New v Edition Coffee Roasters
[2022] FedCFamC2G 448
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
New v Edition Coffee Roasters [2022] FedCFamC2G 448
File number(s): SYG 2622 of 2018 Judgment of: JUDGE BAIRD Date of judgment: 10 June 2022 Catchwords: INDUSTRIAL LAW – Fair Work – Pecuniary Penalties – breaches of ss 44, 45, 340, 535 and 536 of the Fair Work Act 2009 (Cth) – orders made. Legislation: Fair Work Act 2009 (Cth) ss 44, 45, 340, 535, 540 and 536
Fair Work Regulations 2009 (Cth) reg 3.46
Restaurant Industry Award 2010 cl 31, 32, 33, 34
Cases cited: Australian Ophthalmic Supplies Pty Ltd v McAlary‑Smith (2008) 165 FCR 560
Canturi v Sita Coaches Pty Ltd (2002) 116 FCR 276; [2002] FCA 349
Fair Work Ombudsman v Nobrace Centre Pty Ltd (in Liquidation) [2019] FCCA 2979
Fair Work Ombudsman v NSH North Pty Ltd t/as New Shanghai Charlestown [2017] FCA 1301
Jack Robert New v Edition Coffee Roasters Pty Ltd (In Liq) and Daniel Jackson and Ors [2021] FCCA 777
Mason v Harrington Corporation Pty Ltd [2007] FMCA 7
Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383; [2008] FCAFC 70
Seven Network (Operations) Pty Ltd v Communications, Electrical, Electronic, Energy Information, Postal Plumbing and Allied Services Union of Australia (CEPU) (2001) 110 IR 372
Division: Division 2 General Federal Law Number of paragraphs: 27 Date of last submission/s: 5 June 2021 Date of hearing: Determined on the papers Place: Sydney Counsel for the Applicant: Mr Michael Swanson Solicitor for the Applicant: Ms K Lewis, Voice Lawyers For the Second Respondent: No appearance ORDERS
SYG 2622 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: JACK ROBERT NEW
Applicant
AND: EDITION COFFEE ROASTERS PTY LTD
First Respondent
DANIEL JACKSON
Second Respondent
ORDER MADE BY:
JUDGE BAIRD
DATE OF ORDER:
10 JUNE 2022
THE COURT:
1.ORDERS the second respondent, Mr Daniel Jackson, pay a total penalty in the sum of $40,500 to the applicant pursuant to s 546(1) of the Fair Work Act 2009 (Cth) for committing the contraventions set out in paragraphs [1] and [3] of the Orders made on 20 April 2021.
2.ORDERS Mr Daniel Jackson personally pay the penalties ordered pursuant to paragraph 1 to the applicant within 28 days of this Order.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE BAIRD
INTRODUCTION
This judgement is a civil penalty determination concerning the appropriate penalty to be imposed on the second respondent, Mr Daniel Jackson, following default judgment against him for breaches of ss 44, 45, 340, 535 and 536 of the Fair Work Act 2009 (Cth) by reason of being involved in, for the purposes of s 550 of the Act, contraventions of the first respondent. I have earlier delivered reasons on liability and made declarations and certain orders in this proceeding on 20 April 2021, and made further orders on 30 April 2021, see Jack Robert New v Edition Coffee Roasters Pty Ltd (In Liq) and Daniel Jackson and Ors [2021] FCCA 777 (New #1).
On 30 April 2021 (30 April Orders) I ordered pursuant to r 15.03 of the Federal Circuit Court Rules 2001 (Cth) (now r 15.02 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) 2021 (Cth)), that the remaining issues in the proceeding be determined on the papers unless the Court otherwise directs. I ordered that the applicant, Mr Jack Robert New, serve a copy of the orders on Mr Jackson.
Further to the 30 April Orders, Mr New has filed affidavits from himself made 28 May 2021, and from his solicitor, Ms Lewis, also made 28 May 2021. His counsel has filed an outline of submissions dated 5 June 2021 and filed 7 June 2021. I am satisfied on the evidence that Mr Jackson has been made aware of the above reasons, orders, timetable and affidavits, and has had the opportunity to participate in this civil penalty proceeding. He has not done so. As I record below, Mr Jackson has not appeared at any Court date or hearing in the proceeding. His participation was limited to filing a defence.
I have had regard to the abovementioned affidavit evidence, and have been assisted by counsel’s submissions.
THE LAW
Pursuant to s 546 of the Act, the Court may make pecuniary penalty orders in an amount that it considers appropriate if it has satisfied that a person, in the present case, Mr Jackson, has contravened a civil remedy provision. As is apparent from the below, and from New#1 I am satisfied that Mr Jackson has contravened civil remedy provisions of the Act.
The Court has a broad discretion as to penalty. In Fair Work Ombudsman v NSH North Pty Ltd t/as New Shanghai Charlestown [2017] FCA 1301 Bromwich J summarised how the discretion is to be approached at [36], 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 aggregation for those contraventions arising out of a course of conduct, noting that s 557 of the Act provides that two or more contraventions of a given civil remedy provision are to be taken to be a single contravention if committed by the same person and arising out of a course of conduct by that person.
(3)Consider whether there should be 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 (as permitted by Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482 (CFMEU Civil Penalties Case) at [64]) 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: see Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14 at [30]; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8; 165 FCR 560 at [23]. [71] and [102].
The purpose of a civil penalty is primarily, if not wholly, promoting the public interest in compliance with the laws that have been contravened, and it does not engage principles of retribution or rehabilitation: see Fair Work Ombudsman v Nobrace Centre Pty Ltd (in Liquidation) [2019] FCCA 2979 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 on issues of specific and general deterrence: see Norbrace at [66].
The Act does not set out any mandatory criteria, inclusive or exclusive, that the Court must consider when determining whether to impose a penalty or the amount of any penalty: Canturi v Sita Coaches Pty Ltd (2002) 116 FCR 276; [2002] FCA 349 at [88]. The choice of penalty must be guided by the “individual circumstances of a case, not by a line-by-line comparison with another case”: Australian Ophthalmic Supplies Pty Ltd v McAlary‑Smith (2008) 165 FCR 560 at 12. The process is an intuitive one by the Court and not an application of a scientific process: Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383; [2008] FCAFC 70 at [60]‑[63].
In Mason v Harrington Corporation Pty Ltd [2007] FMCA 7, Mobray FCM set out what is a now well accepted 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 Respondents;
(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 employee entitlements; and
(m)the need for specific and general deterrence.
Merkel J in Seven Network (Operations) Pty Ltd v Communications, Electrical, Electronic, Energy Information, Postal Plumbing and Allied Services Union of Australia (CEPU) (2001) 110 IR 372 set out some guiding considerations for the Court at 374:
matters to be taken into account in determining the appropriate penalty include the cost of the contravention, deterrence, the flagrancy and deliberateness of the breach, the offender’s past record of behaviour and any contrition displayed by the offender.
CONSIDERATION
The first step is to identify the separate contraventions. The contraventions of the first respondent (voluntarily placed in liquidation) are as follows:
(a)pursuant to s 44 of the Act by, in breach of s 117 of the Act, failing to give the applicant two weeks’ notice of termination of his employment, or to make payment to him in lieu of notice of at least the amount of pay at the full rate of pay for the hours the applicant would have worked had the employment continued until the expiry of two weeks after termination.
(b)pursuant to s 45 of the Act by contravening the Restaurant Industry Award 2010 by:
(i)failing to pay weekend penalty rates to the applicant for work on weekends and public holidays pursuant to cl 34 of the Award;
(ii)failing to pay overtime rates to the applicant pursuant to cl 33 of the Award;
(iii)failing to provide the applicant with meal breaks, and to give the applicant paid meal breaks pursuant to cl 32 of the Award;
(iv)failing to provide the applicant with average hours of work per week, and the arrangement of ordinary hours pursuant to cl 31 of the Award;
(c)pursuant to s 340(1) of the Act by taking adverse action against the applicant for prescribed (unlawful) reason by each of its denial of a support person, systemic demotion, removal of key responsibilities, harassment at work and outside of work through multiple social media platforms, dismissal, and withholding entitlements;
(d)pursuant to s 535 of the Act by failing to make and keep employee records as required;
(e)pursuant to s 536 of the Act by failing to provide payslips containing the information required by reg 3.46 of the Fair Work Regulations 2009 (Cth), including by failing to record the hours the applicant worked, the rates of pay applicable those hours and the amounts payable to him,
(together and separately, the contraventions)
The contraventions of Mr Jackson are contraventions of each of sections 44, 45, 340, 535, and 536 of the Act, by reason of being involved in for the purposes of s 550 of the Act each of the contraventions of the first respondent identified in the preceding paragraph, subparagraphs (a), (b), (c), (d), and (e).
The total loss suffered by Mr New amounted to $47,261.00, together with prejudgment interest. On 20 April 2021 pursuant to s 545 of the Act, I ordered that default judgment be entered in favour of Mr New against Mr Jackson, and ordered that Mr Jackson compensate Mr New for his loss and damage suffered as a consequence of the contraventions in the total sum of $47,261.00 together with prejudgment interest in an amount to be determined. By paragraph [1] of the 30 April Orders, I ordered Mr Jackson pay to Mr New prejudgment interest in the amount of $6,912.40. Accordingly, the total amount I ordered Mr Jackson to pay to Mr New was $54,173.40.
As I have foreshadowed at [5] above, relevantly to this determination, each of the above contraventions by Mr Jackson is a civil remedy provision, respectively by reference to the contraventions set out in subparagraphs [11] above, s 539(3)(a) items 1(b), 2(c), 11, and 29(d) and (e).
In relation to the contraventions, Mr New accepts, and the Court agrees, that each of the contraventions described above in [11](a) and [11](b) above (and see [12]) are to be taken as a course of conduct. The Court considers however, that the other contraventions pursuant to s 340(1) of the Act in taking adverse action as described (see [11](c) above), together with failing to make and keep employee records and the failing to provide payslips (see ss 535, and 536: see [11](d) and [11](e)) should be dealt with separately, as they are discrete breaches of the relevant provisions of the Act. Contraventions [11](d) and [11](e) might, however, be considered as similar in nature.
The factual background of the matter is set out in New#1, including at [20] to [56]. Mr New, who worked as a Chef for the first respondent, suffered a deteriorating relationship with his employer, the principal of which was the second respondent, Mr Jackson. This resulted in the purported demotion of Mr New from Executive Chef to Head Chef with a reduction in wages. Accusations were made by Mr Jackson about the hours Mr New worked.
Following Mr New filing an application for general protections claim in the Fair Work Commission, Mr New was terminated for purported serious misconduct. Following his dismissal, Mr New recounts multiple instances of trolling on social media and other inappropriate action by staff which amounted to a pattern of unreasonable demands and threats consistent with harassment and an unsafe workplace.
Following the matter being commenced in this Court, and served, Mr Jackson appeared on only one Court occasion, 16 November 2018. Thereafter, he took no further part in the proceeding. Upon application to the Court, hearing and submissions, and the chronology described in New#1, judgment was entered against Mr Jackson on 20 April 2021 and orders made then, and by the 30 April Orders, for compensation and prejudgment interest.
No material has been provided to the Court by Mr Jackson in mitigation of any penalties. On behalf of Mr New, it was submitted that Mr Jackson had provided no cooperation with the Court, or Mr New, in resolving the proceeding or complying with the orders of the Court. There is no evidence before the Court that he has made any payments of the amounts ordered by this Court on 20 April 2021 and on 30 April 2021. The failure to cooperate with the Court has been the cause of additional time being spent by the Court in resolving the matter. Further, the Court is satisfied that there has been no remorse or contrition expressed by Mr Jackson. There is no evidence before the Court that Mr Jackson has taken any corrective action to ensure that there are no further breaches of the relevant legislation.
On behalf of Mr New it was submitted to the Court that Mr Jackson was the director of the first respondent, and was involved in a complex commercial structure, including of companies that appear to continue to operate in hospitality. The liquidation of the first respondent, it was submitted, was adopted to avoid the liabilities owing by the company. Mr New submitted, and I observe, that the failure to comply with the orders of this Court for the payment of $47,261.00 (together with prejudgment interest) is a significantly aggravating factor, given the degree of control exercised by Mr Jackson over the corporate entities referred to in New#1. Further, Mr Jackson is, and remains a director of related companies operating the same, or substantially similar, businesses to that formerly conducted by the first respondent in the hospitality industry. In these circumstances, there was a need for both significant general deterrence and specific deterrence in relation to Mr Jackson due to his behaviour and the way in which he has dealt with the proceeding before the Court.
In particular, Mr New highlighted that the Court found in New #1 there was a pattern of “bullying, harassment, and inappropriate workplace conduct” towards him, which amounted to harassment and an unsafe workplace. Mr New submitted that the contraventions were serious, deliberate and in flagrant breach of the provisions of the Act. I here observe that in the Court’s view, this conduct requires a higher penalty given the nature of the action taken and the need for specific and general deterrence.
The Court accepts the submissions put on behalf of Mr New. The Court notes that the maximum penalty able to be imposed on Mr Jackson for each of the contraventions pursuant to s 539 of the Act is 60 penalty units, to a maximum penalty amount of $12,600 per contravention: see s 539(3) of the Act. The Court takes account of the size of the underpayment to Mr New which is an aggravating feature, given the relatively short period of time that Mr New was employed by the first respondent.
In the Court’s view the breaches were deliberate.
There is no evidence before the Court of previous contraventions by Mr Jackson, or by the first respondent.
DISPOSITION
In all of the circumstances, taking account of the need for specific and general deterrence, together with the need to ensure compliance with minimum standards of entitlements and each of the other factors set out in Mason v Harrington, and the other cases referred to above, the Court is satisfied that the appropriate penalties to be awarded against Mr Jackson, for his declared contraventions of the Act are as follows:
(i)for the breach of s 44 of the Act, $7,500.00.
(ii)for the breaches of s 45 of the Act, $10,000.00
(iii)for the breach of s 340(1) of the Act, $10,000.00
(iv)for the breach of s 535 of the Act $6,500.00.
(v)for the breach of s 536 of the Act $6,500.00.
The total penalties amount to $40,500.00. They are to be paid by Mr Jackson personally. The Court orders that the penalties are to be paid to the applicant (see Seven Network), within 28 days of these orders.
I so order.
I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Baird. Associate:
Dated: 10 June 2022