Ro v Momo Chicken Pty Ltd

[2023] FedCFamC2G 543

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Ro v Momo Chicken Pty Ltd [2023] FedCFamC2G 543

File number(s):

BRG 144 of 2022

Judgment of:

JUDGE EGAN

Date of judgment:

23 June 2023 

Catchwords:

 INDUSTRIAL LAW – imposition of pecuniary penalties – relevant principles – particular factual circumstances taken into account – orders accordingly.

Legislation:

Fair Work Act 2009 (Cth) ss. 45, 323, 536, 550 and 557.

Cases cited:

Fair Work Ombudsman v Promoting You Pty Ltd [2012] FMCA 58.

Hornyak v SIMS Integrated Solutions Pty Ltd [2022] FedCFamC2G509.

Kelly v Fitzpatrick [2007] FCA 1080 at [28].

Division:

Division 2 General Federal Law

Number of paragraphs:

22

Date of last submission/s:

16 June 2023

Date of hearing:

18 April 2023

Solicitor for the Applicant:

Solomons Legal

Solicitor for the Respondents:

Ellem Warren Napa Lawyers

ORDERS

BRG 144 of 2022

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

BETWEEN:

SIBIN RO

Applicant

AND:

MOMO CHICKEN PTY LTD AS TRUSTEE FOR MOMO CHICKEN & BEER DISCRETIONARY TRUST

First Respondent

PYEONGYEON CHOI

Second Respondent

NANHEE HAN (and another named in the Schedule)

Third Respondent

order made by:	JUDGE EGAN
DATE OF ORDER:	22 June 2023

IT IS ORDERED THAT:

1.The First Respondent pay a pecuniary penalty in the sum of $39,960.00 to Ellem Warren Napa Lawyers Solomons Legal on or before 21 July 2023.

2.The Fourth Respondent pay a pecuniary penalty in the sum of $7,992.00 to Ellem Warren Napa Lawyers Solomons Legal on or before 21 July 2023.

AND IT IS NOTED THAT:

A.These Orders have been amended pursuant to rule 17.05(2)(e) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).

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 Egan

Introduction

1. On 24 February 2023, the Court made the following declarations and orders:

   “1. The First Respondent contravened section 45 of the Fair Work Act 2009 (Cth)

   (FW Act) because it:

   a. failed to pay the Applicant the minimum hourly rate, pursuant to clause

   18.1 of the Restaurant Industry Award (Award), during the periods of:

   i.        3 August 2020 to 7 February 2021;

   ii.        19 April 2021 to 1 August 2021;

   b. failed to pay the Applicant penalty rates, pursuant to clauses 23.1 and

   24.2 of the Award, at all for working:

   i.         on a Saturday;

   ii.        on a Sunday;

   iii.       from 10.00pm to midnight on Monday to Friday;

   iv.       outside of his rostered hours;

   c. failed to pay the Applicant the overtime rate required to be paid for working on a public holiday, pursuant to clause 24.2 of the Award;

   d. failed to pay the Applicant annual leave loading, pursuant to clause 25.3 of the Award;

   e. failed to ensure that copies of the Award and the National Employment Standards were available to the Applicant either on a notice board at the workplace or through accessible electronic means, pursuant to clause 3.3 of the Award;

   f. failed to make the required superannuation contributions to  the Applicant’s nomination superannuation fund.

   2. The First Respondent contravened section 323(1)(a) of the FW Act by failing to pay the Applicant in full.

   3. The First Respondent contravened section 536(3) of the FW Act by providing false or misleading payslips to the Applicant.

   4.The Fourth Respondent was involved in, within the meaning of section 550(2) of the FW Act, the First Respondent’s contraventions of sections 45, 323(1)(a), and 536(3) stated in paragraphs 1 to 3 above by failing to ensure those matters did not occur.

   AND IT IS ORDERED, BY CONSENT, THAT:

   5. The Applicant’s claims as set out in the application filed on 1 April 2022 be dismissed as against the Second and Third Respondents.

   6. The declarations sought against the First Respondent in paragraphs 101(a)(viii), (x), (xi) and (xiii) of the Statement of Claim, and against the Fourth Respondent for being involved in those matters be dismissed.

   7.        The hearing listed for 4-days commencing on 27 February 2023 be vacated.

   8.        The proceeding be adjourned to 18 April 2023 for further directions.

   9.        Each party have liberty to apply on the giving of two (2) days’ notice, each to

   the other.”

2. On 3 May 2023, the Court varied the declaration made in paragraph 1(a) of the orders of the Court made on 24 February 2023 by substituting a new 1(a) as follows:

   “1.The First Respondent contravened section 45 of the Fair Work Act 2009 (Cth) (FW Act) because it:

   a.failed to pay the Applicant the minimum hourly rate, pursuant to clause 18.1 of the Restaurant Industry Award (Award) during the period of 3 August 2020 to 18 April 2021.”

3. By order of the Court made on 18 April 2023, and with the agreement of the parties, the question of the imposition of penalties was to be decided on the papers.

4. On 28 April 2023, a Statement of Agreed Facts (SOAF) was filed. Such SOAF was as follows:

5. The claim related to the underpayment by the respondent of the wages of the applicant, as well as the consequential underpayment of superannuation, totalling $9,362.26 in contravention of the provisions of the Fair Work Act 2009 (Cth) (‘the Act’). The fourth respondent has admitted that he was relevantly involved in such contraventions.

6. By a Further Statement of Agreed Facts forwarded to Judge’s Chambers by email from the parties dated 16 June 2023, it was agreed as follows:

   “Grouping of contraventions

   1.The parties agree that the contraventions ought to be grouped as proposed by the Respondents at paragraphs [23J - [34] inclusive and Annexure A in their submissions filed on 10 May 2023 (Respondents' Submissions). However, for clarity, the Applicant does not agree with the amount for penalties proposed by the Respondents in Annexure A.

   2.The Applicant withdraws his submissions at paragraphs [17] - [20J inclusive of the Applicant's submissions filed on 26 April 2023 (Applicant's Submissions).

   Admissibility of evidence

   3.The parties agree that the evidence to which the Respondents' objected, as stated in Annexure A of the Respondents' Submissions, is not admissible and the Applicant does not rely on that evidence in support of his submissions or the matter generally.

   4.Accordingly, the Applicant withdraws his submissions at paragraphs [21], [31] - [41] inclusive and [48] - [55] inclusive of the Applicant's Submissions.”

7. Section 557 of the Act relevantly provided as follows:

   “557 Course of conduct

   (1)  For the purposes of this Part, 2 or more contraventions of a civil remedy provision referred to in subsection (2) are, subject to subsection (3), taken to constitute a single contravention if:

   (a)  the contraventions are committed by the same person; and

   (b)  the contraventions arose out of a course of conduct by the person.

   (2)  The civil remedy provisions are the following:

   (a)  subsection 44(1) (which deals with contraventions of the National Employment Standards);

   (b) section 45 (which deals with contraventions of modern awards);

   (c)  section 50 (which deals with contraventions of enterprise agreements);

   (d)  section 280 (which deals with contraventions of workplace determinations);

   (e)  section 293 (which deals with contraventions of national minimum wage orders);

   (f)  section 305 (which deals with contraventions of equal remuneration orders);

   (g)  subsection 323(1) (which deals with methods and frequency of payment);

   (h)  subsection 323(3) (which deals with methods of payment specified in modern awards or enterprise agreements);

   (i)  subsection 325(1) (which deals with unreasonable requirements on employees to spend or pay amounts);

   (ia)  subsection 325(1A) (which deals with unreasonable requirements on prospective employees to spend or pay amounts);

   (j)  subsection 417(1) (which deals with industrial action before the nominal expiry date of an enterprise agreement etc.);

   (k)  subsection 421(1) (which deals with contraventions of orders in relation to industrial action);

   (l)  section 434 (which deals with contraventions of Ministerial directions in relation to industrial action);

   (m)  subsection 530(4) (which deals with notifying Centrelink of certain proposed dismissals);

   (n)  subsections 535(1), (2) and (4) (which deal with employer obligations in relation to employee records);

   (o)  subsections 536(1), (2) and (3) (which deal with employer obligations in relation to pay slips);

   (p)  subsection 745(1) (which deals with contraventions of the extended parental leave provisions);

   (q)  section 760 (which deals with contraventions of the extended notice of termination provisions);

   (r)  subsection 785(4) (which deals with notifying Centrelink of certain proposed terminations);

   (s)  any other civil remedy provisions prescribed by the regulations.

   (3)  Subsection (1) does not apply to a contravention of a civil remedy provision that is committed by a person after a court has imposed a pecuniary penalty on the person for an earlier contravention of the provision.”

8. By reason of the Further Statement of Agreed Facts, the parties have invited the Court to impose penalties on the basis of the grouping of contraventions as set out in paragraph 31 of the respondent’s submissions filed on 10 May 2023. Such grouping was as follows:

“Group	Contraventions
1	Failing to pay the Applicant the Minimum hourly rate between 3 August 2020 and 18 April 2021. Failing to pay the Applicant the applicable penalty rates for working on Saturday, Sunday, after 10pm and outside of rostered hours. Failing to pay the Applicant the applicable holiday hourly rate. Failure to pay the Applicant in full. Failing to make superannuation contributions. Providing false or misleading payslips to the Applicant.
2	Failure to pay annual leave loading.
3	Failing to ensure copies of the award and NES were available.”

Consideration of Relevant Principles

1. It is important that all businesses, big and small, comply with workplace relations legislation, and that they be deterred from breaching such legislation. In Kelly v Fitzpatrick [2007] FCA 1080 at [28], when considering that very question, Tracy J said as follows:

   “[28]The respondents have expressed contrition and have put in place mechanisms which are designed to ensure that there will be no repetition of the breaches which have led to the present proceeding. Specific deterrence does not, therefore, loom large as a consideration in determining penalty. It does not follow that the need for general deterrence may be disregarded. As Finkelstein J said in CPSU v Telstra Corporation Limited [2001] FCA 1364; (2001) 108 IR 228 at 231: "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 ..." 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": see Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd [2001] FCA 383; [2001] ATPR 41-815 at [13].”

2. The Court has had regard to the principle that whilst any penalty imposed must not be crushing or oppressive, it must be commensurate with the seriousness of the conduct engaged in by the respondents. [1]

   [1]           Fair Work Ombudsman v Promoting You Pty Ltd [2012] FMCA 58.

3. It is of some significance that the respondents have agreed to the filing of an extensive list of admitted facts which has resulted in a saving of Court time and expense to the parties. The underpayment of the wages and superannuation of Mr Ro totalling the sum of $9,362.26 arose because of a payment of less than the minimum hourly rate during the period from 3 August 2020 until 18 April 2021; the non-payment of penalty rates at all for work carried out by Mr Ro on a Saturday, Sunday, from 10 pm to midnight on Mondays to Fridays, and outside his rostered hours; and the payment of less than the required overtime rate for work performed on a public holiday. Notwithstanding the latter, Mr Ro was paid above the minimum hourly rate during the period from 19 April 2021 until 1 August 2021. That discrepancy is not without significance.

4. The amount of $9,750.00 was re-paid to Mr Ro in satisfaction of the underpaid amounts on 28 July 2022.

5. As submitted on behalf of the respondent, there was no evidence before the Court that the respondents had deliberately altered or structured the payslips given to Mr Ro in order to mislead him. Rather, the Court accepts the respondents’ submission that the first respondent was erroneously paying the applicant based on what it believed to be Mr Ro’s proper entitlement.

6. On the question of deterrence, it is noteworthy that the applicant has ceased to trade. Between the time of the complaints made by the applicant and the cessation of trade, the first respondent had taken steps to ensure that employees were properly paid. [2] The Court accepts that in such circumstances, only a low-level consideration of the question of deterrence need be addressed. Such consideration properly ought to be confined to how the imposition of a pecuniary penalty in this matter might send a message to employers at large in respect of similar conduct.

   [2] Affidavit of Moonsoo Choi at [26].

   Penalty

7. It was submitted on behalf of the applicant that total pecuniary penalties in the order of $639,360.00 - $799,200.00 ought to be imposed by reason of the admitted contraventions. That submission was an extraordinary one, particularly in circumstances where it was conceded that contraventions identified in the Statements of Agreed Facts ought to be grouped together.

8. The Court accepts the submissions filed on behalf of the respondents that the matter of Hornyak v SIMS Integrated Solutions Pty Ltd [2022] FedCFamC2G509 was analogous to the factual circumstances of the subject matter. In that case, an employee had been underpaid an amount of $14,932.01 and the respondent corporation was fined $10,000.00 for such underpayment, and the sum of $6,000.00 by reason of the failure to keep appropriate records. The underpayment here was of a substantially less sum.

9. As the parties have agreed that the contraventions were to be treated as a single course of conduct, as per paragraph 31 of the respondent’s submissions, the Court finds that the respondent’s submissions as to penalty are more in line with accepted principles as opposed to those of the applicant, save that in the Court’s view, the respondents’ proposed discounting submissions un-necessarily complicated the assessment of penalty.

10. Having considered the nature of the underpayment as being as a result of erroneous record keeping on the part of the first respondent rather than as a result of an intentional act, and further having regard to the repayment in full of all monies and superannuation sums underpaid, the Court considers that pecuniary penalties ought to be imposed as follows:

#	Section of Act Contravened	Nature of the Admitted Contravention	Maximum Penalty (Fourth R/First R)	First Respondent – Penalty	Fourth Respondent – Penalty
1	Section 45	Failing to pay the minimum hourly rate between 3 August 2020 and 18 April 2021.	60 penalty units - $66,600	$16,650.00 being 25% of the maximum penalty.	$3330 being 25% of the maximum penalty ($13,320).
2	Section 45	Failing to pay penalty rates for Saturday, Sunday, after 10pm and outside of rostered hours.	60 penalty units - $66,600	Forms part of contravention 1. For the reasons outlined at [24] to [30].	Forms part of contravention 1. For the reasons outlined at [24] to [30].
3	Section 45	Failing to pay public holiday pay.	60 penalty units - $66,600	Forms part of contravention 1. For the reasons outlined at [24] to [30].	Forms part of contravention 1. For the reasons outlined at [24] to [30].
4	Section 45	Failing to pay annual leave loading.	60 penalty units - $66,600	$16,650.00 being 25% of the maximum penalty.	$3330 being 25% of the maximum penalty ($13,320).
5	Section 45	Failing to ensure copies of the award and NES were available.	60 penalty units - $66,600	$6660 being 10% of the maximum penalty.	$1332 being 10% of the maximum penalty.
6	Section 45	Failing to make superannuation contributions.	60 penalty units - $66,600	Forms part of contravention 1. For the reasons outlined at [24] to [30].	Forms part of contravention 1. For the reasons outlined at [24] to [30].
7	Section 323(1)	Failing to pay in full.	60 penalty units - $66,600	Forms part of contravention 1.	Forms part of contravention 1.
8	Section 536(3)	Providing false or misleading statements to the applicant.	60 penalty units - $66,600	Forms part of Contravention 1.	Forms part of contravention 1.
Total Proposed Penalty				$39,960	$7,992

1. The pecuniary penalties as imposed by order of the Court, consistent with the submissions of the parties, ought to be paid by each of the First Respondent and the Second Respondent to the applicant’s solicitors within 28 days of the handing down of judgment.

2. No order as to costs shall be made against the Fifth Respondent who relevantly was no longer a party to the proceedings, and who did not appear before the Court during the course of proceedings.

I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Egan.

Associate:

Dated:       21 June 2023

SCHEDULE OF PARTIES

BRG 144 of 2022
Respondents
Fourth Respondent:	MOONSOO CHOI