Munckton v Laser Bean Pty Ltd

[2016] FCCA 872

FEDERAL CIRCUIT COURT OF AUSTRALIA

MUNCKTON v LASER BEAN PTY LTD
T/A MUZZ BUZZ (No.2) [2016] FCCA 872

Catchwords:
INDUSTRIAL LAW – Penalty hearing – contravention of Fair Work Act – failure to comply with order of Fair Work Commission – appropriate penalty.

Legislation:
Fair Work Act 2009 (Cth), ss.12, 392, 394, 405, 539, 546

Evidence Act 1995 (Cth), s.191

Crimes Act 1914 (Cth), s.4AA

Cases cited:
Heather Munckton v Laser Bean Proprietary Limited (2015) FWC 2874
Heather Munckton v Laser Bean Proprietary Limited trading as Muzz Buzz (2015) FWC 4105
Laser Bean Proprietary Limited trading as Muzz Buzz v Heather Munckton (2015) FWCFB 8396
Munckton v Laser Bean Pty Ltd T/A Muzz Buzz [2016] FCCA 410
TWU v Pedro Kayias Pty Ltd [2015] FCCA 3466
Fair Work Ombudsman v Wedderburn Petroleum Pty Ltd [2015] FCCA 2011
Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7
Kelly v Fitzpatrick (2007) 166 IR 14
Australian Ophthalmic Supplies Pty Ltd v Mc Alary-Smith [2008] FCAFC 8
Gibbs v Mayor, Councillors and Citizens of City of Altona (1992) 37 FCR 216 McIver v Healey [2008] FCA 425
Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70
FWO v Wedderburn Petroleum Pty Ltd [2014] FCCA 2645
Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412
Ponzio v B & P Caelli Constructions Pty Ltd [2006] FCA 1221
Meadley v Sort Worx Pty Ltd [2013] FCA 1012
Mayberry v Kijani Investments Pty Ltd [2011] FCA 1238
Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357; (2008) 177 IR 243; [2008] FCAFC 170
Construction Forestry Mining & Energy Union v Coal & Allied Operations Pty Ltd (No.2) (1999) 94 IR 231
Sayed v Construction Forestry Mining and Energy Union [2016] FCAFC 4

Applicant: HEATHER MUNCKTON

Respondent: LASER BEAN PTY LTD TRADING AS MUZZ BUZZ

File Number: MLG 1913 of 2015

Judgment of: Judge O'Sullivan

Hearing date: 15 April 2016

Date of Last Submission: 15 April 2016

Delivered at: Melbourne

Delivered on: 15 April 2016

REPRESENTATION

The Applicant: In person

The Respondent: In person

ORDERS

1. Pursuant to s.546(1) of the Fair Work Act 2009 (Cth) (“FW Act”) the respondent to pay $20,000 by way of a pecuniary penalty in respect of the contravention of s.405 of the FW Act declared on 18 February 2016.

2. Pursuant to s.546(3)(c) of the FW Act the penalty referred to in order (2) above be paid to the applicant within 14 days of this order.

FEDERAL CIRCUIT COURT
OF AUSTRALIA

AT MELBOURNE

MLG 763 of 2015

HEATHER MUNCKTON

Applicant

And

LASER BEAN PTY LTD TRADING AS MUZZ BUZZ

Respondent

REASONS FOR JUDGMENT

(Revised from transcript)

Introduction

1. Before the Court are proceedings commenced by Heather Munckton (“the applicant”) under the Fair Work Act 2009 (“FW Act”). The respondent is Laser Bean Pty Ltd trading as Muzz Buzz (“the respondent”).

2. The applicant is aged 22 years, lives in Clyde North, and worked as a Store Manager at the respondent’s outlet (a coffee drive-through shop) in Rowville.

3. The applicant worked for the respondent from 2 September 2013 till 7 December 2014. Following the termination of her employment, the applicant brought proceedings in the Fair Work Commission (“FWC”) by way of an application for relief from unfair dismissal pursuant to s.394 of the Fair Work Act2009 (“FW Act”). Subsequently there was a hearing before Commissioner Bissett of the FWC on 23 April 2015.

4. On 30 April 2015, in a decision published as Heather Munckton v Laser Bean Proprietary Limited (2015) FWC 2874, Commissioner Bissett concluded that “the dismissal [of the applicant] was harsh, unjust and unreasonable”

5. On 22 June 2015 in a further decision of the FWC published as Heather Munckton v Laser Bean Proprietary Limited trading as Muzz Buzz (2015) FWC 4105 (“the FWC decision”) the respondent was ordered to pay the applicant the amount of $15,456.96 (plus 9.5% superannuation paid into the applicant’s superannuation fund) in compensation for the unfair dismissal within 21 days (‘the FWC order”).

6. The respondent filed an application to appeal the FWC order and for it to be stayed.  The application for a stay came before Senior Deputy President Hamberger of the FWC on 15 July 2015.  The Senior Deputy President refused to issue a stay of the FWC order.

7. Subsequently the Full Bench of the FWC heard and determined the appeal against the FWC order brought by the respondent.  For reasons which were published on 8 December 2015 as Laser Bean Proprietary Limited trading as Muzz Buzz v Heather Munckton (2015) FWCFB 8396, the Full Bench refused permission to appeal from the FWC order.

8. These proceedings had a first court date of 28 October 2015 in the Court’s small claims list.  On 19 October 2015, a response was filed on behalf of the then-named respondent joining issue with the allegations by the applicant.  The response was filed by a director of the respondent, Mr Ciprian Stefan Stinean.

9. When the matter came before the Court for the first court date on 28 October 2015, Mr Stinean (as a director of the respondent) made an oral application for an adjournment.  As the respondent’s appeal from the FWC order had yet to be heard and determined, these proceedings were adjourned and the following orders were made:

   “1.    The name of the respondent to the application filed 19 August 2015 be changed to Laser Bean Pty Ltd T/A Muzz Buzz.

   2.  The proceedings be transferred from the small claims list to the Fair Work Division of the Federal Circuit Court of Australia.

   3.  The respondent’s application for an adjournment be granted and the proceeding for enforcement of an order of the Fair Work Commission and any penalty for breach be adjourned to 18 February 2016 with an estimated hearing time of 1 day at the Federal Circuit Court of Australia at Melbourne at 10:00 am.

   4.  The applicant file and serve any further material to be relied on 14 days prior to the hearing.

   5.  The respondent file and serve any further material to be relied on 7 days prior to the hearing.”

10. The matter returned to Court on 18 February 2016.  The applicant appeared in person and Mr Stinean appeared for the respondent.  Since the first Court date the Full Bench of the FWC had refused the respondent’s appeal from the FWC Order and both the applicant and the respondent had filed further affidavit material.  The applicant filed a further affidavit on 1 February, 2016 and Mr Stinean, for the respondent, a further affidavit filed on 8 February 2016.

11. On 18 February 2016 and for the reasons set out in Munckton v Laser Bean Pty Ltd T/A Muzz Buzz [2016] FCCA 410 (“the principal judgment”) the Court made the following orders:

    “THE COURT DECLARES THAT:

    1. The respondent Laser Bean Pty Ltd contravened s.405 of the Fair Work Act 2009 (“FW Act”) by failing to comply with an Order of the Fair Work Commission dated 22 June 2015.

    THE COURT ORDERS THAT:

    2. Pursuant to s.545(2)(b) of the FW Act the respondent pay the applicant Heather Munckton an amount of $15,456.96 plus 9.5% superannuation as required by law within 21 days of this Order.

    3.  The matter be fixed for a penalty hearing on 15 April 2016.

    4.  The applicant file and serve any further material and an outline of submissions 21 days prior to the adjourned date.

    5.  The respondent file and serve any further material and an outline of submissions 14 days prior to the adjourned date.”

Material relied on

1. The matter returned to Court today pursuant to the above mentioned orders.  Each of the parties have identified the material that they relied on.  In the applicant’s case that was her application Form 5, the affidavits filed on 19 August 2015 and 1 February 2016, and the most recent affidavit filed on 24 March 2016.  For the respondent the Court was told it relied on the affidavits filed on 8 February 2016 and 1 April 2016.

Approach to penalty proceedings

1. The orders of the FWC were made under Part 3-2 of the FW Act which deals with unfair dismissal. Section 405 of the FW Act, falling within Part 3-2 of the FW Act provides that a person to whom an order under that part applies must not contravene a term of that order. Section 539 of the FW Act provides that a contravention (amongst other things) of s.405 is a civil remedy provision.

2. Section 12 of the FW Act provides that “penalty unit” has the same meaning as the Crimes Act 1914 (Cth). At the time the contravention took place, s.4AA of that Act defined “penalty unit” to be $170.[1]  Accordingly, the maximum penalty the Court can impose on the respondent is $51,000.

   [1] Crimes Legislation Amendment (Serious Drugs Identity Crime and Other Measures) Act 2012

3. The factors which may be taken into account in the assessment of penalty are well established. The factors relevant to the imposition of a penalty were summarised by Mowbray FM in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 [26]-[59], as follows:

   “a.the nature and extent of the conduct which led to the breaches;

   b.the circumstances in which that conduct took place;

   c.the nature and extent of any loss or damage sustained as a result of the breaches;

   d.whether there had been similar previous conduct by the respondent;

   e.whether the breaches were properly distinct or arose out of the one course of conduct;

   f.the size of the business enterprise involved;

   g.whether or not the breaches were deliberate;

   h.whether senior management was involved in the breaches;

   i.whether the party committing the breach had exhibited contrition;

   j.whether the party committing the breach had taken corrective action;

   k.whether the party committing the breach had cooperated with the enforcement authorities;

   l.the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and

   m.the need for specific and general deterrence.”

4. This summary was adopted by Tracey J in Kelly v Fitzpatrick (2007) 166 IR 14. In Australian Ophthalmic Supplies Pty Ltd v Mc Alary-Smith [2008] FCAFC 8 Buchanan J after referring to the decision in Kelly v Fitzpatrick (supra) said at [9]:

   “9.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…”

5. In Fair Work Ombudsman v Roselands Fruit Market Pty Ltd & Anor [2010] FMCA 599 Driver FM summarised the approach the Court should follow in these sorts of proceedings at [22] to [26] as follows:

   “22.The first step for the Court is to identify the separate contraventions involved. Each breach of each separate obligation found in the AFPCS, the NAPSA is a separate contravention of a term of an applicable provision for the purposes of s.719.[2]

   [2]     Gibbs v Mayor, Councillors and Citizens of City of Altona (1992) 37 FCR 216 at 223; McIver v Healey [2008] FCA 425 at [16] (unreported, Federal Court of Australia, 7 April 2008, Marshall J).

   23.However, s.719(2) provides for treating multiple breaches, involved in a course of conduct, as a single breach.

   24.Secondly, to the extent that two or more contraventions have common elements, this should be taken into account in considering what is an appropriate penalty in all the circumstances for each contravention. The respondents should not be penalised more than once for the same conduct. The penalties imposed by the Court should be an appropriate response to what the respondent did.[3]

   
   

   This task is distinct from and in addition to the final application of the “totality principle”.[4]

   25.Thirdly, the Court will then consider an appropriate penalty to impose in respect of each course of conduct, having regard to all of the circumstances of the case.

   26.Fourthly and finally, having fixed an appropriate penalty for each group of contraventions or course of conduct, the Court should take a final look at the aggregate penalty, to determine whether it is an appropriate response to the conduct which led to the breaches.[5]

   
   

   The Court should apply an “instinctive synthesis” in making this assessment.[6] This is what is known as an application of the ‘totality principle’.”

   [3]     Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 at [46] (Graham J) (unreported, Full Court of the Federal Court of Australia, 20 February 2008, Gray, Graham and Buchanan JJ) (Merringtons).

   [4]     Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70 at [41]-[46] (Stone and Buchanan JJ) (unreported, Full Court of the Federal Court of Australia, 7 May 2008, Gyles, Stone and Buchanan JJ) (Mornington Inn).

   [5]     See Kelly v Fitzpatrick (2007) 166 IR 14 at [30] (Tracey J) (Kelly); Merringtons, supra at [23] (Gray J), [71] (Graham J) and [102] (Buchanan J).

   [6]     Merringtons, supra at [27] (Gray J) and [55] and [78] (Graham J).

Contraventions

1. The background to these proceedings is set out in the principal judgment at paragraphs 5-12. For the reasons set out at paragraphs 16-28 of the principal judgment the Court made the declarations and orders referred to in paragraph 11 above. Accordingly, the respondent has been found to have contravened s.405 of the FW Act.

2. In Meadly v Sort Worx Pty Ltd [2013] FCA 1012 and Mayberry v Kijani Investments Pty Ltd [2011] FCA 1238 the Federal Court considered what penalty should be imposed for a similar contravention to that in this case.

Consideration

1. In this case the relevant considerations include:

   a)the circumstances in which the contravention took place;

   b)the nature and extent of any loss or damage;

   c)the size of the respondent’s business;

   d)the deliberateness of the breach;

   e)the respondent’s contrition, corrective action and cooperation with the enforcement authorities;

   f)general and specific deterrence.

Circumstances in which the conduct took place and nature and extent of the conduct

1. The applicant in her affidavit filed 23 March 2016 deposed:

   “1.    I worked for Laser Bean Pty Ltd T/A Muzz Buzz from September 2013 until my employment was unfairly terminated on 3 December 2014, which the termination took effect on 7 December 2014.

   2.  On the 22^nd June 2015, the respondent was ordered by Commissioner Bissett in the Fair Work Commission tribunal to pay myself a sum of money as part of an application for relief from Unfair Dismissal according to the rules of s.392 of the Fair Work Act 2009. The order was to be paid by 13^th July 2015. The respondent did NOT PAY the money by this time.

   3.  On the 15^th July 2015, a stay hearing was conducted at Fair Work Commission in which Senior Deputy President Hamberger DENIED a stay order meaning the order still had effect and the money had to be paid immediately as it was already OVERDUE. The money was still NOT PAID after the stay order was denied.

   4.  In November 2015, the appeal hearing was conducted. In December 2015, the verdict of the appeal, which states that the appeal was unsuccessful and that the respondent still needed to pay the due amount, which was 5 months overdue at that point of time. The respondent did NOT PAY after this date.

   5   This matter was then listed and heard by Judge O’Sullivan in the Federal Circuit Court of Australia on 18^th February 2016. The court declared that Mr Stinean, the director of LaserBean Pty ltd contravened s.405 of the Fairwork Act 2009 for failing to comply with any Order of the Fairwork Commission. The court ordered the pursuant to pay me the requested amount within 21 days, due on 10^th March 2016. The respondent has NOT complied with these rules and requirements yet once again, and has NOT PAID the requested amount.

   6.  Mr Ciprian Stefan Stinean has not till date paid the requested amount that the Fairwork Commission has ordered that was due on the 13^th July 2015 (>8 months overdue now.)”

2. In the affidavit filed 1 April 2016 Mr Stinean deposed:

   “1.    This respondent traded while losing money based on capital injections from those supporting it for almost all of its existence.

   2.  An attempt at economic resolution was pursued with Muzz Buzz Franchising Pty Ltd which failed and culminated in the closure of this respondent’s 2 stores, among 4 which closed on 4 September, 2015. All had failed.”

3. Whilst Mr Stinean’s affidavit annexed financial documents that purported to evidence the respondent’s financial circumstances, I note those documents on their face are not audited and place little weight on them.  The respondent’s conduct, and the circumstances in which it occurred warrants consideration of the need for a significant penalty.    Since the proceedings before the Full Bench of the FWC the respondent has failed to abide by the decision of the industrial umpire and such conduct must be the subject of a meaningful sanction.

Nature and extent of any loss or damage

1. The applicant’s evidence relevant to this matter are set out above.  The respondent did not make any submissions relevant to this consideration.

2. In her evidence before the Court the applicant indicated that notwithstanding the orders made in the principal judgment the respondent had still not complied with the FWC order.  The loss sustained by the applicant by reason of the respondent’s contravention should be taken into account and it will be.  The compensation due to the applicant by reason of the FWC order represents a significant amount of money for someone in her position. Given the above and that this loss is continuing is a significant aggravating factor

Similar previous conduct

1. On the material before the Court this is not a relevant consideration.

The size of the respondent’s business

1. On any description the respondent was a small business.  However, compliance with order of the FWC and decisions of the industrial umpire (let alone the Court) is not dependent on the size of the business concerned.[7]

   [7] See Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412 at [27]

The deliberateness of the breach

1. The applicant’s evidence on this issue is set out above.  The respondent made no submissions on this consideration.

2. In this case on what is before the Court the contravention by the respondent can be considered to be deliberate and this tells in favour of a significant penalty.

The respondent’s contrition, corrective action and cooperation with the enforcement authorities

1. The applicant’s position on this issue is set out above.  The respondent made no submissions on this consideration.

2. On the material before the Court there is no basis for considering a discount for these factors.

Ensuring compliance with minimum standards

1. Neither party made any submissions relevant to this consideration.  On the material before the Court and certainly since the Full Bench of the FWC rejected the respondent’s appeal from FWC order the respondent’s conduct demonstrates a deliberate disregard of its legal obligations and compliance with minimum standards.  This is relevant to the level of any penalty.

General Deterrence

1. Neither party made any submissions relevant to this consideration.  In TWU v Pedro Kayias Pty Ltd [2015] FCCA 3466 Judge Brown said:

   “68   In my view, it is also important that this court emphasises the importance of compliance with orders of the Fair Work Commission in order to ensure that employees receive their proper entitlements, particularly in the context of unfair dismissal decisions of the Commission.

   69     In this context, it is important to the administration of the industrial relations system as a whole that both employers and employees are aware that this court will enforce determinations of the Commission and that those who disobey the Commission’s directives are liable to be sanctioned.

   70     Otherwise, there is the potential for the industrial relations system, which the Commission oversees, to fall into disrepute. This would not be in the public interest. As the High Court pointed out in Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate:

   “The purpose of a civil penalty ... is primarily if not wholly protective in promoting the public interest in compliance.”

1. This is a matter where there is a need for a measure of general deterrence to ensure it is understood the decisions of the industrial umpire must be complied with.

Specific Deterrence

1. Neither party made any submissions relevant to this consideration.  It is relevant under this consideration to have regard to the individual respondent’s circumstances, and given the attitude of the respondent manifested by its director’s attitude before the Court, there is the need for a measure of specific deterrence.

Consideration of appropriate penalty

1. As Katzmann J said in Mayberry v Kijani Investments Pty Ltd as Trustee for the Dawe Investments Trust Subway Wallsend trading as Subway [2011] FCA 1238 at [20]:

   “The Court may make a pecuniary penalty order in addition to any other order.  This is a proper case to make such an order.  Employers, no less than employees, are expected to comply with the orders of Fair Work Australia. Failure to do so is liable to bring the system of regulation of industrial disputes into disrepute.  [The employer’s] conduct signifies a refusal to accept the umpire’s decision.  It should not go unpunished.”

2. In light of the matters referred to above and on the material before the Court the factors that are most relevant to the determination of an appropriate penalty in this matter are:

   a)the respondent’s action and demonstration of a deliberate disregard of workplace laws and the institutions which enforce those laws;

   b)the respondent’s history of non-compliance with its statutory obligations and previous orders;

   c)the need for general and specific deterrence in this matter to protect the important role of and the public’s confidence in the FWC; and

   d)the need for specific deterrence to discourage those associated with the respondent from engaging in similar conduct in the future.

3. Therefore, as the Court:

   a)is directed by the relevant authorities to consider what is appropriate in all the circumstances of this case;[8] and

   [8] See Construction Forestry Mining & Energy Union v Coal & Allied Operations Pty Ltd (No.2) (1999) 94 IR 231

   b)in its discretion in relation to penalty is not fettered by a checklist of mandatory criteria;[9] and

   [9] See Australian Ophthalmic Supplies Pty Limited v McAlary-Smith [2008] FCAFC 8

   c)is satisfied the penalty for the contravening conduct is appropriate.

   I make the orders as set out at the beginning of these reasons and order that the penalty of $20,000 be payable to the applicant.[10]

   [10] See Sayed v Construction Forestry Mining and Energy Union [2016] FCAFC 4 at [89] to [116]

I certify that the preceding thirty eight (38) paragraphs are a true copy of the reasons for judgment of Judge O'Sullivan

Associate:

Date:  15 April 2016