Seguel v Carmichael

[2017] FCCA 2365

FEDERAL CIRCUIT COURT OF AUSTRALIA

SEGUEL & ANOR v CARMICHAEL [2017] FCCA 2365

Catchwords:
INDUSTRIAL LAW – Application under Fair Work Act – failure to pay entitlements under award – penalties imposed.

Legislation:

Fair Work Act 2009

Cases cited:

Mason v Harrington Corporation Pty Ltd [2007] FMCA 7

First Applicant: MALCOLM SEGUEL

Second Applicant: HEALTH SERVICES UNION

Respondent: CRAIG GUY CARMICHAEL (TRADING AS MELB RACING LAB)

File Number: MLG 2258 of 2015

Judgment of: Judge Riethmuller

Hearing date: 10 March 2017

Date of Last Submission: 10 March 2017

Delivered at: Melbourne

Delivered on: 10 October 2017

REPRESENTATION

Solicitors for the Applicants: Davies Lawyers

Counsel for the Applicants: Ms Bingham

The Respondent did not appear.

ORDERS

1. Pursuant to ss.546(1) and 546(3)(b) of the Fair Work Act 2009, the Respondent pay a penalty of $48,600.00 to the Second Applicant, within 30 days of service of a sealed copy of this Order on the Respondent.

2. There be no order as to costs.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLG 2258 of 2015

MALCOLM SEGUEL

First Applicant

HEALTH SERVICES UNION

Second Applicant

And

CRAIG GUY CARMICHAEL (TRADING AS MELB RACING LAB)

Respondent

REASONS FOR JUDGMENT

1. The matter came before me on 10 March 2017 for directions in an application under the Fair Work Act 2009 and a further Application in a Case filed 22 December 2016 seeking default judgement.

Background

1. The First Applicant was employed by the Respondent from 19 March 2010 as a Lab Technician. Prior to this the First Applicant had been employed by a number of other entities of the Respondent since 2000. The entitlements of the First Applicant carried over.

2. The First Applicant was paid an annual salary of $80,000 calculated at $38.4615 per hour.

3. On 8 July 2014 the First Applicant contends that he was verbally notified by the Respondent to take a period of two weeks unpaid leave as there was insufficient work and the Respondent could not afford to pay him (Affidavit of Tracey Jane Davies sworn 22 December 2016 at [6]). The Respondent advised the First Applicant he would be paid the previous two weeks wages, while on unpaid leave.

4. The First Respondent commenced unpaid leave as requested and from 16 July 2017 sent numerous emails and text messages to the Respondent seeking payment of owed wages together with a date for him to return to work.

5. On 11 August 2014 the Second Applicant notified the Fair Work Commission of the dispute and a conference was scheduled for

   
   

   25 August 2014. At the conference the Respondent terminated the First Applicant’s employment effective as of that date.

Default Judgment

1. The Applicants initiated proceedings in this Court on 20 November 2015. The Respondent was served with the Application and Statement of Claim on 16 October 2015. On 20 November 2015, the parties appeared in court for directions and orders were made for the Respondent to file and serve a response and the matter referred to mediation before a Registrar.  The Applicants subsequently filed the  default judgment application, which was served on the Respondent on 13 January 2017.

2. The Respondent failed to file any material. The Mediation was vacated by the Registrar following the failure of the Respondent to respond to correspondence and confirm his attendance. The Respondent failed to appear on 10 March 2017.

3. I was satisfied that the Respondent was aware of the proceedings, and had not made any attempt to participate in the proceedings.  Accordingly, I granted the application for default judgment and made the following orders and declarations:

   1. The Respondent, Craig Guy Carmichael has contravened s.44 of the Fair Work Act 2009 by failing to:

   (a) Provide Mr Seguel a minimum of 4 weeks’ notice or make a payment in lieu of notice contrary to s.117 of the Fair Work Act 2009;

   (b) Pay Mr Seguel redundancy pay after Mr Seguel’s position was declared redundant by Mr Carmichael as at 25 August 2015 contrary to s.119 of the Fair Work Act 2009; and

   (c) Pay Mr Seguel annual leave loading on his accrued but untaken annual leave upon the termination of his employment contrary to s.90(2) of the Fair Work Act 2009.

   2. The Respondent, Craig Guy Carmichael has contravened s.45 of the Fair Work Act 2009 by failing to:

   (a) Consult over the redundancy of the First Applicant contrary to clause 8 of the Health Professionals Support Services Award 2010;

   (b) Make superannuation contributions to a superannuation fund for the benefit of Mr Seguel between 24 June 2014 to 25 August 2014 contrary to clause 22.2 of the Health Professionals Support Services Award 2010;

   (c) Pay Mr Seguel on a fortnightly basis between 24 June 2014 to 25 August 2014 contrary to clause 22.2 of the Health Professionals Support Services Award 2010;

   (d) Pay Mr Seguel annual leave loading between 24 June 2014 to 25 August 2014 contrary to clause 31.2 of the Health Professionals Support Services Award 2010; and

   (e) Pay Mr Seguel on the termination of employment an amount equivalent to accrued but untaken long service leave between 24 June 2014 to 25 August 2014 contrary to clause 32.2.4(c) of the Health Services Union of Australia (Private Pathology – Victoria) Award 2003.

   3. The Respondent, Craig Guy Carmichael has contravened s.323 and s.328 of the Fair Work Act 2009 by failing to pay Mr Seguel between 24 June 2014 and 25 August 2014.

   4. Within 30 days of the date of this order, Mr Carmichael pay:

   (a) To the First Applicant the following:

   (i) $16,369.21 unpaid salary for the period 24 June 2014 to 25 August 2014;

   (ii) $27,259.59 accrued and untaken annual leave;

   (iii) $4,770.43 leave loading payable on accrued but untaken leave on termination of employment;

   (iv) $35,983.04 accrued but untaken long service leave;

   (v) $5,846.14 payment in lieu of notice of termination of employment; and

   (vi) $11,692.29 redundancy pay.

   (b) The sum of $1,555.07 to Mr Seguel’s nominated superannuation fund.

   5. Mr Carmichael pay to Mr Seguel interest of $15,996.58 on the monies referred to in paragraph 4 above.

   6. The Applicants serve Mr Carmichael, by way of ordinary post at 1097 Glen Huntly Road, Glen Huntly, Victoria 3163, a copy of this Order and the Applicant’s submissions dated 10 March 2017.

   7. Mr Carmichael file and serve any submissions, affidavit or request for further hearing on penalties and costs on or before 31 March 2017.

   8. In the event that Mr Carmichael does not file and serve a submission or a request of further hearing on penalties and costs on or before 31 March 2017 then the question of penalties and costs be reserved.

   9. The parties be at liberty to apply.

4. Given the seriousness of the breaches and the penalty amounts sought, I further made orders that the Applicants serve the Respondent with a copy of the orders and declarations made on 10 March 2017 together with their submissions on penalty; and the Respondent be given a further opportunity to file and serve any submissions, affidavits or any request for a further hearing by 31 March 2013.  The Respondent was served in accordance with those orders on 20 March 2017.  The Respondent has not filed anything further nor requested any further hearing. I will therefore deal with the question of penalty.

Penalty

1. The maximum penalty that may be imposed in this case is a total of $97,200.00 for the nine contraventions.  The Applicants concede however that while there are nine separate contraventions, some of the breaches constitute a course of conduct pursuant to s.557 of the Act.

2. The Applicants submit at [20] of their written submission filed 10 March 2017:

   20. …The total number of separate contraventions of the FW Act engaged in by the Respondent is nine, therefore the maximum penalty is $97 200.00. Although the contraventions of s323, s328 and clause 20.1 of the Modern Award constitute a course of conduct, as does the contravention of s90(2) of the FW Act and clause 31.2 of the Modern Award.

3. I accept the submission of the Applicants and find the contraventions fall into the following groupings:

Breaches	Maximum Penalty
Failure to provide the Applicant with 4 weeks’ notice or payment in lieu of notice [1(a) of orders 10/3/2017 – s.117 ]	$10,800.00
Failure to pay the Applicant a redundancy payment [1(b) of orders 10/3/2017 – s.119]	$10,800.00
Failure to consult the Applicant in relation to a redundancy [2(a) of orders 10/3/17 – cl.8]	$10,800.00
Failure to pay the Applicant on a fortnightly basis between 24 June 2014 and 25 August 2014 [2(c) of orders 10/3/17 – 22.2]	$10,800.00
Failure to pay the Applicant accrued but untaken long service leave upon termination [2(e) of orders 10/3/17 – cl.32.4(c)]	$10,800.00
Failure to pay the Applicant annual leave loading [1(c) of orders 10/3/17 – s.90(2) and 2(d) of orders – cl.31.2]	$10,800.00
Failure to pay the Applicant wages fortnightly and in accordance with annual guarantees [2(b) of orders 10/3/17 – cl.20.1 and order 3 – ss.323 and 328]	$10,800.00
Total	$75,600.00

1. I have regard to the factors identified by Mowbray FM in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 when considering penalty.

The nature and extent of the conduct

1. The First Applicant was employed by the Respondent on a full time basis for a period of nearly fifteen years.  The Respondent directed the First Applicant to take two weeks of unpaid leave.  The First Applicant was owed wages at the time of taking unpaid leave.  The First Applicant repeatedly contacted the Respondent to enquire of his return to work and it was only after the Applicants lodged a dispute with Fair Work that the Respondent terminated the Applicants employment without notice during the conference.

The circumstances in which the conduct took place

1. The circumstances in which the conduct took place are set out in the beginning of this decision.  In circumstances where a long term employee’s position is ending it is particularly important that they receive their accrued entitlements as commonly this is their only source of income until alternative employment can be found – it is their only ‘nest egg’ for a period of lost income.

The nature and extent of any loss or damage

1. The First Applicant had difficulty in obtaining full time work following termination and struggled financially.  The First Applicant relied upon the financial support of family to make mortgage payments.

Whether the breaches were properly distinct or arose out of one course of conduct

1. I have accepted the Applicants submissions and found the contraventions fall into seven groups as outlined above.  I accept that all of the breaches arise from the circumstances surrounding the end of the First Applicant’s employment.

Size of the company

1. The Applicants submit the business is small with less than 15 employers.  The Applicants believe the Respondent may now be the only employee.

Deliberateness of breaches

1. The Respondent advised the First Applicant that there was insufficient work for him and the Respondent couldn’t afford to pay him.  The Respondent directed the First Applicant to take unpaid leave for a period of two weeks, but made no attempt to provide further work or pay the First Applicant wages owed to him.

Involvement of senior management

1. The Respondent is the director and sole proprietor of the business.

Contrition, corrective action and cooperation with the enforcement authorities

1. The Respondent has not participated in the proceedings following an appearance at the first directions date in November 2015.  The Respondent has made no payment of any outstanding monies to the First Applicant.

Deterrence

1. The Applicants submit that the Respondent continues to operate the business and may engage more employees in the future. I find there is a need for both specific and general deterrence.

Conclusion

1. The Applicants seek penalties against the Respondent at the higher end of the range.  Given the circumstances set out above I am not persuaded that the breaches are at the higher end of offending.  I find the breaches to be in the middle range.  I have particular regard to the fact that the breaches were not rectified prior to the penalty hearing and the very large amount involved.  Clearly there is no remorse.  In the circumstances I find a penalty of 50% is appropriate.  

2. Having regard to the nature of the proceedings and the costs likely to be involved, I find that the penalties should be paid to the Second Respondent.

3. Costs are not ordinarily ordered in cases of this type as a result of the statutory provisions.  The Applicants seeks that the Court exercise its jurisdiction and make an order for costs.  The Applicants submit that the Respondent’s conduct has amounted to “acts and omissions” which have caused the Applicants to incur costs.  I am not persuaded that non participation in these proceedings caused any greater costs to be incurred, nor that it is conduct of the type warranting a costs order.

I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of Judge Riethmuller

Associate: 

Date:  10 October 2017