RIDGE v Abard Engineering Pty Ltd
[2015] FCCA 3208
•9 December 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| RIDGE v ABARD ENGINEERING PTY LTD | [2015] FCCA 3208 |
| Catchwords: INDUSTRIAL LAW – Penalties – failure to pay accrued but untaken annual leave upon termination – failure to pay leave loading upon termination – failure to provide payslips – failure to provide records. |
| Legislation: Fair Work Regulations 2009, r.3.42 |
| Cases cited: Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No.2) (2005) 215 ALR 281; (2005) ATPR 42-051; [2005] FCA 254 Mornington Inn Pty Ltd v Jordan (2008) 171 IR 455; (2008) 168 FCR 383; (2008) 247 ALR 714; [2008] FCAFC 70 Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357; (2008) 177 IR 243; [2008] FCAFC 170 |
| Applicant: | MARTIN RIDGE |
| Respondent: | ABARD ENGINEERING PTY LTD (ACN 004 780 090) |
| File number: | MLG 1418 of 2015 |
| Judgment of: | Judge Riley |
| Hearing date: | 20 November 2015 |
| Date of last submission: | 20 November 2015 |
| Delivered at: | Melbourne |
| Delivered on: | 9 December 2015 |
REPRESENTATION
| Counsel for the applicant: | R J W Hooper |
| Solicitors for the applicant: | Ryan Carlisle Thomas Lawyers |
| Counsel for the respondent: | No appearance |
| Solicitors for the respondent: | The respondent was not represented |
THE COURT ORDERS THAT:
Pursuant to s 546(1) of the Fair Work Act 2009, the respondent pay pecuniary penalties of $36,000 in respect of the respondent’s contraventions of:
(a)s.44 of the Fair Work Act 2009 by failing to pay the applicant for his accrued but untaken annual leave upon termination;
(b)s.45 of the Fair Work Act 2009 by failing to pay the applicant annual leave loading for his accrued but untaken annual leave upon termination;
(c)s.536(1) of the Fair Work Act 2009 by failing to give the applicant payslips within one working day of payment; and
(d)s.535(3) of the Fair Work Act 2009 and r.3.42 of the Fair Work Regulations 2009 by failing to make records available for inspection and copying.
Pursuant to s.546(3)(c) of the Fair Work Act 2009, the pecuniary penalties referred to in order 1 be paid to the applicant within 28 days of the date of these orders.
In default of payment of the pecuniary penalties pursuant to these orders, the applicant have liberty to apply.
The application otherwise be dismissed.
NOTATION
Pursuant to rule 16.05(2)(a) of the Federal Circuit Court Rules 2001, the court may vary or set aside a judgment or order made in the absence of a party.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 1418 of 2015
| MARTIN RIDGE |
Applicant
And
| ABARD ENGINEERING PTY LTD (ACN 004 780 090) |
Respondent
REASONS FOR JUDGMENT
Introduction
This matter concerns the penalties to be imposed for certain contraventions of the Fair Work Act 2009 (“the Act”). The court was satisfied that the respondent was properly served. However, the respondent has not participated in the proceedings.
On 27 October 2015, default judgment was given for the applicant for reasons given orally at the time. Essentially, the respondent was ordered to pay the applicant $19,156.27 consisting of:
a)$9,130 for accrued but unpaid annual leave upon termination;
b)$1,597.75 for annual leave loading of 17.5% upon termination;
c)$8,007.72 for accrued but unpaid long service leave upon termination; and
d)$420.80 for interest.
The matter was adjourned until 20 November 2015 for penalty hearing. However, the respondent again did not appear.
Approach to determining penalty
In view of the decision of the Full Court of the Federal Court in Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (2015) 105 ACSR 403; [2015] FCAFC 59, it is not permitted for the applicant to suggest to the court a range of appropriate penalties. The High Court has granted special leave to appeal from that decision. The appeal has been heard and the High Court’s decision is presently reserved. It was not suggested that my decision in this matter should await the outcome of the High Court appeal. Consequently, I will proceed on the basis of the law as it presently stands. That is, I will form my own view of the appropriate penalty, bearing in mind any comparable decisions of other courts.
In general, the proper approach to determining penalty in cases such as this is as follows. The first step for the court is to identify each separate contravention involved.
Where there are multiple contraventions, the second step is to consider whether any of the various contraventions constituted a single course of conduct, such that multiple breaches should be treated as a single breach.
The third step is for the court to consider the extent, if any, to which two or more contraventions have common elements. A person should not be penalised more than once for the same conduct.
The penalty imposed by the court should be an appropriate response to the contravener’s conduct.[1] This is a separate process from the application of the totality principle.[2]
[1] Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560; (2008) 246 ALR 35; [2008] FCAFC 8 at [46] (Graham J).
[2] Mornington Inn Pty Ltd v Jordan (2008) 171 IR 455; (2008) 168 FCR 383; (2008) 247 ALR 714; [2008] FCAFC 70 at [41]-[46] (Stone and Buchanan JJ).
The fourth step is for the court to consider the appropriate penalty for each breach, treating multiple breaches arising from a course of conduct as a single breach, and taking into account any common elements shared by the various breaches.
The fifth step is for the court to apply the totality principle.
This requires the court to consider the aggregate penalty overall, and determine whether it is an appropriate response to the conduct which resulted in the breaches.[3] The court in this step makes an “instinctive synthesis”.[4]
[3] See Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 at [30] (Tracey J); Ophthalmic, supra at [23] (Gray J), [71] (Graham J) and [102] (Buchanan J).
[4] Ophthalmic, supra at [27] (Gray J) and [55] and [78] (Graham J).
A convenient checklist of the factors that the court might consider in determining penalty include the matters that were identified by Mowbray FM in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 at [26]-[59] and adopted by Tracey J in Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 at [14]. That list is as follows, (with paragraph letters inserted):
(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.
(m) The need for specific and general deterrence.
The court must, of course, be mindful of the caution expressed by Buchanan J in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560; (2008) 246 ALR 35; [2008] FCAFC 8 at [91] as follows:
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. There is no suggestion in the present case that the learned magistrate made any relevant error in her identification of the matters which she should consider in fixing penalties.
The court will consider the circumstances of the case under the various headings suggested by Mowbray FM, and then consider whether any other matters are relevant.
There was no cross examination of any witness, so I accept all of the affidavit evidence. Where there is a conflict, I accept the more recent evidence.
Step 1: identifying the breaches
On the basis of the respondent’s deemed admissions constituted by his default in various respects in the course of this proceeding, the court is satisfied that:
a)the respondent breached s.44 of the Act by failing to pay the applicant for his accrued but untaken annual leave upon termination;
b)the respondent breached s.45 of the Act by failing to pay the applicant annual leave loading for his accrued but untaken annual leave upon termination;
c)the respondent breached s.536(1) of the Act by failing to give the applicant payslips within one working day of payment; and
d)the respondent breached s.535(3) of the Act and r.3.42 of the Fair Work Regulations 2009 by failing to make records available for inspection and copying.
The applicant, in paragraph 15 of his written submissions and in his oral submissions, did not seek a penalty for any breach in relation to payment for long service leave so I take that matter no further.
Step 2: single course of conduct
As discussed below, the applicant said, without contradiction, that the respondent gave him 11 payslips in 15 years of employment. Each failure to provide a payslip over the years could be regarded as a separate breach. However, it seems to me that the respondent’s repeated failures to provide pay slips should be regarded as a single course of conduct constituting one breach.
In my view, each of the other contraventions listed above was clearly a separate breach. There seems to be no reason to treat any or all of them as a single course of conduct.
Step 3: grouped breaches
Similarly, apart from the payslip contraventions which are to be treated as a single course of conduct, there seems to me to be no reason to treat any or all of the various contraventions as a group.
Step 4: the appropriate penalty for the breaches
The nature and extent of the conduct which led to the breach
The applicant was employed by the respondent as a truck driver from 10 October 2003 until 14 October 2014. At the time of the termination of his employment, he was owed 11 weeks annual leave, which had accrued over 2.75 years of full time work. He was also owed long service leave that had accrued over the entire 11 years of the applicant’s employment by the respondent.
The payslip breaches appear to have occurred over the entire 11 years of the applicant’s employment by the respondent.
A director of the applicant, Joan Zizas, refused to provide employee records to the applicant despite a clear request from his solicitor.
The circumstances in which that conduct took place
The respondent was incorporated in 1969. It has operated since that time in the area of industrial, commercial and domestic demolition. It has two directors, Joan and Milton Zizas, and one shareholder, being Milton Zizas.
The nature and extent of any loss or damage sustained as a result of the breaches
The applicant’s losses amounted to about $19,000. He claims to have found it difficult to find other work. Consequently, he claims that he was forced to access his superannuation on hardship grounds and to have been forced to move in with his sister. However, these matters seem to me to be too remote from the breaches to give them any significant weight.
Whether there had been similar previous conduct by the respondent
The applicant claims that other employees of the respondent have not regularly received payslips and thus are unsure as to their entitlements. However, these claims are vague and unsubstantiated and I give them little weight.
Whether the breaches were properly distinct or arose out of the one course of conduct
This point has already been addressed.
The size of the business enterprise involved
The applicant told the court that the respondent had five employees at the time of the applicant’s employment. Otherwise, little is known about the respondent’s financial circumstances.
Tracey J said in Kelly v Fitzpatrick (2007) 166 IR 14; [2007] FCA 1080 at [28]:
No less than large corporate employers, small businesses have an obligation to meet minimum employment standards and their employees, rightly, have an expectation that this will occur. When it does not it will, normally, be necessary to mark the failure by imposing an appropriate monetary sanction. Such a sanction “must be imposed at a meaningful level” ... (citation omitted)
Similarly, in Rajagopalan v BM Sydney Building Materials Pty Ltd [2007] FMCA 1412, the court said at [27]:
Employers must not be left under the impression that because of their size or financial difficulty that they are able to breach an award. Obligations by employers for adherence to industrial instruments arise regardless of their size. Such a factor should be of limited relevance to the Court’s consideration of penalty. … (citation omitted)
Whether or not the breaches were deliberate
In the absence of any evidence to the contrary, it seems from their nature that the breaches were probably deliberate.
Whether senior management was involved in the breach
In the absence of any evidence to the contrary, it seems from the size of the business that senior management was probably involved in the breaches.
Whether the party committing the breach has exhibited contrition, corrective action and co-operation with the authorities
There is no evidence before the court of any co-operation, contrition or corrective action. On the contrary, the respondent has failed to engage in the proceeding and has put the court and the applicant to the trouble of two undefended hearings.
The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements
Nothing was submitted to the court regarding this factor.
The need for specific and general deterrence
In relation to specific deterrence, Gray J observed in Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357; (2008) 177 IR 243; [2008] FCAFC 170 at [37] that:
… Specific deterrence focuses on the party on whom the penalty is to be imposed and the likelihood of that party being involved in a similar breach in the future. Much will depend on the attitude expressed by that party as to things like remorse and steps taken to ensure that no future breach will occur. …
The fact that the respondent has shown no contrition, co-operation or corrective action indicates that specific deterrence is required in this proceeding. The respondent continues to trade and employ staff.
In relation to general deterrence, Lander J noted in Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543; (2007) 162 IR 444; [2007] FCAFC 65 at [93]:
… In regard to general deterrence, it is assumed that an appropriate penalty will act as a deterrent to others who might be likely to offend ... The penalty therefore 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 deterrence will be the paramount factor in fixing the penalty … (citations omitted)
Similarly, in Community and Public Sector Union v Telstra Corporation Limited (2001) 108 IR 228 at 230-231; [2001] FCA 1364, Finkelstein J said:
… even if there be no need for specific deterrence, there will be occasions when general deterrence must take priority, and in that case a penalty should be imposed to mark the law's disapproval of the conduct in question, and to act as a warning to others not to engage in similar conduct ….
It is proper in this case that the penalties give due recognition to the need for general deterrence.
Other issues
I do not consider that there are any other relevant issues in this case.
Step 4: the appropriate penalty
The applicant submitted that a penalty at the higher end of culpability would be appropriate in this case. However, in view of Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (2015) ACSR 403; [2015] FCAFC 59, I disregard that submission.
Under s.539(2) of the Act, the maximum penalty for individuals:
a)for each breach of s.44 and s.45 of the Act is 60 penalty units; and
b)for each breach of s.535(1) and s.536(1) of the Act is 30 penalty units.
Additionally, under s.546(2) of the Act, the maximum number of penalty units that a corporation can be ordered to pay is five times the maximum payable by an individual.
At time when the applicant’s employment was terminated, a penalty unit was $170. Consequently, for each of the two breaches of s.44 and s.45 of the Act, the maximum penalty was $51,000. For each of the two breaches of s.535(3) and s.536(1) of the Act, the maximum penalty was $25,500. The total maximum penalty is therefore two times $51,000, which equals $102,000, plus two times $25,500, which equals $51,000, and which makes a grand total of $153,000.
Penalties should not be oppressive. Merkel J said in Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 2) (2005) 215 ALR 281; (2005) ATPR 42-051; [2005] FCA 254 at [9]:
I therefore respectfully agree with the observation of Smithers J, referred to by Burchett and Kiefel JJ in NW Frozen Foods, to the effect that, a penalty that is no greater than is necessary to achieve the object of general deterrence, will not be oppressive.
I have considered the penalties imposed in other cases. However, I have not found any cases to be closely similar to this one.
Taking into account all of the circumstances of this case, I consider that penalties of $12,000 for each of the s.44 and s.45 offences, and penalties of $6,000 for each of the s.535(3) and s.536(1) offences would be appropriate. In my view, this takes account of:
a)the respondent’s total lack of contrition, co-operation or corrective action;
b)the substantial amount of money which the respondent failed to pay the applicant;
c)the need for specific and general deterrence; and
d)the other matters mentioned above.
Step 5: the totality principle
The total amount of the penalty as calculated above is $36,000, being two penalties of $12,000, and two penalties of $6,000.
In relation to the check that is required by the totality principle, I consider that the total of $36,000 is appropriate for the whole of the contravening conduct engaged in by the respondents.
The applicant sought an order pursuant to s.546(3)(c) of the Act that the amount of the penalties be paid to the applicant. That seems to me to be entirely appropriate.
There will be orders accordingly. In addition, there will be the usual notation under r.16.05(2)(a) of the Federal Circuit Court Rules 2001, as the respondent was not present at the penalty hearing.
I certify that the preceding forty-nine (49) paragraphs are a true copy of the reasons for judgment of Judge Riley
Associate:
Date: 9 December 2015
Key Legal Topics
Areas of Law
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Civil Procedure
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Commercial Law
Legal Concepts
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Abuse of Process
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Costs
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Jurisdiction
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Res Judicata
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Stay of Proceedings
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