I relied upon the judgment of the dissentient in that case (Lander J) at [31] of my Reasons.
In any event, no issue pertinent to penalty arises from my limited reliance upon that Full Court decision.
The only respondent to the application was the corporate employer. At an early stage of the proceedings an intention to join several officers of the company as respondents who were knowingly concerned in the contravention was flagged (see s.550(2)(c) of the Act) but this was not ultimately pursued.
Sub division (b) of Division 2 of Part 4.1 of Chapter 4 of the Act deals with the orders that can be made if, as here, the Court is satisfied that a person has contravened a civil remedy provision. Section 545(1) of the Act provides as follows:
(1)The Federal Court or the Federal Magistrates Court may make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision.
That is a very broad power.
Section 545(2) of the Act goes on to provide:
(2)Without limiting subsection (1), orders the Federal Court or Federal Magistrates Court may make include the following:
(a)an order granting an injunction, or interim injunction, to prevent, stop or remedy the effects of a contravention;
(b)an order awarding compensation for loss that a person has suffered because of the contravention;
(c)an order for reinstatement of a person.
The applicant seeks an order awarding her compensation for the loss she has suffered because of the contravention pursuant to sub-paragraph (b) of that section.
The applicant also seeks an order pursuant to s.546 of the Act. That section provides:
(1)The Federal Court, the Federal Magistrates Court or an eligible State or Territory court may, on application, order a person to pay a pecuniary penalty that the court considers is appropriate if the court is satisfied that the person has contravened a civil remedy provision.
I am dealing with a corporate contravener so the pecuniary penalty is to be calculated in accordance with s.546(2)(b) of the Act. The pecuniary penalty must not be more than five times the maximum number of penalty units referred to in the relevant item in column four of the table in s.539(2) of the Act.
The maximum number of penalty units for a breach of the general protections provisions, as here, is 60 penalty units. A penalty unit is defined in s.4AA of the Crimes Act 1914 as the sum of $110. Therefore, the maximum pecuniary penalty is $33,000.
The application for loss of earnings is based upon the evidence of the applicant in her affidavit of 11 October 2011 in paragraphs [37] to [43] in particular. The applicant conducted her case before me on the basis that she was employed on a permanent part time basis at the time of her dismissal. She claimed to have been employed on a casual basis, from June 2009 (which is when she started working for the respondent) to April 2010 but underpaid during that period. She says that she continued to be employed on a casual basis between April and July 2010 but at an appropriate rate. From July 2010 until her dismissal on 29 December 2010 she says she was employed on a permanent part time basis (her hourly rate at the time of her dismissal was $22.50 per hour).
Complicating the position was that this evidence was not necessarily consistent with the evidence she gave in the State Industrial Court proceedings (see [59] of my Reasons) at least as far as the evidence related to whether she was employed on a casual or a permanent part time basis at various times in her employment by the respondent.
She was working 20 hours per week at the time of her dismissal so her immediate loss was therefore 20 x $22.50 or $450 per week. She secured 4-6 hours employment per week at another shoe repair outlet in July 2011 for which she was paid $22 per hour. If I average the hours at five hours per week that reduced her loss by $110 per week or to $340 per week. Her claim for compensation therefore was in two parts:
a)$450 per week for the first 26 weeks of 2011 or $11,700;
b)$340 per week thereafter. As at the date I received her written submission on penalty (4 June 2012) this was still her position, so her loss to that point of the 2012 financial year is 48 weeks x $340 or $16,320.
The total loss claimed to that point, then, was $28,020 which the applicant has rounded off at $25,000 on account of what the written submission referred to as “discounting factors and normal vicissitudes of life”.
There was no claim prospectively from that point for compensation.
The application also includes a claim for superannuation of $2,250 making a total claim for compensation of $27,250. The claim for superannuation is at a rate of 9% which in itself is appropriate but I think the superannuation component of the claim should be ignored because of the doubts that are associated with whether the applicant was employed on a permanent part time basis or a casual basis at the time of her dismissal. The inconsistent account of her employment status given in the State Court was not principally related to the period of her dismissal but rather relating to the earlier periods over which she was underpaid. However the evidence of the officers of the respondent made it clear that they were uncertain as to whether she was permanent part time or casual. The issue is attended with some uncertainty. I discuss the issue in more detail at [24 a)] hereunder.
Section 547 of the Act provides as follows:
(1)This section applies to an order (other than a pecuniary penalty order) under this Division in relation to an amount that a person was required to pay to, or on behalf of, another person under this Act or a fair work instrument.
(2)In making the order the court must, on application, include an amount of interest in the sum ordered, unless good cause is shown to the contrary.
(3)Without limiting subsection (2), in determining the amount of interest, the court must take into account the period between the day the relevant cause of action arose and the day the order is made.
I did not understand there to be a claim for interest. The written submission misidentifies the claim for superannuation as a claim for interest. I do not propose to allow an interest component.
The applicant contended in her affidavit that she had, following her dismissal, enrolled in the Workskil Job Network and had actively sought employment but her ability to find it was limited on account of the fact that she had no training or skills or qualifications in that industry or any other.
The applicant has limited skills. The earnings were not large but she was significantly reliant on them.
The respondent makes the following submissions in relation to the claim for compensation:
a)That the applicant was employed on a casual basis and her hourly rate took that into account. Her claim was that she was permanent part time from July 2010 albeit being paid at the casual rate of $22.50 which she had begun to receive in April 2010. The respondent’s witness Mr Davies (the applicant’s immediate manager) said that the applicant had asked to become permanent part time in July 2010 but such arrangement was never followed through. The witness Mr Zaharijevski simply assumed the applicant was employed on a casual basis throughout. The managing director of the respondent, Mr Mercanti, seems to have made that same assumption. So there is some doubt about her status. As far as the calculation to an entitlement of compensation is concerned, the only relevance (apart from superannuation) of this issue is the respondent’s contention that the applicant being a casual employee, no notice of termination was required and it says that it is likely that she would have been dismissed on the basis of the downturn in the respondent’s general productivity by January 2011 or at the latest April 2011.
b)The respondent says that given the downturn in business the applicant was likely to have worked less than 20 hours per week after 2011.
c)The applicant’s other employment at one and then two other shoe repair businesses restricted her ability to accept work offered by the respondent in any event. But the applicant had balanced her employment with Beaudells Shoe Repairs with this employment prior to her dismissal and the need to “juggle” hours with the Classic Shoe Repair store following her dismissal only arose because of her dismissal; she mitigated her loss. That cannot be a circumstance that should tell against her in an assessment of her entitlement to compensation.
d)Income tax should be deducted from the amount claimed. For the 2012 financial year tax payable on earnings of $16,320 (assuming that they did not form part of earnings that exceeded $36,000) would have amounted to $1,548. With respect to the lost earnings in the previous financial year (see paragraph [16 a)] hereof), again on the same assumption as to total earnings for the year, the tax payable would have been $855.
e)A discount should be applied recognising the “normal vicissitudes of life”.
f)The applicant’s evidence in relation to the topic of the quantum of her compensation was vague and unsupported by documentation and speculative.
I propose to discount the claim by the amount of tax that would have been payable on the earnings. My saying so in these Reasons should mean that no issue will arise as to payment of tax on the compensation ordered. I also think the limited number of hours worked and the broad circumstances in which the respondent’s business was being conducted in the 2012 calendar year require some discounting of the compensation sought.
I am not able to find that the applicant would have been “let go” in any event in the early part of 2012, even if I were to consider her to be a casual at that time. The evidence as to the financial health of the respondent was discussed by me in my Reasons for finding the contravention proven. It is not conclusive (in the sense of enabling me to be satisfied on the balance of probabilities) that the respondent’s trading in this State was in real difficulty. No other employees were dismissed.
Balancing these matters, I propose to allow compensation in the amount of $20,000.
I turn to the question of pecuniary penalty.
In matters of this kind the Court is guided by the list of sentencing considerations described by Mowbray FM in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7. The list of matters was specifically adopted by Tracey J in Kelly v Fitzpatrick [2007] FCA 1080. The list is non-exhaustive and it refers to matters which are to be taken into account not simply on the question of the quantum of the penalty but as to whether there should be a penalty at all. The list is as follows:
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 one course of conduct;
The size of the business enterprise involved;
Whether 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 for investigation and enforcement of employee entitlements; and
The need for specific and general deterrence.
Lander J said the following things in Ponzio v B and P Caelli Constructions Pty Ltd & Anors [2007] FCAFC 65 at [93]:
There are three purposes at least for imposing a penalty: punishment; deterrence; and rehabilitation. The punishment must be appropriate 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 deterrent to others that might be likely to offend: Yardley v Betts (1979) 22 SASR 108. The penalty should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like minded persons or organisations. If the penalty does not demonstrate an appropriate assessment of the seriousness of the offending, the penalty will not operate to deter others from contravening the section. However, the penalty should not be such as to crush the person upon whom the penalty is imposed or used to make that person a scapegoat. In some cases general deterrents 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.
The statutory discretion is very broad. As Gyles J says in Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550 at [11]:
Turning, then, to the headings of relevant matters, I should say this – although it is convenient to refer to these headings, the discretion as to the imposition of a penalty is quite unrestrained by the statute. There are no mandatory matters to be taken into account. I would not agree to substituting a judge’s checklist for the unrestrained statutory discretion.
One of the matters put on behalf of the respondent in respect of penalty was that the finding of contravention arose on account of the application of the statutory reversal of the onus of proof. But that is the case in every application of this nature. I heard extensive evidence on the part of the officers of the respondent as to why they say the applicant ceased to be employed by them but I rejected the reasons they adduced and found the real reason to have been the exercise of the workplace right in pursuing underpayment of wages.
There is no evidence of similar conduct by the respondent. Indeed, one of the telling features of the evidence was that this employee had been singled out in terms of no further hours being offered to her.
The adverse action taken was deliberate and upon the initiative of the highest level of management of the respondent.
No contrition has been exhibited.
There is a need for both specific and general deterrence. The respondent is a nation wide employer and many of its employees are employed on a part time or casual basis. If the employer were minded to treat such persons who pursued recovery of underpayment of wages in the same way as they treated this employee there is considerable scope and opportunity for mischief. I am not able to say whether they will be so minded in the future but the idea of general deterrence is to impose a penalty which makes such future action less likely.
The applicant’s earnings were modest but concomitantly the loss of such earnings had a very significant impact upon her. The extent to which the financial position of the respondent is relevant on the question of penalty is difficult to discern as previously noted. No other employees of this Australia wide enterprise were shed as a result of the claimed deterioration in earnings of the company at the relevant time.
In December 2010 the gross earnings of the enterprise was just under $6million.
The written submission of the respondent on penalty included a contention that my findings were consistent with an acceptance that the employees of the respondent had given evidence as to their honest belief of the reasons for the dismissal of the applicant but I do not think that submission can be sustained. I did not posit an “unconscious” reason in opposition to an honestly held “conscious” reason as the explanation for the dismissal. While it is the case that there is no discussion of the issue of the credit of any of the witnesses in my Reasons which is unrelated to my discussion of what was the real reason for the dismissal of the applicant, my primary finding – that the real reason for dismissal was the applicant’s pursuit of recovery of underpayment of wages – necessarily entailed my rejection of the account of the reason for dismissal given by the employer witnesses. Certainly I came to the conclusion that Mr Mercanti had decided to effect the withdrawal of employment to the applicant once the claim in the Industrial Court had been received. With Mr Mercanti having made that decision he was then assisted in implementing it by Mr Zaharijevski and Mr Davies.
Moreover, I made a specific finding that there was not more than one reason for the applicant’s dismissal and that s.360 of the Act had no scope for operation in the circumstances of this case.
Balancing all of the competing considerations I think an appropriate pecuniary penalty is a mid range one, in this case an amount of $15,000.
Section 546(3) of the Act says that the penalty or a part of it may be ordered to be paid to one or more of the following entities:
a)the Commonwealth; or
b)a particular organisation; or
c)a particular person.
I accept the submission made on behalf of the respondent that the exercise involved in the imposition of penalty and the decision as to whom the penalty should be paid should not be proxy for an underlying intention to award costs. Costs are the subject of specific statutory guidance (see s.570 of the Act).
The decision to impose a penalty and the decision as to the amount of penalty were guided significantly by the need to provide general and specific deterrence, on the one hand, and the significant impact of the conduct upon this individual employee on the other hand. I consider that an appropriate exercise of the discretion as to whom the penalty should be paid is to order one half to be paid to the Commonwealth and the other half to the applicant.
I order accordingly.
I certify that the preceding forty-five (45) paragraphs are a true copy of the reasons for judgment of Lindsay FM
Date: 31 October 2012