Nabi v New ERA Balustrading and Anor (No.2)

[2020] FCCA 2246

FEDERAL CIRCUIT COURT OF AUSTRALIA

NABI v NEW ERA BALUSTRADING & ANOR (No.2) [2020] FCCA 2246

Catchwords:
INDUSTRIAL LAW – Civil penalty proceedings pursuant to s 546 (1) of the Fair Work Act 2009 (Cth) – exercise of workplace right – underpayments – agreed penalty – penalty imposed.

Legislation:

Fair Work Act 2009 (Cth), ss.45, 323, 546, 570

Federal Circuit Court Rules 2001 (Cth), r.13.03

Cases cited:

Fair Work Ombudsman v NoBrace Centre Pty Ltd (In Liq) (ACN 121 556 447)

(No 2) [2019] FCCA 2979

Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar

[2007] FMCA 7

Melbourne Stadiums Ltd v Sautner (2015) 317 ALR 665

Ryan v Primesafe (2015) 323 ALR 107

Applicant: MD SAIFUL ISLAM NABI

First Respondent: NEW ERA BALUSTRADING

Second Respondent: ANDREW GEORGE TORNYA

File Number: SYG 1911 of 2019

Judgment of: Judge Humphreys

Hearing date: 13 August 2020

Date of Last Submission: 13 August 2020

Delivered at: Parramatta

Delivered on: 15 September 2020

REPRESENTATION

Solicitors for the Applicant: Mr Siddque

Solicitors for the First Respondent: No appearance

Second Respondent: No appearance

ORDERS

1. Pursuant to s 546 of the Fair Work Act 2009 (Cth), a penalty of $20,000.00 is imposed on the first respondent, to be paid to the applicant.

2. Pursuant to s 546 of the Fair Work Act 2009 (Cth), a penalty of $10,000.00 is imposed on the second respondent, to be paid to the applicant.

3. The first and second respondent’s, jointly and severally pay the applicant, a limited costs order of $770.00.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT PARRAMATTA

SYG 1911 of 2019

MD SAIFUL ISLAM NABI

Applicant

And

NEW ERA BALUSTRADING

First Respondent

ANDREW GEORGE TORNYA

Second Respondent

REASONS FOR JUDGMENT

Introduction

1. This judgment concerns the determination of appropriate civil penalties, pursuant to s 546 (1) of the Fair Work Act 2009 (Cth) (“the Act”), following an adverse liability determination against the first and second respondents (see Nabi v New Era Balustrading and Anor (ACN 604 390 329) & Anor [2020] FCCA 1939).

2. In that judgment, the following orders were made:

   1) The first respondent contravened s 323(1) of the Act, by failing to pay the applicant amounts payable to him in respect of performance of work, during a period of 25 October 2018 to 1 March 2019, in the amount of $30,780.00.

   2) The first respondent contravened s 45 of the Act, by failing to pay the applicant for the period 26 October 2018 to 12 February 2019:

   a.A minimum/hourly wage, contrary to cl 2.4.1, as determined by the Manufacturing and Associated Industries and Occupations Award 2010 (“the Award”);

   b.Superannuation contributions to a superannuation fund for the benefit of the applicant, contrary to
   cl 35.2 of the Award, in the amount of $2,924.10.

   3)   Interest on the above amounts.

   4)   That the first and second respondents are to pay the above amounts within 28 days of the date of these orders.

3. Having made those orders, it is now appropriate to consider what civil penalties should be imposed on the first and second respondents.

4. The hearing was conducted via telephone. The applicant appeared before the Court represented by his solicitor. Neither the first respondent nor the second respondent, Mr Andrew Tornya, appeared.

5. Written submissions were received from the applicant. No written submissions were received from either respondents. In the circumstances, pursuant to r 13.03C (1)(e) of the Federal Circuit Court Rules 2001 (Cth) (“the Rules”), the Court determined to proceed with the penalty hearing.

6. The solicitor for the applicant relied upon Counsel’s written submissions and did not seek to make any supplementary oral submissions.

The amount of civil penalty to be imposed

1. The Court has a broad discretion as to penalty. Bromwich J in Fair Work Ombudsman v NSH North Pty Ltd t/as New Shanghai Charlestown [2017] FCA 1301 at [36], summarised how the discretion is to be approached as follows:

   1)   Identify the separate contraventions, with each breach of each obligation being a separate contravention and each breach of a term of the Award being a separate contravention.

   2)   Consider whether each separate contravention should be dealt with independently or with some degree of aggravation for those contraventions arising out of the course of conduct…

   3)   Consider whether there should be a further adjustment to ensure that, to the extent of any overlap between groups of separate aggregated contraventions, there is no double penalty imposed, and that the penalty is an appropriate response to what each respondent did.

   4)   Consider the appropriate penalty in respect of each final individual group of contraventions, taken in isolation.

   5)   Consider the overall penalties arrived at, including by reference to those which may be proposed by the FWO and what is proposed by the respondents, and apply the totality principle, to ensure that the penalties for each respondent are appropriate and proportionate to the conduct viewed as a whole, making such adjustments as are necessary.

2. The Court will now consider each of those five steps.

Step one

1. The following are the contraventions identified:

   1) A contravention of s 323(1) of the Act, by failing to pay the applicant an amount of  $30,780.00 due to him, for the performance of work during a period 25 October 2018 to 1 March 2019.

   2) A contravention s 45 of the Act, in failing to pay the applicant for the period 26 October 2018 to 12 February 2019:

   a.Minimum/hourly wage contrary to cl 2.4.1 as determined by the Award; and

   b.Superannuation contributions to a superannuation fund, for the benefit of the applicant contrary to
   cl 35.2 of the Award, in the amount of $2,924.10.

Step two and three

1. As at the time of the contraventions, a maximum penalty that can be imposed on a corporation is $66,800.00 per contravention. The maximum penalty that can be imposed on an individual is $13,320.00 per contravention. As there were three breaches for both the first and second respondents, the maximum penalties payable are multiplied by three, being $200,400.00 for the first respondent and $39,960.00 for the second respondent.

2. The Court is satisfied that each of the three contraventions arises from a single course of conduct and should be treated as such, for the assessment of penalty.

Step four

1. The purpose of a civil penalty is primarily, if not wholly, to promote the public interest in compliance with the laws that have been contravened and does not engage principles of retribution or rehabilitation (see Fair Work Ombudsman v NoBrace Centre Pty Ltd (In Liq) (ACN 121 556 447) (No 2) [2019] FCCA 2979 (“NoBrace”), per Kelly J at [65]. As these principles of retribution or rehabilitation are not involved in the determination of a civil penalty, this intensifies the focus of a civil penalty determination upon issues of specific and general deterrence (see NoBrace at [66]).

2. In Mason v Harrington Corporation Pty Ltd t/as Pangaea Restaurant & Bar [2007] FMCA 7, Mowbray Fm sets out, what is a now well settled set of factors, relevant in assessing a pecuniary penalty. They are as follows:

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

   b.   the circumstances in which the conduct took place

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

   d.   whether there has been similar previous conduct by the respondent

   e.    whether the breaches were properly distinct or arose out of 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 enforcement authorities

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

   m. the need for specific and general deterrence

3. In relation to the nature and extent of the conduct which led to the breaches, it was submitted the conduct was deliberate and this increases the seriousness of the breach. The fact that there was some dispute between the respondent’s and the applicant over hours worked, does not provide an excuse for the conduct. Further, the conduct was sought to be concealed by the provision of payslips, although no money was in fact paid.

4. In relation to the circumstances in which the conduct took place, the applicant was an employee of a small company controlled by the second respondent. The applicant was dependent upon the respondents for the payment of proper entitlements and did not have easy access to either the Award and or advice, in relation to what he was entitled to.

5. The nature and extent of the loss or damage as a result of the contraventions, has in resulted in economic loss that the Court has assessed at $30,780.00, in relation to wages and $2,924.10 for superannuation. This is a considerable amount of money for an individual and a small company employing a limited number of staff.

6. In relation to whether there had been similar previous conduct by the respondents. The Court is unaware of any previous similar conduct by the respondents and they are entitled to be treated accordingly.

7. The Court has been advised that the business enterprise involved was a small company, involving a limited number of staff. The second respondent is the sole Director and the effective manager of the first respondent and accordingly, is the Senior Manager of the enterprise.

8. The Court is not satisfied there has been any significant contrition by the respondent’s. While making allegations that the applicant had not worked for hours claimed, those allegations were not properly pleaded in the proceedings. The Court does not regard to the fact of alleged impecuniosity, on the part of the second respondent, as an excuse for the manner in which the proceedings were conducted. No evidence has been put to the Court of any reasonable offers of settlement.

9. There is no evidence before the Court that the respondents have taken any corrective action. There is no evidence before the Court that the respondents have cooperated in enforcement action in this Court. Indeed, to a certain extent, the respondents have sought to frustrate it by failing to comply with Court orders, for the filing of documents.

10. The Court is satisfied that there is a need to ensure compliance with minimum standards, by the provision of an effective means for the enforcement of employee entitlements, where they have not been made.

11. There is a need for general deterrence, in relation to the non-payment of entitlements. The Court is satisfied there is a need for specific deterrence to ensure that the respondents understand that the cost of breaching the relevant Award for their employees, is well outweighed by the penalty that this Court will impose.

Step five

1. The last step is to consider the overall penalties and the totality principle. Counsel for the applicant suggested a penalty range of $60,000.00 to $100,000.00 for the first respondent and $12,000.00 to $20,000.00 for the second respondent. The Court is of the view this would be excessive, given it involves a single course of conduct. In those circumstances the penalty should be in the range of a single contravention, that being a maximum of $66,600.00 for the first respondent and $13,320.00 for the second respondent.

2. There is no evidence before the Court that either of the respondents have significant assets. There is some material before the Court of significant ill health, on the part of the second respondent.

3. The Court is of the view that it needs to send a clear message of general deterrence to employers, who fail to pay entitlements of their employees. The Court is satisfied that there is a need for specific deterrence, as well in relation to the second respondent. While the Court has taken into account of the submissions of the applicant, the Court is of the view that some moderation in the penalty ranges it has discussed above, is called for, given this was a small company.

4. Accordingly, the Court imposes a penalty of $20,000.00 on the first respondent and $10,000.00 on the second respondent. These amounts are to be paid to the applicant, pursuant to s 546 of the Act.

Costs

1. Orders for the payment of costs are subject to s 570 of the Act, which is relevantly, as follows:

   s 570(2)

   the party may be ordered to pay costs only if:

(a)  the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or

(b)  the court is satisfied that the parties unreasonable act or omission because the other party to incur the costs; or

(c)   the court is satisfied of both of the following:

(i)the party unreasonably refused to participate in a matter before the FWC;

(ii)the matter arose from the same facts as the proceedings

1. It was submitted to the Court, on behalf of the applicant, that the actions of the respondents had been unreasonable, in that the first respondent failed to participate in the proceedings and both respondent’s failed, on multiple occasions, to comply with orders of the Court, offered no real defence and the first respondent failed to attend, when the matter was listed for a Directions Hearing, necessitating an adjournment.

2. In Ryan v Primesafe (2015) 323 ALR 107, Mortimer J stated at [64]:

   …the discretion conferred by the confined terms of s 570(2) should be exercised cautiously, and the case for its exercise should be clear : see Saxena v PPF Asset Management Ltd [2011] FCA 395 at [6] per Bromberg J…

3. In Melbourne Stadiums Ltd v Sautner (2015) 317 ALR 665, the Full Federal Court stated at [166] that:

   It is well established that a failure to accept a reasonable offer of compromise may constitute an unreasonable act for the purposes of s 570(2) and its predecessors: see, for example McDonald v Parnell Laboratories (Aust) (No 2) (2007) 164 FCR 591 at 598-9 per Buchanan J.

4. It was submitted, on behalf of the applicant, that an order for costs should be made in the amount of $770.00, due to the necessity of a further Directions Hearing, being held on 3 June 2020. The Court is satisfied that the Directions Hearing was unnecessary and a limited costs order in that amount should be made.

5. Given the penalties, imposed, the Court is not satisfied that any further cost orders should be made.

I certify that the preceding thirty-two (32) paragraphs are a true copy of the reasons for judgment of Judge Humphreys

Associate:

Date: 15 September 2020